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VOLUME 126, NUMBER 8 / April 27, 2015
Serving: New York, New Jersey, Connecticut, Pennsylvania and Washington D.C.
A CINN Group, Inc. Publication
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Contents [COVER STORY ] 18
The Evolution of the Independent Insurance Agent
April 27, 2015 | volume 126 number 8
[ AD FEATURES] 11
LICONY: Life Without the Life Insurance Industry?
[FEATURES] 4
Foreword: Steve Acunto, Publisher
6
Insight: Cyber Insecurity Peter H. Bickford
10
On the Level: New Seasons, New Innovations and the Rule They Provoke N. Stephen Ruchman
12
In the Associations: LIRAP 40th Anniversary Celebration
14
The Social Notebook: SEO as Part of Your Agency’s Marketing Strategy Chris Paradiso
16
NewsNotes:
18
Sue Quimby Named AVP of MSO NYS DMV Proposes Electronic Auto Insurance I.D. Card 24
Face to Face: Cheaper to Keep Her! Michael Loguercio
28
On My Radar: Careful with Applications Barry Zalma
30
Looking Back:
32
Guest Article: E&O Considerations for the Automated Agent Keidel, Weldon & Cunningham, LLP
33
Classifieds
12
14
Like us on Facebook… The Insurance Advocate Magazine INSURANCE ADVOCATE / April 27, 2015 3
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[ FORE WORD ]
Steve Acunto
Newton Award to New York’s Peter C. Browne
I
n an advance for commercial property insurers, site-specific exposures can now factor into underwriting models. Verisk has developed a new analytic report that provides underwriters the ability to determine the likelihood of fire incidents and a broad spectrum of non-modelled weather events. The Peril and Incident Report is offered as part of Verisk's newly enhanced ProMetrix® suite of commercial property data and analytics. The Report provides historical records of reported fire and gas emergency incidents and non-modelled weather events, both of which will help identify the likelihood of a future adverse event. Industry experience indicates that insureds typically do not submit claims for incidents that are less than the policy deductible, which may keep carriers in the dark about risks associated with a specific property, according to Verisk. The Peril and Incident Report documents fire and gas emergency reports for the six most recent years available. Those incidents may suggest the presence of risks and lack of precautions, previously unknown to the carrier, that warrant additional examination. Drawing on data from Verisk Climate, the report also provides details around events, such as hail, wind, lightning, and wildfire. The report includes a trend indication for each of the events, historical occurrences down to the street level of the property for the last five years, the date of the last event, and a hail damage score that shows the probability that a damage-producing hail event affected the property in the past. The National Association of Insurance and Financial Advisors (NAIFA) is proud to announce Peter C. Browne, LUTCF, co-founder of Price, Raffel & Browne, as the recipient of the 74th annual John Newton Russell Memorial Award. The award is the highest honor accorded by the insurance industry to a living individual who has rendered outstanding services to the institution of life insurance. He will receive the award October 4, 2015, at the NAIFA Career Conference and Annual Meeting in New Orleans. Peter Browne began his career in the insurance industry in 1962 as PETER C. BROWNE an agent in the Rochester agency of the Union Central Life Insurance Company. He was part of the Rochester Institute of Technology School of Business Work Block Program as a college agent. He became the Rochester agency manager in 1964, where he recruited and mentored numerous agents who went on to great success. In 1970, the Union Central Life sent Mr. Browne to New York City as an aspiring manager of the C.B. Knight Agency, which at one time was considered to be one of the country’s largest life insurance general agencies. In 1984, Mr. Browne along with Arnold Price and Stuart Raffel founded Price, Raffel & Browne. With offices in New York and Los Angeles, the company is now one of the largest pension and profit-sharing consultants in the United States. He has qualified for the Million Dollar Round Table continuously for over four decades, earning membership in the MDRT Top of the Table for the last 30 consecutive years. He is an inaugural inductee into the Union Central Life Hall of Fame. As agency managers, Mr. Browne and his partners have won numerous awards, including the President’s Trophy and Crystal Trophy. Mr. Browne served for years on the NAIFA Board of Trustees and as treasurer of the national organization. He is a past-president of NAIFA-New York State, as well as NAIFANew York City. He has served on the Board of Trustees of The American College and is currently the immediate past chairman of the American College Foundation Board. At The American College, he was instrumental in creating and funding the Larry R. Pike Chair in Insurance and Investments. In 2010, The American College awarded Mr. Browne the President’s Trophy, and in 2012 Mr. Browne was awarded the Huebner Gold Medal along with his good friend and past John Newton Russell Award recipient Alan Press, CLU, LUTCF. Mr. Browne is a past member of the Life Happens Board of Trustees and a past member of the national board of the Life Underwriters Training Council and the board of GAMA International. We wish to extend our personal congratulations to our longtime friend Peter Browne and to Mib and the family on this outstanding – and well deserved – award. [IA] 4 April 27, 2015 / INSURANCE ADVOCATE
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VOLUME 126, NUMBER 8 APRIL 27, 2015
EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Michael Loguercio Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog 914-966-3180, x113 g@cinn.com
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PROOF READER Maria Vano mariavano9@gmail.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x117 circulation@cinn.com PUBLISHED BY CINN Group P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 966-3264 www.cinn.com | info@cinn.com President and CEO Steve Acunto
CINN G R O U P, I N C .
INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in July, August, September and December by CINN ESR, Inc., 131 Alta Avenue, Yonkers, NY 10705. Periodical postage paid at Yonkers, NY and additional mailing offices. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $110.00. TO ORDER Call 914-966-3180, fax 914-966-3264, write Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2015. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Office.
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Robert
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[ INSIGHT ]
By Peter H. Bickford
Cyber Insecurity
A
lthough insurance industry players – companies and producers – are not exactly modern Luddites opposed to any technology advances, it is no secret that the industry usually lags behind in keeping up with an ever-changing world. In an age where young people in the same room are more comfortable
regulatory topic of concern for the foreseeable future. To back up this concern, the DFS produced a report in February on Cyber Security in the Insurance Sector after having produced a similar report on Banking Cyber Security last spring. The insurance sector report, based on surveys conducted even before the Anthem secu-
Of all the “hot topics” in the world of insurance regulation, the current regulatory frenzy over cyber security is right up there with excessive financial standards and SIFI (Systematically Important Financial Institutions) designations.
Peter H. Bickford
communicating via texting rather than talking to each other, the business of insurance clings to personal interface as a keystone. Some consider this a strength of the industry while others seem to always be pushing the industry to wider, more dynamic acceptance of modern technology to keep pace or risk losing its position in the world economy. It should be no surprise, therefore, that the industry is being pressed to recognize and protect itself and its customers from cyber threats. When that pressure comes from regulators – themselves technology challenged – it should raise a few eyebrows! Of all the “hot topics” in the world of insurance regulation, the current regulatory frenzy over cyber security is right up there with excessive financial standards and SIFI (Systematically Important Financial Institutions) designations. Every regulatory level is in on the act, from the Federal Insurance Office (FIO), to the National Association of Insurance Commissioners (NAIC), to individual states like the New York Department of Financial Services (DFS). The most aggressive, of course, is New York’s DFS, whose chief has repeatedly stated that cyber security is the primary 6 April 27, 2015 / INSURANCE ADVOCATE
rity breach was publicly disclosed, concluded that outside of their IT units most company managements had minimal knowledge of the scope and seriousness of the problems relating to securing information or how to address these problems. These findings prompted the DFS to issue a letter to licensed insurers in March advising them that the Department “intends to schedule IT/cyber security examinations after conducting a comprehensive risk assessment of each institution.” To aid in that assessment, the Department “requested” a report from each insurer to be submitted by the end of April addressing 16 specific areas of inquiry regarding its security platform and standards. At the other end of the spectrum, of course, is the NAIC, which at its spring meeting adopted “Principles for Effective Cybersecurity: Insurance Regulatory Guidance” as recommended by its cybersecurity taskforce. The NAIC document includes 12 broad principles addressed not just to insurance companies, producers and other licensees but also includes principles aimed at regulators and their obligations (the NY letter and its 16 specific areas of inquiry are addressed only to
insurers). The NAIC cybersecurity taskforce acknowledged that its principles were derived from a similar earlier effort by the securities industry. The NAIC guidelines as approved made two changes from the initial draft to address industry criticism. First, the language was softened to address concerns that the original draft guidelines were too inflexible or too closely skewed to a specific standard. The other change was to remove a number of guidelines relating to the sale of cyber risk insurance. However, where the New York framework is devoid of reference to cyber insurance products, the NAIC Cybersecurity Taskforce, in addition to its guidelines, is considering a comprehensive, mandatory annual supplement detailing insurers’ cybersecurity policy writings to help regulators understand the size, scope and activities of the market. The NAIC is also working with Federal regulators and the FIO to coordinate data collection efforts on the scope of the marketplace for cyber risks. Which brings us to the FIO and its announced plans that seem to go beyond the collection of data on cyber risk writings into the world of establishing underwriting guidelines for these risks. Huh? Regulators establishing underwriting guidelines? In discussions among regulators, there has been much chatter about the need to coordinate the collection of cyber security data. There also seems to be regulatory recognition that increasing access to cyber coverage can be a significant mitigating factor in cyber crimes by making businesses incorporate better risk management systems. Recognizing underwriters’ need for incident frequency and severity data on cyber risks, however, does not ensure that this data will be successfully collected or made available to underwriters anytime soon. There are still substantial hurdles to be overcome in order to make this happen including the confidential nature of much of the data, National security concerns and the reluctance of targets to be fully open about breaches of their systems. Nobody continued on page 8
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[ INSIGHT ] continued from page 6
wants its system vulnerabilities on public display. It seems a bit premature, therefore, for the FIO to leap from unresolved data collection and availability issues to the realm of insurance underwriting, not to mention the incongruity of government establishing underwriting standards for private businesses. It may be that when the FIO suggests establishing underwriting guidelines for cyber risks it has in mind things like
defining acceptable minimum coverages, or identifying public policy consideration – items that permeate state insurance laws in areas like homeowners, auto and health insurance coverages. But who knows? Like financial standards being determined in large part by bank-centric regulators, the insurance industry - pushed again to the periphery of the dialogue - hopes that its limited voice on cyber security is loud enough to be heard and considered. And who understands New York? While the NAIC and the FIO at least evi-
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Like financial standards being determined in large part by bank-centric regulators, the insurance industry - pushed again to the periphery of the dialogue - hopes that its limited voice on cyber security is loud enough to be heard and considered. dence some understanding of the positive relationship between expanding the cyber risk marketplace and risk mitigation, New York seems singularly focused on insurers’ own internal systems and protections. The few references to expanding cyber risk markets are incidental to the extensive and detailed directives to the companies about their own internal controls. I suppose I should not be surprised at yet another example of New York’s reluctance to actually support growth and expansion of the business of insurance in the state. However, in view of the multiple pronouncements by New York’s chief banking and insurance regulator on the primacy of cyber security as a regulatory concern for the foreseeable future, wouldn’t it behoove the state to be more enthusiastic in expanding the market for cyber insurance products?[IA] Peter Bickford has over four decades of experience in the insurance and reinsurance business, with particular focus on regulatory, solvency, agency, alternative market and dispute resolution issues. In addition to his experience as a practicing attorney, he has been an executive officer of both a life insurance company and of a property/casualty insurance and reinsurance facility. A complete biography for Mr. Bickford may be accessed at www.pbnylaw.com.
