January/February 2017
Chip Atkins 2017 IIAK Chair
Together... We’re making a difference to our members, to our agents, and in our community.
200 Executive Park, Louisville, KY 40207 502.894.8484 | 800.367.5372 | www.kesa.org
What's
Inside
Page 6 Page 18
Contents
6 E&O and Recording Phone Conversations 11 House & Senate Committees on Banking and Insurance 12 2016-2017 IIAK Board of Directors 16 2016 KAPAC Contributors 18 Meet Your 2017 Chair
Page 21
21 2017 Outlook: How Will Your Agency Increase Efficiency? 30 Company Mobile Policy: Proceed with Caution
In Every Issue The Kentucky IA is the official magazine of the 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 Email: iiak@iiak.org Fax: (502) 245-5750 The Kentucky IA welcomes all advertising and editorial submissions. Inquiries for advertising, news releases and editorial contributions can be directed to Nikki Robins at the editorial office address or via email at nrobins@iiak.org
4 From the Chair
26 Industry Partners
5 DOI News
35 Advertiser Index
9 Education Calendar
35 Classified Ads
26 Upcoming Events
35 Social Media Links
Mission Statement The mission of the Independent Insurance Agents of Kentucky is to be the preeminent advocate for Kentucky Independent Agents and support their business and professional development needs.
www.iiak.org | January/February 2017 | 3
Chair
Officers
From the
George L. “Chip” Atkins Chair, Louisville 502.585.3600 Michael G. Johnson, CIC Chair-Elect, Lexington 859.233.1461 Aaron LaRue Vice Chair, Bardstown 502.348.0050 James D. England, AAI Treasurer, Pikeville 606.437.7361 Stephen R. Kinkade, CPCU, AAI National Director, Leitchfield 270.259.5465 David M. Houk Immediate Past Chair, Horse Cave 270.786.2724
Directors Allen J. Crawford, CIC, CSRM Somerset, 606.679.6311 Kevin T. Desmond Bellevue, 859.491.5100 Eric S. Harden Young Agent Chair, Louisville 502.459.7500 Sharon B. Hill Jamestown, 270.343.3144 Skip McGaw, CIC Madisonville, 270.821.3122 Crystal Reid, CIC Madisonville, 270.994.3737 Ray A. Robertson, CIC Mt. Sterling, 859.498.3410 Laura Yount, CIC, CISR London, 606.878.0100
Staff
Happy New Year!
The topic of this issue of Kentucky IA is Leadership. We’re in a new year with a lot of new leadership from the top down. I am excited to see what this year holds for our nation, our state, our industry and our association. But what makes a great leader? I have been fortunate enough to have been inspired by and encountered several leaders both in my personal and professional life, and they all have a few things in common. Vision. When you are passionate about the work you do, its contagious. Great leaders believe in what they do when no one else does. Focus groups of the first iPhone hated the idea. Where would Apple be today if Steve Jobs had let others deter his passion and vision? Would we have independent agents if we listened to the naysayers who think that captive insurance is the wave of the future? Integrity. Yes, it is possible to get to the top without it, but history favors those that have honesty on their side. As insurance agents, we have to build trust with our clients. If we are not men and women of our word, then where does that put us, our agencies and our industry? Empowerment. I have seen first-hand the power of being part of a team. Being a leader means empowering your team from the bottom up. Young agents are the future of our industry and we need to look to them and nurture the traits that will enable them to be great leaders in their own right. Humility. I will be the first to admit that I don’t know everything. But I surround myself with those whom I trust to help me in areas that are not my strength. Being a great leader doesn’t mean you’re perfect. However, if you are open to constructive criticism, the growth potential is endless. I keep a quote on my computer monitor in my office from our late President Ronald Reagan which reads, “There’s no limit to what we can accomplish if no one cares who gets the credit.” A great leader doesn’t care about recognition and knows that any success is shared by those who worked to achieve it.
Peggy P. Porter President & CEO
Sincerely,
Katie M. Freshley Education & Events Director Tara T. Purvis Marketing Director Nikki S. Robins Communications Director Kristie Weyer, CISR Insurance Services Director
4 | www.iiak.org | January/February 2017
Chip Atkins
News Department
Contact Commissioner Maynard
January 12 marked the beginning of my second year serving as Kentucky’s Insurance Commissioner. Looking back, it seems like 2016 was over in a flash. With the beginning of a new year, I wanted to take this opportunity to update you on some areas and give you an idea of where we are heading in 2017. December 2016 was an eventful month for the Department of Insurance. In late December, we reached an agreement to return funds from the Kentucky School Boards Insurance Trust (KSBIT) to nearly 200 Kentucky schools, colleges and education groups, as well as, to the Kentucky League of Cities Insurance Services Association (KLCIS). Under the terms of the settlement, $1 million will be returned to the schools and another $1 million to KLCIS. Additional payments will be made in the future if funds are available. I am glad we were able to reach an agreement and appreciate the efforts of all parties involved. We hope this will reduce some of the uncertainty caused by the ongoing litigation. On December 28, Franklin Circuit Court Judge Phillip Shepherd signed an order in the Kentucky Health Cooperative case to allow the approximately 5,000 proofs of claim from providers for amounts less than $1,000 to be paid without further processing or review. Judge Shepherd noted in his ruling that the high administrative costs associated with further scrutinizing these small claims would outweigh any benefit to the state. In addition, those providers are prohibited from attempting to balance bill consumers since the claims are being accepted in full without objection. While it will be some time before any claims are paid, having this issue resolved allows the remaining cooperative staff to focus on review of the larger claims. Obviously, we are waiting to see what changes the incoming administration may make to the Affordable Care Act. The National Association of Insurance Commissioners has offered our assistance to Congressional leadership as they debate issues related to both the Affordable Care Act and the Dodd Frank Act. We believe we can be a critical partner in those discussions. As we move into a new year, many of the challenges of 2016 will remain with us, but we know 2017 will bring its own set of issues. I appreciate your support over the past year and look forward to working with you in the new year. Commissioner H. Brian Maynard
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E&O and Recording By: Virtual University Faculty Available to IIAK agency members, the Virtual University is an online resource offering access to technical insurance and agency management articles, sample ISO forms, white papers, monthly webcasts and other information on issues affecting today’s insurance marketplace. The following is from the popular “Ask an Expert” service where members can submit a question not already answered in the Research Library and get responses from the volunteer faculty of experts.
