March 2013 IIAW Magazine by Independent Insurance Agents of Wisconsin

MARCH 2013

Your customers deserve a

wisconsin

Silver Lining.

INDEPENDENT AGENT Trusted Choice

MARCH 2013 Eric Schwartz, Editor

Open Door Policy Swiss Re’s E&O Policy Is The Best In The Business . . . . . . . . . 5 Marketing Minute How To Engage Your Audience . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Errors & Omissions How To Report A Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Errors & Omissions Planning For The Unexpected . . . . . . . . . . . . . . . . . . . . . . . . . . 12 News From ACT Groups Urge Industry To Embrace Key Tech Priorities. . . . . 15 Commentary From Counsel PPACA: IRS Rulemaking Finally Begins, Part 2 . . . . . . . . . . . 16 For E&O Coverage, Price Is A Function Of Value . . . . . . . . . . 25 Government Affairs Why Political Involvement Is Important . . . . . . . . . . . . . . . . . . 27

When something happens to your customer’s home, car, or business, it may not be a disaster. But no matter what it is, your customers always deserve fast and fair service from their insurance company. West Bend provides a Silver Lining, no matter what the claim may be. When a clothes dryer started a fire while drying towels, repairing the damage and getting Anna’s hair salon back up and running was important. So that’s just what we did. Sometimes little things mean a lot. And every day, when something bad happens to someone, West Bend makes sure our customers experience the Silver Lining. Because the worst brings out our best.®

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

On The Cover… Mary Morrison has seen everything during her 30-year run as the IIAW’s E&O Administrator. She has worked with Swiss Re underwriter Ron Kettner for 11 years and knows the power and value of Swiss Re’s coverage. It is the best in the business. For more information about the specifics of the IIAW’s E&O program, supplemental documents, and answers to basic questions, please go to iiaw.com and click Errors and Omissions on the homepage. You can also call Mary at 608.256.4429, or e-mail her at mary@iiaw.com. Mary is one of the best reasons to get E&O coverage through Swiss Re. She truly wants our members to have a good experience. Also, included with this magazine is a brochure that details the events of the 114th annual convention. Register online at iiaw.com to get immediate confirmation.

> OUR ADVERTISERS AAA ................................................................ 30

2012-2013 Executive Committee

2012-2013 Committee Chairs

President....................................................... Michael Froh P.O. Box 1320 Sheboygan, WI 53082-1320

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

President-elect .............................................. Dave Dunker P.O. Box 443 Brookfield, WI 53008-0443

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

Secretary-Treasurer .................................... John Wickhem P.O. Box 1500, Janesville, WI 53547-1500

Employee Benefits............................................. Tim Bever 555 Main St. #320, Racine, WI 53403

Big “I” Professional Liability......................13, 14

Chairman of the Board .....................................Mike Hierl P.O. Box 949 Fond du Lac, WI 54936-0949

Finance & Compensation ..............................Skip Hansen 100 North Corporate Drive #100 Brookfield, WI 53045

Burns & Wilcox ................................................. 4

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

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

Erickson-Larsen ............................................. 20

2012-2013 Board of Directors

Industry Relations ..............................................Ted Haase P.O Box 6, Seymour, WI 54165

IIAW Continuing Education ........................ 18, 26

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

IMT Insurance ................................................. 28

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

JM Wilson ....................................................... 26

Technical ......................................................Andy Burkart P.O. Box 1320, Sheboygan, WI 53081-1320

Pekin Insurance.............................................. 24

Mike Ansay 101 East Grand Ave. #11, Port Washington, WI 53704 Jason Bott 330 East Kilbourn Avenue Milwaukee, WI 53202 Thomas Holter P.O. Box 938, Beloit, WI 53512-0938 Lise Meyer Kobussen P.O. Box 633, Sauk City, WI 53583 Bruce Kommers P.O. Box 66, Antigo, WI 54409-0066 Jeff Rasmussen 525 Junction Road, Madison, WI 53717

Young Agents .......................................... Derek Wickhem P.O. Box 1500, Janesville, WI 53547-1500

ACUITY Insurance ............................................ 31 Badger Mutual ................................................. 16

SECURA Insurance ........................................... 17 Society Insurance............................................. 6

Cap Wallrich P.O. Box 90, Shawano, WI 54166-0090

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

Matthew Weimer 100 North Corporate Drive #100, Brookfield, WI 53045

Western National Insurance ............................10

Donald Williams P.O. Box 595, Beaver Dam, WI 53916

Wilson Mutual ................................................. 23

WISCONSIN INDEPENDENT AGENT

MARCH 2013 | 3

OPEN DOOR POLICY

PROUD TO BE PARTNERS: SWISS RE’S E&O POLICY IS THE BEST IN THE BUSINESS

Last year, to meet the changing E&O needs of our members, Swiss Re Corporate Solutions launched a state-of-the-art insurance agents E&O policy form. The policy is a single policy form, as opposed to separate General Terms and Conditions and Coverage Units. Additionally, loss control and experience credits are still offered to qualifying agents looking to reduce their E & O policy premium. The policy form, developed with the IIABA, offers timely and important coverage for 1st and 3rd party breach of personal data. The 1st party coverage is automatically afforded. Eligibility for 3rd party coverage, however, hinges upon your agency’s security procedures in protecting the privacy of your client’s personal information. If you encrypt or use other measures to protect personal data when transmitted, coverage can be afforded at no additional cost.

Investment/Securities Products Endorsement limit options of $2MM. Finally, advertising is defined in the policy and included in the definition of wrongful acts to give you added coverage. There are even more coverage benefits of the Swiss Re policy. They include: !"Acquisitions & Mergers !"Additional Entity !"Agency Cluster/Alliance

In addition, it provides resources and tools such as sample client letters, agency selfassessments and real life claims case studies to not only help your agency avoid costly E&O claims, but improve business practices. Visit the IIAW Website for more information or to get a Fast Quote on your E&O! I know for most of you it’s difficult to get excited about E&O insurance. Your Association is making strides every day to be resourceful and responsive to you, our members. If you don’t have your E&O through us, give us a call. We would love to get you a quote and assist you with your E&O.

!"Claim Supplement

There’s a reason why Swiss Re is one of the world’s largest, loyal and most successful reinsurers. They have the best E&O policy in the market.

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When it comes to placing personal insurance for high-net-worth clients, your success is our success. Grow your business by partnering with Burns & Wilcox. By working with our Elite Client Solutions team, you do not have to turn away clients: We have the products to cover all their needs. Our high-net-worth specialists have the expertise to create personalized solutions. Plus, our unrivaled access to markets allows us to create solutions with speed and diligence. Making personal insurance even more personal is what Burns & Wilcox does best as the largest independent wholesale broker. Milwaukee, Wisconsin | 262.347.0266 | toll free 800.544.5700 fax 262.347.0440 | milwaukee.burnsandwilcox.com

There are many other policy features including a deductible reduction (50% reduction up to $12,500 per claim). Subpoena expense reimbursement limits have increased from $5,000 to $10,000 per policy period and the loss of earning reimbursement increased to $500 per insured per day for a maximum of $10,000 per policy period. Additionally, the definition of personal injury has been broadened, consulting in conjunction with employee benefit plans is now covered, the reporting period has been expanded to include a 2-year option where allowed, added EPL coverage endorsement limits options of $1MM and $2MM, and added WISCONSIN INDEPENDENT AGENT

!""Employment Practices Liability Coverage Unit For Qualifying Agencies !"Mutual Funds & Investment Security !"Name/Ownership Change !"Life/Health Insurance Underwriting !"HR Consulting Coverage !"3rd Party Breach of Data !"Wellness Program Referral Coverage

If you do have your E&O through us, THANK YOU! One hundred percent of the proceeds generated from this program are reinvested into the Association to provide our members with top-notch services and resources. We certainly understand that times are tough and agencies are looking to save money. Sometimes you look at your E&O insurance as a means to save a few bucks. I certainly understand this. That is why we will do all that we can to get you the best product for the best price and that includes your Association dues. We are committed to making your decision to purchase our E&O an easy one and that starts with affordability.

