December 2015 Wisconsin Independent Agent Magazine by Independent Insurance Agents of Wisconsin

wisconsin

INDEPENDENT AGENT DECEMBER 2015

HAVE A SAFE AND HAPPY HOLIDAY SEASON FROM THE IIAW BOARD OF DIRECTORS!

W ishing you a happy holiday and joyful New Year.

Best wishes from your friends at West Bend.

wisconsin

INDEPENDENT AGENT DECEMBER 2015 Eric Schwartz, Editor

Open Door Policy Insurability of Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Government Affairs WI Taxes Still High Compared to National Average . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Marketing Digital Marketing: Pure Gold or a Burden? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Data Breach 5 Myths About Data Breach Coverage, part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Virtual University New Homeowners Endorsements Bridge ‘Where You Reside’ Coverage Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

On The Cover… The 2015-16 IIAW Board of Directors. Front row: Cindy Burns; Linda Steiner,

New IIAW Board & Executive Committee Members . . . . . . . . . . . . . . . . . . . . . . 17

State National Director; Steve Leitch,

Sales 2 Easy Ways to Keep in Touch without Harassing People . . . . . . . . . . . . . . . . . . . 19

President; Matt Weimer, President-

Members in the News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

elect; Lise Meyer Kobussen, Secretary-

Errors & Omissions Stay Sharp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Treasurer; and Chris Hanson. Back row:

Commentary From Counsel Attack of the Drones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Jerry Couri, John Wickhem, Chairman;

Technology Help Google Love Your Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Mike Farrell; Jason Bott; Jack Riesch;

Member Profile Liberty Mutual: Providing Solutions for Agents & Policyholders . . . . . . . . . . . . . .27

Mike Walston; and Brian McClone.

InVEST The Hunger for Financial Literacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Independent Insurance Agents of Wisconsin 725 John Nolen Drive, Madison, Wisconsin 53713 Phone: (608) 256-4429 or (800) 362-7441 ■ Fax: (608) 256-0170 ■ Web: www.iiaw.com Executive Vice President - Matt Banaszynski 2015-2016 Executive Committee President......................................................... Steve Leitch P.O. Box 85, River Falls, WI 54022 President-elect .............................................. Matt Weimer 100 North Corporate Dr., #100, Brookfield, WI 53045 Secretary-Treasurer .......................... Lise Meyer Kobussen P.O. Box 633, Sauk City, WI 53583

Jack Riesch P.O. Box 1610, Waukesha, WI 53187-1610 Michael Walston P.O. Box 236, Kewaunee, WI 54216-0236 Darrel Zaleski 4233 Southtowne Drive, Eau Claire, WI 54701 2015-2016 Committee Chairs

> ADVERTISERS & INFORMATION AAA Wisconsin .................................................. 9 ACUITY Insurance ............................................ 31 Applied Underwriters ........................Back Cover Axley Brynelson ............................................. 30 Badger Mutual ..................................................11

Chairman of the Board ............................. John Wickhem P.O. Box 1500, Janesville, WI 53547-15

Agency Operations....................................... Kim Dandrea N19 W24200 Riverwood Dr., Waukesha, WI 53188

State National Director ................................ Linda Steiner 555 Main Street #320, Racine, WI 53403

Automation/Technology ............... Cathleen Christensen P.O. Box 949, Fond du Lac, WI 54936-0949

2015-2016 Board of Directors

Emerging Leaders ...........................................Jack Demski 101 East Grand Ave. #11, Port Washington, WI 53074

EMC Insurance................................................. 14

Employee Benefits.......................................... Mike Farrell 1300 South Green Bay Rd., Racine, WI 53406

IIAW Continuing Education .............................. 16

Mike Ansay 101 East Grand Ave. #11, Port Washington, WI 53704 Mark Behrens 555 Main Street #320, Racine, WI 53403 Jason Bott 330 East Kilbourn Avenue, Milwaukee, WI 53202 Cindy Burns 500 South Central Ave., Marshfield, WI 54449 Gerald Couri 379 West Main Street, Waukesha, WI 53186 Mike Farrell 1300 S. Green Bay Rd., Racine, WI 53406 Chris Hanson 5601 Grande Market Drive, Appleton, WI 54913 Brian McClone 505 North Westfield Street, Oshkosh, WI 54902

WISCONSIN INDEPENDENT AGENT

Finance & Compensation ............... Lise Meyer Kobussen P.O Box 633, Sauk City, WI 53583

Berkshire Hathaway/Guard .............................18 Burns & Wilcox ................................................. 6

New Level Partners ......................................... 15 Partners Mutual ............................................ 26

Government Affairs .......................................Skip Hansen 100 North Corporate Drive #100 Brookfield, WI 53045

Pekin Insurance.............................................. 22

Industry Relations ....................................... Kevin Murray 525 Junction Road, Madison, WI 53717

Robertson Ryan & Associates.......................... 19

Marketing & Membership Development ........... Jeff Thiel P.O. Box 1610, Waukesha, WI 53187-1610 Smaller Agencies .................................... Michael Walston P.O. Box 236, Kewaunee, WI 54216-0236 Technical ................................................... Mark Truyman P.O. Box 6, Seymour, WI 54165 Technical ...............................................Timothy Kakuska P.O. Box 547, La Crosse, WI 54602-0547

SECURA Insurance ......................................... 28 Society Insurance............................................. 4 The IMT Group ................................................ 25 West Bend Mutual............................................. 2 Western National.............................................10 DECEMBER 2015 | 3

Delivering more by focusing on less. Small detail. Big difference. Rather than attempt to be all things to every kind of business, we focus on the ones we know best—restaurants and bars, supermarkets, convenience stores, hotels and motels, medical clinics, artisan contractors and auto service shops—to deliver outstanding property, casualty and workers compensation insurance. Deep niche expertise, with insight into unique business risks, is how we cover the details that make the biggest difference to our policyholders. To discuss an agency appointment, give us a call at 888-5-SOCIETY or visit societyinsurance.com.

4 | DECEMBER 2015

WISCONSIN INDEPENDENT AGENT

OPEN DOOR POLICY

INSURABILITY OF PUNITIVE DAMAGES

Recently, I was asked the question, “Are punitive damages insurable in Wisconsin?” The agency found the answer to be valuable and I want to share it with you. Let’s start by discussing what constitutes punitive damages.

According to thefreedictionary.com, punitive damages, or exemplary damages, may be awarded by the trier of fact (a jury or judge, if a jury trial was waived) in addition to actual damages, which compensate a plaintiff for the losses suffered due to the harm caused by the defendant. Punitive damages are a way of punishing the defendant in a civil lawsuit and are based on the theory that the interests of society and the individual harmed can be met by imposing additional damages on the defendant. Once a decision has been reached, punitive damages cannot be appealed or reduced.

awards of $1 million or more.

The business community and insurance groups routinely criticize punitive damages. These groups allege that exorbitant damage awards have driven up the cost of doing business. It’s been known to be a hot topic with C-suite executives and in boardrooms.

2. In 76% of the 632 civil trials with both punitive and compensatory damages, the ratio of punitive to compensatory damages was 3 to 1 or less.

Insurance carriers in Wisconsin are allowed to afford/offer coverage for punitive damages, but policies may exclude such damages via an endorsement. Whether insurance coverage is available for such an award is a vital question for the agent to ask the insurance carrier.

3. Differences in punitive damages between bench and jury trials were greater in contract cases than in tort cases.

There is nothing in Wisconsin law that mandates an insurer to either cover punitive damages or exclude coverage (as in some states). Since Wisconsin statutes are silent on this matter, it’s up to the discretion of the carrier to extend coverage. According to a special report by the U.S. Department of Justice (DOJ) titled, Punitive Damage Awards in State Courts 2005, punitive damages were sought in 12% of the estimated 25,000 tort and contract trials concluded in state courts in 2005. Punitive damages were awarded in 5% (or 700) of the 14,359 trails where the plaintiff prevailed. Highlights from the report include: 1. The median punitive damage award for the 700 trials with punitive damages was $64,000 in 2005, and 14% of these cases had punitive WISCONSIN INDEPENDENT AGENT

4. Litigants filed motions for post-trial relief in nearly half of civil trials with punitive damages and appeals in about a third of civil trials with punitive damages. 5. Punitive damages were sought in 10% of all tort trials; however, for certain case types including slander or libel, conversion, and intentional tort cases, punitive damages were requested in approximately 30% of trials. While this report is now a decade old, it contains the latest DOJ statistics. In 2011, the Wisconsin State Legislature amended Wis. Stat. § 895.043 to limit punitive damages in many cases to $200,000, or two times compensatory damages. If you take into consideration the DOJ report and recent legislative action you will see that, while the chance for punitive damages and the amount of the award is relatively low in Wisconsin, the risk and exposure still exists.

