The Tennessee Insuror Mar/Apr 15 by Insurors of Tennessee

THE TENNESSEE

INSUROR March/April 2015

Vol. 26 No. 2

www.insurors.org

8 10 48

Making Policy & Selling Policies

Surviving the Switch: Your AMS

The Interest Rate Watch

Supreme Court Decision Could Turn Healthcare Upside Down

Having Insurance Agents in the Legislature Helps Us Access The Hill

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The Tennessee Insuror

contents

THE TENNESSEE

INSUROR Vol. XXVI, Number 2 March/April 2015

features

Phone (615) 385-1898 Toll Free: 1-800-264-1898 Email: info@insurors.org Editor: Charles T. Bidek, CPCU Publisher: Daniel D. Smith Jr.

4 Making Policy & Selling Policies INSURORS OFFICERS

President ......................................................... Cindi Gresham, CIC Immediate Past President ..................................... Lou Moran III IIABA National Director ................................................ Brad Smith Vice President, Region I ..................................... Chris Allison, CIC VP, Region II and Pres. Elect .... Christie Reeves, CIC, CPCU, CPIW Vice President, Region III ................................. John McInturff III Treasurer .............................................. Battle Bagley III, CIC, CPA Secretary ...................................................................... Rush Powers Director, Region I ....................................................... Portis Tanner Director, Region I ...................................................... Edward Kaiser Director, Region I .......................................................... Tim Roberts Director, Region II ....................................................... Chip Fridrich Director, Region II .................................................... Joe Lester, CIC Director, Region II ................................................. Steve Copeland Director, Region III ..................................................... Kevin Ownby Director, Region III ............................................ Josh Gibbons, AAI Director, Region III .................................................... Eric Campbell Young Agents Chairperson .................................... Stuart Oakes

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Display advertising rates, deadlines and specifications may be obtained by writing to Insurors of Tennessee, 2500 21st Avenue South, Suite 200, Nashville, TN 37212, calling 615.515.2601, e-mailing dsmith@insurors.org or online at www.insurors.org The Tennessee Insuror is provided to all Insurors of Tennessee members and associate members as a member service.

Having Insurance Agents in the Legislature Helps Us Access the Hill

Surviving the Switch: Your Agency Management System

The Interest Rate Watch

Prepare to Master Customer Service

Daniel Learns About Insurance: Google Compare...

Supreme Court Decision Could Turn Healthcare Upside Down

departments 21

From Your President

From Your IIABA National Director

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Education Calendar

Government and Legal Affairs

Broker Spotlight

Company Spotlight

Company Briefs

Meetings

Member Tips

INSURORS OF TENNESSEE 2500 21st Avenue South, Suite 200 Nashville, TN 37212-0539 www.insurors.org

Americaâ&#x20AC;&#x2122;s Addiction to Housing

April Showers May Bring Laws? Local Ads From the Global Internet?

We Have Met the Enemy and He is Us

RT Specialty

Agility Recovery

MR=MC or How Much to Pay for A Warm Lead 3

Representative Ryan Haynes (R-Knoxville) meets with Insurors Past President Lou Moran III and Young Agent Chairman Stuart Oakes

Making Policy & Selling Policies Having Insurance Agents in the Legislature Helps Us Access the Hill

Who better to understand the day-to-day trials of an insurance agent, than another insurance agent? Many times, the lawmakers we work with on issues facing our industry need to understand the business ramifications of proposed legislation to have an informed opinion. When those elected officials are also insurance agents, it can make the job of our government affairs team that much easier. There are currently eleven members of the Tennessee House of Representatives, and three members of the State Senate, that are also licensed insurance agents:

Tennessee House of Representatives Members Rep. Joe Armstrong Democrat - Knoxville District 15 - Part of Knox County Committees: Member of Finance, Ways and Means Committee; Sub-committee of Finance, Ways and Means, Transportation Rep. Armstrong is beginning his twenty seventh year in office, and is the Democratic Leader Pro-Tempore and formerly served as the Vice-Chairman of the Democratic Caucus. His has worked as an Insurance Manager for a Knoxville company and he formerly served on the Knox County Commission as both Vice-Chair and Commissioner. He was previously on the Joint TennCare Oversight Committee and was the Chair of the Health Equity Commission. 4

Rep. Jimmy Eldridge Republican - Jackson District 73 - Part of Madison County Committees: Chair of the Consumer & Human Resources Committee; Member of Local Government Committee; Calendar and Rules Committee; General Sub-committee of Consumer & Human Resources; Rep. Eldridge is beginning his thirteenth year in office and is a former partner of The Allison-Eldridge Insurance Group in Jackson, which is a member of Insurors. He had previously served as the Assistant Minority Floor Leader for the 103rd General Assembly, the Republican Caucus Vice Chair for the 104th through 105th General Assemblies, and on the Madison County Commission from 2002 to the present. Rep. Ryan Haynes Republican - Knoxville District 14 - Part of Knox County Committees: Member of State Government Committee; Ethics Committee; Finance, Ways and Means Committee; Finance, Ways and Means subcommittee and the Advisory Committee on Open Government Rep. Haynes is beginning his seventh The Tennessee Insuror

year in office and works as an insurance broker for WMG Benefits in Knoxville. He formerly served as Assistant Republican Party Caucus Chair. Rep. Roger Kane Republican - Knoxville District 89 - Part of Knox County Committees: Member of Education Committee; Insurance & Banking Committee and Education Sub-committee Rep. Kane is beginning his third year in office, and operates a Farmers Insurance office in the Knoxville area. He is also an educator with Kaplan Financial on Agent Licensing and has been active in the Knoxville Chamber of Commerce. Rep. Kelly Keisling Republican - Byrdstown District 38 - Clay, Jackson, Pickett, Scott & Part of Anderson Counties Committees: Chair of Insurance and Banking subcommittee; Member of Transportation Committee; Member of Insurance and Banking Committee Rep. Keisling is beginning his fifth year in office. He owns Keisling Insurance Agency in Byrdstown, a member of Insurors, which he founded in 1985. He previously served as a Pickett County Executive from 1994-1998. Rep. Steve McManus Republican - Cordova District 96 - Part of Shelby County Committees: Chair of Insurance and Banking Committee; Member of Finance, Ways and Means Committee; Calendar and Rules Committee; Insurance and Banking Subcommittee Rep. McManus is beginning his fifth year in office. He is a licensed life insurance agent and works in benefits and investments for First Tennessee Brokerage in Memphis. He is also a former Regional Business Commentator for the Fox News channel. He currently serves as the Finance Chairman of the Shelby County Republican Party and on their Executive Committee. Rep. Bo Mitchell Democrat - Nashville District 50 - Part of Davidson County Committees: Member of Consumer and Human Resources Committee; Finance, Ways and Means Committee and Consumer and Human Resources subcommittee Rep. Mitchell is beginning his third year in office. He works as a Director of Sales and Employee Benefits in Nashville. He is a former member of The Tennessee Insuror

the Nashville Metro Council Representing District 35. Rep. Mark Pody Republican - Lebanon District 46 - Cannon, Trousdale and Part of Wilson Counties Committees: Vice-Chair of Consumer and Human Resources Committee; Member of Insurance and Banking Committee; Consumer and Human Resources Subcommittee Rep. Pody is beginning his fifth year in office. He currently owns and operates a Nationwide insurance agency in Murfreesboro and is active in several Chambers of Commerce. Rep. Dennis Powers Republican - Jacksboro District 36 - Campbell and Union Counties Committees: Member of Agriculture and Natural Resources Committee; Insurance and Banking Committee; Insurance and Banking Subcommittee Rep. Powers is beginning his fifth year in office. He formerly owned an Allstate Insurance agency in Jacksboro for several years and now operates a Nationwide agency in La Follette. He also serves as the Majority Caucus Vice Chairman. Rep. Charles Sargent Republican - Franklin District 61 - Part of Williamson County Committees: Chairman of the Finance, Ways & Means Committee; Member of Insurance and Banking Committee; Calendar and Rules Committee; Finance, Ways and Means Subcommittee; Joint Fiscal Review Committee and Joint Pensions and Insurance Committee Rep. Sargent is beginning his nineteenth year in office. He is a State Farm insurance agent in Nashville. He formerly served on the Williamson County Commission from 1990-1996 and the Planning Commission from 1989-1997. Rep. Ron Travis Republican - Dayton District 31 â&#x20AC;&#x201D; Bledsoe, Roane, Sequatchie and Rhea Counties Committees: Vice-chair of Insurance and Banking Committee; Member of Consumer and Human Resources Committee; Insurance and Banking Subcommittee and Joint Fiscal Review Committee Rep. Travis is beginning his third year in office and is a Nationwide Insurance Agent who has earned his LUTCF designation. He also serves on the Executive Board of the Southeast Tennessee Rural Planning Organization. 5

Tennessee Senate Members Sen. Jack Johnson Republican - Franklin District 23 - Williamson County Committees: Chair of the Commerce and Labor Committee; Member of the State and Local Government Committee and Joint Government Operations Judiciary and Government Subcommittee Sen. Johnson is beginning his ninth year in office. He is a Senior Vice President and financial advisor for Pinnacle Financial Partners in Franklin and is a licensed life insurance agent. He serves on the State Capitol Commission and is a former Chairman of the Senate Commerce, Labor and Agricultural Committee. He is active in the Brentwood-Cool Springs, Spring Hill and Williamson-Franklin Chambers of Commerce. Sen. Bill Ketron Republican - Murfreesboro District 13 - Part of Rutherford County Committees: 1st Vice-chair of the Ethics Committee; Member of Finance, Ways & Means Committee; State and Local Government Committee and Joint Fiscal Review Committee Sen. Ketron is beginning his thirteenth year in office and is the Republican Caucus Chair. He owns Universal International Insurance in Murfreesboro, a member of Insurors. He is a former recipient of our Association’s Insuror of the Year award, receiving the honor in 2007. He is also a former Commissioner for Rutherford County.

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PERSONAL SERVICE. EXCEPTIONAL PARTNERSHIP. “FCCI’s culture stands out. We are a big company, but we don’t act like one. When I go out and visit policyholders with agents and our loss control consultants, our goal is to get to know and really help the agents and policyholders we work with.”

Sen. Jim Tracy Republican - Shelbyville District 14 - Bedford, Lincoln, Marshall, Moore and parts of Rutherford Counties Committees: Chair of the Senate Transportation and Safety Committee; 2nd Vice -chair of Commerce and Labor Committee; Member of Education Committee and Joint Committee, Council for Pensions and

Trey Stone, CIC Senior Marketing Underwriter Gulf Coast Region Birmingham, Alabama Now, let’s talk about your business. General liability t Auto t Property t Crime Workers’ compensation t Umbrella Inland marine t Agribusiness t Surety

Insurance Sen. Tracy is beginning his eleventh year in office. He is a former Nationwide agent and operated Jim Tracy Insurance in Shelbyville and Murfreesboro for over 25 years. He also works as a college basketball official for the NCAA and is a member of the Governor’s Council on Physical Fitness.

Why it is So Important Having insurance agents in the General Assembly, especially some of our own members, has a very positive impact for our Association. These legislators have a first-hand understanding of industry issues, and representation like that is crucial. We rely on our relationships with these industry veterans. u 6 TI15_Stone_3.625x10.indd 1

The Tennessee Insuror

2/17/15 10:38 AM

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The Tennessee Insuror

Surviving the Switch: Your Agency Management System

by Rick Morgan, Aartijk Senior VP

This article first appeared on the IA magazine Technology website section Must a switch of agency management systems be a Pyrrhic victory, conquering some inefficiency but exacting a toll that negates any gains? The assertion of a range of independent agents, system vendors and industry consultants is a resounding “no”—but surviving the switch is tough. It requires five key essentials: 1. Perform a solid cost-benefit analysis. 2. Involve a swath of staff and producers in deciding whether to switch, what to change and how to transition. 3. Realize where and what the pain points are and prepare for them. 4. Clean up data in the current system prior to porting it to a new one, recognizing that processes often require updating for a new platform. 5. Expect ramping up the new system to take time and effort.

