POLICY MAGAZINE - Spring 2024

Shania

Vaughn

From the Chairman

Mark Your Calendars for Upcoming Workshops, Conferences

I can’t believe I’m saying 2024, as it seems that 2023 just started!

I hope everyone has gotten off to a great start to the year. As usual, the Big I Oklahoma is busy working for its members. Sara Bradshaw Ray recently put together a Perpetuation Workshop for our members, which featured experts speaking on financial funding, perpetuation planning and valuations, and legal aspects of agency transition. This was a big HIT! The responses from our participants have been great and the workshop seemed to be very helpful for a number of our members. For those who did participate, THANK YOU. I hope and believe it was worthwhile.

sharing their “best practices” within their associations. Some of the best ideas are shared ideas, not necessarily new ideas. Another aspect of the conference that was very educational included breaking up into smaller groups and prioritizing the current services provided by our Big I association from a national level. The goal is to focus on those services we do very well and are valuable to our members. Yes, we provide a number of different services to our members, but volume of services doesn’t always equate to value being provided to our members. This is a work in progress but something that Big I National is definitely focusing on going forward.

Some of the best ideas are shared ideas, not necessarily new ideas.

Future workshops will continue to be offered to our members, including “EmpowerHER: Celebrating Women, Inspiring Excellence,” set for March 8 at Cole’s Garden. We encourage all interested to sign up for these great workshops. Please contact the Big I Oklahoma office if you have questions or for more information.

I was able to recently attend the Big I Winter Conference in Puerto Rico, along with Denise Johnson, Chris Floyd and Avery Moore representing Oklahoma. Yes, the weather was MUCH better there than here, but we did actually get some work done as well. A highlight for me included the discussion of various states

Lastly, from a national perspective, please mark your calendars for April 10-12 for the Big I Legislative Conference in Washington, D.C. For those who have never attended, I highly encourage it. We are fortunate enough to be able to meet face to face with most, if not all, of our Oklahoma delegates in D.C. As we all know, politics can be a major factor in our industry. It is worth the time and the money to keep our industry moving in the right direction.

From a local level, we are gearing up for our Annual Conference, taking place in Oklahoma City on May 7-8 at the Oklahoma City Convention Center. Shania Slavick and the Big I Oklahoma

team have put in a ton of time and work on the conference. A golf tournament, casino night, OK-PAC donor breakfast reception and the annual partner showcase are just a few of the highlights of the conference. We hope everyone will find some time to come to the conference. You will not want to miss it. I wish everyone a great 2024 and look forward to seeing you in Oklahoma City at the annual conference in May!

Vaughn Graham Jr., CIC Chairman

We have been committed to providing specialty commercial insurance for the construction industry for more than 75 years. Our expertise and relationshipdriven approach has allowed us to offer solutions which address your unique needs, despite economic instability.

From the President/CEO

Denise Johnson, CISR, CIC BIGiOK President/Chief Executive Officer

BIGiOK Continuing to Work Diligently to Make Our Agencies Better

How can we be this far into 2024? There’s so much we’ve already done… as always, BIGIOK is finding ways to make your agency better!

In January we began our FIRST AgencyWise event to discuss the Hard Market. Our own Sara Bradshaw Ray has set up AgencyWise events each month to discuss the needs of our members. We discuss everything from the current insurance markets to technology to perpetuation. For more information (or to hear past discussions), feel free to access it on our website at: BIGiOK.com/ AgencyWISE.

women! Can I just say SUCCESS?! Many thanks to Sara Bradshaw Ray and our Partners who made this powerful event happen. A fun fact to know is that 60% of agency staff is women yet only one-third of agency owners are women. We want to work with women to adjust that gap –EmpowerHER was our start!

Our Annual Conference, “Unleashing Potential,” is coming up on May 7-8, and it’s going to be incredible this year. Without a doubt, we have the best speakers that we’ve ever had in history. We are providing breakout sessions to allow each of our members to get more

A fun fact to know is that 60% of agency staff is women yet only one-third of agency owners are women. We want to work with women to adjust that gap –EmpowerHER was our start!

We also had a premier event in January to discuss Agency Perpetuation – something that we’ve never done before and that we feel is needed now more than ever! The course had two parts – one for current agency owners considering what to do in the future, the second for those looking for ways to purchase. The course itself included special speakers regarding valuation, legal matters and financing. You will not find a better group of speakers more qualified for these issues. If you were unable to attend, you can access the entire course on ABEN!

Another exciting event that we held in 2024 was our EmpowerHER Conference – a conference where women inspire

in-depth information. Shania Slavick, our director of Member Services, has moved heaven and earth to make this a great event. It’s not too late to register! bigiok.com/events

I hope you realize by now that BIGiOK works diligently to make our agencies better – we provide events, education, products, and programs that are specifically targeted for independent agents – our members!

