Julyaug13 online by Big I Kentucky

1046 Louisville, KY

13265 O’Bannon Station Way Louisville, KY 40223

JULY

INDEPENDENT INSURANCE AGENTS OF KENTUCKY

ANNUAL CONVENTION &TRADE SHOW November 6 to 8, 2013

The Brown Hotel

Wednesday, November 6th 11:45 am A ernoon at Churchill Downs 4 pm Registra on 5 - 6 pm Opening Recep on 6 pm Dinner - on your own Thursday, November 7th 7 am Registra on 8 - 9:45 am Welcome Breakfast & General Session 10 am - 12 pm Email Marke ng Strategies to Generate Revenue with Ryan Hanley 11 am Spouse/Guest Tour: Everything You Should See, Know and Taste While You’re in Louisville 12 - 1 pm CRM Conferment Lunch 1 - 3 pm Health Care Reform Update and Informa on presented by Anthem (2 hours CE)

Louisville, KY

Thursday, November 7th cont.. 1 - 4 pm Professional Ethics in the Insurance Industry presented by Rick Pi s (3 hours CE) 3 - 5:30 pm Trade Show 6 - 7:30 pm Cocktail Recep on & YAC Silent Auc on 7:30 - 9:30 pm Leadership Dinner 9:30 - 11 pm Live Music, Dancing and Social Gathering Friday, November 8th 8:30 - 9:30 am YAC Breakfast with the Commissioner 9:45- 11:45 am A Marke ng Plan: Your Road Map to Success presented by Emily Huling

AUGUST 2013

Join fellow members, industry representatives and guests, to Louisville for the 117th IIAK Annual Convention & Trade Show, the largest insurance gathering in Kentucky. This year we have endeavored to bring you an Annual Convention and trade show that can boost your agency forward in today’s current business climate. With this in mind, this year’s Annual Convention offers plenty of opportunities in the areas of professional development and education; building networks with your peers and industry representatives; and having access to the latest information and developments on issues that the our industry is facing. In addition to this, the Annual Convention will showcase the latest and most beneficial products and services available to your agency, so that you are better equipped to lead it to success. From owners to producers; CSRs to agents; or whether you’re a seasoned professional or new to the industry, the 117th IIAK Annual Convention & Trade Show is an opportunity you shouldn’t miss!

Featuring: Email Marketing Strategies to Generate Revenue with Ryan Hanley

A Marketing Plan: Your Road Map to Success presented by Emily Huling

Marketing to consumers and clients particularly in the digital age is one that is ever-changing and always evolving. Consumers have become more savvy in their purchase of insurance and are now seeking more information online about the services they wish to purchase and the companies and agencies they wish to purchase from. This presents an opportunity for agents to develop a marketing strategy that manages relationship building through social media, email and content marketing. Agencies must implement unique strategies for conveying their values, products and services, so that you can reach those customers and stand out from the rest. This session aims to equip you with the knowledge and tools to grow your agency through email marketing strategies that generate revenue. Presenting this session is dynamic digital marketing leader and highly sought after speaker Ryan Hanley. He is the creator of www.RyanHanley.com a blog dedicated to helping small businesses grow through tried and tested content marketing strategies. A licensed insurance agent, Ryan is also the Director of Marketing for The Murray Group Insurance Services, Inc., in Albany, New York.

Are you overwhelmed with the amount of marketing advice you receive? Don’t be! This fast-paced, nuts and bolts session will break down the marketing process and help you create a simple one-page agency marketing plan. Topics covered include: • How to market your agency so customers will buy. • Five key components of a successful marketing plan. • Strategies to communicate your message. Our speaker is Emily Huling, CIC, CMC. Emily Huling, CIC, CMC, president of Selling Strategies, Inc., works with agencies, companies, and MGAs to create top-performing sales, customer service, and leadership organizations. Emily’s articles appear regularly in Rough Notes and dozens of other insurance industry publications. She’s written the Deal Makers column in IA magazine for 12 years. Emily is on the national faculty of the Society of CIC and is the author of more than a dozen books and audio programs including Selling from the Inside, Kick Your “But”, Great Service Sells.

Thank You to Our Industry Partners Premier Liberty Mutual Safeco Seneca Insurance Company Pla num Encompass Insurance Gold Arlington/Roe & Company Bolton & Company Grange Insurance Progressive Risk Placement Services, Inc.

Silver Acuity Amerisafe, Inc. KEMI Kentucky Na onal Insurance Co. Keystone Insurers Group State Auto Insurance Co. Travelers Bronze Anthem Auto-Owners Insurance Co. Bailey Special Risks, Inc.

Bituminous Insurance Cos. Columbia Insurance Group Countryway Insurance Co. InsurBanc Kemper Preferred Kentucky Agents Finance Co. KESA KY Associated General Contractors MidWestern Insurance Alliance Inc. Secura Insurance SwissRe Corporate Solu ons Wes ield Insurance

JulyAug13_BCFC 8/12/13 10:29 AM Page 1 C

CY CMY

1046 Louisville, KY

13265 O’Bannon Station Way Louisville, KY 40223

JULY

We offer independent agents vacant home insurance at very competitive rates with no restrictions on length of vacancy, coverage up to $5 million and ﬂexible policy terms of 3, 6 or 12 months. We can even cover buildings undergoing improvements.

AUGUST 2013

Coverage for homes where the most important thing is not what’s there. But what isn’t.

Online quotes are available and no minimum volume is required. Just go to www.boltonmga.com and click “Online Rating.”

BOLTON & COMPANY Tracking down the right coverage for over 45 years.

Staying Ahead of the Game

2400 Waterfront Plaza · 325 West Main Street · Louisville, Kentucky 40202 Telephone 502.583.8361 · 800.292.6597 · Fax 502.584.6131 · www.boltonmga.com

Inside: 27 E&O Procedural Mistakes

Composite

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.

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

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

ON THE COVER This issue‘s cover story pictures IIAK chair for 2012-

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

2013, Bill Latta. Read more about him on page 16.

