October 2013 Wisconsin Professional Agent

professional agent october | 2013

2013 - 2014 board of directors

Wh at’s Inside?

Waivers of Liability................15 New Members..........................19

Gold Sponsors

Convention Pages.............. 20-29 Insurance Policies...................31 Comfort Zone..........................38 E&O Issues............................43 Coming Events.. .....................46

l to r: Trey Neher III, John Klinzing, Tracy Oestreich, Tom Budzisz, Jodi Cordes, Jeff Glass, Kathy Mulder, Rick Clements, LouAnn Herriges, Matt Cranney, Brian MacGillis, Dennis D. Kuhnke

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gold sponsors nual Conve n n A

Convention Pages Inside! (pages 20-29)

Digital Editions of PIAW Magazine Available at

www.piaw.org

July 31- August 2, 2013 Chula Vista, Wisconsin Dells

al Co

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For All That Matters 2 OCTOBER 13

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From the

President Jeff Glass — President, PIA of Wisconsin

Committees—Why They Are So Vital MEMBERSHIP

Hello All, th

Thursday September 5 , 2013 was officially my first PIAW Board of Directors meeting as your new PIAW President.

Outside of getting a shiny new gavel with my name on it, the board meeting was pretty easy going, standard business as normal.

What was way more exciting than the board meeting was the annual “fall kickoff” for all the PIAW committees. What is the “fall kickoff”? It’s the one time a year when all the PIAW committees get together and network, plan, share ideas, and lay out “game plans” for the next coming year.

As I floated around the room during the planning session, I was “wowed” by all the great discussion and ideas being tossed around.

Some of the outstanding ideas being put on the table are as follows.

AGENT SERVICES • Develop an “Agents Resource Library”.

AUTOMATION • Have an “Agency Management Automation Summit”.

• Develop webinar capabilities for committee meetings and agent education.

CONVENTION • Continue to raise the bar put on the best industry convention 2nd to none.

EDUCATION • Show PIAW video at beginning of all education venues.

• Continue the best education offerings for our members.

• Increase membership by 10% over the next year.

PUBLIC RELATIONS • Develop a quarterly “Member” YouTube video highlighting current industry issues.

• Continue to develop the “Industry Recruitment Brochure”.

YOUNG AGENTS • Establish a procedure for scholarship rewards recipients.

• Quarterly “Young Agents” get together around state.

As you can see, all the PIAW committees where hard at work throwing around a boat load of great ideas. It’s these ideas that make committees so vital to any organization including the PIAW. I am always amazed to see how many great ideas that started at the committee level get implemented into the day to day operations of the PIAW. For all of you who volunteered to serve on a committee this year, I THANK YOU so much for giving your time. For you the “agency owner” or “company manager”, I THANK YOU also—we need your associates input as well. For any of you who missed this year’s “fall kickoff” it’s not too late, you can join any PIAW committee at any time during the year.

We always welcome new committee members.

Seeing that I chair the convention committee, I would not be doing my committee justice if I didn’t shamelessly “plug” our next event only 5 months out. Mark your calendars for February 5-7, 2014 for the 5th Annual PIAW Winter Get-AWay. By far the best mid-year event in the insurance industry, and I guarantee that.

LEGISLATIVE

Thank you again to all who participated in the “Fall kickoff”

• Promote the new PIAW legislative conduit.

• Promote the federal legislative summit scholarship.

Cheers J.J. Glass

www.sheboyganfallsinsurance.com OCTOBER 13 3

Memos from

Madison Ron Von Haden, CIC — Executive Vice President, PIA of Wisconsin

Workers Compensation Classification NOT ALL GOOD suggestions come to fruition. A recent decision Retail, NOC, code #8017. So, the committee did not agree to by the Rating Committee of the Wisconsin Compensation Rating accept cell phone stores under the jewelry store code or to establish a new code for those stores. The letter stated in part, Bureau (WCRB) is a sterling example of that statement. “the Rating Committee felt that there were sufficient differences Some time ago, Dan Lewison of the Don-Rick Agency in in the operation of cellular telephone stores and the operation of Baraboo talked to me about the classification of cellular phone jewelry stores to not warrant the inclusion of cellular telephone stores. He brought to my attention that those stores, which stores in the jewelry store class. Among the differences, it are now very common in every community in the state, are was felt that the continuous receiving and handling of phone classified as Stores, Retail, NOC, code #8017 for workers packages created additional exposures that are not apparent in compensation rating purposes. His suggestion was to classify typical jewelry store operations. ” the cell phone stores as Jewelry Stores, code #8103 or a similar It seems to me that there are sufficient differences between cell code that would more closely resemble the light operations phone stores and sporting goods stores, paint stores and pawn of a cell phone store or to have a new, separate classification shops to warrant a class code change. But I guess my thinking is exclusively for cell phone stores. The rationale was that flawed and not in sync with the Rating Committee. By the way, the duties and hazards of cell store workers did not closely the rate for Stores, Retail, NOC is $2.01 and the rate for Jewelry resemble the duties or hazards of a general retail store. stores is $0.52. That is a huge difference.

For reference, facilities rated as retail stores include paint stores, Wisconsin has always been a rational leader and innovator in pawn shops and sporting goods stores. It’s hard for me to grasp Workers Compensation. In fact, Wisconsin was the first state to the concept that stocking, demonstrating or bagging cell phones establish workers compensation insurance. The WCRB has done is as hazardous as stocking, demonstrating or bagging weight a great job of maintaining a stable environment and our rates, lifting equipment in a sporting goods store, paint in a paint benefits and loss ratios are envied throughout the country. store or the heavy items found in pawn shops. Thus, I agreed However, sometimes a good suggestion meets with a bad that cell phone stores needed to be reclassified and I contacted outcome and I believe the Rating Committee missed the chance the WCRB to request that consideration. to do something that made sense and reaffirmed our leadership.

Recently I received a letter from the WCRB stating that their Rating Committee had met to consider my request. The committee contacted NCCI to see how they classified cell phone stores and they found that NCCI also classifies them as Stores,

4 OCTOBER 13

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From the

Boardroom

Dennis Kuhnke, CIC, CPIA, Jack C. Loyda & Associates, Ltd. — Director, PIA National

What Does PIA National Offer Wisconsin Agents?

As your PIA National Director I am often asked, “What does PIA National offer Wisconsin Agents?” The answer is PLENTY.

• Agency Marketing Guide – A publication with an emphasis on selling personal lines in independent agencies.

I would encourage each member to go to the PIA National website (It can be accessed from our PIAW website). When you do here’s just a few things you will find.

• Insurance Benefits for You and Your Agency – These include PIA Trust products such as basic term life insurance, short and long term disability, hospital indemnity. PIAPRO – PIA’s own captive errors and omissions market for agents throughout the country. Penn National Agents Umbrella Program.

The PIA Partnership, collaboration between PIA and 13 national insurance companies has done extensive research into a number of programs designed to help members attract and retain clients. Each year they offer a new, at your desktop, program or expand one they already have in place.

Recent PIA Partnership projects include: • Agency Touch Points – Tips to improve retention and customer loyalty; to up sell and enhance coverage; to sell additional products to current clients; to attract and secure new customers.

• Reaching Gen Y – Making the internet work for you.

• Perpetuation Central – Online reference and resource centers for agencies to access as they plan and take steps to implement agency perpetuation or ownership transfer.

• Closing the gap - Growth and Profit – An online tool for agencies to projectand plan for new personal lines business growth and profitability on a 5 year basis.

Other programs that are also available include: • Agoragate – A program whose aim is to help PIA members get found online. (There is a cost for this program.)

6 OCTOBER 13

• Products to Sell – Hartford Flood Insurance Program.

• PIA Member Discounts – Alamo Rent-A-Car, Mines Press Calendars, OMNIA Employee Profiling, CVS Prescription Discount Cards for PIA members, their employees and customers.

• PIA Newsline – PIA of Wisconsin forwards this to all our members. The Newsline informs us of what is in the National news of possible interest to agents.