Always feel free to contact me at denise.johnson@bigiok.com – it’s a privilege to be part of this industry!

WHAT DOES RELIABILITY MEAN TO YOU?

From the Young Agents Committee

Krista Kautz Young Agents Committee Chairman

Navigating Life’s Balance: A Personal Message on Self-Care

With the current market and economy, you may find that the juggling act of life can often leave you feeling exhausted. Achieving work-life balance is undeniably challenging. Here’s a question I’d like you to ask yourself: If you can’t take care of yourself, how are you going to take care of others, such as your family members, coworkers, clients, etc.?

Fresh from a rejuvenating conference focused on self-improvement, I recently took personal time off to recharge and ground myself. While many are in the midst of the fading New Year’s resolutions, I felt compelled to share

consistently? Consider incorporating healthier food choices into your diet and engage in some form of physical activity.

Emotional Health: Delve into your inner world. Monitor your self-talk and acknowledge your achievements. Granting yourself grace, especially during challenging times, is a crucial habit.

Spiritual Health: Take moments to appreciate the beauty around you. Whether it’s through worship of choice or personal reflection, nurturing your inner self is vital for overall well-being.

Relational Health: Time is a precious currency. Invest it wisely in meaningful

In the whirlwind of life, it’s easy to forget self-care. Remember, just as you check in on others, take the time to check in on yourself.

a few insights that could reignite your focus on personal well-being and ultimately assist you in the longer term.

Amidst the hustle and bustle, it’s essential to pause and assess our own state of being. When the daily grind starts to feel like mere routine, it’s time for a self-check. A tool that has proven invaluable for me is the “Alignment Wheel.”

The Alignment Wheel revolves around five key aspects: Physical, Emotional, Spiritual, Relational and Financial. According to speaker Brooke Hemingway, any misalignment in these areas can contribute to dissatisfaction, even in a career we love.

Physical Health: Regularly evaluate your habits. Are you taking your supplements and medications

relationships rather than succumbing to distractions. I’ve made it my mission to prioritize quality time with loved ones over mindless scrolling.

Financial Health: Your financial well-being is intricately connected to the preceding factors. Evaluate your spending habits, ensuring they align with your goals and values. Overspending or indulging in unhealthy coping mechanisms may indicate a need for reassessment.

In the whirlwind of life, it’s easy to forget self-care. Remember, just as you check in on others, take the time to check in on yourself. I encourage you to recognize when you’re merely going through the motions and do what works for you to regain balance. Most importantly, remember that you are not alone.

From the State National Director

Uniting Voices: Anticipating the Big “I” Legislative Conference 2024

The countdown has begun for one of the most significant events in the insurance industry – the Big “I” Legislative Conference 2024, scheduled to take place April 10-12 in Washington, D.C. The annual conference is essential to for industry professionals, policymakers and stakeholders alike. As the insurance landscape continues to evolve amidst a backdrop of economic shifts, technological advancements and regulatory changes, the conference serves as a crucial platform for dialogue, collaboration and advocacy.

a wide array of topics, reflecting the diverse challenges and opportunities facing the independent insurance professionals and their business. Key topics to be addressed include:

1. Maintain

Small Business Tax Fairness & Incentivize Mitigation Through Tax Credits

The Big “I” supports legislation, which would make permanent the 20% small business deduction (Section 199A) passed as part of the 2017 Tax Cuts & Jobs Act. The deduction, which is scheduled to expire at

In addition to the substantive discussions and sessions, the Big “I” Legislative Conference offers ample networking opportunities for attendees to connect with industry peers, policymakers and thought leaders.

A Convergence of Minds

At the heart of the Big “I” Legislative Conference is the opportunity for industry leaders and policymakers to come together and address the most pressing issues facing the insurance sector. From discussions on regulatory reforms to insights into emerging trends, the conference provides a forum for exchanging ideas and perspectives. By fostering dialogue between industry veterans and policymakers, the event aims to shape the future direction of the insurance landscape.

Key Themes and Topics

The conference agenda is set to cover

the end of 2025, is heavily relied upon by many Big “I” members and their clients to expand their small businesses, hire more employees and better serve their communities. Pass-through entities have factored this deduction into their operations so its expiration would result in a tax increase on many small businesses. Such an increase would create an unlevel playing field and put pass-throughs at a disadvantage to those businesses filing taxes at the corporate rate.