Except for punitive damages coverage, the policyholder has an inherent and recognizable gap in coverage. As an independent agent and risk manager, you assess risk, discuss gaps in coverage and find a variety of insurance solutions to cover exposures. To those of you who question the value and need of a policy that extends coverage to punitive damages, I would humbly ask you to put yourself in the shoes of a board member with the fiduciary responsibility for a company that finds itself with a multimillion dollar verdict and no insurance. How would you react if you found out after the fact that there was an insurance policy that could have covered that verdict?

> Matt Banaszynski is the Executive Vice President of the Independent Insurance Agents of Wisconsin. Contact him at matt@ iiaw.com.

DECEMBER 2015 | 5

BURNS

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GOVERNMENT AFFAIRS

WISCONSIN TAXES STILL HIGH COMPARED TO NATIONAL AVERAGE After reading local media reports, one might think that, since Republicans took full control of state government in 2010, Wisconsin has starved itself of tax revenue. Article after article documents all the taxes cut by Governor Scott Walker and the state Legislature, leading to tight budgets and lower tax burdens. It is true that Gov. Walker and lawmakers have cut taxes to the tune of about $2 billion over the past three budgets.

Ohio has none at all. In fact, in the American southeast, no state except Louisiana has a business tax rate above 7%.

But these reductions are actually relatively small compared to the state’s overall tax burden. As business owners know full well, Wisconsin taxes are still high, especially when compared to the rest of the nation.

So, contrary to many media reports, Wisconsin’s problem isn’t a sudden lack of tax revenue. In fact, even with the tax cuts signed into law by the governor, the state budget has increased to $73.3 billion in the most recent biennial budget, up from $66 billion in fiscal years 2011 and 2012. Income, sales and corporate tax revenues have increased by 14% in that time, even as tax rates have been reduced.

According to the Tax Foundation, a leading non-partisan tax policy research group, Wisconsin ranks eighth worst in the nation in total state and local tax climate for 2015. Even with recent tax cuts, Wisconsin has the eighth highest income taxes, seventeenth highest corporate taxes, and nineteenth highest property taxes in the United States. And the trend for the state has been going in the wrong direction. In 2012, Wisconsin ranked tenth worst, but has fallen two spots in three years. In Wisconsin’s graduated tax system, workers in the lowest tax bracket pay 4% of their income in taxes, but the state’s income tax balloons to 7.65% for the state’s highest earners. Only Vermont, Ohio, New York, New Jersey, Minnesota, Maryland, and California have higher individual income tax rates. Just to our south, Illinois dropped its income tax to a flat rate of 3.75% in December 2014. That means businesses that file as individuals and Wisconsin high-earning individuals can grant themselves a raise of 4% just by moving south! While Wisconsin’s business taxes do not rank quite as high, they are still well above the national average. Currently, Wisconsin’s corporate tax is 7.9% - which is below Minnesota to the west that has a 9.8% rate, and Iowa – whose rate spans from 6% to 12% according to income. But Illinois, Michigan, and Indiana all have lower corporate tax rates, while

Nevertheless, there are still those that argue that state government is running on the thinnest of budgets and that public services are being harmed as a result. But this doesn’t square with the reality of the state budget picture. And while many blame the Legislature and governor for slow job growth coming out of 2008’s recession, the fact is that the growth of new jobs may well have been slowed by Wisconsin’s continued high tax ranking. The fact that Wisconsin fares worse in the national tax rankings, even while cutting taxes, suggests that other states are trying to create jobs by reducing taxes even more. If the goal is to make Wisconsin competitive with the rest of the nation in taxes, the governor and Legislature still have a long way to go.

> Misha Lee is Owner/ Founder of Lee Government Relations, LLC and lobbyist for IIAW. Follow Lee Government Relations on Twitter @mishavlee.

Insurance-related Legislation Signed into Law in 2015 2015 Wisconsin Act 16 - Regulation of transportation network companies, providing an exemption from emergency

rule procedures, granting rule-making authority, and providing a penalty. 2015 Wisconsin Act 66 - Immunity from civil liability for certain equine activities. 2015 Wisconsin Act 85 - Extending the date for the repeal of two appropriations to the Office of the Commissioner of Insurance and making an appropriation. 2015 Wisconsin Act 90 - Various miscellaneous changes to the insurance statutes and granting rule-making authority. 2015 Wisconsin Act 91 - An exemption from civil liability related to the placement of buoys or other markers in waterways. 2015 Wisconsin Act 93 - Motor vehicle repair practices. 2015 Wisconsin Act 94 - Structured settlement factoring transactions. 2015 Wisconsin Act 103 - Providing an exemption from civil liability for forcibly entering a vehicle under certain circumstances (Assembly Bill 308). 2015 Wisconsin Act 112 - Liability for damages caused by dogs, court orders to kill a dog, and providing a penalty (Senate Bill 286).

MARKETING

DIGITAL MARKETING OPPORTUNITIES:

PURE GOLD OR A BURDEN?

The show Gold Rush follows a few different gold mining operations in the Klondike. These aren’t lone prospectors wandering with a shovel and a gold pan. No, these are big operations using heavy equipment. A typical operation includes six to 10 large pieces of equipment including dozers, dump trucks and the machine used to collect the gold. In addition to the investment in equipment, these operations consume hundreds of gallons of gas and diesel per day.

It’s big boys playing with big toys. What’s not to like? Because these mining claims are so far north, the season is dictated by the weather. Operations only run from late spring until the end of fall. That’s June through the end of September! On average, it takes about 125 days to either make it or head south broke. To the miners’ advantage, it’s the land and season of the midnight sun. These guys and gals work around the clock. But water is a key part of the process; when temperatures are too low, everything stops.

Get the Gold Contrary to what you may have seen in the movies, the miners aren’t finding golf ball or even pea-sized nuggets. Most of it is sand-sized flakes or smaller. Gold bearing dirt and gravel is dumped into the wash plant. This big machine shakes and screens the rocks ever finer. Finally, the remaining gravel and dirt are washed with water. Gold is so heavy that it sinks to the bottom of the wash water and is collected in screens and fibrous mats.

After a few days of processing pay, it is time for the clean up. The mats are taken out of

sitting there waiting to be piled up and washed. First, the miners have to scrape off all

the wash plant to collect the gold. The silt is washed out of the mats and then washed yet again to purge any impurities. The gold is then dried for weighing.

the vegetation on their claim. Then they need to remove the top layers of soil to get down to the pay dirt. The miners spend considerable time, effort and expense just to get to the good stuff.

The ‘reveal’ is when the gold is carefully poured onto the digital scale and the mining team gets to see the fruit of their efforts. Sometimes there are hearty high-fives all around. At other times, the group is somber, realizing that days of hard work haven’t even paid the cost of getting the gold out of the ground, much less providing some profit (and salaries) for the team.

Those top layers of soil have gold in them, but not enough to make it economically practical. This soil, called overburden, must be removed in order to get to the richer substrate that is hauled to the wash plant. It’s part of the process. There is no rich pay dirt or payday unless you first take care of the overburden.

Overburden in Insurance? The scale of the operations is staggering. A rule of thumb says you can make a profit if there is at least $10 of gold in a cubic yard of pay. A full-size pickup bed will hold about two and a half cubic yards, or $25 if the pay dirt is good. Last season, one mine processed over 100,000 pickup trucks worth of pay dirt for an end-ofyear total of over $3 million in gold.

The Rub

You’re probably wondering, “Where’s the part about digital marketing as promised in the title?” Well, the gold mining metaphor starts now. In your digital marketing efforts, are you focusing on the overburden or the pay? Over and over again Agency Nation hears the following concerns from agencies that regularly receive digital marketing opportunities:

Unfortunately, all of that good pay isn’t

8 | DECEMBER 2015

WISCONSIN INDEPENDENT AGENT

MARKETING > The insurance buyers only focus on price. > They are only tire kickers.

have convinced them to contact you. Now it’s time to show the value your agency provides and convince them to stop shopping and start buying.

