January 2015 WI Independent Agent Magazine by Independent Insurance Agents of Wisconsin

wisconsin

INDEPENDENT AGENT JANUARY 2015

116th

ANNUAL IIAW CONVENTION MAY 13-14, 2015 KALAHARI RESORTS, WI DELLS REGISTER AT IIAW.COM

SCHEDULE OF EVENTS, PAGE 10

People who run a business know. The most valuable things

are also the hardest to get.

Your customer’s veterinarian practice didn’t grow overnight. It came from years of hard work, confidence in what they could do, and making smart decisions. That’s why an insurance policy from West Bend makes sense. It protects these valuable and hard-earned businesses so your customers can focus on doing what they do best. And as an Official Supplier of The Silver Lining, it’s backed by your knowledge and experience. West Bend. Insurance your customers buy when they can’t afford anything less.

wisconsin

INDEPENDENT AGENT JANUARY 2015 Eric Schwartz, Editor

Open Door Policy Could Your Agency Survive A Data Security Breach. . . . . . . . 5 Marketing Minute Do You Have ESP?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2015 Annual IIAW Convention Schedule Of Events . . . . . . 10 Professional Development The Assistants’ Coach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Make-A-Wish Wisconsin: The Force Is With Bryce. . . . . . . 16 Government Affairs State DOT Spending Plan Proposes New Fees, Higher Taxes . . . . . . . . . . . . . . . . . . . . . . . 19 News From ACT Revisiting Carrier-Agency Technology Agreements . . . . . . . 27 Commentary From Counsel President to DOL: Modernize White Collar Overtime Exemptions. . . . . . . . . . . . 29

On The Cover… Collaboration. Fresh ideas. Working together to achieve our goals. That’s the story of the 116th IIAW Annual Convention. The industry continues to evolve and our Association is leading the evolution. Check out the schedule of events on page 10. Register now at IIAW.com.

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 2014-2015 Executive Committee President..................................................... John Wickhem P.O. Box 1500, Janesville, 53547-15 President-elect................................................. Steve Leitch P.O. Box 85, River Falls, WI 54022 Secretary-Treasurer........................................ Matt Weimer 100 North Corporate Drive #100, Brookfield, WI 53045 Chairman of the Board................................. Dave Dunker P.O. Box 443, Brookfield, WI 53008-0443 State National Director................................. Linda Steiner 555 Main Street #320, Racine, WI 53403 2014-2015 Board of Directors 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 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 Lise Meyer Kobussen P.O. Box 633, Sauk City, WI 53583 Brian McClone 505 North Westfield Street, Oshkosh, WI 54902 WISCONSIN INDEPENDENT AGENT

Jeff Rasmussen 525 Junction Road, Madison, WI 53717 Michael Walston P.O. Box 236, Kewaunee, WI 54216-0236 Darrel Zaleski 4233 Southtowne Drive, Eau Claire, WI 54701

> OUR ADVERTISERS AAA................................................................. 30 ACUITY Insurance............................................. 31 Applied Underwriters.........................Back Cover Badger Mutual................................................. 28 Burns & Wilcox..................................................11

2014-2015 Committee Chairs

Erickson-Larsen, Inc.......................................... 7

Agency Operations........................................ Kim Dandrea 1300 South Green Bay Rd. #100, Racine, WI 53406

Guard Insurance.............................................. 24

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

IIAW Continuing Education.............................. 26

Emerging Leaders....................................... Janelle Higgins 6200 Mineral Point Road, Madison, WI 53705-4504 Employee Benefits.............................................. Tim Bever 555 Main St. #320, Racine, WI 53403 Finance & Compensation............................. Matt Weimer 100 North Corporate Drive #100, Brookfield, WI 53045 Government Affairs........................................Skip Hansen 100 North Corporate Drive #100 Brookfield, WI 53045 Industry Relations........................................ Kevin Murray 525 Junction Road, Madison, WI 53717

Insurance Associates of America.....................18 JM Wilson........................................................ 20 Legacy Life Now.............................................. 20 Northern Underwriting Managers.................... 13 Pekin Insurance............................................... 25 Robertson Ryan............................................... 12 SECURA Insurance............................................. 4

Marketing & Membership Development............ Jeff Thiel P.O. Box 1610, Waukesha, WI 53187-1610

The IMT Group................................................... 9

Smaller Agencies..................................... Michael Walston P.O. Box 236, Kewaunee, WI 54216-0236

West Bend......................................................... 2

Technical.................................................... Mark Truyman P.O. Box 6 , Seymour, WI 54165

Western National............................................... 6 Wilson Mutual................................................... 21 JANUARY 2015 | 3

Let’s make sure they can spend time tending their roots.

Strong, steady growth since 1900 Commercial • Personal • Farm-Ag • Specialty 4 | NOVEMBER 2014

WISCONSIN INDEPENDENT AGENT

OPEN DOOR POLICY

COULD YOUR AGENCY SURVIVE A DATA SECURITY BREACH?

Everywhere you turn, you hear the news of another cyber attack on an American business and the expensive pitfalls that come with it. But cyber warfare isn’t just being waged on large corporations. Many small- and medium-sized businesses have suffered breaches as well and your agency is at risk.

If you are an IIAW/Swiss Re E&O policyholder you do have some coverage for 1st and 3rd party breaches of data. However, your agency should be relying on your primary coverage if you have a breach. As a result, the IIAW has partnered with Arlington Roe and Beazley to offer you a state-of-the-art, comprehensive cyber liability program and policy at an unbelievable price. According to Beazley, “A full 80 percent of businesses that experience one don’t survive it. The right insurance can keep your agency from becoming part of this startling

is low hanging fruit... hackers know these enterprises lack the security resources of their larger counterparts. Only 38 percent of breaches in the latest Verizon study impacted larger organizations. 2. Responding to a breach is not only costly - running an estimated $200,000 - it’s complex. Experts from multiple disciplines - from forensic investigators, to public relations firms, to privacy counsel - may be needed to mount a coordinated response to even a small incident. Botch the response and your reputation can be irreparably damaged. There is also the specter of

and few options. If first-part coverage is provided, limits may be inadequate for the exposure. For third-party liability, coverage may fall short in key areas, such as responding to acts of rogue employees. Does it address regulatory fines and penalties? Does the insurer have the duty to defend? 4. You are obligated to protect data you collect. This might include everything from personal information, such as addresses, Social Security and driver’s license numbers of employees, policyholders or prospects, as well as corporate information - including sensitive financial information on commercial clients. If you handle employee benefits, you may have personal health information in your care. State and federal regulations dictate proper handling of private information. If this information is breached, agents must navigate the different laws in 46 states that mandate how victims must be notified.