In addition there is PIA’s aggressive political advocacy at the National level. We are fully engaged in any new and pending legislation that could affect our members or industry. Topics on which lobbying efforts have been extended include; Flood Insurance, Crop Insurance, Federal Regulation of Insurance and Obamacare. PIA National on behalf of all the affiliates has a well respected voice in Washington D.C. We are all very busy with our day to day business issues, but I encourage you to take a few moments to visit the PIA National Website (www.pianet.com). Once you explore this site I think you will agree PIA National has a lot to offer PIAW members.



I realize the importance of political contributions to the future of the Professional Insurance Agents of Wisconsin and our customers. I want to be part of the process leading to success in achieving PIA’s goals in the Wisconsin Legislative arena. Please hold my contribution as a deposit in the PIA Legislative Conduit account to be used at my direction. I understand that I will be contacted in the future, by telephone, email or direct mail, to authorize the use of these contributions. I will be asked to respond with my signature on appropriate authorization forms.

Name:___________________________________________________________________________________ (Please Print)

Primary Employer:________________________________________________________________________ (required to disburse any contributions greater than $100, by Wisconsin Law)

Business Address:_____________________________ City:_____________ State:_______ Zip:__________ Home address:________________________________ City:____________ State:_______ Zip:___________ Business phone:______________________________ Home phone:_________________________________ Email address:_____________________________________ Contribution amount:____________________ Credit Card Payment Name on card:_________________________________ Signature:__________________________________ Amount:______________ Card Number:_________________________________ Exp. Date:____________ Billing address on card:_____________________________________________________________________ City

State

Zip

Contributions are NOT tax deductible for income tax purposes. Donations must be made from Personal accounts only.

NO Corporate or Business Checks or Credit Cards accepted Return to: PIAW Legislative Conduit Account PIA of Wisconsin, Inc. ● 6401 Odana Rd. ● Madison, WI 53719 Fax: 608-274-8195 ● www.piaw.org ● Email: rvonhaden@piaw.org

OCTOBER 13 7

OCI Administrative

Actions Ted Nickel — Commissioner of the Office of Insurance

Madison, WI—OCI has taken the following administrative actions. In many of these cases the respondent denied the allegations but consented to the action taken. Any forfeitures paid in these administrative actions are deposited in the Common School Fund which is administered by the Board of Commissioners of Public Lands. The earnings from this fund are distributed to all public K-12 schools in Wisconsin and are used by school libraries to purchase books. Copies of the administrative action orders may be viewed online at https://ociaccess.oci.wi.gov/OrderInfo/OrdInfo.oci.

OCI is responsible for overseeing the operations and marketing of insurance companies and agents in Wisconsin. OCI encourages anyone with a question or a complaint regarding an insurance company or agent to contact the office at this toll-free telephone number: 1-800-236-8517.

Allegations

and

Actions Against Agents

Ryan Mathew Abel, 1933 Strawberry Ln., Green Bay, WI 54304, had his application for an insurance license denied for 31 days. This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application.

Jacki M. Barthelemy, 7573 Hillton Rd., Royalton, MN 56373, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide proof of resident surplus lines licensing.

Scott T. Bennett, 115 North St., Apt. 2, Sun Prairie, WI 53590, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI, failing to disclose a criminal conviction on a licensing application, and displaying financial irresponsibility.

Kenneth S. Bent, 5215 Turner Ave., Madison, WI 53716, had his application for an insurance license denied for 31 days.

This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application.

Kenneth D. Brown, 4990 E. County Rd. B, Superior, WI 54880, had his application for an insurance license denied for 31 days. This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application.

Yolanda R. Cain, 7151 N. 41st St., Milwaukee, WI 53209, had her application for an insurance license denied. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

Anna H. Cichowski, E3581 Green Valley Dr., La Valle, WI 53941, had her application for an insurance license denied.

This action was taken based on allegations of failing to respond promptly to inquiries from OCI and displaying financial irresponsibility.

Brendan D. Coffey, 2905 E. Crawford Ave., St. Francis, WI 53235, had his application for an insurance license denied for

31 days. This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application.

Michael Carl Connor, P.O. Box 111, Holmen, WI 54636, had his insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

Shana M. Cook, 500 1/2 E. Main St., Evansville, WI 53536, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and displaying financial irresponsibility.

Michael S. Cooper, 7476 S. 75th St., Franklin, WI 53132, had his application for an insurance license denied for 31 days.

This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application.

Adam Brian Damrill, Velapoint LLC, 1100 NW Compton Way, Ste. 205, Hillsboro, OR 97006, had his application for an insurance license denied for 31 days. This action was taken based on allegations of failing to report an administrative action taken by the state of California on a licensing application.

Shawna L. Deatherage, 7713 Blivin St., Spring Grove, IL 60081, had her application for an insurance license denied.

This action was taken based on failing to respond promptly to inquiries from OCI and failing to provide proof of resident surplus lines licensing.

Gregory C. Dryden, 538 S. Pelham, Rhinelander, WI 54501, had his insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes.

Jeremy S. Fisher, 1318 Sunset Ct., La Crosse, WI 54601, had his insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes.

Robert Frank Fleet, 3108 Asheton Ct., Edmond, OK 73034, had his application for an insurance license denied. This action was taken based on allegations of failing to respond [continued on page 10]

8 OCTOBER1313 8 AUGUST

OCTOBER 13 9

OCI Administrative Actions [continued from page 8] promptly to inquiries from OCI and failing to provide proof of resident surplus lines licensing.

inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct.

Zachary Hatcher, 1065 Avenue of the Americas, Rm. 1020, New York, NY 10018, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide proof of residency.

Trevor Munns, 2946 Cimarron Tr., Madison, WI 53719, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct.

Jacquelyn S. Hemming, 203 Stassen St., Algoma, WI 54201, had her application for an insurance license denied for 31 days.

This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application.

Charles E. Hess, 519 13th Pl. N., Onalaska, WI 54650, had his insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

Keith D. Hill, 2440 Mint Thistle Ct., Charlotte, NC 28269, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct.

Kristin Theresia Karisch Laws, 14807 Vesper Lake Ct., Humble, TX 77396, had her application for an insurance license denied.

This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide proof of resident surplus lines licensing.

Kristin Theresia Karisch Laws, 14807 Vesper Lake Ct., Humble, TX 77396, had her application for an insurance license denied.

This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide required documentation for life settlement broker licensure.

Lawrence T. King, 136 Bridger Ct., Missoula, MT 59803, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI, failing to disclose an administrative action taken by the state of Montana, and having a criminal conviction which may be substantially related to insurance marketing type conduct.

Drake A. Koster, 9410 41st Ave., Pleasant Prairie, WI 53158, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to complete digital fingerprinting.

Peter B. Lucas, 3649 Red Bud Ct., Downers Grove, IL 60515, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide required proof of resident state licensure.

Steven G. Markech, 1326 Central St., Oshkosh, WI 54901, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI. Andrew Fabio Morgan, 1625 Gardner Dr., Lutz, FL 33559, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to

Robert G. Reiman, 5850 N. Kent Ave., Whitefish Bay, WI 53217, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct.

Steven Schmidt, 605 North Rd., Cloquet, MN 55720, had his insurance license revoked and was ordered to pay restitution of $168,837.42 and forfeitures of $97,080.00. These actions were taken based on allegations of failing to properly consider suitability in selling life insurance or annuities, failing to complete replacement notices, making misrepresentations, and misappropriating customer funds.

Richard T. Sowka, 19900 128th St., Lot 231, Bristol, WI 53104, had his application for an insurance license denied for 31 days.

This action was taken based on allegations of failing to disclose criminal convictions on a licensing application.

Vivian Strapp-Johnson, 5802 N. 93rd St., Milwaukee, WI 53225, had her insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

Sara Tenant, 308 Elm St., Stevens Point, WI 54481, had her insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

Brian Thompson, 389 3rd St., Fond du Lac, WI 54935, had his insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

Heidi Thompson, 2330 Rockledge Rd., Mishicot, WI 54228, had her insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

Gary L. Toms, 1054 Zephyr Hill Ave., Eau Claire, WI 54703, agreed to the denial of his application for an insurance license for 60 days, agreed to the direct supervision of his work as an insurance agent, agreed to make civil money judgment payments, and agreed to voluntarily surrender his insurance license if convicted of a crime in any jurisdiction. These actions were taken based on allegations of having criminal convictions and unpaid civil money judgments.

