Primary Agent - August 2012 - MD Edition by Insurance Agents & Brokers Service Group Inc

MARYLAND

ALSO INTHISISSUE: ________________ Travelers on industry changes

Contents PRIMARY AGENT MAGAZINE

How to address cyberbullying liability

Today’s bullies lurk behind technology, rather than in a dark alley. And the repercussions more and more frequently involve a courtroom. On the following pages, Jerry Milton explains what cyberbullying is all about and discusses how — or if — insurance policies will respond to victims’ resulting bodily harm or mental anguish.

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Travelers sheds light on industry changes Feedback from IA&B’s spring 2012 Member Agent Panel (MAP) meetings is fueling the association’s carrier relations initiatives. After hearing of Travelers’ proactive education efforts, IA&B invited the carrier to attend the May board meeting and shed light on the property/casualty marketplace.

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Mission Statement Primary Agent delivers ideas to help Insurance Agents & Brokers’ members negotiate their unique position as guardians of trust between insurance consumers and companies while facing the challenges of maintaining a small business. Primary Agent also supports IA&B’s mission to preserve and advocate the American Agency System.

Get social with IA&B

In every issue 2 4 6 8 15 17

Chair of the Board’s Message State News Preventing E&O Coverage Corner Glance at Events Member FAQ

23 24 26 IBC IBC IBC

IA&B Partners Tools You Can Use Technology Update Advertisers Index Classified Ads Last & Least

Subscriptions: Non-member price: $2.25 per copy or $15 per year. All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two months prior to publication. Advertising rates furnished upon request. Address inquiries to: Primary Agent Editor 5050 Ritter Road Mechanicsburg, PA 17055-0763 Phone (800) 998-9644 or (717) 795-9100 Fax (717) 795-8347 Periodical postage paid at Mechanicsburg, Pa. and additional entry post office. Postmaster: Send address changes to above address. Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2012-8 is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

Copyright 2012. All rights reserved. No material may be reproduced in whole or in part without written consent of the publisher. The information in this publication is general in nature and is not intended to serve as legal, accounting, financial, insurance, investment advisory or other professional advice as to any reader’s particular situation. Users are encouraged to consult with competent legal, financial, insurance, investment advisory and or other professional advisors concerning specific matters before making any decisions and we disclaim any responsibility for any decisions or actions by readers. Statements of fact and opinion in Primary Agent are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the IA&B. Participation in IA&B events, activities and/or publications is available on a non-discriminatory basis and does not reflect IA&B endorsement of the products and/or services.

Board of Directors

Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P

Officers Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P Chair of the Board West Chester, Pa. Norman F. Basso, CPCU Vice Chair of the Board York, Pa.

Chair of the Board’s M

David Rosenkilde, CIC Immediate Past Chair of the Board Hunt Valley, Md.

Members

Where we’ve been and where we’re going

Joyce M. Bailey, CIC, CRM, CPIW Newark, Del.

This month marks my last as IA&B Service Group chairman. At the next board meeting, I will pass the gavel to my very capable successor, Norm Basso. And when I do, I’ll feel a sense of accomplishment, knowing that the organization is well positioned for the knowns and unknowns of tomorrow.

Henry “Butch” Bradley, Jr. Forest Hill, Md. Timothy P. Burris Mifflintown, Pa. N. Lee Dotson, CIC, AAI Wilmington, Del.

The past year has been a challenging one for the board. Relationships were evaluated and decisions were made that altered the course of each state association. But I am proud to report that our commitment to members and their best interests was the driving force every step of the way, and I am confident that members are well represented today by a strong, fiscally sound and truly viable organization.

Michael P. ErtelI Columbia, Md. John L. Frankenfield Telford, Pa. G. Greg Gunn, CIC Lemoyne, Pa. John B. Hollister Milford, Pa.

Douglas A. Loesel, CPCU Erie, Pa.

These are challenging times, as the market and economy continue to waver, the competition for personal lines market share continues to escalate, and technologies continue to advance at a lightening-fast pace. But I guarantee that something else will continue as well: IA&B’s commitment to seeing member agencies through whatever comes their way.

Michael F. McGroarty Sr. Pittsburgh, Pa.

All the best,

Diana M. Hornung Hanby, ACSR Wilmington, Del. Jocelyn R. Howard-Sinopoli, CIC, CISR Butler, Pa. +

Robert S. Klinger, LUTCF, CPIA Germantown, Md.

Craig S. Mader Gambrills, Md. Ann Gallen Moll, CIC Reading, Pa. April E. Ressler, CIC Altoona, Pa.

Robert B Hall, ChFC, CLU, CPCU, ARM, ARM-P Chairman of the Board

Scott C. Rogers, CPIA* York, Pa. David B. Wasson Sr., CIC State College, Pa. Lawrence A. Wilson, CIC, CPIA, CPCU, ARM** New Castle, Del.