> They have losses. 3. Losses. The odds are pretty good that your existing book has losses, too. Losses are why we’re in business. Prior losses don’t mean that an account is unwritable or that the risk is bad, but it can be a warning sign.

> They are all XYZ types of risks and completely unwritable. Let’s look at each of these. 1. Price. Price is a topic Agency Nation has addressed a number of times. Our wellfinanced competition, the direct writers and captive agency companies are spending big bucks trying to convince buyers that the only thing that matters is price. We know that isn’t the case, but until you can prove that you are competitive, you aren’t in the game. Prove that you can compete and then you may have an opportunity to show why the cheapest isn’t necessarily the best - and possibly might be the worst.

4. Unwritable risks. Of course, there are unwritable risks and there could be 100 reasons for this. But there are also MGAs and wholesalers who provide all sorts of coverage for difficult to place risks. Sometimes a commission check is waiting for the agent who does a bit of research and makes an inquiry with a wholesaler or two. The good news is that not every customer call will be difficult. Some will be solid gold.

diligence and hard work. When you mine gold in the Klondike, you need to strip a lot of overburden to get to the gold-rich pay. When you do digital marketing in insurance, not all opportunities will be gift-wrapped in 24-carat gold leaf. Some might difficult to place. There may even be one or two that you can’t help. Some might be a lot of work for not a lot of premium or commission. In other words, low-grade pay. But if you work your way through the layers of ‘insurance overburden,‘ you’ll find that every now and again the ‘pay dirt’ will be worth well above $10 per yard.

Long Story Short 2. Tire kickers are buyers. They just haven’t made a decision to purchase yet. The good news is that your digital marketing efforts

Everybody likes a strike-it-rich-quick story and every now and again it actually happens. But, most of the time, fortunes are made through

Your successful clean up will be sweet indeed.

Don’t just insure. Assist.

> Marty Agather is Sr. VP of Client Development at TrustedChoice.com. He also likes cooking, skating and fishing, sometimes all at once. Contact him at Marty. Agather@trustedchoice. com and go to agencynation.com.

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DECEMBER 2015 | 9

DATA BREACH

5 MYTHS ABOUT DATA BREACH COVERAGE PART 2

Last month I focused on the first myth of data breach coverage, specifically if electronic funds transfers and cyber deception are covered for third parties. They are not and you should be vigilant when selling data beach policies to your clients.

For part two, I once again chatted with Ken LaBelle, a brokerage supervisor at Burns

every area of a breach.

& Wilcox and an expert on cyber liability coverage. We got right down to business with myths two through five.

4. Reimbursement Coverage. Watch for these on endorsements. Let’s continue with our retailer example above. If a BOP policy offers $50,000 in reimbursement for a data loss, the retailer would have to pay for everything and then submit the claim to the carrier for reimbursement.

2. Exclusions. Be sure to look over your policy or ask your underwriter or broker for key exclusions. It’s typical to exclude a claim from an unencrypted mobile device. If a business has a lot of laptops that are not encrypted, this can pose a huge coverage gap, though not all policies have this exclusion. 3. Notification Laws. This is vitally important to risks that take credit cards (consider restaurants and tourist retail). The retailer is required to follow state mandated notification laws in the event of a breach. Each state has different laws, and the residing state of the breached party is the law that has to be followed. So a small tourist shop in Northern Wisconsin could easily find themselves responsible for the notification laws of several states. Some states even require a full cyber report! Despite retailers not holding cyber crime expertise, they would have to orchestrate the hiring of contractors who specialize in

5. Limited Coverage on Endorsements. BOP endorsements tend to carry limited coverage relative to a monoline policy. It’s pretty common to see an endorsement exclude forensics, public relations, business income, or extortion to name a few. Even the limits offered are inadequate. Fifty thousand dollars would run out after a week and isn’t even enough to cover forensics and notifications.

imagined he’d need data breach coverage!

All of this felt a bit daunting to me and I said so to Ken. He was quick to give an understanding laugh and some advice.

The tricky part is that hackers can come at you from anywhere. You can’t outguess them.

“The best thing to do is sell a policy that contracts with industry experts to do the orchestrating,” he said. “And for goodness sake, purchase a monoline data breach policy for your agency. You need it!”

Ken recently received a call from a distraught insurance agent who had built her agency from nothing. A hacker accessed her Yahoo account and discovered, after going through her emails, that she was an insurance agent. They sent one email to every one of her contacts. The email stated that she was completing client files and needed Social Security numbers, dates of birth, etc. You can imagine the mess. Did I mention she was about to retire?

Think you’re too small for a breach? Think again.

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Same Commitment to the Independent Agent

badgermutual.com WISCONSIN INDEPENDENT AGENT

800/837-7833 Milwaukee, WI

Let’s look at the Target breach from December 2013. We know the breach came through an HVAC contractor. He had no employees and very few clients, but hackers gained access to Target through his system. He likely never

You never know where it’s going to come from or when it’s going to happen. So do it the right way and protect yourself and your business. Get $1 million on all coverage parts and get secure.

> Meggen Gagas is the IIAW’s Director of Agency Services. Contact her at 608.210.2975 or meggen@iiaw.com.

DECEMBER 2015 | 11

VIRTUAL UNIVERSITY

NEW HOMEOWNERS ENDORSEMENTS

BRIDGE ‘WHERE YOU RESIDE’ COVERAGE GAPS Earlier this year, the Insurance Services Office (ISO) introduced six new Homeowners endorsements that have been described as “the most important change in the Homeowners Program in 40 years.” The effective date of the endorsements for most states was October 1, 2015. It is imperative that agencies contact each Homeowners market, to determine their adoption date of these new endorsements.

Section I – Perils Insured Against

Main Points The fundamental reason for the new endorsements arises from claims denials by insurers, and the subsequent adverse court decisions, which completely eliminated Coverage A on the dwelling. There are two perplexing aspects to these cases. First, the elimination of Coverage A was not because of an exclusion in the coverage form. Instead, the claims denials and adverse court decisions were based on the definition of “residence premises.” Actually, the loss of Coverage A was the result of adverse interpretations by insurers and courts of just three words in the definition of “residence premises: “where you reside.”

A. Coverage A – Dwelling

Here are pertinent excerpts from the current ISO (Insurance Services Office) Homeowners coverage form:

Loss Example

Definitions “Residence Premises” means... The one-family dwelling where you reside Section I – Property Coverages A. Coverage A – Dwelling 1. We cover: a. The dwelling on the “residence premises” shown in the Declarations.

12 | DECEMBER 2015

[No theft coverage in or to a dwelling under construction.] [No vandalism or malicious mischief coverage if dwelling vacant more than 60 consecutive days immediately before the loss.] [No reference to “where you reside.”] Section I – Exclusions [No reference to “where you reside.”]

Jack and Jill are moving to your area from another state because Jill is being relocated by her company. They find a suitable home, make an offer acceptable to the seller, and then close on the home shortly thereafter. In conjunction with the closing, your agency issued a Homeowners policy to Jack and Jill, showing an effective date coinciding with the closing date of the sale. Since the family’s furniture will not arrive for another week, her company continues to pay their hotel bill until the furniture can be delivered. However, before the furniture arrives, the house is destroyed by fire. The insurer denies the claim, asserting that Jack and Jill did not reside in the home at the time of the loss, as stipulated (in their interpretation) for Coverage WISCONSIN INDEPENDENT AGENT

VIRTUAL UNIVERSITY A to apply. The court agrees with the insurer’s view, and upholds the insurer’s denial.

D Buyer Moves In or Takes Possession Before Closing D Renovations/Homes Under Construction D Vacancy and/or Unoccupancy

Comments Referring to the Homeowners coverage form excerpts above, there is no exclusion which applies to this loss. The insurer, and subsequently the court, relies on the fact that, since the insured did not yet reside in the new home, there is no Coverage A in effect.

New Endorsements

However, one widely held argument in favor of coverage holds that the basis for denying a claim must be “clear and conspicuous.” In other words, if the insurer intended to deny coverage for the claim above, in all fairness, there must be a specific exclusion to that effect. A second supporting argument is that the “where you reside” provision relates to an underwriting requirement and is not intended to be interpreted in the context of denying actual coverage.

