November 14, 2016 Insurance Advocate by C Acunto

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Serving New York, New Jersey, Connec cut, Eastern Pennsylvania and Washington, DC

Op mism: Insurance Agents, P&C Insurers Juice-Up Tech Budgets

Vol. 127 No. 18 | November 14, 2016

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[ FOREWORD ]

STEVE ACUNTO

The Sound of Broken Glass uSometimes good things happen and you do not notice them until they hit you somewhere in the future. The U.S. House of Representatives has just passed H.R. 5143, the “Transparent Insurance Standards Act of 2016,” introduced by Rep. Blaine Luetkemeyer (R-Missouri). The Big “I” in Washington was quite pleased, as was this writer. The bill creates important checks on federal officials involved in international insurance negotiations to ensure that our state-based system of insurance regulation stays intact. The Luetkemeyer bill would “install procedural safeguards around international insurance negotiations to ensure the continued primacy of the U.S. statebased system of regulation. The legislation would increase transparency and enhance congressional oversight of international deliberations related to insurance. Most importantly, the legislation also requires coordination and consultation with state insurance regulators.” Charles Symington, the government affairs champion of the D.C. Big “I” stated, “As the 114th Congress adjourns, the Big “I” is grateful that the House passed this important legislation in 2016 and looks forward to working with the 115th Congress and the new Administration on numerous insurance regulatory issues in 2017.” This type of protective regulation levels the playing field and keeps it that way, period.… … Speaking of the Big “I”, highly talented Lisa Lounsbury moves into the top spot in the Syracusebased IIABNY. The Association, now in its 132nd year, will profit for sure as this bright, young, refreshingly 21st century executive gets the keys to IIABNY’s share of the agency force and to the Association’s resources. We have known Lisa for many years and must add that her organizational ability and mission clarity are substantial resources. We wish her God speed.… … Speaking of Lisa, what happened to the glass ceiling in Association leadership? Guess it’s gone. Sounds like it, no? Top Guns at New York Insurance Associations are women who now head the IIABNY (Lisa Lounsbury), PIANY (Kelly Norris), NYIA (Ellen Melchionni), and LICONY (Mary Griffin). It is a pretty picture for the 4 November 14, 2016 / INSURANCE ADVOCATE

progress of women in what really was quite a boys’ club. The best part is that no tokenism or quota mentality appears to have played a role here: each of these women is over-the-top competent and deserving of the job on the merits of her experience and abilities. That’s refreshing. Compliments to the Boards who hired them.… … In that same vein, the Casualty Actuarial Society (CAS) just announced that Nancy Braithwaite, a distinguished insurance industry veteran with more than 30 years of experience in risk management, is its newly-elected president. Braithwaite has an extensive background in the development of loss costs and policy forms for industrywide use, as well as specialty lines experience in pricing, planning, and reserving. She is a Second Vice President and Actuary in the Excess Casualty Department at Travelers Insurance Company, where her

The legislation would increase transparency and enhance congressional oversight of international deliberations related to insurance. responsibilities include planning, large account pricing, and training and underwriter support related to pricing and rate adequacy monitoring. She is also the coauthor of a noted paper on general liability ratemaking. She has been actively involved with the CAS for three decades, having earned her Associateship with the CAS in 1988 and her Fellowship in 1989. She has served in numerous volunteer positions with the organization, including as CAS V.P. of Marketing and Communications. She is a member of the American Academy of Actuaries and also holds the designation of Chartered Property Casualty Underwriter (CPCU). Braithwaite earned her B.A. in mathematics and computer science from New York University and earned her way to this important post. Congratulations. Wishing a blessed Christmas and Holiday season to all of our readers.[IA]

VOLUME 127, NUMBER 18 NOVEMBER 14, 2016

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Kelly Donahue-Piro Michael Loguercio Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Director of Operations and Creative Services Gina Marie Balog 914-966-3180, x113 g@cinn.com EDITORIAL ASSISTANT COPYEDITOR & PROOFREADER Maria Vano mariavano9@gmail.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x111 circulation@cinn.com PUBLISHED BY CINN Media, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 613-1595 www.cinn.com | info@cinn.com President and CEO Steve Acunto

CINN MEDIA, INC.

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., 22 Bedford Road, Greenwich, CT 06831. Periodical postage paid at Greenwich, CT 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 $135.00. 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 2016. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

For high-quality article reprints (minimum of 100), including digital rights, contact Gina Marie Balog at g@cinn.com or call 914-966-3180, x113

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Contents

OPTIMISM: INSURANCE AGENTS, P&C INSURERS JUICE-UP TECH BUDGETS

[FEATURES] 4

Foreword: The Sound of Broken Glass Steve Acunto, Publisher

On the Level: Getting Consumer Attention Jamie Deapo

The Social Notebook: The World of Social Media Chris Paradiso

Guest Opinion: Quality and Value Deﬁned Jane M. Orient, M.D.

Face to Face: Gun, Partner! Michael Loguercio

November 14, 2016 | Volume 127 Number 18

On My Radar: Advertising Injury Requires a Fortuitous Loss Barry Zalma

Looking Back: September, 1991

Courtside: Chunk of Concrete That Fell Off Dump Truck Does Not Qualify for SUM Coverage Lawrence Rogak

Classiﬁeds

[A D F E ATUR E S ] 10

MSO: Protect Your Holiday Cheer

NYIA: Thank You

Insurance Industry Charitable Foundation: 10th Anniversary Beneﬁt Dinner

New York and New Jersey’s Leading Insurance Magazine Since 1889.

FOR ADVERTISING OR SUBSCRIPTION INFORMATION Call 914-966-3180 | g@cinn.com info@insurance-advocate.com www.insurance-advocate.com INSURANCE ADVOCATE / November 14, 2016 5

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[ O N T H E L E VE L ]

JAMIE DEAPO

Getting Consumer Attention uWhile developing information for a producer mentoring and sales program, I realized prospecting is totally different today than it was when I was an independent agent. Like many things in our world today it’s changed because of technology. Even more importantly it’s changed because consumer attitudes and buying practices are different. Even many traditional baby boomer consumers have modified how they buy insurance protection. Technology has allowed consumers to expect availability on a 24/7 basis. It has also changed consumer expectations to where they now require you provide instant service. More importantly it has opened a brand new world of online insurance providers who focus their sales on premium savings and ease of doing business. They work very hard to convince consumers that they don’t need the professional services of an agent; that it merely adds to the cost of coverage and doesn’t really bring any value to the process. Want to understand insurance protection so you can choose the proper coverage—their website can do that. Had a claim—no problem, you can handle all or most of it quickly and efficiently over the internet using an app on your phone. They work hard to convince consumers that buying insurance protection is like buying from Amazon, Jet or any of the online consumer sites. Just go on the computer, decide what you need and then buy it from the online site with the best price. So how do you, a brick and mortar professional agency, convince consumers to even consider you as a possibility for purchasing insurance protection? You’re not going to do it through advertising and marketing because the online digital sites can and will outspend you. You have to develop relationships with consumers and convince them of the value you bring to the buying process. You have to educate them to the complexity of coverage and destroy the onesize-fits all mentality they learned from online carrier marketing and advertising. So we now know that to be successful we need to figure out how to get our mes-

Websites, blogs, Facebook, Twitter, LinkedIn and other social media now become the platform for providing consumers with information that will allow them to better understand insurance protection and to see the value of working with a professional agency.

sage out and convince consumers of the value an agent brings to the insurance buying process. The same technology that allows online insurance providers to lure consumers away can also assist independent agencies in educating consumers on what they aren’t being told about insurance. Websites, blogs, Facebook, Twitter, LinkedIn and other social media now become the platform for providing consumers with information that will allow them to better understand insurance protection and to see the value of working with a professional agency. Your objective is to develop a relationship with consumers in your marketing area where you and your agency staff are seen as highly knowledgeable insurance professionals. You need to use social media to bring to the attention of consumers the protection issues that could affect them, their family and their business. You want to use testimonials from your clients to show the value of the services you have provided for them. Effective social media is written in language and wording understandable by consumers. Stay away from insurance jargon. Something as simple as changing insurance coverage to insurance protection can make a difference. It should also be written from the vantage point of what’s in it for the consumer. Try not to include self-serving information intended to promote your agency. Let the consumer make

Jamie Deapo is AVP of Membership & Member Programs for IIABNY and is an approved CE instructor in New York. Prior to being with IIABNY, he was an independent agent in the Syracuse area for 15 years. Jamie started his career in 1972 working for insurance carriers, and he has held various underwriting and marketing positions with several national as well as regional companies. He is a past president of the Independent Insurance Agents of Central New York and served on the board of directors of IIABNY.

that decision when they see the value of what you provide and the unselfish way you provide it to the public. Take time to review your website and blog. Are they easy to navigate? Is the information provided written in easy to understand language? Is everything focused on how it will benefit the consumer/client? Depending on your agency size and budget, you might consider hiring a social media manager to assist you in effectively using this medium. If your agency is small or you don’t have the budget for an additional staff position, there is a wealth of information you can draw from that will help you to use social media. To be successful you need to make sure that consumers who are looking for insurance information see you first. That means having at least a basic working knowledge of Search Engine Optimization (SEO) or the availability of someone who does that CONTINUED ON PAGE 8

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[ON THE LEVEL] CONTINUED FROM PAGE 6

can help you. Being seen first will drive consumers to you. If you are doing a good job using social media, as well as effectively advertising, seeing you early in searches should result in name and expertise recognition by consumers. The last and most important thing is to make sure a consumer reaching out to your agency is greeted warmly and directed immediately to someone who can answer their questions and provide what

…if you’re not taking every opportunity to tell consumers of the advantages of buying insurance protection from an independent agent then I believe we will continue to lose ground to online insurance sites.

