June 2024 Wisconsin Independent Agent Magazine

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COVER STORY:

Thank Your for Attending InsurCon 2024!

Take a look at our photo spread from the IIAW 2024 annual convention and dive into the exciting highlights of our 125th anniversary celebration!

INDEPENDENT INSURANCE AGENTS OF WISCONSIN

725 John Nolen Drive

Madison, Wisconsin 53713

Phone: (608) 256-4429

Fax: (608) 256-0170 www.iiaw.com

2023-2024 EXECUTIVE COMMITTEE

President:

Mike Ansay | Ansay & Associates

President-Elect: Joanne Lukas Szymaszek | Risk Strategies Company

Secretary-Treasurer:

Dan Lau | Robertson Ryan Insurance

INSURANCE BARTENDER.............................................................6-7

Celebrating 125 Years of Excellence: The Independent Insurance Agents of Wisconsin's Successful InsurCon 2024

RISKY BUSINESS..................................................................................12

Did You Miss "Less Risk. More Reward: E&O Risk Management" at Insurcon?

FROM THE ARCHIVES................................................................15-17

IIAW 115th Convention (2014)

COMMERCIAL LINES.................................................................18-19

What Business Owners Should Know About Election Protests and Riots PERSONAL LINES..............................................................................20

Proactive Education Creates Opportunities in the Hard Market

GOVERNMENT AFFAIRS................................................................22

Justice Walsh Bradley Not Running For Re-election in 2025

COMMENTARY FROM COUNSEL...............................................24

DOL Increases Salary Level Requirements for White-Collar Exemptions

MEMBERS IN THE NEWS................................................................28 FOOD FOR THOUGHT........................................................................31 8-11 PAGES:

ADVERTISERS INDEX

Chairman of the Board:

Nick Arnoldy | Marshfield Insurance Agency, Inc.

State National Director: Steve Leitch | Leitch Insurance

2023-2024 BOARD OF DIRECTORS

Janel Bazan | Avid Risk Solutions/Assured Partners

Beth DeLaForest | Aspire Insurance Group, Inc.

Mike Harrison | R&R Insurance Services, Inc.

Jason Knockel | Kunkel & Associates, Inc.

Aaron Marsh | Marsh Insurance Services, Inc.

Andrea Nelson | Unisource Insurance Associates, LLC

Brad Reitzner | M3 Insurance Solutions

IIAW Staff

Matt Banaszynski | Chief Executive Officer

608.256.4429 • matt@iiaw.com

Mallory Cornell | Vice President 608.210.2975 • mallory@iiaw.com

Kim Kramp | Accounting Supervisor 608.210.2976 • kim@iiaw.com

Trisha Ours | Director of Insurance Services 608.210.2973 • trisha@iiaw.com

Evan Leitch | Agency Solutions Advisor 608.210.2971 • evan@iiaw.com

Kim Fiene | Marketing & Communications Director 608.210.2977 • kimf@iiaw.com

Jeff Thiel | Director of Agency Success 608.256.4429 • jeff@iiaw.com

Andrea Michelz | Education & Membership Engagement Coordinator 608.210.2972 • andrea@iiaw.com

Diana Banaszynski | Events Coordinator and HR Business Partner 608.256.4429 • diana@iiaw.com

Ali Smeester | Accounting Specialist 608.256.4429 • ali@iiaw.com

Wisconsin Independent Agent is the official magazine of the Independent Insurance Agents of Wisconsin (IIAW) and is published monthly by IIAW 725 John Nolen Drive, Madison WI 53713. Phone: 608.256.4429. IIAW does not necessarily endorse any of the companies advertising in publication or the views of the writers. IIAW reserves the right, in its sole discretion, to reject advertising that does not meet IIAW qualifications or which may detract from its business, professional or ethical standards. © 2024

For information on advertising, contact Kim Fiene, 608.210.2977 or kimf@iiaw.com.

When

Wisconsin knows how to help small businesses thrive.