www.insurance-advocate.com 8 April 27, 2015 / INSURANCE ADVOCATE
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[ ON TH E LEVEL ]
LIC
By N. Stephen Ruchman, CPIA
New Seasons, Innovations and the Rules They Provoke
I
’ve always seen Spring as the season of rebirth. As I write this article, I’m sitting at home: The tulips are about four inches above the ground and I’m watching the same birds come back and attempt to nest in the automatic awning over my deck, where they have been for the last two years. But, they are really starting to ruin
able housing might be attainable. PIA of New York is a member of the Lawsuit Reform Alliance of New York, which is fighting to improve the business climate of our state by changing the unique labor law. Hopefully, we will see some changes in an upcoming session. I know it’s too soon to expect sweeping change
Hopefully now, the abuses and bullying by major contractors and municipalities will stop, as there is a provision for penalties in the law preventing anyone, including an agent, from being required to issue a false certificate.
N. Stephen Ruchman
the canvas and I have to get rid of them before they give birth. So, they bring in the branches and debris to build their nest and I pull them out—hoping that my persistence will get them to go away. I even built a platform over one of the eaves on my house with the hope that they will build their nest there, but they are too persistent and they won’t. I think they may be reincarnated insurance agents, because they just won’t take no for an answer. The same persistence that the birds are using to build their nest reminds me of the persistence of my fellow agents at PIA when we discuss New York State’s Labor Law 240/241(a). It’s been an uphill battle for years and a major road block always included Assembly leadership. Like Spring, we now have a change and we see many positive things coming from the office of Carl E. Heastie, the new Assembly speaker. Hopefully, there will be a rebirth of the New York State Assembly with the new leadership. We know from extensive reports that the new Tappan Zee Bridge has a workers compensation bill of more than $400 million, which we, the taxpayers are funding. We know that the governor wants more affordable housing in both the state and New York City, and with some changes to the labor law, the cost of afford10 April 27, 2015 / INSURANCE ADVOCATE
before the current session ends in June, but perhaps groundwork will be set for us to see change in the near future. After all, I have reason to be hopeful, not just because it’s the season of rebirth, but because PIA has had some significant victories in the legislative and regulatory arenas recently. July 28 will mark one of these: I know many agents who are excited to see the certificates of insurance law that PIA made possible take effect on that day. Many people worked very hard to get this bill passed. PIA staff, New York State Assembly Majority Leader Joseph D. Morelle, D136, and Senate Insurance Committee Chair James L. Seward, R-51, and Assembly Insurance Committee Chair Kevin Cahill, R-103, all took measures to see this measure through to the governor’s office. And Gov. Cuomo recognized the changes PIA made to the previous bill and finally signed the bill into law. Hopefully now, the abuses and bullying by major contractors and municipalities will stop, as there is a provision for penalties in the law preventing anyone, including an agent, from being required to issue a false certificate. PIA has been working since the law was passed to arm agents with information they can use.
Another major victory giving agents spring in our step this season is the easing of auto photo inspection rules that helps prevent lapses in physical damage coverages. Thanks to PIA, the Department of Financial Services has increased the time policyholders have to obtain inspection photos to 14 days. This is a welcome achievement and PIA is to be applauded for working with CarCo and regulators to make this change. In fact, it seems like the season is ripe for addressing auto insurance and PIA has been stirred to action from its recent successes and already is working with the Department of Motor Vehicles to get things done. The new electronic ID card regulation that took effect last month will authorize agents to issue electronic IDs if their carriers allow, thanks to PIA’s request to the department. And of course, there are always new issues. Ridesharing is a hot new topic with companies like Uber driving on to the scene with little regard to insurance. PIANY, of course, has been meeting with lawmakers to discuss proposals about ridesharing in the Senate and Assembly, including concern about insurance gaps between the personal auto policy and transportation network company when policyholders log on to an app. The issue is receiving increased attention as groups push for the approval of ride-hailing services in areas outside of New York City. Benjamin J. Lawsky, the Superintendent of the New York State Department of Financial Services, told State of Politics recently that he has some “real issues” with the current proposals. As a result, his office is reportedly working on its own legislation. In addition to ridesharing, I note some problems with auto insurance that we still could address. One example comes from a good friend of mine on Long Island, who called me this month to complain about an automobile dealer on the North Shore that is telling clients they are unable to reach the owners’ existing agent. In order to expedite the purchase of a new vehicle, continued on page 17
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LICONY
ADVERTOR IAL
LICONY
Life Without the Life Insurance Industry? Its Loss Would Make Life Difficult for New York’s Small Businesses, the Employees and Family By Thomas E. Workman, President & CEO, Life Insurance Council of New York, Inc.
O
ver the years, I have written about the benefits that the life insurance industry pays to families and businesses across our great state. This year, however, I am using my column to contemplate what would happen to New Yorkers if the life insurance industry were to vanish. What would be the impact on small businesses? The Governor and New York State government officials recognize that small businesses are at the heart of the American economy, responsible for half of all private sector jobs, and creator of about 70 percent of all new jobs over the past decade, according to Empire State Development.1 Consider that in New York State, there are just over 2 million small businesses operating today, providing employment for 3.8 million New Yorkers. To help support these businesses and to foster a thriving business environment, the Governor continues to create and propose a number of programs to enable small business growth and reduce certain financial barriers.2 For years, small business owners have been using life insurance to protect their businesses, their employees and their families. Take for example the real life story of Frank Szatkowski,3 a dentist and co-owner of a successful dental practice. Lou Gehrig’s Disease forced Frank to stop working at age 56. Multiple insurance contracts protected both business and family from financial ruin. A business overhead disability policy covered office expenses and employee salaries. Frank and his business partner also set up a buy/sell agreement and purchased
disability buy-out contracts to fund it. Those arrangements enabled Frank’s partner to buy out his share of the dental practice and keep it running. For Frank and his family, the financial story was just as positive. Health insurance and an individually owned disability policy covered the high cost of his 24-hour home care and medical bills. The family didn’t have to touch funds set aside for retirement. In addition, a provision of Frank’s permanent life insurance policy called for premiums to be waived in the event of disability—his coverage remained in force and the cash value continued to grow. For Frank, his family and his business, insurance was in place and it protected all. Small businesses are particularly vulnerable to life’s unplanned events. Illness and the resulting disability was the cause in this example, but death, retirement or simply a change of plans can just as easily disrupt a small business. At the same time, life insurance can provide benefits to grow a business by attracting and retaining employees. These small business owners can cover or share the cost of life insurance, disability insurance, retirement plans, dental and vision, for examples. Of course, this kind of financial protection is available only if there is a financially strong life insurance industry in place to provide this critically important protection to small businesses, their employees and their families. New York State government should be applauded for its efforts to help business expand and grow in our state. But, how much
more would the government need to do in order to replace the protection that the life insurance industry provides? Fortunately, there is a strong, trustworthy life insurance industry that stands ready to do more for New Yorkers. We can support more small businesses in New York State with the help of public policy that creates an environment where more New Yorkers appreciate the need for, and secure, life, disability, long term care insurance, and annuities for personal and business protection. [IA] Thomas E. Workman is the President and Chief Executive Officer of the Life Insurance Council of New York, Inc. LICONY is the principal voice of the life insurance industry in New York. LICONY works to create and maintain a legislative, regulatory, and judicial environment that encourages its members to conduct and grow their life insurance businesses here in New York State. For stories about New Yorkers who have benefitted greatly from purchasing the products of life insurers, go to www.licony.org, click on “Published Articles” in the NEWSROOM box on the homepage.
