wisconsin INDEPENDENT AGENT MARCH 2021
Save the Date
AUGUST 10-11, 2021 KALAHARI RESORTS & CONVENTION CENTER
IIAW.COM/INSURCON
UFG Insurance celebrates 75 years In celebration of our 75th anniversary, we at UFG reflect on all the people who have had a hand in our success over the years. After all, our company was founded on the belief that the insurance business is a people business — and that remains at the heart of who we are today. As we begin our next 75 years, we give our most humble thanks to our independent agents. We owe our success to you. UFG INSURANCE | 118 Second Avenue SE, Cedar Rapids, Iowa 52401 | ufginsurance.com | 800-332-7977 © 2021 United Fire & Casualty Company. All rights reserved.
CONTENTS wisconsin INDEPENDENT AGENT
COVER STORY: Save the Date for InsurCon2021 on August 10-11, 2021
Mark your calendars for our annual convention on August 10-11. Join us in-person at the Kalahari Resorts & Convention Center along with our keynote speaker: Joe Theismann. Save your spot for InsurCon2021, visit iiaw.com/insurcon to register now.
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INDEPENDENT INSURANCE AGENTS OF WISCONSIN 725 John Nolen Drive Madison, Wisconsin 53713 Phone: (608) 256-4429 Fax: (608) 256-0170 www.iiaw.com
2020-2021 EXECUTIVE COMMITTEE President:
Darrel Zaleski | Spectrum Insurance Group, Eau Claire
President-Elect:
Marc Petersen | American Advantage - Petersen Group, New Berlin
RISKY BUSINESS.............................................................................12-13
Secretary-Treasurer:
Wisconsin Agents Make Costly Mistakes
Nick Arnoldy | Marshfield Insurance Agency, Inc., Marshfield
FINANCE............................................................................................14
Chairman of the Board:
Meet SFB’s Insurance Lending Team
CYBER................................................................................................16 Strength in Numbers: How Cyber Insurers Can Improve Their Market View
AGENCY OPERATIONS................................................................18 How Older Workers are Holding Up During the Pandemic
ERRORS & OMISSIONS................................................................22-23
Chris Costakis | Midwest Insurance Group, Delafield
State National Director:
Steve Leitch | Leitch Insurance, River Falls
2020-2021 BOARD OF DIRECTORS Mike Ansay | Ansay & Associates, Port Washington Mike Harrison | R&R Insurance Services, Inc., Waukesha Aaron Marsh | Marsh Insurance Services, Inc., Rice Lake
COVID Happened, Now What? A New E&O Landscape
Dan Lau | Robertson Ryan & Associates, Milwaukee
GOVERNMENT AFFAIRS.............................................................25-26
Chad Tisonik | HNI Risk Services, LLC, New Berlin
PPP Recipients No Longer Face Surprise Tax Under 2021 Wisconsin Act 1
VIRTUAL UNIVERSITY.................................................................28 Townhouses: H0-3 or H0-6
MEMBERS IN THE NEWS..............................................................32-33 COMMENTARY FROM COUNSEL...............................................34 OCI Reporting Requirements - An Overview
FOOD FOR THOUGHT....................................................................35
ADVERTISERS INDEX AAA......................................................................13 ACUITY...............................................................30 Ansay & Associates........................................23 Badger Mutual Insurance............................35 Berkshire Hathaway GUARD....................10 DAIS......................................................................11 EMC......................................................................20 IMT........................................................................36 JM Wilson...........................................................35 Keystone Insurance........................................9 Robertson Ryan & Associates...................26 SECURA...............................................................29 Security Financial Bank................................15 Society Insurance.............................................19 UFG........................................................................2 West Bend..........................................................31 Western National............................................17
Joanne Lukas Szymaszek | Johnson Insurance Services, LLC, Racine Andrea Nelson | Unisource Insurance Associates, LLC, Wauwatosa Jonathon Zwettler | Baer Insurance Services, Middleton
IIAW Staff Matt Banaszynski | Chief Executive Officer 608.256.4429 • matt@iiaw.com Mallory Cornell | Vice President and Director of Risk Management 608.210.2975 • mallory@iiaw.com Kim Kramp | Association and Agency Accounting Manager 608.210.2976 • kim@iiaw.com Trisha Ours | Director of Insurance Services 608.210.2973 • trisha@iiaw.com Kaylyn Zielinski | Marketing and Communications Coordinator 608.210.2977 • kaylyn@iiaw.com Evan Leitch | Technology and Risk Advisor 608.210.2971 • evan@iiaw.com Andrea Michelz | Membership Engagement Coordinator 608.210.2972 • andrea@iiaw.com Diana Banaszynski | Education Coordinator 608.256.4429 • diana@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. © 2020
For information on advertising, contact Kaylyn Zielinski, 608.210.2977 or kaylyn@iiaw.com. wisconsin INDEPENDENT AGENT
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AUGUST 10-11 KALAHARI RESORTS WISCONSIN DELLS, WI
TUESDAY, AUGUST 10TH 1PM -3PM
IIAW BOARD MEETING
This meeting is invite-only.
5PM-9PM
SUNSET DINNER BOAT CRUISE
Join us for a Sunset Dinner Boat Cruise. Transportation for the dinner cruise will depart at 5PM from the Kalahari Convention Center. Kick off InsurCon2021 with dinner and cocktails on the Wisconsin River.
Africa East
Kalahari Convention Center Entrance
(Limited space available on a first come, first serve basis. Additional charge)
WEDNESDAY, AUGUST 11TH 9AM-9:45AM Africa East
10AM-10:45AM Africa East
11AM-12PM Africa East
12PM-1:15PM Africa East
1:15PM-2PM Africa East
2PM-5PM
Africa West
9PM-MIDNIGHT Africa East
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INDUSTRY INSIGHTS
As the industry continues to experience many technology, legislative and regulatory changes, it is important to take the time to discuss what is most important for agents to know. Join Matt as he leads a discussion with thought leaders about industry knowledge and insight on emerging trends, threats and opportunities. This discussion will also include Q&A if time permits.
POWERED PRODUCTIVITY
Beth Ziesenis, Your Nerdy Best Friend
Beth will lead a research-based look of common productivity problems, followed by the technology to solve them.
DIGITIZATION & DISTRIBUTION
Info coming soon!