* Pa. IIABA National Director ** Del. IIABA National Director + Md. PIA National Director

Driving members to distinction. [2]

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Call Rick Kelley, Senior Vice President 800-877-0600

www.donegalgroup.com

State News Primary Agent | August 2012

Meet Alicia Woodhouse, Maryland’s Outstanding CSR of the Year

WELCOME

New Members Ross Insurance Agency Inc Baltimore, Md.

Alicia Woodhouse got her start in the insurance industry like most people do — by chance. A stay-at-home mom at the time, Woodhouse heard from a friend about an independent agency in search of someone bilingual. Training and insurance education would come on the job.

“Just when you think you’ve learned the rules, they change them,” Woodhouse laughs about insurance. “There’s always an opportunity to learn.”

“I was nervous,” admits Woodhouse. “I had never worked in the industry before, but I’ve always liked working with people.” And that inclination toward customer service helped her land the job – which led to a career and, most recently, national accolades. Woodhouse received Maryland’s 2012 Outstanding CSR of the Year Award from The National Alliance for Insurance Education & Research.

“You have to have passion and be a people person,” she shares. “Make sure you like what you do because happy employees make happy clients and happy employers.”

Now a CSR for Atlantic/Smith, Cropper & Deeley in Willards, Md., Woodhouse enjoys the challenge of working in an ever-changing industry.

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Beyond that, she cites how rewarding it has been to work with Hispanic clientele. “I’ve been there before, when I wasn’t able to understand the language,” shares the Spanish- and English-speaking Woodhouse. Overall, Woodhouse points to her enthusiasm for her job for her success.

IA&B congratulates member agent Alicia Woodhouse on winning the state competition. Her award allowed her to move on to a nationwide competition and to be considered by The National Alliance when selecting a national Outstanding CSR of the Year Award recipient.

New resource to discontinue "babysitting" late payers It is common knowledge that agents contacting clients who have an overdue payment:

IA&B’s 2012 Ex ecutive Manag ement Confer ence Wyndham Ge ttysburg Hote l Gettysburg, Pa. October 30-3 1, 2012

1. Are increasing their E&O exposure 2. Cannot stop cold turkey Agents must first notify their clients that they will discontinue the practice. To help members get back to safer grounds, IA&B developed a sample letter to notify customers that the agency will stop calling them when a payment has not been received and cancellation is imminent.

IA&B recognizes new designees Fifteen new CICs, CRMs and CISRs attended the June 14 conferment ceremony in Catonsville, Md.

www.iabgroup.com/md/ notif_overdue

Insider scoop on carrier relations Members can benchmark their carrier relationships against other members’ experiences. IA&B’s analysis of its 2012 Company Satisfaction Index (CSI) personal-lines survey results is now available online.

Dino Gavanes of the CIC Board of Governors congratulated the conferees.

The report compares results by carriers’ size (direct premium written and footprint) and category of questions and factors in previous years’ data to expose trends. Plus, members can utilize the interactive, online tool to view results based upon carrier ranking or by any of the four key categories or to see a side-by-side comparison of carriers and individual company results by questions.

Dino Gavanes, CIC, of the CIC Board of Governors, gave a conferment speech and then presented pins to the new designees. IA&B of Maryland Chairman Butch Bradley; IA&B of Maryland Vice Chairman Robert Klinger, LUTCF, CPIA; IA&B Education Consultant Jerry Milton, CIC; Rita Hollada, CIC; and Kitty Ambers, CIC were on hand for the event.

Erin Hott, of Brethren Mutual Insurance Company in Hagerstown, Md., was one of five to receive her certified insurance service representative designation at the event.

www.iabgroup.com/md/csi [5]

Preventing Primary Agent | August 2012

ERRORS AND OMISSIONS

QUALITY DOCUMENTATION A KEY ELEMENT IN A SOLID E&O PREVENTION PROGRAM CURTIS M. PEARSALL CPCU, AIAF, CPIA Curtis M. Pearsall, CPCU, AIAF, CPIA, president of Pearsall Associates Inc. and special consultant to the Utica National E&O Program, supplied this article. Insurance Agents & Brokers Service Group Inc. is the exclusive agent for the Utica E&O program in Delaware, Maryland and Pennsylvania. For questions regarding this article or your E&O coverage, contact IA&B at 800-998-9644 or iab@iabgroup.com.

Agency staff has been trained to ensure that phone messages are properly documented…. The key is actually not whether it is being done, but rather is the documentation of sufficient depth and handled in a prompt time period.