Directors Chip Atkins Louisville, (502) 585-3600

FEATURES

Jason D. Billington, CIC Murray, (270) 753-4751

Maintaining Policies Locally in Today's Agency

Moe Dugger Lexington, (502) 426-6060

and Emailing Policies to Clients ............................................................6

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

Online Rate Comparison - The Independent Agent's Edge ..........................9

Diana G. Hunt, CIC Barbourville, (606) 546-4132 John L. Ison West Liberty, (606) 743-4472

Cover Story: Staying Ahead of the Game .............................................16

Michael G. Johnson, CIC Lexington, (859) 233-1461

Mahle, Morgan, Thomas and Rhinesmith Qualify for

Aaron LaRue Bardstown, (502) 348-0050

the Trusted Choice® Big “I” Junior Championships..................................20

Skip McGaw Madisonville, (270) 821-3122

27 E&O Procedural Mistakes .............................................................22

Staff Peggy P. Porter President/CEO Kristie Weyer Insurance Services Manager Joy E. Holder Membership Manager Arlene Adonis-Hawkins Director of Communications Tara Purvis Marketing Director Katie Freshley Education & Events Director The Kentucky Independent Agent welcomes all advertising and editorial submissions. Inquiries for advertising, news releases and editorial contributions can be directed to: 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.

DEPARTMENTS From the Chair ..................................................................................4 Benefits Spotlight: Caliper....................................................................5 Industry Partners .............................................................................12 Welcome New Members ...................................................................12 Trusted Choice®: Giving Back to Your Community..................................14 Classified Ads ..................................................................................14 Education & Events Calendar..............................................................27 People In The News ..........................................................................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

I hope all of you are well and surviving the heat of summer. Foremost, I would like to congratulate

Bill Latta

and stay involved - you will benefit far more from it. With that said, a great way to get

Steve Thompson of Sterling G. Thompson

involved is to attend the 117th IIAK Annual

& Associates in Louisville, for receiving the

Convention and Trade Show. The Annual

Barney Burns Award from the Independent

Convention will be at The Brown Hotel in

Agents and Brokers of America (IIABA) at

Louisville, on November 6th through the

the Big “I” National Legislative Conference

8th. I encourage you to attend, interact and

in Washington D.C. on April 17th. Steve

learn from your fellow agents and company

has served as Kentucky’s InsurPAC Chair

partners. Please encourage our company

for 20 years and under his leadership,

partners to attend and participate. The IIAK

Kentucky has achieved its InsurPAC goal

staff puts a lot of time and effort to make

every year.

this a premier Convention for members and

Steve epitomizes volunteerism by giving

company partners, so please attend.

2012 - 2013 IIAK Chair your time as an individual member of your

The IIAK staff is always available to

association. There are many opportunities

assist members with any questions issues,

to volunteer, from board leadership to

concerns, information, or to receive

serving on a committee or task force. I

suggestions as to how to better our

would like to say a BIG THANK YOU to

association. We want to reach out to our

those of you who give and have given so

membership and know your thoughts. Give

much of your time, energy and wisdom to

us your feedback! Contact your association

benefit your association. I encourage all

by phone at (502) 245-5432 or email

members to not just be a member but be

iiak@iiak.org.

an involved member. You and your agency will benefit more from your membership

our association. Please let me know if you

this way. There are plenty of opportunities;

have any ideas or issues that involve your

attend events and meetings; participate in

association. You can contact me by phone

continuing education, CRM or ABEN

at (270) 827-3543 or email me at

classes, ask other independent agents to

bill@lattainsuranceservices.com.

join our association, or volunteer for a committee or task force. Please get involved

Once again, it is my pleasure to serve

Get involved!

BENEFITS Spotlight

Which tool does over half of IIABA’s Best Practices insurance agencies use? Caliper. Best Practices agencies know the bigger you want to be, the better you need to manage your #1 asset… Your people. Caliper does that. Did you know that the average IIABA Best Practices Agency spends well over half its revenues on compensation? Did you know that the larger the agency, the more they spend on people? Did you know that 55% of IIABA Best Practices agencies are Caliper clients? Let’s face it, the people in your agency are your biggest asset. maximize top performers.

helping insurance agents successfully navigate today’s challenges by deploying the best talent. Find out what Best Practices agencies know and many members have known for over 30 years.

5Oyears

25,OOO companies

3,OOO,OOO individuals assessed

For member-exclusive pricing, go to www.iiaba.net/caliper.

Technology

Maintaining Policies Locally in Todayâ&#x20AC;&#x2122;s Agency and Emailing Policies to Clients by Jeff Yates,

As agencies go paperless and carriers stop providing paper policies, agencies have to decide whether to continue to retain policies locally or rely on electronic policy view to access the policies on the carrierâ&#x20AC;&#x2122;s website. Agencies are also considering whether to begin to email policies to clients, rather than sending them paper copies. Since I get these questions frequently, I decided to reach out to a number of agency consultants and E&O risk management experts to get their insights on these questions. (Please see acknowledgements at the end of this article for the names of these individuals.)

ACT Executive Director Agency Retention of Policies Many agencies have decided to retain commercial lines policies locally, even if they have a good download of policy data and electronic policy view in place, because they find they need to refer to these policies and endorsements frequently when coverage and claims issues arise. In contrast, many agencies with a good download in place have decided not to retain personal lines policies locally, because they are able to handle the typical client inquiries without referring to the policies. Often these questions relate to billing and making a payment and the agents are able to handle these inquiries efficiently by using real-time Billing Inquiry and Make a Payment functionality. Each agency is different, however, so I have provided a list of considerations to assist agencies in deciding this question: 1. How frequently does the staff need to refer to the actual policies for the line of business and for what purposes? Does the amount of usage justify the amount of time it will take to attach them to the client file? 2. Is there a good download in place for the line of business and is my database accurate? If there is not a good download for the business then the agency will probably want to retain at least the dec page locally. 3. Does the agency use the dec page for policy checking and like to retain it as part of the documentation of the policy checking process?

4. Does the carrier provide links on the dec page to all of the actual policy forms and endorsements applicable to that risk - not just the latest editions of these forms - so that they are easy to access? 5. Has the carrier provided a contractual guarantee that the agency will continue to have access to its policy information in the event the carrier or the agency terminates the relationship? This commitment should be for the statutory period in which the agency must retain this information (usually seven years). 6. Do the applicable state laws require the agency to retain the policy documents locally or is access to them at the carrier website sufficient? Agencies should go through the same analysis with regard to their E&S policies. Industry Opportunity Since many agencies have made the decision to retain commercial lines policies locally, it is incumbent on carriers and agency management system providers to make it as simple as download for agencies to attach these policies to their client files. One approach would be to give the agency the option to have the carrier download PDFs of policies (new, renewal and endorsements) each evening using realtime Activity Notifications and Alerts. An option could even be given to receive the dec pages with links to the actual policy forms or the complete policies. Agency management systems should have the capability to route these notifications to the appropriate person in the agency for checking and attachment to the client file. Using this real-time workflow would be an improvement over the emailing of these policies because of the added security and transmission directly into the agency management system. Since some agencies use the personal lines dec pages to check policies for accuracy and then retains them, the same workflow should be made available to agencies for personal lines. Delivering Client Policies Electronically Agents are generally supportive of personal lines carriers that give clients discounts in order to go paperless and access