Mandatory Endorsement: “Residence Premises Definition Endorsement”

While there are technically six new endorsements, in reality there are only two, with three iterations of each. One is a mandatory endorsement; the other is an optional (broadening) endorsement.

HO 06 48 10 15 – use with all HO forms except Unit Owners HO 00 06 HO 17 48 10 15 – use with Unit Owners HO 00 06 MH 04 26 10 16 – use with Mobilehome

Key Provision Also, it is important to note that the ISO Homeowners forms have included the “where you reside” language in the Definitions section since the 1984 edition was introduced, replacing the HO-76 edition. And in the 1984 ISO filing made with state insurance regulators, ISO made no mention of its intent to have the “where you reside” language be interpreted to deny Coverage A claims.

The definition of “residence premises” is amended to include: “The one-family dwelling where you reside... on the inception date of the policy period shown in the Declarations and which is shown as the “residence premises” in the Declarations.”

Comments Additionally, it wasn’t until around 2001 that the first denials of claims based on the “where you reside” language began to become known in the industry. In the years following, a growing number of questions from agents across the country began coming in to the IIABA’s Virtual University “Ask An Expert” service. In 2005, the IIABA’s national Technical Affairs Committee began discussions with ISO on the problem. The end result was the ISO filing of six new Homeowners endorsements, which many states (including Wisconsin) adopted for October 1, 2015.

1. This language does not help Jack and Jill, in the claim situation discussed above. This endorsement actually reinforces the view that, since they did not reside in the house on the day of closing, there is no Coverage A until they actually move in.

Other Situations

3. However, one obvious gap would be if a loss occurred after they had moved out and the policy had renewed. Under the terms of the endorsement, they would have no Coverage A since they were not residing in the home “on the inception date of the (renewal) policy.”

The above example is only one of many that can (and have) resulted in an insurer denying coverage for an otherwise covered loss to a dwelling, based solely on the interpretation of the “where you reside” language in the Definitions section of the Homeowners policy. There are many ways in which “non-residency” can arise, including the following 16 situations: D Nursing Homes D Relocations D Foreclosures D Rentals D Child Occupies Parents’ Home D Parent Occupies Child’s Home D Divorce D Illness or Infirmary of Insured D Death of Insured D Trusts D Homes Owned by LLCs and Corporations D Seller Remains After Closing D Seller Moves Out Before Closing

2. On the other hand, if later they moved out of the house in another relocation move and had the house on the market, Coverage A would remain in effect for the balance of the policy term since they did reside there “on the inception date of the policy.”

Optional Endorsement: “Broadened Residence Premises Definition Endorsement” HO 06 49 10 15 – use with all HO forms except Unit Owners HO 00 06 HO 17 47 10 15 – use with Unit Owners HO 00 06 MH 04 27 10 16 – use with Mobilehome

Key Provision The endorsement has a Schedule, which indicates an “Inception Date” and a “Termination Date.” In addition, the definition of “residence premises” is amended to include: CONTINUED ON PAGE 23

Important note: This Technical Advisory is intended to be educational and is not legal advice upon which you should rely. Please seek any legal opinion from a qualified attorney

> Mike Edwards headed Edwards & Associates, an insurance training firm in Atlanta. He previously served as the Director of Education for the Independent Insurance Agents of Louisiana.

The Virtual University is a Big “I” members-only resource. Many articles are based on real-life questions received by the Ask an Expert service. This service ensures that the information is current and topical. Go to www.independentagent. com/Education/VU/. You will need to login with your IIABA username and password before using the VU. The IIABA does not assume and has no responsibility for liability or damage which may result from the use of any of this information. WISCONSIN INDEPENDENT AGENT

DECEMBER 2015 | 13

When clients have questions about claims, EMC can put the answers at your fingertips. The minute you report a claim online, you’ll get a claim number to track real-time claim activity. It’s just one of the many reasons policyholders Count on EMC ®. BECKIE JANUSZEWSKI , AIC Claims Supervisor EMC Milwaukee Branch

CLAIMS QUESTIONS?

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NEW IIAW BOARD &

EXECUTIVE COMMITTEE MEMBERS CINDY BURNS Cindy Burns’ 31 years of experience in the insurance industry makes her a valued member of the Smaller Agencies Committee and we welcome her to the Independent Insurance Agents of Wisconsin (IIAW) Board of Directors. Cindy is president of Burns Insurance Agency in Marshfield, Wisconsin, the agency she founded with her husband, Dan, in 2000. They have earned the prestigious Best Practices certification from the IIAW. The Burns’ firmly believe that it is their responsibility to be good community stewards and to make the community a better place to live and work. Together they were selected as the 2008 Marshfield Area Chamber of Commerce & Industry’s “Entrepreneurs of the Year.” They also co-chaired the 2004 United Way campaign and raised over $888,000. They have also served on several boards and committees, including the Marshfield Area Chamber of Commerce, Downtown Business Association, American Heart Association, and the University Foundation Board. Dan and Cindy are also founding members of the National Society of Agents for Consumer Education (NSACE). “As a member of the Board, I’d like to serve as a conduit for small agencies and be voice to be heard on matters that affect their agency’s growth potential,” said Cindy.

LISE MEYER KOBUSSEN Lise Meyer Kobussen’s Association and industry involvement goes back more than 20 years and we’re happy she accepted a position on our Executive Committee as Secretary-Treasurer. Lise is currently serving on the Agency Operations Committee WISCONSIN INDEPENDENT AGENT

and has served on the Young Agents (four years) and Smaller Agencies (six years) committees. She was named the 1995-96 Young Agent of the Year. As president of Meyer Insurance Agency in Sauk City, Lise understands what the insurance industry has to offer. She wants to represent agency owners who would prefer to sell their agencies to one of their staff rather than merging. “InVEST is important to me,” said Lise. “This industry is awesome with so many business opportunities. It provides a great income, flexible schedule, and can survive through the economic downturns. The tech industry rises and falls quickly, and the hospitality, banking and building industries are greatly affected by the economy. The medical field is growing but who wants to pull night, weekend and holiday shifts?” Lise said that the insurance industry allows professionals to control their own destinies and the ability to choose the weekends and evenings they want to work. “I would also love to see more women and minority owners get involved in our Association,” she said. “I think InVEST can be used to attract them.”

JACK RIESCH We are grateful that Jack Riesch is serving his first stint on the IIAW Board of Directors. As the executive vice president and owner of R&R Insurance headquartered in Waukesha, he brings a wealth of knowledge and experience to the Board and Government Affairs Committee. In September, the Milwaukee Business Journal named R&R Insurance as a Healthiest Employer in the medium-sized company category. R&R has also been named a Best Places to Work in Insurance for 2015. Jack’s community and board involvement includes the Marquette Alumni Association, Lake Country Rotary, YMCAWaukesha, the Waukesha County Business Alliance, the Pro Health Care Foundation, and the Boy Scouts of America. His goals for the upcoming year focus on the future of the industry. “I want to continue promoting the independent agency system through branding careers to a new generation, recruiting and developing new talent, and leveraging our partnerships with our insurance carriers,” said Jack.

DECEMBER 2014 2015 | 17

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2 EASY WAYS TO KEEP IN TOUCH

WITHOUT HARASSING PEOPLE Virtually every time I speak to sales organizations, I get asked, “What do I do when I don’t hear back from people? I don’t want to be a pain in the you-know-what.” Keeping in touch is so darn hard. So I ask to see what they’re doing now. Usually it looks like this: “I’m checking in to see if anything has changed since we last talked. I suspect you’re probably busy. If you have time in the upcoming week, I’d love to chat. Let me know!”

Notice how you’re not asking for anything — just providing value — which positions you/your company as a credible resource. 2. Pique their curiosity. Another great sales strategy is to send people to a resource on your own website. I’m not talking about a place that touts your product or services. Doing that is so 1970s.

Big UGH! Boring, pathetic, deletable. With today’s savvy buyers, we can’t do that if we want to be seen as a credible resource…someone actually worth talking to about important business objectives. That’s why we need another approach to our sales strategy.

A great sales strategy is to send people a valuable resource on your own website. 1. Be helpful. It sounds too easy. Not like a salesperson — who’s supposed to always be pitching. But honest to goodness helpfulness really works. For example, one of my clients sells a product that significantly improves customer service. I suggested that they send out an email as simple as this: When I read this article today on the Harvard Business Review, I immediately thought of you. It includes info on social media trends related to customer service. Hope you find it interesting.