“Document. Document. Document.” In all likelihood, this suggestion has been uttered in virtually every Errors & Omissions class ever taught. While it’s unclear who coined the phrase, in many respects truer words have probably never been spoken. Documentation is one of the most important aspects of a quality E&O loss prevention program. It is important to realize, though, that not just any type of documentation will do. It must be quality, detailed and timely. Good documentation can stop a potential claim in its tracks. Conversely, poor documentation can be like “gasoline on a fire” and further intensify the actions against your agency.

expectation of quality, detailed and timely documentation. Customer contact Let’s start with phone calls that come into the agency. Over the years, agency staff has been trained to ensure that phone messages are properly documented in the

Instill in your agency and with each staff member the important role documentation plays – and make sure every employee follows through on your

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paper file or in the agency management system. While it is probably safe to presume this activity is being performed, the key is actually not whether it is being done, but rather is the documentation of sufficient depth and handled in a prompt time period. Does the documentation in the system state something to effect of “spoke with insured regarding their Homeowners’ policy”? If so, what does that documentation truly tell you? Actually, not a lot. The documentation should identify the exact individual with whom you spoke, with detail on what was discussed and what, if any, the next steps are. If the insured must get back to you with some information, put that action item on record to ensure nothing is missed. In reality, the “old school” way of documenting in the

file is no longer good enough. Why? If you simply documented the issue in the file, there is the potential for a misunderstanding between what the customer told you and what you heard. When does the misunderstanding often surface? When the customer has a loss and is unhappy with the settlement. Document it back For example, say the customer asked you to delete the property coverage on 410 Main Street. You understood the conversation to be that they wanted all coverages on 410 Main Street deleted. In this example, there is a misunderstanding in the file. How do you resolve this? The most effective means is to document back to the customer your understanding of the conversation. This should be in writing and, for many agencies that have adopted this approach, a quick e-mail or letter does the job. Something such as: Mr. Jones, per your request, we have deleted all coverages on 410 Main Street. If this is contrary to your understanding, please contact the agency as soon as possible. This now puts the responsibility on your client to speak up, advise you that you misunderstood him and state that he only wanted the property deleted. While this may take some time, the benefits are tremendous. Plus, this added level of documentation helps identify misunderstandings before a claim as opposed to after it. If possible, the customer should make these types of requests in writing. Another option is to require the customer to come into the office when requesting policy changes. While this is ideal and preferred, unfortunately it may not be possible in all situations.

Nearly every day, your staff – internal and producers – interacts with your customers on important insurance issues. Questions are asked, coverages are explained, etc. There is a good chance the customer is documenting the essence of these discussions for his or her records, and your agency must do the same. These discussions need to be thorough and promptly documented, in the agency file and with a letter back to the customer detailing the conversation and what was resolved. Additional tips Any agency staff member engaging with the customer outside of the office via cell phone must be the one handling the file documentation. Don’t ask another agency staff member to do it. Once again, the quality of the documentation is extremely important. Requiring the person who spoke with the customer to perform the documentation adds to its quality and validity. Bring up documentation at practically every staff meeting, too. That helps emphasize you are serious about this issue. In addition, conduct periodic quality control checks of each of your staff, with strong focus on quality, detail and timeliness of the documentation. While quality, detailed and timely documentation might not prevent an E&O claim from happening, there is nothing more important that will determine the direction the claim goes. Don’t wait for a claim to develop to find out a file’s documentation was not what you thought it was. Have your staff become documentation fanatics – you’ll be glad you did.

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Documentation of text messages Close to 200,000 text messages were sent every second in 2010, according to the latest International Telecommunication Union statistics, and usage grows annually. As agency staff and clients begin communicating via text messages, a whole new world of E&O implications opens. Read this month’s Technology Update column to learn more about how progressive agencies are embracing text messages — and finding ways to document them.

Coverage Primary Agent | August 2012

CORNER

IS IT REALLY AN “UMBRELLA”?

JERRY M. MILTON, CIC Jerry M. Milton, CIC teaches and consults on industry issues. The legal profession recognizes him as an expert on insurance coverages. He is also the education consultant for IA&B, working with CISR, CIC and continuing education programs.

Many of our clients purchase higher liability limits than those provided under their Commercial General Liability, Auto, Employers Liability and Comprehensive Personal Liability policies. When we talk about these higher liability limits, we usually refer to the policy that provides those higher limits as an “umbrella.” But is it?

w Primary coverage when broader than the underlying policies If it’s a true umbrella policy, those three functions will be afforded. However, some insurers that use the word “umbrella” in their declarations will add numerous exclusionary endorsements. That supposed umbrella policy then becomes nothing more than an excess liability or follow-form liability policy.

Higher liability limits may be written on an umbrella basis, excess basis or follow-form basis. However, many of us make the common mistake of using the term “umbrella” to describe any policy that provides higher liability limits. There are many umbrellas out there that are not “umbrellas.” They’re an excess liability or a followform liability policy.

A true follow-form liability policy is easy to understand. If the loss is covered by any of the required underlying policies, it’s covered by the follow-form policy; if excluded by any underlying policy, it’s also excluded by the follow-form policy. The good news — a true follow-form policy is never more restrictive than the underlying policies. The bad news — it’s never any broader.