2. Ensure State Implementation of Federal Data Privacy Standards Congress established data privacy

standards for insurance agencies, insurers and other financial institutions with the passage of the Gramm-Leach-Bliley Act in 1999. That statute requires financial entities to disclose information-sharing policies and inform consumers of their ability to stop the sharing of protected information with certain third parties. GLBA adopted a framework based upon functional regulation that appropriately empowered state insurance commissioners to implement and enforce these privacy protections for the insurance market. Congress is now considering significant revisions to these requirements, and it is critically important to leave implementation and enforcement of federal privacy standards in our industry to state insurance regulators and not cede authority to federal regulators. Additionally, federal privacy legislation must not include a private right of action, which would allow trial lawyers and judges to become de facto regulators and enforce the law through litigation. Finally,

Chris Floyd, CIC, CRM IIABA National Director

any new mandates must be clear, reasonable, and workable as well as recognize the differences between large and small businesses.

3. Extend & Reform the National Flood Insurance Program (NFIP)

The Big “I” supports a long-term reauthorization of a modernized NFIP that would increase take-up rates, both in the NFIP and the private market. Specifically, the Big “I” supports H.R. 900, which would allow for private flood insurance to satisfy continuous coverage requirements and ensures that if consumers leave the NFIP for the private market and later must return, they can do so without penalty. The Big “I” also supports allowing refunds for unearned premiums for the midterm cancelation of NFIP policies if a consumer elects to purchase a policy from the private flood insurance market. The Big “I” opposes any policies that would harm the WriteYour-Own (WYO) Program (including WYO reimbursement reductions) and undercut the valuable and trusted role that independent agents play in the sale and servicing of flood insurance. Finally, with Risk Rating 2.0 now implemented, it is essential for FEMA to clearly communicate with agents so they can explain rate setting and changes in premiums to their customers.

4. Oppose Federal Trade Commission (FTC) Non-Compete Proposal

The FTC has proposed a national prohibition on the use of most noncompete agreements. Although this proposal is targeted at employment agreements that block workers from securing employment or starting a competing business and is not intended to apply to other restrictive covenants utilized by many insurance agencies, the FTC’s actions are concerning. This sweeping proposal is unprecedented and would preempt the laws of nearly every state. The FTC is asserting it has the power to issue this and similar rules regulating competition, but only Congress can enact such significant changes in the law and

From the State National Director

never empowered the FTC in this manner. The Big “I” urges Congress to use its oversight authority to closely examine FTC’s proposed rulemaking and guard against unauthorized regulatory overreach.

Networking and Collaboration:

In addition to the substantive discussions and sessions, the Big “I” Legislative Conference offers ample networking opportunities for attendees to connect with industry peers, policymakers and thought leaders. Whether through formal networking events, breakout sessions or informal gatherings, forging connections and building relationships is an integral aspect of the conference experience. These connections often extend beyond the conference walls, fostering ongoing collaboration and partnerships within the industry.

Looking Ahead:

As anticipation builds for the Big “I” Legislative Conference, industry professionals are gearing up for an event that promises to inform, inspire and shape the future of the insurance landscape. With a diverse lineup of speakers, thought-provoking discussions, and unparalleled networking opportunities, the conference serves as a catalyst for driving positive change within the industry. As attendees converge on the nation’s Capitol, they do so with a shared commitment to advancing the interests of the insurance industry and building a brighter future for all stakeholders.

For more details go to independentagent.com/Events/ LegislativeConference.

OKPac is BIGiOK’s state political action committee. It provides financial support for state elected officials who will provide support for or have shown support of issues affecting the insurance industry and to those who share our business philosophies. Only individuals or partnerships can make contributions to OKPac. Under Oklahoma law, OKPac can accept no contributions from corporations.

Debbie Burton

Jerrad Coots

Vicky Courtney

Vaughn Graham Jr.

Guy Griggs

Denise Johnson

Krista Kautz

Avery Moore

Steve & Sara Bradshaw Ray

Kathy Risser

InsurPac is BIGiOK’s national political action committee. It pools the voluntary and individual financial contributions of thousands of independent insurance agents to help elect candidates to Congress who share BIGiOK’s business philosophies. InsurPac is the largest property-casualty insurance industry PAC in the country.

Travis Brown

Debbie Burton

Jenny Dotter

Denise Johnson T.J. Riley

Michael Ross

From Strategic Initiatives

The Crucial Role of Strategic Planning for Agencies Today

In the fast-paced world of insurance, agency owners often find themselves immersed in the day-to-day operations of their business, leaving little time to strategize for the future. However, the importance of strategic planning cannot be overstated, as it serves as the compass guiding agencies toward long-term success.

In this article, we’ll delve into why strategic planning is imperative for agency leaders and introduce an innovative solution tailored to your busy schedules – the “Agency Plan in a Box.”

The Strategic Imperative

Running an insurance agency demands a delicate balance between serving clients, managing teams and keeping up with industry trends. Yet, without a well-defined strategy, agencies risk becoming reactive rather than proactive, missing out on growth opportunities and facing unforeseen challenges. Strategic planning empowers agency leaders to anticipate market shifts, identify strengths and weaknesses, and set a clear direction for sustainable growth.