AWARDS LUNCHEON
Join us as we honor our 2021 Award Winners.
KEYNOTE SPEAKER
Listen to former Washington Redskins star quarterback and NFL Network Analyst Joe Theismann discuss managing unforeseen change with adversity. Joe has evolved from an athlete to a businessman and his high-energy presentation is one you will not want to miss! We will also be giving away autographed items.
Matt Banaszynski, IIAW CEO
Bill Pieroni, President & CEO of ACORD
Joe Theismann, Hall of Fame Quarterback & NFL Analyst
EXHIBITOR SHOWCASE
This year’s Exhibitor’s Showcase is a must-see event! With more exhibitors and more prizes, don’t miss the opportunity to win cash or to meet your next great partner for success. InsurCon2021 will feature the first ever Blackout Bingo, where agency owners and employees will have the opportunity to win prizes, including cash!
EVENING ENTERTAINMENT
It’s time to cut loose and enjoy some great entertainment and music from Granny Shot. This is a great time to network, enjoy company hospitality booths and just have fun!
wisconsin wisconsin INDEPENDENT AGENT INDEPENDENT AGENT
Joe Theismann is an entrepreneur and the former star quarterback for the Washington Redskins. Most recently, he spent the last 2 decades working for ESPN and the NFL Network as an NFL analyst. A 12-year NFL veteran, Joe played in 163 consecutive games from 1974-1985 for the Washington Redskins and holds Redskin records for passing yardage, completions and attempts. He was a two-time Pro Bowl selection and Pro Bowl MVP. Joe Theismann’s career ended abruptly in 1985 after sustaining a badly broken leg during a Monday Night Football game against the New York Giants on national television. In 2003, he was inducted into the College Football Hall of Fame.
JOE THEISMAN N
With every chapter of his life, Mr. Theismann evolved from athlete to the ultimate businessman. An Emmy award winning analyst, business man and athlete, he utilizes his gifts, talent and high energy to share his strategies for handling unforeseen change.
Hall of Fame Quarterback & NFL Network Analyst
BETH ZIESENIS Your Nerdy Best Friend
Since her first Motorola RAZR flip phone, Beth has made a verb out of the word “nerd”. She’s here to help you filter through thousands of apps, gadgets, widgets and doodads to find the perfect free and bargain technology tools for work and home. Beth Z has been featured on Best Speaker lists by several organizations.
BILL PIER ON I President & CEO of ACORD
Bill’s career has spanned technology, operations, and top executive roles at several top insurers, brokers and consulting firms. Bill’s areas of particular expertise include digitization, change management and the strategic and capability imperatives for high performance in the insurance industry.
wisconsin INDEPENDENT AGENT
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MEMBER
$
149
NON-MEMBER
$
E X H I B I T O R S H O W C A S E O N LY
199
$
79
Keynote Speakers
Keynote Speakers
Exhibitor Showcase
6 Online CE Credit Vouchers
6 Online CE Credit Vouchers
August 11th, 2021
Exhibitor Showcase
Exhibitor Showcase
2:00pm-5:00pm
Convention Evening
Convention Evening
Entertainment & More!
Entertainment & More!
*attendees will be identified with a different colored badge
Group reservations of 8 or more will receive a 10% discount. This applies to full registrations only. Please contact info@iiaw.com for group reservations.
REGISTER NOW AT IIAW.COM/INSURCON
COVID-19 We will be following all safety guidelines outlined by the Kalahari, the Wisconsin Department of Health Services and the CDC to make InsurCon2021 safe and enjoyable for all attendees. As guidelines evolve, we will be clearly communicating any requirements or changes that attendees and exhibitors will need to know as we approach the event date.
Questions? Please call the IIAW at 608.256.4429 or email info@iiaw.com. Refer to www.iiaw. com/insurcon for complete event details, sponsorship opportunities and exhibitor information. | MARCH 2021| | 6 |6 MARCH 2021
wisconsin wisconsin INDEPENDENT AGENT INDEPENDENT AGENT
Hotel Information All convention events will take place at the Kalahari Resort & Convention Center. Rooms are available for Tuesday, August 10th and Wednesday, August 11th. Please indicate that you are attending the Independent Insurance Agents of WI InsurCon event to receive the group rate. A link for online reservations is located on the convention registration page found on our website, www.iiaw.com/insurcon.
Exhibitor Information The annual Exhibitor Showcase will be held on Wednesday, August 11th. Exhibitors are invited to review the new registration options and Blackout Bingo participation opportunity. Details and online registration can be found on our website, www.iiaw.com/insurcon.
$144 VALUE INCLUDED WITH YOUR INSURCON2021 REGISTRATION
VOUCHER DETAILS
In an effort to reduce the amount of time attendees will spend in smaller breakout rooms, we will be providing a voucher good for 6 FREE CE Credits (a $144 value). Attendees can redeem their free CE courses online in the comfort of their own home. These vouchers must be used prior to August 11, 2022.
wisconsin INDEPENDENT AGENT
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RISKY BUSINESS
WISCONSIN AGENTS MAKE COSTLY ERRORS Do you ever wonder what types of errors are most often the cause of E&O claims? Does high occurrence also mean high costs? In a recent review of E&O claim data from our partners at Swiss Re Corporate Solutions, it was found that Wisconsin insurance agents incur the highest claim costs from failing to recommend coverage, but that’s not the most common type of error in the state. In fact, only about 7% of Wisconsin E&O claims arose from failing to recommend coverage. The data shown in the tables is provided by Swiss Re Corporate Solutions and captures claim information from January 2015 December 2019.
we can learn from this information and use it to improve agency operations and employee E&O awareness. For example, if 28% of E&O claims in Wisconsin are due to failing to procure coverage then agencies should have a heightened awareness around agency workflows to review applications and policy information. Failing to procure coverage is often the result of missing one of more aspects of the insureds request. It might be an additional vehicle or adding an endorsement for requested coverage. As the data shows, these types of errors can also be costly accounting for about 22% of incurred claim costs.