When we write an umbrella liability policy, we expect, at a minimum, the following: w Higher limits than the required underlying policies

If it’s an excess liability policy, it’s very likely that all it does is provide higher limits for certain losses. In a few situations these

w Broader coverage than the underlying policies

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policies may be broader than the underlying policies. But those instances are usually few and far between. In many cases the excess liability policy is more restrictive than the underlying policies. Exclusions or restrictions found in many excess liability policies that are not usually found in the underlying policies include: w No automatic coverage for newly acquired or newly formed entities w No coverage for volunteers w Cross suits (insured versus insured) excluded w Absolute fellow employee exclusion (no coverage for executive officers) w No employers’ liability coverage for injury to an employee caused by another employee w Coverage for scheduled or written contracts only

w Care, custody or control of any property (real or personal) excluded w No host liquor liability coverage w No exception for damage to your work if work performed by a subcontractor w Total pollution exclusion w Punitive damages excluded Just because the policy says “umbrella,” don’t assume it’s an umbrella. Check it out. Look for broader coverage, but pay close attention to those exclusions in the policy or that may be added by endorsements that make the policy more restrictive than the underlying policies. 7.5 x 4.625

Why do I need a personal umbrella? Let us count the multi-million ways…. Sometimes a dose of reality is the best medicine for sluggish umbrella policy sales. From parents of a teenage babysitter who left an infant unattended to the homeowner whose friend injured himself diving into the pool, the examples of how easily someone could find him or herself on the losing end of a multi-million dollar lawsuit are plentiful — and powerful. IA&B’s online resource (“Why do I need a personal umbrella?”) shares six very relatable losses that showcase the value of a personal umbrella policy.

Delaware: www.iabgroup.com/de/why_personal_umb Maryland: www.iabgroup.com/md/why_personal_umb Pennsylvania: www.iabgroup.com/pa/why_personal_umb

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COVERAGES

How to address cyberbullying liability Lawsuits beat insurance policies to the punch

Primary Agent | August 2012

guess we’ve always had bullies. They were certainly around when I was a kid growing up in south Mississippi. And that was many, many years ago. Bullying back then was a rather simple issue — it typically involved some big boy picking on a little boy. The big boy was usually jealous of the little boy because he was smarter, he dressed better, he had more money, the girls liked him better or whatever. The bullying continued until another big boy stopped it or until the little boy got bigger and put an end to it. Girls just didn’t do that sort of thing. It was a boy thing!

That was then, this is now. Times have changed. Today, youngsters are being bullied while they’re in the classroom or at home with their families. Even while they’re asleep. How is that possible? All you need is access to a cell phone or the Internet. It’s called cyberbullying, The term “cyberbullying” was first coined and defined by Canadian educator and anti-bullying activist Bill Belsey as “the use of information and communication technologies to support deliberate, repeated and hostile behavior by an individual or group that is intended to harm others.” Cyberbullying has subsequently been defined as “when the Internet, cell phones or other devices are used to send or post text or images intended to hurt or embarrass another person.” Cyberbullying usually consists of threats, sexual remarks or hate speech. The intent is to gang up on the victims by making them the subject of ridicule and posting false statements as fact in order to humiliate them. Some cyber bullies send threatening or harassing emails or instant messages to the victims, while others post rumors or gossip and instigate others to join in and attack the victims. Some cyber bullies post the victims’ photos or the victims’ edited photos with defaming captions, or they paste the victims’ faces on nude bodies. And now we have cell phones that take pictures. Another form of cyberbullying involves taking a picture of someone in an embarrassing situation and then posting that picture on the Internet. Once the material has been posted, millions of people can potentially download it before it is removed. Unlike physical bullies, cyber bullies can remain anonymous using temporary email accounts, pseudonyms in chat rooms, instant messaging programs, cell phone text messaging and other Internet venues to mask their identity. Cyber bullies

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If my child has been harmed by a bully, … my “pound of flesh” will be in the form of dollars. I can’t sue the child, but I can certainly sue his or her parents.

COVERAGES

Cyberbullying laws on the books Delaware, Maryland and Pennsylvania each enacted an anti-bullying law(s) which includes cyberbullying. Delaware: Delaware Code Annotated Title 14, §4112D – School bullying prevention Delaware Code Annotated Title 14, §4123A – School bullying prevention and criminal youth Maryland: Maryland Code Annotated, Education §7-424 – Reporting incidents of harassment or intimidation against students Maryland Code Annotated, Education §7-424.1 – Model policy prohibiting bullying, harassment and intimidation Maryland Code Annotated, Criminal §3-805 – Misuse of electronic mail Code of Maryland State Board of Education Regulation §13A.01.04.03 – School safety Pennsylvania: 24 Pennsylvania Consolidated Statute §13-1303.1-A – Policy relating to bullying

can gang up on their victims electronically in large numbers since there is no limit to the number of people who can join in. This frees them from the normal and social constraints on their behavior. Kids report being mean to each other online beginning as young as the second grade. According to research, boys initiate mean online activity earlier than girls do. However, by middle school, girls are more likely to engage in cyberbullying than boys.