An agency’s new phone system allows them to record incoming and outgoing conversations. The agency thinks this will be good for E&O and be better than relying on handwritten notes. What do you think? The agency also wants to know if they are obligated to advise the other party that the conversation is being recorded.
Q:
“This week we met with both our phone vendor and our management information system vendor to discuss our ability to record incoming and outgoing telephone conversations and being able to save the conversations in our computer system. Our phone system can do this and our computer server has the capacity to handle the additional data. Currently, all voice messages are captured on our telephones and in our computer. Most voice messages get deleted after we listen to the voice message unless there is some material information on the voice message. It is my understanding that with telephone conversations we will not be able to delete them once they get into our computer system. “I believe recording of phone conversations will be a good thing relative to our E&O. It will be better than relying on handwritten notes and will certainly be able to clearly determine what was or was not said, good or bad. I would like to know whether you have other insureds that are doing this. Is this something E&O insurers encourage their insureds to do? Has this helped or hurt agents in E&O situations? 6 | www.iiak.org | January/February 2017
“I would also like to know if you are aware whether we are obligated to advise the caller we are recording the conversation in Wisconsin. Our telephone vendor says we are not obligated to notify the caller they are being recorded. With our new phone system, each employee has their own direct line. When a call goes to a direct line we do not have any recording indicating the call may be recorded for quality control purposes before our employee begins the conversation.”
A:
We ran this by the VU faculty and some E&O gurus. Below are their responses, collectively referred to as “Faculty Response” in each instance. This is an emerging issue so we don’t have any definitive recommendations, just some preliminary thoughts. We suggest seeking competent legal counsel. Faculty Reponse: I’m quite sure they need a disclaimer about the recording but in general I feel having the voice documentation saved is so much better than written documentation if an E&O claim were to come up with a client. Faculty Reponse: There are several angles to approach the issue of retaining conversations and voice mails with customers. I believe the first question is if there is a legal obligation to provide the customer with notification that the call is being recorded. I’m not sure if there is a legal requirement but based on the number of times you hear “this call may be recorded for quality assurance,” it is certainly a common practice if not a legal requirement. The key to preventing E&O claims is follow-through and doing what you say you are going to do to meet your customers needs. Sound agency procedures with appropriate followup and verification procedures are key along with good
documentation. Documentation is the most important item in being able to successfully defend a claim. With that said, a recording of customer conversations and voice mails can be a double-edged sword that could help or hurt an agency’s claim.
Needless to say this does not allow a person not a party to the conversation to record any part of the conversation without the parties to the conversation being informed the third party is recording the conversation.
If an agency procures the coverage requested by the customer, offers additional coverage options, provides increased limits, etc. and it is documented via an voice electronic system then great. But, what if the agency does not and a claim occurs and those voice files are subpoenaed and clearly show that the customer requested something that was not delivered? The “he said, she said” claims will be settled more definitely and let’s hope the agency is on the right side. I think retaining customer conversations could prove helpful but only as a supplement to written documentation and follow-up with the customer.
Aside from the legality issue, if my agent was permanently recording my phone calls without my knowledge or option to opt out, I would not be happy at all. I suspect that unhappy customers that feel aggrieved are more likely to sue.
At this point we do not have any specific E&O procedures for implementing a voice recording system. The next generation E&O seminar material we are thinking about will explore technology related issues such as this one so we can better provide risk management guidance for the way today’s agents do business. Faculty Reponse: I Googled this though I can’t attest to its accuracy: Wisconsin is currently a one-party state though recent attempts in the legislature there have attempted, unsuccessfully so far, to change it to two-party. Even so, any evidence gathered by a one-party consensual recording is inadmissible except in murder or drug cases, as they say. The Wisconsin Stats 885.365 Recorded telephone conversation (1) states “Evidence obtained as the result of the use of voice recording equipment for recording of telephone conversations, by way of interception of a communication or in any other number, shall be totally inadmissible in the court of this state in civil actions, except as provided by 968.28 to 968.37.” Exceptions are it the party is informed before the recording is informed at the time that the conversation is being recorded and that any evidence thereby obtained may be used in a court of law or such recording is made through a recorder connector proved by the telecommunications utility as defined in WI Stats 968.28 - 968.37 (which is the stat for court ordered wiretaps) which automatically produces a distinctive recorder tone that is repeated at intervals of approximately 15 seconds. Fire department or law enforcement agencies are exempt as are court ordered wire tapes. Also a recording on the phone made from a out of state call or made to an out of state party, has to have the party informed of the recording and his consent or the tone on line, every 15 seconds, or a consent in writing before the recording is started.