In fact, 99.4%* of businesses in the state are small. UFG Insurance knows how to partner with Wisconsin agents to help small businesses survive. The user-friendly online quoting system at ufgagent.com offers the ability to build a BOP with supporting lines of auto, cyber, umbrella, and workers compensation, which comes with policyholder perks like 24/7 nurse triage. A BOP can be tailored to the unique needs of your customers. And a dynamic team of small business experts, including a dedicated underwriter and territory manager, are only a call or click away when you need them. Here’s a taste of UFG’s small business appetite:

ELECTRICIANS, FENCE CONSTRUCTION, FLOOR COVERING, GLASS DEALERS/INSTALLERS, HVAC, PAINTERS, LAWN CARE/ SPRINKLERS, PLUMBERS

APPLIANCES, AUTO PARTS, FLOWERS, HARDWARE/TOOLS, FLOOR COVERINGS, BAKED GOODS, PLUMBING SUPPLIES/FIXTURES, JANITORIAL SUPPLIES

ACCOUNTANTS, ADVERTISING AGENTS, ATTORNEYS, INTERIOR DECORATORS, REAL ESTATE AGENTS, VETERINARIANS

COFFEE SHOPS, DELIS/ SUB SHOPS, DONUT/BAGEL SHOPS, DINERS, FAMILY STYLE RESTAURANTS, FINE DINING RESTAURANTS, PIZZA SHOPS

APPLIANCE, AUTO PARTS, BICYCLE SHOPS, BOOK, CANDY, FLORISTS, HARDWARE, HOBBY/CRAFTS, HOME FURNISHINGS, SPORTING GOODS

OFFICE BUILDINGS LRO SINGLE/MULTI-TENANT, RETAIL/SERVICE LRO SINGLE TENANT, STRIP MALL LRO

BAKERIES, PHOTOGRAPHERS, BARBER SHOPS, COPY/PRINT STORES, BEAUTY SALONS, FUNERAL HOMES, MAILBOX/PACKAGING

We’re here for your complex middle market and construction packages, too.

We believe some of the brightest minds in the industry are at UFG, ready to leverage deep underwriting expertise to help you and your customers reach goals. We’re eager to write construction and middle market accounts like these with agents like you:

REAL ESTATE

COMMERCIAL CARPENTRY, COMMERCIAL GENERAL CONTRACTORS, CONCRETE PAVING, DRYWALL, HVAC AND ELECTRICAL, MASONRY, PLUMBING

CLASS A PROPERTIES, COMMERCIAL BUILDINGS (NONRESIDENTIAL), OFFICE BUILDINGS, REAL ESTATE MANAGERS, REAL ESTATE OPERATORS

BREWERIES, COMPONENT PARTS, MACHINERY, MACHINE SHOPS, METAL FABRICATION, TOOL AND DIE

AUTO AND HOME SUPPLY STORES, FLOOR COVERINGS, HARDWARE STORES, HOUSEHOLD APPLIANCES, KITCHEN AND CABINET STORES, LAWN AND GARDEN EQUIPMENT

ACCOUNTING FIRMS, ENGINEERS, FINANCIAL INSTITUTIONS, HEAVY CONSTRUCTION EQUIPMENT, PROFESSIONAL SERVICES

DURABLE GOODS, ELECTRICAL GOODS, HARDWARE DISTRIBUTION, PLUMBING AND HVAC, PROFESSIONAL AND COMMERCIAL EQUIPMENT

*U.S. Small Business Administration Office of Advocacy, 2023 Small Business Profile. This publication is for informational purposes only, is accurate as of the publication date, and may not reflect subsequent revisions. The terms and language in the insurance policy shall govern. UFG does not undertake any obligation to update the information contained in this piece between publications. Some states may not allow all coverages listed. Consult an independent UFG agent about specific coverages available in your state.

CELEBRATING 125 YEARS OF EXCELLENCE:

THE INDEPENDENT INSURANCE AGENTS OF WISCONSIN'S SUCCESSFUL INSURCON 2024

The Independent Insurance Agents of Wisconsin (IIAW) recently marked a significant milestone in its illustrious history with the celebration of its 125th anniversary at InsurCon 2024. Held in the crown jewel of stadiums, Lambeau Field, this convention was not just a commemoration of our legacy but a testament to the resilience, innovation, and unwavering dedication and success of independent insurance agency channel across the state and the U.S.