The National Crime Prevention Council reports that cyberbullying is a problem that affects almost 50 percent of all American teens. A survey of 1,500 students in grades four through eight conducted by I-Safe.org revealed the following: w 42 percent have been bullied while online; one in four has had it happen more than once w 35 percent have been threatened online; nearly one in five has had it happen more than once

It’s a known fact that teenagers know more about computers and cellular phones than their parents or guardians. Therefore they are able to operate their devices without concern that a parent or guardian will discover their experience with bullying, whether as a victim or an offender. Incidentally, cyberbullying is not limited to children. The same behavior is present among adults. The distinction is age. When adults use the Internet or cell phones for this purpose, it’s called cyberstalking or cyberharassment.

How prevalent is cyberbullying? Numerous surveys have been conducted concerning cyberbullying, and all of these surveys have reached the same conclusion — it’s a major problem among teens.

w 21 percent have received mean or threatening emails or other messages w 58 percent have had someone say mean or hurtful things to them online w 58 percent have not told their parents or any adult about what has happened to them online Currently 47 states have some type of legislation regarding bullying prevention. As of June 2011, only 30 of those states — including Pennsylvania, Maryland and Delaware — had laws that address cyberbullying. (See sidebar to left) The laws vary from state to state as to what constitutes bullying, as well as the punishment for violating the law. Punishment ranges from school suspension or expulsion to a fine and/ or jail time. continued on page 14

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Valley Forge Service Branch: 800.333.3622 | Home Office: Des Moines, IA

COVERAGES

continued from page 12

Would an insurance policy respond to cyberbullying? What are the harmful effects of cyberbullying? Lower selfesteem; withdrawal from their friends and family; being scared, frustrated, angry or depressed; and the most damaging — suicidal tendencies. There are several examples where cyberbullying has been linked to the suicide of a teenager. I don’t know about you, but if my child has been harmed by a bully, I’m going to take some action if I know who that bully is. In my childhood days that action was physical — it was face-to-face. Not anymore. Today, that’s a no-no. Today it’s in the courts. My “pound of flesh” will be in the form of dollars. I can’t sue the child, but I can certainly sue his or her parents. Are they liable? I don’t know — that’s a legal question. But they are certainly vicariously liable for the actions of their son or daughter. If I do file a suit against the parents of the bully who harmed my child, do they have any insurance coverage for that claim? We have to take a look at the Homeowners’ policy, and possibly a Personal Umbrella policy, to determine the answer to that question. First, what are the allegations? What harm or injury did their 15-year-old child cause my 14-year-old child? Was my child harassed? Was my child’s reputation tarnished or

destroyed? Did my child suffer mental anguish? Or, did my child attempt suicide? Was psychiatric counseling necessary? Section II – Liability of the Homeowners’ policy agrees to pay for damages and provide a defense because of “bodily injury” caused by an occurrence to which coverage applies and for which an insured is legally liable. “Bodily injury” is defined

Most cyber bullies know what they are writing or posting is false. Their primary purpose is to destroy another person with false information. as “bodily harm, sickness or disease, including required care, loss of services and death that results.” Does harassment constitute “bodily injury”? I don’t think so. Is loss of reputation “bodily injury”? I doubt it. Is libel or slander? We call that “personal injury”. What about mental anguish? Possibly. Attempted suicide? Maybe. Suicide? Definitely. What I’m saying is that I don’t really know what constitutes “bodily injury.” The Homeowners’ policy

doesn’t tell me. “Bodily injury” means bodily harm. What has that told me? Nothing! We’ll have to let the courts decide. Assuming that at least one of the allegations meets the test of being “bodily injury,” the Homeowners’ policy is on the hook. But the Homeowners’ insurer may have an out. Personal Liability exclusion E.1. excludes “bodily injury expected or intended by an insured.” Is that teenage son or daughter who bullied my child an “insured” under the parents’ Homeowners’ policy? Absolutely! Did that teenage son or daughter expect or intend my child to suffer bodily injury? Maybe, maybe not. What does he or she have to say? It’s called a deposition. The Homeowners’ insurer also has a safety net with exclusion E.7. which excludes “bodily injury which arises out of sexual molestation, corporal punishment or physical or mental abuse.” Cyberbullying, in most cases, could be labeled “mental abuse.” So, the Homeowners’ insurer may be off the hook after all. I emphasize may be. I know, and y’all know, that each case is based on its own merit, and it’s impossible to give an absolute “yes” or “no” to any theoretical claims question. Let’s expand the liability coverage under the Homeowners’ policy. Let’s add the Personal Injury continued on page 16

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Glance at Events AUGUST CALENDAR

Date 1

Topic

Location

Dynamics of Service

Mechanicsburg, Pa.

Consequences of Property Loss Seminar

Allentown, Pa.