Sony’s data breach garners all the attention and media coverage but more small- and mid-sized businesses — like many independent insurance agencies — are targeted every year. statistic.” If that is not enough reason to consider purchasing data breach protection for your business, here are six more: 1. Data breaches are common among smaller businesses like yours. Some 55 percent of small businesses responding to a recent survey have experienced a data breach and 53 percent have reported multiple incidents. If you collect sensitive information from policyholders, you are at high risk. Data held by small businesses WISCONSIN INDEPENDENT AGENT

regulatory fines and penalties and legal liability. A single laptop left on a commuter train or stolen at an airport can cost an agent nearly $50,000 - most of that being expenses to respond to data breached - or potentially breached. 3. Package policies are not up for the task. Your commercial package policy may have a cyber liability extension, but take a hard look at the coverage it provides. Endorsements typically carry low limits

5. Even if you outsource data handling, your exposure stays in house. You may feed data into 3rd party agency management or document management systems or outsource data storage to a cloud provider. Still, if your agency’s data is breached, you are obligated to respond. Some 70 percent of small businesses report that breaches are more likely to occur when outsourcing data. 6. The exposure is not just from hackers intruding on electronic systems. Breaches are caused by everything from lost, discarded, or stolen laptops, PDAs, smartphones, and portable memory devices, to CONTINUED ON PAGE 7

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

JANUARY 2015 | 5

COULD YOUR AGENCY SURVIVE A DATA SECURITY BREACH? CONTINUED FROM PAGE 5

innocent procedural errors and acts of disgruntled employees. It could be a lost phone or flash drive or a cyber attack by hackers half way around the world. Every breach and threat is different and every one requires a smart, strategic

Beazley: A full 80 percent of businesses that experience a data breach don’t survive it. response. With Beazley Breach Response, your agency can secure comprehensive coverage for the expenses incurred to respond to a

WISCONSIN INDEPENDENT AGENT

breach and have experts standing ready to deliver the well-coordinated response you need to mitigate financial damages and protect your reputation. It encompasses everything from forensic investigation, legal compliance and public relations services to breach notifications, call center servicing and ongoing credit and data monitoring.

table. Attend one of our loss control seminars today. This course is constantly updated with claims data from here in Wisconsin and around the nation so that we may quickly identify trends in claims and relay that information to our students in the classroom.

ATTENTION IIAW E&O POLICY HOLDERS

If you can’t attend one of our in in-person courses, don’t sweat it. You can take E&O Risk Management: Meeting the Challenge of Change virtually from the comfort of your office or home and still receive a 10% credit on your E&O premium. Visit IIAW.com and check out our Education calendar to select the course that best fits your schedule.

During the months of February, March and April, we will be offering the course, E&O Risk Management: Meeting the Challenge of Technology Change live and in-classroom. This course qualifies for a 10% credit on your E&O premium. Don’t leave money on the

Remember…. Our E&O program is not just a policy, it’s a comprehensive program offering you the very best our industry has to offer! Contact Mary Morrison to learn more and to get a fast quote.

To learn more, contact Mary Morrison at the IIAW office, or visit IIAW.com and click Cyber Liability.

JANUARY 2015 | 7

MARKETING MINUTE

DO YOU HAVE ESP? Over the last few years, social platforms have risen in importance as a way for an insurance agency to build an ongoing relationship with their prospects and clients. Email marketing continues to be a vital tool that every agency should utilize.    Email is — by far — the most common way to have a conversation with someone else. Every social platform requires an email address to sign up. Yes, people are buried in emails today. And, yes, email spam is an ongoing problem, but even with these issues, individuals continue to respond to email. Using email

Using an Email Service Provider

a Email’s quick delivery reduces delays in communication, allowing the agency to run more smoothly. a An exact return on investment can be tracked (“track to inbox”) and has proven to be high when done properly. Email marketing is often reported as second only to search marketing as the most effective online marketing tactic.

Email Service Provider or ESP. There are a number of ESPs available to help you properly and legally manage your email lists. Some of the more popular include: > Aweber > iContact > Constant Contact

a Email marketing is significantly cheaper and faster than traditional mail.

> GetResponse > Mailigen

Being able to track how many people receive your emails, open them, and click links within them will help you know what works and what doesn’t.

> VerticalResponse > GraphicMail > GoDaddy

a Your agency can consistently reach email subscribers who have opted-in (i.e., consented) to receive email communications on topics of interest to them.

Why Use an ESP?

Your insurance agency should focus a part of your marketing efforts on growing an email newsletter list.

a Almost half of American Internet users check or send an email on a typical day.

Advantages of Email Marketing

Email Service Providers

Email is an effective tool for the following reasons:

If you want to get the most out of using email as a marketing tool, you’ll need to use an

It’s All About Delivery: Your email could have great content, but that won’t matter if the email never reaches the recipient. Emails sent through an ESP are much more likely to arrive at the person’s inbox because ESPs are considered “trusted.” This does not mean,

communication is a way to build ongoing relationships, perhaps better than any social platform available today.

8 | JANUARY 2015

Here are a few of the benefits your agency can expect when using an ESP to manage your email lists:

WISCONSIN INDEPENDENT AGENT

MARKETING MINUTE however, that some of your emails will not end up in spam folders. Professional Templates: You want your emails to reflect your agency brand. ESPs offer predesigned templates that you can customize for your emails. Templates allow you to deliver consistent information and improve the efficiency of creating multiple email notifications for similar actions. Automatic Sign-Ups and Unsubscribes: Opt-in is a term used when your prospect or client gives you permission to add them to your email newsletter list. If you don’t obtain permission before sending an email, the email is unsolicited bulk email, better known as spam. A double opt-in process first requires the individual subscribing to your newsletter to fill out a form and click a button to be added to the list, and then they need to confirm their request — hence the double opt-in. The second opt-in is an email that is sent to the person asking them to verify that they wanted to be added to the list by clicking on the link in the email. (Author’s Note: For all of my email newsletters I strictly adhere to this double opt-in process. No one can be added to this email newsletter list

without confirming his or her request.) The double opt-in process is the best way to make sure that someone requesting your information cannot come back to you at a later time and say you are spamming them.

and click links within them will help you know what works and what doesn’t. This information will help you improve the number of people who read your emails and, ultimately, boost your sales.

Using email communication is a way to build ongoing relationships, perhaps better than any social platform available today.

The ESP will manage this process for you by using an autoresponder. Autoresponders: Autoresponders allow you to create a series of emails in advance and schedule them to be sent out at the date and time of your choosing. For example, you can automatically send a welcome email after a new subscriber signs up. Unsubscribe Management: You should provide your newsletter recipients with an easy way to unsubscribe from the newsletter. The last thing you want to do is send an email to someone who doesn’t want it anymore. Reporting: Being able to track how many people receive your emails, open them,

An email newsletter is a great way to stay in touch with your prospects and clients. A normal email client like Outlook just doesn’t have the features you need to manage this communication process effectively. Using an email service provider will help you manage your email communications, so you can make sure people are receiving the right message at the right time from your agency.

> Steve Anderson provides information to insurance agents about how they can use technology to increase revenue and/or reduce expenses. He also likes to cook. Find tech and cooking information at steveanderson.com.