!"Payment Plans (available March 1, 2013) We are committed to helping you prevent a claim and there are several resources and tools available to our E&O policyholders. The Big “I” Professional Liability Program and its endorsed carrier Swiss Re have created a comprehensive agency E&O risk management Website exclusively for policyholders. This Website (www.independentagent.com/ eohappens) offers your agency invaluable information on the types of E&O claims seen by Swiss Re, the largest insurer of agents’ E&O in the country.

Contact us today about the best E&O policy in the market or to join our Association today. There’s a reason why Swiss Re is one of the world’s largest, loyal and most successful reinsurers. We are proud to be a part of their team and you will be, too.

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

MARCH 2013 | 5

THE TOP FIVE SALES MYTHS

...DEBUNKED

For the past 24 years as salesman, sales trainer, speaker and coach, I have continually heard debate about the following five sales myths. In this article, I will expose and throw light on these top sales fairy tales.

SALES MYTH #1: Sales is NOT a numbers game.

No waiting period. Small detail. Big difference. Some insurance companies say your customer’s power has to be out for at least 72 hours before they’ll be reimbursed for loss of business. But we both know a business starts losing money the second it loses power. That’s why our coverage kicks in immediately. And it’s just one of the reasons we’re endorsed by organizations like the Wisconsin Restaurant Association. If you agree that details like these can make a big difference, give us a call at 888-5-SOCIETY or visit societyinsurance.com.

The more people you talk to, the more business you will do. Granted, you want quality behind the numbers and, depending upon your business, it may be helpful to do some research on the person you’re calling before you call. That said, in order to be successful in sales you need lots of good solid relationships and the only way to get those relationships is to go out and talk to lots of people. The bottom line is: if you talk to enough people during the day, you will eventually run into someone who says, “I need what you have” or “I know someone who needs what you have.” Know the number of people you need to talk to during the day in order to be successful and then go out and talk to that many people and more.

Cold calling is simply the fastest, most proactive way to get leads.

proactive way to get leads. The reality is: if you are new in business or struggling, it’s likely you don’t have enough leads and you’re not getting enough through networking, referrals, and other sources. It’s time to cold call. Yes, cold calling is the most difficult, most time consuming task you can do, but unless you have millions of dollars to spend on marketing campaigns, cold calling yields results like no other prospecting method. Also, cold calling builds character and keeps you grounded. The reality is: if you can cold call effectively and with confidence, nothing will stop you, you will be able to do any other sales task you need to do in order to be successful. That is why I recommend you never stop cold calling even when you are extremely successful. Granted, you may only make one or two cold calls a week at that point, but this will keep you sharp and on your toes.

SALES MYTH #3: Friday afternoon is a bad time to call on prospects and clients. Most salespeople believe that prospects either take Friday afternoons off or, if they do work, that they don’t want to be bothered by salespeople at this time. This is simply not true. Not only do most prospects work on Friday afternoons, they are also in a better mood at this time than at any other time during the week. As a result, Friday afternoon is a great time to prospect and close business. In addition, because most salespeople don’t make calls at this time, you will stand out as someone who is dedicated and hardworking. The bottom line is: Friday afternoon is one of the best times to prospect and close business.

SALES MYTH #2: Cold calling is a waste of time and doesn’t work.

SALES MYTH #4: A good salesperson can sell ice to Eskimos.

In over 24 plus years I’ve built four different businesses primarily through cold calling. Cold calling is simply the fastest, most

The premise here is that a good salesperson could sell someone on something that is so obviously not needed. Nothing could

WISCONSIN INDEPENDENT AGENT

be further from the truth. Top salespeople, over the long haul, don’t take advantage of people by selling them something they don’t need. Top salespeople make it all about the other person and they always do what is best for them, even to the point of sending someone to the competition on rare occasions. That said, are there some “temporary” sales successes who take advantage of people and make lots of sales by selling items they don’t need? Yes. But in the long-term those people get caught or burn out or both. The bottom line is: you can’t take advantage of people for long and live a happy, fulfilling and successful life. The top salespeople are honest, have integrity, and focus completely on the other person. They only make the sale if it is a win-win.

SALES MYTH #5: The customer ISN’T always right. Salespeople I’ve seen with this attitude seem to have a chip on their shoulder. It’s an attitude of arrogance in which they seem to believe the customer should be privileged to be doing business with them as opposed to the other way around. If you have a mindset that the customer isn’t always right, chances are great that you will not go above and beyond, you will not do more than expected, and you will not deliver topnotch, second-to-none follow-up and service after the sale. If you do not do everything within your power to ensure the customer has a great experience, odds are they will have a mediocre experience at best and you will never stand out. That said, is the customer always right? No. But you’d better walk into > John Chapin has more that conversation than 21 years of sales convinced they are, experience and is the co-founder of Complete or they will pick up Selling Inc. For free access on your suspicion to John’s whitepaper and indifference on what it takes to be quickly and leave you successful in sales, visit with no sale. completeselling.com.

MARCH 2013 | 7

MARKETING MINUTE

SO YOU’RE GOING TO PRESENT: HOW TO ENGAGE YOUR AUDIENCE Most of us have one of two common reactions after making a presentation. Either it went very well or it was lousy. These responses are understandable since presentations are highly personal. When speaking before large or small groups, we put ourselves on the line — there’s no place to hide.

How many times have you heard someone say, “I should have done better, but I didn’t have enough time to prepare,” “I wasn’t feeling well,” “I’m just not good at this” or “My personal style is better in one-on-one situations.” Then, there are those who never doubt their ability, believing they’re better presenters than they actually are. If they hear criticism, they quickly dismiss it: “That guy doesn’t know what he’s talking about.” There’s plenty of available advice on how to be a more effective presenter, but “telling” us what to do usually isn’t much help. A better approach is gaining insight by asking the right questions. Here are ten questions that can be helpful in preparing to present for almost any speaking occasion:

1. Why am I making this presentation? Or, to say it another way, what do I want to accomplish? Most presentations fail because speakers lack a well-defined understanding of what they want their listeners to do. If this isn’t clear to the presenter, the participants will be confused, bored and feel they are wasting their time.

2. What does my audience want to hear? Too many presenters find themselves in trouble

Nerves are not only normal, but embracing them can improve your presentation. They send the message that we’re putting ourselves at risk and it’s time to rise to the occasion. 8 | MARCH 2013

(and don’t even know it) by focusing on what they want to say, almost to the exclusion of the participants. Someone has said that a good presentation is a compromise between what the speaker wants to say and what the audience wants to hear. Viewing those who listen to us as our “customers” is critical. In effect, they’re the ones who judge the success or failure of a presentation. This is a tough task, requiring considerable discipline. As presenters we’re often so intent on “delivering our message,” we lose sight of getting our message across to our “customers.”

3. How can I hold my listeners’ interest? The best way is to use stories, stories, stories. A 93year old family friend, Ruthie, tells of taking her seven-year old grandson to McDonalds on one occasion. She was surprised when he didn’t order French fries. “I thought you really liked them,” she said. “I did, but not since they put potatoes in them,” he replied. He knew them as “French fries,” not French fried potatoes. What a great story to help make the point that shortcuts often lead to unintended consequences. While inexperienced presenters inundate their listeners with words, the pros tell stories.