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they need. It won’t matter how good your outreach is to get consumers to contact you if you drop the ball when they call. You only get one opportunity to impress a new prospect, so don’t waste it. I’ll close this article by saying if you’re not taking every opportunity to tell consumers of the advantages of buying insurance protection from an independent agent then I believe we will continue to lose ground to online insurance sites. You truly offer a distinct advantage; and when consumers understand what they are buying, your premiums are competitive as well. Most consumers are intelligent, responsible people who are interested in making sure they have the correct protection to meet their needs. I don’t think in today’s world they are interested in investing the time and energy necessary to understand the many facets of insurance coverage and to act as their own insurance agent. They are concerned with cost but not at the expense of proper protection and most would prefer to have a knowledgeable agent to advocate on their behalf. To be successful, our focus needs to be on educating them to the pitfalls of buying insurance online and the advantages of having an independent agent. [IA]

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ADVERTORIAL

Protect Your Holiday Cheer THE HOLIDAYS ARE A TIME of increased spending and celebrating. It is also a time for a rise in theft and fraud. Alerting clients to possible scams and dangers and helping them avoid losses is another sign of the true insurance professional. The convenience of online shopping has changed the world. It is estimated that total online sales will top $392 billion in 2016, with over $98 billion done on mobile devices. Online shopping may expose you to hackers and identity theft. Beware of “free” public Wi-Fi. Online shopping, or any sharing of banking or credit card information, should be done at home or on other secure networks, and not while on free Wi-Fi at the mall. Avoid using sites that ask for passwords or credit card information. Protect data by disabling file sharing on your devices. Turn off the option to join free Wi-Fi networks automatically, as this could expose you to fraud and hackers. Fraudulent websites sell name brand goods at significant discounts. Make sure the website is legitimate by checking the domain name, or seeing if they have a rating on www.ResellerRatings.com. Spelling and grammar mistakes are also a giveaway since many fraudulent sites are created outside of the Unites States where English is not the primary language (www.asecurelife.com). All of these sales have to be delivered, which has meant a boon to the package delivery industry, as well as thieves. “Porch pirates” follow delivery trucks and steal items left for delivery. A 2015 report stated that over 23 million Americans had their packages stolen before they could open them (www.insurancequotes.com). There are a number of ways to reduce the chance that your packages will be stolen. Ask the delivery company to hold the package at their facility for pick-up. Sign up for email tracking of shipments. If you won’t be home for delivery, ask a neighbor to watch. Give instructions for packages to be delivered in a location not readily visible from the street. In any event, it is a good idea to purchase insurance for high value items, as there are limitations to the liability of 10 November 14, 2016 / INSURANCE ADVOCATE

the package delivery companies. Request that delivery only be made with an authorized signature. Have packages sent to your office or other safe location. Surveillance cameras with real time access to the camera on your phone or other device are now available. When shipping items, take them to the post office or shipper rather than leaving them outside your home for pickup. Notify the recipient to expect the shipment. The risk of theft does not end once the packages are safely delivered. Thieves may use what you leave on the curb to decide whose house to rob. They are looking for items they can grab quickly and sell easily. Never leave boxes for high end items, such as electronics and designer clothing, on the curb for trash pickup. Don’t make your trash a billboard that says “We have a lot of good stuff inside.” Take the time to cut up the boxes, fold so that the logos are hidden, and tape or tie them in bundles. The FBI estimates that over two million homes are broken into each year, with losses averaging over $2200 each (www.asecurelife.com). Packages aren’t the only things stolen during the holidays. Outdoor decorations are another common target of holiday grinches. Choose large heavy items that are more difficult to grab and go, or use metal stakes or wood to anchor

the items. Motion detector lights can be another deterrent, as thieves prefer to operate under the cover of darkness. Be sure to lock your car, but especially if there are packages inside. While theft of the vehicle itself could be covered under your automobile policy, items stolen from your car would not. If you have off-premises coverage for personal property, the loss could be covered under the homeowners/renters policy, and subject to the deductible. According to the National Insurance Crime Bureau, the number one holiday for vehicle thefts in 2013 was New Year’s Day (2184) (www.nicb.org). Protect your personal property in the home when entertaining. Keep jewelry and other valuables out of sight. Highvalue items should be locked in a safe or vault whenever possible. Helping clients protect themselves against loss, especially during the holidays, is another value-added service of the professional insurance agent.

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[ T H E S O C I A L N OT E B O OK ]

C H R I S PA R A D I S O

The World of Social Media uSocial media, in today’s world, is an essential for all businesses to achieve marketing success. Whether you’re a large corporation, a small business, or a local momand-pop shop, social media is right for your business. It doesn’t matter the industry, nor the products and services your company sells or markets–social media is a powerful tool for connecting with your customers, clients, and prospects. Social media isn’t simply a one-and-done strategy, it takes consistent care and well-thought-out posts and consistent engagement with your audiences within your networks. If you’re new to social media, this could sound a bit confusing, so let’s talk about what social media actually is before we discuss the strategy behind it. The actual definition of social media is “websites and applications that enable users to create and share content or to participate in social networking.” Long story short, social media is a digital platform for people to stay connected on, share thoughts and ideas with different forms of content, and interact with people of similar interests, or meet new people as well. It’s also a platform for businesses to do the same, and actually form a personable relationship with their customers and clients that goes beyond the traditional customer service that happens within your agency. The most common social networks (I’m sure you’ve heard of some of these already) that are used are Facebook, Twitter, Google+, Pinterest, and Instagram, and they each have their own strengths. Honestly, my agency believes in a well-rounded and balanced attack when it comes to social media, so we touch each of these networks daily, and multiple times a day. Let’s discuss some of the strategy we have going in. Unlike the myths you may have heard about, where a small or local business merely opens up a Facebook account and automatically triples their business, social media is a platform you can use to efficiently form long-lasting and personable relationships with your customers and clients, but it takes consistency and time. You can’t just simply open a social media account and then not nurture it, because your social media presence will die out in just a few days. In order 12 November 14, 2016 / INSURANCE ADVOCATE

to get consistent, you need to get yourself established, so first let’s talk about the types of content you can push out to your audience when it comes to social media. There are many different ways that you can spread messages to your audience online through social media, because it offers a wide variety of content forms for you to make use of. The first form of content is written, such as quick tweets on Twitter, status updates on Facebook, and more, but we’ll talk about the different social networks available in a moment. Text updates of this nature are great for blasting out a quick update, especially on a personal network, but when it comes to using social media with business, these are fairly ineffective. At our agency, we almost never push out a post unless it has some form of visual content attached to it (with the exception of Twitter, where we will post more frequently than other networks and some of our updates will be straight text). Speaking of visual content, social media is a great place to spread your agency’s visual content marketing to get the traction and engagement you’re looking for online. Visual content can include posting videos, organic photos of your agency and staff, or photoshopped visuals that strongly and visually represent your agency’s brand (remember, a strong and consistent brand allows your marketing to go from great to phenomenal, because a brand allows your message to resonate with your audience instead of simply making a good first impression). Like I mentioned earlier though, there are many different social media networks to choose from, and it’s up to you and your agency to find the right balance that will work for you. To make things simpler, let’s discuss each of the most commonly used social media in business as well as their unique strengths. First and foremost, there’s Facebook, the largest network of daily users for years now. Facebook is a great platform for posting content of all forms, forming one-on-one connections with your customers and clients, and getting reviews or testimonials for your agency. Another network we use daily is Twitter, which is a bit faster paced, requires a few more posts per day, and has less “life” to each post (simply

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.