Time to Change? What might indicate it’s time for your agency to make the switch? System fees are creeping—or leaping—up. Or the existing system is aging and lacks updated capabilities. Or it might be facing its end of life, making a change inevitable. “Agents want to change because they are frustrated that something does not work or is not available how they want it,” says Michael Foy of Foy Insurance, a board member of Network of Vertafore Users (NetVU). “Others have not implemented version updates or stayed on legacy products, and they become forced to change. Most will find their issues can be addressed with training or version upgrades.” Steve Anderson, an agency 8

technology consultant who tracks 40 agency management systems available from 25 different vendors, says many agencies may go through a sales demo but conclude that they don’t see enough advantage over their current system: “Some decide it’s not worth it (because it seems like they’re) not getting enough to make the pain of switching worthwhile.” Many times, users are better served learning to use the current system more efficiently rather than switching. Kris Hackney, executive vice president of customer experience at Applied Systems, says it’s a must for agencies to have, “systems that are advanced and flexible enough to respond quickly to new market opportunities.” But many agents reach a point where the existing system just doesn’t offer what they need. For Sherry Burrell of Grimes Insurance, a 10-employee agency in Duluth, Georgia, it was a risk management issue. “I think the E&O control was probably the biggest thing that convinced me,” she says of moving from Applied Systems’ TAM platform to Applied Epic four years ago. “In TAM, there is no tracking as far as changes to policies. In Epic, you see the date, time, who made changes and what changes were made to the policy or application.” Vertafore’s Bruce Winterburn, vice president of industry relations, cautions agency principals against waiting until what he calls a “watershed moment”—a system or business crisis when it’s “almost too late,” he says. “It’s not any one time or event, but kind of a movement I think agents can sense.”

Buying the Switch Complaining about the flaws of a management system might come easy. But getting users who might fear the pain of switching to buy in? Not so much. The Tennessee Insuror

That’s because the agency management system is, “the heart of your company,” says Jaideep Jayaram, vice president of sales and marketing for EZLynx—and “asking people to do a heart transplant is always scary. It all depends on which clinic you go to.” Michelle Somberg, marketing/commercial lines manager at Collinsworth, Alter, Fowler & French, a division of Nielson, Hoover & Company that employs more than 90 staff members throughout the country, says the crux of the problem is fear of the unknown. “Have you ever read a book called ‘Who Moved My Cheese?’ Cheese is very important,” she says. “No one likes change. I don’t like change either, but unfortunately change is the future.” That’s why clear communication is so important in a successful process. “Clearly communicating why change is needed and the benefits of implementing a new agency management system across an agency to all stakeholders in the transition helps to build buy-in from the start,” Hackney explains. Anderson, who helps agencies evaluate and select managements systems, understands that changing systems is a very big deal. “Most agencies do not give it the consideration it deserves. Then they make a move, didn’t research it well enough, didn’t know what they were getting into and then all of a sudden have major productivity issues,” he says. “So they’re not getting the benefit they expected or thought they should. Certainly sometimes that’s a vendor issue, but a lot of times it’s just unrealistic expectations.” After deciding a change is necessary, Anderson says employee buy-in is critical—it shouldn’t be the agency owner making a solo decision about the new system. Rather, the agency should engage a group of employees representing all agency functions. That’s exactly the approach Somberg used when her agency combined three operating systems in Epic, converting branches that used AMS360, TAM and AfW. “We drafted people from various departments and said, ‘We want you on the team,’” she explains. That included producers, account managers, service and marketing reps and accounting. “By doing that, they all had input.”

Managing the Migration But getting your team on board is only half the battle—they then have to take the time to implement the change in a thoughtful way. “We’re all creatures of habit,” Winterburn says. “No one is sitting around at their desks looking for something to do. Everyone is very busy.” The migration typically involves not only funneling data from one system to another, but also improving or updating workflows within the agency and with carriers. Experts are unanimous: No matter why or how an agency chooses to switch, the process will disrupt everyone in the office. From training to new processes and procedures to other shifts, it’s essential

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The Interest Rate Watch It seems like - forever. That is, the amount of time that has passed as many interested parties have been waiting to see if the Federal Reserve will raise interest rates. Like the proverbial “watched pot that never boils,” the Fed’s rate (rate charged on overnight funds between banks) has been sitting at near zero percent for the last six years. Certainly most economists agree that the zero rate policy was effective in combating the economic crisis of 2008, reducing the cost of borrowing for everyone - businesses, consumers, and the government. In addition to the Fed’s action to keep overnight/short rates low, they also embarked on massive government securities purchases in order to reduce interest rates at all points on the yield curve. During this period of time the Fed’s U.S. Treasury holdings increased from roughly $500 billion to nearly $2.5 trillion. This latter action ensured that the 10-year U.S. Treasury was persistently at historically low levels, ensuring that homeowners and homebuyers could benefit from very low interest rates too. A little more than a year ago, the Fed began to taper their securities purchases. Its demand, however, was replaced by money center banks and foreign purchasers as the economies of Europe and other developed nations demonstrated continued weakness, on a relative basis.

When is Enough... Enough? For millions of senior citizens, the last six years has been anything but a party. Living on fixed incomes and historically supplementing their pension and social security income with interest on bonds and CDs, the zero interest rate policy has been punitive for this segment of our population, which has limited options for producing income from wages. Anecdotally, for roughly the last three years seniors have been patiently waiting for a lift from the Fed. This is evidenced by the relatively short-term duration of banks’ CD portfolios. As of December of 2014, banks in the state of Tennessee maintained average liabilities (most of which are deposits) over one year in duration of just 11%, and were only paying an average of 0.61% for all interest-bearing deposits. The options for savers are not much better elsewhere as the 10-year U.S. Treasury is yielding less than 2%. But against the backdrop of these protracted low rates, the economy has been steadily improving. Despite evidence that a number of people have permanently left the workforce, unemployment has steadily recovered over the past few years as measured by the Bureau of Labor Statistics (see chart). While the economy has not seen a robust recovery, measures of GDP growth indicate that it is, indeed, recovering - albeit 10

by Jim Rieniets, President & CEO of INSBANK Unemployment Rate (seasonally adjusted)

percent

America’s Addiction to Housing

month Note: Cross-hatched area represents recession.

at a slower rate than some prior recoveries. Within the U.S. regional economic realities vary, and will continue to do so as states and municipalities compete for businesses and job creation. But on average moderate economic growth is happening in aggregate nationwide.

Feeding the Addiction to Housing So with evidence of recovery well established, why has the Fed chosen to sit on zero rates? To this observer the clear answer is fear amongst Fed policymakers that any pullback in the housing sector will reverse the course of economic growth. While the Fed Funds rate is a short-term interest rate, any increase is likely to see a shift in the total interest rate curve, affecting yields at various maturities and resulting mortgage rates. The U.S. Bureau of Economic Analysis estimated that 17.6% of total GDP was attributable to housing and housing services in the first quarter of 2014. That compares to a record high of 20.6% back in 2005. When one considers the level of economic strife in the post 2008 crisis in the context of the 3.0% variance between current housing-related GDP and the record high in 2005, the margin for error appears to be slim. Given this reality, Fed fears of a reversal of housing fortune are understandable. For policymakers, however, it should be a wake-up call to the fact that our economy may, in fact, be too heavily dependent on housing, and consideration should be given to reduce the dependence on it, or consider ways to reduce volatility. So, my fellow Americans, to steal a line from Robert Palmer’s 1985 hit song, “Might as well face it, you’re addicted to… housing.” About the Author Jim Rieniets serves as President and CEO of INSBANK, which requires him to manage the day to day activities of the bank. He also serves as a director of INSBANK and on the Loan and Investment Committees, as well as being the Chief Manager of the bank’s subsidiary, Finworth Mortgage, LLC. Jim has an extensive banking career and leadership background and formerly served on the Credit Committee of the Tennessee Bankers Association. u The Tennessee Insuror

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Prepare to Master Customer Service

Your independent agency today has more opportunities to prosper than ever before in the history of the insurance industry. The complexion of today’s marketplace allows your agency to be the hub of its own community as well as a member of many other communities – all populated by consumers. Some of these consumers are your customers, and you want to make sure they stay with you. Others are prospective customers who need to be convinced to do business with you. The long-term success of your business depends on customers, so you cannot overstate the importance of customer service. So before you try to sell another policy, you should consider two key questions: Who is today’s consumer? What should “customer service” mean in today’s marketplace?

Consumers Are Connected, So How Do You Interact? The American economy is driven by consumers who want and expect to help and serve themselves. Social networking sites such as Facebook, consumer review portals such as Yelp, e-commerce sites such as eBay and Amazon, and community sites such as CraigsList and Wikipedia are the go-to tools for finding information and answers, shopping and buying, and getting things done. Researchers have dubbed this trend “the groundswell.” “The groundswell is: A social trend in which people use technologies to get what they need from each other, rather than from traditional institutions like corporations.” - Groundswell: Winning In A World Transformed by Social Technologies, by Charlene Li & Josh Bernoff Today’s empowered consumers are taking different routes to get where they want to go. Researchers at Forrester have segmented U.S. adult consumers by social technographic: 12

Social Technographic

% of U.S.

Group

Population

Creators

What They Do Write blogs, maintain a website or upload audio/ video

Critics

React to others’ content, post comments, post ratings/reviews, edit wikis

Collectors

Save & tag articles, use newsfeeds, organize content

Joiners

Set up and maintain social networking profiles

Spectators

Read, listen, watch what others produce & publish

Inactives

None of the above

Sources: Groundswell: Winning In A World Transformed by Social Technologies, by Charlene Li & Josh Bernoff, Forrester Research Inc. (2008); Forrester Empowered Tool

Today, most personal insurance consumers begin their search for new coverage online. In fact, nearly 80% of auto insurance shoppers use some form of online research. Only 20% depend on an agent alone to do their research, according to the 2012 McKinsey Auto Insurance Consumer Insights Research.

Professional Service Remains Vital Yet, at the same time, consumers want to interact with product and service providers in insurance and financial services. For example, research and consumer behavior shows they still need and want what independent insurance agents provide: The overwhelming majority turns to a live person – in person or on the phone – to make an auto insurance purchase. The Tennessee Insuror

For a generation, marketers followed a mass-market, megaphone approach. Today’s marketing environment is interactive and consumer-driven. Now that you’ve recognized changes in the environment, it’s time to adapt and work proactively and interactively with today’s connected consumers.