As for the E&O perspective, as you say, the recording could either be a lifeline that saves the agency from drowning in an E&O claim or could be used to form a noose and hang them. I’d have a concern about overreliance on an audio confirmation instead of a written one in so far as the former might make it less likely that the agency staff member would actually follow up on a request as opposed to having something written and in the agency management system to prompt them. Faculty Reponse: I will weigh in based on my general understanding, without the benefit of special research. It is my general understanding that there are a number of states where it is illegal to have a call recorded without prior notice, permission to record it, and/ or or a regular signal on the call to indicate recording. If it is not known where someone is calling from when a call is placed or where they are when a call is received (such as if generated by or made to someone using a cell phone), there is no way to know what state law is applicable as the laws of state where the call is made and where it is received can apply, and may differ. Thus, to avoid having to sort through and remain current on possibly changing state laws on this issue, risk failing to comply with applicable laws, and uncertainty around which state law applies, it has become common practice for businesses that record calls to notify callers that a call may be recorded. Penalties for violating these laws can be quite significant; I have not researched this for quite a while but recall that in some states there used to be criminal penalties for violations. It also is unpredictable if and where any E&O or other claims may be made, and again, state laws may differ on the admissibility and/or weight of recorded calls as evidence, so it would seem prudent to maintain appropriate records in the ordinary course of business distinct from whatever practices are adopted relative to recording calls. I hope my comments are helpful but let me know if you need any clarifications. Faculty Reponse: I’m not aware of agents recording conversations at this point, but I will check further into it. If an agency adopts this practice www.iiak.org | January/February 2017 | 7
with all the precautions that have been mentioned, will all the conversations involving principals and producers on cell phones in the field also be recorded? If not, the agency would not have a consistent approach which is such an important principle for agency E&O risk management. In addition, even if the agency records telephone conversations, it will be important for the agency to continue to document the phone conversation in the agency management system so there is a consistent formal record of all client conversations and this also applies to agency principal and producer cell phone calls in the field. (It will also enable the agency to pinpoint the phone call if saved.) Text messages and emails also need to be documented in the agency management system just as phone conversations are so all client communications are together. I believe agents are starting to convert text messages into email and attaching them to their agency management systems as they are attaching emails. Copyright © 2016 Independent Isurance Agents & Brokers of America, Inc. All rights reserved. Reprinted with permission.
Find more answers to your coverage or claims questions at www.indepentagent.com/vu
You can even “Ask an Expert” for answers directly related to YOUR problem.
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8 | www.iiak.org | January/February 2017
Continuing Education
IIAK has a range of classroom and webcast continuing education courses as well as valuable designation seminars. See below for our latest offerings.
ON-SITE COURSES:
CRM: Principles of Risk Management February 22-27 • Hilton Garden Inn Louisville Northeast
E&O Risk Management: Meeting the Challenge of Change April 6 & October 5 • IIAK Education Center
ONLINE COURSES VIA ABEN: Date/Time
Seminar Name
CE Credits
March 16 @ 12 pm
Agency Management Based E&O and Ethics
3
March 15 @ 12 pm April 13 @ 11 am
Annuity Basics and Where They Fit
1
April 20 @ 10 am
Business Auto Claims That Cause Problems
2
March 16 @ 1:30 pm April 18 @ 11:30 am
Business Fraud Protection
1
March 22 @ 11 am April 21 @ 11 am
Certificates of Insurance – Emerging Issues and Other Stuff that May Scare You!
3
March 21 @ 9 am
Commercial Lines Claims That Cause Problems
2
March 16 @ 10 am
Commercial Property Endorsements That Can Make You Money!
2
March 10 @ 10 am
COPE – Property Underwriting and Effective Loss Control
2
March 8 @ 11 am April 20 @ 2 pm
Data Privacy Insurance
2
March 8 @ 2 pm April 20 @ 10 am
Directors and Officers Liability Insurance
2
March 13 @ 1 pm April 10 @ 1 pm
Double Trouble - Certificates of Insurance and Business Auto Endorsements
2
March 7 @ 9 am March 16 @ 10 am
E&O Risk Management – Meeting the Challenge of Change (6 hour course)
6
March 28 @ 10 am March 30 @ 10 am
E&O Risk Management – Meeting the Challenge of Change (Part 1)
3
March 28 @ 2 pm March 30 @ 2 pm
E&O Risk Management – Meeting the Challenge of Change (Part 2)
3
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Date/Time
Seminar Name
March 16 @ 11:30 am April 18 @ 1:30 pm
Estate Planning Basics
2
March 21 @ 9 am
Ethics and Business
3
April 21 @ 10 am
Home Based Business Exposures
2
March 16 @ 3 pm April 4 @ 10 am
Hot Topics in Personal Lines
2
April 5 @ 10 am
Liability Issues to Worry About – Indemnity Agreements and Additional Insureds
2
March 21 @ 9 am
Long Term Care Insurance
2
March 16 @ 10 am April 4 @ 3 pm
National Flood Insurance Program Basic Course - 2016
3
March 9 @ 11 am March 9 @ 3 pm
Personal Fraud Protection
1
April 26 @ 2 pm
Personal Lines Claims That Cause Problems
2
March 24 @ 11 am April 14 @ 2 pm
Professional Ethics in the Insurance Industry
3
March 1 @ 2 pm April 5 @ 2 pm
Property & Liability Concepts - Comp. Cov. Series
2
March 9 @ 10 am April 13 @ 10 am
Rental Cars: More Than Meets the Eye
2
March 9 @ 11:30 am April 11 @ 12:30 pm
Shake, Rattle, and Roll with it- Earthquake Basics
1
April 6 @ 9 am
Those Kids and Their Cars!