The convention served as a platform for industry leaders, agents, and affiliates to come together, reflect on past achievements, and chart a course for the future. Spanning multiple days, the event was filled with insightful discussions, educational sessions, networking opportunities, and moments of celebration marked by appearances by Green Bay Packers Coach Matt LaFleur, former player Don Majkowski, current Tight End Luke Musgrave and legendary Hall of Famer Charles Woodson.

One of the defining features of the convention was its emphasis on the evolving landscape of the insurance industry. With technological advancements, changing consumer preferences, and regulatory developments shaping the sector, independent agents are continually adapting to meet new challenges. Panel discussions and seminars delved into topics such as digital transformation, risk management strategies, and emerging trends, equipping attendees with the knowledge and tools needed to thrive in a dynamic environment. We were incredibly

grateful for having the CEOs and Executives from Penn National, UFG, ACUITY, West Bend Mutual, Church Mutual, Society, and Progressive with us to celebrate and learn from their tremendous experience.

Beyond the professional development aspect, the convention was also a celebration of community and camaraderie. For 125 years, independent insurance agents in Wisconsin have been pillars of support for their clients, providing personalized service, expert guidance, and a reassuring presence during life's uncertainties. The convention provided an opportunity to recognize and honor these contributions, highlighting the vital role agents play in safeguarding individuals, businesses, and communities.

Moreover, the convention showcased the spirit of collaboration within the independent insurance community. Through partnerships with carriers, vendors, and industry associations, agents have access to a wealth of resources and expertise, enabling them to better serve their clients and navigate complex insurance landscapes. The convention fostered meaningful connections and partnerships, further strengthening the fabric of the independent insurance ecosystem in Wisconsin.

A highlight of the convention was the recognition of longstanding members and industry veterans who have dedicated their careers to the

advancement of the insurance profession. Their wisdom, experience, and mentorship have been invaluable in shaping the next generation of agents and ensuring the continued success of the industry. We paid tribute to retiring CEOs Kevin Steiner of West Bend Mutual and Rich Poirier of Church Mutual. We also honored some special individuals who have significantly contributed to the advancement of the IA channel, their agencies success and the associations prosperity. Bruce Prince was awarded the Carrier Representative of the Year Award, Julie Bartelt received the Mary Morrison CSR of the year award, Darrel Zaleski was presented the Government Affairs Leader of the Year award, Justin Staebler was named the Emerging Leader of the Year and Joanne Szymaszek was presented with the Skip Hansen Agent of the Year award. I would also be remiss if I didn’t recognize the achievements and contributions of Mike Ansay as President and Aaron Marsh and Mike Harrison’s service on the board of directors. While Aaron moves off the board, Mike will advance to the role of Secretary/Treasurer.

As the convention drew to a close, there was a palpable sense of optimism and excitement for the future. The independent insurance agents of Wisconsin have demonstrated resilience and adaptability over the past 125 years, and they

Matt’s Mixology

Classic Champagne Cocktail

are poised to continue growth and success in the years to come. Armed with knowledge, innovation, and a commitment to excellence, they are well-equipped to navigate whatever challenges and opportunities lie ahead.

Lastly, I would like to recognize our staff. They put in a tremendous amount of work into this incredible event. Without them, the IIAW would not be the nationally recognized and successful organization it is today. I am extremely proud of their hard work and dedication, but more importantly how passionate they are in helping independent insurance agencies succeed.

The Independent Insurance Agents of Wisconsin's 125th anniversary convention was a resounding success, serving as a fitting tribute to the past, present, and future of the independent insurance industry in the state. As agents return to their communities inspired and energized, they carry with them the spirit of collaboration, innovation, and service that has been the hallmark of the IIAW for over a century. Here's to another 125 years of excellence and impact. We’ve only just begun!

Because you need to celebrate those wins in life and do so in tasteful fashion. Cheers to another 125 years!