Better Understand Your Customers Creating customer connections means gathering what you know about your existing customer base and using that insight to create long lasting customer engagement. Find out how to create a process that starts with the first contact and continues throughout the customer lifecycle. There some simple steps that you can take to learn more about the customers you already have, and then find ways to leverage that knowledge to attract more just like them. Determine your ideal customer, melding together a grouping and finding what makes them all similar. Use things like their age, gender, income, along with their personality traits and buying preferences, then consider their hobbies, their community affiliations, their families, their employment, and other traits that could help define their buying behaviors. Locate where you most often find your customers. Word of mouth, community involvement, online, via printed marketing materials or ads in the newspaper? Take time to analyze

how you acquired the majority of your customers and use that information to start locating more of them! Work with your ideal customers to gain insight into why they chose your agency over others. Pick up the phone or send a personal e-mail and ask them to let you know what made them buy from you, why they continue renewing their business and what you offer than others didn’t. Take to social media and solicit feedback, get customer to provide feedback on sites that gather customer reviews. Survey your new customers to learn why they choose you, what you offered that was attractive to them, even ask what you could improve upon to help hone your customer image. Remember, the right metrics will help you analyze every interaction and begin to learn more about your customer base, especially as their needs change or their methods of communication evolve. Finally, it is important to know that consumers today will come to you from a number of acquisition points, come more prepared than in the past, come with many questions and with reams of research that they have gathered online. They will have collected information about you and your agency and will have likely formed an expectation of the advice and service they will receive. Be up to the challenge! Reprinted from the Big “I” Best Practices Series on Customer Service Experience available at iiaba.net u

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Daniel Learns About Insurance: Google Compare - Be Afraid? Should You Be Worried? It’s More Complicated Than You Think

Insurors Director of Communications Daniel Smith is far from an insurance expert, but he is trying to learn! In this new series he will look into insurance and coverage questions he has about popular trends in day-to-day life. There is a lot of buzz in the Nashville area over Google Fiber. The technology giant is bringing its ultra high-speed internet service to the city in the next few years, offering users speeds of more than 1,000 megabits per second. I still remember when the internet first got going, and you would wait a couple of minutes for a page to load. But that is all in the past now, as companies like Google have streamlined our online experience.

written by Daniel Smith

business. But is this a true “comparison” of similar policies and coverages, or is this simply another way to commoditize personal auto? Bill Wilson, Director of the Big “I” Virtual University, investigated some of Google’s claims about their new offering, and says this isn’t an “apples to apples” comparison, it’s just an illusion. “Nothing on this website enables consumers to “understand” or compare the product they think they’re buying,” Bill states. “The site tells you absolutely nothing of substance about any individual insurance policy, let alone the claims or service practices of the insurer. It simply gives you the price of an unknown product.”

continues, “How could a driver possibly think Who’s afraid Billthey’d get a ‘better policy’ when the only real

Now Google is trying to bring a streamlined experience to private passenger auto insurance. Working through an online agency, the company has launched Google Compare in California, with plans to expand into more states later this year. Should that worry agents and insurers? In this article I’ll look at two sides of the argument, but my answer would be, “at least a little - just look at the data.” The company has some of the largest networks of data in the world. Its Google Maps program has built street-view networks across the country, and it is working on self-driving vehicles that hold data on road conditions, driving rules, speed limits and more. Not to mention, they do have a pretty good grasp on the popular topic of SEO (search engine optimization).

of the d

comparative information they’re given is a price? I asked for a quote on the website using a hypothetical 60-year-old single California man with a four-year old Honda Civic. The premiums I was quoted for $50/$100/$50 liability and UM (the latter without PD), $5,000 medical payments and comprehensive and collision, each with a $500 deductible, ranged from $569 with ‘one of America’s Most Trustworthy Companies’ to $1,407 with a carrier boasting ‘A Great, Low Rate With Flexible Payments To Fit Any Budget.’ How is that comparing providers by any measure other than price?”3

big, bad

Google

In fact, you may not have been aware, but they just changed some of the SEO rules. Beginning April 21st, websites which are not mobile friendly (not adaptable to viewing on mobile devices) will be demoted in their search rankings. That could be a big deal for those not paying attention. (Not sure? Visit https://www.google.com/webmasters/tools/mobile-friendly/) So we know Google has the data and the means, but do they have the insurance chops to make agents and insurers stay awake at night?

Don’t Worry Too Much - This Isn’t a True Comparison The site itself is called Google Compare, with the hook being that consumers get a quick and easy way to compare rates from several companies fighting for their auto insurance 14

Be Worried - This is Only the Beginning While I agree with Bill on the facts he presents, the reality is that many consumers just don’t care. There are plenty of consumers that never read their auto policy, and only shop based on price. And that is Google Compare’s target market. Is that a good thing? Probably not, but it is the way of the world. When discussing Google’s entry into the market at an event in Texas in January, W.R. Berkley Corp. CEO William R. Berkley shared some strong opinions on the industry impact. He agrees with the argument that many customers will continue to pay more for the service an agent provides, he also cautioned that other steps need to be taken, “But we need to start by asking, ‘what do our customers want, how do we serve them, what are we going to do to make money and see that that they are happy?’” The Tennessee Insuror

IT’S THE RIGHT THING TO DO. From left to right: Andy Roe, Katie Roe Weiper, Jim Roe and Patrick Roe

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He continued with some words of warning to those that feel the industry wonâ&#x20AC;&#x2122;t need to adapt. â&#x20AC;&#x153;We are a bunch of cheap son of a guns. We donâ&#x20AC;&#x2122;t spend on anything. Weâ&#x20AC;&#x2122;re just bums, companies and agents both. We donâ&#x20AC;&#x2122;t invest in the future... We have these meetings and talk about what to do. Itâ&#x20AC;&#x2122;s always in response to whatâ&#x20AC;&#x2122;s going on around us instead of sitting here and saying, â&#x20AC;&#x2DC;Where is the world going to go? What kinds of things should we be doing? How to make it better?â&#x20AC;&#x2122;â&#x20AC;?2

So Whatâ&#x20AC;&#x2122;s the Answer?

THE BRITISH ARE

COMING HERE

As with many things, the answer probably lies somewhere in the middle. Google Compare will get business, but the majority of the business it draws may syphon more away from the GEICOs and esurances of the world than from independent agents. But that doesnâ&#x20AC;&#x2122;t mean agents and insurers shouldnâ&#x20AC;&#x2122;t be more proactive. Consumers want multiple ways to interact and do business, and thatâ&#x20AC;&#x2122;s a fact. If your agency doesnâ&#x20AC;&#x2122;t have an online presence, a social media presence, and provide a high level of personal interaction service, it will eventually catch up to you. Google doesnâ&#x20AC;&#x2122;t have the industry knowledge to immediately step in and dominate the market, but that wonâ&#x20AC;&#x2122;t stop them from trying to build up to that point. They already have the backing of some major carriers, even if it does trend towards the sub-standard category at this point. If your answer is, â&#x20AC;&#x153;We donâ&#x20AC;&#x2122;t what that type of business anyway,â&#x20AC;? then maybe youâ&#x20AC;&#x2122;re safe for now. But if Google and other players develop this technology and mine this data to a point where they can apply it to other lines of business, then you will have to take notice. Will that happen? Probably not for quite a while, but we cannot sit idly by and wait for that day to come. So what should you do? Encourage technology growth at your agency and from your carriers. Develop new ways to interact with your clients. Try new things that may have more long term implications. Utilize resources like TrustedChoice. com. Do they take time out of your day and you employeesâ&#x20AC;&#x2122; day? Absolutely, but they may make a difference in your business in a year, or five years, or ten. Google Compare isnâ&#x20AC;&#x2122;t a death stroke for agents, but it should serve as a wake up call.

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1-Per â&#x20AC;&#x153;â&#x20AC;&#x2DC;Apples to Applesâ&#x20AC;&#x2122;: The Google Compare Illusionâ&#x20AC;? via NAIC at http:// www.iamagazine.com/viewpoints/read/2015/03/09/apples-to-apples-thegoogle-compare-illusion 2-Per Insurance Journal reporting on the meeting at http://www.insurancejournal.com/news/national/2015/02/24/358522.htm

About the Author Daniel Smith serves as the Director of Communications for Insurors of Tennessee. He has a Bachelors degree in Marketing with a minor in Graphic Design from the University of Tennessee at Chattanooga. He may be contacted at dsmith@insurors.org. u 16

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Future Leaders Spotlight

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David Allen â&#x20AC;˘ RSS Insurance - Chattanooga David Allen is a principal agent and co-owner of RSS Insurance in Chattanooga. An Athens, Georgia native who did the â&#x20AC;&#x153;unthinkableâ&#x20AC;? and went across state lines to college at UTK, he worked as an insurance broker for eight years and helped found a tech company in 2011. He has now made Chattanooga his home and has been with RSS since the beginning of 2013. David is also a member of Insurors Young Agents Committee, representing Region III in East Tennessee.

give the industry a try. After just six months, I fell in love with the business, and I have been trying to grow and learn the business ever since.

The Insuror: Can you tell us a little about your current job title and responsibilities?

The Insuror: Is there any advice you could offer Young Agents or others in the industry to achieve success?

David: Production and service is where the majority of my time is spent at RSS Insurance, however every day is different and I try to fill in where my team needs me. So, at the end of the day, my duties have a wide range.

David: Do the right thing, always, no matter the cost. Work hard and persevere. Take risks.

David Allen of RSS Insurance on a recent Heli-skiing trip

I am fortunate to have a great team of people around me. We are a relatively small company, and when you operate with around 25 staff members, you learn to fill in wherever it is needed.

The Insuror: What can you tell us about your educational background? David: I am a proud graduate of the University of Tennessee at Knoxville, although I was born and raised in Athens, Georgia. My undergraduate degree was a Bachelor of Business Administration in Finance and Spanish. For graduate studies, I was fortunate to attend Florida State University and complete their Master of Science in Risk Management and Insurance program, which has been really interesting, informative and fun.

The Insuror: How and why did you get started in insurance? David: A dear friend and family member convinced me to 18

The Insuror: Do you have any influences/role models in the industry? David: Absolutely. I have been extremely fortunate to meet so many great leaders in this industry from all over. From each of them I have obtained advice, guidance and support. At RSS, I am also really fortunate to have good partners, and our senior partners really offer tremendous help and support. During the work week, I keep a list of agents that I look up to in my pocket, and I frequently look at it and use it as motivation to get better. This industry is like a sport, there are always agents that are better than you so you to keep training hard to improve and get better.

The Insuror: As an independent agent, you have many partners in this industry, including carriers, MGAs and many more. How do you determine which ones are the right relationships? David: At RSS, our people come first, then our carrier partners. Without these two assets we cannot deliver the level of service we strive to achieve. This industry is so much fun because every day is different, which makes every relationship with carriers and MGAs unique to the time and situation. For us, the right partnership is with people who do what they say they are going to do and who mirror our long term outlook on where we want to be. We are very fortunate to have partners that do this every day.

The Insuror: Thank you for giving us your time David, we appreciate it and wish you continued success in your career. David: Thank you. I hope to make it a great one and I appreciate the opportunity to discuss it. u The Tennessee Insuror

Young Agents ‘15

Upcoming Events and Information Below are some updates on the events scheduled for Young Agents in 2015, and more will be announced soon. Please mark your calendar and join us for these opportunities to network. April 16 - Young Agents Reception The Sutler • 5-7 pm CST • Nashville April 30 - Young Agents Reception Local on the Square • 5-7 pm CST • Memphis May 7 - Young Agents Reception Carolina Ale House • 5-7 pm EST • Knoxville October 10 - Young Agents Sponsored Coat Drive World’s Fair Park • UT vs. UGA Tailgate • Knoxville October 12 - Young Agents Reception at Annual Convention Location TBD • Knoxville

Young Agents Committee Stuart Oakes - Chair Producer/Construction Division TIS Insurance Services Knoxville sfoakes@tisins.com Paul Steele, CIC, CRM - Immediate Past Chair Producer/Agent Martin & Zerfoss, Inc. Nashville psteele@martinzerfoss.com Tim Treadwell V - Region I Account Executive Boyle Insurance Agency Memphis timt@boyle.com Brent Chance - Region II Principal Agent/Owner Ivy Insurance Brentwood bchance@ivy-insurance.com David Allen - Region III Principal Agent RSS Insurance Chattanooga dallen@rssins.com For more information, please e-mail dsmith@insurors.org. u The Tennessee Insuror

INTRODUCING

Exceptional Agents Berkley Southeast Insurance Group recognizes the need to mentor the growth of new talent and to perpetuate the Independent Agency System, as well as provide young agents with a competitive advantage. Tennessee’s Young Agents are the future of our business. That’s why we are working together for success.