4. How should I go about holding everyone’s attention? The answer is to invite them to participate in your presentation, something that isn’t as risky as it may sound. You can let them know at the beginning that you want them to ask questions or make comments during the presentation by raising their hands. They need to know that they’ll not be interrupting you. Yes, there may be a smart remark or two, an irrelevant comment or question, but it’s worth it to create an open atmosphere that lets everyone know that this is a “we” and not “me” event.

5. How can I avoid having a case of nerves? It may seem a bit crazy, but nerves are normal. Whenever you put yourself on the line — from playing a sport to getting married to buying a home or making a presentation — it involves having “a case of nerves.”

Making presentations is a combination of art and discipline that has but one goal: to do everything possible to convey your message as successfully as possible.

Nerves are not only normal, but embracing them can improve your presentation. They send the message that we’re putting ourselves at risk and it’s time to rise to the occasion. Audiences feel this; they sense the energy. And as we start, we tend to come to an equilibrium that let’s us take control and move forward.

6. How should I go about organizing my material? There are a variety of “formats,” but “Problem-Solution” is one of the best because it works well in just about any situation. If your topic is “The Need to Re-Organize Our Company’s Sales Regions,” the first step is to discuss the reasons why the reorg is necessary: the current arrangement is inefficient, too costly, doesn’t provide a competitive advantage, and isn’t producing the desired results.

the listeners’ support for your analysis. Once your case for change is made, it’s time for your “solution.” Here is where you show how your recommendations overcome each of the points presented “problem” portion. At that point, you will have won the listeners to your viewpoint.

7. How can I be sure I’m properly introduced? This isn’t a minor point. The person introducing you should set the stage for your presentation; it’s your “send off.” It’s a mistake to assume that you will be introduced properly. As a presenter, you are responsible for ensuring that the introduction makes it clear you have earned the right to speak to them. To make sure the introduction creates the desired impression, experienced speakers often provide a prepared introduction that can be used as is or as a guide. Even so, presenters should always begin with a brief “self-introduction” that subtlety expresses why you have been selected to speak. If this seems a bit gutsy, just remember that a poor introduction hurts your presentation.

The goal in the “problem” portion is to gain

8. How should I prepare for a presentation? No presenter is ever totally prepared, even after giving the same talk numerous times. Some speakers write out every word, and there’s no substitute for getting it down in writing and then editing it. One presenter didn’t begin speaking extemporaneously (prepared but not using notes) until he had spent

WISCONSIN INDEPENDENT AGENT

nearly two decades writing his speeches word-for-word. A compromise approach can be helpful. To make certain the opening of the presentation grabs attention and clarifies your purpose in speaking, it should be written out. And so should the various transitions, so you move smoothly and clearly from one point to the next. Above all, it’s essential that the conclusion be written. It’s your last few sentences that determine a presentation’s destiny, up or down. Those who say “I’ve gone over it in my head” are headed for failure. Making an outline is helpful in the initial development of a presentation, but doesn’t help with precise word choice, which is the difference between an adequate presentation and an exceptional one.

9. Should I use screens? The one word answer is — sparingly — recognizing that screens turn into a crutch most of the time. What’s projected is not your presentation. At best, PowerPoint screens should only support your message. If a screen can help clarify a point, use it. If it can enhance the viewers’ experience, include it. If a screen doesn’t pass this test, delete it. In effect, a presentation should never, ever be PowerPoint dependent.

10. What should I do if something goes wrong? The lights go out, the projector fails, the sound system quits, noise from the next

room distracts the participants, the previous presenters run over and, just before you go on, the chairperson asks you to cut your time slot in half. All of these (and others) can happen. I know, because they’ve happened to me — fortunately not at the same time. Something can and will go wrong — and it’s a disconcerting experience, to say the least. So, plan for it. And the best way to get ready is to think about the unthinkable by asking “what if” questions. For example, what if a storm hit and the event is cancelled. The next day you could send everyone a copy of your presentation. Whether the conditions are good or bad, you’re still the presenter. So, always be ready to make lemonade. Making presentations is a combination of art and discipline that has but one goal: to do everything possible to convey your message as successfully as possible. And that starts by asking the right questions.

> John R. Graham of GrahamComm is a marketing and sales consultant and business writer. He publishes a free monthly eBulletin, “No Nonsense Marketing & Sales.” Contact him at jgraham@grahamcomm. com, 617-774-9759, or johnrgraham.com.

MARCH 2013 | 9

ERRORS & OMISSIONS

HOW TO REPORT AN E&O CLAIM

Swiss Re Corporate Solutions is committed to helping IIABA members protect their assets and reputations. The Swiss Re Agents’ Professional Liability claims team realizes that when you are faced with a claim or a potential claim, it can be a traumatic event. That’s why we are dedicated to providing prompt, courteous and efficient claims handling from experienced claims professionals.

Reporting A Claim The Swiss Re insurance agents E&O policy requires that insureds report “claims” and/or “potential claims.” A normal agency reaction is that the mere reporting of a claim or potential claim could result in an adverse underwriting action taken toward the agency. However, reporting a potential claim to the Swiss Re claims department does not automatically result in any underwriting action by the Swiss Re underwriters. The underwriter reviews each claim/potential claim on an The underwriter individual basis to determine reviews each claim/ the facts and circumstances. potential claim on an In fact, since the Swiss Re policy individual basis to is a claims made policy, it is to determine the facts the insured’s benefit to report and circumstances. any and all claims/potential WISCONSIN INDEPENDENT AGENT

claims to insure that they are timely reported within the policy period. If no reserves or payments are applied to a claim, as a general rule no underwriting action will be taken. For the purposes of both the Loss Control Credit and the Claim-free Experience Credit, a claim is defined as an E&O incident or situation for which any expense payment, any loss payment, or any loss reserve is made or established by or on behalf of the insured in excess of certain values (plus any applicable deductible) that are based on GAP size.

Be Prepared Below are some things to think about should your agency be involved in a potential E&O claim: !"Do not admit liability — to the insured or the insured’s insurance company. !"Be empathetic, but be careful what you say. !"Do not discuss the existence of an E&O policy with anyone — and don’t provide copies.

forward it to your E&O carrier or producing state association along with details of any conversation or correspondence you have received making a demand for damages. !"Do not offer to pay the claim yourself. !"Involve your E&O Improvement Specialist, or other appropriate agency personnel, and appoint a person who will be the agency’s sole point of contact for all matters related to the claim. !"Interview every person involved in the claim — and remember it’s not about the “who,” it’s about the what, when, where, and how. !"Have each person involved in the situation write a narrative describing the incident and check the customer’s file to determine the chronology of events. !"Forward all documentation to your E&O carrier. !"Cooperate fully with your E&O carrier. For more information about E&O, please go to www.independentagent.com/eohappens.

!"Complete a claim reporting form and

MARCH 2013 | 11

ERRORS & OMISSIONS

PLANNING FOR THE UNEXPECTED

Insurance agents operate on deadlines. Policies come up for renewal, prospective clients need timely quotes to decide whether to move their coverage and clients have projects that require insurance to be in place before they can proceed. Even under normal circumstances, getting everything done on a timely basis can be a challenge. But what happens if circumstances are not normal? It’s no surprise to any insurance agent that fires, floods, tornados, hurricanes and earthquakes change normal circumstances and disrupt businesses. It’s also no surprise that errors and omissions (E&O) claims against insurance agents are often made as a result of a lack of insurance coverage for an event like a fire or flood that disrupts a client’s business. An event like a flood or fire can also disrupt an insurance agency’s business, and that interruption could lead to an E&O claim being made against the agency. Consider what happens to Acme Insurance Agency. Mr. Acme heads to the office one morning and discovers it has been destroyed by fire. Of course, the agency had adequate building, contents and business interruption coverage. However, there were significant delays before the agency was back up and running. The agency’s paper files and computers were all destroyed in the fire and the agency did not have copies. Trying to recreate what the agents had been working on at the time of the fire was a real problem. The agency had to locate temporary office space, get new computers and load the necessary systems on the new computers. Inevitably, deadlines were missed. Some of Acme’s clients and prospective clients recognized the agency had not obtained coverage for them and went The bottom line is that to another agency. Those planning in advance business opportunities for the possibility were lost by the of a disruption to an agency, but at least coverage insurance agency is was put in place. not just good business, One commercial client was not it may help protect able to close on a property the agency against sale because E&O claims should the of a several week delay in obtaining unexpected happen. property insurance. Acme received an angry letter from that client threatening litigation for the failure to obtain

12 | MARCH 2013

You’re an independent agent.