Mission, Vision and Values: The Foundation of Success

One of the key elements of strategic planning is the formulation or refinement of organizational statements like Mission, Vision and Values. These statements are the bedrock upon which the agency’s culture, purpose and identity are built. Articulating a compelling mission, envisioning future success and establishing core values align the team and resonate with clients, fostering trust and loyalty.

Assessing Strengths and Crafting a Future Plan

Strategic planning goes beyond lofty statements; it involves a comprehensive analysis of individual and agency strengths. Identifying these strengths allows agency owners to capitalize on what sets them apart in a competitive market. Simultaneously, it sheds light on areas for improvement, paving the way for targeted initiatives that enhance overall agency performance. Crafting a plan becomes a strategic exercise that aligns with the agency's strengths and addresses areas of development.

INTRODUCING “Agency Plan in a Box”!

The Solution

Recognizing the time constraints faced by agency owners and key leaders, “Agency Plan in a Box” – brought to our membership through BIGiOK Consulting – emerges as a tailored solution to facilitate strategic planning efficiently. Scheduled for June 12, this program offers a condensed yet comprehensive

six-hour workshop, filed to provide six Continuing Education credits for participants licensed in Oklahoma. The workshop centers on creating or refining crucial organizational statements and delving into strengths to lay the groundwork for future success.

A Workshop Tailored to Agency Needs

“Agency Plan in a Box”participants will benefit from expert guidance and receive valuable resources and a comprehensive guide to navigate the planning process. The workshop’s focus extends beyond theory, offering practical insights that agency leaders can immediately apply to their businesses. The condensed format ensures that participants can invest time strategically without compromising their day-to-day responsibilities.

Follow-Up Coaching for Sustained Success

Recognizing that strategic plans require ongoing attention, the program includes three follow-up coaching sessions with expert facilitators. These sessions aim to keep participants accountable and ensure their strategic plans remain on track. The personalized

Sara Bradshaw Ray, CIC, CKC BIGiOK

Senior Vice President of Strategic Initiatives

From Strategic Initiatives

coaching enhances the program’s effectiveness, providing a support system as agency owners implement their strategies in the dynamic insurance landscape.

BIGiOK’s “Agency Plan in a Box” programming addresses a critical gap in the industry, offering a time-efficient and impactful solution for insurance agency owners. Strategic planning is not a luxury but a necessity for those who aspire to thrive in an ever-evolving market. By investing in their business’s future success, agency owners can secure a competitive edge and navigate the complexities of the insurance landscape

with confidence. Prepare to transform your agency’s trajectory with “Agency Plan in a Box “– the compass for a strategic journey toward lasting success.

The time to secure the future success of your agency is now. Embrace the transformative power of strategic planning with “Agency Plan in a Box.” This groundbreaking program is not just a workshop; it's your compass for navigating the complexities of our dynamic industry.

Plan now to join us in June 2024 to totally redefine your agency’s trajectory. Craft or refine your Mission, Vision and Values, assess your strengths, and design a plan that aligns with your unique identity, then stay accountable to your plan. This isn’t a one-time event – it’s a strategic investment in your agency’s growth.

Don’t let the demands of the present hinder your agency’s potential for lasting success. “Agency Plan in a Box” can help you unlock a clear roadmap to navigate

the challenges and capitalize on the opportunities. Your business deserves a strategic edge – seize it now! But space is limited. This is designed for a small, intimate cohort, so grab a spot while they’re still available.

Use this QR code or visit our website to secure your spot and propel your agency toward a future of unparalleled success. Questions? Let me know how I can help you, Sara@BIGiOK.com

Register HERE

Education at BIGiOK

MARCH

March 14 - AgencyWise Reminder Notification: Women’s History Month featuring Lea AnnHawk: She Survived and So Can YOU! ~ 10:30 -11:30 a.m.

March 15 - Episode 6: Free Friday Ethics Webinar ~ 11 a.m. - noon

March 19 - CISR Commercial Casualty 1 (HYBRID) ~ 8 a.m. - 4:15 p.m.

March 20 - CIC Commercial Multiline (HYBRID) ~ 8 a.m. - 5 p.m.

March 27 - IA-MBA Program ~ noon

APRIL

April 11 - AgencyWise Reminder Notification: Understanding the Value of Your Agency ~ 10:30 - 11:30 a.m.

April 19 - Episode 6: Free Friday Ethics Webinar ~ 11 a.m. - noon

You are...

MAY

May 7 - 2024 BIGiOK Annual Conference ~ 8 a.m. - 7 p.m.

May 9 - AgencyWise Reminder Notification: Staff Stratification: How to Extend Your Bench Through Alternative Resources ~ 10:30 -11:30 a.m.

May 17 - Episode 6: Free Friday Ethics Webinar ~ 11 a.m. - noon

May 21 - KOLBE Strengths Workshop (2 Hours of CE Approved) ~ 1:30 - 3:30 p.m.