1 Source: Empire State Development, http://esd.ny.gov/SmallBusiness/Data/NYSDirect orySmallBusinessProgram.pdf 2 Source: https://www.governor.ny.gov/sites /governor.ny.gov/files/atoms/files/2015_Opportu nity_Agenda_Book.pdf 3 Source: Life Happens, Real Life Stories, http://www.lifehappens.org/videos/insurancesafety-net-holds-fast/
O: (212) 986-6181 F: (212) 986-6549 551 Fifth Ave., 29th Floor, New York, NY 10176 website: www.licony.org INSURANCE ADVOCATE / April 27, 2015 11
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[ IN THE ASSOCIATIONS ]
Long Island RAP 40th Anniversary Celebration
H
undreds of professional, independent insurance agents gathered at Crest Hollow Country Club in Woodbury for the 40th Annual Long Island Regional Awareness Program on April 22. Attendees took the opportunity to honor their colleagues, network, earn continuing-education credits, peruse the latest industry innovations and of course to hear the inspirational words of Dwight “Doc” Gooden.
24-4 with 16 complete games, eight shutouts and 268 strikeouts in 276 2/3 innings with a 1.53 ERA. In 1986, he took the Mets to the World Series for the first time since 1969. Born in Tampa, Fla., Gooden told the audience he came to New York when he was 19 and considers Long Island his home. “Most people go south to retire; I always felt this was home. I appreciate the energy I get from people here,” he said, repeating the sentiment “I’m a Met at heart” several times as he Trade show An enormous trade show took shared memories and highlights of up two halls at the luxurious Crest his career, including his six years Hollow Country Club, as carriers as a New York Yankee, winning the and vendors exhibited their offerWorld Series in 1986 and his fondings to the agent community of est memory, the famous 1996 noLong Island. Old friends and new hitter, which was the last game his contacts filled the space as they father ever saw him pitch before networked and collected informadying. tion and tokens to remember Gooden spoke with pride them by. about his family, making note that PIANY PRESIDENT TONY KUBERA, CIC (LEFT), POSES “mom’s 84th birthday is today” FOR A PICTURE WITH DWIGHT “DOC” GOODEN Honoring Industry stars and sharing stories about his six During the luncheon, LIRAP children – “not by six baby momChair and Master of Ceremonies mas” – talking about his sons’ Michael Loguercio presented Gregory S. sports at school and his two daughters, The room broke into Clark, vice president and regional manager both of whom work in marketing with the NY/NJ Regional Office, MAPFRE Mets organization. applause as Gooden shared Insurance, with the Executive of the Year The room broke into applause as that March 12 marks 12 award. Gooden shared that March 12 marks 12 years of sobriety and he PIANY also honored former board years of sobriety and he admitted that he member Phillip Plafker, CIC, CPIA, with had to make changes in his life. “Just like admitted that he had to the Louis A. Morelli Memorial Award, in baseball,” he said, “what you put in is make changes in his life. which was presented to Phil’s son, PIANY what you get out.” “Just like in baseball,” he immediate past-president Alan Plafker and his grandson, NY-YIP immediate pastCE worth taking said, “what you put in is president Michael Plafker. Sheldon Hansen, CIC, CRM, CPIA, what you get out.” In addition, the Long Island RAP comgave eventgoers ample opportunity to earn mittee honored former Long Island RAP valuable CE credits. Hansen presented two chairs at the luncheon. separate education sessions, covering flood insurance and errors-and-omissions expoKeynote address: Doc Gooden sures, respectively. Hall of Famer New York Met (and For more information, follow #LIRAP Yankee) player, Dwight “Doc” Gooden, Major League Baseball’s Cy Young Award, on Twitter or Facebook, and stay tuned to was welcomed with an enthusiastic stand- made his professional debut in the 1980s future PIANY publications for more inforing ovation as Master of Ceremonies intro- and rose to fame with the New York Mets. mation. duced “Doctor K” as one of the most dom- He was Rookie of the Year, and went on Hyperlinks: inant pitchers in baseball history. to produce one of the most statistically No-hitter; https://www.youtube.com/ Gooden, the youngest recipient ever of amazing seasons in baseball history, going watch?v=Pmued_nZY_0 12 April 27, 2015 / INSURANCE ADVOCATE
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[ IN THE ASSOCIATIONS ]
THE 2015 LONG ISLAND RAP COMMITTEE
LI RAP CHAIR MICHAEL A. LOGUERCIO JR. (LEFT), PRESENTS THE EXECUTIVE OF THE YEAR AWARD TO MAPFRE INSURANCE’S GREGORY S. CLARK.
PIANY PAST PRESIDENT ALAN PLAFKER, CIC (CENTER), AND NY-YIP PAST PRESIDENT MICHAEL PLAFKER, CIC, CPIA (RIGHT), ACCEPT THE LOUIS A. MORELLI MEMORIAL AWARD ON BEHALF OF THEIR FATHER AND GRANDFATHER, RESPECTIVELY—PHILLIP PLAFKER, CIC, CPIA.
SHELDON HANSEN, CIC, CRM, CPIA, TWO EDUCATION SESSIONS, COVERING FLOOD INSURANCE AND ERRORS-AND-OMISSIONS EXPOSURES, RESPECTIVELY.
DWIGHT “DOC” GOODEN SHARES HIS FAVORITE BASEBALL MEMORIES AS KEYNOTE SPEAKER AT PIANY’S 2015 LI RAP LUNCHEON. INSURANCE ADVOCATE / April 27, 2015 13
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[ THE SOCI AL NOTEBOOK ]
By Chris Paradiso
SEO as a Part of Your Agency’s Marketing Strategy
D
id you ever wonder about making your insurance website more appealing to the three core search engines (Google, Bing and Yahoo)? First I would say forget about Bing and Yahoo.
Title Tags Matter Search Engines value the contents of the Title Tag when ranking your site for keywords. Put your most important keywords in your title tags, using singular and plural
The stats don’t lie – 79% of people use Google. In my opinion, that’s where your focus should be. Chris Paradiso
You should limit your Meta Description to about 150 characters, or else it may become truncated in the search engine’s results pages. Although the Meta Description tag is no longer a ranking factor, they should still include your agency’s target keywords as it can help elicit higher click-through rates. Like the Title Tags, you should have a unique, relevant, and compelling Meta Description for each page of your website.
Image ALT Text The Image ALT text is used for a very short description of an image, giving you another way to incorporate some of your target keywords.
Why? The stats don’t lie – 79% of people use Google. In my opinion, that’s where your focus should be. Have you been scared off by the high costs that SEO specialists charge for their services? If so, I have some good advice for you and your agency. There are only a few very effective ways to get good search engine rankings by doing it yourself. These techniques are not very difficult to learn and really only require some small amounts of time and patience on your part or your marketing team’s part. Let’s get started with a few techniques that you and your agency can do.
Your Agency’s Domain Name The trick here is to register a domain name for your agency that your customers can remember and the search engines think is relevant to you and your agency. Use words in your domain name that describe the insurance your agency’s trying to sell. For example, don’t call your site www.SmithAgency.com, if you sell insurance. You’re better off calling your site www.SmithInsuranceAgency.com. Simply because we need to ensure that the potential customer doesn’t have to remember that he or she needs to input a hyphen after every word. (YES I’ve seen 39-character domain names with a hyphen in-between every word and I can assure you that no one will remember that domain.) 14 April 27, 2015 / INSURANCE ADVOCATE
versions of each word. Make your tags different and specific for each page on your insurance agency’s site. For example, using “EPLI” won’t always work. Spelling out “Employment Practices Liability Insurance” may be a better option. Your Title Tags should be concise (keep it to 65 characters) and should be topically relevant.
Meta Descriptions Although Meta Descriptions are no longer used as part of the ranking algorithm, they should still be a key piece of your optimization strategy. The Meta Description tag is used by search engines to display a short description of your webpage.
The world has gone visual, so please stay focused on great visual content because it matters to your agency’s bottom line. Your content needs visuals and without them your content is going to be skipped over.