While we can only speculate specific reasons for why certain error and omission allegations are more prevalent in Wisconsin than nationally, Alleged Error or Omission by Total Incurred Costs (Top 3)
Alleged Error or Omission by % of Total Claims (Top 3) Procure Coverage
23%
Negligent Misrepresentation
9%
4%
Adequately Identify Exposure
6% 0%
5%
WI Percentage of Total Claims
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28%
Recommend Coverage Type
21%
Procure Coverage
8%
26%
Provide Timely Notice of Claim to Carrier
10%
15%
20%
25%
30%
National Percentage of Total Claims
wisconsin INDEPENDENT AGENT
24%
7%
19%
2% 0%
5%
WI Percentage of Total Claims
10%
15%
20%
25%
30%
National Percentage of Total Claims
The team at the IIAW provides continuing education, valuable storytelling, and increased E&O awareness for member agencies. In Wisconsin, we are legally required to procure coverage requested or inform the customer if coverage cannot be obtained (also known as “order taker” status). However, almost every agency has a requirement to do more than this because of the special circumstances that exist in the relationship with a customer. A special relationship is easier than ever to argue in court. With social media and websites stating services, qualifications, and promising coverage reviews, you likely have a higher duty to your customer than what you might expect. This is not always a negative, but everyone in the agency needs to be delivering the same level of customer service for each insurance transaction. Do what you say and say what you do. Seems simple enough, but oftentimes our statements and promises can get away from us.
So, what can the IIAW do to help? Our commitment to offering services for agency exposures is ongoing. As your E&O insurance provider and dedicated team of agency risk management professionals, we offer E&O Risk Management classes, Agency Operational Improvement Reviews and one-on-one support to review agency workflows and customer experiences. Protecting your future and your agency from a costly E&O claim is important to us. You are always invited to reach out to any IIAW team member with questions about agency operations or E&O risk mitigation services through the Association.
> Mallory Cornell,
IIAW Vice President and Director of Risk Management
For more information on becoming a AAA Independent Agent: Leo Plese (630) 328-7076 lmplese@acg.aaa.com
wisconsin INDEPENDENT AGENT
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FINANCE
MEET SFB’S INSURANCE LENDING TEAM At Security Financial Bank (SFB), we are serious about our commitment to the insurance industry. That’s why we assembled a team dedicated to understanding the nuances of the insurance industry in order to best serve the banking needs of our insurance agency clients. Collectively, the team has well over 100 years of banking experience including many years of expertise in the insurance field. Meet SFB’s Insurance Lending Team: Paul Rudersdorf is the President and CEO of SFB. Paul has more than 35 years banking experience. With both a CPA and an MBA, Paul enjoys advising insurance agents through the acquisition process. As a lifelong learner, Paul inspires the SFB team to continually be educated and informed on insurance-related issues, which will help us understand the industry and in turn, our clients. As a leader on SFB’s Insurance Lending Team, Curt Van Auken has been in banking for more than 45 years and has personal experience with an agency acquisition. He served five years as president of a Minnesotabased bank and its insurance agency. The agency was successfully sold. Using the knowledge he gained through this experience combined with his industry knowledge, over the years Curt has helped numerous insurance agents with their banking needs, including acquisitions, buyouts and refinancing projects. Our newest member, Kimberly Bunce brings a fresh perspective to the team. During her tenure with SFB, she has been involved with a complicated, ever-changing partner buyout that morphed into a partner buydown over a five-year period. Kimberly’s experience as a CPA and her attention to detail helped the transaction run smoothly. Kimberly has since been involved in additional projects for the same owners as well as acting as a key advisor for other professionals.
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Deirdre Tumm has 20 years of banking experience. Deirdre’s specialty is in cash management. She has used her expertise to help seamlessly guide our insurance agency clients with their depository needs and specialized business services. Some of those services include remote deposit capture, positive pay and ACH services. She brings value to our insurance agency clients as she implements products and services that provide direct benefits to their agency. A host of SFB employees, including our primary insurance analyst, Cole Crabb, backs the team. We’ve learned that insurance agencies are unique and not just like any average operating company. SFB utilizes Cole’s precise knowledge in order to underwrite agencies properly. He holds a bachelor’s degree in accounting and has five years in the industry including underwriting several complicated insurance agency deals. What all of our team members enjoy the most is helping our insurance agency clients fulfill their dreams. If you have questions or concerns about an upcoming project, feel free to contact Curt, Kimberly or Deirdre at 888-2540615. Whether it is to verify you are on the right track with your current financial institution or if you just want to explore another option, as an IIAW supporter we are more than happy to provide you free advice.
> Paul Rudersdorf,
SFB CEO & President
PROTECT YOUR NEST EGG. Your insurance agency is your most valuable asset. It’s your nest egg. Shouldn’t you trust it with a Wisconsin bank that understands the insurance business? We can help with all stages from buying, selling to merging.
Bloomer • Durand • Eau Claire • Ladysmith • River Falls www.sfbank.com • 888.254.0615
CYBER
STRENGTH IN NUMBERS: HOW CYBER INSURERS CAN IMPROVE THEIR MARKET VIEW The law of large numbers is one of the statistical underpinnings of all insurance operations. Simply stated, the law posits that the more data you amass, the more confident you can be in your projections of future outcomes. In the still-nascent world of cyber insurance, many insurers simply lack the broad-based, credible, and relevant data assets that undergird strategic planning, portfolio management and product development. It’s not that this data doesn’t exist, it’s just that it’s been decentralized and dispersed among individual companies and stakeholders, robbing it of much of its potential for predictive power. Rather than access a more complete picture of the cyber risk environment, many insurers and market participants are forced to peer through the data equivalent of a keyhole. This pinched view of the cyber landscape can have significant real-world implications. Consider an insurer evaluating the results of their (hypothetical) cyber portfolio. Let’s say they focus in on loss ratios for companies with revenues above $1 billion and discover that they have a 0 percent loss ratio. Looks promising! But let’s also stipulate that the carrier is actually writing just $5.9 million of the total $320 million in premium in this market segment (again, hypothetically). If our overly confident carrier restricts their view to only their own results, they’d miss the fact that on an aggregated, industry-wide basis, the $1 billion-plus segment of the cyber insurance is actually quite volatile. In fact, if they were to enlarge their view to include the $320 million in total premiums available in the industrywide results, the loss ratio isn’t 0, but 82.5 percent. Suddenly, our carrier is looking at a totally different picture. Had they pursued this market segment based solely on their own data, they could potentially have put the profitability of their portfolio at risk. What’s typically true for traditional insurable loss exposures can hold for cyber risks as well: It’s only when comparing individual experience with the overall industry results that you can achieve a more credible view. A growing market needs data While the COVID-19 pandemic has disrupted businessas-usual across a huge swath of the economy, cyber risks continue to multiply unabated. 16 | MARCH 2021 |
wisconsin INDEPENDENT AGENT
The need for cyber risk transfer solutions remains as urgent as ever—a trend that’s underscored by the growth of cyber premiums. Indeed, according to ISO MarketStance, direct written premium for cyber policies (standalone and packaged) is projected to reach $6 billion in 2020. To capitalize on this market growth, cyber insurance professionals need a centralized source of data. The Verisk Cyber Data Exchange was built to help stakeholders access this wider view, with all the predictive benefits that data can bestow. The Verisk Cyber Data Exchange is the industry’s chief source of contributory aggregated cyber insurance data—and it’s growing larger and more powerful through the recent additions of several new members. Recognizing the pressing need for a centralized source of critical cyber business intelligence, companies are joining and contributing to the Cyber Data Exchange to help sharpen their insights into the growing market for cyber coverages. As of August 2020, the Cyber Data Exchange contained significant assets including: • 1 million transactions • Over 100,000 policies • Over $300 million in premium • Over 1,000 claims Exchange participants can access these and other data points through interactive dashboards. More importantly, the Cyber Data Exchange provides the critical mass of data needed to help insurers, MGAs and other market participants leverage the key insights that are only available when viewing a broad cross section of cyber market data. Isn’t it time you put the law of large numbers to work for your cyber portfolio? To learn more about the Cyber Data Exchange and how an insurance carrier can participate, please visit our website at verisk.com/cyberexchange or email me at eduard.alpin@ verisk.com.