Congratulations Exceptional Agents 2015 Aaron Jensen Adam Reeves Andrew Powers Blake Dickens Brandon Patterson Chad Richardson Chad Snider Charlie Taylor Clement Ledbetter David Evans Garrett Flannery Jamie Williams Jared Smith Jason Stiltner Jason Teague Jeremy Stiltner John Brock John Fritts Josh Witt Kevin Ownby Leslie Frazier Matt Spellings Michael Novarese Mike Thomas Patrick Sala Ramsey Brock Robert Harris Stacy Woodard Stuart Oakes Tim Treadwell Will Webb

Shafer Insurance Agency, Knoxville Union City Insurance Agency, Union City Burke, Powers, and Harty Insurance, Bristol Harris, Madden and Powell, Memphis Ownby Insurance Services, Sevierville Swallows-Newman Insurance, Cookeville Westan Insurance Group, Martin Burke, Powers, and Harty Insurance, Bristol Battle Page Insurance, Franklin The Insurance Group, Inc., Knoxville Carroll Insurance Agency McKenzie Hardin County Bank Ins. Agcy., Savannah TIS Insurance Services, Knoxville Heritage Insurance, Kingsport Watauga Insurance, Johnson City Heritage Insurance, Kingsport Brock Insurance, Chattanooga TIS Insurance Services, Knoxville The Insurance Group, Inc., Knoxville Ownby Insurance Services, Sevierville Shafer Insurance Agency, Knoxville Consolidated Insurance Agency, Paris McDaniel-Whitley, Inc., Memphis Insurance, Inc., Nashville Harris, Madden and Powell, Memphis Brock Insurance, Chattanooga Tigrett & Pennington, Nashville Shafer Insurance Agency, Knoxville TIS Insurance Services, Knoxville Boyle Insurance, Memphis Battle Page Insurance, Franklin

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The Tennessee Insuror

From Your President

April Showers May Bring Laws?

How quickly my year as President of the Insurors of Tennessee is passing. It is hard to believe that we are almost through the first quarter of the year. We have all had to deal with the ice and snow of the winter of 2015 and looking forward to spring. This, of course, is the time that our state legislators are in session. Chuck and Ashley are busy examining each bill that has been filed, insuring that the content is favorable to our members. They are meeting with various State Senators and Representatives, providing our elected officials with their insight to the wording and effectiveness of each bill. They are currently working on an amendment to the sinkhole bill that was passed last year. The bill that was passed defined that the applicable coverage responded only to the dwelling and not to any appurtenant structures. Many of our customers have free standing garages, barns, pool houses and other buildings. Redefining the structures covered will help to eliminate a potential E&O exposure and avoid legal action by disgruntled insureds. We are supporting a bill that broadens the definition of covered building to fix an unintended consequence in last year’s sinkhole bill. It is currently making its way through the various committees. Under much discussion this year is the uninsured motorist bill. Higher limits and penalties for uninsured motorists in Tennessee are proposed. The bill would also authorize the Department of Revenue to create an online auto verification database for personal vehicles that revokes registration, after a time, of uninsured vehicles. This bill has the backing of several high profile Senators and well as local news reporters and public figures. Some form of the bill is likely to pass. You can rest assured that our lobbyists, Chuck and Ashley will be monitoring the progress as it continues to work through the committees.

Of course, the ACA Health Care Reform law is under much discussion at the State level as well as on the National front. We expect to see changes in the program and various bills will be up for debate throughout the year in Washington, D.C. The Workers’ Compensation Opt Out plan is a widely debated bill that is ongoing this year. If passed it would make Tennessee the third state to implement a program with an option in lieu of a workers’ compensation system. At this time, the bill has received a negative implication from the Workers’ Compensation Advisory Committee. The bill has been discussed in the Senate Commerce Committee, but no action was officially taken and it has been rolled to 2016 in the House. We will continue to monitor it, and expect the bill to be amended, but we cannot support it in its current form. The involvement of our Association in pending legislative bills does not come without a cost. Our State and National PAC provides the funds our staff needs to be beneficial and effectively provide our message to our elected officials. It is imperative that we donate to funds necessary to continue the success that we have had and to be sure our voice is heard in congress. Our State and National PAC is strong and efficient. We need your help to continue to pursue our goals. Please be sure to make your donation to InsurPACTN and InsurPac National. Find more information on both PACs on our website at http://www.insurors.org/what-we-do/government-affairs/

“ T h e involvement o f o u r A ssociation in pending legislative bills does not come without a c o s t .”

I am looking forward to Spring and attending the events of our various local Associations. I cannot express how honored I am to be in this position. Thank you for your continued support to the Insurors of Tennessee. u

Cindi Gresham, CIC The Tennessee Insuror

For All That Matters

WWW.ACUITYU.COM

ACUITY The Tennessee Insuror CE VIDEO

From Your IIABA National Director Local Ads From the Global Internet? It’s probably happened to you before. You’re online shopping for something, and you decide to just look around some more and buy “it” later. Then your surfing the web looking at something else, and an ad for “it” pops up on your screen.

you see a spike in your own web traffic, call-ins or online quotes, you can bet your receiving the benefit of the ads.

It’s amazing (and maybe sometimes a little scary) what they’re able to do with ad tracking these days. What if you could use this same technology to promote your agency? With the Trusted Choice Local Advertising program, now you can.

One of the great things about online advertising is the low entry cost. You can reach a lot of people, still target your ads, and not have to pay an arm and a leg. Plus, with all the tracking methods, you can actually determine a realistic return on your investment. Even better, as part of Trusted Choice’s new Marketing Reimbursement Program, you can receive up to $750 on your local online advertising package as a member of Insurors.

This program will allow you to target your ads to a specific market segment. You can set up your ads to focus on age, gender, location, time of day, web behavior or matching content. If you are looking to focus your sales on boat insurance, maybe you target users who frequent the Boating Magazine and Bass Pro Shop websites. Maybe you are looking to add high value homeowners, so you target certain age groups and their content interests. All these things are now possible, and can be accurately measured and tracked.

How Would I Know if it Was Working? Online advertising success can be tracked through impressions (number of times viewed), geographical location, length of time spent on the site, references to the site, click-throughs and many more metrics. Not only that, but if In the example banner ad below, the captive agent in a cage will swing in...

Doesn’t That Cost a Ton of Money?

And these ads won’t end up on sites where no one is ever visiting. Your package can include popular sites like YouTube, Yahoo!, Trulia, Facebook, AutoTrader and more.

How Do I Get Started? The third “flight” of advertising is scheduled to run from September 1-November 30 of this year. You must purchase these ads by August 1st to be included. You can get more details and information on the program by viewing the online presentation at https://cobrand.iiaba.net/ uploads/files/x/000/0b5/545/Local%20Ad%20 Webinar%20-%20March%202015.pdf or contact Keischa Cherry at keischa.cherry@iiaba.net. u

“What if you could use this same technology to p ro m ote your agency?”

...then transition to an add with your contact info, along with an opportunity to begin a quote online.

Brad V. Smith The Tennessee Insuror

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The Tennessee Insuror

From Your CEO

We Have Met the Enemy and He is Us?

Since the beginning of legislative session I have heard, ad nauseum, about ride sharing companies such as Lyft and Uber. I personally never cared for the name ridesharing, because there is no “ride sharing” going on here. If you are old enough to remember ride share boards in your college dorm there are no similarities. The ride share boards I remember consisted of a piece of paper stapled to bulletin board announcing that someone was going home for the weekend—leaving on Friday afternoon and returning Sunday—to a city where you were often dropped off and someone else, like your parents, picked you up. Today’s rideshare folks insist they are not taxis, in that all riders are picked up by individuals who accept or reject business on their own. There seems to be no dispatching, but rather individual car owners responding to a request. Not being a taxi makes life because they do not have to comply with local ordinances, licenses and taxes. They are active at passing laws limiting government from regulating them. However, they want parity with taxis regarding such rules as airport pickup points through legislation they are sponsoring.

One Man’s Experience I learned about this new phenomenon via by millennial daughter. Late last summer I was going on a business trip to Dallas and decided to use their services as a I made my way to three separate meetings. Transportation Network Companies (TNCs as they are correctly called) use a sophisticated app on your smart phone that finds your pickup point, and then you provide your destination

address. Just by opening the app and selecting a pickup, a car was on the way and I could watch the screen to see where my driver was located. I was also shown a photo of my driver and an estimate of the cost of my trip before I entered the car. The cars were newer models and clean vehicles. No receipt was required as my phone received one as we arrived at the destination. The fares charged seem very reasonable and overall, it was a great experience. I understand why so many have chosen to shun traditional public transportation. I began to wonder how long would it take for the more traditional companies to embrace the technology founded by these TNCs and change their own business models.

Thoughts From an Insurance Guy As we rode the streets of Dallas, I began to think about the insurance implications. Who is providing the coverage for liability/med pay and physical damage to the vehicle? All of this came out in testimony during Capitol Hill debates this winter. Basically, the driver is required to have a liability policy with physical damage at their own discretion. However, none of that would be available while that car is hauling me. The livery exclusion or using the vehicle for hire would apply. The exclusion is found in most (not all) personal lines policies.

“We certainly can develop a solution without our clients having to rely on third party arranged cove r a g e. . .”

The TNCs address this by saying they provide liability coverage and physical damage if the driver has it on the car. The coverage turns out to be surplus lines from out of state (or country) and somewhat protected from state regulation. Their speakers are eloquent, using the phrases like “they will pay,” and hinting at a self man-

The Uber app in action, setting a pickup location

Chuck Bidek, CPCU The Tennessee Insuror

aged insurance program. They have also suggested that they would not get involved until after a declination from the personal lines carrier. That thought has largely been dispelled through negotiations.

have TNCs running around the streets.” Don’t be so sure. Signing up as a driver is simple and there is virtually no cost to the drivers in entering the business. TNCs have nothing to lose by signing up every one who meets their rather minimal requirements.

App On/App Off Another major question has been, “When does the personal lines policy end and the TNC policy take over?” The TNC providers themselves have always wanted it to be when the passenger actually gets into the vehicle (hauling for hire). Insurance carriers have insisted coverage ends when the driver has his “App On” actively seeking customers (commercial enterprise). We have had a similar situation with pizza delivery going on for years. But this issue could be much bigger.

Agent Issues Before you say to yourself, “This doesn’t apply to me since my town will never

Moreover, consider a parent sending a child to college with their vehicle. A new way to earn spending money appears. Do you think the child will call expressing their concern about invoking the livery exclusion of your personal auto policy before signing the driver agreement? What reaction will your carriers take to individuals who have accidents or traffic violations while using the vehicle in business? If claims are denied, for whatever reason, what effect will that have on the relationship with your client? What do you tell your client when they freely admit using their (or Dad’s) car in the business and want a discount on their personal policy since you’re only covering them part time? These issues are far from settled.

EXPERTISE YOU CAN LEVERAGE. , IT S THAT SIMPLE.

How Do We Move Forward? Legislation will help by setting standards for all those in the current market and all those that will come after them. The taxi business will either change or may face extinction. Insurance carriers must adapt in a similar way. We should not rely on an exclusion to wash our hands of the issue. Our clients deserve more. The industry has lived through muscle cars, replacement cost contents, all risks policies and even sinkholes. We certainly can develop a solution without our clients having to rely on third party arranged coverage though off shore surplus lines carriers. I am pleased to see some carriers have already developed part time commercial endorsements to charge a rate commensurate with the exposure or using commercial forms. I hope we as an industry will continue to create solutions, and not barriers. u

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3/5

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6/17

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8/25-28 CRM

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11/4- 6 CIC

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6/10-12 Commercial Casualty Inst* Knoxville

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7/23-24 Ruble Graduate Seminar

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The National Alliance for Insurance Education & Research is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Website: www.nasba. org. Advanced Curriculum Rating = 20 CPE Credits. For more information regarding administrative policies such as complaint and refund, please contact our offices at 800-633-2165.