Ingredients

• 4-6 oz Champagne or Sparkling Wine

• 1 cube sugar

• 2-3 dashes bitters

• 1/2 oz brandy splash

• 1 ea orange peel or slice

• 1 ea maraschino cherry

Directions

• Assemble ingredients

• Drop sugar cube to bottom of glass

• Add bitters on top of sugar allowing them to soak into cube

• Splash brandy on top of sugar cube and bitters

• Top off with champagne, filling glass

• Garnish with cherry and orange

• Serve very well chilled

> Matt Banaszynski, CEO, IIAW

THANK YOU FOR ATTENDING INSURCON 2024

Thank you to all who joined us at InsurCon 2024 at Lambeau Field, marking our momentous 125th anniversary celebration. It was a privilege to gather with such an exceptional group of insurance professionals, united in our commitment to advancing the goals and fostering the growth of the independent agency channel. Your presence and participation were integral to the success of this historic event, and we are immensely proud to have shared this milestone with you.

Tailgate with the Greats

We were joined by Packers Head Coach Matt LaFleur, Packers tight end Luke Musgrave, and Packers Hall of Famer Don Majkowski at our 125th Anniversary Tailgate Party.

An Evening Celebration to Remember

Thursday night's evening celebration dinner included our annual awards ceremony, a presentation from Big "I" President and CEO, Charles Symington, and a stellar keynote from none other than NFL Hall of Famer Charles Woodson.

EVENING CELEBRATION & AWARDS

DID YOU MISS “LESS RISK. MORE REWARD: E&O RISK MANAGEMENT” AT INSURCON?

The IIAW’s 125th Anniversary celebration at InsurCon2024 was a huge success. One of my personal highlights was the E&O Risk Management class, a departure from traditional E&O classes. Filled with engaging storytelling and real-life examples from agencies across the country, this class offers resources that can improve your agency operations.

For those who couldn't attend the convention or this session, here's a glimpse of what you missed. Even if you were present, remember, repetition is key to learning.

Standard of Care: The National Big I has an updated guide to state standard of care laws. While many states (including Wisconsin) fall under “order takers with special circumstances,” it is important to understand how your duty to your customer may be interpreted if you have customers in other states.

Sample Late Payer Letter: Want to discontinue reminding direct bill clients to pay their premium? You should! This is the carrier’s responsibility, not the agents', so you are essentially creating a new duty where none previously existed. We have a letter that will help you cordially tell clients you will no longer be offering these reminders, but they will still receive payment reminders from the carrier.

Sample Procedure Manual: Looking for a template to build your own internal workflows or new ideas to update the procedures you already have documented? This updated Sample Procedure Manual will be a time-saver and will help you continue

to drive consistency and improvement in your agency operations.

Sample Coverage Checklists: Most E&O claims are made against agents for failing to procure coverage. This can be defended by using an exposure checklist to confirm information from the client and a coverage checklist to help agents remember to offer important coverage options to their clients. Oh, and it's very good documentation to use to show you actually had these conversations!

Website Language: Over the last five years, there has been a significant increase in attorneys using an agency’s website against them in an E&O lawsuit. This is so prevalent that you may be eligible for a premium credit on your SwissRe E&O policy if you utilize your IIAW team for a formal E&O website review! We offer a quick guide of “What Not to Say” on your website and social media, but the easiest way to mitigate this risk is to have our team review your site for promises, guarantees, or missing disclaimers.

If you’ve always considered E&O risk management a boring subject, let me prove you wrong. Our team’s goal is to help drive efficiency, build consistency, and enhance the customer experience. If we can do these things for your agency, proactive E&O risk mitigation will be completed as well!

> Mallory Cornell, Vice President, IIAW

We’ll keep the kitchen rolling.

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The worst brings out our best.®

WHAT BUSINESS OWNERS SHOULD KNOW ABOUT ELECTION PROTESTS AND RIOTS

In the midst of a fraught election season, business owners may be starting to wonder about insurance coverage if their property is damaged by a protest or riot. Six months before the November election, independent agents can help commercial clients think through the exposures that political unrest could present.

The standard business owners policy, as well as auto and homeowners insurance, covers physical damage to property caused by a civil disruption, such as a protest or riot. However, policies exclude war and insurrection.

“The most recent widespread instances of civil disruption were after the tragic murder of George Floyd in Minneapolis in 2020," says Mark Friedlander, director of corporate communications of the Insurance Information Institute (Triple-I). “Unfortunately, some of those turned violent, and we saw damage to properties and local businesses."

In contrast, “war is an international issue, typically caused by a foreign adversary—a completely different set of dynamics," he says. “War has always been an exclusion in not only business policies but homeowners insurance as well."