!"Did the agency back up its computer hard drives on a frequent basis and store the backups in a safe location? !"Did the agency maintain a client contact database so that it could communicate to its clients in the event it suffered a business interruption? !"Did the agency have a plan by which employees with laptops would take them home at night so they could continue to work in the event they could not access the office? !"Are long-term records stored off site in a safe location? !"To what extent has the agency moved to electronic data management, and to what extent does it rely on paper documentation?

An event like a flood or fire can disrupt an insurance agency’s business, and that interruption could lead to an E&O claim being made against the agency. Don’t be caught off guard. Plan for such events.

the necessary insurance by the closing date. Another Acme client homeowner’s policy had not been renewed and he was without coverage for several weeks due to the agency’s disrupted operations. In the interim, the home had a water loss for which there was no coverage. The Acme agency was contacted by the client’s attorney instructing the agency to report the claim to its E&O insurer. The agency’s primary defense to these claims would obviously be that delays in obtaining insurance were not the result of any negligence by the agency, but rather were due to fire interrupting the agency’s business operations. A creative plaintiff’s attorney might argue that the agency should have taken precautions so that it could better maintain business continuity in the event of a fire, flood or other disaster and could inform clients of the interruption. Such a plaintiff’s attorney might ask questions such as: !"Did the agency have a business continuity plan to implement in the event of a fire, flood or other interruption?

One would expect that a judge and jury would be sympathetic to an agency that has suffered a disaster, even if a client ended up with an uncovered loss. Nonetheless, if a plaintiff’s attorney could provide evidence of a lack of advance planning or that planned protective steps were not actually taken (causing long and unnecessary delays before the agency was back up and running), then a judge or jury might be persuaded that the agency was negligent in not obtaining the coverage or informing the client it could not obtain coverage. Every agency is different so the reasonable steps taken to plan for a possible disruption will be different for every agency. It makes sense for any agency to think about those issues in advance and make plans based on its size, location, nature of business and other factors. The bottom line is that planning in advance for the possibility of a disruption to an insurance agency is not just good business, it may help protect the agency against E&O claims should the unexpected happen. For more info about E&O, please go to www. independentagent.com/eohappens. Contact Mary Morrison, IIAW > David Holt is claims E&O Administrator, expert with Swiss Re at mary@iiaw.com for Corporate Solutions. He info about receiving a handles claims against quote. insurance professionals. WISCONSIN INDEPENDENT AGENT

Do you trust your pit crew?

The Big “I” Professional Liability Program Protect. Prosper. Prevent. Our risk management resources keep your agency from making common preventable mistakes.

Our superior coverage and expert claims teams are in your corner in the event of a claim.

When you know you have the best E&O protection, you can focus on growing your most important asset–your business.

The Big “I” and Swiss Re are jointly committed to providing IIABA members with leading edge agency E&O products and services. The IIABA and its federation of 51 state associations endorse Swiss Re’s comprehensive professional liability program.

www.independentagent.com/EO

Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas. Westport is a member of the Swiss Re group of companies and is licensed in all 50 states and the District of Columbia. ©2008 Swiss Re WISCONSIN INDEPENDENT AGENT

MARCH 2013 | 13

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• • • • •

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ACT AND AUGIE LEADERS URGE INDUSTRY TO EMBRACE KEY TECHNOLOGY PRIORITIES The leaders of the Independent Insurance Agents & Brokers of America’s Agents Council for Technology (ACT) and ACORD’s User Group Information Exchange (AUGIE) recently met and agreed to work together to advance four important industry priorities: ID Federation, Real Time, e-signatures and client self-service capabilities. “Carriers and vendors frequently ask the agents to identify their key technology-related priorities which they would like to see the

Four key priorities: ID Federation, Real Time, e-signatures and client self-service capabilities. whole industry get behind and adopt,” said Jim Armitage, ACT chairman and VP of Arroyo Insurance in Arcadia, Calif. “We have now done that and encourage industry leaders to support these priorities and implement them.” ACT and AUGIE have worked together on numerous issues in recent years and this recent effort is part of that continuing partnership.

“The last five years have brought enormous improvements in agency and carrier efficiency and customer service, because we have all worked together to streamline

• • •

carriers. This includes increasing the use of Real Time for commercial business, including program and E&S business, and supporting the all-industry Real Time Day to be held April 9, 2013.

To encourage agencies to incorporate e-signature tools into their client workflows and carriers to support their agencies employing these tools.

The four key priorities the AUGIE and ACT leaders urge the industry to work together on to implement in 2013 are:

The groups also are seeking integration of e-signature technologies with the agency management systems.

To support the ID Federation and movement to federated digital identities to replace passwords.

To enhance agencies’ ability to offer clients selfservice capabilities through the agency Website which integrate with carrier functionality, such as to make a payment.

Efforts are underway to encourage vendors to become identity providers and the carriers to support the initiative. The development of an effective digital identity infrastructure is also likely to increase agency use of Real Time and enable agencies to provide greater customer functionality through the agency Website, such as to make a payment.

To increase agent and carrier adoption of Real Time. The groups are encouraging carriers to build out their transactions following the industry recommended workflows, so that agencies will have a consistent experience across their

“In addition to advocating for these industry priorities, both ACT and AUGIE will put greater focus on achieving successful industry implementations of the recommendations that come out of our groups,” said Cal Durland, CPCU, ACORD director of member relations and AUGIE facilitator. “We will ask our working groups to validate their recommendations with a larger audience, encourage proof of concepts and develop timelines to set industry expectations.” The ACT and AUGIE leadership will continue to meet quarterly and review the progress on these industry priorities. “Another outcome of our joint planning sessions was to coordinate the agendas between our two organizations so that the industry does not duplicate its efforts,” added Jeff Yates, ACT executive director. “Each of our organizations has a number of additional initiatives that we each will be pursuing, but we thought it was important for our two groups to work together on these four key priorities in an effort to get the whole industry behind them and to achieve actual implementations in 2013.”

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workflows and incorporate improved technologies,” added Lisa Goth, AUGIE’s February meeting rotational chair and vice president of the Charles P. Leach Agency in New Bethlehem, Pa. “It is now time to build on these accomplishments and put our distribution system in an even stronger position for the future.”

Z/!-)![DW!4#!.)$$!0)#-&).!*#+!0.*48$!'5/'&4'#0'!0&'+4-$!*3*4.*:.'1! H8/&)3'+!&'#'<*.!/&)0'$$1!B'#'<*.!*//.40*-4)#$!*&'!/&'R94..'+1!\'<!*%-)8*-'+!)#.4#'!&'#'<*.!*3*4.*:.'1!I%-)8*-'+! &'#'<*.!:(!,%)-*-4)#!<4-6)%-!*//.40*-4)#!%$'+!<6'#!/)$$4:.'1! I3'&*7'!/).40(6).+'&!$-*($!<4-6!/&)7&*8!9)&!YD!('*&$1!H9!()%!06))$'!A<4$$!B'@!()%!$-*(!<4-6!A<4$$!B'1!