Technology

their policies electronically. In the commercial lines and E&S markets, however, many agents are concerned about the inefficiency and cost shifting that takes place when carriers stop sending the paper policies to the agent for delivery to the client, because many insureds still want the paper. Electronic policies represent the future and are more efficient in many ways (no mail time, do not to be scanned into agency system, potentially save printing costs). Agents should encourage their clients to make the transition to electronic policies, in the same way that other financial services companies are inviting their clients to move to electronic delivery. Carriers, in turn, should help their agents with this transition by providing them with electronic policies and the option to receive paper copies for clients who are not ready to accept the electronic model. Many agencies like to deliver commercial lines policies to their insureds personally and are now delivering these policies on a CD as a “value add,” where clients agree to this method. Several larger agencies provide a secured area on their website where clients can access their policies. Hopefully, technology providers will increasingly provide turn-key solutions for the broader agency population so that they can provide their clients a secured portal for accessing their policies, as well as linking to their carriers to make payments and perform other self-service functions. This is an area in which ACT’s Consumer Functionality Work Group is trying to spur more industry action.

3. Provide in the email attaching the policy a request that the client acknowledge receipt of the email and policy by return email and have a procedure - that is consistently followed - of following up with the insured if he/she does not acknowledge receipt.

Emailing Policies to Clients In this emerging “paperless” environment, many agencies are considering emailing policies to their insureds. There are several issues for agencies to assess and then incorporate into their procedures when considering such a change in delivery:

7. Deliver the policy to the client promptly after being received - whether emailed or delivered personally - and avoid any agency backlog in policy deliveries.

1. Confirm that the particular state’s laws and regulations permit the emailing of policies and do not require that the insured be provided a physical copy. 2. Secure the advance agreement of the client to receive policies electronically by email.

4. Include in the email a disclaimer that the insured should read the policy to ascertain that its limits and coverages are appropriate for its needs and that it should contact the agency if it would like to add any coverages or make any changes. The notice should also give the insured the option to elect to receive paper policies. (This disclaimer should be provided in the cover letter that accompanies the personal delivery of a paper policy or CD as well.) 5. Check the policy for accuracy before sending as provided in the agency’s procedures. 6. Send the email by secure email if the policy contains any private personal information under the applicable state and federal privacy and data breach notification laws. Such private information might include the federal employer identification number, driver license numbers, etc. ACT encourages the use of TLS email encryption for secure email, and TLS works very well in agent-carrier communications when both parties have it. A proprietary secure email solution, however, will be necessary for many client communications when the client does not have TLS.

8. Document in the agency management system that the policy has been sent, the steps taken to follow up if necessary and attach the transmittal email in unalterable form. The emergence of a paperless environment is precipitating changes in agency workflows and is creating opportunities for carriers and technology providers to provide new tools to help agencies function more efficiently in this

Technology

new environment. These new tools include the use of Activity Notifications and Alerts to send electronic policies to agencies and the availability of easy to use and cost effective “plug ins” to enable agencies to provide secure portals for their clients to access documents and to perform other services online. I’d appreciate receiving your thoughts on how your agency and the industry can best adapt to these trends. You can contact me here. Acknowledgements: I would like to thank the following agency consultants for their insights on these issues: Pat Alexander, Steve Anderson and Laura

ROOFING

MARINE

Nettles. I’d also like to thank the following agency E&O risk management experts: Dave Hulcher, IIABA; Jim Keidel, Keidel, Weldon & Cunningham; and Sabrena Sally, Westport Insurance Corporation. Thanks also to the ACT Agent Feedback Group for its input. Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. Jeff can be reached at here. This article reflects the views of the author and should not be construed as an official statement by ACT.

CONSTRUCTION

TRUCKING

Workers' Comp for Working People American Interstate Insurance Company Silver Oak Casualty Inc. 800.317.0876

OIL & GAS

LANDSCAPING

Amerisafe.com

MANUFACTURING

AGGREGATES

Marketing

Online Rate Comparison - The Independent Agent’s Edge By Dave Wencel

There is simply no denying that the internet is fundamentally changing consumer shopping habits and how the marketplace works. Whether it’s books, music, cars, consumer goods, or for us maybe most importantly insurance. The internet has created a “flattening” of the world of information. Consumers are empowered by their ability to easily gather information for making decisions that would have been highly difficult or impossible in the past. Today without leaving their homes consumers can obtain insurance information and quotes from multiple carriers at the click of a button. With monumental marketing budgets, major direct carriers like State Farm, GEICO, Progressive and Allstate got a quick jump creating platforms to reach tech-savvy consumers. As a result they’ve seen significant results carving out greater share of the U.S. personal lines market. Though these companies are ransacking consumers with a constant barrage of messages, there is one thing these direct writers cannot provide - Choice! All these companies can offer only one option and will be focused on pigeon-holing the consumer into their products rather than finding the best risk management solution for the consumer. To

consumers, carrying out an effective comparison search can be very complicated and time-consuming. Understanding the various complexities impacting a premium quote such as assessing appropriate coverage levels and deductibles is in most cases beyond the ability of the average consumer to accurately do on their own. One-Stop Shopping: The Consumer Portal The truth is what consumers really want is to be able to shop with “confidence”. They want a transparent process that helps them understand what they are buying and why it is right for them. They want to know they got the right product and the best deal that meets their needs. Trusted Choice® as a brand identity was conceived as a unifying concept representing the advantage and promise independent agents across America provide of greater choice, advice and trust. Launching at the end of June the new TrustedChoice.com will host the “Consumer Portal” tool. Rather than having to make multiple visits for shopping, the Consumer Portal will allow consumers to one-stop-shop multiple carriers at TrustedChoice.com. It will make information gathering easier and more effective than ever before. Even better, the new TrustedChoice.com will match consumers with local agents offering Bigger Savings, Better Coverage and the Best Service of anyone in the industry! Yes, the internet has changed the playing field of the marketplace. Despite the greater availability of information available, the vast majority of consumers still realize and value having an expert to help vet out their personal risk management needs. A recent Deloitte study reports that 70-75% of consumers believe a professional agent will provide them more objective advice and better represent their interests. And that’s where independent agents really shine! There is a new day dawning for independent agents. The Consumer Portal will provide the tools and platform to outdo the State Farms and GEICO’s of the world. The Trusted Choice® brand promise will affirm the value that a local Independent Insurance Agent provides with the best professionalism, knowledge and options. To get your agency set up with the new TrustedChoice.com and Consumer Portal register now at www.projectcapmarketing.com. You can also reach Project CAP by calling 855-372-0070.