2015 ANNUAL IIAW CONVENTION SCHEDULE OF EVENTS WEDNESDAY, MAY 13 8:00 AM

CONVENTION REGISTRATION OPENS

8:00–10:30 AM

CE SESSION: • Automation/Technology Committee Committee Seminar Featuring Annual Open Forum with Additional Mini-Sessions: Electronic Delivery and Strategic Technology Plan

8:30–10:30 AM

CE SESSION: • Emerging Industry Issues Panel

8:30–10:30 AM

EXECUTIVE ASSISTANT COACHING Kathy Paulson, The Assistants’ Coach LLC

10:45 AM–12:15 PM

WELCOME REMARKS IIAW President John Wickhem FEATURED SPEAKER: RYAN HANLEY OF AGENCY NATION Content Marketing & Digital Strategy

12:30–2:00 PM

KEYNOTE LUNCHEON WITH SPECIAL GUEST ROB O’NEILL (RSVP Required) Never Quit

2:00–5:00 PM

CONVENTION SHOWCASE Featuring VIP Suite, Free Headshot Booth and Emerging Leaders’ Social Media Lounge–Free Assistance in Setting Up Social Media Accounts (Facebook, LinkedIn and Twitter)

5:00–8:00 PM

COMPANY HOSPITALITY HOURS FOR PRIVATE ENTERTAINING & INDIVIDUAL DINING

8:00 PM–Midnight

CONVENTION RECEPTION AT WISCONSIN BREW PUB Featuring Live Dueling Pianos, a Late Night DJ, and Complimentary Local Beer All Night Long

THURSDAY, MAY 14

10 | JANUARY 2015

8:30–9:45 AM

ANNUAL AWARDS BREAKFAST & BUSINESS MEETING

10:00–11:15 AM

FEATURED SPEAKER: RYAN HANLEY OF AGENCY NATION Trusted Choice – Best Practices & Strategies to Make Marketing Work for You

11:30 AM–2:00 PM

CE SESSIONS: • Procedures Manual 1…2…3 - An E&O Overview Mary Hauri, Insurance Concepts in Motion • Workers’ Comp Forum - Advanced Concepts • Let’s Talk SHOP - Federal HCR’s Impact on 2015, 2016 and 2017 Dave Grunke, WPS

WISCONSIN INDEPENDENT AGENT

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PROFESSIONAL DEVELOPMENT

THE ASSISTANTS’ COACH: TEACHING WORLD-CLASS COMMUNICATION, CONFIDENTIALITY & COMPETENCY

Creative and smart company leaders – presidents, CEOs and other high-level executives – partner with their assistants to increase their own productivity and efficiency. In truth, it takes a creative and smart executive assistant to pull this off. Long gone are the days when assistants provided primarily clerical support for the boss. Executive assistants today attend key meetings, manage schedules, are involved in strategy sessions, and serve as a sounding board for the leader. Experience counts in these positions but finding employees with these talents and interpersonal skills can be a lesson in futility. Enter the Coach. Kathy Paulson is founder and principal of The Assistants’ Coach, a consulting firm that specializes in teaching and developing senior level assistants and executive assistants with world-class skills. Kathy’s eminent experience lends itself perfectly to this venture.

“It comes down to the three Cs — Communication, Confidentiality and Competency,” said Kathy. “In my time in corporate America managing, training and mentoring, these three components exemplify what it takes to achieve and maintain a high level of professionalism. The Assistants’ Coach will develop and strengthen these skills.” Paulson asserts that communication and the reintroduction of formal language, confidentiality and its ethical implications, and competencies beyond computer skills, are being lost in these tech savvy times. One competency that stands out is the ability to understand your boss.

For 23 years, Kathy has worked closely with executives, stakeholders and their customers. Most recently, she served as the senior executive administrator for Dave Pauly, president and CEO of Capitol Insurance Companies.

“In many ways, you have to clone yourself to the person you’re working for,” she said. “The executive assistant should match the leader’s management style. Otherwise there could be an organizational disconnect. An exceptional assistant should also be a good gatekeeper for the executive. This seemingly simple act alleviates the leader’s stress so they can do the job they are paid to do.”

Kathy’s background has given her valuable insight into what is required to be successful.

She continued: “All of these concepts remain critical to the success of the individual and the

After 23 years in the corporate workplace, Kathy Paulson founded The Assistants’ Coach, a consulting firm specializing in teaching world-class skills to senior level assistants. company. Without them the workplace can lack cohesiveness and trust. My goal is to help achieve synergy between the executive and the entire support team. My passion and understanding of the job allows me to teach and enhance the skills of others.” Kathy Paulson is founder of The Assistants’ Coach. Contact Kathy at 608.220.6918, or kapaulson48@ gmail.com. Learn more at madisonconsultants.com and linkedin.com. Look for in depth articles about the importance of communication, confidentiality and competency in upcoming issues of Wisconsin Independent Agent.

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For more information call Gary Burton, Chief Operating Officer, at 414.221.0386. All calls will be kept in the strictest confidence.

WISCONSIN INDEPENDENT AGENT

JANUARY 2015 | 13

ERRORS & OMISSIONS

DOES THE RIGHT HAND KNOW WHAT THE LEFT HAND IS DOING? As technology allows the ability to service large groups of clients more efficiently, many agencies are increasingly expanding their reach beyond the confines of one metropolitan area. In order to better service their customer base, agencies may open additional locations or may acquire existing entities to expand their business. The management of multiple locations creates new challenges and those challenges, if not handled correctly, may lead to increased opportunities for error. Controlled growth whether organic or through acquisition can increase efficiencies and reduce cost. However, it is important to manage that growth. Be sure that the “right hand knows what the left hand is doing”. Consistent culture, compliance and communication throughout the agency at all locations, is essential to prevent confusion and potential claims which may otherwise arise from acquisitions and dispersed locations.

Make sure all staff understands your agency culture Owners, producers, agents, CSRs and all staff must understand the focus of the business. If the agency’s stated focus is on personal lines, then the agency should not deviate into complex specialized lines. If the agency focus is on certain niches of business, the agency should train their agents and supporting staff on how to service those markets. Often

When the workload is heavy and clients demand your attention at your primary agency location, it can be difficult to give your attention to the other office locations. But in order to keep those other locations in line with your vision, you must provide them with the attention they need. You should try to visit your other agency locations frequently, at least once a month. Visit each site for a long enough time that the each site does not put on a front for you but actually reveals to you its true method of operation. By allowing each office to become comfortable with your visits, you can build trust and familiarity. The agents and staff at each location must feel close enough to the primary agency to be able to ask questions, share problems and seek feedback.

Establish uniform office procedures and a standard system of compliance Each province has regulations to protect their own citizens. If you locate a branch office or even a teleworker, in another state, you must research licensing and other business regulations impacting your

Owners, producers, agents, CSRs and all staff must understand the focus of the business. Often claims begin when the agency attempts to sell insurance products with which it is unfamiliar.

claims begin when the agency attempts to sell insurance products with which it is unfamiliar. Understand your focus. If you are acquiring agencies, acquire those that fit your vision. Then share your vision with all staff at every agency location on a regular basis. Help your team see what the agency is trying to accomplish and how each person can contribute by staying focused on the goals of the entire organization.