May 22 - CISR Insuring Personal Residential Property Webinar (ONLINE) ~ 8 a.m. - 4:15 p.m.

JUNE

June 4 - CISR Agency Operations (HYBRID) ~ 8 a.m. - 4:15 p.m.

More information at BIGiOK.com/education

Promote the value you bring to your local community.

Access our new campaign that puts your unique value in the forefront.

Provide your current and prospective clients with a snapshot of the added benefits of working with a Trusted Choice® Independent Insurance agency.

Customize these materials today! cobrand.iiaba.net/made-for-you/i-am

About BIGiOK

BIGiOK LEADERSHIP

Chairman

Vaughn Graham Jr., CIC

Rich & Cartmill Inc.

Oklahoma City

Secretary

Scott Dull

Omega Insurance Agency

Choctaw

Director at Large

Guy Griggs

INSURICA

Tulsa

Chairman Elect

Vicky Courtney

Ricketts Fennell & Assoc.

Tulsa

Treasurer

Kathy Reeser

VIP Insurance

Edmond

State Director

Chris S. Floyd, CRM, CIC

Brown & Brown Insurance

Pryor

Director at Large

Rob Piearcy

Arnett Insurance Agency

Durant

Immediate Past Chairman

Jerrad Van Coots

Burrows & Burrows Agency

Claremore

Director at Large

Trent Willis

Cornerstone Insurance Group

Oklahoma City

Company Liaison

Jennifer Dotter

One General Agency

Oklahoma City

Company Liaison

Brad Owens

CompSource Mutual Oklahoma City

BIGiOK MISSION STATEMENT

YAC Chairman

Krista Kautz

Ed Berrong Insurance Agency Edmond

As the new voice of the independent agents of Oklahoma, BIGiOK promotes and provides education, legislative advocacy, innovative concepts and practical solutions, and community and career opportunities.

ABOUT BIGiOK

BIGiOK is the largest insurance trade association in Oklahoma. With more than 475 independent insurance agencies, we represent nearly 3,000 independent insurance agents and their employees and more than 100 company members. BIGiOK member agencies range in size from one person to some of the largest agencies in the region.

Founded in 1906 as the Oklahoma Association of Local Fire Insurance Agents, BIGiOK is a result of the consolidation of the Independent Insurance Agents of Oklahoma, Inc. (IIAO) and the Oklahoma Association of Professional Insurance Agents (OAPIA) on Jan. 1, 1992.

BIGiOK policy is set by a board of directors elected at the annual conference. Policy is implemented by a professional

staff located in Oklahoma City. BIGiOK’s mission is carried out through a variety of programs designed to enhance the business of independent insurance agencies.

BIGiOK is an active advocate on behalf of independent agents before legislative, regulatory and judicial groups in Oklahoma and at the federal level.

BIGiOK is affiliated at the national level with the Independent Insurance Agents and Brokers of America with offices in Alexandria, Virginia, and Washington, D.C.

BIGiOK is an excellent source of information through POLICY magazine, published quarterly, and the Oklahoma Agent, a monthly newsletter of time-sensitive material for its members.

May 7 & 8, 2024 Watch this

Gear up for the 2024 BIGiOK Conference: "Unleashing Potential: Embracing Success!" at the new Oklahoma City Convention Center. From Golf Tournament to Casino Night, OKPac Donor Breakfast, and Annual Partner Showcase, it's an extraordinary experience. Power-packed sessions covering tech, ChatGBT, AI, staffing strategies, recruiting, and sales mastery. Captivating speakers like Kelly MacDonald, Andrew Davis, Steve Anderson, Dustin Wambsgans, Glen Mulready, Todd Jackson, and Nolan Duda promise electrifying insights.

REGISTER NOW AT BIGiOK.com/Unleash

Dustin Wambsgans

Kelly McDonald Keynote

Andrew Davis

Steve Anderson

Nolan Duda Commissioner Glen Mulready

Todd Jackson

From the State Insurance Commissioner

Climbing Insurance Premiums: Understanding the Evolving Insurance Landscape

Throughout the country, consumers are experiencing higher premiums in all lines of insurance that are hitting the consumer's pocketbooks quite hard. I get phone calls, emails and on occasion the harsh social media comment that I am doing nothing to prevent higher premiums in Oklahoma. I thought sharing some key information could help explain this current situation.

The Oklahoma Insurance Department holds a vital position in the oversight of insurer rate filings, particularly in the Property & Casualty lines of insurance. As consumers navigate the complex world of insurance premiums, it is crucial to shed light on our rate review process, its limitations and the importance of empowering consumers in today’s evolving insurance landscape.