WISCONSIN INDEPENDENT AGENT

MARCH 2013 | 15

EMPLOYER OBLIGATIONS UNDER PPACA IRS RULEMAKING FINALLY BEGINS, PART 2

Last month, in part one of this column, a number of the substantive components of the proposed rules for Obamacare promulgated by the Internal Revenue Service (IRS) were discussed — and remember — there is still time to comment if you wish! This month, a quick review of the potential penalties for non-compliance is discussed.

Potential Penalties for Employers Beginning in 2014, large employers will be subject to penalties for every month they do not offer full-time employees the opportunity to enroll in minimal, affordable coverage, subject to several exceptions. Under the proposed rules, the penalty can also apply if an employer does not cover seasonal employees during the months they work full-time. But, employers need not offer coverage to an employee’s spouse. After 2014, employers must offer coverage to an employee’s dependents. And, just as determining the number of employees to decide if an enterprise is a large employer, there are quirks to the math when analyzing the penalty exposure for failing to comply: Full-time employees in their first 90 days of work, and all part-time employees (or part-time equivalents) do not count when determining the number of full-time employees for The potential exposure to purposes of calculating penalties. substantial penalties for Under the proposed rules, some employees — those with failing to offer or provide household incomes under 400% PPACA-compliant coverage of the Federal Poverty Level and a potential coverage contribution makes compliance a top between 8-9.8% of household priority for any employer income — must be offered “free choice” vouchers if not already falling under Obamacare’s enrolled in an employer plan. Employer Mandate. The voucher equals the amount the employer would have contributed for the employee under the employer plan, and allows the employee to purchase coverage through an exchange. These employees also do not count towards potential penalties.

hypothetical employer with 78 full-time employees offers coverage, but the cost is greater than 9.5% of employee’s income or the plan does not cover at least 60% of costs, and 25 employee receive an exchange subsidy, the employer is subject to an annual penalty of $75,000 (25 * $3,000). If more than 25 employees receive a subsidy, the penalty would increase at $3,000 each, up to a maximum penalty of $96,000, equal to the penalty if the employer did not offer coverage at all. The IRS will contact employers regarding potential penalty liability and provide an opportunity to respond. Unlike coverage costs, the penalty will not be tax deductible. Clearly the potential exposure to substantial penalties for failing to offer or provide PPACAcompliant coverage makes compliance a top priority for any employer falling under Obamacare’s Employer Mandate. Employers must first be vigilant in determining their status, and then, if necessary, their compliance.

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

The first potential monthly penalty amount will vary based on the number of full-time employees and a proposed formula. For any month in which an employer does not offer coverage and at least one full-time employee receives a credit or subsidy to participate in a plan offered through an exchange, the employer is subject to a penalty of $166.67 (the pro rata share of an annual $2,000 penalty), multiplied by the number of full-time employees minus 30. For example, if an employer with 78 full-time employees fails to offer coverage, and one employee or more is eligible for an exchange subsidy, the employer will be subject to a monthly penalty of $8,000 ($2000/12 x (78-30)) or $96,000 annually. This penalty will increase annually based on the growth in insurance premiums. The second potential penalty calculation under the proposed rules applies if an employer offers a plan, but it: (1) is either unaffordable or fails to provide the minimum value; and (2) at least one fulltime employee receives a credit to participate in one of the statebased exchange health plans. In this situation, the employer pays a penalty of $3,000 for every employee enrolled who receives an exchange credit or subsidy, up to the maximum penalty if the employer did not offer any coverage. For example, the same

16 | MARCH 2013

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Commercial Personal

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MARCH 2013 | 17

CONTINUING EDUCATION CREDITS FILED!

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ASK AN EXPERT

BUSINESS INCOME AND ORDINANCE OR LAW Ask An Expert is a great feature of the Big “I” Virtual University. There are questions and answers about a variety of personal and commercial insurance topics. What follows is one example of an Ask An Expert question.

An apartment building is located in an area where a building ordinance mandates a certain amount of parking space per unit. As a result, if the building was rebuilt at this location, it would have fewer units to allow space for more parking, thus resulting in a loss of rental income. Is there an Ordinance or Law endorsement that can solve this business income problem?

“Is there a way to cover loss of income resulting from Ordinance or Law requiring the apartment building be rebuilt with fewer units following a covered loss? The reason for the building ordinance is a density issue, resulting in requiring the rebuilding on the same premises to have room for adequate parking of cars, thereby requiring fewer apartments units be built to make room for the parking area. As a result, the rental income will be less due to fewer rental units.” While ISO provides an endorsement to permit coverage for direct loss governed by an ordinance or law, there is no real complimentary endorsement for indirect losses such as the future loss of business income you cite. Below are some suggestions from the VU faculty.

Faculty Response

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The CP 15 31 only extends the period of restoration. Business income coverage vanishes when the property is restored so there is no way to cover the FUTURE loss of income. The only way I know to get what you’re looking for is to have the carrier manuscript something. I’ve never seen it done, though there are a lot of things I’ve never seen done.

Faculty Response The CP 04 05 will have no bearing on a business income loss - it is for direct property losses only. The CP 15 31 - Ordinance or Law Extended Period of Restoration will provide business income coverage to the extent that the period of restoration is increased due to compliance with the new building code. However, I do not see any way to cover the long-term reduced income which will be caused by having less rental units.

Faculty Response The Building Ordinance Time Element endorsement is just to cover the business income loss during the extra time required due to the building ordinance demolition and rebuilding. It does not cover the loss after the property is fully rebuilt/repaired. I assume most landlords increase rents to correct this problem. The insured does not need to rebuild on the same premises. He could rebuild at a different location that allows for more units. Replacement cost coverage includes this possibility.

Ask An Expert is a Big “I” members-only resource. Members using the Big “I” Virtual University (VU) sometimes need answers to questions that they can’t find in the Research Library or classrooms. In such instances, the VU has a volunteer faculty of experts who can usually answer, or find an answer, to your questions. Go to www. independentagent.com/Education/VU/AskanExpert/. You will need to login before using Ask An Expert. WISCONSIN INDEPENDENT AGENT

MARCH 2013 | 19

INSURANCE INDUSTRY PROVIDES JOB STABILITY People may not think of insurance as the most glamorous industry in America, but it does offer stability, challenge and growth to those who choose the profession. “You don’t have a lot of college students graduating and saying, ‘I want to work in insurance,’” says Eric Schulting, enterprise recruiting and retention manager for a large insurer in Bloomington, Illinois. “But there are a lot of benefits and advantages in insurance that you don’t have in other industries.” For instance, insurance is fairly recessionproof, because insurance companies tend to be fiscally conservative and Americans need insurance whether the economy is up or down. And since insurance firms are often mutual companies (meaning they answer to policy holders rather than Wall Street), they can launch sophisticated and aggressive information technology strategies, routinely support safety education and tend to have close ties to their local communities, Schulting adds. The industry is not without challenges. If gas prices rise too high, consumers may decide to own (and insure) fewer cars, and fewer home sales mean fewer homeowners’ policies sold. When unemployment rises, so do theft and arson, and, therefore, hazard insurance claims. Industry job growth is also limited by corporate downsizing, improved productivity due to new underwriting technology and a trend toward marketing by mail, telephone and Internet.

At the same time, the industry is expanding into the sales of other financial-services products, such as securities, retirement plans and mutual funds. That trend is balanced by competition from banks that have entered the insurance market.