Concerns about insurrection may well be on business owners' minds, in light of the attack on Capitol Hill by supporters of former president Donald Trump after he lost the 2020 election to

President Joe Biden. “Insurrection is a unique category to itself," Friedlander says. “Since unfortunately we saw an insurrection after the last federal election, that's a new concern."

Whether insurers will begin considering coverage for this type of loss remains to be seen. “Insurrection has always been a common exclusion in property insurance policies," he says.

Meanwhile, as long as the damage is caused by a protest, riot or civil unrest, or the civil authorities' response, “a standard BOP will cover physical damage to the business, including the structure, contents and inventory," Friedlander explains.

However, a major variable that is not covered by a standard BOP during a protest is loss of income, which is “covered under business interruption insurance, also known as business income coverage, and it's an add-on policy," he says. “It kicks in if there is direct physical damage to the premises, and a civil authority provision triggers coverage for lost income and extra expenses if law enforcement or the fire department bars access to the property."

Important to note, business interruption is only triggered if there's a physical loss to a property. “If a business owner is worried and decides to voluntarily shut down, that's not a covered loss," Friedlander says.

While typically businesses with revenues up to $5 million are eligible for business interruption insurance, “it's estimated that between 30%-40% of U.S. small business owners carry this coverage— which means there's a significant insurance gap, in our opinion," Friedlander says.

While riots may crop up quickly and unpredictably, if a business owner does have some advance warning, such as a planned demonstration with the potential to escalate into a full-blown riot, they can take some risk mitigation steps.

“Board up windows," Friedlander says, also pointing out that some businesses do purchase a separate endorsement for coverage for plate-glass windows. “If there's a concern about impacts of

an expected disturbance, are they able to move inventory to a different location?"

“In the past, insurance was about reacting to losses. Now, it's about predicting and preventing losses," he adds. “That's where risk mitigation comes into play—not only with your property but also protecting the people you employ."

This article was originally featured on iamagazine.com in May 2024.

Workers’ Compensation

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Upfront loss control measures

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Our Workers’ Compensation policy is available nationwide except in monopolistic states: ND, OH, WA, and WY.

> AnneMarie McPherson Spears, IA News Editor, Big 'I'

PROACTIVE EDUCATION CREATES OPPORTUNITIES IN THE HARD MARKET

Through proactive communication, diversification and investment in their agencies, independent agents are successfully navigating the hard market and laying the groundwork for future growth, according to the “2024 Agent-Customer Connection Study," the latest research by Liberty Mutual and Safeco's Agent for the Future.

The report explores how the hard insurance market is impacting both agents and customers, with 83% of agents saying this is the hardest market they can remember seeing. Also, 89% of customers said their insurance rates increased in the last year and 21% said it increased “significantly."

Yet, customers don't fully understand what's causing rate increases, the report said. Only about 20% of insurance customers say they understand the market forces behind rising insurance rates. Insurance clients want their agents to help them understand, as 62% said it's important for their agent to educate them on the changing market dynamics.

However, while 70% of independent agents say they are proactively communicating with their clients about market conditions, only 20% of customers said they first heard about a rate increase from their agent. More than half (58%) said they first learned about the increase when they noticed their bill amount changed.

There is an opportunity for agents to communicate their value as trusted advisors through improving proactive communication. Agents could improve customer satisfaction and retention by adapting their communication strategies, particularly when it comes to customers who have experienced significant rate increases, the report says.

“Insurance is a relationship business," said Luke Bills, president of independent agent distribution

at Liberty Mutual and Safeco Insurance. “In a hard market, those relationships have become even more important. We already know that customers rely on their independent agents for advice and expertise on their insurance coverage. But this research goes further to show that today's customers are turning to their agent for even more. They want their agent to educate them on changing market conditions, help them better understand policy changes and provide advice on risk mitigation."

According to the research, forward-thinking agents have stepped up to today's challenges, adapting to meet clients' needs and finding growth opportunities. Agencies that experienced an annual revenue increase of more than 10% reported three strategies: diversifying and shifting toward markets less impacted by the hard market; investing in new retention programs to keep existing clients happy; and positioning themselves for future growth by continuing to invest in new client acquisition programs, as well as hiring additional staff.