Dennis W. Tondryk, 1155 Algoma Blvd., Oshkosh, WI 54901, had his application for an insurance license denied for 45 days.

This action was taken based on allegations of failing to disclose criminal convictions on a licensing application. [continued on page 12]

10 OCTOBER 13

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OCI Administrative Actions [continued from page 10]

Allegations

and

Actions Against Companies

1 800 Life Insurance Agency, Inc., 5170 Golden Foothill Pkwy., El Dorado Hills, CA 95762, had its insurance license revoked.

This action was taken based on allegations of failing to pay Wisconsin delinquent taxes.

Cigna Health & Life Insurance Company, 1601 Chestnut St. TL 14A, Two Liberty Place, Philadelphia, PA 19192, was ordered to enact certain market reforms pursuant to a multistate settlement. This action was taken based on allegations of using an unfair claims settlement practice.

Cincinnati Insurance Company, The, P.O. Box 145496, Cincinnati, OH 45250, was ordered to pay a forfeiture of $1,000.00 and was ordered to cease and desist issuing cancellation and nonrenewal notices that do not comply with Wisconsin law. These actions were taken based on allegations of issuing an improper mid-term cancellation or nonrenewal of an insurance policy.

Dallas National Insurance Company, P.O. Box 800499, Dallas, TX 75380, agreed to pay a total forfeiture of $6,000.00 in two separate cases. These actions were taken based on allegations of issuing improper mid-term cancellations and nonrenewals of insurance policies.

League of Wisconsin Municipalities Mutual Insurance, 402 Gammon Pl., Ste. 225, Madison, WI 53719, was ordered to pay a forfeiture of $250.00. This action was taken based on allegations of failing to comply with a previous examination order.

Life Solutions Inc., P.O. Box 44425, Madison, WI 53744, had its insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

Sheboygan Falls Insurance Company, 511 Water St., Sheboygan Falls, WI 53085, was ordered to pay a forfeiture of $500.00. This action was taken based on allegations of failing to comply with a previous examination order.

CPS Advantage Insurance Services, Inc., 12501 Seal Beach Blvd., Ste. 270, Seal Beach, CA 90740, had its insurance license revoked. This action was taken based on allegations of failing to pay Wisconsin delinquent taxes due.

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OCTOBER 13 13

14 OCTOBER 13

Waivers of

Liability:

Are they worth the paper

they are written on?

by Tim Fenner, Axley Attorneys

Waivers of liability are a fact of life. You sign up your kids for swimming lessons or tennis lessons or some sort of parks and recreation activity, and you invariably are confronted with a “waiver of liability” form, releasing the particular organization from liability from any injury your child may sustain during the activity. You rent a boat or an all-terrain vehicle or a snowmobile, and you are confronted with a waiver of liability in favor of the business supplying the boat, ATV or snowmobile. The point is there are many businesses that provide products and services to the public, on the premise that by having their customer execute a waiver of liability, the businesses are limiting their exposure for liability and attendant damages. But are they?

I

I have read many waiver of liability forms. Most are incredibly broad and all-inclusive; and if these waivers are enforced literally, the business would never have any liability for the particular activity. Over the last several years, there has been significant litigation in Wisconsin concerning the enforceability of waivers of liability. In the year 2005, the Wisconsin Supreme Court observed: “Indeed, each exculpatory contract (i.e., waiver of liability) that this court has looked at in the past 25 years has been held unenforceable.” See Rainbow Country Rentals and Retail, Inc. v. Ameritech Publishing, Inc., 205 Wis. 153 at paragraph 35. Throughout this last 25-year period, the courts have repeatedly said that waivers of liability clauses are and will continue to be looked at with disfavor. Waivers of liability (i.e., an exculpatory clause) are not invalid per se. Rather, provisions of any such waiver must be closely scrutinized and strictly construed against the party seeking to rely on it.

Recently, the Wisconsin Court of Appeals issued a decision in Brooten v. Hoist Fitness Systems, Inc., et al. (Appeal No. 2012 AP 1940). In that case, an individual was injured at a fitness center when a weight bench he was using, failed. The bench collapsed because a component had not been properly installed, and the supporting bolts had not been tightened.

The injured person brought a common-law negligence, safe

place and strict liability claim against the fitness center. The fitness center required every one of its customers to sign a waiver form before they were permitted to use the facility and the equipment. The waiver was very comprehensive.

The customer acknowledged inherent risks and dangers associated with the fitness activities; that the activities could result in personal injury; and that the customer assumed such risks, but nevertheless desired to participate in the fitness activities. The customer agreed to release, waive and discharge, as well as hold harmless, defend and indemnify the fitness center from any claims, actions or losses for bodily injury which may arise out of the customer’s use of any equipment or participation in these activities. The question before the Court of Appeals was whether or not the waiver was enforceable. The Court held that it was not. Generally, exculpatory clauses have been analyzed on principles of contract law and on public policy grounds.

However, the contractual analysis has been de-emphasized; and waivers are generally reviewed on the basis of whether or not it is contrary to public policy. In the case before it, the Court concluded that the fitness center’s liability waiver was contrary to public policy and therefore void and unenforceable. In reaching this conclusion, the court noted the following: [continued on page 16] october 13 15

Waivers of Liability. . . [continued from page 15]

1. The waiver was presented to the customer on a take-it or leave-it basis. The law in Wisconsin is that the form itself must provide an opportunity to the customer to “bargain.”

The absence of an opportunity to bargain in regard to the term of an exculpatory clause is a significant factor suggesting a violation of public policy.

2. The waiver was impermissibly broad and all-inclusive. It is well-settled law that an exculpatory clause can only release claims of “negligence.” It cannot, under any circumstances, bargained for or not, preclude claims based upon “reckless or intentional conduct.” The waiver before the court was broad and applied to causes of action “…caused by negligence or any other cause.” This would suggest a release for claims based upon reckless or intentional conduct. Further, the release required the customer to both“defend and indemnify”the fitness center. This went beyond just simply a mere release.

3. Finally, the court indicated that the waiver was unenforceable because it exceeded the contemplation of the parties. The court specifically indicated: “We are satisfied that an ordinary consumer would not contemplate that“defend and indemnify”language buried in the middle of a form’s text would require him or her to provide a legal defense for (the fitness center) and to pay (the fitness center’s) share of damages in the event a third party sued (the fitness center).

{

For the foregoing reasons, the waiver was held unenforceable.

For those businesses that use waiver of liability forms, it is essential that the form be appropriately drafted. With respect to drafting, the only advice I could give is that “less is more.” Do not try to make your waivers of liability forms all-inclusive covering everything and anything under the sun. By doing so, you run into the trap of being overbroad.

The focus should be on negligence and negligence alone.

Further, do you really need to have an “indemnity” and a “defend” clause in the waiver? Isn’t the release of liability sufficient? Finally, with the requirement that there be an opportunity for“bargaining,”you are going to have to be creative and develop some sort of bargaining proposal or format. For example, if I am a business renting an all-terrain vehicle, I could charge one rate if the waiver is signed and another rate (presumably significantly higher) if a waiver was not signed. The customer would be given the opportunity to choose and therefore, perhaps, “bargain” as contemplated in the court decisions. The bottom line is that waivers of liability are incredibly difficult to enforce. More often than not, courts declare them to be unenforceable. If you or your clients are going to be using such waivers, it is essential that your waivers be drafted in a manner that will at least facially comply with the requirements established by Wisconsin courts.

Tim Fenner • 608.283.6733 • tfenner@axley.com

If you're looking for a promotion at work, be prepared to answer the same sorts of questions you'd get at a traditional job interview. You'll need to think on your feet and intelligently discuss your goals, aspirations, and work skills.

success

16 OCTOBER 13

Here are three key questions to be ready for: • What would you do differently if you could start over again?

Don't go negative. Try to reinforce a positive image of yourself by choosing a work-related decision that you made early in your professional life and then focus on a minor error that you've since recognized.

•

How would you rate your own performance?

Don't be squeamish about self-promotion. In a job interview you should brag. Rate yourself at the top. If you don't believe in yourself, how can you expect your employer to believe in you?