We can first look at the transparency and regulatory framework. Our Rate and Form Division, operating under its statutory authority, is responsible for thoroughly reviewing insurer rate filings. The provisions outlined in Title 36 of the Oklahoma Statutes define competitive and noncompetitive markets, establish rate-making standards, and lay out filing requirements. Currently, Oklahoma operates within a competitive market, which mandates insurers to submit rates and supplementary rating information.

Next is the evaluation of rate changes. Our primary focus is assessing whether insurers’ rate changes align with their actuarial indications. In cases where deviations arise, we seek clarification from the companies to understand the rationale behind these alterations. In a competitive market, rates can only be disapproved if they are deemed to be

inadequate or unfairly discriminatory, not based on being excessively high.

You may be thinking that the real problem may be the limited authority we have over the rates in Oklahoma. The only way we can expand that authority over rates is if a market is declared to be “noncompetitive” through a public hearing process that requires compelling evidence. Given the multitude of insurers and rate variations in markets like Homeowners (HO), where 120 insurers are active, and Private Passenger Auto (PPA), 125 active insurers, declaring one of these as noncompetitive would not be an option.

For Oklahoma consumers facing unexpectedly high renewal premiums, the OID advises shopping around for alternative coverage options. Consumers can obtain quotes from different carriers by reaching out to other insurers or independent agents. However, it is crucial to compare policies accurately by ensuring the same coverages, limits and other factors are considered. This approach takes advantage of the rate variation in the market and can potentially (and often does) result in cost savings.

In an evolving insurance landscape, it is crucial to foster consumer empowerment and encourage a competitive free market that benefits all stakeholders. Despite limitations, OID plays a critical role in ensuring rates are not inadequate or unfairly discriminatory. By actively exploring alternative insurance options, consumers can exercise their right to make informed choices and potentially reduce their insurance costs.

Glen Mulready State Insurance Commissioner

Purchasing E&O Coverage

Should an Agency Purchase E&O Coverage From One of Its Carriers?

By Nancy Germond

Agencies have many options available for the placement of their E&O coverage. For some agencies, one of the options is purchasing E&O coverage directly from one of their appointed carriers. However, this approach can be a doubleedged sword. This article, which first appeared in E&O Guardian, covers some of the inherent conflicts of interest in this decision.

Proper placement of the agency’s errors & omissions coverage is of utmost importance. Protection provided by an E&O policy can be the difference

between the agency’s continued success and financial ruin.

Errors and omissions coverage is of utmost importance

Agencies have many options available for the placement of their E&O coverage. For some agencies, one of the options is purchasing E&O coverage directly from one of their appointed carriers. In fact, these carriers constantly solicit their appointed agents, enticing them with exclusive perks for placing their E&O coverage such as points toward carrier incentive plans, reductions in deductibles for E&O claims and applying the E&O premiums towards overall production.

On the surface, this seems like a good deal, especially since the agency already has a relationship with the appointed carrier. The agency trusts them to protect its customers, they are highly rated and they a have a great reputation for paying claims. But serving the agency’s clients and defending the agency from E&O claims are two separate and distinct relationships. The line between what is best for the agency and best for the customer becomes blurred; the two aren’t always compatible. Further, what is best for the carrier and best for the agency may not be the same either. It’s seldom spoken of when this happens, but it’s always lurking in the background, and it’s called “conflict of interest.”

Before placing E&O coverage with any carrier the agency is appointed to represent, there are several factors that agent principals must consider.

Agent vs. Direct

Big “I” considers promoting the value insurance agents bring to their customers as part of its mission. Independent agents know the value they add to customers, so why would the agency not want the benefit of a trained professional liability agent working on its behalf?

Professional liability can be tricky, and just because an agent knows the coverage needs of their customers doesn’t necessarily translate into knowing the nuances of agents’ E&O coverage. Big “I” state association personnel whose only focus is professional liability work closely with the agency to service its E&O needs. Yes, even the best agency benefits from the professional service and knowledge offered by a dedicated E&O professional.

Damaging Carrier Relationships

The intrinsic value of agencies is their book of business and carrier appointments. A disagreement about the handling of an E&O claim has the potential to severely strain that relationship and may hamper any long-

term representation. If the agency is embroiled in an E&O claim involving the same carrier, maybe even forcing the carrier to fight for and against its agent, these discussions and outcomes can harm relationships.

Sharing Application Data

E&O applications necessarily contain large amounts of sensitive and proprietary information necessary for underwriting. This data includes premiums by line of business, revenue, staff count, appointed carriers and descriptions of office procedures. In addition to knowing all the carriers with which the agency holds appointments, the E&O carrier will also know the amount of business with each carrier.

Will the E&O department keep this information confidential; or is it shared with other departments? The hope is that the information is kept confidential, but there may be no guarantees. It is easy to imagine the carrier’s field underwriter hounding the agency for more business because of this inside information.