Amid the hard market, 65% of agents say their retention rates are the same or better than they were a year ago, and 69% say they are acquiring new clients at the same rate or better than the previous year.

“Hard insurance markets are challenging, but they don't last forever," Bills said. “It's with a sense of optimism that I can say—and this research validates— that independent agents are well-positioned to weather this market and come out stronger, more resilient and customer-centric."

This article was originally featured on iamagazine.com in May 2024.

>

JUSTICE WALSH BRADLEY NOT RUNNING FOR RE-ELECTION IN 2025

Justice Ann Walsh Bradley has announced that she will not seek reelection to the Wisconsin Supreme Court in 2025, marking the end of her tenure as the court's longest-serving active member, which began in 1995. This decision is particularly notable

because Justice Walsh Bradley had previously indicated plans to run for a fourth 10-year term in the 2025 spring nonpartisan election. Her departure leaves an open seat on the high court that is expected to result in a highly competitive and costly court race.

Walsh Bradley, known widely as a judicial liberal, has been a significant figure on the court. With the election of Justice Janet Protasiewicz in 2023, which flipped the court to a liberal majority, many anticipated Walsh Bradley might eventually become Chief Justice. The current liberal majority on the court stands at 4-3, and retaining or flipping this philosophical balance will be crucial for both political sides. Conservatives will not have another chance to regain a majority until at least 2028, following the terms of conservative Justices Rebecca Bradley and Annette Ziegler, which end in 2026 and 2027, respectively.

The upcoming 2025 election for Walsh Bradley's seat is set to be intensely contested. Brad Schimel, a former Republican Attorney General, announced his candidacy early, positioning himself as a judicial conservative. Another conservative, Appellate Judge Maria Lazar, is also considering entering the race. On the progressive side, Appellate Judges Chris Taylor

and Pedro Colón have opted not to run, but Dane County Judge Susan Crawford is still contemplating a candidacy. The outcome of this 2025 spring election will be pivotal in maintaining or altering the court's current ideological balance, as well as will impact all major statewide cases on appeal ranging from business and environmental regulations, tax enforcement, separation of powers, and tort law, to name a few.

In Other News:

New Revenue Agency Secretary Appointed

Governor Tony Evers announced the appointment of David Casey as the new Secretary of the Department of Revenue (DOR). Casey, who began his tenure on April 29, brings extensive experience in tax compliance and fraud prevention from his recent role at SAS Institute, an analytics software company. Prior to this, he served as Deputy Revenue Secretary from 2019 to 2022 under former Secretary Peter Barca.

Peter Barca resigned from his position in late March and soon after announced his bid for Congress. The leadership transitions in the Evers Administration extend beyond the DOR; the Departments of Corrections (DOC) and Natural Resources (DNR) are currently without appointed cabinet secretaries. The DNR has been without a leader since October 2023, and the DOC has been leaderless since former Secretary Kevin Carr retired in March. Both Barca and Carr were among the original cabinet appointees from when Governor Evers first took office in 2019.

> Misha Lee IIAW Lobbyist

In 1919, A group of Pennsylvania farmers founded Penn National Insurance to provide affordable workers’ compensation insurance.

Today, Penn National Insurance sells property-casualty insurance in 12 states by partnering with more than 1,200 independent agency operations. In 2012, we affiliated with Wisconsin-based, Partners Mutual Insurance Company. As one company, we bring the personal attention and local focus of a regional carrier, along with the quality of products and services of national carriers.

Interested in partnering with a thriving insurance carrier with superior customer experience? We are looking for seselect commercial lines-oriented agencies in Wisconsin.