•

Discuss your biggest strength and greatest weakness.

Refer to one of your recent accomplishments listed on your resume when talking about your strengths. When you have to name a weakness, be careful not to sabotage your chances.

Suggest a flaw that's not too damning, and don't go overboard with weakness—that's really a strength ploy (like being a perfectionist) that executives are likely to see through right away.

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For more information call Mike Sabourin 866-789-9712 OCTOBER 13 17

MAPLE VALLEY MUTUAL Insurance Company “The Promise You Can Trust” Maple Valley Mutual’s vision is to be the best smaller mutual insurance carrier in northeastern Wisconsin.

This means providing exceptional service and top-notch products to our Agents and Policyholders/Owners while maintaining the Company’s excellent financial condition and A.M. Best Rating of A- (EXCELLENT).

• Well Established, Competitive Farmowners Program • Comprehensive Modern Homeowners Program • Competitive BOP & Commercial Programs Writing Territory Northeastern Wisconsin

• Unique Quotation System for New Business • Above Average Commissions For more information Contact

Al Schuettpelz, President, at: al@maplevalleymutual.com | 800-23MAPLE | www.maplevalleymutual.com

18 OCTOBER 13

new MEMBERS

PIA of Wisconsin

AGENCY Alpine Insurance Agency LLC East Troy, WI

Noble Insurance Company LLC Delavan, WI

Schnoll Insurance Services, Inc. Milwaukee, WI

Castle Insurance LLC Fall Creek, WI

Procter Insurance Agency Inc. South Milwaukee, WI

Wisdom Insurance Agency Inc. Pewaukee, WI OCTOBER 13 19

2013 - 2014 board of directors

l to r: Trey Neher III, John Klinzing, Tracy Oestreich, Tom Budzisz, Jodi Cordes, Jeff Glass, Kathy Mulder, Rick Clements, LouAnn Herriges, Matt Cranney, Brian MacGillis, Dennis D. Kuhnke

gold sponsors

64 t

n tio

h

nual Conve n An

July 31- August 2, 2013 Chula Vista, Wisconsin Dells

h

64 t 20 OCTOBER 13

n tio

nual Conve n An

The generous support of the GOLD, SILVER and BRONZE sponsors enables the PIA to bring you a convention with quality speakers and entertainment.

Please be sure to thank their representatives. s i lver sponsors AAA Wisconsin Continental Western Group EMC Insurance Companies Foremost Insurance Company Hastings Mutual Insurance Company Western National Insurance Group

Big Winners!

br o n z e s p o n s o r s 1st Auto & Casualty Insurance Company/ WRC Agency, Inc. ALLIED Insurance AMERISAFE INC. Austin Mutual Insurance Company Badger Mutual Insurance Company Germantown Mutual Insurance Company Mt. Morris Mutual Insurance Company Rockford Mutual Insurance Company SECURA Insurance Companies Selective Insurance Co. of America Sheboygan Falls Insurance Company State Auto Insurance Companies The Cincinnati Insurance Companies

cash, cash and more cash!

OCTOBER 13 21

YPC SCHOLARSHIP WINNERS

A tremendous amount of scholarships were awarded by the Young Professionals Club at our Opening Party—a total of $25,000 to be exact!

opening party!

Casino action, music, food, spirits, friends and portraits keep the party going!

22 OCTOBER 13

education & other events

Wisconsin Outstanding CSR of the Year

Lindsey and her colleagues from M3 Insurance Solutions, Inc.

cic , cisr , crm conferment ceremony

(l) Lindsey Hamielec, CIC, CISR–M3 Insurance Solutions, Inc. with her Outstanding CSR of the Year plaque. (r) Mary Czaja, CISR Board of Governors–The National Alliance

Speakers

Sheldon Hansen, CIC, CRM, CPIA – Turning Your Technical Knowledge Into $$$$.

Ted Nickel – Commissioner of the Office of Insurance.

Keni Thomas, US Army Ranger OCTOBER 13 23

business meeting

Board Candidates

Board Candidate Matt Cranney, CIC M3 Insurance Agency, Inc.

Board Candidate Jodi Cordes, CIC, CRM RC Insurance Services, Inc.

Re-elected

Rick Clements, LUTCF, MDRT Clements Insurance Agency, Inc.

Board Candidate Tom Budzisz BWO Insurance Group, LLC

Special Guest

Trey Neher III, CIC, CISR THZ Insurance Group

company presidents panel (l) Dennis Kuhnke–PIA National Director (r) Andrew Harris–PIA National President

(l to r) Jeff Glass, President of PIAW; Richard Ewert, President & CEO Partners Mutual Company; Daniel Keyes, President/Chairman Wisconsin Mutual Insurance; Rick Parks, President & CEO Society Insurance; Scott Martin, President Pekin Insurance 24 OCTOBER 13

A sold out

trade show

has nearly 80 exhibitors showing their products & services to Wisconsin's premier agents.

Gold Sponsors

Partners Mutual Insurance

ACUITY Pekin

School Kits for Kids Charity Progressive

CAPITOL

The Hanover Insurance Group

Integrity Insurance & RC Insurance Services—top collectors in the School Kits for Kids Charity Drive.

Society Insurance

West Bend Mutual

The IMT Group

Presenting to the representative of the Salvation Army on behalf of PIAW's own Public Relations Committee are Tracy Oestreich and Jodi Cordes.

Thank you to all who donated to this wonderful cause.

Integrity Insurance

Wilson Mutual Insurance Company OCTOBER 13 25

Special Recognition

awards dinner

PIA National President Andy Harris honored Tracy Oestreich for her year as PIAW President

Ron Von Haden congratulates Dennis Kuhnke with the Agent of the Year Award

Ron Von Haden presents Larry Jendusa with The Company Representative of the Year Award

New President

Ron Von Haden presents Alan Breitenfeldt with the Stony Steinbach Achievement Award

Ron Von Haden welcoming the new PIAW President, Jeff Glass

A Fun Filled Evening for Everyone!

26 OCTOBER 13

Ron Von Haden thanking Dennis Rupers for his time served on the PIAW Board of Directors

we know how to have fun!

OCTOBER 13 27

10

th

28 OCTOBER 13

Annual YPC Sch

olarship Golf Outing

OCTOBER 13 29

"What time does your watch say?"

"It doesn't say anything; you have to look at it."

30 OCTOBER 13

Interpreting

Insurance Policies

When Courts Take Shortcuts

W

By Craig F. Stanovich, CPCU, CIC, AU Austin & Stanovich Risk Managers LLC

When a witness or deponent is being asked as to their understanding of a letter, email or other document, it is not uncommon to hear the objection "the document speaks for itself." I will admit that I take this too literally, but this objection (which usually means objecting counsel doesn't want to discuss the document) reminds me of the old joke: "What time does your watch say?"

"It doesn't say anything; you have to look at it."

Any documents, in particular insurance policies, don't say anything – you do have to read them. The point, of course, is that the actual words used (when read closely) usually determine the coverage provided and excluded by the policy.

In interpreting insurance policy wording, courts are fond of making very clear that figuring out what the wording means is their business – and their business alone. Statements like "the interpretation of an insurance policy is a question of law for the courts to decide" are a testament to this unequivocal assertion of their authority. Some courts even go as far as to explain how they go about their work "Our primary goal in interpreting a policy, as with any contract, is to ascertain the parties' intent as manifested by the policy's terms." 401 Fourth Street v. Investor's Insurance Co., 879 A2d 166 (Pa 2005).

Our Court System Unlike many in the insurance and risk business, I do not consider our civil courts to be out of control or badly in need of repair. Despite sensational reports, plaintiffs do not always receive huge awards for the smallest of injuries. Likewise, judges do not automatically side with policyholders in all matters of coverage dispute.

In my opinion, our courts ultimately get it right much more often than they get it wrong, and get it right for the correct reasons. It is from this perspective that I offer the following observations.

Defective Construction Over the past few years, a disturbing trend has developed as to how some courts

decide whether Commercial General Liability insurance applies to defective construction or defective work claims.

Framing the Question In some, but certainly not all instances, insurers have successfully denied coverage for defective work claims with some novel arguments, all of which have a common underlying strategy – direct the court's focus away from considering the wording of the entire CGL policy. Rather, the insurers attempt to reduce the coverage dispute to one question – is it the intent of the CGL policy to pay for "faulty workmanship?"