Dynamics

Fee: $475

5/4-6 Dynamics of Selling*

CRM

Fee: $430

8/25-28 Financing of Risk*

Risk Seminars

4/7 4/15 4/15 4/16 4/27

E&O - Considerations of Agent Ops NFIP Updated Basic Course Professional Ethics in Insurance E-World for Insurance Professionals E&O - Understanding Agent Duties

CE: 3 $72 CE: 3 $72 CE: 3 $60 CE: 3 $72 CE: 3 $72

Nashville

Fee: $420

12/8- 9 Executive Risk Seminar*

Nashville

Online Courses (www.iiaba.net/vu) Available from IIABA Virtual University. Member pricing shown.

Ethics for Insurance Professionals How to Calc. Business Income in 5 Min. National Flood Insurance Program New Employee Training Course

CE: 3 CE: 3 CE: 6 CE: 9

$75 $50 $80 $100

*check VU site for current information on CE and pricing

Available from The National Alliance

(www.scic.com)

Legal & Ethical Requirments of Insurance CE: 4 Insuring Flood Exposures - NFIP Review CE: 4

ABEN Webcasts (insurors.aben.tv)

Memphis

Available from The Institutes

$75 $75

(insurors.ceu.com)

Insurance Principles and Policies Long Term Care Workersâ&#x20AC;&#x2122; Compensation Employee Benefits for Small Companies Healthcare Reform and Affordable Care e-Coverage Fundamentals of Personal Auto Insurance

CE: 7 CE: 24 CE: 10 CE: 4 CE: 5 CE: 15 CE: 3

$49 $99 $59 $39 $49 $79 $29

Indicates course is presented by The National Alliance. Register for these courses at www.thenationalalliance.com The Tennessee Insuror

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Government and Legal Affairs The Interview: How to Hire While Avoiding a Lawsuit Written by Ashley N. Gold, JD, Insurors General Counsel

Opening Scene: A conference room in an agency somewhere in Tennessee. An owner or manager is sitting patiently waiting for the job applicant, who has applied for a job as insurance producer. In walks the applicant… Owner: “Good morning, let’s get right to it. I have read your resume and it is clear that you have several years of experience selling the exact type of insurance we sell. I also see you are currently employed by our competitor across the street. Do you have a non-compete agreement we need to be concerned about?” As the owner of an agency, and if you follow our seminars and articles, you probably know the benefits of having a good non-compete or non-piracy agreement to keep your top producers from taking your top clients and leaving. However, you may not be as familiar with the risks associated in hiring someone who is subject to an employment contract. So, let’s review.

If you, as the employer, hire someone who has an existing employment contract, you too can be sued. In fact, Tennessee has a specific law regarding the procurement of breach of contracts. The law is Tenn. Code Ann. §47-50-109 which reads: “It is unlawful for any person, by inducement, persuasion, misrepresentation, or other means, to induce or procure the breach or violation, refusal or failure to perform any lawful contract by any party thereto.” There are six elements to this law that must be met in order to find a violation: 1. There must be a legal contract. 2. The wrongdoer (hiring party) must know of the contract 3. The wrongdoer (hiring party) must have intended to induce the breach 4. The wrongdoer (hiring party) must have acted maliciously 5. The contract must have been breached 6. The breach causes harm

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Contact Tom Perez at tom.perez@bwood.com or 615-379-8245 www.midsouthmutual.com Administered by Brentwood Services Administrators, Inc. Proudly serving the members of the Home Builders Association of Tennessee since 1995.

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If you are hiring someone with an existing employment contract, first you should determine whether it is a lawful contract. Does it meet the Tennessee common law rules of being reasonable in scope, time and territory? Does it protect a legitimate business interest of the employer or trade secrets? If not, then the initial contract may not be a legally enforceable contract, thereby losing on the first element of the law.

Commercial Computer Act which reads:

The second element of the law is did you as the hiring employer know of the contract? While not stated directly, courts tend to use a common sense approach to this and a policy of “don’t ask, don’t tell” is not going to win for the employer on this one. The better idea is to ask, and if you suspect that there could be an undisclosed employment contract, have the employee sign a disclosure affirming there is not an existing contract. It may even be advisable after making a contingent offer of employment to have the employee go back to the old employer and ask if there are any contracts in his file.

Historically when disgruntled employees left, they took paper files with them, which was not illegal. Today, since most all records are digital, it is as simple as downloading an entire database onto a thumb drive and walking out the door. Under the Private and Commercial Computer Act it is illegal to take an unauthorized copy of computer data. The act establishes not only civil but criminal penalties.

Three, five and six are straightforward, but four requires that the hiring party act maliciously. This is not the traditional malice that indicates ill will, but is a willful violation of the employment contract, or willful violation of a known right. Does this mean that you may never hire anyone again that has a non-compete contract? No. It merely means that if the contract is reasonable in scope then it will not be violated. For example: the producer may not call on any existing clients of the old agency for a year. As long as the producer calls on new clients, or existing clients of the new agency, then there is no violation of the law. However, if a condition of employment for the new agency is that their newly hired producer call on the clients from the old list, the agency is opening itself up to a lawsuit. Other Laws to Know About There are two other laws that as an employer you need to be aware of for your own protection and to avoid potential liability. First is Tennessee’s Private and 32

“It is unlawful to make or cause to be made an unauthorized copy, in any form, including but not limited to, any printed or electronic form of computer data, computer programs, or computer software residing in, communicated by, or produced by a computer or computer network.” Tenn. Code Ann. § 39-14-602(b)(5).

Additionally, the penalties apply not only to the person who took the files, but also to the new employer who uses the unauthorized files. So, if you have a new employee who shows up to work with files from a prior employer, confirm that the information was obtained with permission, or require it to be destroyed or returned. Last but certainly not least is the Uni-

form Trade Secrets Act. Under this act, trade secrets are protected by statute. The law states: “A trade secret may consist of any formula, process, pattern, device or compilation of information that is used in one’s business and which gives him an opportunity to obtain an advantage over competitors who do not use it.” Hickory Specialties v. BNL Laboratories, 592 S.W.2d 583 (Tenn. Ct. App. 1979). So, if you are in the market to hire a new producer and are looking at someone with experience working for a competitor, be aware of the potential pitfalls and ask the hard questions during the interview. It could save you a lot of legal fees later. About the Author Ashley N. Gold has served as General Counsel of Insurors of Tennessee since 2007, and previously consulted for the Association on legal and government affairs matters. She received her undergrad degree from the University of Kentucky and her Juris Doctor from Samford University. She may be contacted at aarnold@insurors.org or by calling her at 615.515.2606. u

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The Tennessee Insuror

Association Update

Two Insurors Members Named to Accident Fund President’s Club

The award recognizes the top Tennessee Young Agent in profit and production.

Accident Fund has announced that two Insurors members have been named to the company’s 2015 President’s Club. The award is presented each year to a select number of independent insurance agencies who met specific criteria for written premium and sustained profitability. Agencies included exceeded $1.5 million in written premium, carried a cumulative loss ratio of 50 percent or less and achieved a premium retention of 80 percent or higher.

Aaron will be the proud new owner of this year’s Young Agent belt and receive his registration for the Insurors of Tennessee 2015 Convention in Knoxville paid for by Berkley Southeast, a proud supporter of the Insurors of Tennessee and its members.

For 2015, Cate-Russell Insurance of Maryville and Wyatt Insurance Services of Knoxville were the only Tennessee agencies to earn the distinction.

Owen Joins Fridrich, Pinson & Rothberg Fridrich, Pinson & Rothberg Insurance Agency in Nashville recently announced the addition of Parkes Owen as a Producer. Parkes will focus on all lines of commercial and personal insurance. He is a graduate of Montgomery Bell Academy and The University of Mississippi. Parkes has 12 year of experience in the industry, and was formerly with The Crichton Group.

Shafer Insurance Agents Named Berkley Southeast Award Winners for 2014 Berkley Southeast Insurance Group recently announced its 2014 award winners for Agency and Young Agent of the year, and Shafer Insurance in Knoxville was the proud winner recognized for these achievements. First, Berkley Southeast recognized Shafer Insurance as the Tennessee Agency of the Year winner for 2014. Shafer principal agent Andy Shafer accepted the award on the agency’s behalf from Berkley Southeast Regional Vice President Bill Emerick. The award recognizes the top Tennessee Independent Agent in the areas of profitability and growth. Andy Shafer receives his award for Agent of the Year from Bill Emerick

The Tennessee Insuror

Berkley Southeast their 2014 Young Year Championship Insurance producer

also awarded Agent of the Belt to Shafer Aaron Jensen.

Aaron Jensen receives his belt from Andy Wilder

Arthur J. Gallagher Acquires Aviation Broker NationAir Illinois-based international brokerage Arthur J. Gallagher recently announced the acquisition of NationAir Aviation Insurance (NationAir) based in West Chicago, Illinois. Terms of the transaction were not disclosed. Founded in 1978, NationAir is a retail insurance broker offering commercial property/casualty and risk management insurance services specifically for the aviation industry. They provide insurance for the entire spectrum of aircraft owners and operations worldwide and specialize in corporate, commercial, private and public entity coverages. Jeffrey Bauer and his associates will continue to operate in West Chicago under the direction of Michael Pesch, head of Gallagher’s Midwest region retail property/casualty brokerage operation. “NationAir is highly-regarded for its level of aviation experience, quality client service, and outstanding market relationships,” said J. Patrick Gallagher, Jr., Chairman, President and CEO. “NationAir’s aviation expertise and international reach will help expand our global client capabilities. They will be a terrific addition to our Midwest Region and aviation group, and we are extremely pleased to welcome Jeff and his colleagues to our growing Gallagher family of professionals.”

Big “I” CEO Rusbuldt Named to Hot 100 List Big “I” CEO Bob Rusbuldt continues to receive distinctions for his work with the Association. Rusbuldt was recently named to the “Hot 100” by Insurance Business America. In their feature, “Who Made the Biggest Waves in the Insurance Industry This Year?” Rusbuldt was featured for his work in guiding the National IIABA as well as leading its industry lobbying efforts. u 35

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Broker Spotlight

RT Binding Authority

Tennessee Underwriters, Inc. (“TUI”) became part of R-T Specialty, LLC (“RT”) in November 2014. RT is an independent wholesale brokerage focusing on tough, high-hazard risks, including property, casualty, transportation, workers’ compensation, professional and management liability. Known for its strong customer service and relationships with respected carriers, TUI is a perfect addition to the growing RT Binding Authority division. RT Binding Authority continues to be a valuable asset for Tennessee agents and brokers, delivering a greater spectrum of insurance solutions than before, and capable of accommodating risks both large and small.

Stronger Together RT Binding Authority - Tennessee can quickly review and place binding authority risks even as the marketplace changes at an incredible rate. RT Binding Authority – Tennessee benefits from a symbiotic relationship with carriers and understands carriers’ current appetites. The combined capabilities of TUI and RT enable them to offer broad and effective solutions to customers in a timely manner.