Instead, I’m talking about something that could help your prospect achieve their objectives — a white paper, case study, article, or interview that’s informative or shares insights. You could send an email like this: “Last week, I sent you info on how XYZ Company is leveraging their online community to drive incremental revenue. I thought you might also be interested in how Generic Systems reduced customer churn by 17%. Here’s a link to their case study: linktocasestudy.com. I think you’ll be impressed with all the results they’re seeing.” Tempting? It should be if you’ve found the right resource for your prospect. Again, there’s no pathetic “circling back” or “checking in.” Every email (or phone message) you send to your prospect has to stand on its own as valuable. Once you get the hang of it, it’s easy. And honestly, you feel better communicating this way.

> Jill Konrath is the author of 3 bestselling books: Selling to Big Companies, SNAP Selling & Agile Selling. She speaks frequently at sales conferences, sharing her gamechanging prospecting and sales acceleration strategies. For more info, please go to jillkonrath.com.

ϳϬй ŽĨ ĂŐĞŶĐǇ ŽǁŶĞƌƐ ĚŽŶ͛ƚ ŚĂǀĞ Ă ƉĞƌƉĞƚƵĂƟŽŶ ƉůĂŶ Ͳ >Ğƚ ZK Zd^KE Zz E Ğ WĂƌƚ KĨ zŽƵƌ &ƵƚƵƌĞ You’ve built a successful agency and book of business but don’t have someone to take it ŽǀĞƌ ǁŚĞŶ ǇŽƵ ƌĞƟƌĞ͘ tŚĂƚ ĚŽ ǇŽƵ ĚŽ͍

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Keep your book Remain a trusted advisor to your clients to give them peace of mind ŽŶƟŶƵĞ ǁŽƌŬŝŶŐ ƵŶƟů ǇŽƵ ĚĞĐŝĚĞ ƚŽ ƌĞƟƌĞ Find the right buyer for your book within Robertson Ryan to maximize your return Ğ ŝŶ ƚŚĞ ϯϬй ƚŚĂƚ ŚĂǀĞ Ă ƉůĂŶ

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DECEMBER 2015 | 19

WS E N E H T N I S R E B M ME To learn more about Ansay & Associates, please visit ansay.com.

Ansay Continues Market Expansion with Acquisition of Koehler Ansay & Associates said Wednesday that it has acquired Koehler Insurance of Cedarburg, continuing its Wisconsin expansion. Koehler Insurance is a family-owned agency that sells personal and commercial insurance. It has 15 employees. “This acquisition aids in Ansay & Associates’ vision of being a statewide insurance and employee benefits advisor,” Mike Ansay, CEO of Port Washington-based Ansay & Associates, said in a statement. With the addition of Koehler Insurance and its staff in Cedarburg, Ansay & Associates now has 215 employees, Mike Ansay said in an interview Wednesday. In 2009, when the firm launched its expansion strategy — which includes growing existing operations as well as acquisitions — it had 76 employees. Ansay & Associates has offices in Port Washington, West Bend, Manitowoc, Appleton, Green Bay, Madison, Mosinee and Burlington in addition to its new location in Cedarburg. Family-owned Ansay & Associates was started in Port Washington in 1946 by Adolph N. Ansay, the father of company leaders, Mike and John Ansay. It serves more than 5,000 businesses and 15,000 personal lines customers. Ansay has annual revenue of more than $29 million. Mike Ansay said other agencies, knowing that Ansay is an acquirer, are approaching it to merge because they like its family-owned nature, culture and the products, growth and career development opportunities a larger firm can offer. Ansay & Associates has mentoring, internship and career education programs, and wants its employees to have a career path, Mike Ansay said. “We want people to understand that we have an expectation of constant improvement through education in this firm,” Mike Ansay said. The firm’s goal to grow its insurance and employee benefits business means it is likely to expand beyond Wisconsin at some point, he said. Ansay executives are beginning to look at other states. “As we build this out, we recognize that this vision has a lot of opportunity outside the state,” Mike Ansay said. The firm’s expansion strategy began in 2009 when the insurance subsidiary of Manitowoc’s Bank First National — the Vincent Group — merged into what then was called A.N. Ansay & Associates Inc. The name changed to Ansay & Associates at that time, with Ansay retaining majority ownership.

20 | DECEMBER 2015

Paul Gores, a staff writer with the Milwaukee Journal-Sentinel, wrote this article. This article was first published in the Nov. 18, 2015, edition of the Journal-Sentinel.

Auto-Owners Insurance Tops Claims Satisfaction Study Auto-Owners Insurance, a regional insurance company based in Lansing, Michigan, nabbed 1st in the 2015 US Auto Claims Satisfaction Study by JD Power. Auto-Owners sells coverage in 26 states, chiefly in the Midwest and Southeast. The insurance company has consistently placed highly in the annual study, having won 2nd last year. Auto-Owners has an old-fashioned method of handling its customers’ claims. Three-quarters of its customers are taken care of by local Auto-Owners agents instead of having customers deal with centralized call centers. Letting agents who sold the policies start the claims process builds a level of trust that leads to higher customer satisfaction marks, said Mark Garrett, JD Power director of insurance industry analytics. Of the various companies included in the study, only AutoOwners Insurance, at 893 points, and Amica Mutual, with 885 points, received five “power circles” (the study’s version of stars). To measure satisfaction, JD Power surveyed nearly 11,500 consumers who had auto insurance claims settled in the previous six months. To learn more about Auto-Owners, please visit auto-owners. com.

SECURA Honors Retiring Jeff Bemis; Hires Todd Thiel Jeff Bemis, SECURA Insurance Vice President– Information Technology, is retiring Dec. 31, 2015, after 21 years of service. The company hired Todd Thiel to take over leadership of its IT division upon Bemis’ retirement. Bemis began his career in the insurance industry nearly 40 years ago after graduating cum laude from UW–Eau Claire. He joined SECURA in 1995 as Jeff Bemis Director–Information Technology, and also served as Vice President–Personal Lines Underwriting from 2001-2006. He was promoted to his current position of Vice President–Information Technology and Chief Information Officer in 2006. “Through the years, Jeff has helped develop our company’s culture by fostering caring, dedicated, and genuine relationships WISCONSIN INDEPENDENT AGENT

WS E N E H T N I S R E B M ME Company’s Symbol of Freedom Flies Larger among associates,” said Dave Gross, President and CEO. “His ability to bring people together to get things done, often with limited resources, is second to none. He’s helped build a solid foundation for the next phase in our company’s IT strategy.” Todd Thiel joined SECURA in 2015 as the incoming Vice President–Information Technology. He has more than 18 years Todd Thiel of combined IT and corporate strategy experience in the insurance industry and other fields. Prior to SECURA, Todd served as Vice President–Information Technology and Vice President–Application Development for Ameriprise Auto & Home Insurance. He also held management roles with Schreiber Foods and Kimberly-Clark. “We knew it was important to find someone who could build on Jeff’s accomplishments and help us keep pace with emerging technologies to lead our company into the future,” said Gross. “Todd’s combined background in IT and the insurance industry, along with his leadership, vision, and expertise, will equip our company to succeed even further through an ever-evolving marketplace and technological advances.” To learn more about SECURA, please visit secura.net.

J.M. Wilson Adds Assistant Transportation Underwriter J.M. Wilson is pleased to announce the addition of Amanda Witkowski as Assistant Transportation Underwriter in their Arlington Heights, Illinois office. Amanda is responsible for assisting the transportation underwriting department with setting up policies for issuance and serving independent insurance agents in Illinois and Wisconsin. Amanda Witkowski Prior to joining J.M. Wilson, Amanda was a VIP Fraud Investigator at a bank, as well as a Consumer Loan and Mortgage Professor / Assistant Underwriter at a credit union. Amanda also worked as a Doctor Technician Manager for an optical office. In addition, she is also a Notary Public. Amanda earned a Bachelor’s Degree in Business Management from Rasmussen College, as well as an NMLS (Nationwide Mortgage Licensing System) License. For more information about J.M. Wilson, please visit jmwilson. com. WISCONSIN INDEPENDENT AGENT

ACUITY announced that it has increased the size of its American flag to 140 feet wide by 70 feet high, a 36 percent increase over the previous flag’s dimensions. The increase was made to provide better visual balance with the 400-foot flagpole at ACUITY’s Sheboygan headquarters. The flag is the world’s largest free-flying American flag and, combined with the flagpole, represents the World’s Tallest Symbol of Freedom. ACUITY erected the flagpole in 2014 as a statement of gratitude to our country and those who defend it. At the base of the pole is a veterans memorial, which features the names of every Sheboygan County veteran killed in the line of duty. The flagpole is one of the most visible landmarks on the Interstate 43 corridor. “We proudly fly the American flag at our headquarters to pay tribute to the service and sacrifice of American veterans,” said Ben Salzmann, ACUITY President and CEO. The new flag at ACUITY, covering nearly 10,000 square feet, features stripes that are over 5 feet high and stars nearly 3 feet across. Weighing 340 pounds dry, the nylon flag requires 72 cubic feet of storage space when not being flown. For more information, visit www.acuity.com/flag.