14 | JANUARY 2015

insurance operation. Failure to comply with regulatory requirements could lead to regulatory investigation, disciplinary action, or even the possible revocation of your license. If adjustments are needed as a result of the regulations, do not begin operating your business until you comply with the law. For example, an agency had a CSR move to another state and began working remotely as a clerical assistant to their

personal lines manager. This employee’s job description did not entail discussing or recommending coverage with clients, and the agency believed that her job description was in line with the requirements of the state department of insurance. However the department viewed it differently and fined the agency $7,000 for the employee not having the proper license and viewed the tasks performed by this employee as “effectuating the sale of coverage.” As soon as the agency was notified of the infraction, they made changes to her job description and directed her to acquire the proper license. They then established a Director of Compliance and Compliance Committee to monitor the activities on an ongoing basis. Standard operating procedures will enhance the efficiency and management of multiple agency locations. Staff can transfer among agencies, without extensive readjustment. The essential procedures should not vary. Each agency should have similar procedures regarding date-identification of communication with clients and carriers. Additionally, documentation of coverage offered and rejected, and maintenance of expiration lists should be standardized. This excerpt from a letter we received from the attorney retained to defend an insured, reveals the difficulties in offering a defense when procedures are not followed. The litigation arose from damage sustained by a commercial enterprise where the carrier argued that the agency had not provided the necessary information for the carrier to quote coverage, despite several requests. Counsel stated the agency “has no documentation that it sent the proper information and the agent who worked on the account left the agency several years ago on unfavorable terms. The agent’s CSR says the agent was not detail oriented, was not good about providing information, and often made mistakes.” Defense counsel WISCONSIN INDEPENDENT AGENT

ERRORS & OMISSIONS

opined that it was highly likely the judge will rule that the agency failed to provide the necessary information. The agency itself had a strong culture of compliance but suffered from one agent who had not followed the standard office procedures established and who, thus, created a significant problem for the agency. In addition to implementing uniform procedures around the process of file documentation, the agency should also implement uniform procedures for diary

and suspense systems. There should be a centralized agency management system and computers in each location should be compatible with one another. In fact, it is likely that computer systems will become a backbone for your organization as offices are spread out geographically. Additionally, it is essential that you ensure adequate security of personal information acquired from your insureds, and that you provide proper privacy training to all employees. The use of encryption and other measures to protect personal data when transmitted is important. If employees use smart phones, verify the phones are password protected.

> While with ERC/GE Insurance Solutions/Swiss Re, Annette Hollingsworth has served in a variety of capacities ranging from claims to underwriting, legal to regulatory services and global compliance. Annette now serves in the Products unit where she supports the Insurance Agents Professional Liability underwriters in both the US and Canada. WISCONSIN INDEPENDENT AGENT

As part of the establishment of standardized procedures, make sure the staff in each location knows the

method to report an errors and omissions situation. Establish and discuss the procedure with all agents and employees. Do so regularly to prevent hesitation in reporting at the time of occurrence. Donâ&#x20AC;&#x2122;t let problems linger. Delays could create coverage issues with your professional liability carrier.

Communication is a key to successfully running multiple locations Free and open communication with all staff is very important when you have multiple locations. Neither the culture nor the compliance can happen if you neglect to focus on communication. Have weekly staff meetings by phone or webinar. Have your office personnel get together at least once or twice a year to enhance communication between people on all levels.

CONTINUED ON PAGE 21

JANUARY 2015 | 15

Bryce is an amazing 8-year-old boy who was diagnosed with Ewing’s Sarcoma last April. He has fought his illness bravely and kept his spirits up through exhausting chemotherapy and other treatments. Make-A-Wish Wisconsin set the wheels in motion to fulfill Bryce’s wish to have his bedroom remade into the ultimate game room with a Star Wars theme. The inspiration for the game room came from Cameron, another wish kid he met and became friends with in the hospital. The Independent Insurance Agents of Wisconsin, with a grant from Trusted Choice, partnered with Make-A-Wish to sponsor the wish. The sponsorship is part of a larger commitment ($500,000 in total) from Trusted Choice that will help local chapters

This page photos, left to right: The message on the cake says it all. In addition to the Star Wars decorations, Bryce’s room was fully furnished with a loft bed, activity desk and a football-shaped desk chair. To play video games, his room was outfitted with two video gaming chairs with speakers, a flat screen TV, an Xbox One with four controllers, gaming headphones, Xbox live cards and an entertainment center to hold his new TV and video games. A $400 gift card donated by Game Stop will help Bryce buy his favorite games like Plants vs. Zombies Warfare and Minecraft which he is holding here. The big moment is finally here! Bryce opens the door to his new room. Bryce beams as he sees his room for the first time. The Force is with him and now it’s written on his wall. This is what it looks like to have a wish come true.

throughout the country grant more wishes. On December 5, Bryce experienced the power of the force and his wish came true when he walked into his new Jedi game room. Bryce shared his wish with his Dad and Mom, Jeff and Michelle, and his 10-year-old sister, Marissa. “Make-A-Wish does a fantastic job of bringing hope to wish kids like Bryce,” said Matt Banaszynski, IIAW Executive Vice President. As you can see from the photographs, Bryce was surprised and beaming as he discovered his new room. Thank you to MoreThanJustPictures.com for taking these fantastic photos. Please go to www.facebook.com/IIAofWI for more.

Next page photos, left to right: A place to rest and read. Bryce’s new bunk bed has a built in dresser, desk, new bedding and pillows, and a cool football chair. Darth Vader stands watch. The gaming center - a new flat screen TV on top of the entertainment center. A new Xbox One is in the top row in the second cubby hole from the right. Every Jedi needs a light saber. Bryce’s big sister, Marissa. Bryce received a football signed by Packers coach Mike McCarthy. He also has a basketball signed by Bo Ryan. Bryce admires his new Stormtrooper. After a week in the hospital, Bryce was happy to be home. Bryce in his new bed. A true gamer has sweet headphones.

WISCONSIN INDEPENDENT AGENT

JANUARY 2015 | 17

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YOU

1 0 OW 0%

MARKETS

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Not all markets are available in all states.

GOVERNMENT AFFAIRS

STATE DOT SPENDING PLAN PROPOSES NEW FEES, HIGHER TAXES

In preparation for the 2015-17 biennial budget debate set to begin early next year, one major state agency has caught the attention of the public and state lawmakers. The Wisconsin Department of Transportation (DOT) recently proposed a budget plan that includes $751 million in tax and fee increases and $1.36 billion in additional spending. focus on reining in overall spending on transportation that could lead to road and other projects being delayed or cut. Other groups such as road builders, labor unions and local governments have come out in support of the DOT’s spending plan.

*Graph from the MacIver Institute Graph from the MacIver Institute

The agency’s formal budget request to the Governor is an increase of about 22 percent from the previous budget.