2
March 2 @ 1 pm
Top 5 Life Insurance Uses
2
March 8 @ 3 pm April 2 @ 3 pm
What you Need to Know about Employment Law & Coverage
2
April 18 @ 1 pm
Workers Compensation Beyond the Basics
3
New Hire eLearning Training Available! Visit iiak.org/education for more information 10 | www.iiak.org | January/February 2017
CE Credits
House & Senate Committees on Banking and Insurance HOUSE COMMITTEE - Chair -
- Vice Chair -
Rep. Bart Rowland* R - Tompkinsville
Rep. William Wells R - West Liberty
- Members Rep. Will Coursey D - Symsonia
Rep. Dennis Keene D - Wilder
Rep. Michael Meredith R - Brownsville
Rep. Jim DuPlessis R - Elizabethtown
Rep. Adam Koenig R - Erlanger
Rep. Steve Riggs* D - Louisville
Rep. Joseph M. Fischer R - Ft. Thomas
Rep. Stan Lee R - Lexington
Rep. Wilson Stone D - Scottsville
Rep. Jim Gooch, Jr.* R - Providence
Rep. D. Chad McCoy R - Bardstown
Rep. Addia Wuchner R - Florence
Rep. Jeff Greer* D - Brandenburg
SENATE COMMITTEE - Chair -
Sen. Tom Buford R - Nicholasville
- Vice Chair -
Sen. Jared Carpenter R - Berea
- Members Sen. Julie Raque Adams R - Louisville
Sen. Morgan McGarvey D - Louisville
Sen. Albert Robinson R - London
Sen. Rick Girdler* R - Somerset
Sen. Dennis Parrett D - Elizabethtown
Sen. John Schickel R - Union
Sen. Christian McDaniel R - Taylor Mill
Sen. Dorsey Ridley D - Henderson
Sen. Dan “Malano” Seum R - Fairdale
* These legislators are licensed as insurance agents in the state of Kentucky
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BOARD OF DIRECTORS
2016 - 2017 IIAK
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Chair GEORGE L. “CHIP” ATKINS, III R.H. Clarkson Insurance Agency Louisville Phone: 502-585-3600 Email: catkins@rhcgroup.com
Immediate Past Chair DAVID M. HOUK
Houk Insurance Agency, Inc. Horse Cave Phone: 270-786-2724 Email: davidmhouk@gmail.com
Chair-Elect
Vice Chair
MICHAEL G. JOHNSON, CIC
AARON LARUE
Treasurer
National Director
JAMES D. ENGLAND, AAI
STEPHEN R. KINKADE, CPCU, AAI
Al Torstrick Insurance Agency, Inc. Lexington Phone: 859-233-1461 Email: mjohnson@altorstrick.com
Peoples Insurance Agency Pikeville Phone: 606-437-7361 Email: james.england@pebo.com
Larue Insurance, Inc. Bardstown Phone: 502-348-0050 Email: aaron@larueinsurance.net
Kinkade-Cornell Insurance Agency, Inc. Leitchfield Phone: 270-259-5465 Email: steve@kinkadecornell.com
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Director at Large
Director at Large
ALLEN J. CRAWFORD, CIC, CSRM
KEVIN T. DESMOND
Director at Large
Director at Large
BARRETT H. “SKIP” MCGAW, II, CIC
CRYSTAL REID, CIC
Reed Brothers Insurance Services Somerset Phone: 606-679-6311 Email: acrawford@mikrotec.com
Riddle Insurance Madisonville Phone: 270-821-3122 Email: smcgaw@riddleins.com
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Desmond Brothers, Inc. Bellevue Phone: 859-491-5199 Email: kevin.desmond@desmondinsurance.com
Riddle Insurance Madisonville Phone: 270-994-3737 Email: crystal@riddleins.com
Young Agent Chair
Director at Large
ERIC S. HARDEN
SHARON B. HILL
Director at Large
Director at Large
RAY A. ROBERTSON, CIC
LAURA H. YOUNT, CIC, CISR
Insuramax Louisville Phone: 502-459-7500 Email: erich@insuramax.com
Limestone Agency, Inc Mt. Sterling Phone: 859-498-3410 Email: ray.robertson@limestoneagency.com
McKinney & Blair Inc. Jamestown Phone: 270-343-3144 Email: mc-blair@duo-county.com
Mountain Valley Insurance London Phone: 606-878-0100 Email: laura@mountainvalleyinsurance.com
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Thank You 2016 KAPAC Contributors Tommy Adams Donald Anderson Chip Atkins Joe Barnes Jason Billington Robbie Blain Custer Blair Jeff Brown Barbara Buckman Brian Burkhead Dick Burks David Clarke Bobby Clarkson Neal Cleary Bryan Clontz Tim Conder Allen Crawford Steve Crawford Ron Crimm Gary Criscillis Ginny Danner Joe Davis Denny Desmond Kevin Desmond Bob Detherage Jim Downing John Drew Logan Edelen Jim England Bob Fehrenbach
Brad Felts Bruce Ferguson Stuart Ferguson Whitney Floyd Neel Ford Steve Ford John Funkhouser Virginia Goff Sean Green Jay Hall, III Eric Harden Tom Hart Norm Hatter Mike Hepp Sharon Hill Stephen Hill Miller Hoffman Spencer Holley David Houk Michael Huff Tripp Humston Diana Hunt Andrea Hurley Brett Ison Mike Johnson Spencer Kilijian Steve Kinkade Drew LaMaster Aaron LaRue Alex LaRue
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Bill Latta Jim Lavelle John Lavelle Ronald LeMaster J.D. Lester David Livingston Stan Logan Michelle Love Lynn McCandless Bill McCarty Ryan McCarty Ted McClain Skip McGaw Carolyn Moran Adam Murphy Tim Murphy Bill Murrey Danny Neely Raymond Nelson Jeffri Northcut Diana Norwood Robert Palmer Bill Parman Glenn Pike Chuck Polin Peggy Porter Warren Pulliam Jared Pursley Tara Purvis Rick Rand
Crystal Reid Carolyn Reynolds Ross Richey Keith Riley Bob Roberts Ray Robertson Nick Rolf Allen Rudd Philip Schardein Donna Schlie Jerry Schott Adam Sheridan Bob Shipp Brian Smith Matt Stephens Scott Stoermer Jeremy Terry Carolyn Thomason Steve Thompson Steve Turner Steve Vaughn Tim Wenzel Bob Werner Ashley White Buddy Wilson Mike Winner David Wiseman Laura Yount
WHY GIVE to KAPAC? TOP 3 REASONS TO GIVE TO KAPAC
1 2
RELATIONSHIPS
Build relationships with the new faces in Kentucky’s legislature and educate them on important insurance issues. KAPAC helps open doors and gain access to our legislators!