CISR—Commercial Casualty Course

Frederick, Md.

Consequences of Property Loss Seminar

Mechanicsburg, Pa.

CPIA—Module 1

Philadelphia, Pa.

7-9

P&C Licensing Study Course

Mechanicsburg, Pa.

CPIA—Module 2

Philadelphia, Pa.

8-9

James K. Ruble Graduate Seminar

Hershey, Pa.

CPIA—Module 3

Philadelphia, Pa.

13-14

James K. Ruble Graduate Seminar

Ellicott City, Md.

CISR—Commercial Casualty Course

Allentown, Pa.

14-16

L&H Licensing Study Course

Pittsburgh, Pa.

Consequences of Property Loss Seminar

Philadelphia, Pa.

CISR—Commercial Casualty Course

Wilmington, Del.

20-23

CIC—Life & Health Institute

Philadelphia, Pa.

CISR—Commercial Casualty Course

Reading, Pa.

Consequences of Property Loss Seminar

Pittsburgh, Pa.

P&C Licensing Study Course

Philadelphia, Pa.

21-23

IA&B On-Demand Training Education from IA&B is now available online when and where you want it. Visit iabgroup.com/on-demand for more information.

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COVERAGES

continued from page 14

Coverage endorsement (ISO Form HO 24 82). Covered injuries and damages now include “oral or written publication, in any manner, of material that slanders or libels a person,” and “oral or written publication, in any manner, that violates a person’s right of privacy.” Certainly the information their son or daughter wrote or posted about my child was libelous or slanderous. Now their Homeowners’ insurer might as well step up, bite the bullet and settle this claim. You would think so. After all, libel or slander is considered “personal injury.” But again the Homeowners’ insurer may have an out. The Personal Injury endorsement excludes “personal injury”: 1. Caused by or at the direction of an “insured” with the knowledge that the act would violate the rights of another and would inflict “personal injury”; 2. Arising out of oral written publication of material, if done by or at the direction of an “insured” with knowledge of its falsity. Those are tough exclusions to overcome. Especially the “if the insured knew it was false” exclusion. Most cyber bullies know what they are writing or posting is false. Their primary purpose is to destroy another person with false information.

What about Personal Umbrella policies? That’s hard to answer. They usually have a broader definition of “bodily injury” and “personal injury” that may include harassment, defamation, humiliation, shock and mental anguish. Not always, but usually. But what about exclusions? Does the Personal Umbrella policy provide broader coverage than

I think all of us will agree that technology is advancing at a much faster pace than our insurers’ ability to address the exposures that those technologies are creating.

the Homeowners’ policy, or is it about the same? I can’t answer that question. There is no standard Personal Umbrella policy. They are usually insurerproprietary forms.

Is the insurance industry ready for today’s exposures? I think all of us will agree that technology is advancing at a much faster pace than our insurers’ ability to address the exposures that those technologies are creating. To their credit, many of our insurers are doing a good job of addressing these new technological exposures in the business arena with the development of their ECommerce and Cyber policies.

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In many cases, these policies may cover cyberstalking or cyberharassment by an employee of the insured. However, nothing is being done to address the same exposures for individuals under their personal liability policies. Cyberbullying is a major issue in today’s society. I firmly believe that in the future more and more parents will be called into court to answer for the actions of their children. Will they have coverage for those claims? I just don’t know. Do you have any insureds that have children who may be cyber bullies? If they are sued for the actions of their children, do they expect coverage under their Homeowners’ policy or Personal Umbrella policy? I think so. If you’re an agent, talk to your insurers. If you’re an insurer, give this some thought. Y’all take care! ________________________________

Jerry M. Milton, CIC, teaches and consults on industry issues. The legal profession recognizes him as an expert on insurance coverages. He is also an education consultant for IA&B who works with CISR, CIC and continuing education programs.

Member FAQ QUESTION: One of my customers is shutting down his business. He has an occurrence form, so isn’t he covered no matter when the claim is brought forth since the “incident” would have occurred when he had coverage? If so, why is discontinued operations coverage offered? Can you help me understand if and why my client should purchase it? ANSWER: person retires and will go back to the policy that was in force when the insured built the deck. Naturally, anything can, and will, be argued, including what in the specific case constituted the occurrence.

Discontinued operations coverage, or more precisely the absence thereof, can be a major E&O exposure for agents. That’s because there is significant confusion over the occurrence form and its coverage triggers. If we go back to the ISO Occurrence form (CG 00 01), the relevant section reads:

When all is said and done, a policy must be in force when the claim occurs, and the correct way to cover the builder is to offer discontinued operations coverage. The discontinued operations policy is a standard CGL policy that has been rated to account for the decreasing exposure. It is possible the current carrier will not want to offer the coverage, and you may have to seek a policy elsewhere. But you must do it. If your client declines the offer, document it. If you cannot find a market, let the client know.

