Kentucky Independent Agent - January/February 2013 by Big I Kentucky

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JANUARY

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FEBRUARY 2013

2013 2013 Legislative Legislative Overview Overview

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Inside: Meet your 2012-2013 Board of Directors

E R A C H T I W E L D HAN We believe "handle with care" means more than a stamp on a box. We believe the best way to handle a claim is to prevent it from happening in the first place. Our SAFETY W.O.R.K.S. program offers an array of tools focused on training, education and awareness of workplace risks. If you do have a claim, we handle your claims with the utmost care and personal attention. Our fair-minded claims adjustors will guide you through the process. And our financial results show proof of our commitment to "handle with care" our financial strength and stability.

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THE KENTUCKY INDEPENDENT AGENT is the official magazine of Independent Insurance Agents of Kentucky, and is published bi-monthly. Editorial offices are located at 13265 O’Bannon Station Way, Louisville, Kentucky 40223, telephone (502) 245-5432; E-mail IIAK@iiak.org; FAX (502) 245-5750.

Officers William S. Latta Chair; Henderson (270) 827-3543 John Funkhouser, CIC, CWCA Chair-Elect; Danville (859) 236-5922 Michelle L. Love Vice Chair; Owensboro (270) 926-2806 James D. England, AAI Treasurer; Pikeville (606) 437-7361

ON THE COVER

Stephen R. Kinkade, CPCU, AAI National Director; Leitchfield (270) 259-5465

The Kentucky legislature has convened for another

Tim Conder Immediate Past Chair; Louisville (502) 459-7500

year and in this issue we've provided with important

Directors

Read more on page 5.

information you need to know about your legislators.

Chip Atkins Louisville, (502) 585-3600 Jason D. Billington, CIC Murray, (270) 753-4751 Moe Dugger Lexington, (502) 426-6060

FEATURES

David M. Houk Horse Cave, (270) 286-2724

Cover Story: 2013 Kentucky Legislative Overview....................................5

Diana G. Hunt, CIC Barbourville, (606) 546-4132

Your IIAK Board for 2012-2013 ...........................................................8

John L. Ison West Liberty, (606) 743-4472 Michael G. Johnson, CIC Lexington, (859) 233-1461 Aaron LaRue Bardstown, (502) 348-0050

10 Tips to Support New CSR Success.................................................10 Combat Cybercrime and Protect Your Agency with Simple Security Steps......12

Skip McGaw Madisonville, (270) 821-3122

Recognizing Our PAC Contributors ......................................................16

Staff

Agencies Aim to Reach Diverse Prospects ...........................................17

Peggy P. Porter President/CEO Kristie Weyer Insurance Services Manager Joy E. Holder Membership Manager Arlene Adonis-Hawkins Director of Communications

Everyday Online: What to Do Today to Build Your Presence .....................20 Are Mortgage Payments Business Income “Continuing Expenses?” ..........28

Tara Purvis Marketing Director

DEPARTMENTS

Megan Granger Member Services Director

From the Chair ..................................................................................4

The Kentucky Independent Agent welcomes all advertising and editorial submissions. Inquiries for advertising, news releases and editorial contributions can be directed to:

Trusted Choice®: Make Trusted Choice® Content Yours ...........................14

Arlene Adonis-Hawkins 13265 O‘Bannon Station Way Louisville, Kentucky 40223 Ph: (502) 245-5432 Fax: (502) 245-5750 Email: aadonishawkins@iiak.org

Mission Statement

The mission of the Independent Insurance Agents of Kentucky, working in the public’s best interest, is to be the preeminent advocate for Kentucky Independent Insurance Agents and support their business and professional development needs.

Classified Ads ..................................................................................17 Education & Events Calendar..............................................................23 Benefits Spotlight: Big Business Benefits that Small Businesses Can Afford .....24 Industry Partners .............................................................................30

This publication is intended to provide accurate and authoritative information on the subject matter covered and is distributed with the understanding that neither IIAK, nor any contributing author or publisher is rendering legal, accounting or other professional services and assume no liability whatsoever in connection with its use. The opinions expressed in the articles are those of the authors and does not necessarily reflect those of IIAK.

FROM THE Chair

It’s early January and your IIAK Communications Director, Arlene Adonis-

all members attend is the 2013 Agents

Hawkins has just informed me that I need

Legislative Day.

to provide my article for the association magazine. So, I will take a stab at this. Firstly, I hope that all of you had a happy

Bill Latta 2012 - 2013 IIAK Chair

The Agents Legislative Day in Frankfort is coming up and will be held on February 13th and I ask at least one individual from

and healthy holiday season, and are off to

each member agency to attend. The

a fast start in 2013. That is, despite hanging

schedule for the event includes a buffet

on by our finger nails, regarding the topic

breakfast, followed by an issues briefing by

of what will be decided by our nation’s

our government affairs team and various

leaders concerning the financial cliff. I wish

other speakers. The highlight of the day is

I really knew what the financial cliff is. To

an excursion to the Capitol where you will

me, I think it means higher taxes and fewer

have the opportunity to attend a House

benefits for all of us that are working and

Banking & Insurance Committee meeting

paying taxes. Well, enough of the cliff, as

and meet with your respective legislators.

I am sure all of you are tired of it being

Legislative Day is a great venue to

dragged out.

communicate your personal and association

In December, your Executive Committee

issues to your legislators. Your efforts to

along with President Peggy Porter attended

meet with these legislators do not go

the Southern Agents Conference in Atlanta,

unnoticed by them.

GA. The Southern Agents Conference is

I encourage all of you to take advantage

comprised of Agency leaders from the

and utilize the many services and benefits

District of Columbia and the states of

that your association has to offer. All these

Alabama, Arkansas, Florida, Georgia,

benefits can bring value to your agency

Kentucky, Louisiana, Maryland, Mississippi,

services including the packages offered by

North Carolina, Oklahoma, South Carolina,

Project CAP, Big “I” Markets, our group health

Tennessee, Virginia and West Virginia. We

program through Anthem, life and disability

break off into several small group workshops

products for your employees and not to forget

discussing various topics ranging from

the Big “I” Professional liability program.