Contact:

Vicki Lentz

262-432-3420

vlentz@pnat.com

Contact: Clayton Zogata

715-383-5454

czogata@pnat.com

• Strong financial performance and A.M. Best Financial Strength Rating of A (Excellent) Positive Outlook

• Expanded Commercial Lines products and services with competitive pricing and comprehensive coverages to help our agents grow profitably

• Comprehensive Personal Lines product offerings, including Homeowners Equipment Breakdown and additional protection plans

• State-of-the-art quoting, processing and self-service tools, making it easier and faster to meet your customers’ needs

• Local, experienced underwriting, claims and management staff

DOL INCREASES SALARY LEVEL REQUIREMENTS FOR WHITE-COLLAR EXEMPTIONS

You have no doubt heard and seen media and industry coverage of an upcoming increase in the federal salary threshold for white collar workers to be exempt from overtime requirements. There is a little bit of déjà vu, as we saw a similar rollout in 2016, though it ultimately was never implemented. So, what is happening now? On April 23, 2024, the U.S. Department of Labor (DOL) issued its long-expected final rule increasing the salary threshold for employees to be exempt from federal overtime requirements under the Fair Labor Standards Act (FLSA). The new rule significantly increases the minimum salary requirement for executive, professional, and administrative employees (aka “white-collar workers”), effective July 1, 2024, with additional increases in the future. The new rule faces stiff headwinds, is likely to be challenged in court, and, of course, it is a presidential election year, which could significantly impact the rule's future.

Refresher on White-Collar Exemptions

The FLSA requires that employers ordinarily pay their employees time and one-half for work exceeding forty hours in a week. The Act provides an exemption from overtime for persons “employed in a bona fide executive, administrative, or professional capacity”—aka, the “white collar” exemptions. Generally, each of the white-collar exemptions has three elements that an employee must satisfy before he/she can be considered exempt under that category: (1) Salary Basis Test, i.e., how the employee is paid; (2) Salary Level Test, i.e., how much the employee is paid; and (3) Duties Test, i.e., the nature of the job. If the employee’s responsibilities and compensation do not satisfy all three elements, then the exemption does not apply. While the new DOL rule affects only the Salary Level requirements, a short reminder of the operation of the three tests is helpful.

The Salary Level test currently requires the employee to earn at least $684 per week, or $35,568 annually. An employer meets the Salary Basis requirement when it pays a regular, predetermined amount to an employee each pay period that makes up all or part of the employee’s

total compensation. The salary cannot vary because of variations in the quality or quantity of work performed. The employee must receive the full salary for any week in which the employee performs work, without considering the number of days or hours the employee worked. The Duties Test varies slightly by type of white-collar exemption, but essentially rules out repetitive, manual labor positions and looks to the actual supervisory, managerial or executive function of the position.

New Salary Threshold

As explained above, the current Salary Level requirement is $684 per week ($35,568 per year). The new DOL rule increases this minimum salary threshold, initially to $844 per week ($43,888 per year) as of July 1, 2024, and then to $1,128 per week ($58,656 per year) as of January 1, 2025. Thereafter, the rule provides for an automatic update to the threshold every three years based on wage data.

The new rule also increases the annualized salary threshold for white-collar workers to qualify under the “highly compensated employee” overtime exemption. As of July 1, 2024, this threshold will increase from $107,432 to $132,964. Then, on January 1, 2025, it will rise to $151,164, and thereafter, the threshold will be updated every three years based on wage data.

What To Do?

First, keep an eye on this column, IIAW alerts and other industry coverage for the status of the new rule, as it will be subject to legal challenges prior to its July 1, 2024 effective date. Next, your agency still should prepare for potential compliance and examine each position for which you are claiming the White-Collar exemption from overtime to ensure it qualifies (not just under the Salary Threshold, but of course all three tests). If your salary levels exceed the new thresholds, this change will not immediately impact your operations, as long as all three requirements are met. If in doubt, contact your counsel for assistance interpreting the tests and analyzing the positions for which you are claiming White-Collar exemptions.

> Josh Johanningmeier, IIAW General Counsel

READY TO TAKE THE NEXT STEP?

No matter where you are in your insurance journey, the Big “I” is ready to help. Expand your knowledge, build your book of business, maximize your marketing or cultivate an agency team that thrives in any market. Independent agencies at more than 25,000 locations lean on the Big “I.”

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IT’S TIME TO TAKE THE NEXT STEP, THE BIG “I” HAS YOUR BACK

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EMERGING LEADERS

Who We Are

What We Do

The IIAW Emerging Leaders is a statewide network of insurance professionals striving for professional growth through education, leadership development, legislative involvement and insurance career perpetuation. The group hosts a variety of in-person and virtual events throughout the year to allow members to learn, network and grow professionally.