Retirements Driving Strong Hiring Climate With so many of their employees rapidly reaching retirement age, insurance companies are on the lookout for all types of employees. “The biggest trend influencing hiring and employment in the insurance industry is the generational shift the talent market is going to experience,” says Sharon Rues Pettid, manager of human resources for a large national insurance company. Some insurance firms look beyond recent college graduates and also recruit midcareer professionals from the health, financial-services and call-center industries. “We hire doctors and nurses for underwriting,” says Clarissa Gilliam, corporate vice president of talent acquisition for another insurance company. “We open our search to investment houses for our accounting positions and look for sales and marketing people who want to move over and learn insurance.”

Actuaries and underwriters continue to be very much in demand, according to Pettid. “This unique skill set is challenging to find and provides a unique and defined career path,” she says. “Also niche product line expertise, such as group disability insurance, tends to be very hot and lucrative for candidates.”

Surveying the Segments The medical service and health insurance segments are the fastest-growing parts of the insurance industry, thanks to aging Baby Boomers buying health and long-term care insurance, as well as annuities and other pension products. Growth may be slower in the auto insurance segment, where competition has resulted in rate declines in virtually every state, says a spokesperson for the Insurance Information Institute. While some areas of insurance are projected to grow more than others, companies in all lines will continue to need support personnel in the years ahead, Gilliam says. Source: Monster.com

L E A R N I N G iS A

LIFELONG PURSUIT

Most people don’t really think much about how they learn. Generally you assume learning comes naturally. You listen to someone speak either in conversation or in a lecture and you simply absorb what they are saying, right? Not really. In fact, I find as I get older that real learning takes more work. The more I fill my brain with facts, figures, and experience, the less room I have for new ideas and new thoughts. Plus, now I have all sorts of opinions that may refute the ideas being pushed at me. Like many people I consider myself a lifelong learner, but more and more I have to work hard to stay open minded. But the need for learning never ends, so your desire to do so should always outweigh your desire to be right. The world is changing and

The more I fill my brain with facts, figures, and experience, the less room I have for new ideas and new thoughts. new ideas pop up everyday; incorporating them into your life will keep you engaged and relevant. The following are the methods I use to stay open and impressionable. They’ll work for you too. No matter how old you get.

1. Quiet Your Inner Voice. You know the one I am talking about. It’s the little voice that offers a running commentary when you are listening to someone. It’s the voice that brings up your own opinion about the information being provided. It is too easy to pay more attention to the inner voice than the actual speaker. That voice often keeps you from listening openly for good

20 | MARCH 2013

WISCONSIN INDEPENDENT AGENT

information and can often make you shut down before you have heard the entire premise. Focus less on what your brain has to say and more on the speaker. You may be surprised at what you hear.

2. Argue With Yourself. If you can’t quiet the inner voice, then at least use it to your advantage. Every time you hear yourself contradicting the speaker, stop and take the other point of view. Suggest to your brain all the reasons why the speaker may be correct and you may be wrong. In the best case you may open yourself to the information being provided. Failing that, you will at least strengthen your own argument. 3. Act Like You Are Curious. Some people are naturally curious and others are not. No matter which category you are in you can benefit from behaving like a curious person. Next time you are listening to information, make up and write down three to five relevant questions. If you are in a lecture, Google them after for answers. If you are in a conversation you can ask the other person. Either way you’ll likely learn more, and the action of thinking up questions will help encode the concepts in your brain. As long as you’re not a cat you should benefit from these actions of curiosity.

4. Find the Kernel of Truth. No concept or theory comes out of thin air. Somewhere in the elaborate concept that sounds like complete malarkey there is some aspect that is based upon fact. Even if you don’t buy into the idea, you should at least identify the little bit of truth from whence it came.

Play like a detective and build your own extrapolation. You’ll enhance your skills of deduction and may even improve the concept beyond the speaker’s original idea.

Next time you are listening to information, make up and write down three to five relevant questions. 5. Focus on the Message Not the Messenger. Often people shut out learning due to the person delivering the material. Whether it’s a boring lecturer, someone physically unappealing, or a member of the opposite political party, the communicator can impact your learning. Even friends can disrupt the learning process since there may be too much history and familiarity to see them as an authority on a topic. Separate the material from the provider. Pretend you don’t know the person or their beliefs so you can hear the information objectively. As for the boring person, focus on tip two, three, or four as if it were a game, thereby creating your own > Kevin Daum is the bestentertainment. selling author of Video Marketing for Dummies.

MARCH 2013 | 21

WS E N E H T N I S R E B M ME McClone Acquires Burkart-Heisdorf

!Strong agency selection and long-term relationships.

Two Wisconsin independent insurance agencies have joined forces with the acquisition of Burkart-Heisdorf Insurance Agency Inc. by McClone. The acquisition was completed Dec. 31, 2012, the companies announced.

Find SECURA on the Web at www.secura.net.

McClone, founded in 1949, is a third-generation family company that helps companies and individuals drive down their risk. With office locations in the Fox Valley, Oshkosh, Fond du Lac, and Milwaukee, McClone has more than 70 employees. Burkart-Heisdorf, founded in 1916, has a main office in Sheboygan as well as locations in Mount Horeb and Green Lake. The full lines insurance agency employs more than 40 in its three locations. Burkart-Heisdorf Insurance will continue to operate under its current name and locations. Its agency ownership group and employees all are continuing as employees of the newly combined organization. Find McClone on the Web at www.mcclone.com and BurkartHeisdorf at www.burkart-heisdorf.com.

SECURA Announces Strong 2012 Business Results Appleton-based SECURA Insurance announced that A.M. Best has affirmed its financial strength rating of A (Excellent) with a stable outlook. The company also reports strong business results for 2012. The company achieved exceptional operating results in 2012, growing its direct written premium 7.9 percent with strong retention as well as new business, well ahead of industry projections of 4 percent. Loss results were favorable, especially in the Casualty area. Overall, this allowed the company to attain a combined ratio of 97.9 percent, nearly 10 points better than the forecasted industry result, which helped it bolster surplus by more than $32 million. â&#x20AC;&#x153;At SECURA, our focus is to remain a vibrant, financially strong company over the long term for our policyholders, agents, and associates,â&#x20AC;? said president and CEO John Bykowski. â&#x20AC;&#x153;Our business results prove weâ&#x20AC;&#x2122;ve continued down this path during 2012, and Iâ&#x20AC;&#x2122;m happy to say that A.M. Best agrees by affirming our rating.â&#x20AC;? Key factors cited by A.M. Best in its rating analysis include SECURAâ&#x20AC;&#x2122;s:

In Business Highlights Murray In Business magazineâ&#x20AC;&#x2122;s annual 40 Under 40 feature this year included Kevin Murray of Johnson Insurance Services. Kevin is VP - Commercial Insurance at Johnson. Kevin credits â&#x20AC;&#x153;surrounding myself with seasoned insurance experts, studying the Wisconsin insurance market to identify areas of need, and developing niche industry expertise and product specialty.â&#x20AC;? Murrayâ&#x20AC;&#x2122;s niche is health care systems, hospitals, and clinics, with a focus on medical malpractice insurance. His next goal is to reach â&#x20AC;&#x153;a senior leadership positionâ&#x20AC;? to impact decisions and long-term company vision.

22 | MARCH 2013

increases our capacity to help people. We can insure more individuals, families, and businesses, and we can contribute more to the communities in which we operate.â&#x20AC;?

West Bend was ranked #41 nationwide among 872 organizations that participated in regional top workplaces programs and employ more than 1,000 employees.

ACUITY has averaged a double-digit growth rate over the past 14 years despite insurance market fluctuations and global economic downturns. During that period, ACUITY has also expanded its geographic reach, doubling the number of states in which it does business. The companyâ&#x20AC;&#x2122;s expansion has it on track to quickly become a top-60 carrier in the United States â&#x20AC;&#x201D; out of more than 3,000 in the nation â&#x20AC;&#x201D; and to break into the top 50 within a few years.