In other words, if insurers can, at the outset, convince the courts that such claims were never intended to by covered and thus fall outside of the CGL insuring agreement, there is no need for the courts to grapple with all of those messy property damage exclusions and their exceptions – rendering the policy exclusions and exceptions to those exclusions superfluous.

Disregarding Policy Wording While the CGL does not and should not provide coverage for claims that do not come within its insuring agreement, what is troubling here is the vague assertions and broad platitudes put forth by insurers that are embraced by the courts as sufficient legal interpretation of coverage. Typical contentions by insurers that defective work claims are never covered include the "business risk doctrine" or the CGL is not a "performance bond." Even a superficial reading of the CGL reveals that these contentions are not based on actual policy wording.

While such considerations may be valuable in determining the meaning of certain policy terms, particularly exclusions to coverage, such sweeping doctrines are not in themselves exclusions to coverage and should not be treated as such as by the courts.

Faulty Workmanship not an Occurrence This problem is well illustrated by one of the more prominent cases - L-J, Inc. v. Bituminous Fire & Marine Ins. Cas. Co., 621 S.E.2d 33 (S.C. 2005) – in which the South Carolina Supreme Court [continued on page 32]

OCTOBER 13 31

Insurance Policies . . . [continued from page 31] overturned both the trial and appellate courts' finding of coverage, instead concluding that "faulty workmanship can never constitute an 'occurrence' under the CGL." In this case, L-J, Inc. contracted to build roads for a real estate developer. L-J, Inc. engaged subcontractors to perform the road work, including compaction of the road bed. The subcontractor's compaction work was done improperly, resulting in deterioration of the road. The developer (owner) brought an action against L-J, Inc. for the cost to repair the cracked and deteriorated road.

The South Carolina Supreme Court in their 2005 decision found that property damage to the road did occur as the result of the subcontractors' negligence in compaction of the road bed.

Despite a finding of negligence, the court held that faulty workmanship cannot be an "occurrence" as defined under a CGL policy as faulty workmanship is not something that typically is caused by an "accident." In court's view, any other finding would convert the CGL into a performance bond.

In a footnote (number [4]), the court did conclude the policy may provide coverage in cases where faulty workmanship causes property damage to other property, not in cases where faulty workmanship damages the work product alone.

Even though the South Carolina Appellate Court found coverage for L-J, Inc. due to the subcontractor exception to the Your Work exclusion, the Supreme Court did not consider any exclusion or exception. Instead, the Supreme Court concluded that faulty workmanship cannot be accidental and therefore not an occurrence - no coverage existed and the court declined to read any further into the policy.

Faulty Workmanship as an Accident While it is certainly possible that faulty workmanship may be intentional, such as a contractor who chooses to cut corners and knowingly produces shoddy work, to presume that faulty workmanship cannot ever be accidental stains common sense.

As any "do it yourself" homeowner knows, projects can go terribly wrong – despite the best of intentions. It seems obvious that inadvertent errors combined with a lack of skill or competence is often at the root of faulty workmanship.

Damage to Property of Others The CGL policy definition of property damage is not limited to the property of others.

Restrictions to whose property the CGL will respond when damaged are found in the CGL policy's property damage policy exclusions, not in the basic insuring agreement as the L-J, Inc. Court found.

The footnote that states faulty workmanship which damages third party property may be covered by the CGL is very curious indeed. The court seems to suggest that damage to the work itself is never accidental, but the same incident becomes accidental if the damage happens to extend to other property.

This is roughly analogous to saying that if I damage my car by 32 OCTOBER 13

negligently colliding with another vehicle, it is only an accident if the other vehicle is damaged.

Coverage Explanation - From 1971 A slightly different approach to no coverage for faulty workmanship can be found in the Supreme Court of Pennsylvania 2006 case of Kaverner Metals et al v. Commercial Union et al.

The Supreme Court of Pennsylvania similarly decided that the definition of accident (and thus "occurrence") cannot be satisfied by claims based upon faulty workmanship. The oft quoted law review article by Roger C. Henderson entitled Insurance Protection for Products Liability Completed Operations; What Every Lawyer Should Know, 50 Neb. L. Rev 415, 441 (1971) appears to be the prime basis (in addition to L-J, Inc. among other cases) for the court's understanding of the application and limitations of CGL policies.

While Mr. Henderson's law review article is no doubt very insightful, it should not be relied upon in lieu of actually reading the policy. Possibly more importantly, Mr. Henderson's commentary was based on a review of the 1966 edition of the Comprehensive General Liability policy, which bears little resemble to today's CGL policy. The 1966 edition of the CGL policy was much more limited in scope and did not contain the subcontractor's exception to the Your Work exclusion that is a crucial element of coverage in today's CGL. Nonetheless, law clerks seem to dust off Mr. Henderson's article every time the phrase "faulty workmanship" appears, even though a closer look should reveal that the article is not only dated, but may be irrelevant to the case at bar considering it pertains to entirely different policy wording.

Of course, there are other similar arguments made by insurers as to why faulty workmanship does not fall within the CGL insuring agreement, such as the CGL policy does not cover property damage that results from a breach of contract. The underlying reasoning is basically the same – a breach of contract is not accidental and therefore not an occurrence. As noted above, failing to correctly perform a contract may very well be inadvertent and accidental – the broad brush shortcut doesn't fit here, either.

The "breach of contract" argument has an additional wrinkle, however. Insurers have argued that the CGL policy provides coverage only for liability imposed in tort and that liability based on contract is not covered - despite the fact that today's CGL makes no such distinction in its insuring agreement.

The California Supreme Court in Vandenberg v. Centennial Ins. Co., 21 Cal. 4th 815, 982 P.2d. 229 (1999) overruled previous cases and found "legally obligate to pay as damages" refers to any obligation which is binding and enforceable under the law, whether by contract or tort liability. Nonetheless, some insurers continuously attempt to dismiss faulty workmanship claims based on the tort versus contract distinction.

We Can Help! excluded by the policy. Denying coverage for the right reasons Conclusion Insurer's attempts to divert the court's attention is far preferable to denying coverage for the wrong reasons. away from the reading the entire policy so the insurer may Shortcuts taken in coverage interpretation and construction more expediently deny faulty workmanship claims has met are likely to leave the next policyholder without the coverage with a growing amount of success. If courts continue to they purchased because a prior decision, incorrectly decided, settle for analytical shortcuts in their interpretations of the is now broadly applied to a different set of facts.

CGL policy, such as relying on 36 year old treatises that are commenting on entirely different CGL policies or on broad © 2007 Craig F. Stanovich, CPCU, CIC, AU * be 100% Retained generalizations of intent that may not reflected in the Ownership * Increased Markets-Over 30 Represented This article first appeared in the April 2007 issue of the CPCU policy, a spate of poorly reasoned decisions will likely follow.

The Midwest’s Premier Cluster Group

Society Consulting, Litigation and Expert Witness Section newsletter * Knowledgeable Support Staff

It is time to put into perspective Mr. Henderson's treatise; Commercial Assistance - Placement Craig F. Stanovich is co-founder and principal of Austin & it is also time to critically examine the broad, vague and * Increased and More Stable Contingencies Stanovich Risk Managers, LLC, a risk management and insurance sweeping generalizations of coverage intent urged by * Comparative Rater Provided advisory consulting firm specializing in all aspects of commercial insurers. There is no substitute for reading the entire policy * Retain 90% of Commission insurance and risk management, providing risk management and to understand the intent of the parties, regardless of how insurance solutions, not insurance * Reduced Cost Management Systemsales. Services include fee based tedious it may be. Ultimately, such an analysis may find of no Applied "rent-a-risk manager" outsourcing, expert witness and litigation coverage for faulty workmanship claims under the CGL * Preferred Agency Contracts support and technical/educational support to insurance companies, not necessarily because there is not an accident or there is agents and brokers. Email at cstanovich@austinstanovich.com. no property damage or the property damage results from For more information call Mike Sabourin 866-789-9712 Website www.austinstanovich.com. a breach of contract, but because the property damage is

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ROBERTSON RYAN & ASSOCIATES, INC.