meaning that they will only appear in a news feed for moments, instead of potentially sticking around in one for hours like with Facebook). Twitter is great for posting visual content, quick updates for your agency throughout the day, and spreading URLs or links that lead to your agency’s website. Another network we use at our agency is Pinterest, the “buyer’s network” as some would like to call it. Pinterest is a great way to push out your visual content marketing, since it’s a 100% visually based network, but it’s also a known fact that users on Pinterest are more likely to make a purchase online than any users on any other social network. Next up, we have Instagram, which is very similar to Pinterest in nature, being also completely comprised of visual content. The difference here is that Instagram is also a great way of forming one-on-one connections with your clients, pushing out your agency’s brand, and reaching out to millennials, because this is one of their favorite places to hang out. The next social network I’d like to mention is LinkedIn, your one-stop solution to connecting with professionals in your space and your commercial clients. Although you may CONTINUED ON PAGE 34

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Optimism: Independent Agents, P&C Insurers JuiceUp Tech Budgets New market study shows a major increase in business optimism; to fuel growth, insurance agencies look to technology—and their own carriers—for assistance 14 November 14, 2016 / INSURANCE ADVOCATE

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Overall, the findings of “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace” indicate a strong understanding of the importance of technology to help drive revenue growth, and an equally strong desire for technological support from the carriers uThe future of independent property and casualty insurance with whom they work.

agencies looks bright, according to a recent survey of agency principals and producers conducted by Hanover Research. The study, “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace,” reports that nearly half (49%) of agency respondents were “very optimistic” about the future success of their agencies. Agents are increasingly turning to technology to find new ways to engage with customers and increase their competitive edge. Two-thirds of surveyed agencies either use or plan to invest in mobile-enabled websites to help attract new customers, up from 40% in 2015. Almost half (47%) of agencies say they are experimenting with new marketing tactics, and 36% say that they, like the carriers, are increasing customer self-service capabilities. A substantial number (31%) have noticed an increase in customer inquiries for usage-based products such as payas-you-drive car insurance. While this is a relatively low-margin product, agents—particularly those working with customer relationship management (CRM) programs—regard these inquiries as an opportunity to grow their customer base. The study shows a steady yearover-year increase in technology budgets and the adoption of business software applications, such as mobile interfaces and CRM—both of which are credited with helping the independent agent channel remain competitive. Michael Macauley, CEO of Quadrant Information Services (pictured above), a leading supplier of pricing analytics (http://www.quadinfo. com/) services to property and casualty insurance carriers, said, “Like practically every other industry, insurance at the agency level has been disrupted to some extent by digital technology.” Highly interactive websites make it easier and more costeffective for carriers to deal directly with individual policyholders. Younger and more technology-savvy insurance customers, and especially Millennials, prefer this approach for certain products—particularly auto insurance, which is now essentially a cost-differentiated commodity. Agencies are reevaluating their relationships with the carriers whose products they handle. Factors such as compensation plans and marketing support for carriers, which in the past have been quite important to agencies, are no longer as relevant as they once were. Industry observers warn that carriers who con-

tinue to do business as usual will find that agencies have moved on to those carriers that “get it” and are willing to meet the agencies’ evolving needs. Overall, the findings of “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace” indicate a strong understanding of the importance of technology to help drive revenue growth, and an equally strong desire for technological support from the carriers with whom they work. While agencies are determined to deliver better service, they are aware that the level of service they can provide is highly dependent upon the carriers. “They want information,” said Macauley, “and they want it quickly. Response time is hugely important to the agencies. They also want the information delivered in a form that enables them to use it to make good business decisions. Macauley stated that Quadrant is working to help carriers provide such information through the development of Periscope, a business intelligence tool that provides a written, qualitative, plain-English summary of complex data comparisons. He explained that Periscope is designed to help a carrier understand—quickly and clearly—what the competition is doing and what they, themselves, can do better. In addition to being a top management tool for carriers, it’s a terrific way for the carrier to provide strategic support to its agencies. About Quadrant Information Services: Quadrant Information Services, headquartered in Pleasanton, CA, provides pricing analytics solutions for property and casualty insurance companies. Quadrant gives actuary, product development, pricing, sales and marketing personnel at its client companies—which include all the major insurance carriers in the United States—the data they need to make accurate, data-driven decisions. An industry innovator since its founding in 1991, Quadrant has provided the P&C insurance field with a long series of technological advances, including InsureWatch, the industry’s first cloud-based pricing tool, which allows the user to produce unlimited combinations of reports with the click of a mouse. For more information, and to learn why Quadrant is for insurance companies that are tired of losing the right customers and winning the wrong ones, please visit www.quadinfo.com.

EXCERPTS OF THE SURVEY APPEAR ON THE FOLLOWING PAGES..

INSURANCE ADVOCATE / November 14, 2016 15

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FROM THE REPORT - KEY EXCERPTS Independent principals and producers in the property and casualty (P&C) insurance space remain optimistic about the state of the industry and continue to expect growth in the coming years. Agencies are predicting growth in technology budgets in the next 12 months, though smaller agencies are more likely to focus these investments on maintenance of current software and hardware while large agencies consider new systems. Consumer inquiries into usage-based and sharing economy policies are also likely to increase over the next year, according to many independent P&C agencies. The following report examines independent P&C agency outlook for 2016 and into the future and considers principal and producer perceptions of investments, threats and opportunities as the P&C industry continues to evolve. This represents the third annual edition of the report, making it the longest running study of its kind in the P&C market. Section I reviews revenue and growth, while Section II outlines forecasted trends in technology budgets and Section III evaluates agency use of tools and technologies. Section IV discusses industry threats and impacts, while Section V concludes with a consideration of new products. KEY FINDINGS • Overall, independent P&C agencies remain optimistic in 2016, with seven in ten agencies optimistic about future success and a strong majority working towards growth over the next three to ﬁve years. While overall optimism is down slightly from 2015, the share of agencies working to aggressively grow has risen year over year. In all, nearly 85 percent of agencies say they are working for growth. Large agencies are most optimistic with 85 percent of agencies optimistic about future success, while medium-sized agencies (over 90%) are most likely to report an expectation to grow over the period. • A majority of agencies have seen revenue growth in both personal and commercial lines over the past two years, and a focus on improved service and selling to existing customer is a major driver of this revenue growth. Improved customer retention, more effective cross-selling to existing customers, and better service are the top three drivers for personal lines, while increases in demand for particular coverage types also drive revenue growth for commercial lines. Better customer retention and care remain important factors for commercial lines as well. • Technology budgets are likely to grow over the next year. While just over half of respondent agencies report growth in IT budgets in the last 12 months, 63 percent say they expect growth in the next 12 months. Software updates and hardware replacement are most often the focus of this growing investment, but nearly one-fifth report investments in mobile technology and a tenth say implementation of new systems. - The growth and focus of technology budgets vary by agency size. Large agencies are more likely to see greater increases to IT budgets and are more likely to invest in mobile and new technologies, while small and medium agencies are more likely to devote technology budgets to maintenance (replacing hardware or updating software). 16 November 14, 2016 / INSURANCE ADVOCATE

While a slightly larger share of respondents reports working toward aggressive growth in 2016 (36 percent) relative to 2015 (29 percent), a similar share of independent P&C agencies is reports plans for growth in general, either moderate or aggressive (84 percent in 2014 versus 86 percent in 2015).

• Agency websites, workﬂow tools, and company Facebook pages are the most commonly utilized tools, and – year over year – growing shares of respondents indicate they are adopting them. Direct marketing and lead generation tools and with CRM applications are also used by about half of all respondents, with respondents identifying the latter as a particularly important tool to achieve sales goals. Relative to previous years, fewer respondents are using Twitter and agency blogs. • The largest share of agencies predict they will see an increase in both usage-based policies and insurance policies tailored to the sharing economy over the next year. More agencies have seen increases in sharing economy policies than usage-based policies over the past 12 months, and a greater share of respondents expects growth in sharing economy policies relative to usage-based ones in the next 12 months.

SECTION I: REVENUE AND GROWTH FUTURE PLANS AND OPTIMISM Overall, most agencies are working to grow over the next three to five years. While a slightly larger share of respondents reports working toward aggressive growth in 2016 (36 percent) relative to 2015 (29 percent), a similar share of independent P&C agencies is reports plans for growth in general, either moderate or aggressive (84 percent in 2014 versus 86 percent in 2015). While the total share of agencies working toward growth is down slightly from 2014, a strong majority nonetheless remains optimistic about future prospects. Figure 1.1 presents details of agency business plans for the next three to five years. Figure 1.1: Which of these describes your business plans over the next 3 to 5 years? Segmented by Year

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A solid majority of respondents across all agency sizes reports they are working towards growth over the next three to five years. Medium agencies are the most likely to report expectations of aggressive or moderate growth (93 percent), though plans for aggressive growth are most common among large agencies (69 percent of respondents). Although large agencies are more likely than others to work toward aggressive growth, both small and large agencies are about equally likely to work toward growth more generally (aggressive or moderate) in the coming years (Figure 1.2). Figure 1.2: Which of these describes your business plans over the next 3 to 5 years? Segmented by Size

Figure 1.6 (top of next column): Over the past 24 months, what change in revenue, per year, has your agency seen inâ&#x20AC;Ś?