The IIAW Emerging Leaders is committed to offering best-in-class professional development and networking opportunities for insurance professionals across the state.

Who Should Join

Young insurance professionals who are looking to enhance their career and build relationships within the industry.

We create experiences to help members build their careers and integrate best practices.

We develop meaningful relationships between agents, carrier representatives and association members.

We provide unique professional development opportunities (industry simulations, personal development, speakers, webinars, etc.).

We engage future industry decision-makers in events and volunteer roles.

Members in the News

SFM’S FINANCIAL STRENGTH RATING OF A(EXCELLENT) REAFFIRMED BY AM BEST

BLOOMINGTON, Minn – SFM Mutual Insurance Co. announced that its Financial Strength Rating of “A(Excellent)” and Long-Term Issuer Credit Rating of “a-” have been reaffirmed by AM Best Rating Services, Inc.

AM Best issued this rating based on several factors, including its assessment of SFM’s balance sheet strength, as well as its operating performance, business profile, innovation and enterprise risk management. Before publicly disclosing this affirmation, AM Best conducted a thorough analysis of SFM’s finances and operations.

“Our annual review with AM Best gives us the opportunity to share our company’s story, and commitment to customer service, with experts from the global authority in credit ratings for the insurance industry,” said SFM President and CEO Terry Miller. “We view this annual rating as an important indicator of SFM’s long-term financial strength and stability.”

About AM Best

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the U.S., the company does business in more than 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com .

About SFM

SFM, headquartered in Bloomington, Minn., is a customerowned mutual insurance company providing Minnesota, Wisconsin, Iowa, Nebraska, South Dakota, Kansas, Indiana and Tennessee employers with workers’ compensation coverage. SFM offers workers’ compensation insurance solutions for employers of all sizes, including injury prevention, claims and disability management, cost containment, legal assistance and third-party administration. For more information, visit sfmic.com.

Community support includes monetary grants, volunteer work and donation drives.

FOND DU LAC, Wis. (May 20, 2024) — A major corporate gift to the St. Katharine Drexel Shelter and a United Way workplace fundraising campaign led charitable giving efforts for Society Insurance in 2023.

Society and its employees donated $191,423 to local organizations and programs including Big Brothers Big Sisters, Boys & Girls Club, Fond du Lac Area Women’s Fund, Fond du Lac Area YScreen, Fond du Lac Family YMCA, Moraine Park Foundation, Treffert Way School for the Exceptional Mind and the UWO-Fond du Lac Foundation.

“Society Insurance believes in giving back where we live and do business, whether from an employee, agency or policyholder perspective,” said president & CEO Heather Boyer. “We made a difference in our communities with our time and donations.”

As a leading restaurant and bar insurer, Society donated to non-profit organizations dedicated to ending food insecurity, supporting farmers, providing aid to restaurant workers and educating the next generation of hospitality industry entrepreneurs in Wisconsin (Children’s Museum of Fond du Lac Le Cordon Kids culinary program, Extension Fond du Lac County Lemonade Day, Feeding America Eastern Wisconsin, Fondy Food Pantry, Moraine Park Technical College Culinary Arts degree program and Second Harvest Foodbank of Southern Wisconsin) and beyond (Chefs for Farmers in Texas, Giving Kitchen in Georgia and Tennessee and Keep Feeding Austin in Texas).

Employees rolled up their sleeves to supply 567 volunteer hours for non-profit groups Big Brothers Big Sisters, Boys & Girls Club, Fondy Food Pantry, Sleep in Heavenly Peace and United Way. They also gave coats, Christmas presents, hygiene supplies and school supplies via community donation drives.

To expand its reach, Society assisted charitable causes across its nine-state operating territory through agency and employee match programs. These programs offer a matching grant from Society to charities selected by independent insurance agencies and employees.

ABOUT SOCIETY INSURANCE:

Headquartered in Fond du Lac, Wis., Society Insurance has been a leading niche insurance carrier since 1915. Society focuses on the small details that make a big difference to its policyholders while offering top-notch insurance coverage, service and competitive pricing to businesses in Wisconsin, Illinois, Indiana, Iowa, Minnesota, Tennessee, Colorado, Georgia and Texas.

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