Legislative, Technology, Personal Lines,

These are just some of the benefits offered

Commercial Lines, Education and the

to you as a member. All of which are aimed

operations of our association. The

at increasing your professionalism as an

interaction and discussion is very

independent agent, and helping to grow and

informative as we learn how the other state

enhance the efficiency of your business.

leaders are addressing and finding solutions

I thank you for the privilege to serve as

to these topics. The Southern Agents

your Chair for this great association and

Conference in my opinion is one of the best

look forward continuing the conversation

conferences that we attend on a national

with you in the next issue.

scale. On a more state level, one event on

our IIAK calendar that I highly recommend

COVER Story

Senate Leadership

2013 Kentucky Legislative Overview

President: Sen. Robert Stivers (R), District 25 President Pro Tempore: Sen. Katie Kratz Stine (R), District 24 Majority Floor Leader: Sen. Damon Thayer (R), District 17 Minority Floor Leader: Sen. R.J. Palmer (D), District 28 Majority Caucus Chair: Sen. Dan Seum (R), District 38 Minority Caucus Chair: Sen. Johnny Ray Turner (D), District 29 Majority Whip: Sen. Brandon Smith (R), District 30 Minority Whip: Sen. Jerry Rhoads (D), District 6

Senate Banking & Insurance Committee Chair: Sen. Tom Buford (R), District 22 Vice Chair: Sen. Jared Carpenter (R), District 34 Sen. Julian Carroll (D), District 7 Sen. Julie Denton (R), District 36 Sen. Chris Girdler (R), District 15 Sen. Morgan McGarvey (D), District 19 Sen. Dennis Parrett (D), District 10 Sen. Dorsey Ridley (D), District 4 Sen. Albert Robinson (R), District 21 Sen. Dan Seum (R), District 38 Sen. Brandon Smith (R), District 30

House of Representatives Leadership House Speaker: Rep. Greg Stumbo (D), District 95 Speaker Pro Tempore: Rep. Larry Clark (D), District 46 Majority Floor Leader: Rep. Rocky Adkins (D), District 99 Minority Floor Leader: Rep. Jeff Hoover (R), District 83 Majority Caucus Chair: Rep. Sannie Overly (D), District 72 Minority Caucus Chair: Rep. Bob M. DeWeese (R), District 48 Majority Whip: Rep. Tommy Thompson (D), District 14 Minority Whip: Rep. John Carney (R), District 51 House Banking & Insurance Committee Chair: Rep. Jeff Greer (D), District 27 Vice Chair: Will Coursey (D), District 6 Vice Chair: Ron Crimm (R), District 33 Vice Chair: Mike Denham (D), District 70

Vice Chair: David Osborne (R), District 59 Vice Chair: Steve Riggs (D), District 31 Vice Chair: Bart Rowland (R), District 53 Vice Chair: Kevin Sinnette (D), District 100 Rep. Julie Raque Adams (R), District 32 Rep. Johnny Bell (D), District 23 Rep. Dwight Butler (R), District 18 Rep. Robert Damron (D), District 39 Rep. Joseph Fischer (R), District 68 Rep. Jim Gooch (D), District 12 Rep. Mike Harmon (R), District 54 Rep. Dennis Horlander (D), District 40 Rep. Dennis Keene (D), District 67 Rep. Thomas Kerr (R), District 64 Rep. Adam Koenig (R), District 69 Rep. David Meade (R), District 80 Rep. Michael Meredith (R), District 19 Rep. Brad Montell (R), District 58 Rep. Sannie Overly (D), District 72 Rep. Ruth Ann Palumbo (D), District 76 Rep. Ryan Quarles (R), District 62 Rep. Jody Richards (D), District 20 Rep. Jonathan Shell (R), District 36 Rep. Fitz Steele (D), District 84 Rep. Wilson Stone (D), District 22 Rep. Tommy Thompson (D), District 14 Rep. John Tilley (D), District 8

Association Members Elected to the House of Representatives Rep. Ron Crimm (RLouisville) House District 33 Rep. Ron Crimm has served Jefferson County since 1996. A former teacher turned independent insurance agent, Representative Crimm started his own agency in 1977. He managed and owned that agency until 1999 when it was sold to Thoroughbred Associates in Louisville. He continues to be active in the insurance business on a daily basis. He is currently a vice chair of the House Banking & Insurance Committee and serves on a number of other committees including; Appropriation & Revenue, Licensing and Occupation, Local Government, Veterans Military Affairs and Public Safety. Additionally, Rep. Crimm is vice chair of the Life Committee for the National Council of Insurance

COVER Story

Legislators (NCOIL) and serves on the Agriculture Committee of the National Council of State Legislators (NCSL). He has been a long-time member of IIAK. Rep. Crimm is a graduate of Shippensburg University in Pennsylvania. Rep. Jeff Greer (D-Brandenburg) House District 27 Rep. Jeff Greer has served Bullit, Hardin and Meade counties since 2007. He founded Greer Insurance in 1990 and has been active in the industry ever since. He served as the chair of IIAK's Young Agents Committee in 2005. In 2012, the association presented him with the distinguished E. Starling Holloway Award. Rep. Greer is chair for the House Banking & Insurance Committee, vice chair of the House Veterans, Military Affairs and Public Safety Committee, is liaison member of the House Budget Review Subcommittee on Transportation, and member of the House Committee on Tourism Development and Energy. Additionally he is a member of the National Council of Insurance Legislators (NCOIL). Rep. Greer attended Eastern Kentucky University where he obtained a BA in Business Administration. Rep. Rick Rand (D-Bedford) House District 47 Rep. Rick Rand serves Carroll, Henry, Oldham and Trimble counties, and has done so since 2003. Prior to serving in the House, Rep. Rand served in the Senate from 1991 to 1994. In addition to his legislative duties, Rep. Rand is both a farmer and an independent agent with membership in IIAK. He is an agent with Rand Insurance Agency, Inc., in Bedford. Currently, Rep. Rand is the chair of the House Committee on Appropriations and Revenue. In addition, his is ex-officio to several House Budget Review subcommittees including; General Government, Finance and Public Protection; and Economic Development & Tourism, Natural Resources and Environmental Protection.