Increasing Carrier Claims Against Agents

Carriers analyze E&O claims data regularly to reveal claims trends. One very clear trend that began nearly two decades ago is the steady increase in carriers suing agents for mistakes that result in damages to the carrier. Defending an agent against itself creates a clear conflict of interest for the carrier.

Conflict of Interest

Once the carrier decides the agent has created an E&O incident, all the years of a pleasant and profitable business relationship nay be quickly forgotten. The carrier only has one purpose in mind – forcing the agent to pay the claim. So, if the E&O is with that same carrier, there is an immediate conflict of interest because the E&O contract places on the carrier the sole duty of defending the agency. But if the carrier is also trying to lay blame on the agency; how can it, in good faith, also defend the agency? It’s rather mind-bending to think about, but what kind of defense can the agency expect when the carrier is defending the agency against itself?

Protecting the Agency’s E&O Claims History

Many potential E&O incidents involve “he said, she said” narratives of the relevant incidents. What happens when a customer written by the same carrier is the subject of a potential E&O incident? Even if the agency didn’t make a mistake, the customer may misrepresent the facts in an attempt to secure payment from the E&O policy. The E&O carrier must make the decision to defend the agent or pay the retail customer’s underlying claim to appease them. Maybe the carrier just decides to pay the loss as an E&O claim under the agency’s account because it is less expensive than defending it. There are two problems to this approach for the agency: 1) the agency’s E&O policy has a deductible, and 2) the E&O carrier can use the claim to justify future rate increases or simply cancel the policy.

Also, the loss will show up on the agency’s loss history and will likely have

a negative impact on the agency’s ability to shop future E&O coverage.

Consider all Your Options

Agencies have a choice to make regarding the placement of their E&O coverage. This article lays out just a few factors that must be considered when making this very important decision. Although placing the coverage with a carrier the agency represents may seem safe and convenient, the ultimate risk may be too high.

Agents are better served placing their E&O coverage with long-term, stable programs focused strictly on agents’ E&O coverage. Not only are these programs more focused, but they also aren’t full of the inherent conflicts of interest common when placing coverage with an appointed carrier.

For more information on Big “I” Professional Liability or to receive a quote, visit independentagent.com/EO.

A Matter of Trust: Avoiding E&O Exposure When Turning Prospects Into Long-Term Clients

By Madlyn Tombs

Every salesperson's aspiration is to turn every prospect into a successful business relationship. In sales, you want a seat at the table with the inner circle—the elite group that holds conversations about business growth—because their growth is your growth.

However, to earn that coveted seat, there must first be an earned level of trust through careful preparation that begins well before the sale.

The foundation for your client’s trust is established during the fact-finding part of the sales process, where you learn as much as you can about the business, its products and services, its team, its locations, and its plans for the future. When you sit down with business owners, listen as they express pride in their business accomplishments while

guiding the conversation to fill the gaps in your understanding of the risks involved both today and in the coming months and years.

During your meeting, take careful notes about what’s discussed. Your factfinding notes should be supported by a checklist that will guide you through the conversation. If you haven’t prepared your own, the Big “I” Virtual University offers several great examples.

The customer may confide in you about their last insurance experience— what they liked and what they would have changed. As part of that discussion, you should ask the customer to share what coverage is currently in place and what changes they are looking for. Although your role in many states is that of an order taker, at least initially, you are not required to stop there, but discussions regarding offerings and rejections should be carefully documented.

This is the point where you have an opportunity to take advantage of what is, perhaps, the most important strategy of all for avoiding or mitigating error & omissions claims—sell insurance. It is possible to offer a quote without substituting your judgment for your customer’s, which is a leading cause of E&O claims. There is a subtle, but significant, difference between offering to quote a higher limit or new coverage and actively recommending it.

In every case, resist invitations to “tell me what I should buy.” Rarely will your judgment be as good as your customer’s when it comes to their business and livelihood, especially when 20/20 hindsight comes into play in the wake of an inadequately insured loss.

Trust is also earned over time through a continuing sense of security. You’ve heard the old adage “the only constant is change” countless times, and that is especially true of your customers in this

rapidly changing world. Though your initial placement of coverage may have been outstanding, it will not withstand the effects of time, growth, inflation, and innovation.

Granted, it may not be possible to visit every client at every renewal, but there needs to be a sensible cadence with your contacts. In many cases, your client’s business will have changed substantially in just a few years, presenting new risks. If inflation has been running hot, there has been a recent storm that led to a boom in the rebuilding of homes and businesses, or the client purchased new vehicles or equipment, you may need to accelerate the timing of your visits.

But even if there hasn’t been such an event, new insurance products are coming on the market all the time in response to unmet insurance needs that may benefit your customers. A disappointed client may or may not be successful in pursuing an E&O claim against you for failing to recommend new limits or coverages, depending on the law in your jurisdiction—but they almost certainly will not trust you going forward.