The Tennessee Insuror

Most Common Classes General Liability:

Property/Inland Marine:

• Contractors • Manufacturing/Distributors • OL&T/Habitational • Special Events

• Vacant • Subsidized/Student housing • Habitational • CAT Driven Properties

Umbrella/ Excess:

Liquor Liability:

• Binding Authority $1-10M limits • Restaurant • Brokerage $200,000M Plus • Bar Garage: • Dealers & Non-Dealers The above is just a sample of risks RT currently places in the market. Agents and brokers are invited to contact their local RT underwriter in Tennessee or visit the website at http:// www.rtspecialty.com to acquaint yourself with RT’s full spectrum of insurance solutions. u

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Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Home Office: Columbus, OH 43215. Subject to underwriting guidelines, review, and approval. Products and discounts not available to all persons in all states. Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Nationwide, the Nationwide N and Eagle and Nationwide is on your side are services marks of Nationwide Mutual Insurance Company. ÂŠ 2015 Nationwide NPO-0605AO (03/15)

The Tennessee Insuror

Company Spotlight

Agility Recovery

Disaster has no schedule. Nothing tests an insurance agent’s ability to meet a client’s needs like an unforeseen disaster, occurring without warning and creating unpredictable damage. Insurance agencies, more than any other business, have an obligation to their clients to be available when disaster strikes. There’s no such thing as a minor disruption. Any event that prevents work from happening can be catastrophic for an insurance agency. The reality is disasters happen every day. In fact, over the past two years Agility has responded to over 560 disaster events. Whether it’s a broken water pipe, a building fire, or hurricane; rest assured that they’ll help rescue your agency. Agility Recovery began over 25 years ago as part of General Electric. They saw a need for businesses to have plans and resources to recover from disasters, natural or man-made. In the beginning, this service was only available to the largest corporations. It remained focused on the needs of the Fortune 500. Unfortunately, this model was simply too expensive for the vast majority of small and mediumsized businesses. But in 2004, Agility Recovery developed an efficient, effective recovery solution that any organization can afford: ReadySuite. Over the past 25 years, they’ve recovered thousands of businesses from every possible type of disaster, and have never failed. For a small monthly fee, your agency will have a detailed disaster recovery plan, executed by Agility. In the event of a disaster, they will provide four critical needs: office space, power, communication and computer systems.

Perfectly Aligned with Insurance Agility understands how many businesses and people rely on you. Agility is ready to do whatever it takes to ensure The Tennessee Insuror

your business and your clients always thrive. You have made a promise to those clients and our primary goal is to enable you to keep that promise even during the most difficult of times. Maybe that’s why over 1,500 independent insurance agents have become members of Agility, with many of those also referring Agility to their own clients. Your success as an agent is directly tied to their success, and here are some more reasons why: THE AGENCY BENEFIT: In the days after a disaster, your agency must be up and running. Your clients demand it. Agility delivers it. THE PRODUCER BENEFIT: Your producers must bring a certain value to their clients and prospects that is competitively unique, in order to differentiate themselves during these difficult times. THE CLIENT BENEFIT: Your clients will have access to a simple, cost effective solution that will rescue their business in days. Not weeks. THE COMPANY BENEFIT: Agility truly mitigates the loss. A complicated business interruption claim becomes a more simple, inexpensive extra expense claim. With an Agility ReadySuite solution in place, your agency will have an efficient, real-time disaster recovery solution ready for when you need it most. Enabling you to keep the promises you’ve made to your clients, employees and community. Contact them today to get more information.

Getting Started To become a member, contact an Agility representative at 1.866.364.9696 or visit them online at www.agilityrecovery. com. u

Contact Information Call 1.866.364.9696 Visit agilityrecovery.com E-mail info@agilityrecovery.com Member Discount ReadySuite for only $420 per month Leadership Team Bill Boyd Chairman of the Board Bob Boyd CEO & President Taylor Busby VP Marketing Paul Sullivan VP & General Manager Headquarters 2101 Rexford Road Suite 350E Charlotte, NC 28211 About Agility Recovery Agility Recovery, a former division of General Electric, is a leading provider of disaster recovery solutions to organizations of all types. Agility provides robust, easy-to-implement recovery solutions for an affordable monthly membership fee, including access to temporary power, office space, communications equipment and computer systems. For more than 25 years, Agility has rescued thousands of organizations with a 100% success rate.

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Stephen Bryant Heritage Insurance Group

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Van Robins Robins Insurance Agency

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Roger Smith Thompson & Smith Insurance

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Burchfiel-Overbay & Associates

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Taylor Porch

Matt Swallows Swallows Insurance Agency

David Palmer Holman & Holman Agency

Tom Strate Strate Insurance Group

Bob McIntire McIntire & Associates Insurance

Charlie Rowland RSS Insurance

Busch Thoma E.B. Thoma & Son Agency

Art Gernt Art E. Gernt Insurance

Al Oliver Portis Tanner Westan Insurance Group

Thomas H. Chappell Christopher J. Turnbull CS&A Insurance

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Walt Bradshaw Bradshaw & Company Insurors

Richard Hollis Hollis & Burns

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40 Thefranchise Tennessee Insuror ©2014 Keystone Insurers Group®. All Rights Reserved. This does not constitute an offer to sell a franchise in any state in which the Keystone Insurers Group is not registered.

Surviving the Switch, continued from page 9 to input data properly in the outgoing system, manage the change efficiently and get proper training. According to Hackney, Applied Systems encourages clients to identify “champions” early in the transition process and involve them in every step along the way. Agencies “should identify key business areas where they can streamline workflows and reduce duplicate administrative tasks,” she says. Benefits can include optimizing business operations and service practices, Hackney says, as well as adding capabilities for the agency to meet the expectations of personal and commercial lines clients for online account access, never-ending customer service and self-service tools. Unfortunately, most agencies rely on vendors for implementation—and “there are pretty significant considerations to setting up the system properly that the vendor isn’t going to handle for you,” Anderson says, citing accounting, document and data conversion as three top issues for agencies to consider prior to switching systems. Hackney likens the switch to moving to a new home. “You take the time when moving to consider what to move into your new home and what you no longer need,” she says. “You don’t simply move everything from your existing home to the new one. When making the transition to a new agency management system, data quality is critical to your success.”

Somberg agrees: “If the system isn’t cleaned up prior to the conversion, the conversion can be very challenging.” Foy says agents shouldn’t forget to account for the downtime associated with a switch. “You’ve got conversion time,” he says. “When you move systems, you’ve certainly got training issues and then that ramp up time. It takes three months for everybody to get proficient in the system if they were proficient in their system before.” Somberg remembers that adjustment period well—but notes you can come out the other side with fewer scars if you get in the trenches with the employees you’re asking to make the change. “As a manager in the agency, I actually worked the workflow and I created cheat sheets in Epic for every workflow in the organization,” Somberg says. “I created picture books for users to refer to when they felt frustrated. I had an open-door policy and literally at one point had six people standing outside my office. I felt like I was at Publix: ‘I’m now serving customer number 101.’ But that’s OK. You need to make sure you have someone that is very, very good [in the new system] to answer.” About the Author Rick Morgan is a Senior Vice President for Aartirjk, an insurance focused brand consulting firm. Morgan was proclaimed by programbusiness.com as one of the 100 Most Powerful People in Insurance in North America. Contact him at rick@Aartrijk.com u

ENTHUSIASM IT’S CONTAGIOUS “I am passionate about underwriting Personal Lines. That enthusiasm gives me the ability to brighten a customer’s day and let the agent know that I really do care about the account they are sending me. They know I will get the job done for them.”

Calvin McNamara Personal Lines Manager

800.666.5692

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

The Tennessee Insuror

EMC can get you the reports you need to close more sales. As a leader in real-time/ download technology, EMC provides you with timeand money-saving agency connectivity services. It’s just one of the many reasons policyholders Count on EMC .® SARA RICHARDS Business Technology Analyst

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The Tennessee Insuror

Company Briefs

Sciortino to Retire from Consumers; Gregoire Expected to Lead Company David Sciortino, president of Consumers Insurance USA, Inc. (CIUSA) has announced his retirement, effective June 1, 2015. Shaun Gregoire, CPCU, AIC, senior vice president, sales and underwriting for the company, is expected to become the president at that time. Sciortino has worked closely with Insurors for years, including as a partner in the Titans Radio program. Sciortino was one of the company’s original founders and board members before taking the reigns as president in 2012. He will remain a board member, providing his expertise to Consumers Insurance. Gregoire has been with Consumers Insurance since The Motorists Insurance Group announced the acquisition in May 2014. Before joining Consumers Insurance, Gregoire was vice president, Sales, for Motorists Mutual Insurance Co. “Consumers Insurance was created by independent insurance agents and remains dedicated to serving the independent agency system. We’re excited about the opportunity to provide a broader spectrum of high-quality solutions for the agents who represent us...” Gregoire said. “I’m excited to be a part of their continuing success, and I’m deeply appreciative of the time and trust David has given during the transition.”

Largent Named As New Westfield CEO On January 20, 2015, the Ohio Farmers Insurance Company Board of Directors elected Ed Largent to succeed Jim Clay as Westfield Group leader, president and CEO, effective July 1, 2015. Jim will remain chairman of the OFIC Board until his retirement April 1, 2016. Employees were informed of this change on January 27, 2015. Jim became CEO in January 2011, when Bob Joyce retired. At the time he was selected, Jim informed the Board of his plans to retire in 2016. This provided ample opportunity to carefully plan a leadership change and make sure the next succession would proceed smoothly. Board members are confident that the transition will be seamless.

Central Appoints White to Board of Directors The Central Insurance Companies has announced the appointment of John E. White to the Board of Directors for Central Mutual Insurance and All America Insurance Companies, and the Central Insurex Agency effective February 27, 2015. White has also been appointed to the Executive Committee of the Central Insurance Companies. The Tennessee Insuror

As Senior Vice President of Information Technology, White has accountability for all Information Technology at Central including software development, hardware infrastructure and procurement, disaster recovery, and I.T. Operations. White began his career with Central in 1979 as a Programmer and was steadily promoted to various positions in the department including leading the first agency/company interface efforts before being named Vice President of Information Technology in 1999.

TrustedChoice.com Welcomes W. R. Berkley Corporation as an Investor TrustedChoice.com recently announced that W. R. Berkley Corporation has joined the industry initiative as an investor and commercial lines participant. W. R. Berkley now joins seven other major carriers in working with the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) and its state associations, and other industry leaders on the TrustedChoice.com initiative. Founded in 1967, W. R. Berkley Corporation is a Fortune 500 insurance holding company. Among the W.R. Berkley companies in Tennessee are Berkley Southeast, Berkley Fire & Marine and Key Risk. “Increasingly, businesses are researching their commercial insurance needs online,” says Bill Berkley, W. R. Berkley Corporation chairman and CEO. “In response, the new TrustedChoice. com allows business owners, office managers, CFOs and risk managers to research their commercial insurance needs, coverages, and likely price ranges online. The site also assists business owners and managers to identify markets with an underwriting appetite for commercial risks in their industry. Most importantly, TrustedChoice.com helps companies find the right independent insurance agent or broker - one that specializes in serving businesses like theirs. W. R. Berkley is pleased to be an investor and commercial lines participant on TrustedChoice.com.”

Builders Mutual Distributes $1.525M Dividend Builders Mutual Insurance Company is distributing a $1.525 million dividend to eligible policyholders in Tennessee, as well as Georgia, Maryland, Mississippi, North Carolina, South Carolina, Virginia and Washington, DC. This year, as Builders Mutual continues to focus on jobsite safety and risk management, we are proud to return a dividend to nearly 8,600 eligible workers’ compensation policyholders. Throughout our history, Builders Mutual has consistently returned more than $50 million dollars in dividends in 26 out of 30 eligible years. Builders Mutual continues to provide financial stability to our policyholders and show steady, controlled 43

growth as a company. We are positioned as a leading carrier of workersâ&#x20AC;&#x2122; compensation in the Southeast and this dividend return is one way to recognize the strong results of both our policyholders and our company.

company and will have primary day-to-day responsibility for planning, implementing, managing, and controlling all financial-related activities of the company. Harford Mutual also announced the promotion of Robert F. Ohler to Executive Vice President. Ohler joined the company 24 years ago leading the Claims Division until 2003 when he became the head of Commercial Business Services.