COMPETITION
Some of the largest PACs in Kentucky are from groups that often have very different interests than independent agents. A strong KAPAC means we can effectively compete with these powerful PACs when needed!
3
LEGISLATION
Workers’ compensation is just one of the significant insurance issues facing Kentucky’s legislature today. Our voice needs to be heard as decisions are made that could have a long-term impact on our industry!
MAKE YOUR CONTRIBUTION ONLINE www.iiak.org AT IIAK.ORG/KAPAC | January/February 2017 | 17
Growing up on a farm in Lawrenceburg helped teach George - or as you probably know him better - Chip Atkins a work ethic that has no doubt served him well in all areas of life. I was able to sit down with him recently at his office at R.H. Clarkson to discuss what he’s learned after 22 years in the insurance industry and where he sees the future of both our association and the industry as a whole.
How did you get started in insurance? I worked at Humana for two summers while in college. Upon graduating, I participated in their management training program where I spent two years in their Tampa, Florida office working in all different aspects of the health plan. How do you feel about being an independent agent? I love that every day is a challenge, but in a good way. Our profession has a lot of moving parts, and every client’s needs are different. How did you become involved in IIAK? I became involved in IIAK as a young agent. I received a phone call one day at the office from Jeff Greer inviting me to an event. How has your involvement with the association impacted you – both personally & professionally? The friendships that you develop while serving our industry are lifelong. While serving the organization, you are surrounded with industry experts with common goals. Serving our clients while working to promote the Independent Agency system. I feel that the association allows me the opportunity to become more educated, both at a State and Federal level, which in turn allows me to better serve my clients. Tell me more about R.H. Clarkson. R.H. Clarkson was founded by Robert H. “Bobby” Clarkson on May 4, 1964. Bobby was, and is an extremely hard worker. He started the agency from scratch and built it into one of the top independent agencies. Bobby continues to be an integral part in the success of the agency. I wouldn’t be able to do the things I do without him. 18 | www.iiak.org | January/February 2017
By: Nikki Robins
I know that you stay busy whether it be at the office or in the community. Tell me more about that. Knowing that being the Chair was going to involve additional time commitments, I have attempted to plan accordingly. I have to make sure that the added responsibilities do not interfere with my ability to take care of my clients. I have had to learn how to say no to some other outside interests. I have been able to continue to participate in a number of Business First and GLI events. 2017 is shaping up to be an interesting year. What issues do you see our industry, both this year and in the near future? Without question, the dismantling of the Affordable Care Act and what it will be replaced with. At this point, we’re still getting bits and pieces of what they anticipate replacing it with, but not enough to start formulating decisions. What are the goals that you hope to see IIAK accomplish this year? The primary part of my platform is to encourage young agents to get involved, not just in the association, but within the industry as a whole. Statistically speaking, without the younger generation getting involved, the industry is going to have a lot of challenges. By 2018, ¼ of the insurance industry will be retiring. I want to try to do what I can to work with the existing Young Agent Committee and Eric Harden to build and promote young agent involvement.
What would you be doing if you weren’t in insurance? After 22 years, you really don’t remember what you thought you would be doing! But while I’ve grown to love baseball through my son, basketball is near and dear to my heart. I would probably be coaching were I not in insurance. What lessons from your personal life have you incorporated into your business career? Work ethic. Growing up on a farm, you just work. Hard work pays off. Do you have a personal motto or creed that you try to live by? “There’s no limit to what we can accomplish if no one cares who gets the credit”. - Ronald Reagan
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2017 Outlook: How Will Your Agency Increase Efficiency? By: Jordan Reabold At the start of the New Year, Ernst & Young predicts technology, customer expectations and cyber risks will be the top three most impactful factors on the propertycasualty market in 2017. What’s the common thread among them? Efficiency. “Analytics and technology in general will be part of an agent’s value proposition—understanding what customers are needing, better understanding interactions across channels,” explains David Bassi, executive director at EY. “This is important as people continue focusing on how to drive efficiency.” Here’s what you can expect in those areas this year.