Keyword Density “Keyword density” is defined as the percentage of your content that is comprised of your target keywords. Although not something that many people talk about anymore, it is something to be mindful of. While there is no magic percentage, it’s continued on page 17
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Sue Quimby Named A.V.P. of MSO
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len Rock, N.J.—The Mutual Service Office, Inc. (MSO) is pleased to announce the promotion of Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE, to the position of Assistant Vice President, Media Editor, Client Services & Training and Senior Product Development Analyst. Ms. Quimby has been in the insurance industry since May 1977, and is a licensed property/casualty producer. Ms. Quimby has been employed at MSO since November 1991. Her most recent position was Director – Client Services & Training and Senior Product Development Analyst. Her duties include writing articles for various industry publications, coordinating educational seminars and webinars, providing training on industry topics, as well as product development work for MSO and its member companies. Prior to her work at MSO, she spent 14-1/2 years as an employee of several New Jersey insurance agencies, handling all aspects of property and casualty insurance from the application submission to policy issuance and servicing to claims handling. She is a graduate of Cook College/Rutgers University. Ms. Quimby earned her CIC (Certified Insurance Counselor) designation in 1987 and is a tenured CIC. She completed her CPCU (Chartered Property Casualty Underwriter) designation in 1989. She has also earned the AU (Associate in Underwriting), CPIW (Certified Professional Insurance Woman) and DAE (Diversified Advanced Education) designations. She is the Director of MSO’s Continuing Education school which currently is approved in NJ, PA, DE, MD and VA. She has also served as Director for the NJ Council of IAIP Insurance School. Ms. Quimby is active in a number of industry organizations, serving on the Board of the NJ Chapter of the CPCU Society, past president of Insurance Professionals of Central NJ, and past State Director for NJ Council of IAIP (formerly NAIW). She serves on the Publications Taskforce for IAIP, and will be chairing the taskforce for the 2015/16 term. In her local church, she is a Sunday School teacher and 16 April 27, 2015 / INSURANCE ADVOCATE
NYS DMV Proposes Electronic Auto Insurance I.D. Cards By Timothy Dodge
W SUE C. QUIMBY
“Ms. Quimby has been instrumental in building the MSO media presence in the P&C industry.…” newsletter editor as well as other capacities. She lives in Hillsborough, N.J. According to Chairman of the Board, Robert Gage, “Ms. Quimby has been instrumental in building the MSO media presence in the P&C industry. She is an excellent writer and very well respected for her product knowledge by the MSO member companies and others in the industry. The Board was delighted to promote her to Assistant Vice President. She is a very valuable member of the team.” MSO is a national property and casualty rating service bureau, providing product development and rating services to the insurance industry since 1944. MSO has long been an industry leader, offering programs that are comprehensive and easy to use. MSO will work with companies to customize programs to meet a company’s marketing and underwriting requirements. For information on all of the programs and services offered by MSO, call Sue C. Quimby, CPCU at (800) 935-6900, Direct dial 201-857-9128. Email: MSO_Press@ msonet.com. Mail to: MSO, Inc. 139 Harristown Road, Suite 100, Glen Rock, NJ 07452. Visit us on the Internet at www.msonet.com.[IA]
ith input from IIABNY and other groups, the New York State Department of Motor Vehicles this week proposed regulations that would for the first time permit insurers to issue electronic insurance I.D. cards. The proposal appeared in the Feb. 25 issue of New York State Register. The DMV said that it consulted with several interested groups while drafting the proposed regulations, including the state police, the New York State Association of Chiefs of Police, seven individual insurers, and the Property Casualty Insurers (PCI). PCI asked IIABNY for an assessment of potential negative impacts on insurance producers. IIABNY said that any effects on producers would be minimal, since producers do not issue permanent I.D. cards. The DMV also surveyed its peers in the 30 states that currently permit electronic I.D. cards to address concerns raised by the police chiefs.
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[ THE SOCIAL NOTEBOOK]
The cards must be capable of being displayed on a device that would earn the driver a ticket if used while in motion, such as cellphones, PDAs, tablets, laptops, game systems, and similar devices.
Highlights of the proposed rules: • Insurance companies that choose to will be permitted to issue electronic I.D. cards. However, they will be able to do so only with the consent of the person or entity named on the card. • Electronic ID cards will be acceptable as proof of insurance in the same manner as paper ones. • The cards must be capable of being displayed on a device that would earn the driver a ticket if used while in motion, such as cellphones, PDAs, tablets, laptops, game systems, and similar devices. • They must meet the standards that apply to paper cards. • Insurers will be prohibited from issuing them for: - Temporary I.D. cards – agents and brokers will probably not be able to issue them - Self-insured entities - Fleet transactions, where the vehicle description on the card is “ALL OWNED VEHICLES” - Retail auto dealers, where the vehicle description on the card is either “DEALER GARAGE AUTO LIABILITY POLICY” or “ALL OWNED AND NONOWNED VEHICLES-COMPREHENSIVE AUTO LIABILITY POLICY” - Wholesale auto dealers and transporters, where the vehicle description on the card is “AUTO LIABILITY POLICY” The DMV was accepting comments from the public on the proposed regulations until April 11. [IA]
[ ON T H E LEVEL ]
continued from page 14
continued from page 10
important to include your keywords whenever it seems natural to do so. You should feel free to use plurals and synonyms of your keywords throughout your copy, but keyword stuffing should be avoided at all costs. I would recommend you use the H1 and H2 heading tags to elevate your important agency keywords within your agency’s website. The agency keywords contained in those tags are considered more important by search engines.
the dealer is steering customers to a designated carrier, issuing ID cards so they can pick up new cars and customer-bedamned when the underwriting takes place and customers find they are paying far more for their coverage than they were quoted at the dealership. Auto dealers are interested in getting the car off the lot and they couldn’t care less about the insurance needs and concerns of the drivers, which by the way, are mostly direct writers. So much springing up this season as technology evolves and we develop policies and laws to address them. Having been around for a few seasons, I am confident we’ll deal with these issues and have many more to come.[IA]
Your Agency’s Inbound Links Getting inbound links should be considered one of the most important pieces of your SEO strategy. All of the major search engines use inbound link metrics as part of their ranking algorithms. Links from other highly ranked sites are very valuable and will increase the overall authority of your agency website. Contacting other website owners with whom you may do business and asking them for links is a good starting point. The sites linking to you should not be your competitors’, so insurance agency-to-insurance agency may hurt you depending on where they are located. As an example, a motorbike repair shop would benefit by exchanging links with a motorbike trail site. When arranging a link exchange, make sure that your important agency keywords are included in the anchor text. Search engines use anchor text when they try to figure out the relevance and importance of your web pages. This is a very important step, so please make sure to handle this with care because if done right it can help you and your agency out a lot, but if done wrong it can backfire on you. Like keyword density, it’s all about balance and should not seem forced or spammy. Keep in mind, when working with an SEO specialist they will have numerous other tricks and techniques, but here are just a few techniques you can use and not spend all kinds of money. All the best with your online marketing but let’s always remember if you want big-time results you will have to invest in an SEO specialist — our agency does and we spend $500-1K a month and I have to say he more than pays for himself. So if you want advice please call me or email
N. Stephen Ruchman, CPIA, is a retired independent agent and founder of Ruchman Associates, Inc. the agency he started in 1961. A past president of the Professional Insurance Agents of New York State, Inc., he is an active supporter of PIANY, and he has sat on or chaired nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. He can be reached via email at: nsruchman@gmail.com.
me because like you I am an insurance agent not an SEO Guru![IA] Christopher Paradiso, CPIA, is President of Paradiso Financial & Insurance Service. He has been acknowledged by several insurance publications as a leader in the industry for his use of digital marketing and social media to help brand his agency and promote other small businesses within his community. Chris has also been recognized for his charity work with The Connecticut Children’s Medical Center. In 2011, Chris introduced “Paradiso Presents LLC,” a social media program aimed at teaching small agencies to not only survive, but compete in today’s complex online marketing world. Chris resides in Stafford Springs, CT with his wife and two children, Mia and Gianni. INSURANCE ADVOCATE / April 27, 2015 17
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[ COVER ]
By Phil Gusman
18 April 27, 2015 / INSURANCE ADVOCATE
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[ COVER ]
Modern Technology could very well determine the trajectory of your business
T
he insurance industry in general has often been accused of lagging when it comes to adopting and leveraging the latest technologies, but that doesn’t mean the industry is standing still, particularly insurance carriers. And sometimes, carriers’ use of technology has come at the expense of insurance agents. In recent decades, insurers have used the Internet to open direct-to-consumer channels for personal auto, homeowners, and even some commercial coverages. More recently, insurers have released a number of mobile apps that allow consumers to complete tasks across the entire range of the insurance process. Insurers have also established a presence across social media, where they have attempted to connect directly with consumers in a new way in order to, according to a 2012 National Association of Insurance Commissioners report, “build consumer relationships based on trust and the exchange of information.” And if the insurance industry has been somewhat reluctant to embrace technology, technology appears to be embracing the insurance industry, as Google makes its presence known, recently announcing its intent to launch an auto insurance comparison-shopping site. A March 2015 article in The New York Times, “Google Introduces Long-Anticipated Insurance Shopping Site,” written by Conor Dougherty, states, “Google’s move into the lucrative but heavily regulated world of insurance sales had been anything but quiet. The company has been acquiring state licenses to sell insurance and forming partnerships with the insurance sites like CoverHound and CompareNow.com….” What does all this mean for insurance agents? The challenge of competing with direct writers — and the mobile tools and other technologies they continue to roll out — has been going on for years, and the threat to agents is well known and has been well covered. In the case of Google looking at the U.S. insurance industry, the Times article says, “One group that is particularly worried about Google’s move into insurance are the about 40,000 insurance brokers who have for decades been the backbone of the insurance trade. Comparison sites like Google’s allow customers to buy directly from insurers, giving them a discount by cutting out agents and their commissions.”
BELOW: CHRIS PARADISO OF PARADISO INSURANCE SPOKE RECENTLY AT A WORKSHOP HELD AT TRAVELERS’ CLAIM UNIVERISTY ABOUT THE IMPORTANCE OF AN AGENCY’S PRESENCE IN SOCIAL MEDIA
Fighting back But agents don’t have to stand by while others leverage technology to take business from them. Agents can themselves use social media and other digital technologies to spread their own message and connect with consumers in their regions, and some are doing just that. Chris Paradiso, who started Paradiso Insurance in 1998 and later started Paradiso Presents LLC to teach small agencies about online marketing, recently held a workshop at Travelers’ Claim University to teach agents continued on page 20
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how to leverage technology to their benefit—through social and digital outreach, through mobile advertising, and through developing and sharing content online. In a statement, Paradiso frames the workshops he runs as a way of sharing what he has learned with other agents: “Along our journey, we’ve learned a lot about what works in the insurance business and what doesn’t,” he says. “This workshop allows me to
Beth McManus, vice president of communications for Connelly Campion Wright Insurance (CCW Insurance), in Belmar, N.J., acknowledges that the biggest challenges agents face are competing with direct writers (and their seemingly limitless marketing dollars), and changing consumer habits, where shopping and information gathering is increasingly done online. “Everyone’s online and buying their insurance online,” she says. “It’s not the days of old where people would see our sign, walk in off the street, and get educated on insurance and what programs they want to purchase.”