> Eduard Alpin,
Lead Cyber Actuary, Verisk
AGENCY OPERATIONS
HOW OLDER WORKERS ARE HOLDING UP DURING THE PANDEMIC At this point, it seems safe to say that working from home is here to stay. The pandemic has helped shatter long-held negative perceptions about working from home and has given millions of people who never had the opportunity to work from home the chance to “try it out.” And while many are thriving in the new work-from-home economy, it hasn’t been rainbows and unicorns for everyone. A new global study by Oracle and Workplace Intelligence of people between the ages of 22 and 74 found that the pandemic has negatively affected the mental health of 78% of the global workforce. And 85% say that mental health issues at work are bleeding into their home lives. In the United States, the number of adults experiencing depression has tripled since the outbreak began. Stress and anxiety have been on the rise too. So, we at WAHVE were curious — how are older workers holding up? According to the study, older age groups are less worried about mental health compared to younger counterparts. In fact, 73% of millennials (26 to 37) said they’ve had more stress at work than any year before compared to 59% of baby boomers (55 to 74). The study doesn’t say why this may be the case, but we believe that age and experience is a benefit when it comes to navigating change in the workplace. Older workers have seen many changes during their careers and have grown the skills of adaptation and resilience. It’s the “been there, done that” advantage that helps older workers combat typical workplace stressors. 18 | MARCH 2021 |
wisconsin INDEPENDENT AGENT
On a practical level, most older workers may not feel as stressed because they haven’t had to deal with the chaos of raising and homeschooling kids while working through the pandemic. Still, 59% isn’t a statistic that makes any of us breathe a sigh of relief. Stress and anxiety are affecting all ages in the workplace at an unprecedented rate – and in the same Oracle and Workplace Intelligence study, 76% of people said companies should be doing more to support the mental health of their employees. Requested services include self-service access to health resources, on-demand counseling services, wellness or meditation apps, and even chatbot services. Interestingly, 68% of respondents said they’d prefer to talk to a robot (i.e.: chatbot) instead of their manager about workplace stress and only 18% of people preferred humans to robots because robots are non-judgmental and unbiased. Mental health has become a top workplace challenge, and employers who can offer the best support to their employees will reap the benefits in terms of team effectiveness, organizational productivity and individual performance.
> Connie George, CPCU, ARM, AU, AIM
WAHVE Placement Specialist
© 2020 Society Insurance
Filling them up now so they won’t be hungry later.
Small detail. Big difference. You know as well as anyone that today’s cut corner can easily turn into tomorrow’s missing piece. With our forty years of experience in specialized coverage and policies developed alongside actual restaurant and bar owners, you can rest assured that your policyholders are protected against the unique risks they face every day. If you agree that details like these make a big difference, give us a call at 1-888-5-SOCIETY or visit societyinsurance.com.
From buttons to bread EMC has it covered. EMC offers comprehensive coverage tailored to the needs of 98 different types of light manufacturers. This line offers optional coverage for manufacturers and delivery errors or omissions, plus employment practices liability. Certain coverages are even bundled automatically — meaning whatever your clients make, EMC makes insuring their businesses easier.
emcins.com/lightmanufacturing
©Copyright Employers Mutual Casualty Company 2021. All rights reserved.
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Agency Solutions TRUSTED CONSULTING FOR THE INDEPENDENT AGENT
We know how important it is for you to succeed in business. The IIAW has created a portfolio of solutions built just for you.
OPERATIONAL EVALUATION Evaluate agency workflows and operational procedures with a customized plan for your agency
VISIT IIAW.COM/AGENCYSOLUTIONS TO START YOUR FREE PERSONALIZED EVALUATIONS.
Explore other Agency Solutions evaluations:
TECHNOLOGY
STRATEGIC
FINANCIAL
MARKETING
Questions?