While personal lines saw higher revenue increase compared to commercial lines, personal lines in 2016 saw lower revenue growth than in 2015 (Figure 1.7). Compared to 2015, commercial lines in 2016 also saw lower revenue growth (Figure 1.8). Nonetheless, majorities continue to report revenue increases across both lines. Figure 1.7: Over the past 24 months, what change in revenue, per year, has your agency seen in personal lines?

Over two-thirds (70 percent) of agencies in 2016 say they are either very optimistic or somewhat optimistic about their future success. Nearly half of agencies in 2016 say they are very optimistic, up 17 percentage points from 2015, though overall optimism (somewhat and very optimistic respondents) is down slightly relative to the past two years. Agencies were the most optimistic in 2014 (Figure 1.3). Figure 1.3: How do you feel about the future success of your agency? Segmented by Year

Over the past 24 months, a majority of agencies report growth in both personal and commercial lines of business. Notably, agencies are seeing a slightly larger increase in revenue in personal lines compared to commercial lines. While the share of agencies reporting high growth (over 15 percent) is comparable for personal and commercial (12 and 11 percent, respectively), higher shares of agencies report low (5 percent or less) to moderate growth (6 to 15 percent) in personal lines than for commercial lines (Figure 1.6). 18 November 14, 2016 / INSURANCE ADVOCATE

Figure 1.8: Over the past 24 months, what change in revenue, per year, has your agency seen in commercial lines?

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PERSONAL BUSINESS LINES Notably, the largest share of agencies attribute revenue growth in personal lines to four main factors – customer retention, effective cross-selling to existing customers, better service to existing customers, and increased marketing efforts. These results suggest that better care and utilization of existing customers supplemented with increased marketing efforts are leading drivers of growth in personal lines. In comparison to 2015, agencies in 2016 are over 10 percentage points more likely to mention the top three items (customer retention, effective cross-selling, and better service) as growth drivers. This suggests that the primary drivers of growth in the past year shifted towards customer-facing activities (Figure 1.10).

Over half of surveyed agencies (51 percent) say that their technology budget has increased over the past 12 months. This includes 11 percent who report double-digit growth and one-third of respondents who report growth of 6 percent or less. Figure 1.14: What has driven your agency’s growth in commercial lines over the past 24 months?

Figure 1.10 (top of next column): What has driven your agency’s growth in personal lines over the past 24 months?

Which drivers an agency has relied on for growth depends in part on agency size. For instance, medium and small agencies are more likely to report customer retention as a major growth driver over the past 24 months. On the other hand, large businesses are more likely to mention the effectiveness of marketing efforts (Figure 1.11). Figure 1.13: What has driven your agency’s growth in commercial lines over the past 24 months? Check all that apply.

Markets for commercial lines that saw the most growth over the past two years, according to agencies, are commercial auto and commercial property. These increases appear similar to those for personal lines, where agencies most frequently saw both property (homeowners) and car insurance increase over the past two years (Figure 1.16). Stagnant markets include burglary and theft and inland marine, as over half of agencies state that these markets remained flat over the past two years. Markets where there are relatively few competitors include industry-specific insurance (71 percent do not offer), medical malpractice (53 percent do not offer), and crop insurance (52 percent do not offer). Figure 1.16: How have your agency’s sales of the following commercial line coverages changed over the past 24 months in…? Top 5 Line Coverage Increases

SECTION II: TECHNOLOGY BUDGETS These primary drivers represent a major change from 2015 to 2016. Although effective cross-selling to customers was almost as frequently mentioned in 2015 as it is in 2016, the other top drivers – increase in demand for particular coverage types and better service to existing customers – saw increases of 10 to 16 percentage points over 2015 (Figure 1.14).

Over half of surveyed agencies (51 percent) say that their technology budget has increased over the past 12 months. This includes 11 percent who report double-digit growth and onethird of respondents who report growth of 6 percent or less. More than one-third (38 percent) also indicate that their technology budget remained flat over the period. However, over the next 12 CONTINUED ON PAGE 20

INSURANCE ADVOCATE / November 14, 2016 19

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months, a growing majority of agencies anticipates growth in technology budgets; 63 percent anticipate increases in the next 12 months relative to 51 percent who report growth in the past 12 months (Figure 2.1). Figure 2.1: Over the past 12 months, how has your agency’s technology budget changed?

Across different agency sizes, large agencies appear more likely to focus their budgets (which are more likely to increase) on mobile technologies, and to a lesser extent updating software and implementing new systems. Mid-size agencies are more likely to update software, while small agencies are more likely to focus on replacing hardware (Figure 2.4) . Figure 2.4: Over the next 12 months what will be the primary focus of your IT budget? Segmented by Size

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Growth in agency technology budgets appears to increase with agency size. Large agencies appear slightly more likely to predict larger increases in their IT budgets over the next 12 months, while small agencies are more likely to maintain their current budgets. Medium agencies remain in between, though they are more likely to see budget increases rather than small agencies (Figure 2.2). FUTURE FOCUS OF IT BUDGETS Bearing in mind the increases over the next 12 months, most agencies say that the primary focus of their agency will be either updating software (26 percent) or replacing hardware (25 percent), which are more maintenance-based activities rather than investments in new technologies (such as the cloud) or systems (Figure 2.3).

SECTION III: USE OF TOOLS AND TECHNOLOGY According to agencies, they primarily use websites (68 percent currently use), workflow tools (66 percent) and a company page on Facebook (66 percent). On the other hand, tools that agencies are least likely to use include Twitter communications (56 percent do not use and have no plan to do so), video conferencing (55 percent), and a blog that they maintain (55 percent) (Figure 3.1). Figure 3.1: What is your agency’s use of the following tools?

Figure 2.3: Over the next 12 months what will be the primary focus of your IT budget?

N=102

…tools that agencies are least likely to use include Twitter communications…, video conferencing…, and a blog that they maintain…. 20 November 14, 2016 / INSURANCE ADVOCATE

Across the years, the combination of tools that agencies use change has evolved. A website specifically for the agency is the most commonly used tool across years, and usage of these websites has increased between 2014 and 2016. Notably, agencies in 2016 are 18 percentage points more likely to report using a company

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page on Facebook compared to 2015. However, in 2015 agencies were much more likely to say that they used Twitter communications (40 percent in 2015 versus 20 percent in 2016), a blog, and risk analytics tools (Figure 3.2). Figure 3.3: How important do you think it is to use the following items to achieve your agency’s sales goals...

Figure 3.5: In your job function, how frequently do you conduct business outside of or away from the office?

N=101

Looking at the different agency sizes, large firms appear to be more likely to use many different methods to achieve their sales goals, but are most likely of all agency sizes to use customer portals and CRM technologies (both 92 percent extremely or moderately important). In addition, they are more likely to say that they use items that are considered to be not at all important, like drones and wearables. Nevertheless, agencies of all sizes are most likely to mention customer portals as important tools (Figure 3.4). Figure 3.4: How important do you think it is to use the following items to achieve your agency’s sales goals... Segmented by Size, Agencies Selecting ‘ Extremely’ or ’Moderately Important’

N=102

When in the field, smart phones are by far the most commonly used devices in the field. Nearly three-quarters of agencies say that they use them more than once a week. The next most frequently used device, the laptop, has just around half of agencies using it every day or more than once a week. Unsurprisingly, the least frequently used devices are wearables and drones – which are also regarded to be the least important technologies for achieving sales goals (Figure 3.6). Figure 3.6: How frequently do you use the following devices in the ﬁeld? Percentage of Agencies Selecting ‘At least once a day’ or ‘More than once a week but not every day’.

N=102

Technology for helping agents work outside the office is becoming more essential. At least 40 percent of agencies say that they conduct business outside or away from the office every day or more than once a week, suggesting a growing need for this technology. Nevertheless, the majority of agencies conduct business out of the office less than once a month, rarely, or never (Figure 3.5).

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[ G UEST O PI N I ON ]

J A N E M . O R I E N T, M . D .