Arlington/Roe. You have our word on it. “Whether you choose Arlington/Roe for our breadth of knowledge, product line diversity, market access or industry know-how, you may be assured we are in business primarily to serve you. We will do our best to earn and keep your trust. You have our word on it.” – James A. Roe, CPCU, ASLI, President

Managing General Agents and Wholesale Insurance Brokers

800.878.9891

ArlingtonRoe.com

Relax...

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

Competitive, low premiums for increased limits of liability Simple, self-underwriting application that lets you know immediately if the insured is accepted E-signature and credit card payment options Immediate coverage available in all 50 states plus D.C.

So cover your clients... protect your agency... and profit from umbrella sales!

Contact Jennifer Hopper, your RLI Administrator at: Email: jhopper@arlingtonroe.com Tollf Free: (800) 878-9891, ext. 8639 Local Fax: (317) 554-8551 Toll Free Fax: (888) 552-9891

WELCOME WELCOME NEW NEW MEMBERS We welcome the following to membership in the Independent Insurance Agents of Kentucky since our last report: Agency Members Allen Insurance Agency - Prospect Hoskins Insurance Agency - Evarts PWC Insurance Agency - Florence Taylor Made Insurance Group - Lexington Zach Leonardo & Association, LLC - Prospect The Independent Insurance Agents of Kentucky, its officers and staff look forward to serving these new members with the best membership benefits and related products and services available.

Thank you to the following companies that are supporting IIAK through Industry Partners program for 2013. Their support helps to make possible many of our events and meetings such as Big â&#x20AC;&#x153;Iâ&#x20AC;? Day, the YAC Sales & Leadership Conference, YAC Day at Keeneland and the IIAK Annual Convention & Trade Show. The Industry Partners program is an opportunity for insurance companies, wholesalers and vendors to support the efforts of IIAK and bring to its members affordable, quality events geared towards enhancing the professionalism of members. Industry Partners as of June 26, 2013

Premier Level Liberty Mutual Insurance Safeco Insurance Seneca Insurance Company Platinum Level Encompass Insurance Gold Level Arlington Roe & Company Bolton & Company Grange Insurance Progressive Risk Placement Services, Inc. 12

Silver Level Acuity Amerisafe, Inc. KEMI Kentucky National Insurance Co. Keystone Insurers Group State Auto Insurance Company Travelers Bronze Level Anthem Auto-Owners Insurance Company Bailey Special Risks, Inc. Bituminous Insurance Companies Columbia Insurance Group Countryway Insurance Company InsurBanc Kemper Preferred Kentucky Agents Finance Company KESA KY Associated General Contractors Midwestern Insurance Alliance, Inc. Secura Insurance SwissRe Corporate Solutions Westfield Insurance 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.

NON-RENEWED

One homeowners claim and you’re out? What kind of policy is that? Are you Ànding more and more of your clients are being dropped after one claim? And you have to make the call to tell them they are no longer covered? You know what happens next. You lose a client. Once they start shopping, you stand a good chance of losing their auto coverage and everything else.

• HO3 Coverage available • Prior claims are OK • A Rated company • $150,000 to $10,000,000 in values Top rated products and service. It’s why we’ve been in business for over 47 years. Call or visit our website today. Then call your clients and tell them they’re covered.

Bolton & Company has a market that is perfect for those homeowners.

Tracking down the right coverage for over 47 years. 2400 Waterfront Plaza • 325 West Main Street • Louisville, Kentucky 40202 Telephone 502.583.8361 • 800.292.6597 • Fax 502.584.6131 • www.boltonmga.com

TRUSTED Choice®

Giving Back To Your Community

The Trusted Choice® Pledge of Performance states it right at the beginning: As a Trusted Choice® agency, we are dedicated to you and are committed to treating you as a person, not a policy. Trusted Choice® agents care about their customers - how are you demonstrating this to them? Many independent agents are involved in the community. Some agencies sponsor local baseball teams, hold networking luncheons for small business owners or sponsor a 5k walk/run. Trusted Choice® agents don’t only help their community when they are in need, but they support and care about what is important to customers: a son’s baseball team, a husband’s business, a daughter’s illness. It’s this outreach that helps solidify the brand in a community. Community relations are the personal contacts and relationships built between an organization and the public which results in building an organization’s image or brand. And it’s community relations that set independent agents apart, because they are truly members of the local community. Community involvement enhances perceptions of trustworthiness and likability,

and leads to more favorable impression of an agency. Insurance may not seem fun or exciting. It’s something that people buy because they have to, and hope they never have to use. Through community involvement a Trusted Choice® agency imparts a lasting impression and makes personal connections with their customers which make financial decisions like insurance easier. These customers will know that in the event of a car accident, fire or tree falling on their house-A Trusted Choice® agency and their staff is there for them. That is what being a Trusted Choice® independent agent is all about. This culture of service and absolute dedication is what Trusted Choice®s independent agents embody. With that in mind, is there anything else your agency could be doing to get involved in your community? Rather than simply sponsoring the 5K walk/run, put together a team and participate. In addition to collecting canned food for a holiday food drive, you could organize a day for staff to volunteer at a local soup kitchen. The opportunities to give back are limitless and the rewards are priceless.

Classified Ads Acquisitions Established Louisville agency interested in acquiring insurance

Acquisitions & Producers A well established regional agency is interested in individual

agencies in Jefferson and surrounding counties. If you are interested in

producers and insurance agencies considering selling or merging.

selling, merging or need assistance with perpetuation, we would like to

Commercial lines & personal lines wanted in Louisville, Lexington,

talk with you in confidence. Call R. Alex Rankin, CPCU or Steve B.

NKY and BG. We represent the best and desired markets for

Thompson, CPCU, at Sterling G. Thompson, Co. at (502) 585-3277.

growing an agency or book of business. Confidentiality provided to all interested parties. Call Scott Ferguson at The Underwriters Group (502) 244 – 1343.