Contact Mallory Cornell IIAW Vice President mallory@iiaw.com wisconsin INDEPENDENT AGENT
| MARCH 2021 | 21
ERRORS & OMISSIONS
COVID HAPPENED, NOW WHAT? A NEW E&O LANDSCAPE February 2020 seems like a lifetime ago. The then new Coronavirus was only a brief mention on the nightly news, few paid much attention to it. We had heard about pandemics before. Move forward one month to March 2020 and our whole world changed. Cities, counties and even entire states introduced various measures in immoderate attempts to curtail the spread of the virus. The now infamous if not misquoted phrase or promise, “15 days to flatten the curve,” has dragged into its 11th month. American business owners and the insurance industry saw something that neither EVER anticipated, the wholesale closure of businesses considered “non-essential.” No one in the business world or insurance business would have ever considered the idea that any government in the US would prevent a legal business from operating, especially for several months at a time. Prior to COVID, few if any “main street” agents would have anticipated the need to ask about much less search out coverage for governmental actions such as these experienced in the last year. One problem is that few markets existed for such coverage; another issue is that very few agents or brokers even knew these markets existed; and lastly, the cost for such coverage was high (maybe prohibitively high). From the perspective of the “reasonable man” (or “reasonable agent”) test, it would be 22 | MARCH 2021 |
wisconsin INDEPENDENT AGENT
unreasonable to hold the agent responsible for something that had never happened on such a large scale in anyone’s lifetime. This was not a risk that could or should have reasonably been anticipated. Although agents may likely see an uptick in errors and omissions (E&O) claims in the coming months, the anticipation is that few cases will be lost because of the “reasonable man” test. But now COVID has happened, and what may have been an “unreasonable” expectation before is no longer “unreasonable.” COVID has happened, now what? Agents are practicing in a new world of probabilities if not possibilities. Previously there was little or no need to address the question of mass government closures of business in the absence of property damage or natural catastrophe because nothing like it had occurred before. Now it has and agents must address the exposure. A few recommendations for this timid new agency world are: •Undertake a reasonable search of the agency’s available markets and those with which the agency has a relationship to ascertain whether the necessary coverage is available or not. This is not an exhaustive search of the entire marketplace as theoretically coverage is
available for any risk of loss. Rather this is a survey of the agency’s standard markets and the brokers with which the agency has an on-going relationship and maybe two or three additional brokers. If a market is found, learn about the market, coverages offered and the pricing scheme. If no market is found, state so on all proposals and program deliverables. • During the prospecting and renewal process, specifically address the exposure with the insured. If the agency has an available market, ask the insured if a quote is desired. If the agency does not have a market, state that the agency was not able to locate a market. (Never state that no market exists, only that the agency was not able to find a market.) • Like with any other exposure, make sure that the prospect/client signs or initials that the exposure has been discussed and what options are available from the agency. • In the proposal, the exposure should be addressed again along with the agency’s available options (i.e., “The agency does not
have an available market;” “The agency has a market, but could not get a quote because of ‘X,’ ‘Y’ or ‘Z’” (whatever the reason); “The agency was able to obtain a quote,” then provide the coverage specifics)). • Resist the temptation to create a narrow disclaimer focused solely on COVID or a COVID-type exposure. Disclaimers should be general in nature. Now that COVID has occurred, anticipating such losses is no longer unreasonable. Agents must now address this loss possibility with prospects and clients. The “one bite” allowance previously available from the “reasonable man” test may no longer be available. Businesses have been bit, now agents must address the exposure. > Chris Boggs, IIABA Executive Director of Risk Management and Education
Take Your Business to New Heights. Going into business was a big decision. Succession planning—your next business decision—can be even bigger. A partnership with Ansay & Associates can transition that decision by joining a group of like-minded leaders committed to measuring performance for accountability and growth. Family-owned and committed to your success for over 75 years, we cultivate insurance carrier options and design insurance solutions that last well beyond the initial merger.
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IIAW Agency Accounting Services Our Services: • Provide day-to-day bookkeeping • Payroll processing • Direct agency bill reconciliation • Financial statement preparation and interpretation • Prepare annual budget plan • Work with your external accountants for tax and auditing needs
Who is best fit for our services: Agencies lacking financial acumen on staff Agencies with mature staff looking forward to retiring Agencies looking for additional bookkeeping knowledge and support
Contact: Matt Banaszyski, IIAW CEO 608-256-4429 matt@iiaw.com 24 | MARCH 2021 |
wisconsin INDEPENDENT AGENT
GOVERNMENT AFFAIRS
PPP RECIPIENTS NO LONGER FACE SURPRISE TAX UNDER 2021 WISCONSIN ACT 1 Wisconsin businesses who had been facing hundreds of millions of dollars in unexpected state tax liability on loans they received from the federal Paycheck Protection Program (PPP), can rest easy now with the enactment of Assembly Bill 2 - this session’s first piece of legislation signed into law by Governor Evers as 2021 Wisconsin Act 1. The Paycheck Protection Program was part of the $2.2 trillion CARES Act passed by Congress in March 2020 to help keep small businesses afloat during the pandemic. Any PPP loan proceeds used for qualifying costs i.e. payroll, health insurance for paid sick, medical, or family leave, mortgage interest payments, rent and utility payments, and 60% of the loan proceeds are used for payroll costs, the federal government forgives the loan. While a loan does not generate taxable income, a forgiven loan generally does. Congress took steps to address this issue by clarifying that forgiven PPP loans under the CARES Act are not included in taxable income for federal tax purposes. But some states like Wisconsin were looking at PPP loans as taxable income and a revenue generator for state coffers. Wisconsin businesses were facing a tax increase to the tune of about $450 million. A large coalition of statewide business groups, including IIAW, quickly organized with grassroots member advocacy and lobbying state lawmakers to deal with this issue. Legislators in both parties and the Evers Administration acknowledged they were overwhelmed by the thousands of communications they received from local businesses and constituents all across the state. It was an impressive, collective, grassroots effort assembled in a short amount of time and a prime example of the importance and value of membership in a trade association like the IIAW. On behalf of our members and their customers, the Association thanks all 114 legislators who voted in a bipartisan manner to support the bill and keep our economy moving forward.
COVID-19 Liability Protections Closer To Becoming Law IIAW, working in conjunction with other major business associations, has been working since last year advocating with state lawmakers on the importance of passing COVID-19 liability protections for our state. Following several failed attempts at passing legislation and through lots of subsequent negotiations with stakeholders, a measure to protect businesses, schools, non-profit organizations and other entities from civil lawsuits related to the Coronavirus pandemic, is now closer to becoming law. Special Session Senate Bill 1 overwhelmingly passed the State Senate on a bipartisan 27-3 vote and the Assembly is slated to also pass it. Governor Evers has publicly stated that he intends to sign the bill into law as part of other measures dealing with updating the state’s Unemployment Insurance (UI) system. The liability protection language was added as an amendment to separate legislation that Evers has prioritized with the state’s outdated UI system that has been overburdened by the pandemic due to the volume of claims. Under the amended bill, reasonable protections are created from civil liability caused by an act or omission resulting in exposure to COVID-19. Such protections would not apply if the entity engaged in reckless or wanton conduct or intentional misconduct. The legislation would help ensure that business and other entities are implementing protocols to protect public health and welfare by affording them protection from potentially bankruptcy-causing lawsuits. The bill also gives employers a needed level of certainty that they will be protected from such liability and would help ensure businesses are comfortable reopening and staying open. If Wisconsin’s economy is going to successfully rebound from the global pandemic, our members and their customers cannot be hampered with the threat of lawsuits tied to COVID-19. wisconsin INDEPENDENT AGENT
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Having a fair and predictable state liability system is vitally important for a stable insurance climate and the Association applauds the members of the Legislature for working hard to get the job done.