L-R: CARLOS VARGAS, VARGAS AND VARGAS INSURANCE; CHRIS PARADISO, PARADISO INSURANCE; LINDA REY, REY INSURANCE; MATT AARON, CO-FOUNDER AND CEO, INSURANCE AGENT; AND CARL GARCIA OF EAGLE TRUST INSURANCE
If the landscape is different from the days of old, the solutions are as well. McManus and CCW Insurance have embraced digital marketing and social media to get their message out to the public. McManus says much of her efforts as a communications director involve getting CCW Insurance’s name out to consumers across multiple platforms to get the agency the highest possible search ranking.
It’s different, but still the same
share my insights and experience with independent agents and brokers who want to develop and execute a revenue-generating social media strategy of their own.” And agents are eager to learn. Travelers says turnout was high for the event. Angela Grimaldi, regional sales director at Travelers, says in a statement, “We’re encouraged to see a great turnout for an event like this, where agents are learning from digital experts, sharing with each other, and feeling supported by insurance carriers like Travelers.” Agent associations also hold webinars and provide resources to teach agents about the power of technology and digital marketing, and agencies that have acted on this information and the available resources have success stories to tell. 20 April 27, 2015 / INSURANCE ADVOCATE
With so many consumers shopping online, a favorable search ranking today might be considered the attractive sign that would draw people in off the street in the days of old. And the conversations where agents would educate consumers about insurance programs are still happening; the venue has simply changed from faceto-face and over-the-phone to social media and through informative digital content. In fact, Mary Christiano, director of communications for the Professional Insurance Agents of N.Y., N.J., Conn., and N.H., says the traits that have always made agents great — their knowledge, personalities, and ability to easily connect with people in their neighborhoods — are the same qualities that attract consumers today online and on social-media outlets. With social media in particular, it’s more about those connections to the community than directly bringing in leads, Christiano says. “It builds trust and relationships, just like being a coach in Little League does.” She adds, “That special touch that independent agents have always had that allows them to know their community in a unique way — that’s something that these
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[ COVER ] tools, if used right, give independent agents more power to do.” In other words, she says, agents should see social media as “the new way of doing what they always have done.”
“IT BUILDS TRUST AND RELATIONSHIPS, JUST LIKE BEING A COACH IN LITTLE LEAGUE DOES. THAT SPECIAL TOUCH THAT INDEPENDENT AGENTS HAVE ALWAYS HAD THAT ALLOWS THEM TO KNOW THEIR COMMUNITY IN A UNIQUE WAY — THAT’S SOMETHING THAT THESE TOOLS, IF USED RIGHT, GIVE INDEPENDENT AGENTS MORE POWER TO DO.” - Mary Christiano, Director of Communications PIA N.Y., N.J., Conn., and N.H
Content is king In 1996, Bill Gates wrote an article titled “Content Is King” about the power and future of content on the Internet. Anyone who read it back then and took the message to heart probably had a leg up on their competitors. Now, the article’s title has become a cliché used to support another common modern phrase: every company is a media company. Increasingly, companies across all industries are using blog posts, native ads, video and other content to tell their stories and project knowledge to customers in ways traditional advertising could never accomplish. In many ways, the content they are creating is not much different from what media companies produce, hence the phrase. For agents, quality content is a way to demonstrate their expertise and level the messaging playing field at least a little bit with the large direct writers. Agents will never be able to outspend a company like GEICO on advertising, but the right content, amplified through the right channels (social media, search, email, even direct mail), can be an effective way to reach consumers and draw attention to an agency’s brand. Ryan Hanley, head of marketing at TrustedChoice.com, knows all about the power of content marketing. In fact he wrote the book on it (OK, he wrote a book on it, titled “Content Warfare: How to find your audience, tell your story and win the battle for attention online”). Hanley says the content that resonates with consumers, and ranks well on search engines, answers “the very specific questions insurance buyers have about the insurance products they need to purchase.” In a blog post, Hanley expands on that concept, relating his experiences when he was with The Murray Group Insurance Services, based in Albany, N.Y. The idea is that when an insurance customer enters a specific question into Google, the agent’s content, designed to answer such a question, will pop up first. The “keyword” is actually a phrase rather than a single term. As Hanley states in his blog, “I will never rank for the term ‘Insurance.’ There is simply too much money thrown at that term. However, I can and do rank for the Long-Tail Keyword phrase, ‘When do I drop collision coverage?’” Hanley has the proof to back up his claim; his blog post shows
Google Analytics screen shots of how search traffic increased when he began posting relevant content focused in the right areas, and he calculates how much new business revenue The Murray Group generated as a result. And that’s the idea for agents: if they can produce the appropriate content, they can collect the right kind of traffic. But who has time for this? Agents, of course, are busy selling insurance. Making a few social-media posts is one thing; writing blogs and building a library of compelling content might be more than an agent bargained for. As Hanley notes, “The common content-marketing mantra of the day is every company is a media company, which is great, but your classic 11-person, one-location independent insurance agency — maybe all 11 hate writing basic emails, so how can we expect them to create a blog post?” Thankfully, there’s help. Not only is there an emerging industry of specialized content-marketing firms that work with companies in all industries to produce quality, searchable content, but insurance-industry associations are also ready to assist. Hanley talks about TrustedChoice.com, which is not the same as Trusted Choice the brand. Both are affiliated with the Independent Insurance Agents & Brokers of America, but while Trusted Choice is a branding campaign, TrustedChoice.com is an online resource for agencies that, according to the site, “is a helpful resource and launchpad for progressive independent agents that are ready to leverage the power of the internet to connect with new consumers and help their agencies grow,” according to the site’s description. Part of what TrustedChoice.com does, says Hanley, is produce articles designed to educate consumers (and also work with agents on their websites, social media, content marketing in general and SEO). Agents cannot copy and paste the articles to their own sites, notes Hanley, but they can create emails to clients with links, and when the client clicks the link, the page rebrands as if it’s from the agency. As Hanley states, “Our mission is to help local independent agents play at a bigger level.” PIANY/NJ/NH/CT also provides services for agents, including continued on page 22
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consulting on social media and digital marketing, as well as content, relevant to consumers across all four states, that agents can have crafted into a number of formats, from plain text for blogs, to postcards and brochures, to emails. Christiano says content is in high demand among PIA agents. Nationally, PIA also has webinars designed to skill agents up on social media and digital/mobile strategies.
Getting started Social media, blogs, video, SEO: it can all seem a bit daunting to those who have not been immersed in this world for most of their lives. But it’s really not all that complicated — especially not in relation to understanding the ins and outs of an industry like insurance. As Christiano notes, “It’s not hard to do this stuff. You don’t need to be particularly sophisticated to use the tools. You have to be sophisticated to have the expertise about what you’re selling, and what you’re claiming to be an expert on. And agents are experts.” If you’re all-in, then yes, content marketing and being active on social media can become a second job (or a full-time position to be filled), but it doesn’t have to be. “I don't necessarily believe that agencies need someone dedicated to social media,” says Hanley. “Certainly there can be an ‘owner’ of digital communications, but what's more important is that the agency establish a culture of digital connection and relationship building. This can mean many things: blogging, social media, videos, etc., but also reaching out on LinkedIn, sharing pictures at events or client offices. Each individual can contribute in small ways to grow the overall agency presence online.” McManus says, “It doesn’t have to be overwhelming to start, but you have to start somewhere.” She adds, “You have to have a website, obviously. That’s minimal.” Christiano concurs. The website is what you’re trying to drive traffic to. It should be mobile friendly, notes McManus, as Google is penalizing websites that are not as of April 21. From there, Christiano says she tries to gauge the comfort level of agents that contact PIA about digital marketing. Are they already active on the social-media platform, perhaps in their personal lives? If so, they could start establishing their professional presence there. LinkedIn could be a good next step, she adds, as it is easy to create a profile. Both Christiano and McManus agree that joining Facebook is important as well. It’s a safe bet that your clients and prospects are on Facebook, so it’s probably a good idea to engage them there. A Pew Research Center report on social-media demographics released in January notes that 71% of online adults used this platform in 2014. And it’s not just millennials and young adults. Over half of online adults 65 and older said they use it, as did 63% of online adults ages 50-64. Just be sure to engage them in the right way. Says McManus: “From our perspective, a lot of our social media and digital marketing is geared toward educating clients — not ramming products down their throat, but getting in front of them and letting them know the value of an insurance agent vs. a big-box insurance company.” 22 April 27, 2015 / INSURANCE ADVOCATE
A PEW RESEARCH CENTER REPORT ON SOCIAL-MEDIA DEMOGRAPHICS RELEASED IN JANUARY NOTES THAT 71% OF ONLINE ADULTS USED THIS PLATFORM IN 2014. AND IT’S NOT JUST MILLENNIALS AND YOUNG ADULTS. OVER HALF OF ONLINE ADULTS 65 AND OLDER SAID THEY USE IT, AS DID 63% OF ONLINE ADULTS AGES 50-64.