The National Top Workplaces list was determined solely by feedback gathered through an objective employee survey. The survey was conducted by WorkplaceDynamics, LLP, the leading on-demand employee survey provider, in conjunction with 30 leading regional newspapers. West Bend participated in The Milwaukee Journal Sentinelâ&#x20AC;&#x2122;s Top Workplaces 2012 program.

â&#x20AC;&#x153;We have the agents, employees, and strategic plan in place to allow our growth to keep compounding,â&#x20AC;? Salzmann said. â&#x20AC;&#x153;We plan to sustain our momentum on the path to becoming a multibillion-dollar insurer.â&#x20AC;? Find ACUITY on the Web at www.acuity.com.

West Bend Named 2013 National Top Workplace West Bend Mutual Insurance Company announced it has been named one of Americaâ&#x20AC;&#x2122;s Top Workplaces by WorkplaceDynamics.

His role models are Samuel Curtis Johnson Jr., who â&#x20AC;&#x153;had the entrepreneurial spirit and foresight to grow his familyâ&#x20AC;&#x2122;s businesses into multibillion-dollar companies that will provide employment to thousands of people for generations,â&#x20AC;? and Vince Lombardi, a symbol of hard work and leadership. Outside of work obligations, Murray enjoys spending time with his wife, Michelle, and dog doing â&#x20AC;&#x153;almost anything on waterâ&#x20AC;? and traveling to new places. The Leadership Greater Madison graduate is also involved with BioForward. Financial Executives International, and many industry-related organizations. Kevin was the IIAWâ&#x20AC;&#x2122;s Young Agent of the Year in 2008. Find Johnson Insurance on the Web at www.johnsonins.com.

ACUITY Reaches $1 Billion Revenue Milestone ACUITY announced that it has reached the $1 billion revenue mark, generated on premiums written across its 20-state operating territory. ACUITY has quadrupled its annual written premium revenue since the beginning of 1999. Company president and CEO Ben Salzmann stated that ACUITYâ&#x20AC;&#x2122;s growth is significant to its employees, independent agencies, and the communities in which it does business.

! Strong capitalization and historically profitable results. !Long-standing regional business presence.

S W E N E TH N I S R E B MEM

â&#x20AC;&#x153;As we grow, we can hire more people, and the people who are already on our staff find more opportunities for growth and advancement,â&#x20AC;? said Salzmann. â&#x20AC;&#x153;Being a $1 billion company also WISCONSIN INDEPENDENT AGENT

Rely on

The survey uses a set of 22 questions to rank companies. The survey data showed that employees most want to work at companies with high levels of organizational health. Companies that set a clear direction for their future, execute well, and bring real meaning to work are the healthiest. â&#x20AC;&#x153;Our vision at West Bend is to be the company of choice for our associates, agents, and policyholders,â&#x20AC;? said Kevin Steiner, West Bendâ&#x20AC;&#x2122;s president and CEO. â&#x20AC;&#x153;To be named as one of the nationâ&#x20AC;&#x2122;s top workplaces is strong evidence that our vision is becoming reality. I am proud of our associates and their commitment to excellence.â&#x20AC;? Find West Bend on the Web at www.thesilverlining.com.

!"#$% &'. Rely on Wilson. Quality . Stability . Teamwork . Service . Integrity

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MARCH 2013 | 23

E M P LOY E E B E N E F I TS CO M M I T T E E M E E TS

FOR E&O COVERAGE, PRICE IS A FUNCTION OF VALUE Agents sell insurance but they also buy insurance. As insurance buyers, agents are similar to their own customers — they buy on price. A recent survey found that agents purchase Errors and Omissions (E&0) insurance on price 70 percent of the time, by far the number one response. Coverage (18%) and Financial Strength of the Carrier (12%) round out the top 3. While the results of the survey are not overly surprising, there are definitely some concerns if price and price alone is the main issue for moving E&O coverage.

The IIA of Wisconsin’s Employee Benefits Committee met on Thursday, February 21 to tackle a large agenda. From left around table: Matt Banaszynski, IIAW Executive VP; Julie Allord, The Benefit Works; Dick Tillmar, Tillmar Connect; Christy Engel, Anthem Blue Cross Blue Shield; Dennis Richards, Anthem Blue Cross Blue Shield; Aaron Zwaska, Anthem Blue Cross

Blue Shield; Misha Lee, IIAW Lobbyist; Barb Schroeder, Ansay & Associates; Matt Weimer, Diversified Insurance Services; Chairman Tim Bever, Johnson Insurance; Niel Larsen; Maritime Insurance; Barbara Schlaefer, JC Rose & Associates; and J.P. Wieske, OCI. Not pictured: Alisa Allen, Wisconsin Medical Society.

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Price is a function of value. You get what you pay for. In the world of agents E&O, since no two policies are the same, there is the possibility that if the price is less, so is the coverage.

Mary values each new piece of business and returning customers. “We make sure the pricing is fair and that all the available coverages are in place,” said Mary. “The size of the agency does not matter. We care about what happens to our members and want them to feel good about their experience.”

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For more information about the specifics of the IIAW E&O program, supplemental documents, and answers to basic questions, please go to www.iiaw.com, and click Errors and Omissions. You can also call Mary at (800) 362-7441 or e-mail her at mary@iiaw. com.

Independent insurance agents deserve the best E&O coverage and that’s what Swiss Re delivers. Swiss Re is the largest writer of E&O insurance in the world for a reason. Solid underwriting and financial strength are great assets when it comes to E&O insurance, but independent agents in Wisconsin may appreciate something more downto-Earth — personal service and the ability to talk with someone locally.

The size of the agency does not matter. We care about what happens to our members and want them to feel good about their experience.

“People can reach me anytime with questions,” said Mary Morrison, the IIA of Wisconsin’s E&O expert. Mary, a licensed agent, has run the IIAW’s errors and omission program for 30 years and is here every day answering policy and coverage questions. “That’s where we really stand out. Other carriers have to call an underwriter in another part of the country. I can give personal service.”

Mary Morrison is the IIAW’s errors and omissions expert. With 30 years of experience and attention to detail, Mary’s E&O program with Swiss Re has one of the highest retention rates in the country.

AUTO • HOME • BUSINESS • LIFE • HEALTH 24 | MARCH 2013

WISCONSIN INDEPENDENT AGENT

MARCH 2013 | 25

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GOVERNMENT AFFAIRS

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WHY POLITICAL INVOLVEMENT IS IMPORTANT

Since enactment in 1945, the federal McCarran-Ferguson Act clearly established that the “business of insurance” is to be regulated by the states. Here in Wisconsin, our industry generally enjoys a favorable regulatory climate when compared to many other states.

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

KNOWLEDGE COMES FROM EXPERIENCE

AS A RESULT, competition in the marketplace is fierce. Generally, consumers reap the benefits through low insurance costs and a variety of products and services. According to data collected annually by the National Association of Insurance Commissioners (NAIC), Wisconsin consistently ranks as having some of the least expensive property and casualty insurance rates in the country. But Wisconsin’s healthy and competitive market does not diminish the fact that our industry remains heavily regulated. For independent insurance agents, these regulations and state laws have a direct impact on your bottom line and whether or not you are able to grow your book of business.

would have dictated how agents could — or could not — communicate with their customers regarding the repair of their automobile. From years working in the industry, I’ve learned that one of the most important moments in the agent-customer relationship is the time when the customer contacts their agent with a claim. This proposal would have muzzled agents from communicating options to their customers on how and where to repair their vehicle. Fortunately, the bill failed to pass legislative scrutiny, but it helps emphasize my point on why political involvement and advocacy is important. In order for the IIAW to be effective, I believe there are three components of political involvement that must work together: >1 Professional lobbyists. >2 Political fundraising. >3 Grassroots involvement. If one of these components is missing or weak, the advocacy or political involvement by the IIAW becomes unbalanced and undermines the success of the overall effort. The higher the level of political involvement in which IIAW members are willing to commit, the more influence your organization and members will have with decision makers.