Attention Utica E&O Policy Holders:

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USING SIRCON SERVICES, YOU CAN: • APPLY FOR A LICENSE • RENEW YOUR LICENSE • LOOK UP AVAILABLE COURSES • CHECK LICENSE RENEWAL STATUS • CHECK LICENSE APPLICATION STATUS • REQUEST A LETTER OF CERTIFICATION CERTIFI • UPDATE YOUR NAME OR ADDRESS • FIND YOUR LICENSE NUMBER/NPN • CHECK YOUR STATUS WITH A STATE • MAINTAIN YOUR FIRM ASSOCIATION • UPDATE YOUR ADDRESS • UPDATE YOUR EMAIL ADDRESS • PRINT YOUR LICENSE © 2011 Vertafore, Inc. Vertafore, the Vertafore logo and design, Unleash your potential, and the Vertafore trademarks listed are owned by Vertafore, Inc.

From the friendly voices of our customer service staff to the personal visits by our marketing managers and underwriters, to the promptness of our claims adjusters, we are told time and again …

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O ut of the

Comfort Zone

Learn New Skills

Just Because You Couldn’t Doesn’t Mean You Can’t

by Walt Grassl

Early in Karl’s career, he had no problem accepting a technical promotion from junior technician to senior technician. When asked to be a supervisor, self-doubt became his constant companion. He agonized over the decision for days. He had trouble sleeping at night and concentrating on even the simplest tasks. Finally, with the support of his family and co-workers, he reluctantly took the promotion. Five years later, he has been asked to apply for the department manager position, where he will have to manage a hundred employees, including other supervisors. Self-doubt has returned, and he is extremely anxious about the unknowns associated with the increase in responsibility. He has a week to apply for the job and is dreading more sleepless nights.

M

Most of us don’t like change. We like to be comfortable.

We like to play things safe. We avoid risk. We put ourselves in safe little boxes and then we miss out on opportunities for growth and advancement, both personally and professionally.

It is said we spend 70% of our time in our comfort zone, when we should really spend 80% of our time in our

uncomfortable zone. Where do you spend your time?

Getting out of your comfort zone is a lot like exercising muscles that have atrophied. As babies, we learn to stand by trying to stand up and then falling down, over and over until we succeed. The same thing happens when we learn to walk. Around the time we learn to ride a bike, things change. We want to enjoy that the mobility of bike riding but we fear falling and looking bad in front of our family, neighbors and friends. Usually, with the encouragement of a family member or friend, we overcome the fear – and we learn to ride a bike.

38 OCTOBER 13

However, as we get older, we often find it easier to say “I can’t do it” than to try to learn a new skill or take on a new challenge.

We tend to stay in our comfort zones and our “step-outside-thecomfort-zone” muscles atrophy.

Karl decided to seek the advice of Sydney, a former supervisor and mentor. Throughout her career, Sydney has moved around within the company, taking challenging assignments and growing in value to the company. The company rewards her risk taking and she is now a division manager. Sydney talked to Karl about the importance of stretching yourself, of being uncomfortable, of testing your limits.

Sydney gave Karl these five steps to exercise the “stepoutside-the-comfort-zone” muscles.

1 – Vary your routines One sign of being comfortable is sameness, doing the same thing over and over. Do you take the same route to work every day? Do you find yourself eating in the same restaurants, even ordering the same meals? What would happen if you didn’t go to the same place, or if you didn’t have “the usual”? Consciously decide to do something different. Break out of your routines. It will probably feel very uncomfortable at first – Great! Experience the newness. Over time, it will feel less and less uncomfortable. The more you do it, the easier it becomes.

2 – Try new hobbies Ever thought about being a magician? Playing the ukulele?

Knitting? Performing standup comedy?

Make a list of 20 things you think would be fun to try, then pick one. Find a class through your local continuing education, YMCA or parks and recreation department. Sign up, attend the first class and go in with the idea that you will have fun. If you are really bad at it, so what? At least you tried. Now, try another activity on your list! Chances are, you will have fun, develop new skills and you’ll likely make new friends.

3 – Try new things at work Is your first response when the boss asks for volunteers to avoid eye contact, shrink down in your chair and try to make yourself really, really, really small?

Often times, your organization will be asked to provide people to participate in focus groups or special committees, for example for an open house or for planning a holiday party. Seek out lateral work assignments and volunteer yourself. Make your manager know you are happy to fill those roles that, in the past, you and most of your co-workers probably shunned.

4 – Say yes If your natural inclination is to say No to new opportunities, change your mindset. The more you say Yes to new opportunities, the broader your experiences will be and the

less afraid of new things you will become. Want badly to say Yes and set a high threshold for saying No. Use this new mindset at home and at work.

5 – Get back up Falling down is not failing. We often hear, “it is better to try and fail than to fail to try”. Inventors rarely create their inventions the first time. They try, observe the results, and then try it differently. They repeat it until they get the results they desire.

Another saying we often hear is, ‘the only person who doesn’t make mistakes is the one that doesn’t do anything’.

When you try new things and they don’t flow smoothly, don’t be discouraged. There are often bumps in the road. What is important is how you handle the bumps in the road. Do you know when to ask for help? Do you figure out what happened and then provide corrective action, so the same problem won’t occur again? Each time you go through a learning experience, you become more seasoned and more confident when facing future challenges.

Just Because You Couldn’t Doesn’t Mean You Can’t When you stay in your comfort zone all the time, you will feel unfulfilled, like you aren’t getting everything you want out of life. By taking steps in your personal and professional lives to get comfortable being uncomfortable, you will open yourself up to new, challenging opportunities. The more you do it, the easier it becomes. Just because you couldn’t do something before, doesn’t mean you can’t do it now.

Karl now knows many places to go for dinner, plays the ukulele for friends at parties and, in his second year as a department manager, is gaining more confidence in his leadership ability.

Walt Grassl conquered his crippling fear of public speaking at the age of 50, and through his Internet radio show, “Stand Up and Speak Up,” he is determined to help others do the same. Walt’s accomplishments include success in Toastmasters International speech contests, performing standup comedy at the Hollywood Improv and and the Flamingo in Las Vegas. He is also the author of the book “Stand Up and Speak Up”. For more information on Walt Grassl, please visit http://waltgrassl.com/

{

An executive spotted a group of employees hanging out in the break room. To show them he was a regular guy, he joined them and told a few jokes he'd heard on TV the night before.

GIGGLES

He was pleased that everyone laughed loudly. Everyone except one employee, Michelle.

Finally he asked, "What's the matter Michelle? Bad day today?"

"It's a great day!" Michelle said "Then why aren't you laughing?"

"I don't have to laugh—I'm quitting tomorrow."

OCTOBER 13 39

Certified Insurance Counselor Each Approved for 20 Wisconsin CE Credits COMMERCIAL PROPERTY

personal lines

November 13-15, 2013 Radisson/Oneida Casino – Green Bay, WI 920-494-7300 $99 rate through 10/24/13 includes full breakfast

December 11-13, 2013 Hilton Garden Inn Milwaukee Park Place 414-359-9823 $93 rate through 11/10/13

• COMMERCIAL PROPERTY COVERAGES • COMMERCIAL PROPERTY CAUSE OF LOSS FORMS • COMMERCIAL PROPERTY ENDORSEMENTS Keith Wilts, CIC, CPCU • TIME ELEMENT COVERAGES • COMMERCIAL INLAND MARINE COVERAGES Robert Ford, CIC, CISR • BUSINESS OWNERS POLICIES • COMMERCIAL PROPERTY CASE STUDY John Dismukes, CIC, CPCU, AII, AIS

WI CE Course # 66246

Day One: 8:00 – 5:15

• personal residential coverages Jerry Kennedy, CIC • personal automobile coverages • rental car Terry Tadlock, CIC, CPCU, CRIS • personal umbrella/excess coverages • personal lines case study John Dismukes, CIC, CPCU, AAI, AIS

NEW WI CE Course # Pending

Day Two: 8:00 – 5:00

Day Three: 8:00 – noon, Optional Exam 2:00 – 4:00

$390.00 per Institute. Register at www.piaw.org or call 800-261-7429.