The budget timeline and process will be: • The Joint Finance Committee will hold agency briefings and conduct public hearings on the budget • The Joint Finance Committee will then begin to vote – agency by agency – on changes to the budget and send its version to the the Assembly and Senate
Governor Evers Unveils $91 Billion State Spending Plan Governor Tony Evers (D) delivered virtually his 202123 executive state budget plan to the Legislature this month proposing an overall operating budget of $91 billion over a two year period. Evers’ 1,846page budget proposal will be carefully examined and changed by the Legislature’s 16-member Joint Finance Committee over the next several months before both houses of the Legislature debate and take votes until a final budget bill is passed by both houses.
• In June, the budget will be debated and eventually passed by both houses of the Legislature •The Governor will review budget for potential line item vetoes and sign bill into law See more details on the Governor’s budget proposal at http://bit.ly/MarchGovAffairs.
>M isha Lee IIAW Lobbyist
JOIN US, a WI Based Top 100 Agency
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www.RobertsonRyan.com
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wisconsin INDEPENDENT AGENT
CONTINUING
EDUCATION IIAW ONLINE EDUCATION & CE CLASSES 2021 DATE
TIME
COURSE
MARCH 09 12 15 16 17 18 19 23 29
9AM-11AM Embracing Directors & Officers Liability Insurance 9AM-12PM Commercial Lines Claims That Cause Problems 9AM-12PM E&O - Roadmap to Homeowners Insurance 12PM-2PM The Guy in the Bar Returns 10AM-12PM Business Auto Claims That Cause Problems 8AM-11AM Ethics in the Insurance Industry 9AM-12PM E&O - Commercial Property Coverage Gaps & How to Fill Them 8AM-9AM Setting Business Income Limits: It’s Easier Than You Think! 12PM-3PM Agency Management Based E&O and Ethics
APRIL 01 02 05 05 06 07 09 13 15 16 19 20 21 26 27 27
12PM-2PM Those Kids and Their Cars 9AM-12PM E&O - Roadmap to Homeowners 9AM-11AM Coverage Disputes Between Thompson & Boggs, You Be the Judge 11AM-1PM Insight on Modern Day Cyber Exposures & Risk Management 8AM-10AM Builders Risk and Contractors Equipment 12PM-2PM Personal Lines Issues That Keep You Up at Night 9AM-12PM Commercial Lines Claims That Cause Problems 9AM-11AM Embracing Directors & Officers Liability Insurance 9AM-11AM Contracts Agents Should Read 9AM-12PM E&O - Commercial Property Coverage Gaps & How to Fill Them 9AM-12PM E&O - Roadmap to Homeowners Insurance 12PM-2PM The Guy in the Bar Returns 10AM-12PM Business Auto Claims That Cause Problems 12PM-3PM Agency Management Based E&O and Ethics 8AM-9AM Setting Business Income Limits: It’s Easier Than You Think! 1PM-4PM Understanding (and Managing) the Latest Government Benefits: Social Security
For more information and to register for these classes, visit iiaw.com/education. QUESTIONS? CONTACT IIAW AT 608-256-4429 OR AT DIANA@IIAW.COM wisconsin INDEPENDENT AGENT
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VIRTUAL UNIVERSITY
TOWNHOUSES: HO-3 OR HO-6 Over the past few weeks I’ve received a flurry or emails about a customer who owns a fee simple home inside a Homeowners Association (HOA). There are various coverage options, but none of them being the “silver bullet.” Every solution has shortfalls. While presenting classes at an insurance company about a month ago, several underwriters asked my view of the way to structure coverage. Their position, shared by many underwriters whom I know, is that they will not write a HO-6 policy unless it’s truly a condominium. They would not write a HO-4 policy, either, because their guidelines are that an owner-occupied dwelling does not qualify for the HO-4. That left them with the HO-3 as the only option. One underwriter stated, “Our agents don’t like that for a variety of reasons, two being price and the duplication of coverage between the master policy that often covers part of the dwelling and the HO-3 policy.” He asked, “What information do you have that I can use with agents.” Below are some of the points I made with the staff. Some of the points are my personal view, but I think they hold merit. • Technically under ISO rules the HO-6 can only be used for a condominium unit or cooperative unit; it’s not available for a dwelling. Of course, some companies ignore ISO rules and make their own decisions. • My main concern is trusting a HOA board to insure my investment that is typically in the hundreds of thousands of dollars. Why trust the board to buy a policy on my house? To me, it’s akin to asking someone, “Will you please buy my automobile insurance and take care of the payments?” • The master policy could lapse and, without a HO-3, the owner is left in a bad situation. That exact occurrence took place about two months ago (and it’s not the first time I’ve seen it) when the HOA lost coverage and was unable to replace coverage timely. The agent in question received a phone call from a panicked customer who had no personal coverage of her own. The agent submitted an application for a HO-6 to an insurer who, once they underwrote it and saw it was not a condominium, issued a 28 | MARCH 2021 |
wisconsin INDEPENDENT AGENT
20-day cancellation notice. • The master policy could be underinsured, resulting in a coinsurance or ACV penalty for the homeowner. • The master policy may be lacking coverages. For example, there may be no ordinance or law coverage, losses might be settled on an ACV basis, the policy might not include water/sewer backup, and many more important coverages could be missing. • Property loss checks would be paid to the HOA, not the property owner. Thus, the owner has no control over those funds and they are at the mercy of the HOA. In one recent instance involving roof damage, the association would not sign the claim check because only part of the roof was damaged and if that part was replaced then the entire roof would not match. • Lenders may not accept a HO-6 policy with a Coverage A limit less than the replacement cost of the structure. • Even with a HO-6 policy, there is the “duplicate coverage” issue between the HO-6 and the master policy. Whether the policy is HO-3 or HO-6, duplicate coverage exists. • How is a Coverage A limit going to be determined under the HO-6? Regardless of HO-3 or HO-6, the best option is Coverage A equal to the replacement cost of the structure. How many customers will buy that much coverage under a HO-6 policy? How will they determine the Coverage A limit needed? It’s certainly not the agent’s job to do that. As mentioned earlier, every solution has problems. I joke that if you Google “Control Freak” my photo appears! I’d never trust someone to insure my property. I’d buy the HO-3 policy and ignore any coverage provided by the HOA. I’d certainly rather have double coverage as opposed to no coverage. > David Thompson CPCU, AAI, API, CRIS FAIA