Looking for Producers Independent with top best markets looking to expand presence

Producer Wanted

in Jefferson, Oldham or Shelby counties. Wanting Personal lines,

Louisville Insurance LLC has producer opportunities with flexible

Producer or book of business to move or purchase. All arrangements

compensation plans while offering ownership in book of business

possible, in strict confidence. Please send inquiries to Turner

produced. Confidentiality provided to all interested parties. Contact

Insurance Agency, 2460 Shelbyville Road, Shelbyville, KY 40065

Glenn Pike at 502-473-5454 or glenn@louisvilleins.com.

or call Kurt Turner, CPCU at (502) 633-6060. To place a classified ad please contact Arlene Adonis-Hawkins at aadonishawkins@iiak.org or (502) 245-5432.

Your customers deserve a

Silver Lining.

When something happens to your customer’s home, car, or business, it may not be a disaster. But no matter what it is, your customers always deserve fast and fair service from their insurance company. West Bend provides a Silver Lining, no matter what the claim may be. When a clothes dryer started a fire while drying towels, repairing the damage and getting Anna’s hair salon back up and running was important. So that’s just what we did. Sometimes little things mean a lot. And every day, when something bad happens to someone, West Bend makes sure our customers experience the Silver Lining. Because the worst brings out our best.®

COVER Story The team at Latta Insurance Services, Inc. (l to r): Kimberly Portman, Whitney Floyd, Tammy Risley, Bill Latta, Alisa Sutman and Melanie Hutchison.

Staying Ahead of the Game

Each year, the Kentucky Independent Agent features a story on the association Chair. This year, we sit down with IIAK Chair for 2012-2013, William “Bill” S. Latta. Bill is the President of Latta Insurance Services, Inc., in Henderson, Kentucky; he is a proud, fifth generation resident of Henderson, a city in north western Kentucky of about 29,000 people and sits along the Ohio River. Bill, is one of those individuals

COMMITMENT A PROMISE WE DON’T TAKE LIGHTLY

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that never meets a stranger, whether it’s waving to people as he’s driving along the Henderson waterfront or speaking to fellow business owners along Main street. The father of two, and grandfather of three has an avid thirst for knowledge and involvement, be it in business or with his community. He is a constant learner and never afraid to seek opportunities to share his time to be engaged. These traits have helped him grow and succeed as an independent agent and agency owner. Now as IIAK Chair, we get to know him, his agency, and his thoughts on the industry. Q. You’ve been in the insurance business for over 40 years now, can you share with us how you first got started? A. When I started out in insurance, I didn’t know anything about the industry. At the time, I had graduated from the University of Kentucky and was selling safety equipment. A good friend of mine had a father who owned an agency called the Royster & Lambert Insurance Agency and Mr. (Farmer) Lambert was looking to retire from the business and had wanted his son to take over. My friend told his father, “Dad, I’m a lawyer!” So he approached me to see if I would be interested in partnering with him to buy his father’s agency. We would both own it, however I would be the one to run it. I told my friend I didn’t know anything about insurance and that I wasn’t interested in going door-to-door selling, because I had initially thought it involved selling life and health. He eventually convinced me to work with his father for a period of time to see if I would like the business. I did. And so in 1972 we bought his father out of the agency. Q. Tell us a little bit about Latta Insurance Services, Inc. A. The history of the agency goes back to the 1880s and was a result of a merger between the W.T. Lambert and the X.R. Royster insurance agencies. When I first joined, a majority of our business was farm insurance and personal lines, with a small amount of commercial. In the early 80s, my younger

COVER Story believe that agencies at whatever level need to embrace change, whether “it'sI technological or otherwise and adapt to it to avoid being left behind. ”

Bill with Whitney, daughter and Vice President of Latta Insurance Services, Inc.

Bill with his mother Mildred Latta.

Bill and his team goofing around with the office’s old style bank vault.

brother Tom joined the agency as a co-owner and we changed the name to Royster, Lambert & Latta Insurance Agency. Later that decade we bought out my friend’s share who I had originally gone into partnership with and changed the name to Latta Insurance, Inc. Then in 2010, we merged with Bank Trust Financial and we are now Latta Insurance Services, Inc. Today, we are primarily 75% commercial and 25% personal lines. Q. You work with a close-knit team at your agency, can you tell us about them? A. Everyone at the agency is licensed and we consist of five full-time people including myself, and one part-time person. I am fortunate that I get to work with my daughter Whitney Floyd who is our Vice President. She was much like me when I first started and had no intention of entering the insurance business. Her college degree is in Retailing & Merchandising but after college she was having difficulty finding a job in that area. So she came to work at the agency on a fill-in basis and after two weeks approached me to see if she could apply for a full-time job at the agency. I discussed the job with her and told her to think about whether she was just after a job or a career, because I didn’t want her getting into the business just because I was. She indicated that she wanted to get into it as a career and the rest is history. A few years ago, we decided to undertake full automation for our agency and transition to going paperless. We initially hired Alisa Sutman as a consultant for the project since she was familiar with our management system and has since stayed on part-time. Kimberly Portman joined us in 2012 and concentrates on our commercial accounts, Melanie Hutchison joined in 2010 and serves primarily as our CSR, while Tammy Risley who has been with us since 1997 is also a CSR and bookkeeper. Q. What is it that appeals to you most about working in insurance? A. Developing relationships with clients and customers is what I find most appealing when it comes to working in insurance. I enjoy interacting with clients and finding out what their insurance needs are and then trying to match them with products, pricing and good service that offer them the protection solutions they need. What also excites me is that one morning I could be on a farm and in the afternoon I could be in a factory that makes drill bits. Or the next day I’m at a gas station and that afternoon I’m in a clothing store. I get to see and learn about all sorts of businesses from restaurants, tow-boats and

barges on the river, to companies that blow things up. So on the contrary, insurance is not your regular office job. Q. Can you discuss with us some of the challenges and achievements you’ve experienced during your career in insurance. A. Being adaptable to change and staying in step with the changes, particularly technological ones, has been a consistent challenge that I’ve experienced. When I was starting out we were rating policies and typing them out in our offices. Now everything is much more automated. Also along the lines of technology, we see the market being affected to where a lot more business (especially with personal lines), is taking place through online channels. The Internet has made it more convenient for consumers to purchase their insurance with online quoting. Information is also more accessible to them, whether it’s information on the insurance they buy, or the companies and agencies they buy from. In this regard, agencies have to lift their game when it comes to marketing within the online sphere. However I see this as a unique opportunity for independent agents, because although consumers may use online quoting for comparing prices, they’ll eventually want to talk to an agent to assist them with the buying process. I believe that agencies at any level need to embrace change, whether it’s technological or otherwise and adapt to it and avoid being left behind. We have gone through the purchase of two agencies and a merger and fortunately the transition with those processes have gone relatively seamless. To me those are achievements I’m proud of. I would also say that undergoing the transition to become automated and 99% paperless is another huge achievement for us. We as an agency have tried to stay abreast of industry changes and have endeavored to be proactive in our actions with these changes, rather than sitting on a log and waiting for things to happen or run past us. Q. Throughout your career you’ve been involved with IIAK in one capacity or another. Can you share with us how you first got involved with the association and the progress you’ve made with your membership? A. Royster & Lambert was already a member of the association when I joined the agency. And because I was about to become an agency owner, I wanted to soak up as much information as I could and learn all I can about the industry. This led to me attending my first annual convention with Mr. Lambert in 1973, who introduced me to

COVER Story

“

I wanted to be able to use my experience and bring representation from my community to help fellow members become better agents for their clients and customers, to be more knowledgeable and to help develop the training and education available to them. I also wanted to be a better advocate for an industry that has been good to me...