PEOPLE WHO EARNED THIS ALSO EARNED MORE

30,900 MORE OF THESE

PER YEAR.

If you’re looking to jump start a new career or make more with the one you are in, education is your best investment. Now, more than ever, it is important to invest in your greatest assets—yourself and your people. According to The National Alliance Producer Profile, commercial lines producers with the Certified Insurance Counselor (CIC) designation earn 30% more than those without the designation. To learn more about the CIC Program, call or visit us on the web.

The most successful training programs for insurance professionals

40 OCTOBER 13

Register at www.piaw.org or call 1-800-261-7429

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Help Build Your Familyâ&#x20AC;&#x2122;s Financial Future With

PIA Trust Insurance Plans INSURANCE PLANS DESIGNED WITH LOCAL AGENTS IN MIND As a PIA Member* serving Main Street America, you and your employees have access to a variety of highquality, competitively priced insurance plans.

Plans available include: > Basic Term Life** > Voluntary Term Life > Dependent Term Life > Hospital Indemnity > Long Term Disability > Short Term Disability > Business Overhead Expense > Accidental Death & Dismemberment

PIA SERVICES GROUP INSURANCE FUND

*PIA National membership, when required, must be current at all times. **Only available if 100% employer paid and if the employer and 100% of the employees enroll.

No medical underwriting necessary up to guaranteed issue limits.

For additional information about PIA Trust Insurance Plans, please contact your local PIA Affiliate or call the Plan Administrator at 1-800-336-4759. Additional information is also available on-line at www.piatrust.com.

Policies or provisions may vary or be unavailable in some states. Policies have exclusions or limitations which may affect any benefits payable.

Underwritten by Unimerica Insurance Company, Portland, ME. Administered by Lockton Risk Services.

OCTOBER 13 41

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E&O

Issues every agency must know about

by Curtis Pearsall, CPCU, AIAF, CPIA

Managing an insurance agency is a challenging and demanding undertaking. Key decisions must be made every day. Most owners would agree that one of those involves the errors-andomissions coverage they choose to protect their agency. Significant financial consequences, up to the possibility of the agency’s demise, could result from inadequate coverage or insufficient limits.

T

That no two policies are alike adds to the complexity of this line of business. Properly addressing such issues as who is covered and what activities are covered are critical to ensuring that if an E&O claim is made against an agency, it will be well protected.

Frequency and severity Interestingly, despite our living in an increasingly litigious society, E&O claims against insurance agencies are at a low level compared to the past. In the early 1990s, E&O claims frequency was in the 12%-14% range; that is, 12 to 14 claims per 100 E&O policies. This translates into 1 claim for every 7-8 agencies around the country. Today, frequency is at the 6% level, less than half of what it was 20 years ago. This is an excellent result despite a society that sues with regularity.

Good results like this don’t “just happen,” tough, so how did this transpire? To begin, today there is a much greater commitment to E&O in agencies in the United States. It is also fair to say that as issues and procedures are discussed at the agency level, the topic of errors-and-omissions is likely to find its way into the conversation.

Another alarming yet impressive number is that E&O carriers that aggressively defend their E&O customers are able to close out 60%-70% for no loss payment. There are

typically some defense costs, which is one reason most agencies have a loss-only deductible on their E&O policy.

That means that the agency will only have to pay the deductible if it is found legally liable.

The average-size E&O claim is in the $50,000 range, but agents should be careful not to factor this number into the decision when choosing the size of their E&O limit. Why? It is only an average and E&O claim settlements in the millions do occur. E&O claims involving personal lines are typically smaller, while heavy commercial lines agencies tend to generate fairly large E&O claims due to the nature of the business they write.

Who generates claims Producers seem to be most culpable in generating E&O claims, with customer service representatives next in line.

Yet virtually every person in an agency, including the claims staff and the receptionist, has an E&O exposure and has been known to generate E&O claims.

Types of claims For at least the last two decades, the # 1 cause of E&O claims has been failure to provide the proper coverage.

Consequently, when an agency customer suffers a loss and [continued on page 44]

OCTOBER 13 43

E&O Issues . . . [continued from page 43] does not receive the settlement he or she was expecting, there is significant potential for the customer to try to find fault with the agency.

Mother Nature has not been kind to agents E&O either, with Superstorm Sandy generating a significant number of E&O claims in recent times. Agencies must be proactive in communication and education on the coverages available before such loss-generating events occur. An annual account review has shown to be a great way to make a customer more accountable for his or her insurance program.

Agencies must also be careful in how they promote themselves to the public. It is prudent for an agency to review its letters, promotional pieces, website, etc., to ensure these materials don’t raise the legal liability standard to that of a “special relationship.” What is the typical legal liability standard?

Absent a specific request for coverage, the producer should not be liable for failure to procure a particular type or amount of coverage. The producer does owe the client a duty of reasonable care and diligence, yet again, absent a specific request for coverage not already in the client’s policy or the existence of a special relationship with the client, the agent/ broker should have no continuing duty to advise, guide or direct a client to obtain additional coverage. Plus, while a producer owes a duty of reasonable care, an agent/broker in the basic relationship with the customer should not be held liable for failing to provide unsolicited advice after coverage is obtained regarding a client’s ever-changing insurance needs.

What are some of the more common issues? The “Additional Insured” issue seems to be getting worse. As insurance carriers look to transfer risk via phrases such as “primary and non-contributory,” this is causing problems when the coverage is not properly structured. Moreover, E&O claims are being generated from:

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• Improperly completed certificates of insurance • Valuation • Excess & Surplus Lines • Customers not understanding the coverage they do or don’t have • Coverage not properly placed • Lack of documentation, etc.

The key element What is the key element in an E&O loss prevention program?

Document, document, document. There is truly nothing that determines whether an E&O claim develops and what direction it will go if it does as much as documentation.

An agency’s E&O culture The agency’s ownership determines its errors-and-omissions culture, so it must “walk the walk” and “talk the talk” daily.

It is unfair to expect the agency’s staff to be committed to E&O prevention if ownership shows a lack of commitment.

Don’t be scared of E&O E&O claims happen, but that doesn’t necessarily mean the agency did anything wrong. The staff should not be intimidated by E&O. The best mindset is for the staff to have a healthy respect for it and to know there are many things they can do to minimize the potential of facing an E&O claim.

Curtis M. Pearsall, CPCU, AIAF, CPIA President, Pearsall Associates Inc. and Special Consultant to the Utica National E&O Program

A Question of Honesty

GIGGLES

A little boy and his mother were visiting a cemetery, placing flowers on a relative's grave. The boy wandered around for a while, looking at the tombstones, then came up to his mother and asked, "Mommy, do they ever bury two people in one grave?"

"I don't think so," his mother replied. "Why would you ask that?"

"Because over there I saw a grave that said, 'Here lies a lawyer and an honest man."

44 OCTOBER 13

GERMANTOWN MUTUAL INSURANCE COMPANY W209 N11845 Insurance Place PO Box 1020 Germantown, WI 53022-8220 Phone (262) 251-6680 Fax (262) 623-3130 www.gmic.com

SERVING POLICYHOLDERS AND INDEPENDENT AGENTS IN WISCONSIN SINCE 1854

Right in your backyard!

With Continental Western Group® in your backyard, you have the comfort of knowing we are responsive to your needs and the confidence of knowing we are dedicated to our partnership!

Call Fritz Weitendorf, our Wisconsin Representative at 1-877-643-0219 ext 3828.

www.cwgins.com

Looking for Success? The Feeling Is Mutual.

Rockford Mutual is committed to building strong agent relationships and offering competitive products and outstanding claim service. And that means, when you’re successful, we’re successful. Ready to get started?