“b. this insurance applies to ‘bodily injury’ and ‘property damage’ only if: (1) The ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ that takes place in the "coverage territory," and (2) The ‘bodily injury’ or ‘property damage’ occurs during the policy period.” [emphasis added]

In conclusion, under a claims-made policy, the insured must have a “tail.” Under an occurrence form, he must have a live CGL in the form of a discontinued operations policy.

While this language looks fairly innocuous, it is often misunderstood, with some unfortunate consequences at claim time. Using an example may be the best way to illustrate this case: Let’s say the insured builds decks. After he retires, one of his decks collapses during a Fourth of July party, and the homeowner is injured.* The retired builder turns the claim into his former CGL carrier, only to receive a denial letter because the bodily injury and property damage did not occur during the policy period.

*For purposes of this illustration, we are intentionally disregarding the debate over faulty work and occurrence.

DO YOU HAVE A QUESTION? Email it to us at iab@iabgroup.com. Please use “Primary Agent FAQ” in the subject line of your message. You can also fax your question to 717-795-8347. We look forward to answering your questions!

Many producers are under the impression that, since it is an occurrence form, coverage will continue after the

[ 17 ]

COVERAGES

Travelers sheds light on industry changes

Feedback from IA&B’s spring 2012 Member Agent Panel (MAP) meetings is fueling the association’s carrier relations initiatives. After hearing of Travelers’ proactive education efforts, IA&B invited the carrier to attend the May board meeting and shed light on the property/casualty marketplace.

Primary Agent | August 2012

IA&B’s

spring MAP meetings focused on the current market conditions — and their effect on day-to-day agency operations. Participants reported overall premium increases and higher deductibles on renewal business and a general consensus to proceed into the apparent firming market with caution, knowing that a still-struggling economy would make customers less receptive to higher pricing. Throughout IA&B’s MAP meetings, the Travelers name came up time and time again. Member agents shared that the carrier — a major property/casualty player in IA&B’s tri-state footprint and fifth largest nationwide — was leading the way with agent and consumer education about market changes. IA&B decided to go straight to the source and invited Travelers’ representatives to discuss the current and developing national insurance marketplace with the board of directors. The carrier’s president of the mid-Atlantic region, Kirk Larsen, and regional vice president of personal lines, Dick French, sat down with the IA&B Board in late May and did just that — sharing insights on recent market trends and their repercussions on underwriting and appetite.

Understanding market drivers Front and center on many agents’ minds is the market status: Is a hard market finally imminent? The Travelers representatives noted a recent West Virginia Insurance Day presentation by Bob Hartwig, president of the Insurance Information Institute and leading economist, who shared the four components necessary for a true hard market. One is a restriction in capacity — something currently not seen as agents continue to find carriers interested in writing their business. Then why are renewal prices on the rise nationwide? Several market drivers, which insurance companies closely monitor, while the agent community and certainly the general public rarely give a second thought, can explain. For one, there is the return on equity necessary to attract and retain investors who are critical to the health of insurance companies. Insurers’ recent lack of investment income coincides with higher combined ratios and loss trends moving in a negative direction. This clash of factors forces the hands of insurers, leading to tightened underwriting and increased premiums. Then there is the unexpected, such as the recent spate of natural disasters. Many carriers’ claim-frequency numbers

[ 19 ]

This clash of factors forces the hands of insurers, leading to tightened underwriting and increased premiums.

COVERAGES

More on MAPs shot through the roof, thanks to catastrophe and weatherrelated losses. Compounding the effects of these losses is the nationwide urbanization trend, which means more insureds are affected by a single disaster. Hence insurers’ need to improve profitability. According to member agents, national and regional carriers alike are responding to that need by increasing deductibles and focusing on underwriting. And for some policyholders that’s a tough pill to swallow … which sparked Travelers’ recent education focus. As reported by MAP participants, the carrier aims to stay ahead of the curve by helping agents to educate consumers on the changing marketplace and how to minimize the repercussions. Travelers’ reliance on the independent agency community to spread these messages is a testament to the company’s belief in the system. Larsen and French ended their presentation by reaffirming their support for the independent agents, calling them “value providers” and touting what they bring to the marketplace — no matter what challenges that marketplace ________________________________

By Karen Robison, public relations director at IA&B

Feedback from IA&B’s spring 2012 Member Agent Panels (MAP) meetings triggered IA&B’s invitation to Travelers. So what’s the scoop on MAPs? Who:

approximately 150 IA&B members (often agency principals and producers), who sign on for a two-year commitment

What: opportunity to weigh in on industry issues and provide feedback on IA&B’s activities and direction Where: 13 meeting locations across Delaware, Maryland and Pennsylvania. Why:

to provide valuable insight to the IA&B Board of Directors

When: semiannually; next series of meetings slated for Sept. 11-27, 2012 Since the inaugural meetings in 2003, MAP participants have had a significant impact on IA&B’s initiatives — spurring legislative and regulatory action, initiating the creation of new resources and helping the association stay relevant to membership’s changing needs.