Rep. Steve Riggs (D-Louisville) House District 31 Rep. Steve Riggs has been serving part of Jefferson County as legislator since 1991. By trade, Rep. Riggs has over 26 years of experience in the insurance industry, both as a company representative and independent agent. He has been a long-time member of IIAK and is a producer with Nelson Insurance Group in Louisville. Rep. Riggs is a vice chair of the House Committee on Banking & Insurance. In addition, he is also chair of the House Committee on Local Government and member of the House Committee on Transportation, Budget Review SubCommittee on General Government, Financial and Public Protection, and House Rules Committee. Rep. Riggs is a graduate of the University of Kentucky with a degree in business administration. Rep. Bart Rowland (R-Tompkinsville) House District 53 Newly elected Rep. Bart Rowland serves Cumberland, Green, Metcalfe and Monroe counties. He is the vice president of Rowland Insurance Agency, Inc., in Tompkinsville and has been an independent agent since 1999. An active member of the association, Rep. Rowland was a member of the Young Agents Committee (YAC) from 2002 to 2005. In state government, Rep. Rowland is member of several House committees including; vice chair of Banking and Insurance, Agriculture & Small Business, Education, and Elections, Constitutional Amendments and Intergovernmental Affairs. Rep. Rowland is a graduate of Western Kentucky University (WKU).

Association

Your IIAK Board of 2012-2013

Each year the Kentucky Independent Agent magazine produces a profile of IIAK’s current Board of Directors, along with some facts about how the Board works. This serves as a great resource for IIAK members to become familiar with the leadership body of the association and offers an exchange of information and communication between board members and members. • In 2010 the association changed its bylaws to reflect continuity between state and national officer titles. As a result it now has a Chair, Chair Elect, and Vice Chair, whereas previously these officer titles were President, PresidentElect and Vice President. In addition to this, the position formerly known as Executive Vice President is now President/CEO. • The Board usually meets five times in a fiscal year. Included in those meetings is a strategic planning retreat. The meeting helps the Board produce the association’s strategic plan for that year. Another board meeting is commonly held in the Chair’s home town. This meeting includes some social functions of which during this time, guests and spouses are invited to attend and participate. In cases where an urgent matter is needed to be discussed, the Chair will call for a special meeting. • The Kentucky Young Agents Committee is represented on the Board by its Chair, who is also a voting member. • When there is a new agency or associate member applicant, votes are taken from the entire Board of Directors to determine membership of that agency or company/vendor. There is a majority vote rule for that potential member to have membership into the association. • Any association agency member in good standing may serve on the Board of Directors. There is always an attempt to get representatives from all regions of Kentucky and

from varying size agencies. • The Chair serves a one-year term and the directors, who are appointed by the Chair, serve a three-year term unless that individual is going through the chairs or serving an unexpired portion of a term. The positions of Treasurer and National Director are elected by the Board of Directors, while the positions of Chair, Chair-Elect and Vice Chair are elected by the membership.

Executive Committee

William S. “Bill” Latta – Chair Latta Insurance Services, Inc. Henderson Ph: (270) 827-3543 wslatta@lattainsuranceinc.com

John Funkhouser, CIC – Chair-Elect Johnson-Pohlmann Insurance Danville Ph: (859) 236-5922 jfunkhouser @johnsonpohlmann.com

Michelle L. Love – Vice Chair E.M. Ford & Company Owensboro Ph: (270) 926-2806 mlove@emford.com

James D. “Jimmy” England, AAI – Treasurer Peoples Insurance Agency Pikeville Ph: (606) 437-7361 james.england@pebo.com

Association

Stephen R. “Steve” Kinkade, CPCU, AAI – National Director Kinkade-Cornell Insurance Agency, Inc. Leitchfield Ph: (270) 259-5465 steve@kinkadecornell.com

Timothy X. “Tim” Conder – Immediate Past Chair Insuramax, Inc. Louisville Ph: (502) 459-7500 timc@insuramax.com

Directors George L. “Chip” Atkins, III R. H. Clarkson Insurance Agency, LLC Louisville Ph: (502) 585-3600 catkins@rhcgroup.com

Diana G. Hunt, CIC Mountain Valley Insurance Barbourville Ph: (606) 546-4132 dhunt@mviaweb.com

John L. Ison Ison Insurance Agency West Liberty Ph: (606) 743-4472 insjohn@mrtc.com

Michael G. “Mike” Johnson, CIC Al Torstrick Insurance Agency Lexington Ph: (859) 233-1461 mjohnson@altorstrick.com

Aaron LaRue LaRue Insurance Bardstown Ph: (502) 348-0050 aaron@larueinsurance.net Jason D. Billington, CIC The Murray Insurance Agency Murray Ph: (270) 753-4751 Jason@themurrayinsuranceagency.com

David Houk Houk Insurance Agency Horse Cave Ph: (270) 786-2724 davidmhouk@gmail.com

Barret “Skip” McGaw, II, CIC Riddle Insurance Madisonville Ph: (270) 821-3122 smcgaw@riddleins.com

Hobert “Moe” Dugger, AAI Arthur J. Gallager Risk Management Services Lexington Ph: (502) 426-6060 moe_dugger@ajg.com

10 Tips to Support New CSR Success Emily Huling, CIC, CMC

Most agencies cringe at the thought of bringing a new CSR onboard. Will she get along with everybody? Who will train her? Will her work be accurate and reliable? How fast will she learn our agency management system, rating programs, and carriers? Will she connect with our customers? While this conventional thinking puts the burden of success on the new employee, it’s the employer who is primarily responsible for ensuring that the qualified new hire is a winner. 1. Before the CSR’s first day, let everyone know a little personal information about her and why she was chosen to be part of your agency team. 2. Have her workstation clean and organized with equipment to be up and running on the first day. Remove all things that she won’t need for the job or was the personal property of the former employee. Having business cards and a name plate ready is a nice touch. 3. Plan the reception that your new employee receives from the minute that she walks in on her first day. This includes being