The DOT’s proposed budget includes: a M odifying the motor vehicle fuel tax to include a variable component based upon the wholesale price of fuel sold in Wisconsin a Establishes a higher tax rate on diesel fuel

The plan is a direct response to address a projected $680 million transportation budget shortfall in the near term and a $5 billion shortfall over the next decade - an estimate from the Wisconsin Transportation Finance Policy Commission. The commission was created by the Legislature several years ago to examine issues related to the future of transportation finance in the state and to provide recommendations. States like Wisconsin are also facing budget uncertainty from the federal government and solvency issues with the federal Highway Trust Fund. There is widespread consensus that investments in our transportation infrastructure is vitally important economically for the state, but the varied responses from policymakers and the public to the latest DOT budget proposal demonstrates that consensus is lacking on how to address the shortfall and fund transportation over the long term. Governor Walker has already indicated that there would be changes made to the DOT budget between now and when he formally introduces his state budget plan to the Legislature early next year. A diverse coalition of influential business organizations has already come out expressing serious concerns with raising gas taxes and other fee increases arguing they could put businesses at a competitive disadvantage. These same business groups also acknowledge the need for certain revenue enhancements to fund critical infrastructure improvements, but they question whether the amount of revenue increases proposed by the DOT are appropriate. Some want the DOT to WISCONSIN INDEPENDENT AGENT

a I mposes a new highway user fee based on a percentage of the manufacturer’s suggested price for a new vehicle a C reates a $50 annual registration fee for owners of electric and hybrid cars a U ses approximately $500 million of general purpose tax revenues to fund transportation operating costs The biennial state budget is a massive $71 billion spending package that affects all of us and sets Wisconsin’s fiscal course for the next two years. The DOT budget is just one major component that affects all users of the state’s Transportation system. While the budget plan is simply a starting point for public dialogue and changes to it by the Governor and Legislature are expected, it has without question, forced a much needed conversation about developing a > Misha Lee is Owner/ better, more comprehensive, long-term strategy Founder of Lee for financing our state’s transportation needs. Happy holidays and best wishes for a healthy and prosperous New Year!

Government Relations, LLC and lobbyist for IIAW. Follow Lee Government Relations on Twitter @mishavlee.

JANUARY 2015 | 19

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DOES THE RIGHT HAND KNOW WHAT THE LEFT HAND IS DOING? CONTINUED FROM PAGE 15

Communicate your vision to all managers in all locations and they in turn must commit to clearly communicating your vision to others in the off-site agencies. Regular audits and evaluations of the

organization, do not avoid discussing problem situations. Consider learning opportunities that may present themselves from potential claims situations. Educate your employees about the situations that

Standard operating procedures will enhance the efficiency and management of multiple agency locations. The essential procedures should not vary.

manager and the office are critical to making sure your vision is being carried out according to your expectations. While striving for positive energy in your

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have created problems in one office so other office sites can avoid the same mistake. Growth is positive when controlled but be sure that the â&#x20AC;&#x153;right hand knows

what the left hand is doingâ&#x20AC;?. Consistent culture, compliance and communication throughout the agency at all locations, can be essential to preventing confusion and potential claims which may otherwise arise from acquisitions and dispersed locations. This article is intended for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group and/or its subsidiaries and/or management and/or shareholders.

JANUARY 2015 | 21

WS E N E H T N I S R E B M ME West Bend, Lester & SmartSpectrum Insurance and Rafters Partner to Benefit YMCA The Wisconsin Rapids Rafters are proud to announce that, in partnership with West Bend and Lester & Smart/Spectrum Insurance Group, the organizations have helped raise $1,125 for the South Wood County YMCA. The partnership centered around the number of home runs hit by the Rafters at Witter Field during the 2014 season. For each home run hit, West Bend and Spectrum Insurance made a donation of $75 to the South Wood County YMCA.

“The Road to Success Scholarship is a great way for Grinnell Mutual agents to recognize student drivers. Together we encourage our young drivers to earn good grades and drive responsibly,” said Barb Baker, director of advertising and community relations. Is a high school senior you know eligible for the scholarship? Applicants must: a Be insured through a personal auto policy with Grinnell Mutual Reinsurance Company or Grinnell Select Insurance Company, or be a dependent named on a Grinnell Mutual or Grinnell Select Insurance Company personal auto policy; a Maintain a cumulative high school GPA of 3.0 or above; a Have a clean driving record (no accidents or violations);

“We would like to thank both West Bend and Lester & Pictured from left: John Fanta (Rafters General Manager), Brett Salscheider (SWCYMCA Director), Tim Birkhauser (Spectrum Insurance Group), Ryan Smart-Spectrum Severson (West Bend Mutual Insurance), Joe Treml (Spectrum Insurance Group). Insurance for their contribution to the South Wood County YMCA for each home run hit at home by the Rafters this season,” Rafters general manager John Fanta said. “By working with great partners like these we are able to utilize the game of baseball to assist organizations that provide outstanding services to our community.” The YMCA has been serving South Wood County since 1957. The “Y” is the place to go for family events, activities, and fun. Annually, over 15,000 individuals participate in YMCA programs and no one is ever turned away for an inability to pay. “We are happy to support the South Wood County YMCA through this endeavor and look forward to partnering again with the Rafters next summer,” said Tim Birkhauser from the Lester & Smart-Spectrum Insurance Agency. To learn more about West Bend, please visit thesilverlining.com. Find our more about Spectrum Insurance at spectruminsgroup.com.

Grinnell Mutual Offers 60 Road to Success Scholarships in 2015 Grinnell Mutual Reinsurance Company and its independent agents will award 60 Road to Success Scholarships of $1,000 each to college-bound high school seniors in 2015. The scholarship recognizes students for their excellence in the classroom and behind the wheel. The scholarship is available to students throughout Grinnell Mutual’s 11-state writing territory, including Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, and Wisconsin.

22 | JANUARY 2015

a Plan to attend an accredited post-secondary educational institution in the fall of 2015 as a full-time student; a Not be a dependent of any Grinnell Mutual employee or affiliated agent. Scholarship winners will be chosen at random from eligible applicants. To learn more and to apply, pick up an application from your local Grinnell Mutual agent or download it at grinnellmutual. com. All applications must be submitted to Grinnell Mutual by March 15, 2015. To learn more about Grinnell, please visit grinnellmutual.com.

EPA Honors Philadelphia Insurance with Green Power Leadership Award  Philadelphia Insurance Companies (PHLY) announced today that it has received a 2014 Green Power Leadership Award from the U.S. Environmental Protection Agency (EPA). The annual awards recognize the country’s leading green power purchasers for their commitment and contribution to helping advance the development of the nation’s voluntary green power market. EPA presented PHLY with the award (photo available upon request) at an event held in conjunction with the 2014 Renewable Energy Markets Conference in Sacramento, California on December 3, 2014. “EPA is pleased to recognize Philadelphia Insurance Companies with a Green Power Purchasing award for its exceptional commitment to buying green power and reducing carbon pollution associated with its electricity use,” said EPA Administrator Gina McCarthy. “In doing WISCONSIN INDEPENDENT AGENT

WS E N E H T N I S R E B M ME so, Philadelphia Insurance Companies is taking action to address climate change, and we encourage other organizations to do the same.”

National Society of Human Resources and the Latino Chamber of Commerce Dane County Member. She graduated from the University of Wisconsin-Madison in 2008 with a double major in Marketing and Management/Human Resources. To learn more about M3, please visit m3ins.com.

PHLY is one of only nine organizations nationwide to receive a Leadership Award for its green power purchase. The award recognizes EPA Green Power Partners who distinguish themselves through purchases of green power from a utility green-pricing program, a competitive green marketer, or a renewable energy certificate (REC) supplier. PHLY is currently purchasing nearly 5 million kilowatt-hours (kWh) of green power annually, which is enough green power to meet 100 percent of the organization’s electricity use. According to the EPA, PHLY’s annual green power use of nearly 5 million kWh is equivalent to eliminating the carbon dioxide (CO2) emissions of nearly 700 passenger vehicles per year or the amount of electricity needed to power nearly 500 average American homes annually.