Company Earns “Coolest Office” Honors ACUITY is named one of the top five coolest offices in the U.S. by national consulting and software firm PayScale. This recognition is vital regarding ACUITY being able to attract future generations of employees in a tightening skilled labor market. Highlighting ACUITY’s recognition is the company’s plan to install a full-size Ferris wheel when it completes its facilities expansion in 2016. Dubbed the ACUITY Charity Wheel, the installation will serve as a showcase for charitable and philanthropic events held at the company’s headquarters. “ACUITY is recognized as one of the best companies to work for in America because of the great work environment we have cultivated,” said Ben Salzmann, ACUITY President and CEO. “Having a Ferris wheel will serve as a constant reminder that ACUITY is not your typical insurance company.” In 2012, ACUITY had temporarily installed a vintage Ferris wheel within its headquarters as part of a fundraiser for the Aurora CONTINUED ON PAGE 23

DECEMBER 2015 | 21

ERRORS & OMISSIONS

STAY SHARP

Keep up with new coverages and new products to protect yourself

An agent needs two sharp eyes at all times to stay on top of the market. Keeping abreast of new product offerings and offering coverage to customers may well prevent a future E&O claim. When a carrier distributes marketing brochures about new products or coverage extensions, the best practice is to read them and provide notice to your customers if appropriate. Otherwise, when your customer

third-party cyber liability coverage and insurance coverage for the use of commercial drones, such as in farming operations. For example, if a carrier providing liability coverage to farmers includes coverage for commercial drones used to survey crops, what qualifies as a covered invasion of privacy? When an incident occurs during drone use, will the policy exclude it as an intentional act? Or because it qualifies as an aircraft? In some instances, you face not a new product on the In some instances, you market, but rather a product that is new to your customer. face not a new product Even though you’re working on the market, but rather with an existing customer, take extra care—E&O claims a product that is new to relating to new business your customer. drive frequency. Use proper risk exposure assessment has a claim, they could argue that had they and update the application with a customer known about this new product, that higher signature. limits were obtainable or that the coverage was And whether or not the agency has a legal available without the exclusion, they would duty to do so, review prior policies with new have pursued another option. customers for any coverage differences— A constant flow of new insurance products documenting differences with the customer includes first-party breach of data coverage, can prevent future E&O claims. Regardless of a

WE DON’T TAKE A BACKSEAT

new product or a new customer, agents need to ask themselves a few questions: > Do my customers have these types of exposures? > Should I be offering these products to my customer? > Do I understand what they cover and do not cover? Hindsight after an uncovered claim is a great coverage salesman— after the fact, even your thriftiest customer will say they’d buy any coverage presented to them. Protect yourself and your agency by keeping abreast of > Caryn Mahoney new products and is an assistant vice new coverages—and president, claims specialist with Swiss sharing them with Re Corporate Solutions your customers in and works out of the writing. Chicago office.

TO INNOVATION

WE UNDERSTAND WHAT YOUR CLIENTS NEED AND GO BEYOND THE EXPECTED® TO GIVE IT TO THEM EQUIPMENT BREAKDOWN It’s easy for homeowners to take their heating, cooling, and electricity for granted. And if this equipment breaks down, many insureds assume that they’re already covered with insurance—but that’s not always the case. Should a breakdown happen, we have the coverage your clients need for just pennies a day.

CROSSROADS If you know someone with a less-than-perfect driving record due to serious auto accidents, multiple claims, or motor vehicle violations, we can help keep them in the driver’s seat. A Crossroads auto policy from Pekin Insurance® will give your insureds reliable coverage at a reasonable price and get them back on the road driving worry-free.

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Our pets are just like family. Offering companionship, unconditional love, and loyalty. Pet Insurance can easily be added to any homeowners policy so your policyholders won’t have to worry about their pet’s health again. Protect your clients’ four-legged friends, both cats and dogs, against accidental injury and illness at an affordable cost.

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WS E N E H T N I S R E B M ME CONTINUED FROM PAGE 21

Sheboygan Memorial Medical Center’s Neonatal Intensive Care Unit, a project that served as the inspiration for the current installation.

“Steve’s talent and contributions have been invaluable and he represents so many of the wonderful qualities of our company. His innovative thinking and vision will continue to enhance the marketing team’s involvement in our strategic direction, growth and profitability,” said Integrity Insurance President Jill Wagner.

In selecting ACUITY as one of the Coolest Offices in the U.S., PayScale also noted ACUITY’s unique facilities, workplace, and employee-focused culture. These qualities have earned the insurer other accolades as well, including being named the #3 large company to work for in America, the best insurer to work for, a top employer for women, and a top five employer for millennials. For more information about ACUITY, please visit acuity.com.

Martin joined Integrity Insurance in 2011 as Vice President, Claims. In his new larger role, Martin will now oversee sales strategy and operations while continuing his leadership role in claims. Christian Martin

Integrity Insurance Announces Promotions Integrity Insurance is proud to announce the promotions of Steve Klingemann and Christian Martin to Vice President, Personal Lines & Marketing and Vice President, Claims & Sales, respectively. Klingemann joined Integrity Insurance in 2012 as Vice President, Personal Lines. Klingemann’s promotion expands his responsibilities to include marketing strategy and operations in addition to his leadership role in personal lines.

Wagner continued: “I know Christian’s success will carry over into his new, broader role. I’ve already witnessed his dedication since he joined Integrity. With his drive, commitment to our agency partners and insight into the needs of the market, I’m confident he will lead our sales team to success.” Klingemann and Martin both bring more than 20 years of experience in the insurance industry.

Steve Klingemann

For more information about Integrity, please visit integrityinsurance.com.

NEW HOMEOWNERS ENDORSEMENTS BRIDGE ‘WHERE YOU RESIDE’ COVERAGE GAPS CONTINUED FROM PAGE 13

a. With respect to the period shown in the above Schedule: (1) The one-family dwelling...which is shown as the “residence premises” in the Declarations; and b. With respect to any portion of the policy period not shown in the above Schedule: (1) The one-family dwelling... where you reside and which is shown as the “residence premises” in the Declarations.

Comments 1. In a. above, Jack and Jill would have coverage for the fire loss to the house as described in the loss example above, so long as the loss occurred between the Inception Date and the Termination Date on the Schedule of the endorsement, even if they had not moved in yet. Note that a.(1) makes no reference to “where you reside.” 2. One potential drawback is that if they WISCONSIN INDEPENDENT AGENT

selected a Termination Date for the Schedule based on the furniture delivery date given by the moving company, but the delivery was delayed for some reason. In b. above, they would have no coverage for the fire loss if it occurred after the Termination Date, and they had still not moved in. Note that in b.(1) above, losses which occur after the Termination Date are covered only if Jack and Jill have moved in, and the house is “where you reside.” 3. The best solution would be to use the policy’s inception and expiration dates as the Inception Date and Termination Date on the Schedule. 4. However, the gap still remains for a loss that occurs after policy renewal, and after they have moved out, but failed to notify their insurance agent.

Residence Premises Questionnaire Given the importance of residency

status, insurers will most likely develop a questionnaire to be completed by the insured in conjunction with the writing of new business, as well as the processing of renewals. Alternatively, some insurers, as well as ACORD, might opt to amend their Homeowners application to capture this information.

Additional information The Virtual University has a special section on its website devoted to the “Where You Reside” issue. This includes several excellent articles, and a free recording of a Webinar on the subject, done in July 2015. Go to independentagent.com/Education/VU and click Featured Resources.