greeted warmly by all employees and scheduling a break time to mix and mingle. 4. Assign an office buddy. Match your new CSR with a coworker from another department who will make introductions and familiarize her with general office information. This assures a cross-departmental welcome which is often overlooked. 5. Agency owners should spend some time to welcome the new hire and impart firsthand the vision and values of the agency. 6. Have a 90-day structured orientation and training program in place to coincide with the 90-day probationary period. Within that time both the manager (or assigned training coordinator) and new employee will have enough interaction to determine if the employment is working as it should. 7. Expose the new hire to as much as the agency operation as possible through shadow training. Have the CSR spend several hours or more with coworkers in various departments and positions to get a feel for job responsibilities and the flow of the agency. 8. Utilize as many coworkers as possible for technical, product, and technology training. This not only spreads the work around, it helps build relationships. 9. Ask your carriers for assistance in training. Marketing reps love to do this to gain loyalty and get business. 10. The manager or training coordinator should provide weekly feedback and monthly updates to both the employee and the owner. This keeps the training and education process on track and opens communication for adjustments in the training schedule. A highlymonitored program helps avoid surprises and if things don’t work out, the situation can be handled within the 90-day trial period. Think of your new employee as a guest. Be welcoming, helpful, have the place in good order, and educate them on the house rules. With an effective 90-day orientation, your new CSR will be a guest you want to have around a long time. Emily Huling, CIC, CMC helps the insurance industry create top-performing sales and customer service organizations. She is the author of Selling from the Inside, Great Service Sells, and Kick Your “But.” For information on her programs and products call 888-309-8802 or visit www.sellingstrategies.com.

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Technology

Combat Cybercrime and Protect Your Agency With Simple Security Steps By Danielle Johnson

What is Cybercrime? Like traditional crime, cybercrime covers a broad scope of criminal activity and can occur anytime and anyplace. What makes it different is that the crime is committed using a computer and the Internet. You may recognize some of its most common forms such as identity theft, computer viruses and phishing, and at a corporate level, computer hacking of customer databases. Most people are aware of these and protect themselves and their PCs with antispyware and anti-virus software such as Norton or McAfee programs. As an agency owner, you should be alert to the fact that cybercrime is becoming more and more sophisticated and not only targets consumers and large corporations, but small to medium sized businesses as well. Single programs against these intrusions are not enough. An alarming cybercrime now affecting small to medium sized businesses is “corporate account take over.” This involves cyber criminals penetrating the computer network of a business and spreading malicious software, such as a “keylogger” which records the words typed, Web browsing history, passwords and other private information. This in turn allows them access to programs using your log-in credentials. If they steal your password and breach your online banking system, the cyber criminal can begin an online session to initiate funds transfers, by ACH or wire transfer, to their accomplices. The accomplices withdraw the money almost immediately. Take the first steps to prevent fraud at your agency - become aware of the latest cybercrimes and how they can access a business’s computer network. An agency should also employ the most up-to-date online security practices on a pro-active basis. Agencies can also take the opportunity to present these online security practices to their clients, as many are also instituting internet-based online programs at their businesses. Online Security Practices While no tools or automated software

is 100% effective, the best solutions to protect your agency are to be well informed and use common sense. Using a multiple vendor, multi-layer approach to system design can significantly reduce your chances of being a victim of cybercrime. To assess the risks associated with a cyber intrusion of your agency’s online systems and critical client data, ask yourself the following questions: 1. Does your agency have a hardware based firewall at the network level? 2. Does the network firewall include antivirus, anti-spyware and anti-spam services along with content filtering and intrusion prevention, detection and realtime reporting? 3. At the individual PC level, does each computer have centrally updated and monitored anti-virus, anti-spyware and anti-spam software loaded? 4. Are your computers set up to automatically update your operating system and applications for the latest available security and critical updates? 5. Do you consider your browser security setting to determine how much or how little information the browser can accept from, or transmit to, a website? 6. Does your agency have a security policy in place that includes such policies as disaster recovery, use/storage of passwords, use of social media on work computers, etc.? 7. Does your agency back-up critical files in case of an issue that disables your systems? 8. Has your agency identified an individual to review security policies and practices on an ongoing basis? 9. Are you aware of the laws governing the protection of personal information in your state? 10. Do you have cybercrime insurance to protect your data and liability exposure in the event of an intrusion? 11. Does your agency have a training program to educate employees on best practices to avoid becoming a victim? 12. Does your online banking system provide multiple layers of security tools to prevent intrusions into the system such as token-based authentication?

Agency principals should consider the types of transactions they conduct within online banking and check with their banking institution for available security enhancements. These are just some of the basic steps an agency can implement to assess and protect itself from cybercrime. Your agency should have a network security assessment and review conducted by a certified information technology firm that specializes in network security. This evaluation will help you to identify the “next steps” in securing your network and data from unauthorized access and distribution. If Your Agency Becomes a Victim If you discover, or even suspect, your agency has fallen victim to corporate identity theft, you should proceed as follows: • Immediately cease all online activity and contact your IT administrator. • Remove the affected computer from the network and any other computer stations involved. • Contact your financial institution to disable online access to the accounts and close affected accounts. You can then open new accounts and reset passwords. Consult your counsel and your state’s data breach notification law and regulations to ascertain the process you need to follow. • Notify other business partners that may have been affected, such as your insurance carriers. • File a report with the police department. Common Online Fraud Definitions • Malware refers to software programs designed to damage or do other unwanted actions on a computer system. Common examples of malware include spyware, keyloggers, and viruses. • Spyware is a type of malware installed on your computer without your knowledge. It collects small to large pieces of personal information including Internet surfing habits. It can redirect web browser activity and change computer settings. Spyware is typically hidden from the user, and can be difficult to detect once installed without proper

antispyware tools. • Keyloggers, as with spyware, are installed on your computer without your knowledge. It is the action of tracking (or logging) the keys struck on a keyboard, typically in a hidden manner so that the person using the keyboard is unaware that their actions are being monitored. Keystroke logging can record the words typed, Web browsing history, passwords and other private information. This is extremely dangerous in all aspects of computer usage. • Viruses are an ever changing and constant threat to all systems. Based on their digital makeup they can deliver malicious content to your data and systems in an effort to either collect data, destroy data, or turn your systems into a machine that spreads the virus or other malware. • “Phishing” is the act of obtaining personal information or spreading malware using emails, calls, text messages or pop-up messages from what appear to be friends or legitimate banks, retailers, government agencies or other organizations. All of the security tips presented here are simply guidelines to aid agencies in not becoming a target for cybercriminals. However, none can be guaranteed 100% effective. Editor’s Note: Please also refer to ACT’s “Security & Privacy” page for a prototype agency information security plan and recorded webinar which will help agencies fashion their written security plan and implement their security program. Go to www.iiaba.net/act and click on “Security & Privacy” in the gray shaded area on the left side of the page. Danielle Johnson is the VP, Director of Information Technology at InsurBanc, which IIABA and the W.R. Berkley Corporation established to assist independent agencies, businesses and consumers with their specific banking needs. Danielle prepared this article for ACT and she can be reached at technology@insurbanc.com. This article reflects the views of the author and should not be construed as an official statement by ACT.