Harnessing Technology
In 2017, expect InsurTech—the many segments of new
technology that are disrupting the insurance space—to continue impacting the industry. “Give or take, 35% of emerging InsurTech providers have determined that the distribution of insurance products is broken, and they have created technology to change that,” says Karen Pauli, principal of Strategy Meets Action. And although plenty of InsurTech startups fail, “there is so much change in the distribution space that today’s independent agents and brokers need to make choices about the tech they’re adopting,” Pauli says. “Technology is now a clear piece of the transaction.” Jay Sarzen, senior p-c analyst at the Aite Group, points out that technology is also a critical component of agency-carrier interactions. This year, “technology is going to help agents align better with carriers. I think it’s critical
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not to waste time and energy submitting business that isn’t going to go anywhere,” he says. Making agent-carrier interactions more efficient is especially important in commercial lines, Pauli explains: “It’s a hyper-competitive market, and because of that and globalization, the need to get quotes done in minutes to an hour vs. weeks or months is weighing on every insurer. Every agent is saying, ‘You’ve got to be able to get me quotes.’” Sarzen believes this is the year when carriers are going to “throw up their hands and listen. Things are challenging for carriers right now because we’re in a low interest rate environment, so they’re going to be looking to tech to help them advance. Whether they’re looking for more innovation in underwriting or claims to deliver a better customer experience, carriers are going to start getting their heads around what tech innovations can do for them.”
Meeting Customer Expectations
When all is said and done, the goal of technology is “improving the customer experience and better meeting their needs,” Bassi notes. The Aite Group’s Top 10 Trends in Insurance 2017 ranks insurers’ focus on improving customer experience in underwriting at No. 5. And while many in the industry are turning their noses up at Lemonade’s oversimplified approach to quoting, Pauli points out that efficiency is the company’s main appeal. “Let’s say Lemonade doesn’t make it in the end. It will still change certain parts of the insurance process because people will understand it can be easier. They will expect certain things to be seamless that aren’t right now,” Pauli explains. Sarzen agrees, adding that agents can use that concept as an opportunity to compete. “The savvier insurance agencies will embrace online portals to combat the other comparers of the world,” he suggests. “People shop on Amazon because it’s a one-click purchase. People are conditioned to that kind of shopping experience, but it doesn’t mean brick and mortar stores are going away. They just have to adapt.” It’s not about you—it’s about the customer, Bassi says: “It’s all about creating a customer-centric experience that drives ways of interacting with 22 | www.iiak.org | January/February 2017
customers via channels they’re comfortable with. You have to figure out how to touch them in different places. Use these methods to get a 360-degree view of the customer, then act appropriately with products and services.” Like peer-to-peer insurance, the industry is still holding its breath about the Internet of Things (IoT). “From a personal lines perspective, smart homes bring new opportunities for customers,” Pauli says. “You can provide a better service by engaging them more around the benefits of IoT.” And while it’s debatable whether connected devices like refrigerators will change the insurance landscape or end
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underwriters at J.M. Wilson previously worked for a retail agency
3
GENERATIONS OF LEADERSHIP
RELATIONSHIPS IT’S ALL ABOUT WHO YOU KNOW
1947
the year our longest-standing carrier relationship began
MGA and E&S Broker since 1920
(800) 666-5692 | JMWILSON.COM
55% OF OUR AGENTS HAVE WRITTEN BUSINESS WITH US FOR 10 YEARS OR MORE
BROKERAGE / PROFESSIONAL PERSONAL LINES PROPERTY & CASUALTY TRANSPORTATION SURETY
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You’ve offered each of your clients a personal umbrella policy.
Right? It might not be quite as relaxing as a day at the beach, but knowing you’ve done everything in your power to protect the customers who trust you to help them will go a long way towards easing your mind. Offering each and every client an umbrella not only protects those who choose to purchase the coverage. It protects your agency from liability. And it protects your book of business, since studies show that customers who have multiple policies are less likely to move their business elsewhere. As a Big “I” member, you have access to a stand alone personal umbrella program from A+ rated carrier RLI, featuring: Limits up to $5 million available Excess UM/UIM available in all states You can keep your current homeowner/auto insurer New drivers accepted - no age limit on drivers Up to one DWI/DUI per household allowed Auto limits as low as 100/300/50 in certain cases
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up translating to lower insurance premiums, “systems like smoke detectors and water sensors—things that can actually save a life and prevent real damage—that’s going to be where people see value,” Sarzen notes.
“Can we expect insurance to help people understand risk management and trends and be their defense in terms of breaches?” Bassi asks. “We see it high on the agenda in 2017, and it calls for immediate attention.”
Increasing Cyber Awareness Despite its advantages, however, the connectedness of the IoT “clearly creates more of an avenue for cyberattack,” Bassi says. “One of the things companies are becoming aware of is that a cyberattack has actual manifestations beyond the data loss.”
Jordan Reabold is IA assistant editor.
The Aite Group’s top 2017 insurance prediction: Cyber insurance moves beyond coverage for data breaches. Sarzen says agents must start having extensive conversations with their clients about what constitutes a breach: “Businesses still see cyber as just an endorsement. It’s more than sending your customers a notice saying their information has been compromised—it’s a business interruption.” According to the Insurance Information Institute, 60 carriers now offer cyber insurance—and the U.S. cyber market is worth more than $3.25 billion in gross written premiums, with the potential to grow to $7.5 billion over the next few years.