”

Being installed as IIAK Chair with fellow officers Michelle Love (Vice Chair) and John Funkhouser (Chair-Elect).

all his colleagues and friends in the business. In my second year of being in the business the YAC had just formed. So I attended the second ever YAC Annual Conference and didn’t know anybody! But for me it was about being a forward thinker and preparing for the career ahead of me. I was like a sponge in those initial years and wanted to absorb everything of what the insurance business was about. I ended up participating in the YAC as a district chairman but when it came time to think about going through the chairs as an officer, I decided to step back my involvement. At the time, Mr. Farmer was retiring, I had a young family and I was also involved with a number of community organizations. Despite cutting back my time on serving in the association, I still tried to attend the annual conventions and various meetings and maintain my relationships with the other members. Several years passed and I was asked to serve on the IIAK Board. I was in a better position to serve my time to the association and I also felt that it was a good way for me to reach out

to other agents and give back to the industry. I wanted to be able to use my experience and bring representation from my community to help fellow members become better agents for their clients and customers; to be more knowledgeable and to help develop the training and education available to them. I also wanted to be a better advocate for an industry that has been good to me whether it was by representing the association in Frankfort or in Washington D.C. I saw it as a way for me not only to learn further but to give back to the association and industry. Q. This leads us to ask, how have you benefited most from your membership in the Big “I”? A. The opportunity to interact and engage with fellow independent agents has been a great value to me. Either by attending our annual convention or one of our meetings and education seminars. Also, by having the chance to volunteer and become involved with the association. I’ve been able to get to know many agents who have been a great resource for me. Members need to take

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COVER Story

At his IIAK Chair installation with daughter Whitney and son Justin.

A plaque presented to Latta Insurance recognizing its long-time relationship with the Hanover Insurance Company.

the board for the Four Star Industrial Park. So we develop the infrastructure, the zonings and things like that to attract new companies and industries to relocate to the park. I also just finished serving on a task force that was formed to research the consolidation of our chamber of commerce and economic development board. We conducted a thorough investigation for about six months and I’m proud to say that both of these boards, after looking at our proposed models and findings, will be moving forward with the consolidation. Q. Lastly, from your experiences what does it take to succeed as an independent agent? A. As I said previously, we are experiencing major challenges from technology that have affected our personal lines market share and the way we do business. While the Big “I”s efforts through the Project CAP initiative is leading our industry’s response to this challenge, I think that as an independent agent, you need to be open and willing to adapt to change. Independent agents need to be willing to adapt to change by looking at their business philosophy, how they operate and manage their business and how they market to clients and customers. Another thing I see as important for independent agents is, they don’t have to go at it alone. Interact with other agents, become knowledgeable and informed about all aspects of the business and industry, learn all you can and reach out to fellow agents and your association. As they say, knowledge is power, sometimes you can’t absorb all that knowledge by yourself, but if you reach out to as many people as you can, you can gain from their experiences.

Brother, Tom Latta, joined and agency name changed to Royster, Lambert & Latta Insurance Agency Early 1980s

Latta joined Royster & Lambert Insurance Agency in Henderson 1967

1970

advantage of these opportunities because it goes a long way in helping your business and you grow as an independent agent. Another aspect of membership I’ve greatly benefited from is the legislative advocacy, both at the state and national levels. Our association serves as a unified voice for independent agents, they are there to bring our issues to the forefront, issues that affect how we do business, issues that affect our clients and customers. Q. In turn, how can we as an association better serve its members? A. We have so many benefits as an association and it can be difficult for members to know what’s available to them. I’ve always been an advocate of building relationships with people through personal contact and I think we need to do more of that outside of our events and meetings. Visiting with members, in their own areas, will give us a chance to gain candid feedback on how we are doing as an association. It also gives us the opportunity to find out what the needs of members are and let them know of the benefits they have as members. At the same time, I think this gives us a chance to let members know about the ways they can further their involvement with the association. Sometimes, some people just have to be asked or are reticent about their willingness to be involved in a volunteer capacity. Proactively engaging with our members on a more personal level is something I feel strongly about. Q. Giving back and being involved is obviously important to you. Outside of the industry, what other organizations or initiatives are you involved with in your local community? A. Aside from being on the board for Bank Trust Financial, I am also currently on

Purchased Atkins & Stanley Insurance Agency Early 1980s

1980 Became a partner in Royster & Lambert Insurance Agency 1972

1990

Merged with Bank Trust Financial to form Latta Insurance Services, Inc. 2010

2000

Original friend and business partner was bought out and agency changed named to Latta Insurance, Inc. Late 1980s

2010

2020 Became Chair of IIAK 2012

Events

Mahle, Morgan, Thomas and Rhinesmith Qualify for the Trusted Choice Big I Junior Championships

IIAK CFO/Blogger, TeeCee hanging out on the fourth hole.

Lexington junior golfer Matthew Mahle shot an even par 71 for the win in the final round of the Trusted Choice Big “I” Junior Championships State Qualifier held June 27 to 28 at The University Club of Kentucky’s Wildcat Golf Course. Mahle, who recently graduated from Lexington Catholic, and will be attending the College of Charleston in the Fall, beat Chandler Morgan of Lexington by two shots. Mahle opened with a 7-under par 64, which included a 5-under par 30 on the back nine. He is also a 2-time Kentucky All State player. Morgan, who graduated from Tates Creek High School and will play college golf at the University of Akron, had rounds of 66 and 71 for a two-day total of 137. Michael Sass, a sophomore-to-be at St. Xavier High School in Louisville, finished in third place with rounds of 72 and 70 for a two-day total of 142. Will Sallee, a senior at Lafayette High School in Lexington, finished in fourth place with rounds of 73 and 71 for a two-day total of 144. Stephen Stallings, Jr. of Louisville and Tyler Gray of Huntingburg, Indiana tied for fifth place at 146. In the girls division, first round leader Madison Thomas of Shelbyville never let off the gas as she posted a 1-over par 72 to shoot 145 and win medalist honors by 14 shots. The junior-to-be at Shelby County high School also won the KY Junior Masters Championships back in May. Ayla Rhinesmith, who will be a senior at Scott

YAC Chair Moe Dugger with TeeCee.