TRUSTED Choice®

Make Trusted Choice® Content Yours Share Trusted Choice®developed content and make it your own on social media platforms.

Social platforms like LinkedIn, Facebook and Twitter are great tools for delivering content, but they aren’t much help unless they deliver the right content to the right audience. Trusted Choice® creates content for agents and brokers to use, but here are a few ways to maximize content that can be found in Trusted Choice® social spaces. Trusted Choice® on Facebook and Twitter: Paging All Consumers The Trusted Choice® page on Facebook promotes the brand to consumers. It’s where Trusted Choice® promotes its sponsorship of the Make-A-Wish Foundation to increase brand awareness and where it publishes consumer articles on various insurance topics. Occasionally, there are Facebook posts that encourage consumers to visit TrustedChoice.com. But you should take what is posted, and then copy, paste and modify it so it directs your fans to your website or other contact information. Likewise, the @TrustedChoice account on Twitter is an outlet for consumer content. It’s appropriate to retweet and share content, though don’t miss an opportunity to bring consumers in to your own social spaces or website.

The Trusted Choice® Group on LinkedIn: Talking with Industry Insiders The Trusted Choice® LinkedIn group has an audience of industry insiders as opposed to consumers. The posts are generally intended for agents, and because of this focus, you shouldn’t try to market your agency or sell insurance products to this audience of insiders, and you wouldn’t necessarily share the content directly with consumers either. Instead, the group is a great place to ask questions, get answers and apply the lessons learned to your own consumer outreach. Take It and Make It Your Own It all comes down to understanding your audience and the content, and making sure they match. Think of it as sheet music that Trusted Choice® provides: You still need to be the one to perform the piece in front of an audience and make it your own. So share and retweet, but don’t be afraid to edit content and promote your agency-add a little drum solo, if you will. After all, Trusted Choice® is here to help you enhance your agency’s brand, not replace it.

Advocacy

Recognizing our PAC Contributors 2012 KAPAC Contributors Charles Adams Tommy Adams Donald Anderson, Jr. Todd Anderson Philip Anderton Chip Atkins Joe Barnes John Barnes Todd Benson Jason Billington Brad Blain Sandra Blain Marion C. Blair Malcolm P. Blane Carolyn Bogie Bobby Bramlett Robert Braun Barbara Buckman Brian Burkhead George Burks, II Colin Buzzard Floyd Chelf Dick Clark David Clarke Jordan Clarke Tim Conder Steve Crawford Ron Crimm Gary Criscillis Dennis Desmond Dave Dietrichson Tiffany Dobbins-Bridges Jim Downing Moe Dugger James England Robert English Robert Fehrenbach Stuart Ferguson Whitney Floyd Neel Ford Steve Ford Terry Ford Paul Franz John Funkhouser

Each year the voluntary contributions of individuals to the Kentucky Agents Political Action Committee (KAPAC), make it possible for independent agents to provide support to candidates serving in the state legislature. The same rings true for contributions made by individuals to InsurPAC which is the political action committee of independent agents on a national level.Together with the lobbying efforts of IIAK and IIABA’s government affairs teams and contributions from these PACs, the voice of the industry is able to be heard by our decision makers. If you would like to support either of these PACs please visit www.iiak.org or call (502) 245-5432. The association would like to recognize those who contributed to KAPAC and InsurPAC in 2012. Virginia Goff William Gorman, Jr. Bill Greenwood Frank Gross Alford Gustafson Joseph Hall, III Norman Hatter Michael Hazelwood Michael Hepp Sharon Hill Joy Holder David Houk Helen Houlihan Danny House Michael Huff Edward Humston, III Diana Hunt Phillip Hunt Andrea Hurley Brett Ison John Ison Susan Jewell Michael Johnson Robert Kilijian Spencer Kilijian Anna Kinkade Stephen Kinkade Aaron LaRue Jack LaRue William Latta John Lavelle James Lavelle, Jr. Ronald LeMaster Rachel Liford Stanley Logan, Jr. Michelle Love Lynn McCandless Michael McCandless Ryan McCarty William McCarty Skip McGaw Kelly McNulty Matthew Meyer Carolyn Moran Don Mucci

Adam Murphy Tim Murphy Raymond Nelson Diana Norwood Matt O’Brien Robert Palmer William Parman Lisa Petty Thomas Phipps Charles Polin Peggy Porter Larry Powell Janice Pulliam Teri Ralston Reginald Rand Mark Richey Roy Riley R.C. Riley Norman Risen Bart Rowland Charles Rudd Candice Schmitt Wess Schuyler Doug Sims Ron Smedley Brian Smith Gregory Souder Mark Stephens Bill Stiglitz Carolyn Thomason Kurt Turner Steve Vaughn Greg Way Robert Werner Robert Wessel, Jr. Thomas Wheeler Ashley White Kim Wilburn Mary Wilkerson Buddy Wilson Grady Wilson David Wiseman Melissa Worrell Joseph Yarbrough Laura Yount

2012 InsurPAC Contributors Charles Adams Tommy Adams Philip Anderton Chip Atkins Joe Barnes Jason Billington Brad Blain Sandra Blain Jeffrey Brown G. R. Burks David Clarke Robert Clarkson Chapin Collins Tim Conder Steve Crawford John Delpont Dennis Desmond Bob Detherage John DeWeese James Downing David Dunn James England Robert English Bruce Ferguson Whitney Floyd Neel Ford John Funkhouser Steven Garrett Virginia Goff Bill Gorman Bill Greenwood Frank Gross Tim Hafling Joe Hall Linda Hardison Norman Hatter Sharon Hill David Houk Diana Hunt Phillip Hunt Andrea Hurley John Ison Mike Johnson Joseph Kaelin