McManus also advises that there are ways you can post one item that will appear on multiple social-media platforms, which could save time. In the end, agents simply need to familiarize themselves with the tools that are out there. “Agents just have to educate themselves,” McManus says. “Put yourself in the consumer’s shoes…what is easiest, fastest and best?” She adds that in her own free time, she is very active on her mobile phone, and most consumers today are as well. “We have to be where the consumer is,” she says.
Does this stuff even work? Hanley notes that he’s seen increased interest in content and digital marketing strategies among agents over the past five years, and part of that is because success stories are emerging. Hanley can quickly rattle off a long list of agencies that have grown leads and revenue through digital marketing. “For each agency that’s had success, for another 10, the lightbulb goes on,” he says. They’ll take a first step after that: perhaps upgrading to a mobile-responsive website or adding a blog post. “I wouldn’t say that as a group the agency owners are diving into this,” he notes, but he says if people within agencies want to develop a strategy, owners are now allowing them to do that. And that’s a huge step in the right direction.” He also credits the support IIABA has given to TrustedChoice.com. “For them to put so much emphasis into TrustedChoice.com over the last four years, I think it showed a lot of people — if they’re willing to push that many chips on the table for this digital-marketing thing, there must be something there,” Hanley says. McManus relates how social media played a vital role for CCW Insurance during Superstorm Sandy. “We were at the Jersey shore and were completely affected by Sandy,” she says, “We couldn’t get into our town for two-and-a-half weeks, so we went completely virtual. And fortunately we had set up plans so we were able to do that.” She says CCW Insurance communicated with clients through Twitter, Facebook, even texts while they were unable to access the office. “So social media was vital for us during that time, and it continues to be.” She adds, “It’s a great place for referrals; we continue to get prospects through Facebook, and Twitter and LinkedIn as well.” [IA]
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[ FACE TO FACE ]
By Michael Loguercio
Cheaper to Keep Her!
S
o when you hear this saying, what do you typically think of? Someone who is contemplating a potential divorce? The song made famous by The Blues Brothers? The movie starring singer turned-actor Mac Davis? Then what is the first thing that pops into your mind when
retaining business as well…something that many agencies don’t take advantage of. I typically do not do commercials in this column, but when I see a piece of technology that I believe will help an agency increase revenue and decrease expenses, I feel that it is incumbent upon me to share
…I am not at all saying that you should not continue to obtain new business, but it makes perfect sense for an agency to find new, innovative ways to increase their effort on retaining business as well… something that many agencies don’t take advantage of. Michael Loguercio
you hear that saying? What about the insurance industry, and retaining your existing business? For many agencies out there, the emphasis has long been on obtaining new business, and not as focused on protecting what is already in-house. For instance, according to many sources, the following is believed to be extremely accurate: 1. Most experts agree that it costs fourto-six times more to acquire a new customer than to retain an existing one 2. Marketing to existing customers is five-to-eight times less expensive than marketing to new ones 3. 65% of a company’s new business comes from existing customers 4. Because it costs so much more to acquire a new customer than it does to sell to an existing customer, you are much better off spending your marketing dollars on those whom you know, rather than on complete strangers 5. Repeat customers spend on average 67% more than new ones Armed with these and other facts, I am not at all saying that you should not continue to obtain new business, but it makes perfect sense for an agency to find new, innovative ways to increase their effort on 24 April 27, 2015 / INSURANCE ADVOCATE
it. Being that this is the technology issue of our magazine, the information that I am going to share with you now is certainly apropos.
A New Era in Policy Renewal Management Nag Rao, founder, president and CEO of EZLynx recently released this statement: “I would like to announce the release of a ground breaking product called EZLynx Retention Center for personal lines renewal management, available as an add-on to EZLynx Management System customers only. We are extremely proud of this product because it has taken nearly 24 months of hard work to get from conception to release, and it’s as revolutionary as our original real-time rating tool! EZLynx strongly believes that a personal line is under direct attack from other industries. One way for small agencies to combat this challenge is to be smart about how you service policies and manage renewals. EZLynx Retention Center addresses the daunting task of renewal management. With Retention Center, you no longer wait for your customer to call and complain about rate hikes at renewal. Instead, our system will identify on a daily basis those customers that you are most at risk of losing so that you can focus your efforts in the right place. As part of our twelve month beta program, several
agencies used EZLynx Retention Center and, not surprisingly, noticed a huge increase in retention! I want to spend some time impressing upon you the importance of retention. I have always been surprised during any one-onone conversation with agents on the question of what their agency retention rate is. Agents are never sure of what their exact agency retention numbers are, but they always think it’s good. We have identified a solid and obtainable agency retention rate as being in the 90-95% range. However, you may be surprised to hear that the average retention rate across all EZLynx agencies was only around 75%. Three years ago we made it one of our goals to attack this problem head-on for our customers. As a first step, we started delivering a monthly email report called EZLynx Agency Pulse for all EZLynx Management System customers. In addition to agency retention numbers, Agency Pulse has several key agency performance metrics that we believe every agency owner should be using as a guide to manage their business. As our second step, EZLynx Retention Center removes the drudgery of trying to manually manage your renewals. During our beta testing, we worked with five large agencies to gauge just what kind of results we could see with this tool. To our delight, and to that of our beta agencies, we found that with very little effort agents were able to hit our 90-95% retention target within 3 months! Think about that…For a book size of $10M, that’s at least $100,000 in additional annual revenue! We believe that EZLynx Retention Center is a powerful tool that can help your business become more profitable. We have several exciting tools in development that continue our trend of finding innovative ways to help independent agents manage their top and bottom line. Please remember that in order to enjoy the benefits of our complete customer lifecycle solution, the first step is to switch to EZLynx Management System!” Congratulations, Nag, and the entire EZLynx development team, for bringing yet another amazing piece of technology to our industry.
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[ FAC E TO FACE ] The Professional Insurance Agents of New York recently held their annual event, “Long Island Regional Awareness Program aka Long Island RAP”. Once again, congratulations to the entire Long Island RAP Committee (of which I am honored to be the Chairman) for another outstanding and successful event! The day was complete with a sold out trade show, exceptional education classes, and of course the coveted awards presented to Phil Plafker who was the recipient of The Louis A. Morelli award; and Gregory Clark, VP of MAPFRE Insurance Company, for Executive of The Year. Our keynote speaker at this year’s awards luncheon was NY Mets and NY Yankees pitching sensation Dwight “Doc” Gooden. Filled with stories that brought both laughter out loud and a tear to the eyes of the standing room only crowd, Dwight spoke not only on his amazing career in baseball, but also on how he overcame the challenges in his life, and on the ways that he now gives back to those with whom he met along the way. Also honored at the luncheon were the past Long Island RAP chairs, who served this committee over the past 40 years. On a personal note, I am honored to be among such an incredible group of people, who have dedicated so much time and effort to help this thing of ours become what it is today! Thank you to everyone who participated! Well, until next time when we will be talking about insurance events in Rhode Island and Massachusetts, “Ciao for Now”! [IA] Michael Loguercio is the Regional Sales Manager for EZLynx; and has been active in the insurance industry since 1978 as a licensed insurance broker and an insurance technology professional. He is an active Past President and Lifetime Member award honoree of the Young Insurance Professionals of New York State, current ACT/AUGIE, Professional Insurance Agents of New York State, Independent Insurance Agents and Brokers of New York State, and Council of Insurance Brokers of Greater New York committee member. NY-YIP/PIA has honored Michael with a “Distinguished Service” award in 2001;
“Insurance Professional of The Year” award in 2009; “Lifetime Achievement” award in 2012; and “Special Service” awards in 2013 and 2014. In his community, Michael is the Immediate Past President and current member of the Longwood Central School District Board of Education on Long Island, NY since 2004; is a Director on the board of REFIT NY (Reform Educational Financing Inequities) and is a member of The Middle Island, NY, Rotary Club; Central Brookhaven Lion’s Club; and Ridge, NY, Volunteer Fire/EMS Department. He also served two terms on his Church’s vestry, and
in 2013 he was awarded the SCOPE “Community Service” award for his dedication to the public. Michael is a regular Contributor to the Insurance Advocate since 2008, and may be contacted at 631-345-9359 or michael.loguercio@ezlynx.com.You may also follow him on Twitter @MLoguercioJr; and on Facebook @ Michael Anthony Loguercio Jr.
4441 Sepulveda Blvd., Culver City, CA 90230-4847 www.zalma.com | zalma@zalma.com 310-390-4455 | fax: 310-391-5614 http://zalma.com/blog Zalma Insurance Consultants provides expert advice to counsel for insurers and counsel for policyholders. Advice from Zalma Insurance Consultants is indispensable to the resolution of insurance disputes. Consultation from Zalma Insurance Consultants can save you, your counsel or client hundreds of hours of investigative and legal work. INSURANCE ADVOCATE / April 27, 2015 25
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[ FACE TO FACE ]
KIM ZIELINSKI OF PIA WITH DOC GOODEN
MICHAEL LOGUERCIO AND DWIGHT GOODEN SELFIE
LI RAP AWARDS LUNCHEON
DWIGHT “DOC” GOODEN SIGNS AUTOGRAPHS AND GREETS A CROWD FOLLOWING HIS KEYNOTE ADDRESS 26 April 27, 2015 / INSURANCE ADVOCATE
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[ ON M Y RADAR ]
By Barry Zalma
Careful with Applications Broker’s Misrepresentation Without Knowledge of Insured is Sufficient for Rescission
I
nsurance brokers, who represent the insured to transact insurance with, but not on behalf of, an insurer often will try to make the process easy for the insured by filling out the application before
tained material misrepresentations about various facts concerning plaintiffs and their home. Fidelity stated it would not have issued the policy had it known the truth about the misrepresentations.