County High School this fall, had rounds of 77 and 82 for a two-day total of 159 to finish in second place. Summer Newsome, a senior-to-be at Henderson County High School in Henderson, fired an 8-over par 79 in the final round to shoot 159 and grab third place while Sacred Heart graduate Katie Page of Louisville, finished fourth place at 162. Page will be attending Southern Methodist University on a golf scholarship in the Fall. Mahle, Morgan on the boys side and Thomas and Rhinesmith in the girls division all qualified to advance to the 45th Trusted Choice Big “I” National Championships, which will be played from August 5 through 8 at the Country Club of North Carolina in Pinehurst, North Carolina.

Qualifiers (left to right): Ayla Rhinesmith, Madison Thomas, Matthew Mahle and Chandler Morgan

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ERRORS & Omissions

27 E&O Procedural Mistakes By Edgar H. Lion

Ask an agency principal about internal procedures and he or she inevitably will tell you, “Our procedures are proper; you won’t find any discrepancies in our operations.” Following a third-party audit of those procedures, however, most agency principals are horrified to learn just how many procedural mistakes are being made in their offices every day. These mistakes can lead to E&O claims and substantially impair an agency’s ability to defend against claims. Ask an agency principal about internal procedures and he or she inevitably will tell you, “Our procedures are proper; you won’t find any discrepancies in our operations.” Following a third-party audit of those procedures, however, most agency principals are horrified to learn just how many procedural mistakes are being made in their offices every day. These mistakes can lead to E&O claims and substantially impair an agency’s ability to defend against claims. This article reflects Alpine Risk Management Corporation’s findings during procedural reviews at more than 150 insurance agencies over the past 5 years. It presents a checklist of procedures that can eliminate breakdowns and substantially reduce an agency’s E&O exposure. 1. Have applications signed and dated. More than 70 percent of the agencies reviewed do not require the insured to sign and date applications for commercial insurance. The producers told our analysts they could not return the application to the insured and ask him or her to sign it. Basically what they were saying was, “We sold the policy, now let’s get it issued and go on to the next one.” From a defense point of view, it is extremely important to have the insured sign and date the application. If the insured has indicated that he or she has read the application by signing and dating it, the agency has a better defense if a claim arises regarding coverage that was not included at policy inception. 2. Peer review applications. A majority of agencies do not have procedures for double-checking an application that was completed by a producer or

CSR. Our analysts found many agencies in which the producer completes the application and sends it directly to the company without having it processed by the CSR. 3. Document coverage rejections. A majority of the agencies reviewed do not have evidence in their files when insureds reject offers of higher limits or other coverages. It is extremely important to document when broader coverage, higher limits, or increased values are rejected by having the insured sign and date an acknowledgement of the offering. Without this documentation, insureds frequently develop amnesia on the witness stand following an uninsured or underinsured loss. 4. Document UM and UIM coverage decisions. Uninsured motorists (UM) and underinsured motorists (UIM) limits usually are lower than auto liability limits. Most agencies keep no evidence that insureds have rejected higher limits. Also, some companies would not write higher limits, but there is usually no documentation that the insured has been so advised and has accepted the lower limits. 5. Document the source of property values. On many occasions our analysts found that the agencies have accepted the insured’s estimates for values on buildings or contents. Ninetyfive percent of the agencies studied fail to note in the insured’s file when the insured establishes the property values to be insured. 6. Inspect insured properties. More than 75 percent of the agencies reviewed have no established procedures for personally inspecting the property risks they insure. In fact, these agents told our analysts that they had never personally seen the properties. 7. Establish umbrella claims reporting procedures. In many agencies, there are no established procedures for notifying excess or umbrella insurers

ERRORS & Omissions

when a bodily injury claim is reported under the primary coverage. Even small BI claims can balloon beyond policy limits, and late-reporting claim denials are very possible when the umbrella or excess insurer has not been notified. For example, one of our analysts was involved as an expert witness in a case where the excess insurer was not notified and the primary insurer refused an offer to settle within the primary policy limits. The case went to trial and the award was for $345,000 above the primary limits. The excess insurer sued the agent for breach of contract. 8. Establish defined procedures for placing business through a surplus lines broker. Eighty percent of the agencies we reviewed do not have any standardized written or automated procedures for qualifying or placing business through a surplus lines broker. Also, the majority do not determine whether the surplus lines broker carries E&O insurance in limits at least equal to its own E&O limits. Furthermore, the overwhelming majority of the agencies had neither thoroughly examined nor analyzed the written contracts they had signed with surplus lines brokers. As a result, the agencies were unaware of hold harmless clauses and other restrictive wording in contracts. 9. Establish an internal quality control program. Eighty-five percent of the agencies reviewed do not have any type of a standardized internal quality control program. They have no internal audit procedures to make certain that all personnel were following established agency procedures. This is extremely important, especially when agencies are adding staff. Too often a new CSR will bring his or her own favorite way of doing something from a previous job. Soon, everyone is doing his or her own thing, and standardization and procedural consistency goes out the window. 10. Review company financial ratings and notify insureds of changes. Eighty-five percent of agencies reviewed have no established procedures for regularly

monitoring the financial ratings of the companies with whom they place business. Most agencies also do not have a standard procedure for notifying their insureds of changes in their insurers’ ratings. A strong argument can be made that agents have a duty to notify their insureds when their insurers’ ratings are lowered. 11. Execute contracts with independent contractors. Many agencies classify producers as independent contractors rather than employees. However, there often is no written contract between the agency and these producers, and when there is a written contract the arrangement probably would not withstand a close inspection by the IRS without a clear explanation of the producer’s duties. In other words, the existing arrangements often do not comply with the generally accepted common law factors of independent contractors as confirmed by the U.S. Supreme Court in Nationwide Insurance v Darden or the IRS 20 Rule test for establishing employment relationship. 12. Include a “procedural observance” clause in the contract. The contract you use with producers you consider to be independent contractors should contain a paragraph covering “procedural observance” requiring the independent contractors to follow the agency’s procedures. The majority of audited agencies have at least some producers who do not follow established agency procedures. These “loose cannons” substantially increase E&O risks. 13. Establish agency automation procedures. Ninety-five percent of the agencies that are fully automated have no written procedures to assure compliance with federal and state laws regarding the admissibility of their automated data and no standard procedures to audit the accuracy of the data entered into their systems. 14. Eliminate needless duplication. During recent internal reviews of agencies that