William Kantlehner Spencer Kilijian Anna Kinkade Stephen Kinkade Aaron LaRue William Latta John Lavelle Michelle Love Jerry Mauzy Lynn McCandless Michael McCandless Ryan McCarty William McCarty Joseph McClain Ted McClain Skip McGaw Jeff McGowan Matt Meyer Don Mucci Adam Murphy Tim Murphy Raymond Nelson Jeffri Northcut Matt O’Brien Thomas Phipps Charles Polin Peggy Porter Alex Rankin Ross Richey Keith Riley R.C. Riley Jim Roe Allen Rudd Gerald Schott Lloyd Stafford Bill Stiglitz Steve Thompson Sharon Vance Robert Werner Robert Wessel Beth Wilkerson George Wilson Chris Wiseman David Wiseman Laura Yount

Agencies Aim to Reach Diverse Prospects By Russ Banham

More agencies are using a mix of marketing techniques to sell to a multicultural consumer base. The fabric of America-its people-is vastly different than it was a generation or two ago. But that’s no surprise to anyone. What is surprising is the number of independent agencies now tailoring their marketing to reach various ethnic and other demographic groups. About half of more than 2,500 agencies surveyed this year said they’ve acted to meet the needs of emerging markets, including women, LGBT, Latino/Hispanic, AfricanAmerican, Asian-American and American Indian consumers, according to the 2012 Agency Universe Study by Future One, a cooperative effort of the Big “I” and independent agent carriers. Some agents say they’re using a mix of techniques to market successfully to these groups, from diversifying their staff to joining or networking with demographic-specific

organizations in the community. HNH Insurance Partners in Houston built its agency over the past three years by focusing on Asian-Americans and women, says agency partner Robert Su, who is Chinese-American and owns the firm with his wife Andrea Hoang, who is VietnameseAmerican. Hoang has used her family network to arrange introductions to other successful Vietnamese-Americans in the sprawling city, many of them female entrepreneurs like herself. Eighty percent of the firm’s clients are Vietnamese and 70% of those clients are women. “They range from high-end accountants and attorneys to small businesses like commercial real estate firms,” Su says. “The other 20% of our book runs the gamut, including Latin-American, Jewish and Caucasian; most of this [is] personal lines. After all, we speak Chinese, Vietnamese and English here.”

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Other agents too are marketing to their respective clientele by hiring people like the prospective customers they’re hoping to reach. Coughlin Group Inc., headquartered in Calabasas, Calif., has hired three gay and lesbian individuals over the years, including one in IT and another in sales for his agency. “Frankly, he’s our best salesperson-just phenomenal,” Coughlin says. “Nevertheless,

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most of the staff of 25 here is straight.” Coughlin Group, which also has offices in New York, has a substantial gay and lesbian clientele, among customers from other demographic and ethnic groups. Coughlin began marketing to the LGBT community before coming out as gay himself. He and his brother bought the 65-yearold business in 1997 from their father. At the time, the agency had only a few gay clients. “I remember this marketing brochure from Chubb that had a gay couple on the cover,” he says. “The policy made no difference between a married couple and a domestic partnership. It was the only policy and advertising material of its kind at the time, and it had a powerful impact on me.” So powerful that Coughlin subsequently wrote a letter to Chubb, thanking the insurer for the marketing brochure. He told the company that his agency would back the Empire State Pride Agenda, a LGBT advocacy organization in New York, which Chubb supported. “Their backing of Empire State Pride had given me the courage to also back it, as well as other gay initiatives,” he says. “If a company as old and well-respected as Chubb said this was okay, then it couldn’t be all that bad.” “That’s when I came out to my parents and friends,” he adds. In addition, Coughlin and Scott Hauge, president of CAL Insurance Agency Inc. in San Francisco, use more traditional marketing strategies, such as advertising in gay-themed publications. But, as Hauge points out: “If you don’t have the producer backup, it’s just not very effective. Getting solid producers-whatever their ethnicity or lifestyle-is difficult.” Meanwhile, Ricardo Del Rio, vice president of Actinver Insurance Services, says a personal touch is vital to building business. His San Antonio agency markets to a largely Hispanic community. “I’m a member of the Hispanic Chamber of Commerce, as well as the greater Chamber of Commerce, and I’m active in doing things for the community,” he says. “That’s really made the difference.” Russ Banham is an IA senior contributing writer.

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Everyday Online: What to Do Today to Build Your Presence By Robert Allan Paul

The phone rings in your office. Can you imagine not answering or never responding to the voicemail left? Could you conceive deleting an email from a potential client without reading it or following up with an appropriate reply? Of course not. Ignoring such inquiries would not only violate basic rules of customer service, but would also be detrimental to your company’s growth. Yet many companies have created a new website or established a corporate account on social media sites without the necessary follow-through- and without a daily commitment to engage online. These companies aren’t just failing to gain benefit from their online presence, but might actually be harming their brand because they are not interacting appropriately. The advent of online marketing has changed the playing field. In the past, marketers controlled the message, pushing content to customers. Now, the customer is in charge of the conversation; they’re pulling the content they want, when they want it, and they expect you to participate. If not, you are letting their questions, comments and complaints fall on deaf ears. As Paul Gillen remarked in Secrets of Social Media Marketing, “Social media challenges nearly every assumption about how businesses should communicate with their constituencies. The most important change to understand and to accept is that those constituencies now have the capacity to talk - to each other and to the businesses they patronize. In the past, those conversions have been limited to groups of at most a few people. Today, they are global and may include millions of voices. Once a shift like this occurs, a lot of change happens, both predictable and unforeseen.” To facilitate this new level of customer engagement, there are some simple basics:

responsibility occasionally to gain insight to your brand’s footprint and diverse customer perceptions. This is the process Project CAP uses to produce its weekly blog at www.ProjectCapMarketing.com and it’s made the content more interesting for all concerned. 3. Speak with one voice. Even though different people may be responding on different sites or to different customers, make sure you’re all reflecting your brand’s personality in the same way. This calls for creation of an “engagement strategy,” which establishes clear lines of responsibility, clarifies required timelines for response, and addresses how comments will be handled-from positive feedback to negative complaints. 4. Share conversations. Some messages will reveal issues that will require immediate action. Others can be collected for review by the group on a weekly or monthly basis so that you can track trends and understand what is driving customer comments. 5. Be genuine. The technology used-your computer-may be impersonal, but the conversation should be just as real as if you were having it face-to-face. You owe a quick, courteous response and if additional research is needed, timely follow-up.