IIABA (the Big “I”) has endorsed Docusign as the official electronic signature platform for its members. Benefits for Insurance Professionals:
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There can be no doubt that all our knowledge begins with experience. – Immanuel Kant
www.summitholdings.com
Policies are underwritten by Bridgefield Casualty Insurance Company and Bridgefield Employers Insurance Company, authorized insurers in AL, AR, FL, GA, IN, KY, LA, MS, NC, SC, TN and TX; BusinessFirst Insurance Company, authorized in FL, GA, KY, NC, SC and TN. ©2016 Summit Consulting LLC | 2310 Commerce Point Drive, Lakeland, FL 33801
24 | www.iiak.org | January/February 2017
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Save These Dates
Thank You 2017 Industry Partners (as of 01/30/17) Diamond
Check out these great events near you! CRM: Principles of Risk Management
Platinum
February 22-25
Hilton Garden Inn • Louisville
Robert B. Morgan Insurance Conference (formerly EKU “I” Day) March 3 Hyatt Regency • Louisville
Big “I” Legislative Conference
Gold Acuity KEMI
May 3-5
Renaissance Downtown • Washington, D.C.
Road Show May 16
Kentucky Dam Village
Road Show May 17
Bowling Green
Road Show May 18
Liberty Mutual Safeco Silver
Amerisafe, Inc. Keystone Insurers Group Motorists Insurers Group
Secura Insurance State Auto Insurance Company
Bronze Alexander J. Wayne & Associates Anthem Blue Cross & Blue Shield Auto-Owners Insurance Company BITCO Insurance Companies Burns & Wilcox LTD Columbia Insurance Group FCCI Insurance Group FFVA Mutual Insurance Company Frankenmuth Mutual Insurance
InsurBanc J.M. Wilson KESA KY Associated General Contractors Midwestern Insurance Alliance Prime Insurance Companies SwissRe Corporate Solutions Westfield Insurance
Owensboro
Road Show May 23 Louisville
Road Show May 24
Northern Kentucky
Big “I” Sales & Leadership Conference June 14 & 15
Marriott Griffin Gate, Lexington
121st Annual Convention & Trade Show November 8-10
The Brown Hotel, Louisville
26 | www.iiak.org | January/February 2017
Want to be an Industry Partner? Contact Tara Purvis Marketing Director tpurvis@iiak.org
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COMPANY MOBILE POLICY: Many times, the risk management topics discussed at insurance seminars and presentations are applicable to not only to insureds, but also to the agencies themselves. I often find myself speaking to the audience and using phrases like, “dual track” or “double applicability” to try to describe risk management concerns that should be applied or addressed within an agency as well as communicated to customers and clients as important risk management concerns. Nowhere is that more the case than in the arena of “texting while driving.” Specifically, the concern is how an employer manages and responds to employee use of cell phones during working hours and business activities. There is a growing consensus that employers should, for risk management reasons, ban all forms of electronically distracted driving while on company business. That’s not easy in an insurance agency. Insurance agencies are populated with outgoing people with a service orientation. Simply put, insurance producers like to address and solve the problems their client present. Insurance agency personnel also like to be responsive when a client calls. These are admirable business traits, one and all. If left unchecked, those traits can lend themselves to squeezing in one more business cell phone call or just quickly tapping out one more responsive text or e-mail while driving down the road to the next appointment. But it’s a problem for clients, too. Let’s assume that a catering company sends out servers and food in a company van. On the way to the event, the catering company’s employee has a small accident, the proverbial “fender bender.” Would we expect that the catering company would ultimately be responsible if the accident was the fault of the company’s driver? Yes, we would, because of a legal doctrine known as “respondeat superior.” This is the basic doctrine that says that the principal/employer is liable for the torts of the agent/ employee when those torts are committed in the scope of the agency, or in this case, the employment.
30 | www.iiak.org | January/February 2017
Now, let’s change our facts just a bit. Rather than a fender bender, the accident is more serious and involves multiple vehicles and personal injuries. The fault still lies with the catering van’s driver. But let’s assume that the driver was inattentive because of a last-minute call from the catering office itself about the menu for the catering event that the driver was headed towards. Do these additional facts change the applicability of the legal doctrine of respondeat superior? Does it change the exposure for the catering company? In one meaningful sense, the answer is “no, not really.” We’ve already determined that the employer has liability for the actions of the employee; the employee was clearly within the scope of employment. One last change to our fact pattern. Let’s assume that the catering person is in his or her own vehicle, not going to a catering job. A phone call comes in from the company, asking him or her to run an errand for a catering job later that day. The accident happens while the driver was on the phone. Is the catering company still liable? Traditional analysis might suggest that the answer is “no,” because the employee wasn’t necessarily within the scope of employment when the phone call came in. The modern trend, though, is to suggest that the employer still is liable, especially if, for instance, the phone call came in on a company-provided phone, and especially one that the employee is expected to answer any time, day or night. In other words, work-provided cell phones are a liability problem for the employer. So, too, is work conducted on even a private cell phone. The line between “on the job” and “off the job” gets blurred. Juries do not like it when a demanding job is perceived as having compromised safety. And juries take it out on employers. According to a recent publication from the National Safety Council, called “Employer Liability and the Case for Comprehensive Cell Phone Policies,” there have been notable verdicts and settlements:
PROCEED WITH CAUTION
By: Rick Pitts
• $21.6 million against a corporation and driver; driver may have been talking with her husband on a cell phone • $4 million against an employer; off-duty police officer texting before crash • $500,000 settlement for personal cell phone use employee Saturday; employee making “cold calls.” A Bureau of National Affairs HR Report titled, “Employer Liability Varies When Workers Using Cell Phones Cause Vehicle Crashes” suggests how employers might or should respond to this risk: “Adopting a detailed cell phone policy can help protect employers from liability should an employee cause an accident by using an electronic communications device while driving… [b]ut such policies do not provide organizations with absolute legal protection, they said, especially if employees are not properly trained and held accountable for violations.” There’s even another employer-based, human resources risk here: responsibility for injury to an employee / driver. This is, of course, a worker’s compensation concern. But the Occupational Safety and Health Administration has weighed in on the topic, too. OSHA’s Distracted Driving Initiative says: “We call upon all employers to prohibit any work policy or practice that requires or encourages workers to text while driving. The Occupational Safety and Health Act of 1970 (OSH Act) is clear—employers must provide a workplace free of serious recognized hazards. It is well recognized that texting while driving dramatically increases the risk of a motor vehicle injury or fatality. It is imperative that employers eliminate financial or other incentives that encourage workers to text while driving. Employers who require their employees to text while driving—or who organize work so that doing so is a practical necessity even if not a formal requirement - violate the OSH Act.”