Quality and Value Defined uThe congressional echo chamber, on both sides of the aisle, constantly talks about the great reform fad: “payment for value” and “quality” care. And the Medicare version called MACRA passed nearly unanimously, with cheers from the marbled halls of the AMA tower. ObamaCare too constantly harps on “quality.” Politicians seem to think that payment for value is an original think-tank inspiration, instead of the way things always have worked, at least outside of medicine. There was the BMW, the Mercedes-Benz, and the Citroën SM (early 1970s), and then my grandpa’s car, of which he said “it beats walking.” The difference is the answer to the question: value to whom? Now Medicare and soon all “health plans” want to pay only for “value,” instead of for doctors doing work, and it all has to be “high quality.” Grandpa can just walk, or stay home, if he can’t get the highest quality—but he’ll still have to pay into the “health plan.” Despite all the promises of Medicare and ObamaCare, the reformed system is like taking away Grandpa’s reliable old Chevy, with its stick shift and hand choke. Instead he must choose a model (these days there may be only one available on the Exchange) that resembles a BMW only in price. The price is so high that it is divided into monthly chunks. As soon as he can’t pay it, they tow the vehicle away, leaving him both broke and without wheels. It drives like a Yugo, is often waiting in line at the shop for preauthorization, requires high-test fuel he can’t afford, and can’t go to a lot of the places he wants to because they are “out of network.” Grandpa would like to forgo the smoke detector, the computerized monitor of beverage consumption, the automated health warnings in 50 languages, and the condom dispenser, but these are not optional. They are needed for “value,” and he has to pay for them. You may think this piece is a mixed metaphor, and that I have confused Grandpa with a car. But that’s just it: the “healthcare system” is mostly about the 22 November 14, 2016 / INSURANCE ADVOCATE

payment system, transporting trillions of dollars around, and only incidentally about medical care for patients. Maybe half the revenue sucked into the system buys something recognizable as a medical service or item used by a patient. Maybe less. The whole system of calculating value or determining quality in medicine is designed by and for bureaucrats and technocrats and their abstract concept of what is good for “society” or the system. The 2200 pages of the MACRA Final Rule have to do with that kind of value. In a free market, there is always the option of saying “no thanks.” No value means no payment. But with Medicare and ObamaCare, there is no way to decline to pay the army of compliance staff, auditors, executives, and writers of constantly changing and incomprehensible rules. Their share comes off the top. Patients probably don’t care about the average blood pressure of patients in the doctor’s practice or about his documentation of anti-smoking advice or any of the other dozens of “quality” metrics he must record—but they all pay a share of the $50,000 or so it will cost him to collect such information every year under MACRA. Grandpa might be willing to pay for an unhurried hour of a doctor’s time, without the intrusion of an electronic medical record. Or for a treatment that may greatly improve his life, such as home oxygen, for which he does not meet some “expert’s” criteria. But that would involve “balance billing” or payment for an “unnecessary” or “inappropriate” service. Such things are federal crimes. But while Grandpa might not be allowed to make do with his old car, or old-fashioned doctor visit, he will get counseling on “end of life”—free of charge. The new Administration needs to recognize true value: the value of human life and liberty. These can’t be expressed in dollars. But when people have liberty, they are in charge of determining the dollar value of goods and services they buy with their own earnings. With medical care, as with cars, their voluntary decisions, based

Jane M. Orient, M.D. obtained her undergraduate degrees in chemistry and mathematics from the University of Arizona in Tucson, and her M.D. from Columbia University College of Physicians and Surgeons in 1974. She completed an internal medicine residency at Parkland Memorial Hospital and University of Arizona Affiliated Hospitals and then became an Instructor at the University of Arizona College of Medicine and a staff physician at the Tucson Veterans Administration Hospital. She has been in solo private practice since 1981 and has served as Executive Director of the Association of American Physicians and Surgeons (AAPS) since 1989. She is currently president of Doctors for Disaster Preparedness. Since 1988, she has been chairman of the Public Health Committee of the Pima County (Arizona) Medical Society. She is the author of YOUR Doctor Is Not In: Healthy Skepticism about National Healthcare, and the second through fourth editions of Sapira’s Art and Science of Bedside Diagnosis, published by Lippincott, Williams & Wilkins. She is the editor of AAPS News, the Doctors for Disaster Preparedness Newsletter, and Civil Defense Perspectives, and is the managing editor of the Journal of American Physicians and Surgeons.

on honest price signals, will optimize value and allow supply and demand to come into balance. It will bring about the lowest cost without shortages and coercive government rationing. The Medicare system of price controls, the new MACRA methodologies, and the managed care methodologies of ObamaCare all disregard patient values, while at the same time adding a huge overlay of dead-weight costs. They all belong in the junkyard. [IA]

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IN THE MATTER OF THE LIQUIDATION OF COLONIAL COOPERATIVE INSURANCE COMPANY Supreme Court County of New York Index No.: 400236/10 NOTICE Pursuant to an order of the Supreme Court of the State of New York, County of New York (“Court”), entered on October 4, 2010, the then-Superintendent of Insurance of the State of New York and his successors in office were appointed as liquidator (“Liquidator”) of Colonial Cooperative Insurance Company (“CCIC”) and, as such, has been directed to take possession of CCIC’s property and liquidate its business and affairs pursuant to Article 74 of the New York Insurance Law (“Insurance Law”). The Superintendent of Financial Services of the State of New York has now succeeded the Superintendent of Insurance as Liquidator of CCIC. The Liquidator has, pursuant to Insurance Law Article 74, appointed Gail Pierce-Siponen, Assistant Special Deputy Superintendent (“Assistant Special Deputy”), as her agent to liquidate the business of CCIC. The Assistant Special Deputy carries out his duties through the New York Liquidation Bureau (“NYLB”), 110 William Street, New York, New York 10038. The Liquidator has submitted a motion to the Court seeking an order: (i) approving the Liquidator’s recommendation to allow the claim of the New York Property/Casualty Insurance Security Fund (the “P/C Fund”) for expenses and losses it incurred and paid from April 1, 2016 to June 30, 2016 in the amount of $7,109 (the “Remaining Portion of the P/C Fund Claim”); and upon the Court’s approval, the Remaining Portion of the P/C Fund Claim becoming an allowed claim; (ii) approving the Liquidator’s report on the status of the CCIC liquidation proceeding (the “Liquidation Proceeding”) and the financial transactions delineated in such report; (iii) authorizing the payment of administrative expenses, including such expenses for the closing of the Liquidation Proceeding; (iv) terminating and closing the Liquidation Proceeding; (v) releasing and discharging the Liquidator, her predecessors and successors in office, and their agents, attorneys and employees, from any and all liability arising from their acts or omissions in connection with the Liquidation Proceeding; (vi) authorizing the NYLB to continue, after the termination of the Liquidation Proceeding, to receive and disburse assets to those creditors of CCIC with allowed Class two claims who are eligible to share in a pro-rata distribution, and to pay any and all administrative expenses incurred in connection with the collection and disbursement of any such assets; and (vii) granting the Liquidator such other and further relief as this Court deems appropriate and just. The Return Date on the Liquidator’s motion is the 7th day of December 2016, at 12:00 o’clock, p.m., before the Court at the Courthouse, 111 Centre Street, New York, New York, Room 623. If you wish to object to the Liquidator’s application, you must serve by first class mail a written statement setting forth your objections and all supporting documentation upon the Liquidator at the following address: Superintendent of Financial Services of the State of New York as Liquidator of Colonial Cooperative Insurance Company, 110 William Street, 15th Floor, New York, New York 10038, Attention: General Counsel. The application, including the Closing Report, is available for inspection at http://www.nylb.org and at the above address. In the event of any discrepancy between this notice and the documents submitted to Court, the documents control. Requests for further information should be directed to the NYLB, Creditor and Ancillary Operations Division, at (212) 341-6241. Dated: October 7, 2016. MARIA T. VULLO, Superintendent of Financial Services of the State of New York as Liquidator of Colonial Cooperative Insurance Company.