Commercial | Personal | Farm-Ag | Specialty
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Underwriter
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ACUITY’S 2020 FINANCIAL RESULTS HIGHLIGHT STRENGTH, CONSISTENCY
Sheboygan, WI (February 2, 2021) - Acuity released its 2020 financial results, which demonstrated the insurer’s continued strength, stability, and growth. In 2020, Acuity grew its policyholders’ surplus—essential for fulfilling its promise of financial protection to customers—to nearly $3 billion, finishing the year at $2.929 billion (GAAP). Additionally, assets climbed nearly 13 percent to $5.8 billion (GAAP). “Throughout the challenges of COVID-19, Acuity didn’t skip a beat,” said Ben Salzmann, Acuity President and CEO. “When the world paused, Acuity didn’t. We were always open for business, serving customers and writing new business. And despite providing millions of dollars in rate relief to personal auto customers impacted by COVID-19, we emerged from 2020 stronger than ever.” In 2020, Acuity also combined outstanding financial performance with strong revenue growth. With a company record-setting $319.9 million in new business in 2020, Acuity reached an all-time high in written premium in 2020 of $1.781 billion, an increase of more than $122 million over 2019. “We will continue to build on our foundation of financial strength as we deliver consistent performance our customers depend on,” Salzmann said. “We are starting 2021 with remarkable momentum and look forward to the years ahead.” Acuity Insurance, headquartered in Sheboygan, Wisconsin, insures over 125,000 businesses, including 300,000 commercial vehicles, and nearly a half million homes and private passenger autos across 29 states. Rated A+ by A.M. Best and S&P, Acuity employs over 1,400 people.
ROBERTSON RYAN WELCOMES TWO NEW SHAREHOLDERS Milwaukee, WI (February 3, 2021) - Robertson Ryan continues to be very proud of our unique operating model, very different from the traditional corporate or family owned 32 | MARCH 2021 |
wisconsin INDEPENDENT AGENT
agency set-up. Our Agent Owner concept was radically different when founded 60 years ago and it proudly remains so today. Jack Ryan, one of our founders, preferred to think of the agency as a collection of insurance professionals who exhibited rugged individualism and entrepreneurialism who all share in the success of the firm together. Robertson Ryan & Associates is happy to announce their two newest Robertson Ryan Shareholders. We’re very proud to welcome Patti Blaschka and Pat Skaar to the Shareholder Group. They have both demonstrated industry sales success, community involvement and a strong commitment to our agency. Patti started her insurance career in claims management at Wausau Insurance Company shortly after graduating from UW Stevens Point. She eventually moved to Chubb Insurance in Milwaukee as an underwriter specializing in commercial and international risk underwriting. In 2006 Patti began a new journey as a licensed independent agent with Veitenhaus Insurance Services, eventually becoming partner/owner before joining the Robertson Ryan team in 2016. Patti specializes in both commercial and personal insurance products, working with a variety of industry segments and risk of all sizes. Her niche areas include manufacturing, marina-related programs for yacht clubs, marinas, boat dealers, boat rental operations, dinner cruises as well as products for the pet industry including veterinary clinics, animal hospitals, kennels, dog day cares and animal welfare organizations. Patti is passionate about animals, and very active in supporting humane societies and various animal rescue groups. She currently serves on the state level board of directors for the Wisconsin Federated Humane Societies and serves locally on the board for Washington County Humane. Patti and her husband Todd live in Glendale, WI. Pat has been in the insurance industry for over 30 years and holds the designation of Certified Insurance Counselor (CIC). He joined Robertson Ryan & Associates in 2006 when the agency he was with, Grade Schaller Insurance, joined Robertson Ryan. He looks at the last 10+ years as an amazing opportunity to be part of a Top 100 US Agency that is Wisconsin based. Dating back to his childhood, he has fond memories of a good friend’s dad who was an Independent Insurance Agent in their town and remembers him as a successful, well respected member of the community. While attending UW-Stevens Point Pat worked part-time for Sentry Insurance in sales support and was able to learn a lot about the industry before making a successful career of it for himself. Pat’s primary focus is working with commercial clients. He enjoys the many moving pieces, asking questions, listening to concerns and needs, and ultimately tailoring an insurance program for them. He has expansive experience working with many different types of clients ranging from contractors, trucking, manufacturing (from machine shops to food manufacturing), habitational/apartments, home health care and many more. Pat and his wife, Anne, live in West Salem, WI. They enjoy outdoor activities and living an active lifestyle in scenic Western Wisconsin with their son & two daughters.