â&#x20AC;&#x153;Our ability to return $1.525 million in dividends is directly related to the importance our policyholders place on jobsite safety and our continued financial stability as a company,â&#x20AC;? stated John Boggs, President/CEO. â&#x20AC;&#x153;This year, to encourage policyholders continued focus on safety, Builders Mutual created a new training program called WorkSafe 101. It is our intention that the use of this program will provide policyholders with new resources to use in employee training and education. Proactively working to prevent injuries through education helps employees stay safe, reduces the employerâ&#x20AC;&#x2122;s expenses for temporary employees and increases policyholdersâ&#x20AC;&#x2122; opportunity to receive future dividend distributions.â&#x20AC;?

In addition to Ohler, the company promoted John D. Goodin to Vice President â&#x20AC;&#x201C; Underwriting and Jeffrey S. Rink to Vice President â&#x20AC;&#x201C; Marketing & Business Development. Both Goodin and Rink joined the company over five years ago bringing national carrier experience to their roles at Harford Mutual.

Harford Mutual Announces Promotions Bel Air, MD-based Harford Mutual Insurance recently announced an addition and several promotions for the company. First, the Board of Directorsâ&#x20AC;&#x2122; approval of Karen Mashinski, CPA, CPCU, who joins the company as Vice President and Chief Financial Officer. Mashinski will assume a strategic role in the overall management of the

agency partners.

Under the leadership of Ohler, Goodin and Rink, Harford Mutual has succeeded in increasing direct written premium by $50 million to $156 million in four years, and driving a $122 million increase in policyholdersâ&#x20AC;&#x2122; surplus since 2004. They are committed to establishing Harford Mutual as the carrier of choice for independent

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The Tennessee Insuror

CNA IS PROUD TO SUPPORT THE INDEPENDENT INSURANCE AGENTS AND BROKERS OF TENNESSEE.

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With customized coverages, local industry knowledge and the strength and stability of an “A” rating by A.M. Best, when you’re looking for a carrier that can help you play an instrumental role in your customers’ business success … we can show you more.® For more information about our coverages, products and services, contact our local Nashville Branch at 615-886-3300, or visit www.cna.com. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2015 CNA. All rights reserved.

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Vertafore Users Name 2015 Quantum Award Finalists The Network of Vertafore Users has announced the finalists for its 2015 Quantum Award, with the winner to be announced at the 2015 NetVU Conference, March 26-28 in Indianapolis, Ind. The Quantum Award recognizes an insurer’s achievements in working agency-company technology providing superior workflow productivity and profitability for member insurance agencies. Nominations are solicited from members, Vertafore employees, insurer employees, and others.

codes, has already been successful in Indiana and Missouri. Sagamore underwrites accounts up to hazard grade G and includes all states endorsements on every policy. We offer competitive commission rates and an agent contingency plan. We are looking for a limited number of agents in protected territories. Agents who are interested in learning more or partnering with Sagamore can contact Vice President of Sales Jack McKinney at sales@sagamoreinsurance.com or 1.800.644.5501 x7481.

ACUITY Promotes Paltzer to Vice President

The 2015 National finalists are The Hanover Insurance Group, Liberty Mutual Insurance and Progressive Casualty Insurance Co. The Regional finalists are Central Insurance Companies, The Cincinnati Insurance Company and Selective Insurance Company of America.

Sagamore Expands Work Comp Program Into Tennessee

ACUITY recently announced that Shane Paltzer is promoted to Vice President - Marketing and Personal Lines. In his new capacity, he will direct and oversee product and customer development efforts, regulatory compliance, market intelligence, and all line underwriting functions in personal lines.

Sagamore Insurance Company, a subsidiary of Baldwin & Lyons, Inc., is expanding its mono-line Workers’ Compensation program into Tennessee and five other new states: Kentucky, Oklahoma, Mississippi, Kansas and Arkansas. The program, which offers workers’ compensation for a wide variety of class

Paltzer began his career at ACUITY in June 1992 as a Personal Lines Underwriter. From 1994 to 1995, he served as a Commercial Lines Underwriter. In 1995, he was promoted to Area Sales Manager for northeast Wisconsin. In January 2002, he was promoted to General Manager in Sales. In that capacity,

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The Tennessee Insuror

Shane managed ACUITY’s sales efforts across much of the company’s geographic footprint and led numerous strategic initiatives, including new state and agency expansion and ACUITY’s customer segment marketing program.

casualty, specialty and workers’ compensation business.

A graduate of the University of WisconsinOshkosh with a bachelor’s degree in finance, Paltzer holds the Chartered Property & Casualty Underwriter (CPCU) and Associate in Underwriting (AU) designations. He has also completed the Advanced Management and Leadership program at the University of Wisconsin FLUNO center and the Insurance Executive Development Program at the Wharton School of the University of Pennsylvania.

ALTRU Introduces Miscellaneous Professional Liability in TN

Chubb Wins PAM High Net Worth Insurer Award The Chubb Group of Insurance Companies has been recognized as the Best High-NetWorth Insurance Company by Private Asset Management, a leading publication that reports on the wealth management and family office industry. The Private Asset Management (PAM) Awards recognize organizations that have “successfully serviced high-net-worth individuals in an increasingly complex economic environment.” The awards also “celebrate those that have provided exceptional client service to the private asset management industry over the past 12 months.” According to the publication, the judging process is rigorous, and the judges are carefully selected based on their wealth management experience and expertise. Kathleen Tierney, chief operating officer of Chubb Personal Insurance, said that Chubb took several measures over the past year to further enhance the services it provides to high-net-worth clients. Chubb significantly upgraded their Signature Suite of services, and also created a Fine Art Practice.

Enstar Completes Its Companion Acqusition A subsidiary of the Enstar Group has completed its acquisition of South Carolinabased Companion P&C. BlueCross BlueShield of South Carolina was the former owner of the insurance group, which writes property, The Tennessee Insuror

Total for the transaction was $218 million, and Enstar will now operate the business as part of its property and casualty legacy business. Some portions of the Companion business will be renewed through Enstar subsidiary Torus National Insurance Company.

ALTRU, LLC has announced the introduction of a new Miscellaneous Professional Liability Insurance facility. Expanding the partnership it began with Chicago Underwriting Group and Old Republic Insurance Company in 2010 with Non-profit Management Liability, ALTRU, LLC now makes available coverage in 9 states in the Midwest and South with filings in 2 other states awaiting approval. The commercial insurance product is available to a wide range of service businesses through independent insurance agencies and wholesale brokers. The coverage is now approved by Tennessee as well as the following states: Ohio, Kentucky, Indiana, Wisconsin, Michigan, Iowa, North Carolina, and Pennsylvania.

J.M. Wilson Adds to Trucking Account Offerings J.M. Wilson recently announced they now have multiple ‘A+’ rated carriers to quote 1-2 unit trucking accounts in business for 1+ years. J.M. Wilson underwriters are happy to quote trucking risks for independent insurance agents writing in Tennessee, as well as the states of: Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, West Virginia and Wisconsin. u

Partners.

You and your clients. You and Harford Mutual. We’re committed to protecting their business and building yours. That’s what mutual success is all about.

Explore P&C insurance opportunities at HarfordMutual.com 47

Supreme Court Decision Could Turn Healthcare Upside Down

by Alex Tolbert, Bernard Health

This article originally appeared in The Tennessean and is reprinted with the author’s permission. The Supreme Court of the United States is now hearing the case of King v. Burwell. The facts of the case are largely irrelevant. The basic issue is whether or not the federal government can give subsidies to citizens who purchase health insurance policies on a federal, rather than a state, health insurance exchange. If you’re a healthcare consumer receiving a subsidy right now, the outcome of this case could mean you’ll lose that aid. If you’re an employer facing a big penalty, the outcome could spare you from that fine. Let’s review the Court’s options, and what it could mean to you.

Option #1: Yes, Subsidies Are Available on Federal Exchanges This would be a really awkward finding because the law quite literally doesn’t say that. If the Court goes this way, it would most likely do so claiming that it is clear that the legislation intended that, and so the Court is choosing to interpret it that way. But interpreting it that way is really awkward, too. Why? Because it violates expressio unius est exclusio alterius.What’s that? It’s what judges call a “canon of construction,” which are guidelines for how judges are supposed to interpret laws. This particular guideline comes up when a law addresses multiple things that are similar enough to be “classed” together. For example, a state exchange and a federal exchange — they’re both exchanges and so it makes sense to “class” them together. When things belong to the same “class,” if the law has provisions that in its plain language only apply to one of the things, then those provisions should be interpreted not to apply to the other. For instance, if there are provisions specifically written about state exchanges that are not written about federal exchanges, then it should be interpreted that those provisions do not apply to federal exchanges. And that is exactly the case here. In the section of the law that allows for the establishment of state exchanges, the law very specifically delineates that subsidies are to be available to citizens who purchase policies on a state exchange. In the analogous section of the law that allows for the establishment of federal exchanges in states that do not set up a state exchange, the law says nothing about the availability of any subsidies. Expressio unius est exclusio alterius— if subsidies are specifically provided for state exchanges and not mentioned for federal exchanges, then it should be interpreted that 48

subsidies were meant to be excluded from federal exchanges. Many for a long time have understood this issue. Indeed, Professor James Blumstein from Vanderbilt University Law School testified to Congress about it on September 12, 2012.

Option #1: No, Subsidies Are Not Available on Federal Exchanges Then, the Supreme Court’s other option is to rule that subsidies are not available to citizens who buy policies on the federal exchange. Insiders estimate that this would mean nearly eight million Americans would lose subsidy dollars, which would make them unable to afford their health insurance. It also brings up a series of questions. Do citizens who are currently getting subsidies lose them the next month, or at the next open enrollment? Do citizens who got subsidies in 2014 have to pay them back? The majority of states did not set up a state exchange — would many of them re-visit this decision? How long would it take them to set up a state exchange, and at what expense? Of course, while healthcare consumers would lose subsidies under this decision, their employers would win. Why? Because the big penalties that employers are subject to under reform are triggered when their employees get federal subsidies. Even just one employee getting a federal subsidy has the potential to trigger massive penalties on the employer. If employees cannot get subsidies, then their employers cannot be penalized. This consideration was weighed by at least some of the states that originally decided not to set up a state exchange in the first place. After all, some states do things all the time to make themselves more business-friendly versus other states.

Secret Option #3: Who Knows? Back in 2012, the Supreme Court upheld the individual mandate of healthcare reform by ruling that the “penalty” for not buying health insurance was actually a “tax.” No one had argued it was a tax, and so classifying it that way caught everyone by surprise. Perhaps the Court will surprise us again this time, coming up with a ruling or rationale that no one has predicted. About the Author Alex Tolbert is the founder of Bernard Health, a “trusted advisor” for individuals on their healthcare planning needs. He completed his JD/MBA at Vanderbilt University. u The Tennessee Insuror

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The Tennessee Insuror

Meetings

Spring is Here, So Get Out There and Meet! Big “I” Legislative Conference April 22-24 The 2015 Big “I” Legislative Conference and Convention will be held April 22-24 at the Hyatt Regency on Capitol Hill in Washington, D.C. Attend this one-of-a-kind legislative event for the independent agency system and educate members of Congress on issues important to you and your clients. Registration includes an in-depth issues briefing, legislative breakfast with high-profile Congressional speakers, a general session and networking opportunities. Top insurance CEOs, including David H. Long, Liberty Mutual Insurance chairman, president & CEO; Christopher J. Swift, The Hartford chairman & CEO; Thomas F. Motamed, CNA chairman & CEO and David L. Kaufman, The Motorists Mutual Insurance Group president & CEO will be featured on a panel discussion. Agents will also visit over 400 Congressional offices during this important opportunity for our industry. Get more information or register now at http://www.independentagent.com/ Events/LegislativeConference/home.aspx.