24 November 14, 2016 / INSURANCE ADVOCATE

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MICHAEL LO GUERCIO

Gun, Partner! uAs I have written so many times before, I am writing this article while sitting on an airplane…I guess this is my quiet time, with no text messages, phone calls or emails that need to be answered immediately! Well, times sure have changed since I began writing for Insurance Advocate over eight years ago. We have experienced a change in President, a boom in technology, and even large changes in music and fashion…to mention just a few. However, one change that is certainly not for the better is the change in how we experience our daily lives, constantly trying to be much more cognizant of our personal “situational awareness” with all of the threats that we face due to random public shootings, bombings, “lone wolf ” terror attacks, “sleeper cell” threats, and other fears that we have come to live with in this day and age that we never would have dreamed of just 20 years ago. As an active member of my local volunteer Fire and EMS Department, we are constantly reminded of the threats that face every first responder, each and every time that bell rings and a “call bangs out.” Whether the alarm is for a person in cardiac arrest, or a motor vehicle accident, or a structure fire, or even a cat in a tree, those who respond to these alarms are no longer just concerned with what the alarm itself brings, but what else may be lurking behind a tree, or on a roof, or in a trash can, or even at the call itself from those who made the call to begin with. First responders sign up to help others…not to be assaulted themselves. It is very well known and accepted that there are inherent risks associated with the job, however you do not answer an alarm with the intention of being involved in an altercation, or be shot at…although you are always very aware that anything may happen, at any time. Sometimes a violent reaction may be brought about by the responder themselves during the normal course of administering care to a patient. For instance, when responding to a heroin overdose situation, there is an excellent chance that the medic 26 November 14, 2016 / INSURANCE ADVOCATE

As an active member of my local volunteer Fire and EMS Department, we are constantly reminded of the threats that face every first responder, each and every time that bell rings and a “call bangs out.” or EMT, or police officer may administer Narcan: a nasal spray that counteracts the life-threatening effects of an opioid overdose, that was developed for first responders, as well as family, friends, and caregivers of those who may come in contact with someone who is a heroin user. Narcan works by separating the opioids from the opiate receptors in the brain. Narcan™ (aka naloxone) can help even if opioids are taken with alcohol or other drugs. After a dose of Narcan™, the person will usually begin to breathe normally, and then become easier to be awoken from their drug-induced stupor. However, it is extremely important to give help to an overdosing person right away, because brain damage can occur within only a few minutes of an opioid overdose as a result of a lack of oxygen to the brain. Narcan™ provides those who are with the victim a window of opportunity to save a life by providing extra time to call 911 and carry out CPR until emergency medical help arrives. However, a person who is treated with Narcan™, once awake, may often become extremely agitated, and even violent as the drug begins to take effect. Therefore, you want to always make certain that the proper dosage is administered, and that as a first responder you are aware and prepared for a very irate person when awoken, as it is common for an overdose patient to try to fight off first responders, causing injury to both themselves and the responder. So how does all this relate to this thing of ours: the insurance industry? Well, in Louisiana, Gov. John Bel Edwards recently made his state the first in the nation to

Michael Loguercio has been active in the insurance industry since 1978 as a licensed property and casualty & life and health insurance broker, and an insurance technology professional. He is a Director on the Professional Insurance Agents of New York State (PIA) Board of Directors; an active past-president of the Young Insurance Professionals of New York State ACT/AUGIE, 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, 2014, 2015 and 2016. In his community, Michael is currently an elected Councilman for Brookhaven Town; former 12-year member/president of the Longwood Central School District Board of Education on Long Island; former 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 and EMS Department. He also served two terms on his Church’s vestry, and in 2013 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 MichaelL@atlanticagency.com.

adopt legislation making attacks on police, firefighters and emergency medical personnel a hate crime. The legislation, which was immediately criticized by members of the Black Lives Matter movement, was introduced in the

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[ FAC E TO FACE ] state House in April and passed that body by a 92-12 vote before winning approval of the Senate earlier this month 33-2. The governor then signed the measure shortly thereafter in a ceremony in Baton Rouge. “Coming from a family of law enforcement officers, I have great respect for the work that they do and the risks they take to ensure our safety,” said Governor Edwards. “The men and women who put their lives on the line every day, often under very dangerous circumstances, are true heroes and they deserve every protection that we can give them. They serve and protect our communities and our families. The overarching message is that hate crimes will not be tolerated in Louisiana.” The new law, which passed the legislature as HB 953, adds police, firefighters and emergency medical personnel to the already existing categories of perceived age, color, creed, disability, gender, race, sexual orientation and national origin protected under hate crime statutes in the state. Individuals convicted of a hate crime in Louisiana can see five additional years tacked on to their sentence. Misdemeanor hate crime offenders can be sentenced to prison for up to six months and given a $500 penalty. In addition, the definition of law enforcement includes both active and retired police, sheriffs, peace officers, corrections, parole and conservation officers. The move was supported by law enforcement lobby groups and the state police. “The signing of this bill gives us all an opportunity to pause and remember the extraordinary acts by seemingly ordinary people who serve our state as first responders,” said Colonel Mike Edmonson, State Police superintendent. “Whereas citizens flee danger, police, fire and EMS personnel run to it.” However, in New Orleans, the local chapter of the Black Youth Project 100, which is associated with the Black Lives Matter movement, opposed the passage of HB 953, claiming that the number of people killed by what the group terms “police violence” far outpaces the number of law enforcement officers killed. “The criminal (in)justice system and those who uphold it have a long and egregious history of inflicting violence on Black and Brown bodies while hiding behind uniforms and badges,” reads a statement from BYP100. “The ‘Blue Lives Matter’ bill is an insidious attempt to destabilize our First Amendment rights as community mem-

bers who hold the police and others sworn by oath to serve and protect, accountable.” The law immediately took effect once signed by the Governor. From an insurance perspective, citizens, business owners, and even governments need to be financially protected from an active shooter. According to Insurance Forums Now, Texas-based GDP Advisors, LLC recently announced the launch of an “Active Shooter Insurance Program,” joining the Willis Group, and XL Catlin in offering specific “active shooter” policies. According to the Department of Labor, more than 700 people nationally die every year, and an average of 13 people are injured annually as a result of violent attacks in the workplace, although the number of workplace homicides has actually fallen over the past five years. An FBI study of active shooter incidents identified 160 that occurred in the U.S. between 2000 and 2013, accounting for 486 deaths and 557 wounded with an average of 11.4 incidents annually. Shootings occurred in 40 of 50 states and Washington DC, and 70% occurred in either a commerce/business or educational environment. “With recent events and the continued increase in mass shooting activity during the last several years, learning institutions and businesses are vulnerable to this type of unforeseen incident occurring at their facilities or place of business,” said a release announcing the coverage from GDP Advisors. “Regardless of your opinion on gun-related issues, mindfulness and having an action plan prior to and after any tragic incident should be top priority on your agenda today. GDP Advisors is announcing this ‘Active Shooter Insurance Program’ to reach out and educate the public about preparation for this type of high-risk event.” Willis Group started selling its Active Shooter Insurance last fall—originally marketing it to universities but quickly expanding it as inquiries poured in from hotels, hospitals and other facilities. Commercial agents with clients or prospects such as shopping mall management companies, school districts, nightclubs, theaters, concert venues—pretty much any place the public gathers—may find interest in this type of coverage. Such a policy offers additional coverage beyond workers’ compensation, which traditionally covers medical costs of

employees who are injured as the result of a shooting. XL Catlin’s “Active Assailant” coverage was added to its Crisis Management product suite earlier this year to help organizations with the financial impacts of active assailant events ranging from business interruption and denial of access through to medical expenses and business rehabilitation costs. “Sadly, global terror events and a number of recent, high profile attacks carried out by terrorist groups and individuals has brought into focus the need for such an insurance solution,” said Stephen Ashwell, XL Catlin’s Chief Underwriting Officer for Crisis Management. GDP says most individuals and organizations think their current insurance policy provides coverage in an Active Shooter situation. “Our analysis of available coverage in most policies shows that coverage is inadequate and many policies do not address this specific type of incident. GDP Advisors’ Active Shooter Insurance Program provides specifically tailored coverage in planning and reacting to these types of events.” An Active Shooter situation not only includes firearms but also knives, weapons and certain types of explosives. The program includes risk assessment within 45 days of coverage inception, a training seminar and special crisis management services available 24 hours a day for up to 90 days after an event, including counseling and funeral expenses. Up to $20M aggregated policy limits are currently available. In the United States, we are averaging one active shooting event every week. Educational facilities, churches, sports facilities and other public venues where there is a gathering of people are at risk every day for a life-changing mass shooter incident to occur. GDP Advisors specializes in strategic risk management consulting, creation and implementation of customized property and casualty insurance programs and exclusive benefits administration programs. For more information visit www.activeshooterinsurance.com. So, with that said, thank you to all first responders, law enforcement, and military personnel for keeping us safe and for “running in when all others are running out,” and from my family to yours, a very happy and healthy Thanksgiving Day! Ciao for now![IA] INSURANCE ADVOCATE / November 14, 2016 27

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[ O N M Y R A DA R ]

BA R RY Z A L M A

Advertising Injury Requires a Fortuitous Loss Defendant’s Business Saved by Brilliance of Insurer uI have over the last 1700 posts to this blog advised against entering into a stipulated judgment and granting a viable defendant a covenant not to execute in the hope of a windfall judgment from the insurer who refused to defend and indemnify the insured. In Auto-Owners Insurance Company v. Stevens & Ricci…, — F.3d —-, United States Court of Appeals, Third Circuit, 2016 WL 4547641 (September 1, 2016), Auto-Owners Insurance Company (“AutoOwners”) sought a declaration that it has no obligation to defend or indemnify its insured, Stevens & Ricci, Inc. (“Stevens & Ricci”), in connection with a $2,000,000 judgment entered against Stevens & Ricci as part of the settlement of a class action lawsuit. In that class action, the Hymed Group Corporation (“Hymed”) alleged, as representative of the class, that Stevens & Ricci had violated the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, by sending unsolicited fax advertisements. While that class action was pending, AutoOwners sought declaratory judgment against both Stevens & Ricci and Hymed. The District Court concluded that the sending of unsolicited fax advertisements in violation of the TCPA did not fall within the terms of the insurance policy, and thus granted Auto-Owners’s motion for summary judgment and denied Hymed’s crossmotion and, as to the class, the $2 million judgment was uncollectable.