Necessary Action Circulate this Technical Advisory to all appropriate agency staff. It is imperative that agencies contact each Homeowners market, to determine their adoption date of these new endorsements.

DECEMBER 2015 | 23

COMMENTARY FROM COUNSEL

TECHNOLOGY OPENS NEW RISK MANAGEMENT OPPORTUNITIES As many of you may remember, around this time last year, a drone was spotted hovering over the student section at Camp Randall during what was sure to be another spirited installment of Jump Around. The owner probably got some pretty cool video, but what if the drone had fallen from the sky and hit an unsuspecting student (who was most likely already unsteady on their feet)? More interesting and impressive is the use of drones by our military during recent conflicts around the world. If you were in the crowd at last year’s IIAW convention for former Navy SEAL Rob O’Neill’s inspiring keynote, you heard him talk about the value of drones and saw some drone video footage related to his missions. The latter example is by far the most important use of drones to date, but the former is closer to home (and your business). Commercial and hobby drone usage naturally call for risk management and insurance. Drones? Drones are more formally known as unmanned aircraft systems (UAS) or unmanned aerial vehicles (UAV). Essentially, a drone is a flying robot that can be remotely controlled. Drones are often associated with the military, but they have become very popular among civilians and businesses for recreational and commercial use. Extremely inexpensive, toy-like drones can be had for under $100, and a higher quality

24 | DECEMBER 2015

personal drone with a video recorder attached can be bought for around $1,000. Their affordability puts this technology well within reach for consumers and small businesses. Drones can even be equipped with more advanced technologies than video, including facial and license plate recognition technology, raising privacy concerns that can be discussed another day.

drones to monitor crops and far-flung herds of livestock as well. Additionally, real estate companies have used drones to advertise listings, and news media have utilized drones for aerial coverage. Public safety agencies, including law enforcement and fire departments, also employ drones—a friend of mine recently had a local fire department offer assistance in finding a lost dog by launching their drone to search for it.

Government Regulation and Commercial Use

Insuring Drones

As is nearly always the case, new technology draws the attention of the government and well-intentioned regulators. For drones, the obvious regulatory nexus is aerial operation, so in steps the Federal Aviation Administration (FAA). Once new FAA regulations have been finalized, the FAA estimates that more than 7,000 businesses will obtain drone permits within three years. The new regulations are expected to take effect in early 2017.

Insurance coverage for drones is a relatively untapped market. While drones may be able to fit under traditional first-party property or standard commercial general liability policies, the vast majority of these polices contain aircraft exclusions. Companies like AIG and Unmanned Risk Management now offer UASspecific policies, such as dedicated unmanned aircraft hull and liability coverage, as well as liability-only coverage.

Companies like Amazon and Walmart have already conducted drone-delivery tests and applied to the FAA for an exemption from current regulations. Farmers have begun using

There are several complex liability and coverage issues that can result from drone use, such as: WISCONSIN INDEPENDENT AGENT

COMMENTARY FROM COUNSEL > Third-party liability, including personal injury (that poor, unsuspecting, possibly tipsy student), property damage involving buildings, powerlines or automobiles, and privacy concerns. > Cyber risks, such as theft of confidential data and accidental gathering of sensitive information. > First-party property damage, such as damage to the drone itself (aircraft hull) and damage to the operator’s own property. > Professional liability for businesses using drones. > Workers’ compensation for people working for and in the facilities of businesses using drones. > Directors’ and officers’ liability insurance for investor-funded entrepreneurial startups using drones.

insurance agencies to educate clients and add value in helping manage the risk. The first step, of course, is to determine if your client has a drone. If so, work with them to analyze how it is used and whether insurance is needed (or, while highly unlikely, already in place). Will drone insurance become prevalent and its coverages user-specific—imagine the shift in premium, akin to auto policies, when a

All of these areas present new opportunities for

teenager is the operator of the drone! Insurance carriers are already grappling with scope of coverage issues, and like all good controversies, eventually courts will weigh in as well. Should aircraft exclusions in existing policies be read narrowly and construed in favor of coverage for drones? From an underwriting and coverage standpoint, should insurance companies require or “favor” drone training for the insured? Should policies require drone operators to have the latest firmware and act responsibly? Right now, there are more questions than answers. What is clear is drone usage is taking off, presenting new opportunities in the insurance marketplace. You do not want to miss the flight.

> Josh Johanningmeier is the IIAW’s General Counsel. Call the Legal Services Hotline at (877) 236-1669.

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WEST DES MOINES, IOWA • 800.274.3531 • WWW.IMTINS.COM

WISCONSIN INDEPENDENT AGENT

DECEMBER 2015 | 25

TECHNOLOGY

HELP

YOUR WEBSITE

Google has the largest share of online search. Making sure Google likes your agency website will help your site show up in online searches. How Google decides what sites to display has evolved over the years. It will only show sites that have relevant and useful information for users. So, to become Google’s favorite, you need to follow certain steps.

High Authority Links Your website’s “authority” or “Page Rank” is one factor that will help your site show up in a search result. The more that other websites with high authority link to your site, the higher Google ranks your site. In other words, more weight is given to links from an authority site of high expertise than sites having a low expertise.

If you are establishing a high-quality connection throughout your content, that makes Google identify you as a high-quality site.

Google will even impose a penalty for distributing bad links if lowquality links are in your content. If you are establishing a high-quality connection throughout your content, that makes Google identify you as a high-quality site. The best way to get high-quality links is to create high-quality content that others want to link.

Appropriate Content Keywords Content Keywords are still important but don’t carry the same weight as in the past. However, it continues to be important for you to make sure the keywords (or search terms people use to find your information) are appropriately used in your articles and other content. Your keywords help Google better understand the information on your page so they can list your page in a search result.

Good Heading and Description Tags Another way Google evaluates the information on your webpage is with the help of metadata (information contained in the actual code that makes up a web page). This information helps Google lead traffic to your page rather than falling back on related keywords. In this way, Google will send people that are searching for information your website provides to your page, which will bring more business to the agency.

XML Sitemap Development

the

An XML Sitemap provides search engines with an easy to “read” catalog of all your website pages. Every website should have a sitemap. You can create an XML sitemap using several available free tools. These tools will also help you to alert Google that your site is ready to be indexed. A sitemap acts as a guide for Google to recognize what your website is all about and how those pages and links are relevant. Much time is saved depending on how the search engine ranks your page for a search result.

We look for the best independent agents and build relationships that last the duration. We are committed to the independent agency system as the only means to deliver our products. Because of that, we work hand-inhand to help our agencies grow profitably.

Our agents set us apart. For information about becoming a Partners Mutual Insurance Agent please contact Brian Martin at 262.432.3439; Martin.Brian@PartnersMutual.com or Mike Ottman at 262.432.3418; Ottman.Michael@PartnersMutual.com.

While Google has the majority of search traffic, the principles described here also apply to Bing (and other search engines). This admittedly more technical tip is important to remember when creating a new website, updating an existing site, and when adding new content to your site. Consumers are increasingly likely to start their search for insurance help with an online search. You want to do everything possible to have your agency website show up in their search results.

26 | DECEMBER 2015

> Steve Anderson provides information to insurance agents about how they can use technology to increase revenue and/ or reduce expenses. Go to steveanderson.com.