Insurors of Nashville Golf Tourney May 4th The Nashville Local Board will hold their Spring Golf Tournament and Social on Monday, May 4th at the beautiful Old Natchez Country Club in Franklin. All players will be treated to an arrival gift, 18 holes of championship golf, on course beverages and snacks, and an outstanding Luauthemed dinner with drinks and music. For more information, please contact Tournament Chairman John Ridenour at jridenour@bvcw.com or visit http://w w w.insurorsofnashville.com/site/event/golftournament/?instance_id=135

Memphis Local Board Picnic & Golf May 12th The Insurors of Memphis will host their annual picnic and golf tournament on Tuesday, May 12th at Windyke Country Club in Memphis. The event will feature two flights of golf, a picnic lunch and dinner, and a special Casino Night with games and prizes. Proceeds from the event will help support Make-AWish Foundation of the Mid-South. For more information, please contact Bryan Wimberly at bwimberly@douglasgreer.com or download the forms at http://www.insurors.org/media/22591/InsurorsPicnic2015. pdf u The Tennessee Insuror

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Reduce the device shape to the required size, then make a new clipping mask

ycling means different things to different people. That is why, Markel

icycle Insurance offers bicycle coverage customized for each individual

ycle, and doesnâ&#x20AC;&#x2122;t provide one-size-ďŹ ts-all coverage.

We know bicycles.

olicies are as low as $100 per year.

overage Highlights:

Bicycle Physical Damage: primary coverage for the cost to repair or replace the cycle (including ďŹ xed accessories and components) up to the policy limit, due to sudden, accidental direct physical loss or damage to the cycle. This coverage would apply if insured bicycle were to be involved in a collision, ďŹ re, theft, vandalism, or in the hitting of another object.

Coverage also includes protection while the bicycle is in transit (land or air) to & from any location in the United States or Canada, and protection when competing in triathlon or bicycle races.

INCLUDED COVERAGES AT NO EXTRA COST: Â&#x2026; 3FOUBM 3FJNCVSTFNFOU Â&#x2026; $PNQFUJUJWF &WFOU 'FF 3FJNCVSTFNFOU Â&#x2026; 4QBSF 1BSUT Â&#x2026; $ZDMF "QQBSFM Bicycle Liability: primary coverage for the injuries or property damage

(caused by the insured bicycle) for which the insured is held legally responsible. Coverage is offered at combined single limits of: $25,000, $50,000 and $100,000.

Specialty insurance Medical Payments: covers medical expenses of the insured cyclist if they for bicycles are injured while on the insured bicycle, regardless of fault. The following

per person limits are available: $1,000, $2,500, $5,000, $7,500, $10,000.

Vehicle Contact Protection: covers injuries if, while on the insured bicycle, UIF JOTVSFE JT TUSVDL CZ BO VOJOTVSFE PS VOEFSJOTVSFE NPUPSJTU "WBJMBCMF JO combined single limits of $10,000 or $25,000.

Roadside Assistance: GPS POMZ QFS ZFBS QFS CJDZDMF IPVS &NFSHFODZ Service will be provided (up to 35 miles per tow, 5 tows per year). See how an average Homeownerâ&#x20AC;&#x2122;s Policy measures up to Markel

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Member Tips

Cycling means different things to different people. That is why, Markel Bicycle Insurance offers bicycle coverage customized for each individual cycle, and doesnâ&#x20AC;&#x2122;t provide one-size-ďŹ ts-all coverage. Policies are as low as $100 per year.

MR=MC or How Much to Pay for A Warm Lead

Coverage Highlights:

Â&#x2026; Bicycle Physical Damage: primary coverage for the cost to repair or replace the cycle (including ďŹ xed accessories and components) up to the policy limit, due to sudden, accidental direct physical loss or damage to the cycle. coverage apply if insured bicycle were to be involved in a ByThis Paul Buse,would President of Big I Advantage collision, ďŹ re, theft, vandalism, or in the hitting of another object.

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So with this theory, and applied to a personal auto insurance

(caused by the insured bicycle) for which the insured is held legally policy, I had the opportunity to revisit my microeconomics responsible. Coverage is offered at combined single limits of: $25,000, lessons compliments of YouTube and Khan Academy (you can $50,000 and $100,000. view their videos at https://www.youtube.com/channel/UC4a-

Gbdw7vOaccHmFo40b9g or expenses https://www.khanacademy.org/ Â&#x2026; Medical Payments: covers medical of the insured cyclist if they youcanlearnanything). are injured while on the insured bicycle, regardless of fault. The following per person limits are available: $1,000, $2,500, $5,000, $7,500, $10,000.

_ C M = R M$127.50/4 15%

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Â&#x2026; Vehicle Contact Protection: covers injuries if, while on the insured bicycle, UIF JOTVSFE JT TUSVDL CZ BO VOJOTVSFE PS VOEFSJOTVSFE NPUPSJTU "WBJMBCMF JO combined single limits of $10,000 or $25,000. Â&#x2026; Roadside Assistance: GPS POMZ QFS ZFBS QFS CJDZDMF IPVS &NFSHFODZ Service will be provided (up to 35 miles per tow, 5 tows per year). See how an average Homeownerâ&#x20AC;&#x2122;s Policy measures up to Markel

Average Markel Homeownerâ&#x20AC;&#x2122;s Policy Bicycle Policy My re-education applied to insurance went like this: At an *OTVSFE BU 'VMM 7BMVF Not Likely Yes average premium of $850 for a personal auto policy and Crash Damagea commission of 15%, an Noagentâ&#x20AC;&#x2122;s marginal revenue Yes assuming Theft Limited Yes on Coverage the sale is $127.50 (15% times $850). One would assume, then, that if an agent typically has a quote to bind ratioYes of 25% 5IFGU "XBZ GSPN )PNF Limited that the most the agent would pay for a quoting opportunity 7FIJDMF $POUBDU 1SPUFDUJPO No Yes Policy Coverage

is $32 (that is, $127.50 Ăˇ 4). Note this 1FSTPOBM -JBCJMJUZ Yesassumes the only variable Yes cost in the sale is the cost of the lead. For example,Yes in this 3FQMBDFNFOU #JLF 3FOUBM No case there is no producer commission sharing or other costs &WFOU 'FF 3FJNCVSTFNFOU No Yes incurred solely because of an added sale. If there are producer

$ZDMJOH "QQBSFM Nottheory, Likely the amount an Yes commissions, under this MR=MC agent .FEJDBM 1BZNFOUT Not Likely Yes would pay for a lead would be reduced by that amount. 3BDJOH $PWFSBHF No Yes 4QBSF 1BSUT *OTVSFE Not Likely So, hereâ&#x20AC;&#x2122;s the question for students of insurance outYesthere. Why might leads for â&#x20AC;&#x153;auto insuranceâ&#x20AC;? on Google regularly Covered in Transit Not Likely Yes cost substantially more per quoting opportunity than the first 8PSMEXJEF 1IZTJDBM %BNBHF Not Likely Yes year Date of the event** Date of purchase thru event date commissions would seem to justify? Weâ&#x20AC;&#x2122;ve seen analysis 3PBETJEF "TTJTUBODF Not Likely Yes per policy limit, due to sudden, accidental direct physical loss or damage to the cycle. This coverage would apply if insured bicycle were to be involved in a * Homeownerâ&#x20AC;&#x2122;s coverage is typically limited Actual Cash Value (ACV) of the bike, not replacement value. vandalism, or in the hitting of another object. collision, ďŹ re, theft,

Coverage also includes protection while the bicycle is in transit (land or air) to & from any location in the United States or Canada, and protection when competing in triathlon or bicycle races.

â&#x20AC;&#x153;warm leadâ&#x20AC;? of well over $250 per lead. Have a theory? E-mail Paul.buse@iiaba.net. u

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ACUITY Amerisafe AmTrust North America Applied Underwriters Arlington/Roe & Co. Auto-Owners Insurance Bailey Special Risks, Inc. Berkley Southeast Insurance Group Berkshire Hathaway Guard Insurance Cos. BITCO Insurance Companies Brentwood Services Administrators Builders Mutual Burns & Wilcox CNA Insurance Consumers Insurance Donegal Insurance Group EMC Insurance FCCI Insurance Group Harford Mutual Heartland Ovation Payroll INSBANK J.M. Wilson Johnson & Johnson Keystone Insurers Group National Security Group Nationwide North Alabama Insurance Penn National Insurance Preferred Comp/Meadowbrook Preferred Property Programs Risk Innovations RT Specialty Securerisk South & Western Southern Cross Underwriters Summit Holdings WAHVE

Phone

(800) 242 - 7666 (800) 897 - 9719 (877) 528 - 7878 (877) 234 - 4450 (800) 878 - 9891 (615) 373 - 5200 (800) 768 - 7475 (615) 932 - 5508 (800) 673 - 2465 x4567 (615) 871 - 9042 (800) 524 - 0604 (800) 809 - 4859 (800) 341 - 4844 (800) 251 - 5852 (615) 896 - 6133 (770) 232 - 2272 x1370 (800) 239 - 2005 (800) 226 - 3224 (800) 638 - 3669 (901) 598 - 4829 (866) 866 - 4268 (800) 595 - 0063 (931) 704 - 0810 (800) 416 - 5498 (800) 239 - 2358 x267 (614) 948 - 4107 (800) 824 - 1740 (800) 395 - 0518 (800) 755 - 8090 (888) 549 - 2465 (800) 913 - 6696 (615) 791 - 1400 x205 (770) 723 - 8096 (800) 492 - 5351 (800) 682 - 5263 (800) 971 - 2667 (646) 807 - 4372 x506

Website

www.acuity.com www.amerisafe.com www.amtrustnorthamerica.com www.auw.com/us www.arlingtonroe.com www.auto-owners.com www.bsrins.com www.berkleysig.com www.guard.com/apply www.bitco.com www.bwood.com www.buildersmutual.com www.burnsandwilcox.com www.cna.com www.ciusa.com www.donegalgroup.com www.emcins.com www.fcci-group.com www.harfordmutual.com www.ovationpayroll.com www.insbanktn.com www.jmwilson.com www.jjins.com www.keystoneinsgrp.com www.nationalsecuritygroup.com www.nationwide.com www.nai1982.com www.pennnationalinsurance.com www.meadowbrook.com www.umbrellaprogram.com www.riskinnovations.com/tni www.rtspecialty.com www.securerisk.com www.southandwestern.com www.scui.com www.summitholdings.com www.wahve.com

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BIG ”I” LEGISLATIVE CONFERENCE APRIL 22-24 | WASHINGTON, D.C.

Thank you, agents. Auto-Owners has always been dedicated to the independent agency system and proudly standing behind the agents who represent us. We would like to thank you for your continued loyalty, which has helped us achieve tremendous growth and accomplishments over the years.

2500 21st Avenue South Suite 200 Nashville, TN 37212

PRSRT STD U.S. Postage PAID Nashville, TN Permit No. 380

We look for the best independent agents and build relationships that last the duration. We are committed to the independent agency system as the only means to deliver our products. Because of that, we work hand-in-hand to help our agencies grow profitably.

Our agents set us apart. Business t Surety t Auto t Home