BACKGROUND This case began with the improper use of fax machines. Stevens & Ricci was solicited by an advertiser claiming to have a fax advertising program that complied with the TCPA. Relying on that representation, Stevens & Ricci allowed the advertiser to fax thousands of advertisements to potential customers on its behalf. The advertiser sent 18,879 unsolicited advertisements by fax. 28 November 14, 2016 / INSURANCE ADVOCATE

To be covered, an “advertising injury” must also be inflicted “in the course of advertising [the insured’s] goods, products or services.”

Much later, on June 1, 2012, Hymed filed a class action lawsuit in the United States District Court claiming that the advertisements actually did violate the TCPA (the “Underlying Action”), which prohibits the “use [of] any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement….” Given the volume of faxes sent, a finding of liability to the class under the TCPA, with statutory damages of $500 per fax, could have resulted in a damage award in the Underlying Action of $9,439,500, before trebling. Such a judgment could have bankrupted Stevens & Ricci and caused the dissolution of its business, allowing the class to only collect a pro-rata share of the judgment as one of many creditors in bankruptcy. During the time that Stevens & Ricci had the unsolicited faxes sent to Hymed and other class members, it was covered by a “Businessowners Insurance Policy” (the “Policy”) issued by Auto-Owners. The Policy obligates Auto-Owners to “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury,’ ‘property damage,’ ‘personal injury,’ or ‘advertising injury’ to which this insurance applies.” To be covered, an “advertising injury” must also be inflicted “in the course of advertising [the insured’s] goods, products or services.”

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.nationalunderwriter.com/ZalmaLibrary. The new books are Insurance Law, 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/Pro ductDetails.aspx?productId=214624, or 800-285-2221 which is presently available. Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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[ ON MY RADAR ] Auto-Owners agreed to defend Stevens & Ricci in the Underlying Action, but reserved its right to later challenge whether the alleged misconduct (i.e., the sending of unsolicited faxes) fell within the terms of the insurance policy’s coverage. While the declaratory relief action was pending, Hymed, Stevens & Ricci, and AutoOwners reached an agreement to compromise and settle the Underlying Action. Among other things, the parties agreed to entry of judgment in favor of the class, and against Stevens & Ricci, in the amount of $2,000,000. Hymed and the class also agreed to seek recovery to satisfy the judgment only from Auto-Owners under the Policy. As a result Auto-Owners protected its insured and placed the gamble of an adverse judgment on itself. The District Court concluded that the sending of unsolicited faxes to Hymed and other class members did not cause the sort of injury that falls within the Policy’s definition of either “property damage” or “advertising injury.” Accordingly, the Court granted Auto-Owners’s motion for summary judgment and denied Hymed’s crossmotion. Hymed promptly appealed.

DISCUSSION Viewing this case from the perspective of the insurer at the time of filing of the declaratory judgment complaint, AutoOwners’s quarrel was with Stevens & Ricci regarding its indemnity obligation under the Policy. The only “amount in controversy” that the insurer was then concerned with was its total indemnity and defense obligation; it presumably had no interest in the way the indemnity sum might later be divided among the various class members. Its dispute was thus with its insured, not the class.

ANALYSIS A federal court sitting in diversity must apply state substantive law. As best we can tell, Hymed is using the “reasonable expectation” test to empower it to conduct a fifty-state legal survey and to advocate that Arizona’s law must be whatever the prevailing legal theory is across the country since that prevailing law is—given its popularity—inherently “reasonable.” The key term in the definition of the “accident” is “unexpected” which implies a degree of fortuity. An injury therefore is not “accidental” if the injury was the natural and expected result of the insured’s

The Policy’s protection of the “right of privacy” is thus logically limited to a privacy interest, the infringement of which depends upon the content of the advertisements: in other words, the privacy right to secrecy. actions. Accident has been defined in the context of insurance contracts as an event or happening without human agency or, if happening through such agency, an event which, under circumstances, is unusual and not expected by the person to whom it happens. That definition comports with the basic purpose of insurance: “to cover only fortuitous losses.” United Servs. Auto. Ass’n v. Elitzky, 517 A.2d 982, 986 (Pa. Super. Ct. 1986). Here Hymed’s claimed injury is the use of ink, toner, and time that was caused by the receipt of junk faxes. Those injuries are the natural and expected result of the intentional sending of faxes, a far cry from Pennsylvania’s definition of an “accident.” Though it did not intend injury, Stevens & Ricci clearly intended that the third-party advertiser send the fax advertisements to the members of the class. The Supreme Court of Pennsylvania has not addressed whether unintended damages from faxes sent in violation of the TCPA constitute an “accident.” The Third Circuit, as required, predicted that the court would reject coverage under the “property damage” provision of the Policy. Whether an event is accidental is evaluated from the perspective of the insured. An accident is anything that happens or is the result of that which is unanticipated and takes place without the insured’s foresight or expectation or intention. The use of ink, toner, and time can be regarded as the natural result of the intentional sending of faxes. The Policy defines “advertising injury” as, among other things: “Oral or written publication of material that violates a person’s right of privacy.” Congress took aim at unsolicited advertisements, not the content of those advertisements since to do so could be a violation of the First Amendment to the U.S. Constitution. An unsolicited fax intrudes upon the right to

be free from nuisance, not a violation of the right of privacy. Accordingly, the TCPA seeks to protect privacy interests in seclusion, not secrecy. The underlying action, similarly, alleged that the sending of the faxes violated “class members’ privacy interests in being left alone.” The Policy, therefore, does not cover the violation of the class members’ interests in being left alone. Read in context, the Policy provides coverage only for violations of the privacy interest in secrecy, and thus does not cover violations of a right to seclusion. The Policy’s protection of the “right of privacy” is thus logically limited to a privacy interest, the infringement of which depends upon the content of the advertisements: in other words, the privacy right to secrecy. None of the allegations in the Underlying Action relate in any way to the content of the faxed advertisements. The faxes caused the alleged damage because they were received without permission, not because of their content. At no point did Hymed allege that those unsolicited faxes included confidential or otherwise secret information about any of the class members. Because the Policy’s “advertising injury” deals only with the publication of private information, it strongly suggests that the injury alleged in the Underlying Action falls outside of the scope of that protection.

ZALMA OPINION The TCPA law would destroy the sender even though the ads were sent innocently without intent to violate the statute. Auto-Owners knew there was no coverage and, rather than leave its insured destroyed, by defending its insured and then convincing the plaintiffs that rather than destroying Stevens & Ricci, it could take an assignment and collect everything from Auto-Owners if it could prove coverage. Auto Owners protected its insured and destroyed the case of the plaintiffs who were ready to destroy Stevens & Ricci and got nothing because insurance only provides defense and indemnity for a fortuitous act, not the intentional act of sending a fax.[IA]

INSURANCE ADVOCATE / November 14, 2016 29

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[ COURTSIDE ]

L AW R E N C E R O G A K

Chunk of Concrete That Fell Off Dump Truck Does Not Qualify for SUM Coverage Matter of Ean Holdings LLC v Joseph Edited by Lawrence N. Rogak While driving a rental car, claimant was struck by a chunk of concrete that fell off a dump truck, crashed through his windshield and took out his left eye. He ﬁled for UM arbitration and Enterprise Rent-A-Car moved for a stay. The Court held that because the debris was not an integral part of the dump truck, it does not satisfy the contact requirement for SUM or UM coverage. In addition, notice of the claim was late. A permanent stay of arbitration was granted. — LNR

Upon the foregoing papers, the Notice of Petition brought pursuant to CPLR article 75, by the Petitioner, EAN HOLDINGS, LLC, inter alia: (1) permanently staying a demand for arbitration of uninsured motorist benefits by the Respondent, Chrissler L. Joseph; or alternatively (2) temporarily staying the Arbitration to allow for discovery to be conducted, is determined as provided herein. On April 8, 2010, a rental agreement was entered into between Harold James Lynch and the Petitioner, EAN HOLDINGS, LLC (hereafter “Petitioner” or “EAN”) for the rental of a 2009 Chevrolet bearing

Lawrence N. ("Larry") Rogak has been practicing insurance law since 1981. He has defended over 23,000 lawsuits and arbitrations and has represented over 75 different insurance companies and self-insured corporations. Lawrence N. Rogak LLC is listed in Best's Recommended Insurance Attorneys, a distinction that requires written recommendations from at least 12 insurance carriers. A 1981 graduate of Brooklyn Law School, Mr. Rogak has published more books and articles on insurance law than any other New York attorney in the field.