WISCONSIN INDEPENDENT AGENT

MEMBER PROFILE > Eric Schwartz

LIBERTY MUTUAL: PROVIDING SOLUTIONS FOR AGENTS AND POLICYHOLDERS You’ve seen the TV ads. With the Statue of Liberty as a backdrop, a lone consumer speaks plainly and directly to the camera about their experiences with, among others, new car replacement, accident forgiveness and replacing the irreplaceable “Brad.” These simple and effective messages maintain Liberty Mutual’s strength as a top 10 U.S. auto insurer (using 2014 data) with more than $9 billion in direct written premium and the country’s 3rd largest P&C insurer (based on 2013 data compiled by the NAIC). Overall, the Boston-based company is ranked 78th on Fortune’s list of largest U.S. corporations. At the end of 2014, Liberty had $124.3 billion in consolidated assets, $104 billion in consolidated liabilities, and $39.6 billion in annual consolidated revenue. The company is a diversified insurer with operations in 30 countries and economies around the world, and employs more than 50,000 people in approximately 900 offices. With this staggering national and global success, it’s hard to imagine that it all started in rural Wisconsin. The company, through Wausau Insurance, wrote the first workers’ compensation policy in the United States in 1911. According to Tim Zepnick, Liberty’s Upper Midwest Regional VP and 1992 graduate of UW-Madison, the company currently works with over 80 independent insurance agents representing more than 200 locations in the Badger State. Tim adds, “With local underwriting, distribution, claims, and risk control resources, we are committed to helping our agents and brokers succeed and thrive in the state of Wisconsin,” said Tim. “For our customers, we follow through on our claims service principles: we do what’s right, we’re there when we’re needed, we provide solutions and we make things easy.” On the commercial side, Liberty sells commercial auto, BOP and packages, general liability, property, umbrella, excess liability, multinational, reinsurance, surety bonds, employee benefits, and third party administration through Helmsman Management Services. In personal lines, Liberty Mutual, through Safeco, offers a full line of personal insurance products including homeowners, renters, condo and life insurance. “After 104 years, we still provide workers’ compensation coverage, WISCONSIN INDEPENDENT AGENT

too,” said Tim. After more than 23 years at Liberty working in loss prevention, distribution and various management positions in Wisconsin, California and Texas, Tim has observed challenges that face the industry.

Tim Zepnick is Liberty Mutual’s Upper Midwest Regional Vice President. With its roots in Wisconsin, Liberty has grown into an international force with operations in 30 countries and 50,000 employees.

“It’s been talked about for years but agency perpetuation is a critical issue,” he said. “The industry also has to stay current with emerging trends, technology and customer preferences.” On the subject of perpetuation and bringing in new blood to the industry, Tim thinks the industry has a lot to offer to recent college graduates. “This industry affords professionals a good work-life balance, development and advancement opportunities, varied and interesting work content, and the ability to positively impact society,” said Tim. “Most career disciplines have significant roles in the insurance industry.” This is true and now it’s up to the industry to spread the word and start recruiting future agency and company leaders. It’s a daunting job but not an impossible one. Younger people entering the workforce place a premium on personal fulfillment and Tim feels that the insurance industry can deliver that. “There is tremendous value in what we do. Protecting people and all types of businesses with smart risk management advice and necessary coverages is very satisfying. We help protect what people value most. At Liberty Mutual, our company creed states, ‘We Help People Live Safer, More Secure Lives.’ This is what we strive to do each and every day.” Liberty Mutual’s Wisconsin headquarters is located at N19W24130 Riverwood Dr., Suite 200, in Waukesha. Contact Tim Zepnick at Timothy. Zepnick@LibertyMutual.com, or visit libertymutualgroup.com. Liberty Mutual is a 2015-16 Exclusive Company Sponsor of the Independent Insurance Agents of Wisconsin.

DECEMBER 2015 | 27

Let’s be there when they need that little push.

Loving every minute since 1900 Commercial • Personal • Farm-Ag • Specialty

INVEST _ Andrea Kiemen-Rognsvoog (left) and Diane Mattis, Executive Director of NationalInVEST, presented at the 9th Annual Get Your Students Pumped Up on Personal Finance and Economics! event at Lambeau Field.

THE HUNGER FOR FINANCIAL LITERACY

There is a hunger for financial literacy in Wisconsin.

This past July, Edgewood College held a weeklong class for teachers titled, Investor, Education, Economics and Insurance. Sponsored by the National Institute of Financial and Economic Literacy (NIFEL), the class attracted teachers from all across Wisconsin to learn more about financial literacy. Looking at the presentation agenda, I was struck by the quality of the presenters who preceded me. “Oh no!” I joked with the early birds in the class. “You’ve had a lot of insurance people already?” They bobbed their heads in agreement. I then asked, “What could I give you today that would be valuable for you to take back to your classrooms that you haven’t had yet this week?” Their answer? “Tools to use in the classroom.” As I questioned them further, I found that they had received a comprehensive overview of the insurance industry. They learned about businesses, life insurance, health insurance, and the impact of the Affordable Care Act on the industry and individuals. They had a great baseline of knowledge, but no tools…yet. After following a prestigious line-up of insurance industry peers, it was exciting to know that I could enhance their experience and provide further value for this class! At the conclusion of our time together, 10% of the teachers had signed up for InVEST! In October, I was able to join Diane Mattis, Executive Director at NationalInVEST, in presenting at the 9th Annual Get Your Students Pumped Up on Personal Finance and Economics! summit. What an opportunity! EconomicsWisconsin and Lakeland College’s Center for Economic Education partnered to bring this summit to Lambeau Field for hundreds of Wisconsin teachers. The energy there was incredible! Each session competed with several other sessions for attendees so we were unsure of how many attendees we would draw. It is thrilling to tell you that InVEST filled the room! When I entered the insurance industry 19 years ago, there was limited excitement for insurance. After the presentation, many educators came up to speak with Diane and I about what they were doing and how they saw InVEST as being a part of it. There are so many good things going on in Wisconsin! The flexibility of the InVEST program makes it a viable go-to solution for many initiatives for teachers from high schools, universities and community colleges. These energetic educators are working on projects such as creating free online courses to peak people’s interest in education, working to help struggling students have fun learning about various aspects of finance, and helping the next generation understand the career opportunities insurance offers! Immediately after the summit, the requests to sign up for InVEST WISCONSIN INDEPENDENT AGENT

came pouring in. In one day, we added nine additional Wisconsin schools from various districts to InVEST! At each speaking opportunity, we reviewed the numerous free tools and benefits that InVEST has available for educators and their students. They include: R Scholarship opportunities for students. R Turnkey lesson plans. R PowerPoint presentations for each topic. R Engaging videos to enhance the learning experience. R Online games and activities to reinforce learning. R New e-book (or print copy) for students. R Teacher’s Guide in downloadable electronic book format. R Access to software used by many insurance agencies. R Separate web access for teachers, students and even volunteers! R Ideas and presentations for classroom volunteers. R A volunteer database of Wisconsin insurance agents ready and willing to share their knowledge and passion for our industry! There is a hunger for financial literacy education in Wisconsin and you can help feed it! To be included in our volunteer database, please complete the survey at: surveymonkey.com/ WI_InVEST_Volunteer. You will be contacted based on need by a match by geographical region in Wisconsin and by area of expertise if desired by the educator. By signing up as a volunteer, you will automatically receive a login to InVEST. Please allow a few days to receive your login. To learn more about the InVEST program, visit investprogram.org.

> Andrea KiemenRognsvoog is InVEST State Champion and AVP Personal Insurance Service Manager at Johnson Insurance Services. Contact Andrea at linkedin.com/in/ dreakiemenrognsvoog and iiaw.com/ member/AndreaKR.

DECEMBER 2015 | 29

FOOD FOR THOUGHT BEER BUILT THE BADGER STATE

Food and beverage (including beer) makes up a huge portion of the overall manufacturing picture in Wisconsin. Five Wisconsin breweries are among the 11 oldest in the nation. PBR Me ASAP since 1844 This is not a definitive list but there’s no doubt that beer has a long history in the state and includes a number of the brands and breweries that keep us happy at weddings, ball games and insurance conventions. Among the Wisconsin brewers making the list: • Jacob Leinenkugel Brewing Co., Chippewa Falls, 1867 • Stevens Point Brewery, Stevens Point, 1857 • Miller Brewing Co., Milwaukee, 1855 • Minhas Craft Brewery, Monroe, 1845 • Pabst Brewing Co., Milwaukee, 1844 Source: Thrillist.com

WE ALSO MAKE THINGS THAT DON’T HAVE ABV

While on the subject of old manufacturers…what is the state’s oldest manufacturer (non-food or beverage)? Again, getting a definitive answer isn’t easy but with a little help from the Wisconsin Historical Society, the list narrowed to include Sheboygan Falls’ based Richardson Industries, which traces its roots to 1848 and the construction of sawmill on the Mullet River by Joseph Richardson. Richardson Industries currently operates three divisions: Richco Structures, Richardson Kitchen and Bath, and Richardson Yacht Interiors. Other notables are Kohler Co. (1873), Menasha Corp. (mid-1800s), Briggs and Stratton (1908), S.C. Johnson (1886) and Harley-Davidson (1903).

HAVE A SAFE AND HAPPY HOLIDAY SEASON! I FROM THE STAFF OF THE IIAW

Source: Green Bay Press-Gazette

30 | DECEMBER 2015

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