The evidence presented at trial would support a finding that plaintiffs were licensed to operate a residential care facility out of their home and that they received money in exchange for providing room and board to mentally ill clients.
Barry Zalma
asking the insured to sign it. It is a practice fraught with danger that can cause the insured to have no coverage at all and make the broker a defendant in a major lawsuit. In Douglas v. Fidelity National Insurance Co., 229 Cal.App.4th 392, 177 Cal.Rptr.3d 271, 14 Cal. Daily Op. Serv. 10,315, 2014 Daily Journal D.A.R. 12,127 (2014) the insureds sued a fire insurer for bad faith. The Superior Court, Alameda County, entered judgment on special jury verdict awarding damages to the insureds, but struck the jury’s $1.9 million punitive damages award following the granting, in part, of insurer’s motion for judgment notwithstanding the verdict (JNOV). The insurer appealed.
Factual Background In December 2010, plaintiffs went to a business called Cost–U–Less Insurance (Cost–U–Less) where, over the telephone, an InsZone Insurance Services (InsZone) employee assisted them in obtaining a homeowner’s insurance policy with Fidelity. Three months later a fire damaged plaintiffs’ home. After an investigation, Fidelity rescinded the homeowner’s policy on the grounds that plaintiffs’ insurance application con28 April 27, 2015 / INSURANCE ADVOCATE
Proceedings at Trial In December 2010, plaintiffs went to a Cost–U–Less store in Stockton to purchase an insurance policy for the Locust Street home. The insurance paperwork Jerry signed consisted of three pages. The first page was a blank form. The employee at Cost–U–Less did not ask him any questions about the property. Jerry signed the documents and gave the employee a check. After the fire and investigation by Fidelity, Jerry received a letter dated May 31, 2011 from an attorney named Jeffrey Charlston. The letter included a check from Fidelity in the amount of the insurance premium Jerry had paid. Charlston stated that in the course of investigating the fire loss, evidence had developed showing material misrepresentations had been made in connection with plaintiffs’ insurance application. The alleged misrepresentations pertained to: (1) whether any unit in the structure was occupied by more than one family, (2) whether the electrical panel utilized circuit breakers or fuses, (3) whether there were roommates or boarders in the home and/or if the home was used as a rooming or boarding house, and (4) whether a business was conducted on the property. Charlston also stated it did
not appear Jerry had ever personally lived in the home, asserting the property was being used either as a halfway house for parolees or as a rehab facility. Jerry testified that these claims were untrue. Finally, Charlston advised that plaintiffs owed Fidelity in excess of $24,000 for benefits already paid.
The Purchase of Insurance And Succeeding Fire Richard Gasparini, Jr., had visited On the Right Path several times. During one such visit, he was setting up his laptop computer when people came through the front door yelling that they had a search warrant. He was handcuffed and taken out to the street. In connection with that visit he created a report dated December 30, 2009. He also visited plaintiffs’ home on February 10, 2011. Later, Betty came to his office and told him about the fire. She said several times that she wanted to relocate the facility to another house. Bruce LeBlanc evaluates policies to ensure they meet Fidelity’s underwriting guidelines. He confirmed that insurance brokers use Fidelity’s website to complete online applications. The application program is called Fidelity Rating and Internet Service Technology (FIRST). It automatically quotes and underwrites policies in real-time. Some of the questions on the application are underwriting questions and others are rating questions. The rating questions pertain to the quote for the premium on a specific policy. The underwriting questions are intended to qualify the risk for acceptance. The broker obtains the relevant information from the applicant and inputs it into the FIRST system. Once the application is submitted, the broker can print the signature page off the Internet and have the applicant sign it. The system will not approve applications that have unacceptable underwriting responses.
Discussion It is well established in California that material misrepresentations or conceal-
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[ ON M Y RADAR ] ment of material facts in an application for insurance entitle an insurer to rescind an insurance policy, even if the misrepresentations are not intentionally made. To prevail, the insurer must prove that the insured made a material “false representation” in an insurance application. The evidence presented at trial would support a finding that plaintiffs were licensed to operate a residential care facility out of their home and that they received money in exchange for providing room and board to mentally ill clients. For example, the unusual incident/injury report that Betty submitted to the licensing agency after the fire states that two male clients were residing in the home at the time of the fire. Plaintiffs’ counsel essentially stipulated, outside the presence of the jury, that Betty was running a business out of her home.
InsZone’s Status as Broker or Agent As a matter of law, if an insurance application was prepared by an insurance broker (the agent of the insured), the application’s contents are the insured’s responsibility. Unlike insurance brokers an “insurance agent” is one who represents an insurer under an employment by the insurer. Brokers and insureds are ordinarily involved in what can be viewed as a series of discrete transactions, while agents and insureds tend to be under some duty to each other during the entire length of the relationship. Insurance agents and insurance brokers must be licensed by the Department of Insurance (DOI) (California Insurance Code § 1631). But a person may not act as an insurance agent without a notice of the agent’s appointment by the insurer to transact business on its behalf filed with the DOI. There was evidence, albeit conflicting, that InsZone and Lockefeer acted as plaintiffs’ insurance brokers, and not as agents of Fidelity. The court’s review of the record indicates a reasonable probability that a properly instructed jury could have rendered a different verdict. The instructional errors were exacerbated by plaintiffs’ counsel’s closing arguments. He repeatedly asserted the “application” was the blank form Jerry had signed, emphasizing that this form did not include the disputed
Insurance agents and brokers should always advise their clients of how they will market the insurance requested. underwriting questions. Of course, Fidelity was not necessarily required to prove that the misrepresentations it relied on in issuing the policy were contained within an application. It only needed to prove that there was a misrepresentation or concealment of a material fact in connection with an application for insurance. None of the questions or accompanying answers are printed on the page Jerry signed. Thus, Jerry’s testimony that he never saw the Fidelity underwriting questionnaire generated by InsZone is not implausible, and, under the instruction given, the jurors could have concluded there were no misrepresentations in Jerry’s “application” because there were no representations at all on the blank pages that he signed. Importantly, the jury was not asked to consider whether the FIRST application submitted by InsZone on plaintiffs’ behalf via Fidelity’s website contained any material misrepresentations. Additionally, the instructions and jury form required Fidelity to prove that the misrepresentations were made deliberately in violation of California law that allows for rescission based on an innocent concealment or misrepresentation of material fact. Fidelity’s affirmative defense was not properly presented to the jury and the court concluded Fidelity was prejudiced thereby, necessitating a new trial.
Zalma Opinion Insurance agents and brokers should always advise their clients of how they will market the insurance requested. If they are acting as a broker, that is a person who transacts insurance with but not on behalf of an insurer, the broker should advise the insured that he only works for the insured. If an agent, he should advise the insured that he is acting for the insurance company. Regardless, when an application is prepared the prudent agent or broker will always provide a copy of all representations made to the insurer – whether on an appli-
cation or on a computerized system like FIRST and explain to the insured that the insurer will rely on each statement of fact provided to the insurer by the application process whether on an ACORD form or by e-mail or some other method of transmitting information.[IA] Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunder writer.com/ZalmaLibrary. The new books are Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/Store /ProductDetails.aspx?productId=21462 4, or 800-285-2221 which is presently available. Mr. Zalma’s e-book, “Zalma on California Claims Regulations – 2013 explains in detail the reasons for the Regulations and how they are to be enforced; “Rescission of Insurance in California – 2013;” “Random Thoughts on Insurance” a collection of posts on this blog; “Zalma on Diminution in Value Damages – 2013,”“Zalma on Insurance,” “Heads I Win, Tails You Lose,” “Arson for Profit” and others that are available at www.zalma.com/ zalmabooks.htm. Mr. Zalma reports on World Risk and Insurance News’ web-based television programing, http://wrin.tv or at the bottom of the home page of his website at http://www.zalma.com. INSURANCE ADVOCATE / April 27, 2015 29
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[ LOOKING BACK… Insurance Advocate, 25 years ago]
30 April 27, 2015 / INSURANCE ADVOCATE
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[ LOOKING BACK… Insurance Advocate, 25 years ago]
The relationship is really a rebirth of the medieval feudal system where the agent is cast as a serf and the power of the lord of the Manor is absolute. If an agent dares to disagree… punishment is forthcoming, without warning, and in mysterious ways.
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[ GUEST ARTICLE ]
By Keidel, Weldon & Cunningham, LLP
E&O Considerations for the Automated Agent
T
echnology is providing agents and brokers (“agents”) today with several tools to increase sales and profitability, as well as to provide better customer service. Automation is also helping many agencies manage their E&O risks more effectively, because of its capabilities to retain accurate data, foster consistent processes, document transactions and conversations and generate reports to monitor adherence to agency procedures. However, if the agency does not implement its technology in a disciplined way, this same technology can be used against the agency in connection with an E&O claim or lawsuit. ACT requested the law firm, Keidel, Weldon & Cunningham, to provide this overview of E&O considerations agents should keep in mind when using technology, given the firm’s expertise in defending agents in E&O lawsuits.