For more information about becoming an independent agent for Rockford Mutual: please contact us at 815/489-3158 or visit www.rockfordmutual.com

OCTOBER 13 45

PROFESSIONAL INSURANCE AGENTS OF WISCONSIN, INC. OFFICERS

DIRECTORS

Mr. Jeff J. Glass, President A.F. Glass Insurance Agency PO Box 1149 Lake Geneva, WI 53147 Phone 262-248-5555 Fax 262-248-5544 jglass@glassinsurancecenter.com

Mr. Thomas Budzisz BWO Insurance Group, LLC 2111 E. Rawson Ave. Oak Creek, WI 53154 Phone 414-768-8100 Fax 414-768-8110 tom@bwoinsurance.com

Ms. LouAnn Herriges, CIC, CISR Vice President Anderson's Insurance Associates 17500 W. Liberty Lane New Berlin, WI 53151 Phone 262-789-8500 Fax 262-754-6038 louannh@iaanetwork.com

Ms. Jodi Cordes, CIC, CRM RC Insurance Services, Inc. 1320 Walnut Ridge Dr. Ste. 200 Hartland, WI 53029 Phone 262-367-8611 Fax 262-367-8529 JCordes@rcinsure.com

Mr. Rick Clements, LUTCF, MDRT Treasurer Clements Ins. Agency, Inc. 317 N. 6th St. Wausau, WI 54402 Phone 715-842-1664 Fax 715-848-3337 rick@clementsagency.com

Mr. Matt Cranney, CIC M3 Insurance Solutions, Inc. 3133 W Beltline Hwy Madison, WI 53713 Phone 608-273-0655 Fax 608-273-7783 matt.cranney@m3ins.com Mr. John W. Klinzing, CIC Affiliated Ins. Agencies of WI, LLC 3830 Atwood Ave. Madison, WI 53714 Phone 608-310-3924 Fax 608-441-8787 johnk@affiliatedllc.com

Mr. Trey Neher, CIC, CISR THZ Insurance Group 420 E. Northland Ave. Appleton, WI 54911 Phone 920-730-0123 Fax 920-833-6870 tneher@thzins.com Ms. Tracy A. Oestreich CIC, AU, CPIA Anderson Ins. Associates, Inc. W177N9856 Rivercrest Dr., Ste. 215 Germantown, WI 53022 Phone 262-789-8500 Fax 262-754-6038 tracyo@iaanetwork.com

Ronald Von Haden, CIC Executive Vice President rvonhaden@piaw.org Darcy Brown Member Benefits Coordinator dbrown@piaw.org Heather Falk, CISR Bookkeeping hfalk@piaw.org Mandy Penn Administrative Assistant mpenn@piaw.org Becca Prestbroten Special Project Coordinator bprestbroten@piaw.org Brenda Steinbach Education & Convention Director bsteinbach@piaw.org

12

Hot Topic/William T. Hold Green Bay (8 WI CE)

13-15

CIC COMMERCIAL PROPERTY Green Bay (20 WI CE)

3, 4

CISR COMMERCIAL CASUALTY 1 Brookfield, Madison (8 WI CE)

11-13

CIC PERSONAL LINES Milwaukee (20 WI CE)

14-16

CIC LIFE & HEALTH Middleton (20 WI CE)

5-7

WINTER GET-AWAY Minocqua (9 WI CE, 3 of 9 Ethics)

12

CISR ELEMENTS OF RISK MANAGEMENT Rothschild (7 WI CE)

13

CISR ELEMENTS OF RISK MANAGEMENT Brookfield (7 WI CE)

18-19

CIC RUBLE GRADUATE SEMINAR West Bend (16 WI CE, 4 of 16 are optional Ethics)

12

ADVANCED COMMERCIAL LINES ANALYSIS FOR E&O PREVENTION Wauwatosa (7 WI CE)

13

CPIA 1 Madison (7 WI CE)

19

CISR COMMERCIAL CASUALTY 2 Madison (7 WI CE)

25

ETHICS Green Bay (4 WI Ethics CE)

26-28

CIC COMMERCIAL CASUALTY Green Bay (20 WI CE)

23, 24

CISR PERSONAL LINES MISCELLANEOUS Brookfield, Madison (7 WI CE)

13-14

CIC RUBLE GRADUATE SEMINAR Middleton (16 WI CE, 4 of 16 are optional Ethics)

15

Hot Topic/William T. Hold Tomah (7 WI CE, 3 of 7 are Ethics)

March 2014

February 2014

April 2014

46 OCTOBER 13

Ms. Kathy M. Mulder Nolan Insurance Agency LLC PO Box 238 Brandon, WI 53919 Phone 920-346-2241 Fax 920-346-5600 kmulder@nolanins.com

STAFF PIA of Wisconsin, Inc. 6401 Odana Road Madison WI 53719 Phone: 608-274-8188 Toll Free: 800-261-7429 Fax: 608-274-8195 Toll Free Fax: 866-203-7461 www.piaw.org

10 ETHICS Milwaukee (4 WI Ethics CE)

May 2014

Coming Events

January December November 2014 2013 2013

Mr. Brian MacGillis, CPIA Secretary MacGillis Agency, Inc. W3934 County Highway H PO Box 100 Fredonia, WI 53021-0100 Phone 262-790-0000 Fax 262-790-0004 brian@macgillisinsurance.com

Mr. Dennis Kuhnke, CIC, CPIA PIAW National Director Jack C. Loyda & Associates, Ltd. 4414 N. Oakland Ave. Shorewood, WI 53211 Phone 414-332-5150 Fax 414-332-7267 dkuhnke@loyda.com

Your customers deserve a

Silver Lining.

®

When something happens to your customer’s home, car, or business, it may not be a disaster. But no matter what it is, your customers always deserve fast and fair service from their insurance company.

West Bend provides a Silver Lining, no matter what the claim may be.

When a strong wind damaged the pens at Golden Meadow Hunt Club and the birds were lost, it was important to fix the damage and replace the birds in time for the fall season. So that’s just what we did.

Sometimes little things mean a lot. And every day, when something bad happens to someone, West Bend makes sure your customers experience the Silver Lining. Because the worst brings out our best.®

OCTOBER 13 47

6401 Odana Road Madison, WI 53719 Change Service Requested

Professional Insurance Agents of Wisconsin, Inc. 6401 Odana Road • Madison, WI 53719 (608) 274-8188 • (800) 261-PIAW • FAX (608) 274-8195 • TOLL FREE FAX: (866) 203-7461 www.piaw.org

MEMBERSHIP APPLICATION Agency Name_______________________________________________________________________________________________________________ Street Address_______________________________________________ PO Box_______________________________________________________ City, State, Zip_______________________________________________ County_______________________________________________________ Phone_______________________________________________________ FAX_________________________________________________________ E-mail Address_______________________________________________ Website Address______________________________________________

Primary Contact Information:

The Primary Contact will receive a copy of the Wisconsin Professional Agent magazine and all mailings from PIA State and National.

The Primary Contact will have voting privileges at both PIA State and National.

Name & Designation

DOB

Gender

Employment Status

Part-time

Magazine

Nat’l Voting

Privilege

o o

Male Female

o o

o

Corporation

Licensed Owner Licensed Producer

INCL INCL

o

Agency Information: Agency Type:o Sole Owner

o

Top 3 P&C Companies (list in order)

Partnership

Other Association affiliated with_____________________________

1)__________________________ 2)__________________________ 3)____________________________

Which Agency Management System are you using____________________ E&O Carrier_______________________________________Exp. Date______________ Annual P&C Prem. Vol._____________________________

Calculate Membership Amount Due:

Part-time employees count as one-half. If count ends in half, drop half. # Owners_________+ # Producers_________+ # Licensed staff_________+ # Unlicensed staff_________= Total Agency Size_______________ DUES SCHEDULE

Total Agency Size $Amount Total Agency Size $ Amount 1 335 16 890 2 375 17 930 3 415 18 965 4 450 19 1005 5 490 20 1030 6 525 21 1070 7 570 22 1105 8 605 23 1145 9 640 24 1180 10 675 25 1220 11 710 26 1255 12 750 27 1295 13 780 28 1330 14 815 29 1370

15 855 30 & Over 1400 I certify that the information on this application is true and correct.

Signed_______________________________ Dated_______________________

Total Amount from Dues Schedule $_______________ Send:

o

Check

o

MC

o

VISA

o

DIS

o

AMEX

Card No._________________________________________________________ Exp. Date_________________________________________________________ Name as it appears on card:__________________________________________________ Billing address if different from above: __________________________________________________________________ __________________________________________________________________ Payments to PIA are not deductible as charitable contributions for federal income tax purposes. However, they may be deductible under the provisions of the Internal Revenue Code as a business expense.