ERRORS & Omissions

were on transactional filing, CSRs told analysts that some producers do not like or accept the procedure of transactional filing and require the CSRs to photocopy everything they place into the T-file so the producers could keep it in their own files as well. This practice can lead to problems beyond the obvious waste of time. For example, these producers may file information in their own files that does not get into the T-file. In the event of an E&O claim, where all information concerning the insured is subpoenaed as evidence, the plaintiff’s case is immediately strengthened if there is a discrepancy between the two files. 15. Execute brokering contracts. Our analysts found that many of the agencies reviewed place business for other agents and that virtually none of them had written contracts with the other agents. As a result, the placing agent has no evidence of the originating agent’s errors and omissions policy, nor is there a hold harmless agreement between them to protect the placing agent against an error by the originating agent. 16. Document cellular phone conversations. While most agencies have a procedure for recording phone messages in the office, more than 90 percent have no procedures for keeping records on cellular phone conversations. 17. Develop E&O claims reporting guidelines. The majority of agencies reviewed have no defined written or automated procedures for reporting a claim to their E&O insurers, and most do not have established procedures for follow-up on the status of the incident or claim if it is reported. 18. Provide access to company binding authorities. Among those agencies that have automated systems, more than 90 percent do not have their companies’ binding authorities entered into the system for all personnel to access before binding a risk. 19. Retain fax transmission verifications. An

overwhelming majority of the agencies neither attach fax transmission verification sheets to original documents nor maintain records of fax transmissions. 20. Secure claims drafts. In the majority of agencies that have claims draft authority, the unused claims drafts are stored in unlocked desk drawers. 21. Promote good interoffice communication. In many of the larger agencies, there is a complete lack of communication among departments. In one particular agency, our analyst found that producers in different units actually compete against each other with different insurers on the same accounts, and CSRs in many smaller agencies voiced similar complaints. 22. Standardize your agent/broker of record letter. Many agencies do not have a standardized agent/broker of record letter, and CSRs are drafting their own. The majority of these letters do not contain a clause wherein the insured holds the new agent of record harmless for any errors or omissions on the part of the former agent/broker. Such a provision can prevent major E&O headaches. 23. Establish a confidentiality policy. More than 90 percent of the agencies reviewed have no established procedure or policy concerning the confidentiality of a customer’s file. In many agencies, for example, someone calling to claim they or their client had been involved in an accident with the agent’s insured would be provided with the insured’s policy information. This is a disclosure of privileged information! Under no circumstances should any information be given to another party without the prior express written permission from the insured. 24. Teach producers about new product offerings. Failure to teach producers about new types of coverage results in both lost sales opportunities and E&O claims. For example, with the exponential increase in claims against employers, agents should be aggressively marketing employment practices liability insurance (EPLI) to all

ERRORS & Omissions

commercial insureds. However, our analysts found that more than 85 percent of the agents interviewed are not selling EPLI or offering it to their commercial insureds. Their explanation for this omission: “We don’t sell it because we don’t know anything about the coverage.” 25. Don’t “baby-sit.” Many agents will call their direct-bill insureds following receipt

of a notice to cancel for nonpayment and remind them to pay the premium before the cancellation takes effect. This practice, referred to as “baby-sitting,” is acceptable if you follow up with all insureds who receive a cancellation notice. This is an expensive practice, and it presents a potential E&O problem if the agency misses calling a customer and there is an uninsured loss. By adopting this practice, the agency develops a “special relationship” with the insured and can be held to a higher standard of care by the courts. To safely cease this practice once it is established, notify all insureds that you will no longer be following up on cancellation notices for nonpayment of premium. 26. Create an employee handbook. Seventy percent of the agencies reviewed do not have an employee handbook outlining their personnel practices. When the analysts asked why, they were told, “We’re a small agency and we work like a family. All our employees know what our rules are.” Not having standard rules in writing and applying them fairly to all staff increases exposure to employee claims. 27. Prepare written job descriptions. More than 80 percent of all agencies did not have written job descriptions outlining duties and responsibilities for each workstation or job position. This, too, increases exposure to employee claims. Conclusion Many of these recommended procedures are simply good management practices. Nevertheless, it is astounding how many agencies are remiss in many of the areas. Using this list as a compliance checklist and eliminating problem areas will go far in reducing your firm’s errors and omissions liability exposure. Edgar H. Lion, BS, MS, JD is President and C.E.O. of Alpine Risk Management Corporation, LLC. He can be contacted by phone at (510) 653-5117 or via email at alpinerisk@earthlink.net. Copyright 2000 by Edgar H. Lion. Used with permission.

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PEOPLE In The News

Poyner Becomes the First to Receive CLP

in the entire U.S.A. Poyner is a commercial

Designation

lines manager for IIAK member agency

Angelia Poyner, CIC, KACSR, CLP has become the first recipient of the Certified Leadership Professional (CLP) designation

Van Zandt, Emrich & Cary in Louisville. The CLP designation is a designation of the International Association of Insurance Professionals. It consists of four modules that teach leadership through strategic managing, business mentoring and motivating. All together these modules consist of 52 learning hours. In addition, Poyner competed in and won the Confidence While Communicating Speak-off at the Region IV Conference of IAIP. It was held on April 12 in Ypsilanti, Michigan. She went on to represent the region at the IAIP national convention on June 7 in Orlando, Florida.

Angelia Poyner

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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CY CMY

1046 Louisville, KY

13265 O’Bannon Station Way Louisville, KY 40223

JULY

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2400 Waterfront Plaza · 325 West Main Street · Louisville, Kentucky 40202 Telephone 502.583.8361 · 800.292.6597 · Fax 502.584.6131 · www.boltonmga.com

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Silver Acuity Amerisafe, Inc. KEMI Kentucky Na onal Insurance Co. Keystone Insurers Group State Auto Insurance Co. Travelers Bronze Anthem Auto-Owners Insurance Co. Bailey Special Risks, Inc.

1046 Louisville, KY

13265 O’Bannon Station Way Louisville, KY 40223

JULY

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The Brown Hotel

Louisville, KY

AUGUST 2013