For that reason, your early conversations should identify a point of contact within the business and plans of ongoing communication to ensure that questions can be asked and answered as they arise. This creates a reliable channel through which updates, acquisitions or changes can be reported and handled in a consistent manner beyond simply trading cell phone numbers. This ensures easy access to trackable information where everyone is engaged and in participant mode during communication about needed updates and included on communication follow up confirmations.

Your plan is a tacit reminder that you can provide insight into the best insurance products to protect them and their business … but only as long as they keep you informed.

Young Agents Happy Hour

Cheers to an unforgettable night at Woodworks Distillery with the amazing attendees of our OKC Young Agent's Happy Hour! A massive shout-out to our incredible sponsor, Berkley Aspire, for making the evening extra special with their support for drinks, pizza and distillery tours!

Check out www.bigiok.com/ya for all our future events!

Mid-Continent Group: No. 5 Best Place to Work in Oklahoma

Congratulations are in order for MidContinent Group, recently recognized as the No. 5 Best Place to Work in Oklahoma for 2024 by the Best Companies Group.

BCG utilizes rigorous research methodologies to assess workplace environments and employee satisfaction. This prestigious accolade is a testament

to MCG’s commitment to fostering a supportive and rewarding workplace culture.

MCG's commitment to employee development and well-being extends was evidenced by numerous testimonials

from satisfied team members. By investing in educational opportunities and career advancement initiatives, MCG demonstrates its dedication to fostering a dynamic and fulfilling work environment for all employees.

Rich & Cartmill: A Five-Time Top Workplace in Oklahoma

Rich & Cartmill Insurance & Bonds has once again secured its position as one of Oklahoma’s Top Workplaces for the fifth consecutive year. This commendation, based on employee surveys and feedback, underscores the firm’s unwavering commitment to fostering a positive and supportive work environment. Such recognition not only reflects the dedication of its workforce but also highlights the enduring culture of excellence cultivated within the organization.

Established in 1922, Rich & Cartmill has evolved into one of the largest privately held Trusted Choice® independent agencies in the nation. With a steadfast dedication to assisting individuals and

organizations in securing insurance solutions tailored to their specific needs, the company has garnered a reputation for reliability and integrity. Headquartered in Tulsa, Rich & Cartmill serves a diverse clientele with a team of 117 dedicated employees across the United States.

The recognition of Rich & Cartmill as one of Oklahoma’s Top Workplaces for the fifth consecutive year is a testament to the company’s enduring commitment to its employees and clients alike. By fostering a culture of collaboration, innovation, and inclusivity, Rich & Cartmill continues to set the standard for excellence in the insurance industry.

In Memoriam

Robert “Bobby” Marshall Bramlett, 71, passed away on Dec. 29, 2023, leaving an irreplaceable void in the loves of his family and colleagues and in the industry he served with passion and dedication.

On Aug. 4, 1973, Bobby married Susan "Nanette" Potts in Okmulgee, beginning a lifelong partnership filled with love and shared endeavors. Following his graduation from the University of Oklahoma with a bachelor's degree in business, the couple settled in Ardmore, where Bobby joined the family business at the Bramlett Agency, excelling in insurance and real estate.

Bobby was an inspiration to many, embodying fortitude and charisma that

Newsmakers

John F. Sullivan Jr., CPCU, CIC, a beloved lifelong resident of Ardmore, passed away on Nov. 20, 2023.

John’s passion for the insurance industry led him to serve as a commercial

casualty underwriter with the Insurance Company of North America from 1971 to 1973. Throughout his esteemed career, he earned accolades such as the CPCU (Chartered Property Casualty Underwriter) designation in 1976 and the Certified Insurance Counselor (CIC) designation in 1981.

His leadership extended beyond his professional achievements, as evidenced by his tenure on the Board of Directors of Associated Risk Managers of Mid-America Inc., and his continued service on the Associates Risk Managers International Board from 1989 to 1999 and again from 2011 until his passing.

John leaves behind a legacy of integrity, dedication and service that will be cherished by his family, friends, and colleagues.

touched the lives of everyone around him. As the president & CEO of The Bramlett Agency, two-time chairman of BIGiOK, national chairman of the Independent Insurance Agents & Brokers of America Inc., and director at First National Bank & Trust of Ardmore, he played a pivotal role in shaping the landscape of the Ardmore community. Bobby's impact extended beyond his professional accomplishments. As chairman of the Maxwell Intercollegiate and through his various philanthropic endeavors, he demonstrated a commitment to making a positive difference in the lives of others.

Young Agents

Young Agents Celebrate Christmas

Cheers to the vibrant crowd of young agents who graced our Tulsa and Oklahoma City Christmas parties! A blast was had by everyone, and we’re eagerly anticipating your presence at our upcoming events throughout the year. Stay tuned for more exciting gatherings at bigiok.com/ya