Electronic Delivery of Insurance Policies It is crucial in defending many E&O claims and lawsuits that the agency be able to demonstrate that it delivered the insurance policy to the customer. Without this evidence, we are unable to raise one of our most valuable defenses – the “Duty to Read” defense. However, many agencies are now delivering insurance policies and other insurance documents to customers in electronic form rather than in paper form. Providing insurance documents to customers in this way can help save both time and money and also allows the agency to provide a higher level of customer service. Any agency that is contemplating the delivery of electronic copies of insurance documents to customers should follow a few simple steps in order to better serve the customer and help protect against an E&O claim or lawsuit. First, the agency should
make certain that the customer consents to electronic delivery and understands that going forward, until such time as he or she indicates otherwise, he or she will only receive electronic copies of insurance documents and will not receive paper copies. The best practice for the agency to follow is to have the customer sign a letter acknowledging his or her acceptance of this practice. If policies are being emailed to customers, the agency should not rely upon automatic receipts, since sometimes they can be falsely generated by the recipient’s antivirus software. Instead, the agency should request that a customer who is sent a policy by email affirmatively respond that he or she has, in fact, received the email and attachment. If the customer does not affirmatively respond, the agency should be sure to call the customer to confirm receipt, and then be sure to make a note of that conver-
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[ GUEST ARTICLE ] sation in the agency management system. If a customer is being provided with an electronic copy of his or her insurance policy that is contained on a CD, the agency should be sure to send or hand deliver that CD along with a letter stating that the electronic document is the policy and that the customer should be sure to review the policy carefully and advise the agency of any questions he or she may have or changes that need to be made. In addition to email or delivering a copy of the insurance policy on a CD, there is also an electronic system whereby an agency sends an email to the insured with a link to a standalone secure server where the client can obtain a copy of his or her policy. If the insured retrieves an electronic copy of his or her policy, the agency management system is documented to show that it was retrieved, by whom it was retrieved and when it was retrieved. However, if the insured does not retrieve the electronic copy of his or her policy, an email is sent to the agent to advise that the policy has not been retrieved. The agency can then either send the customer another email reminding him or her to access the policy through the secure portal or print the policy out and send it the old-fashioned way, via mail.
Notes of Discussions with Insureds and Insurers The rule within every agency should be that all employees must consistently make notes within the agency management system of any discussions with insureds, insurers or anyone else that concern in any way issues related to coverage or claims. The agency management system notes the date and time for any such notes which are entered. These notes can be very powerful proof if needed to defend the agency against an E&O claim or lawsuit. There are five important aspects to documenting any communications, and they are as follows: • Note the date, time and duration of the conversation; • Note the name and title of the individual with whom your agency is communicating; • Note how the conference took place, such as office conference, telephone conference and/or cell phone conference; • Note the salient points of the conversation; and,
• If possible, follow-up with the insured in writing to confirm the conversation. While this seems extremely basic, you would be amazed by how many times we open an agency’s file and the notes are missing such details as with whom they spoke, or where the conversation took place, or even the issues that were discussed. Without some, or all, of this basic information, it may be more difficult or even impossible to properly defend an agent in an E&O claim.
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Activities Noted in the Agency Management System Activities that are created within the agency management system are a great way for employees to diary matters for followup. No matter what agency management system you are utilizing, the first and most important thing to confirm is that any activity performed is reflected by an activity within your system. For example, if your agency creates a certificate of insurance for a customer, your agency management system should create an activity in the activity log that corresponds to the creation of the certificate of insurance. This would likewise apply to any other type of task, such as the completion of applications, change endorsements, performing a function on the carrier website, etc. The second most important thing to keep in mind is that the activities that are created should always be closed when the activity has been completed. A very powerful piece of evidence in defending E&O claims and lawsuits is to demonstrate that an activity was opened, handled and then closed when completed. Conversely, it can be very damaging for an agency to have activities within its agency management system that have never been followed up on; or if they have been followed up on, they have not been closed. Accordingly, every agency should make certain that all employees are creating, following up and then closing all activities within the agency management system.
coverage. For this reason, it is recommended that a voice mail disclaimer be used on both the message for every employee and also on the main message for the agency. This disclaimer should state that coverage cannot be bound or modified, nor can a claim be reported, by use of the voice mail system. In addition, it is a good practice for an agency to consider adopting a procedure whereby voice mail messages are retained either in the original recorded form or in written form. Some agency management systems are compatible with phone systems to allow a copy of voice mail messages to be attached to an insured’s electronic file. There are also programs that exist where you can have a written version of your voice mail messages sent to you by email and then retain that written version of the message.
Voice Mail Messages and Disclaimers
Disclaimers for Email, Websites and Social Media Sites
Voice mail messages are regularly left by customers on the voice mail system of agencies, asking questions on coverage, reporting claims, and requesting changes in
In addition to a disclaimer on voice mail, it is also important for every agency
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continued on page 34
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[ GUEST ARTICLE ] continued from page 33
to have similar disclaimers on their email transmissions, websites and social media sites. Some agencies advise us that they like to use email for their customers to report claims. For those agencies, the disclaimer might state as follows: “Please note that an email will not be effective to report a claim or request a coverage change until such time as you receive a confirmation from us that the claim submitted or change requested has been processed.” Additionally, some agencies have interactive websites that allow customers to report claims or request policy changes. A similar type of disclaimer should be used for those interactive websites as well. Where an agency or brokerage is utilizing a social media site like Facebook or Twitter, the agency should use a disclaimer similar to that mentioned above with the addition of advising that these vehicles should not be used to communicate client specific information to the agency, any content the customer provides becomes the property of the agency and the agency is at liberty to add, modify or delete any content that is not acceptable.
Certificates of Insurance Certificates of insurance are still one of the largest sources of E&O claims and lawsuits. As such, it is important for every agency to have good documentation concerning how certificates were issued in the event an issue arises related to a certificate. The agency should be sure to retain, either in paper form or electronically, a copy of every certificate of insurance issued. While agency management systems will automatically save a copy of the certificates on the system, one problem we have encountered is that many of those systems will only print out the current date (not the date that the actual certificate was issued). Because of the importance of having an exact copy of the actual certificate that is issued (including the exact date it was issued), agents should make certain that if they are saving the copies of certificates electronically, and not in a paper form, their agency management system will either: • print out the date that the certificate was actually issued if the certificate is printed at a later date; or 34 April 27, 2015 / INSURANCE ADVOCATE
• scan a copy of the certificate that is actually issued by the system and maintain an electronic copy of it within the respective insured’s file.
ACORD Forms It is equally important that every agency use the most current and up-to-date ACORD forms in connection with its daily operations. Doing so will help protect the agency from potential E&O claims and lawsuits and will often also help better serve your customers. For example, the ACORD 80 Homeowners Application was revised in October 2009, but some agencies appear to still be using the earlier versions of the application. The new ACORD Homeowners Application now contains five pages and it is akin to a checklist of coverages and exposures which is one of the best means to dispute a claim by a customer that coverages were never reviewed. Reviewing the completed application with customers will help protect the agency from claims that the agency did not review a particular type of coverage with the customer or ask about a certain exposure that may exist. Another form that is often not used by agencies in its most current version is the ACORD 25 Certificate of Insurance. The most recent version of the ACORD 25 is the May 2010 edition. As mentioned above, because certificates of insurance are involved in a great many E&O claims and lawsuits, it is of the utmost importance that agencies use the most recent version of the ACORD 25 Certificate of Insurance.
Downloads and Uploads Another area we would like to address is the agency’s uploading and downloading of documents and information from the insurers with whom they do business. While we understand that uploading and downloading has become a major tool to increase agency efficiency, there are several points to keep in mind: 1. Confirm that your agency management system is not allowing your agency’s downloads to change the applications from insureds unless it creates a new version. 2. Downloads can greatly enhance the accuracy of the agency’s data which is essential when counseling insureds, but it is important to audit these
downloads regularly to make sure they are accurate and that the agency’s database contains good data overall. Critical to all of these recommendations is that the agency incorporate them into its written procedures, train its employees on them and require that they be followed, as well as audit the agency’s systems regularly to make sure the procedures are being followed. This overview is not meant to be an exhaustive list of potential E&O issues that you may face when you examine the electronic side of your business. Agencies should always keep in mind all of the other E&O risk management principles that they have learned and how the technology they are using might impact them.[IA] Editor’s Note: Additional ACT articles on agency E&O and risk management issues are available on the ACT website, such as “Don’t Get Caught in the Web” (agency website exposures); “Agency E&O Considerations When Using Social Media”; “Creating a Social Web Policy for Your Independent Agency” (comprehensive checklist); and “ACT Prototype Agency Information Security Plan” (tool to build your agency’s written information security plan). All of these tools are available at the “Websites & Social Media” Quick Link in the gray shaded portion on the left of the ACT home page (www.iiaba.net/act), except the prototype agency information security plan is at the “Security & Privacy” Quick Link. This article was prepared for ACT by Jim Keidel, Chris Weldon and Darren Renner of Keidel, Weldon & Cunningham, LLP, a law firm located in New York, Connecticut, New Jersey, Pennsylvania and Rhode Island, concentrating its practice in the defense of insurance agent and broker E&O claims and litigation, loss control and education, as well as insurance coverage analysis and litigation and insurance regulatory matters for insurance agents and brokers. Jim or Chris can be reached at 914-948-7000 or by email at jkeidel@kwcllp.com and cweldon@kwcllp.com . This article reflects the views of the authors and should not be construed as an official statement by ACT.
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