SECURA INSURANCE ANNOUNCED ITS LEADING AGENCIES FOR 2020 -
Coverra Insurance Services, Inc. and North Risk Partners, LLC Take Home Top Awards Neenah, Wis. (Feb. 10, 2021) – SECURA Insurance announced its leading agencies for 2020, naming Coverra Insurance Services, Inc. and North Risk Partners, LLC as the TopPerforming Agencies. The awards were presented at a virtual ceremony earlier this month during the company’s annual Premier Agent Professional Development Conference. Coverra Insurance Services, Inc is headquartered in Sparta, Wis. North Risk Partners, LLC is headquartered in St. Cloud, Minn. To earn this prestigious recognition, independent agencies met specific criteria based on their premium volume, profitability, growth, retention, and loss history with the insurance carrier. “Each year we look forward to recognizing our top agents at our annual Premier Conference,” said Tim Heyroth, SECURA Vice President and Chief Sales Officer. “Although this year’s conference looked different in a virtual format instead of in person, we still wanted to recognize our agents’ successes. Our independent agents allow us to serve their best customers, our policyholders, and this recognition is a celebration of our shared success.” Four additional agencies received top-performing agency awards: • AssuredPartners of Minnesota of St. Paul, Minn. • United Agents of Arizona of Gilbert, Ariz. • Van Wyk Risk Solutions of Grand Rapids, Mich. • Vaaler Insurance, Inc. of Grand Forks, N.D. ABOUT SECURA INSURANCE SECURA Insurance is headquartered in Neenah, Wis. Approximately 550 independent insurance agencies in 12 states represent the company, which provides a broad range of competitive commercial, personal, farm, nonprofit, and special events products. It is known for providing exceptional service to its agents and policyholders since 1900, and is rated A (Excellent) by A.M. Best for its excellent ability to meet policyholder obligations. The carrier is a Ward’s Top 50 company for outstanding results in financial performance and consistency over a five-year period, and it is a certified Great Place to Work. Visit secura.net to learn more. WEST BEND NAMED ONE OF AMERICA’S BEST MIDSIZE EMPLOYERS
recognized on Forbes’ annual list of America’s Best Midsize Employers for 2021. The company ranked 74th of 500 the companies named to the list. Forbes and Statista selected America’s Best Midsize Employers based on an independent survey of approximately 38,000 U.S. employees working for companies employing at least 1,000 people in their U.S. operations. The surveys were administered using a series of online panels and provide a representative sample of the U.S. workforce. All surveys were anonymous, and respondents were asked to rate how likely they’d be to recommend their employer to others. In addition, respondents nominated other organizations, as well as identified organizations they would not recommend. “West Bend has repeatedly been recognized for our outstanding culture,” said Kevin Steiner, president and CEO. “In the past several years, we’ve received numerous awards for being one of America’s best employers. “At West Bend we know our greatest asset is our associates. With them, we’ve created a collaborative work environment that has really become the foundation of our culture. While being together is key to collaboration, we also understand it’s important to provide our associates with flexibility in their work schedules. We’ve always worked hard, and will continue to work hard, to create a workplace that’s a destination for our associates.” Other companies on this national list include Carvana in Tempe, Arizona; Serta in Doraville, Georgia; Portillo’s Restaurants in Oak Brook, Illinois; Hasbro in Pawtucket, Rhode Island; and Dropbox in San Francisco. WEST BEND MUTUAL INSURANCE ANNOUNCES PROMOTIONS WEST BEND, WI (February 16, 2021) – West Bend Mutual Insurance Company recently announced two promotions.
Tammy Muckerheide has been promoted to assistant vice president- Commercial Underwriting. Muckerheide has been with West Bend for 35 years, serving in a variety of roles within the Commercial Lines division, including director of Commercial Underwriting.
Marc Emery has been promoted to assistant vice presidentCommercial Underwriting. Emery joined West Bend in 2015 with a combined 15 years of management and agency experience. He previously served as director of Commercial Underwriting.
WEST BEND, WI (February 16, 2021) - West Bend has been wisconsin INDEPENDENT AGENT
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COMMENTARY FROM COUNSEL
OCI REPORTING REQUIREMENTS AN OVERVIEW We frequently get inquiries from client agencies as well as on the IIAW Hotline regarding the obligation to report particular events to the Wisconsin Office of the Commissioner of Insurance (OCI). As the new year begins, it seems like a good time to give an overview of the issues presented. Keeping in mind that each situation is unique and that you and your agency need to be vigilant to ensure you meet your obligations, including getting legal advice if in doubt, here are some basic principles to keep in mind. Generally, reporting obligations fall on the licensed intermediary. Certain occurrences must be reported to the OCI by the intermediary within 30 days. Customer or client complaints—a frequent inquiry item—do not alone, by definition require reporting to the OCI. If a customer complaint ultimately leads to the discovery of a mandatory reporting event, then the intermediary would be obligated to report such occurrence to the OCI. Those mandatory reporting events are identified in Wis. Admin. Code s. INS 6.61 as: • An initial pretrial hearing date related to any criminal prosecution (either misdemeanor or felony) • A conviction of a crime (either misdemeanor or felony) • An administrative action taken by any state agency which licenses individuals for any occupational activity • A lawsuit filed alleging misrepresentation, fraud, theft, or embezzlement (individual or business) Also keep in mind, as a corollary consideration when receiving communications from policyholder customers, that intermediaries are also required to maintain policyholder records, including consumer complaints, for at least three years after termination or lapse of the policy. Wis. Admin. Code s. INS 6. 61(14). Many agencies are also licensed as an intermediary firm. Generally speaking, there are no specific reporting requirements that apply to intermediary firms for actions of their intermediaries. However, because of the broad powers of the OCI to request records and information and take action against 34 | MARCH 2021 |
wisconsin INDEPENDENT AGENT
intermediaries or intermediary firms, it is still important for an intermediary firm to exercise oversight of its agents. In certain situations, it may also be in the intermediary firm’s interest to report an agent’s activity to the OCI. For example, if an agency learns of a termination of an appointment by an insurer based on circumstances that call into question the agent’s conduct, the licensed intermediary firm may want to consider notifying the OCI. This is because Wis. Admin. Code s. INS 6.57 requires insurers to submit notices of termination of appointment to the OCI and, if the reason for termination relates to trustworthiness or competency criteria in Wis. Admin. Code s. INS 6.59(5)(d), or is because the insurer has knowledge of complaints received or problems experienced by the intermediary or the intermediary’s agency involving indebtedness, forgery, altering policies, fraud, misappropriation, misrepresentation, failure to promptly submit application or premiums, or poor policyholder service that involved the intermediary being terminated, the insurer must information relating to this termination to the OCI. In these situations, it may be advisable for the intermediary firm to voluntarily report the actions of the agent to the OCI. Whether this reporting is advisable would depend upon a variety of factors including the allegations of the complaint, the harm to the policyholder, whether there has been a pattern of behavior, and whether the insurer in fact intends to terminate the appointment. As you can see, while there are certain events that meet clear reporting thresholds, there may be many others that fall into gray areas ripe for discussion and advice. If in doubt, reach out for assistance.
>J osh Johanningmeier IIAW General Counsel
Historic Company. Startup Mentality.
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