ACUITY Employees Present $350,000 to Community Organizations At a recent ACUITY Town Hall meeting for its staff, employees determined the distribution of a special-year end contribution of $350,000 to six different organizations. Those groups included American Cancer Society, Feeding America, Safe Harbor of Sheboygan County, The Salvation Army, Sharon S. Richardson Community Hospice, and Sheboygan County Health and Human Services.

“The increase in severe weather events worldwide has demonstrated a need for greater environmental responsibility by governments, businesses, and communities,” said PHLY Chief Executive Officer Bob O’Leary. “Purchasing renewable energy certificates is an effective and meaningful way for PHLY to support green power as we work to reduce our environmental footprint. We truly appreciate being recognized by the EPA for this effort.” To learn more about Philadelphia, please visit PHLY.com.

M3’s Alicia Kiser Wins ATHENA Young Professional Award Alicia Kiser, Human Resource Manager at M3 Insurance, is the recipient of the 2014 ATHENA Young Professional Award presented by The Business Forum. Kiser’s efforts around career development and diversity at M3 and throughout the business community, along with her commitment to guiding and supporting young women in various aspects of their life, were instrumental in her winning this year’s award.

Laura Roenitz, Safe Harbor Executive Director, speaks to employees during an ACUITY Town Hall meeting on December 11, 2014. The special contribution adds to ACUITY’s ongoing support to the community throughout the year. Guided by the ACUITY Charitable Foundation, ACUITY contributed $1.25 million to organizations in 2014 and plans to increase that amount to $1.35 million in 2015. The foundation was created in 2003 and is under the direction of a seven-member board that evaluates requests and monitors community needs. “We believe in supporting the communities where we work, live, and do business,” said Ben Salzmann, ACUITY President and CEO.

Kiser has led an effort to ensure every employee at M3 has a career plan. She has served as a role Alicia Kiser model and coach to young women by providing guidance and support to grow their careers, and she has worked to broaden the diversity of M3’s workforce. Kiser serves as M3’s liaison and an executive board member to the Madison Area Diversity Roundtable.

“We place a high priority on helping organizations that provide social services to the community, but we also support children’s organizations, scholastic events, the arts, and many different types of groups and activities,” said Wendy Schuler, ACUITY Vice President – Finance. “We strike a balance between addressing the needs and security of individuals and families and providing general support for the community as a corporate citizen.”

In addition, Kiser is a board member of Girls on the Run – Dane County and The Business Forum, and a member of Greater Madison Area and

ACUITY’s community support throughout the year also includes

WISCONSIN INDEPENDENT AGENT

CONTINUED ON PAGE 25

JANUARY 2015 | 23

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WS E N E H T N I S R E B M ME J.M. Wilson Promotes Brokerage Manager

CONTINUED FROM PAGE 23

in-kind donations and use of the company’s corporate headquarters for charitable events. In addition, ACUITY employees contribute to charitable causes each year though donations of time, money, and much-needed supplies. In the company’s 2014 holiday gift drive, ACUITY staff members donated more than 40 cases filled with gifts and over $1,400 in cash to Sheboygan County Health and Human Services for distribution to local families.

J.M. Wilson is pleased to announce the promotion of James Reincke as Brokerage Manager for the newly formed Brokerage Department. James is responsible for developing and strengthening new and existing agency and company relationships, as well as growing the Brokerage book of business for 21 states. Earning a Business Administration Degree with a Concentration in Insurance from Olivet College, James has also James Reincke earned designations of Associate in Insurance Services (AIS) and Associate in Commercial Underwriting (AU).

“During the holidays, ACUITY provides toys, clothing, gift cards, hygiene items, food items, and more. It is wonderful to be able to distribute these gifts on ACUITY’s behalf and make the holidays a little more joyous for those less fortunate,” James began with J.M. Wilson in 2006 as a Commercial Underwriter, before being said Pat Prigge, Services Social Worker III and Volunteer promoted as Wisconsin Branch Manager in 2011. Prior to J.M. Wilson, James worked for Coordinator. “ACUITY’s donations to the Health and Human Hastings Mutual, Burns and Wilcox and OneBeacon Insurance. With close to 14 years Services have provided invaluable assistance and support to in the Insurance industry and 10 years working in a Managing General Agency, James is children, families, and the elderly throughout Sheboygan well equipped to be the go-to resource for unique brokerage accounts. County for years.” To learn more about ACUITY, please visit 2014_IndustryAds_FieldManagers_WI - Ind. Agent 1/17/14 7:58 acuity.com. To AM learnPage more1 about J.M. Wilson, please visit jmwilson.com.

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CONTINUING EDUCATION ABEN ONLINE CLASSES

Procedures Manual 1, 2, 3 – An E&O Overview 3 CE Credits Approved Date: January 20, 2015 Location: ABEN Online – iiaw.aben.tv Time: 8:30 – 11:30 AM Ethics in Today’s Changes Times 4 CE Credits Approved Date: January 21, 2015 Location: ABEN Online – iiaw.aben.tv Time: 8:30 AM – 12:30 PM Hot Topics in Personal Lines 2 CE Credits Approved Date: February 3, 2015 Location: ABEN Online – iiaw.aben.tv Time: 9:00 – 11:00 AM E&O Risk Management – Meeting the Challenge of Change 6 CE Credits Approved Date: February 3, 2015 Location: ABEN Online – iiaw.aben.tv Time: 10:00 – 4:00 PM Data Privacy Insurance 2 CE Credits Approved Date: February 3, 2015 Location: ABEN Online – iiaw.aben.tv Time: 12:00 – 2:00 PM From Medicaid to the Exchange: What Every Agent Should Know 4 CE Credits Approved Date: February 4, 2015 Location: ABEN Online – iiaw.aben.tv Time: 8:30 AM – 12:30 PM Directors and Officers Liability Insurance 2 CE Credits Approved Date: February 4, 2015 Location: ABEN Online – iiaw.aben.tv Time: 1:00 – 3:00 PM From Medicaid to the Exchange: What Every Agent Should Know 4 CE Credits Approved Date: February 4, 2015 Location: ABEN Online – iiaw.aben.tv Time: 12:00 – 4:00 PM

IIAW ONLINE CLASSES

Ethics and the Law 3 CE Credits Approved Date: January 27, 2015 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM Unwrapping the New BOP Package 3 CE Credits Approved Date: January 28, 2015 Location: IIAW Webinar – iiaw.com/events Time: 8:00 – 11:00 AM Cyber Liability 3 CE Credits Approved Date: January 28, 2015 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM Unlock the Secrets of D&O Insurance 3 CE Credits Approved Date: January 29, 2015 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM Condominiums 3 CE Credits Approved Date: February 5, 2015 Location: IIAW Webinar – iiaw.com/events Times: 12:00 – 3:00 PM The Dirty Dozen 3 CE Credits Approved Date: February 6, 2015 Location: IIAW Webinar – iiaw.com/events Time: 8:00 – 11:00 AM Contractors Property Exposures 3 CE Credits Approved Date: February 9, 2015 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM E&O Risk Management – Meeting the Challenge of Change (Parts 1 & 2) 3 CE Credits Approved for Each Class Date: February 12, 2015 Location: IIAW Webinar – iiaw.com/events Times: 8:00 – 11:00 AM (Part 1) 12:00 – 3:00 PM (Part 2)

FOR MORE CLASSES AND TO REGISTER, PLEASE GO TO IIAW.COM

NEWS FROM ACT

ACT WORK GROUP REVISITS CARRIERAGENCY TECHNOLOGY AGREEMENTS Group makes recommendations on 10 key issues In 2004, ACT published recommendations on agency-carrier technology agreements that looked at a range of issues, from data access and integrity to document retention, third-party information and more. Much has changed since that report and more change is on the way. This led a Work Group of ACT volunteers to take a fresh look at carrieragency contracts — those that incorporate technology and those that address it as a

and addressing retention and systems of control in the tech addendum; and ensuring that negligent parties bear responsibility for resolution.

currently occurs from agreement to agreement. Recommendations offer guidance on form, timing issues, duties and an array of content-related topics.