1. Establish a daily schedule. Just as you set aside time to reply to emails or follow up on phone calls, commit to a block of time each day to review your sites and respond as needed.

6. Connect to sites. Just as you want to encourage customers to leave comments on your own sites, it is equally important to leave comments elsewhere on the Internet to improve your search rankings. Every time you leave a comment, create a link, “retweet” or indicate a “like,” you are increasing the amount of “interconnectivity” with your own site. This will ultimately increase your overall visibility and establish you as an expert within your own field.

2. Divide and conquer. If there are multiple sites to manage, assign different individuals to each one. Rotate

7. Relish the opportunity to learn. Your online interactions will give you tremendous customer insight. You’ll

be talking with customers who are eager to receive a response. Don’t be afraid to ask for their advice. The most important consideration as you approach the incredible resources of online marketing may be your attitude. Don’t look at it as another task, but as a direct line to your consumers. Once it becomes a part of your routine, it will feel as natural as picking up the phone or sending an email. And you’ll soon wonder what you ever did without it! For more information on Project CAP, visit ProjectCAPMarketing.com. Robert Alan Paul

ROOFING

MARINE

(RobertPaul@ProjectCAPMarketing.com) is Vice President of Marketing for Project CAP. Project CAP provides digital marketing tools and services to help independent agencies, brokers and insurance carriers build their online brands and visibility in order to attract and interact with today’s digital consumers. Project CAP was created through an alliance of the Independent Insurance Agents and Brokers of America (IIABA or the Big “I”), Trusted Choice® state associations and key insurance carriers to expand the independent agent’s share of the personal lines insurance market.

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Are Mortgage Payments Business Income “Continuing Expenses”? By the VU Faculty

Here’s a recent “Ask an Expert” question: “We have a client that carries business income coverage. The question came up if mortgage payments were part of the continuing expenses of an idle business. I seem to recall that I learned somewhere that only the interest part of the monthly payment was a covered expense, not the principal part. I would appreciate any help that you could provide.” This is an interesting question...what portion, if any, of a mortgage payment is covered by business income forms as a continuing expense? Is it just the interest or the entire mortgage payment, including the principal? As you can see from our expert responses below, the consensus is that the mortgage principal is “probably/kind of” not included as a continuing expense.

Faculty Response: The principal should not be considered as a continuing expense for business income coverage. The argument is that the principal portion of the payment is going into the insured’s equity in the property, so that portion of the mortgage isn’t “lost.” I usually just say they don’t cover the principal, since escrow or other payments in addition to interest that make up the total mortgage payment are valid expenses to claim. Faculty Response: This issue comes up often, but to my knowledge we still don’t have a definitive answer in our industry. My belief is that most adjusters will pay the interest on the loan as a continuing expense, just as the agent suggests. However, I have heard of adjusters paying nothing. There is a good argument for not paying the principal sum payments, but I would argue that interest is a covered expense. This is one of those issues that it is best to clear up with each of your carriers. Faculty Response: All financial obligations are a continuing expense. A mortgage is a financial contract obligating the mortgagee to pay a monthly amount to the mortgagor. The whole monthly amount is due or the property can be foreclosed upon and lost. This is a normal business expense and since it is paid out of income, it should be part of the business

income calculation. I have never seen an adjuster question this expense. All obligatory notes payable are normal business expenses, even loan repayments to officers and employees. Their position is like saying they won’t pay all payroll because some of it is going into a retirement account. On the other hand, if the business takes out a loan to pay normal operating expenses while waiting for their insurance payments, then only the interest expense is part of the BI calculation. Building interest is not an issue because rents on untenantable premises or lease payments on damaged equipment must still be paid for several months under the contract wording.

Faculty Response: The definition of Business Income is “Net Income plus continuing expenses.” In an accounting sense, a mortgage principal payment is not an “expense,” it is a reduction in a liability. The accounting transaction (simplified) of a mortgage payment is: Debit Debit Credit

Mortgage Loan Payable (Liability) for Principal Interest Expense (Interest) Cash

As such, the “continuing expense” of the business is the interest payment. Now comes the tricky part of the answer. If it is not a continuing expense, is it covered? Well yes, no, or maybe. The answer cannot be provided for all risks as a constant. Let’s go back to our accounting transaction. If the mortgage principal was not paid from an expense, where was it paid from? Back to Accounting 101...what is the definition of “Net Income”? Net income equals gross income less cost of goods sold less operating expenses. We can determine that the mortgage payment is not a “cost of goods sold,” which is covered by direct property insurance by the way; and it is not an expense per above, so it must be part of net income. Maybe. We said that business income covers net income, so it must be covered. Well, yes, it would be covered if the insured has a net income...if the insured has a net loss, we also cover it to the extent that it reduces his/her recovery. Remember that the insurance puts