That’s OSHA’s view, and of course Kentucky has put in place legislation for all drivers (not just employees) with KRS 189.292. It says that no driver may, while in motion, “…write, send, or read text-based communication using a personal communication device to manually communicate with any person using text-based communication, including but not limited to communications referred to as a text message, instant message, or electronic mail.” So, what’s an employer to do? The National Safety Council recommends employers put in place a policy that is a total ban on all cell phone calls, texts and emails for drivers, for all handheld and even hands-free devices. The NSC also says the ban should include all employees; all company vehicles; all company cell phones; and all work-related communications (even in a personal vehicle or on a personal cell phone). The policy has to overcome employee resistance through education, compliance monitoring and meaningful responses to violations, the Council says. In our 24/7 world, the NSC’s approach is tough to institute and monitor, especially for insurance agencies and service organizations in general. As difficult as a total ban on cell phone communication may be for employers, it may well prove to be worth it from a risk management and human resources perspective. Richard S. Pitts, IIAK’s General Counsel is also part of our newest member benefit, First Call Free Legal. Members receive up to a 30- minute phone consultation on an insurance or agency-related matter once a year at no charge. Contact IIAK for more information at 502-245-5432.
www.iiak.org | January/February 2017 | 31
It’s simple, trust matters. Reliability. Experience. Stability. These are the qualities clients look for in an agent. Shouldn’t they be the same qualities you look for in a carrier? When you’re choosing a business to partner with, look for one ranked by your peers for those very values. United Fire Group (UFG) was named a Five Star Carrier in four categories by Insurance Business America: ■■ ■■ ■■ ■■
Carrier reputation and financial stability Claims processing Underwriting expertise Range of products
To learn more about UFG, visit www.UFGSolutions.com
simple solutions for complex times ® 32 | www.iiak.org | January/February 2017
I will not accept policy changes from a third party. I will not accept policy changes from a third party. I will not accept policy changes from a third party.
AT THE BIG “I” PROFESSIONAL LIABILITY PROGRAM,
WE TAKE CLAIMS PREVENTION VERY SERIOUSLY .
You carry professional liability insurance to protect you in the event of a claim. But is your carrier helping you to prevent a claim in the first place? The Big I has dedicated significant resources to bringing the best claims prevention information and strategies to your agency. And while we won t really make you write it out on a chalkboard, we believe that the best way to protect your business is to help you protect yourself.
VISIT INDEPENDENTAGENT.COM/EOCONTACT TODAY. www.iiak.org | January/February 2017 | 33
We know what it took to build this unique business. And we know what it takes to protect it. Underwriters who know and understand what coverages are necessary for each unique business. Loss prevention professionals who use a hands-on approach to help develop programs tailored to each specialty business. Claim reps with the expertise and technology to process claims quickly and efficiently. As an Official Supplier of the Silver LiningÂŽ, you and West Bend will find a specialized insurance plan for your valued customers. To find out more, talk to your West Bend underwriter.
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Classifieds Acquisitions
Looking for Producers
Established Louisville agency interested in acquiring insurance agencies in Jefferson and surrounding counties. If you are interested in selling, merging, or need assistance with perpetuation, we would like to talk with you in confidence.
Independent with top best markets looking to expand presence in Jefferson, Oldham or Shelby counties. Wanting Personal lines, Producer or book of business to move or purchase. All arrangements possible, in strict confidence.
Call R. Alex Rankin, CPCU or Philip Anderton, CIC, at Sterling G. Thompson, Co. at 502-5853277
Please send inquiries to Turner Insurance Agency, 2460 Shelbyville Road, Shelbyville, KY 40065 or call Kurt Turner, CPCU at 502-633-6060.
Advertisers We would like to thank our advertisers for their support. This publication would not be possible without you!
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For classified ads or to advertise in the Kentucky IA, contact: Nikki Robins, Communications Director at nrobins@iiak.org or call 502-245-5432.
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www.iiak.org | January/February 2017 | 35
Having trouble writing vacant homes? Call us today! If your clients are going on an extended vacation or have moved into a new house and still have the old one up for sale, vacant home insurance can be hard to get.
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BOLTON & COMPANY
2400 Waterfront Plaza • 325 West Main Street • Louisville, Kentucky 40202 Telephone 502.583.8361 • 800.292.6597 • Fax 502.584.6131 • www.boltonmga.com