Professional Lobbyists

Without a strong voice in the political process, agents will have a diminished role in the policymaking process.

“I go the distance on my bike—just like my 30-year journey with J.M. Wilson. I lead a great team of managers and underwriters that work hard to help our agents be successful.”

Sandi Fritz, CIC Vice President, Underwriting and Branches—and fixture on the bike trail

Connect with Sandi on LinkedIn!

Managing General Agency Since 1920 Property/Casualty t Professional Liability t Surety Commercial Transportation t Personal Lines t Premium Finance

26 | MARCH 2013

800.666.5692

jmwilson.com

WISCONSIN INDEPENDENT AGENT

Every legislative session, lawmakers introduce thousands of ideas by way of legislation; these legislators hold the keys to how our industry and agents are governed. Their decisions are often driven by constituents’ wants and needs, so it’s critical that agents advocate for their priorities and profession. If they don’t, they run the risk of allowing others to shape policy harmful to independent agents. For example: During the last legislative session, the auto repair industry lobby (the Wisconsin Auto Collision Technicians Association, Ltd.) proposed legislation that WISCONSIN INDEPENDENT AGENT

Lee Government Relations, LLC is your direct advocate at the State Capitol for your association, legislative program and priorities.

Political Fundraising The people who run for public office and win ultimately decide the outcome on the issues of the day, particularly the ones you care most about. Without a strong voice in the political process, agents will have a diminished role in the policymaking process. The IIAW Insuring Wisconsin PAC was established in 2011 to collectively direct political resources to state candidates who demonstrate support and appreciation for the independent insurance agent community. The PAC is an important tool in our overall political advocacy effort. In addition, I am encouraging the IIAW’s leaders to consider initiating a Conduit Program this year to complement the Insuring Wisconsin PAC. Unlike the PAC,

contributions from the conduit are recognized as individual donations to candidates, and agents providing funds to the conduit decide which candidates they want to support. The IIAW can provide its members with guidance on candidates worthy of industry support, but you ultimately decide how your conduit dollars are spent. PAC contributions are useful under limited circumstances, but the conduit program allows greater flexibility for its donors. Frankly, it is the most desirable political funding mechanism that exists in Wisconsin for candidates.

Grassroots Involvement Grassroots is and should continue to be the backbone of any political involvement by the IIAW. The IIAW’s strength is in its numbers. Our members are spread out all across the state of Wisconsin in every legislative district. Each one of you is on the front lines of the industry and embedded in communities and neighborhoods throughout the state. As independent agents, you bring instant credibility with your local legislators because you are constituents, neighbors, civic leaders, and small business owners. In the coming months, the IIAW’s leadership will be exploring the creation of an Adopta-Legislator initiative that will help link up interested IIAW members directly with their area state legislators. This initiative can provide the IIAW and its members a stronger voice on issues that directly impact agents in the marketplace. For your voice to be heard loud and clear in Madison, the IIAW membership must acknowledge and participate in all facets of political involvement. As ugly and souring as recent political campaigns have been, the reality is that we cannot separate policy making from politics. I look forward to working with all > Misha Lee is Owner/ of you to help the Founder of Lee Government Relations, IIAW become more LLC and lobbyist for politically involved. IIAW.

MARCH 2013 | 27

FROM THE ARCHIVES

BIG ‘I’ FEDERAL PAC BEEFS UP WEB PRESENCE As the political world becomes more technologically advanced, InsurPac is embracing that change and upgrading its Web presence. Now, independent agents can access valuable content and take action by visiting www.insurpac.com. The upgraded Webpage allows visitors to see where their state ranks in terms of federal political involvement and, when logged in, see who in their state is a major InsurPac booster. Did you know that, in 2012, North Carolina agents invested the most money to InsurPac? Did you know that North Dakota led the country in most dollars invested per member agency? Where did your state rank? More than 5,000 independent agents came together to support InsurPac in the 2012 election cycle, helping raise more than $1.8 million. That money was disbursed to nearly 300 federal campaign committees, helping elect officials from both sides of the aisle that understand and appreciate the independent agency system. While this was significant participation, InsurPac’s goal is to become a $1-million PAC per year and multimillion PAC per two-year election cycle.

process. The federal government is making decisions every day that affect the insurance market. Please visit www.insurpac.com to learn more about the federal political action committee for independent agents.

Today it is more important than ever to be engaged in the political

Nathan Riedel is Big “I” vice president of political affairs.

The Carlton West was a popular nightclub in Green Bay that hosted comedians, musical theater productions and musicians ranging from Glenn Campbell to Tom Jones to Metallica. The Carlton was also the venue for the 1979 Wisconsin Big “I” annual convention. Comedian Steve Allen, the first host of The Tonight Show, entertained the attendees.

We are seeking quality agency appointments to become part of our “Worry Free” family. Simply bundle your customer’s auto, home and business insurance into IMT’s “Worry Free” bucket, and you will be worry free too.

In the 70s, crushed velvet and plaid trousers ruled the world. Association president Harland Klipstein (left) presents an award to a young agent. Harland cofounded the Klipstein-Lane Co., a general insurance agency, in 1971.

West Des Moines, IA 28 | MARCH 2013

800.274.3531

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WISCONSIN INDEPENDENT AGENT

MARCH 2013 | 29

FOOD FOR THOUGHT HE WAS BOOED FOR BEING UNPATRIOTIC On March 12, 1942, Joe DiMaggio ended his holdout and accepted a $4,500 raise for his work. In 1941, the Yankee Clipper batted .357 with 30 home runs and 125 RBI. He also hit safely in 56 consecutive games, a record that still stands today. Originally, the Yankees offered him a contract worth $37,500, which is exactly what he made in 1941. DiMaggio was furious at the offer since he was the biggest gate attraction since Babe Ruth. Adjusted for inflation, DiMaggio’s contract today would be worth around $600,000, still a bargain. By comparison, in 2011, Angels slugger Vernon Wells was paid $23 million for batting .218, hitting 25 homers and driving in 66 runs. Adjusted for inflation, his contract is still terrible. Source: A Stitch In Time by Gene Elston and baseball-reference.com

EVERYONE AT THE GYM THANKS YOU Milwaukeean John C. Koss founded Koss Corp. in 1953. In 1958 he introduced the world’s first high-fidelity stereophone headphones, launching the personal listening industry. The Koss stereophones were the first to provide full range for both low and high notes. In 1958 Koss and engineer Martin Lange Jr. paired up to demonstrate a new audio device, “a little portable phonograph with side-wing speakers,” at a Wisconsin audio show. It featured a “private switch,” which allowed listeners to hear music by plugging in the world’s first SP3 stereophone. The stereophones, originally just a gimmick to get buyers to appreciate the stereo sound of the portable player, became the hit of the show. Although headphones were not new, up to this point, they had been used for communication, not music. The Koss Corporation even garnered presidential recognition in 1969 when Pro-4 stereophones were installed on Air Force One during the Nixon Administration. Source: wisconsinhistory.org

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6,0$#"+6(*('+*%,-'7 has pushed ACUITY over the $1 billion revenue mark! In the past 14 years, we’ve quadrupled our written premium and you are responsible for that. Thank you! We have the agents, employees, and strategic plan to allow our growth to keep compounding on the path to becoming a multibillion-dollar insurer.

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30 | MARCH 2013

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