the insured in the same position as before the loss. If the insured was running a net loss (expenses exceed income), insurance will not jump in to provide a net profit and thereby protect the insured from having to use its’ retained capital to pay the principal. So to make this even more confusing, my short answer would be: 1. Mortgage Interest is covered as continuing expense. 2. Mortgage Principal is covered as net income in the event the insured has earned a net income sufficient to meet its ongoing accounting liabilities (not to be confused with legal liabilities which may be an expense or may be a debit to a liability). 3. Mortgage Principal is not covered and actually reduces coverage in the event the insured has earned a net loss and has used retained earnings to meet its ongoing accounting liabilities. 4. Mortgage Principal is neither covered nor a reduction in coverage when a business is in break-even mode. Finally, here’s an article written by insurance and risk management consultant Jim Mahurin: Principal and Interest Coverage and Business Interruption Policies...Unique Problems for Public, Nonprofit and Private Firms. The subject of Business Interruption and Extra Expense applying to interest and principal payments are very serious risks on accounts with facilities financed through bond issues. The insurance requirements in bond documents often stipulate coverage to include both principal and interest for an extended period of time. This requirement is quite at odds with the language contained in standard Business Interruption programs. Public and nonprofit entities, and some private organizations, will fund facilities through the use of bond issue financing. The facilities normally serve a unique public purpose, are often quite large, and involve substantial sums of money. Some examples include retirement communities, schools, courthouses, jails, wastewater treatment plants, hospitals, stadiums, convention centers, docks, industrial facilities, etc. The size and complexity of these facilities often involve construction periods of more than one year. A two or more year period may be required for major repairs, demolition or reconstruction.

Business Interruption policy forms tie income to the facility. The funding for bond issue financed projects is often derived from a separate source. A hospital will earn revenue from their facility. A school, courthouse or city hall is financed from general revenues. A wastewater plant may derive income from operations, or have external funding. A retirement community may accept deposits from residents, plus charge monthly fees. The deposits are amortized over a period of years and both deposit and fee revenues are used to pay the bond debt. Much of the interruption risk related to public facilities is Extra Expense. Let me share wording from the Insurance Requirements section in a recent bond document on a fairly small facility. The part quoted is limited to Business Interruption. “Blanket earnings and extra expense insurance, covering loss of revenues by reason of the total or partial suspension of, or interruption in, the operation of the Facility caused by the damage to or the destruction of any part of the Facility, ..... and in such amount as will provide the cash portion of Revenue Equal to the Maximum Annual Debt Service on the Bonds together with an amount determined by the Management Consultant, required to pay salaries of key personnel of the Facility and other unavoidable costs during a 12-month period of such suspension, interruption or destruction of the Facility or its operation.” The above facility is fairly small and could be rebuilt within 12 months. But the facility cares for severely handicapped people. The extra expense of housing the patients in substitute facilities for a year is enormous. The bond interest and principal payments are large sums. As a mature facility, the principal payment is sizeable. This fairly small entity presents a very complex Business Interruption and Extra Expense exposure. A separate example would be a regional high school is financed by general revenue. The time period for demolition and removal, public hearing and design requirements, public bid process and reconstruction are considerable. What means are best suited to address the requirements to insure interest and principal payments through an extended period, and cover the increased cost of operating the school in substitute facilities

until the repairs are complete? The insurance requirements on bond issue financed projects are usually quite complex. The requirements often stipulate the entity will obtain a review by an independent insurance consultant every three years. I have performed these independent consultant reviews since 1985 and can speak to the complexity. Insurance agents and brokers working with public and nonprofit entities, or private entities with bond issue financed facilities, need to exercise a high degree of care in their handling of these accounts. The issue of Business Interruption coverage for the cash portion of the Maximum Annual Debt

Support Independent Agents and Become an Industry Partner The Industry Partners program is an opportunity for companies, wholesalers and vendors to strengthen their support of IIAK on an on-going basis. Your participation in the program will guarantee you high-profile, yearlong exposure to our members, but also extends to a wider audience of industry personnel and industry leaders. Benefits to you Support of the independent agency system. Your backing makes it possible for IIAK to develop affordable, quality programs that enhance the professionalism of Kentuckyâ&#x20AC;&#x2122;s independent insurance agents. Savings The value of the various benefits you receive as an Industry Partner far exceeds the cost. Unique perks Many of the perks you receive as an IIAK Industry Partner are not available to other companies, wholesalers or vendors.

Service is only one of many problems. I would like to add a final word of caution. Many insurance agents and brokers are asked to provide letters describing coverage to the trustees of bond issue financed accounts. Anyone performing this task needs to carefully read both the Insurance Requirements and the Damage & Destruction parts of the bond document very carefully. If the bond document states the review is to be performed by an independent consultant, you may want to reconsider delivering an opinion on your own work. James R. Mahurin, CPCU, ARM - Risk Management & Insurance Consulting

No hassle Industry Partners are only solicited once, after confirmation of participation. There are seven levels of participation available: Premier, Diamond, Platinum, Gold, Silver, Bronze and Sterling. For further information, visit www.iiak.org or call us at (502) 245-5432. Industry Partners as of 1/7/2013:

Premier Level Seneca Insurance Company Platinum Level Encompass Insurance Gold Level Arlington/Roe & Co. Silver Level Travelers Bronze Level Bailey Special Risks, Inc. If you are interested in becoming an IIAK Industry Partner or would like further information on this program, contact IIAK at (502) 245-5432 or email iiak@iiak.org.

Our Members Say It Best

The KRF-SIFâ&#x20AC;&#x2122;s loss prevention and safety training has meant the world to our company. Prior to becoming members of the Fund, we spent quite a bit on annual safety training. Since the Fund provides this type of training at no charge to its members, we have been able to significantly decrease our training expenses. Jennifer Shaw, HR Manager, Kentucky Lake Oil Company

with care" our financial strength and stability. â&#x20AC;Śthe main reason we went with the KRF-SIF workersâ&#x20AC;&#x2122; comp program is because of their reputation for handling claims management in a manner that is fair not only to the individual, but also to the company holding the policy. The Fund has proven to be able to reduce the cost per claim and overall claims costs. My advice is that if claims management counts, you can count on KRF-SIF. If not, you can go anywhere. Bruce Pieratt, President/CEO, Pierattâ&#x20AC;&#x2122;s

Want to have a voice in your workersâ&#x20AC;&#x2122; comp? For more information, contact your independent agent or: Mary Carney, KRF-SIF Program Manager Â&#x2021; /RXLVYLOOH DUHD )D[ e-mail: mcarney@ccmsi.com www.krfsif.org Contact us about our SAFETY W.O.R.K.S program at www.kesa.org. 200 Executive Park, Louisville, KY 40207 | 502.894.8484 | 800.367.5372 | www.kesa.org

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Inside: Meet your 2012-2013 Board of Directors