Connecticut State license plate number 225WFB. On April 21, 2010, the Respondent, Chrissler L. Joseph, while the driver of the rental vehicle, was allegedly involved in an

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accident which took place on Sunrise Highway, Route 27, approximately 75 feet from exit 45 in the Town of Islip, County of Suffolk, State of New York. The Respondent claims that while driving the rental vehicle, a piece of concrete fell from a dump truck traveling in front of him, striking the windshield of the rental vehicle, piercing the windshield and striking him in the head. He claims injuries as a result of the occurrence, including the loss of his left eye. Thereafter, the Respondent served the Petitioner with a demand for arbitration which was dated April 20, 2016. The Petitioner avers that the demand does not specify the nature of the arbitration demanded, SUM or UM. Indeed, a review of the demand indicates that no specific type of arbitration is selected. By Petition dated May 6, 2016, the Petitioner commenced the within proceeding pursuant to CPLR Article 75, seeking a judgment permanently staying the Respondent, Joseph’s, arbitration demand. In substance, EAN’s Petition is predicated upon allegations that the Respondent’s demand is improper in that it fails to designate whether it is for SUM or UM Arbitration, is untimely in that the Respondent failed to provide the Petitioner with notice of the claim within a reasonable time and that the accident lacks contact with an uninsured vehicle, a condition precedent to an arbitration based upon a hit-and-run accident involving an unidentified vehicle. The first of the Petitioner’s objections, that the demand for arbitration does not specify if it is for SUM or UM Arbitration, has not prejudiced the Petitioner in that the instant proceeding has been commenced timely. Regardless, the Demand for Arbitration does indicate that there is no additional tortfeasor and the “Hit-andRun” category on Page 2 of the Demand is circled. The second of the Petitioner’s arguments is that the Petitioner failed to give notice of the claim within a reasonable time. In support of this claim, the Petitioner relies on Nationwide Ins. Co. v. Bietsch, 224 AD2d 623 (2d Dept. 1996), where the Court permanently stayed an uninsured motorist claim where the insured failed to give notice within a reasonable time under all the circumstances. The Petitioner further relies on GEICO v. Lawrence, 20 Misc 3d 1120(A),

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[ COURTSIDE ] CONTINUED FROM PAGE 33

867 N.Y.S.2d 374 (Sup. Ct., Bronx County 2008) which provided that a delay of more than one year has been held to be unreasonable as a matter of law. Counsel for the Respondent, in opposition to the issues raised by the Petitioner concerning the timeliness of the demand for arbitration, states that this argument is without merit. Specifically, the Respondent’s counsel states that the Respondent commenced the arbitration within the required statute of limitations, thus it is timely. Additionally, he claims that since his office took over the matter from another attorney in October, 2013, that he assumed the prior counsel had given notice. With regard to the Petitioner’s claim that no contact from an unidentified vehicle has been established, a condition precedent to an arbitration based upon a hit-and-run accident, the Petitioner argues that the Police Report makes no mention of involvement from any other vehicle. However, the Petitioner argues that even if the chunk of cement that went through the windshield came from another vehicle, the Respondent would still not be entitled to Uninsured Motorist benefits since he cannot establish contact between his vehicle and the uninsured vehicle. Counsel for the Petitioner cites Smith v. Great Am. Ins. Co., 29 NY2d 116 (1971) as authority for the proposition that objects cast off by a hit-and-run vehicle cannot serve as physical contact necessary to warrant UM coverage if it does not originate in collision. Additionally, the Court of Appeals in Allstate Ins. Co. v. Killakey, 78 NY2d 325 (1991), ruled that “‘physical contact’ occurs within the meaning of the statute, when the accident originates in collision with an unidentified vehicle, or an integral part of an unidentified vehicle.” In Killakey, five witnesses detailed that the unidentified vehicle lost a wheel which struck the claimant’s vehicle. Those witnesses also saw the driver of the other vehicle stop and put a spare tire on the vehicle before he left the scene. In opposition to the Petitioner’s claim that the “chunk of cement” which struck the Respondent’s vehicle did not constitute physical contact between the hit-and-run vehicle and the Respondent’s vehicle, the Respondent’s counsel argues that since the piece of concrete caused the Respondent to be rendered unconscious, thus causing the 34 November 14, 2016 / INSURANCE ADVOCATE

crash, this object was the direct cause of the accident and the Respondent’s injuries. Relying on Bajrami v. General Acc. Ins. Co., 206 AD2d 527 (2d Dept. 1994), the Respondent’s counsel argues that the requirements of indirect physical contact have been satisfied for the purpose of UM coverage in accordance with Allstate v. Killakey. Specifically, he avers that the Respondent has demonstrated that the object that came from the unidentified vehicle was the primary cause of the collision. However, the Respondent’s counsel does not address how the object, specifically the “chunk of cement,” was an integral part of the other vehicle. Upon the record presented, the Petitioner, EAN, has established its entitlement to an order permanently staying the uninsured motorist arbitration proceeding instituted by the Respondent, Joseph. EAN’s argument that Joseph did not timely provide it with notice of his intention to make a claim for uninsured motorist benefits is unrebutted. The Respondent does not come forward with any credible excuse for the almost six- (6) year delay in giving any notice. The Respondent’s claim that the six- (6) year Statute of Limitations had not yet run is insufficient to explain the failure to have given the Petitioner notice within a reasonable time from the date of the accident. Additionally, it has been held that a delay of more than one year is unreasonable as a matter of law. (See Rekemeyer v. State Farm Mut. Auto Ins. Co., 4 NY3d 468 [2005].) In its opposition papers, the Respondent has not submitted relevant, evidentiary materials which, in any sense, contradict EAN’s arguments, or which would otherwise generate a triable issue of fact or require a hearing on this Petition to stay arbitration. (cf., Matter of Allstate Ins. Co. v. Aizin, 102 AD3d 679 [2d Dept. 2013]; Government Employees Ins. Co. v. Baik, 94 AD3d 888 [2d Dept. 2012]; Matter of New York Cent. Mut. Fire Ins. Co. v. Vento, 63 AD3d 841 [2d Dept. 2009]; Hertz Corp. v. Holmes, 106 AD3d 1001 [2d Dept. 2013].) Rather, the Respondent’s opposition papers contain conclusory averments which do not even address EAN’s factual assertions. Accordingly it is, ORDERED that the proceeding pursuant to CPLR article 75, by the Petitioner, EAN HOLDINGS, LLC, seeking to permanently stay CHRISSLER L. JOSEPH’s demand for arbitration for uninsured motorist benefits is GRANTED.[IA]

2016 NY Slip Op 51229(U) Decided on August 23, 2016 Supreme Court, Nassau County Marber, J.

SOCIAL NOTEBOOK CONTINUED FROM PAGE 34

not be able to reach out to many of your clients who purchase policies for personal insurance on LinkedIn, this network is a great place for you to look for your commercial clients and connect with them, as well as push out your agency’s core messages and values as well through frequent posting. Lastly, I’d like to also mention Google+, which is probably the most underrated social network right now. Google+ is believed to be dead by some, but that is certainly not the case. Google+ has a very high user count since it is owned by Google, and it even has groups, or communities and circles, where you can connect with people of similar interests (for example, we sell classic car insurance at my agency, so I’ve connected myself with several classic car circles on Google+ to reach out to those people). Additionally, posting your agency’s content frequently here will play a role in your SEO (search engine optimization) since, as I mentioned earlier, Google owns this network and they decide who gets to have the highest search engine ranks in the world of SEO. With all this being said about social media, where to begin? Well, I would suggest that if you’re new to the game, first check out Facebook and Twitter, and see if these networks will be a success for you and your agency. If you find good traction on Twitter, try posting a few times throughout the day to get more engagement. If you find good traction on Facebook, then you can try to extend your reach by boosting your posts, or “paying to play” by investing some of your marketing budget into your posts to reach a wider audience outside of your network. If you’ve already taken that initiative, try to expand to the other networks, track what is and isn’t working, and optimize whenever you can. Remember, social media’s primary strength is to nurture existing client relationships, so consistency and engagement with your networks is everything in the social world. Let’s get social everyone, and happy marketing on your journey to go digital![IA]

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