The group also identified and offered guidance on ten specific issues that agreements should address:

a Access by Authorized Users. Carrier policy on website access and definitions of user and permitted use must be clear, as should processes for granting access and responsibilities for misappropriation or

standalone topic — and to publish updated guidelines.

in the use of e-signatures calls for clear understanding of procedures and policies, particularly around integration, characteristics of identity, consent, disclosure, and audit trail.

Failure of both carriers and agencies to make sure there’s clarity on technology issues up-front can lead to significant problems down the road — for them and their customers. Many issues the Work Group addressed often are not contemplated during the busy-ness of day-to-day operations. It’s kind of like insurance: you don’t think about it until something happens, and then it’s the most important thing in your life. Failure of both carriers and agencies to make sure there’s clarity on technology issues up-front can lead to significant problems down the road — for them and their customers. The ACT Work Group identified key overarching principles that govern agreement language and details. These include: addressing technology as an addendum to a broader agency agreement; establishing the agency agreement as the controlling document; handling data ownership and expirations in the main agency agreement WISCONSIN INDEPENDENT AGENT

a E-Signatures. Significant growth

a Click-Through/Clickwrap Agreements. These on-screen license agreements typically are one-sided and “signed” only by parties against whom terms will be enforced. The recommendation is to not use these for agreements between carrier and agency. a Single Sign-On/Federated IDs. As vendors implement Single Sign-On and the industry moves toward ID Federation, agreements need to address access restrictions and administrative responsibilities of both parties. a Data Breach. It’s important to spell out notification responsibilities and incorporate “hold harmless” and other language that addresses what happens for both parties — carriers and agents — when a data breach occurs. And we know one will! a Prompt Correction of Data and System Errors. Either party must immediately notify the other when they find incorrect info in the system and the responsible party must make prompt corrections. a Telematics. Carriers should provide agents and brokers with clear education, direction and access to available telematics-generated data and procedures to ensure responsive agency- and carrier-driven customer service. a Agency Agreement Controlling Document. Significant inconsistency

misuse of information. a Use of Data by Third Parties. Use of thirdparty information and disclosure of customer information to third parties should be addressed, as should use of click-through and clickwrap agreements for customer access. a Access to Data by Active & Terminated Agency. Agencies that terminate their agreements still need access to their data — including policy information and full activity logs. The recommendations set out considerations for this. The Work Group created a six-page document, Summary Review of Agency Agreements for Technology Content, which reviews these critical and emerging issues. A section for each briefly discusses how agreements should address the topic and, more importantly, offers guidance for contractual improvement. For the full report, please email eric@iiaw. com. You can also login to iiaba.net, hover over Resources, select ACT and then click the Top 10 Considerations graphic. The link to the report is at the bottom of the article. It is in the best interest of carriers, agencies and their business partners to understand the issues and to address them now, before a problem arises.

> Ron Berg is the Executive Director of the Agents Council for Technology. Contact him at ron.berg@iiaba.net.

JANUARY 2015 | 27

3 TECH TRENDS THAT WILL DEFINE SUCCESS IN 2015 Leaders of independent insurance agencies are facing a critical ultimatum: adapt to new technologydriven consumer preferences — and revisit your own internal operations — or be left behind. While the insurance industry has traditionally been sleepy in this regard, 2014 marked an important shift in mainstream thinking. Not every agency is utilizing new products and platforms, but acknowledgment of their importance is increasingly widespread. “I think 2015 will continue to see the early adopters of some of this technology continue to succeed, but what is just as relevant is that it will be an excellent opportunity for other agencies to catch up,” said Bruce Winterburn, vice president with Vertafore. With technology that is more intuitive, more affordable and simply more palatable, agencies have a good chance to improve their bottom line dramatically in the New Year. Insurance Business America spoke to several industry leaders to pinpoint the most important tech trends that can help make that opportunity a reality. 1. “Big data” is a buzzword for a reason With more than 20 years in the insurance technology world, Peter Lynch has both witnessed and help bring about much of the tech revolution. In 2015, he anticipates one area will be more dynamic than most: the use of big data, particularly as it affects the producer-carrier relationship. “There’s an age-old conflict between brokers and carriers. Brokers want to protect their risk and carriers want more visibility,” Lynch said. Carriers have traditionally been ahead of agencies in the harnessing and use of big data to fuel business decisions, but agency software firm Applied Systems is hoping to bridge that gap with its Applied PerformanceManagement product. The software program is designed to give agencies “data-driven business insights” including identifying cross-selling opportunities, evaluating carrier relationships and breaking down internal concerns like employee performance. Despite the product’s relatively recent launch, CEO Reid French believes high take-up rates and interest levels reflect big data’s positive potential for independent agencies. “This is a big, big trend that won’t happen overnight, but in the next three to five years,” French said. Big data is so vital to success, a report from Vertafore suggests that independent agents failing to leverage their own data for marketing and risk selection purposes will miss out on a full 45% of new lines of business in 2015

providing services like EvoSure, and the brokers that use them, will be better positioned for future success. “This really has some opportunity for helping brokers in building their business,” he said. 3. Social media isn’t just for marketing Winterburn believes marketing is where technological change is having its “quickest and most readily available impact” — particularly with regard to leveraging social media. “Any agency that doesn’t have a social presence — Facebook, Twitter, LinkedIn — in 2015 is far behind,” he said. “The bigger question is how to properly leverage that presence.” As an owner of his own small town independent agency, Winterburn has seen the value social marketing can bring. However, it’s critical not to think of social media platforms as traditional marketing venues. “We hardly ever advertise, but instead put a lot of helpful hints out there, or pass along tornado > Caitlin Bronson writes warnings,” he said. “Then, all of a sudden, we start getting phone calls saying ‘Do I do business for Insurance Business America (IBA). This story with you?’ and ‘If not, can I?’ They’ve never had appeared on IBAmag.com on December 16, 2014. anyone contact them like that before.”

2. Enhanced revenue programs will boost agencies’ lead gen During Lynch’s time with LexisNexis, the company attempted to tackle the inefficiency in back-end insurance processes like risk-matching and application delivery. While he feels that data flow between agencies and carriers is still a very fragmented process, one area of the initiative generated great interest and success — technological solutions to revenue generation. “The reality is brokers really want help in lead generation and efficiency of revenue generation rather than efficiency of operations,” Lynch said. Today, he’s involved with EvoSure — a commercial insurance software developer attempting to connect underwriters and brokers in more efficient and profitable transactions. Lynch believes companies

28 | JANUARY 2015

WISCONSIN INDEPENDENT AGENT

COMMENTARY FROM COUNSEL

PRESIDENT TO DOL: MODERNIZE WHITE COLLAR OVERTIME EXEMPTIONS

On March 13, 2014, President Obama held a signing ceremony and issued a memorandum to the Secretary of Labor instructing the Department of Labor (“DOL”) to “modernize” and “streamline” the current “white-collar” exemptions from overtime compensation under the Fair Labor Standards Act (“FLSA”).

The DOL initially planned to roll out the proposed regulation revisions in November 2014, but has since amended the rollout date to sometime in 2015. When (not if) the new regulations take effect, they will have a significant impact on every workplace.

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 elements that an employee must satisfy before he/she can be considered exempt under that category. One of the requirements for the white collar exemption is that the employee earn at least $450 per week, or $23,660 annually, on a salary or fee basis. An employer pays on a salary basis 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. There are exceptions to this general rule for disciplinary and certain absences. For professional and administrative employees (but not executive employees), an employer may meet the salary or fee basis test by paying an agreed upon sum (the fee) for a single job regardless of the time required for its completion. Payments based on the number of hours or days worked are not considered payments on a fee basis. If the fee would be equal to or greater than the $455 per week threshold on an annualized basis, the professional or administrative employee satisfies the salary or fee basis test.

Impact of Expected Revisions to White Collar Regulations The impact of the President’s instruction and the coming revisions to the regulations will have a significant effect on many employers. First, there is general speculation that the DOL will increase the current minimum salary that an employee must earn in order to be considered as an employee that is exempt from overtime compensation. Right now, the minimum salary is $23,660 per year, or WISCONSIN INDEPENDENT AGENT

$450 per week. It is expected that the DOL will increase that figure, perhaps going as high as $50,000 per year. This means more employees will be eligible for overtime compensation. The second impact on employers comes with less speculation. The changes in the regulations — whatever they are — will lead to publicity about the rights of employees and, ultimately, will lead to increased attention by employees and plaintiffs’ attorneys alike. When the white-collar regulations were last revised in 2004, there was a significant spike in the number of new FLSA claims filed in court. From 2004 to 2007 the number of new FLSA suits filed rose 40%. FLSA collective action claims (similar to a class action claim where many employees are aggregated to assert a claim) also grew dramatically during that same three year period, when claims went from 1,094 cases filed in 2004, to 2,167 cases filed in 2007. That 98% increase in collective action claims over the three-year period is a good indicator of what is likely to come in future years, and a good reason to discuss employment practices liability coverage with your clients.

Want to be proactive? Conduct an internal audit of classifications Employers that prepare for these changes to the FLSA now will be in a better position to keep employees from filing lawsuits. It will also put them in a better position to defend against any claims employees may bring. Be careful, however, that your preparation does not open the company up to even greater liability. The first step is to conduct an audit of your employee classifications. Employers can conduct the audit now and time it so any implementation of changes necessitated by the audit can be rolled out during the publicity and hype surrounding the proposed and final regulations. Employers are always cautious to conduct an audit because it could — perhaps likely would — expose potential mistaken classifications and require the company to either pay employees for overtime hours already worked and/or any potential future overtime hours. This is, of course, a potential and likely effect of conducting an audit. That risk must be balanced, however, against the risk that those same employees you would have found were due overtime talk to an attorney — and eventually file a collective action against the company — exposing you to double damages, a longer statute of limitations and attorney’s fees (theirs and yours!). Under the

current regulations and whatever new regulations come about, the bottom line is simple: employees are entitled to proper overtime compensation if they are non-exempt under the law. Another common concern of employers is that an audit will draw attention to the issue where attention is not desirable. This, too, is a legitimate concern. No employer wants to wave the red flag while telling employees: “We may have mistakenly underpaid you, but we’re going to check now!” The best time for waving that flag is going to be as the proposed and final regulations are issued. There will be massive amounts of media attention surrounding the changes. Thus, if an employer makes changes to classifications during that media frenzy — even if the changes were driven by a past mistaken classification rather than the new, forward-looking regulations — it is less likely to draw the attention of the employees.

Conducting the audit: Attorney-Client Privilege Plaintiffs’ attorneys salivate over internal audits of exempt/non-exempt classifications. An internal audit that is discoverable can be used as evidence of a willful violation of the FLSA, which lengthens the statute of limitations from two to three years. The strongest protection against an audit becoming fodder for plaintiffs’ attorneys is the careful use of the attorney-client privilege to protect the audit itself. Engaging human resources staff or consultants to conduct the audit without the involvement of legal counsel will not allow the company to avail itself of the attorneyclient privilege. An attorney should be involved, preferably outside counsel, for whom it is easier to assert attorney-client privilege than it is for in-house counsel.

Conclusion The coming changes to FLSA’s white-collar exemptions call for careful planning, including budgeting for possible increased overtime expense, bracing for an uptick in litigation, reviewing available insurance coverage for claims and, of course, auditing and, if appropriate, modifying employee classifications to ensure ongoing compliance with the law. > Josh Johanningmeier is the IIAW’s General Counsel. Call the Legal Services Hotline at (877) 236-1669.

JANUARY 2015 | 29

FOOD FOR THOUGHT INDIAN PACKING COMPANY HAS COME A LONG WAY

Founded on August 11, 1919, the Green Bay Packers are the second-oldest franchise in NFL history. Never imagining what might become of the semipro football team being formed that day, nobody documented who was there or how many were on hand. There had been no announcement of the meeting beforehand, and the PressGazette provided no details about it the day after. By the way, the Arizona Cardinals are the oldest franchise. More history: Green Bay’s colors were originally blue and gold like “Curly” Lambeau’s alma mater, Notre Dame. It wasn’t until 1950 that the familiar green and gold colors became their official trademark.

In 1992, Brett Favre replaced the Majic Man, Don Majkowski, in a game against Tampa Bay. Who caught Favre’s first completed pass a Packer? He rolled right and tried to throw to running back Harry Sydney in the flat, but defensive end Ray Seals tipped the pass and Favre himself plucked it out of the air and was tackled

Arnie Herber

for a 7-yard loss. IN 1950, Bob Mann, a wide receiver, became the first African-American to play for the Packers. He broke the Big Ten record for receiving yardage at the University of Michigan and in 1948 became the first AfricanAmerican to play for the Detroit Lions. After he led the NFL in receiving yardage in 1949, the Lions asked him to take a pay cut. He refused and held out. He signed with the Packers near the end of the 1950 season and

was the team’s leading receiver in ’51. Mann was inducted into the Packers Hall of Fame in 1988. Arnie Herber led the NFL in passing yardage three times, a team record. Herber led the league in passing yards in 1932, 1934 and 1936. Favre led the league twice (1995, 1998) and Dickey once (1983). Rodgers has not led the NFL in passing yards. Source: jsonline.com, mensfitness.com & packers.com

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