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[ 20 ]

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[ 21 ]

Your Business Is Our Business!

Platinum Profile Insurance Agents & Brokers proudly recognizes The Main Street America Group as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.

FEATURED PARTNER The Main Street America Group CORPORATE HEADQUARTERS Jacksonville, Fla. CHIEF EXECUTIVE OFFICER Tom Van Berkel, Chairman President and CEO Northeast Region Headquarters Syracuse, N.Y. Northeast Region President Mark Berger Northeast Region Sales Director John Hwilka Northeast Region Field Representatives Renee Herness (Eastern Pennsylvania) Dave Roshala (Western Pennsylvania) Luz Lopez (Pennsylvania, Maryland, Delaware) Northeast Region Markets New York, Pennsylvania, Maryland, Delaware A.M. BEST RATING** Financial Strength: “A” (Excellent) Issuer Credit Ratings: “a+”

he Main Street America Group’s rich history began in 1923 when we formed our company to serve the insurance needs of Grange fraternity members. Today, Main Street America provides a full line of competitively priced personal lines and commercial lines products and services to individuals, families and small businesses in 27 states, and fidelity and surety bond products in 46 states.. We annually write nearly $900 million in premium and have more than $2 billion in total assets. Through our eight “A” rated property and casualty writing companies — including our largest carrier, NGM Insurance Company — we partner with more than 2,000 independent agents to provide superior, personal service to more than 600,000 policyholders. As the founding company partner of Trusted Choice®, Main Street America is 100 percent committed to the independent insurance agent, as you are our sole channel of

Mark Berger Northeast Region President distribution. We strive to meet the needs of our customers (agents), and our customers’ customers (policyholders), better than anyone else in the market. We are also one of six carriers which invested in the development of the new Consumer Agent Portal (CAP). To become our customer and represent Main Street America in your market, please visit www.msagroup.com and click on the “Become a Main Street America Agent” link. ** A.M. Best’s rating of “A” (“Excellent”) applies to The Main Street America Group. Ratings listed herein are as of May 1, 2012, are used with permission of A.M. Best, and are subject to changes by the rating service. For more information about ratings, please access www.ambest.com

Listed below are those companies that strongly support the independent agency system and Insurance Agents & Brokers. Thank you for your continued sponsorship.

WHAT IS IA&B PARTNERS? The IA&B Partners program gives company and allied businesses the opportunity to demonstrate their commitment of support to independent agents and receive maximum market exposure. As an IA&B Partner, you will also realize the benefits of IA&B membership to help you succeed in the insurance industry.

DO YOU SEE YOUR NAME? To become an IA&B Partner, choose the sponsorship package that matches your commitment of support. Contact the Member Sales Center at 800-998-9644, 717-795-9100 or visit us online at www.iabgroup.com to get started.

PLATINUM LEVEL

BRONZE LEVEL

ACUITY Berkley Mid-Atlantic Group Donegal Insurance Group Erie Insurance Group Harleysville Insurance Highmark Casualty Insurance Co Insurance Agents & Brokers Service Group Inc

Aegis Security Insurance Co

MMG Insurance Company Millers Mutual Group Millville Mutual Insurance Co Mutual Benefit Group Ohio Casualty Penn National Insurance Selective Swiss Re The Main Street America Group Utica National Insurance Group

Encompass Insurance

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Lebanon Valley Insurance Company

Progressive Westfield Insurance

Merchants Insurance Group

Agency Insurance Company AmWINS Program Underwriters Inc Auto-Owners Insurance Company Briar Creek Mutual Insurance Company Builders Insurance Group Chubb Group of Insurance Companies Countryway Insurance Company First General Services Foremost Insurance Group Goodville Mutual Casualty Company Guard Insurance Group Harford Mutual Insurance Co Hanover Fire & Casualty Insurance Company Insurance Alliance of Central PA Inc Insurance House Insurance Placement Facility of PA Keystone Insurers Group Inc Mercer Insurance Group Mercury Casualty Penn PRIME Municipal Insurance

SILVER LEVEL Access Insurance Company Allied Insurance American Mining Insurance Co Cumberland Insurance Group Frederick Mutual Insurance Co Juniata Mutual Insurance Co PSBA Insurance Trust The Philadelphia Contributionship

Reamstown Mutual Insurance Company Rockwood Casualty Insurance State Auto Mutual Insurance Company TAPCO Underwriters Inc The Brethren Mutual Insurance Company The Motorists Insurance Group The Mutual Service Office Inc Travelers Tuscarora Wayne Insurance Company Zenith Insurance Primary Agent August 2012

Tools

YOU CAN USE

TECHNOLOGY TIPS Voice recognition People have always talked to their computers — using four-letter words in many cases — and until recently, computers didn’t listen very well. Affordable, usable and reliable voicerecognition software has been an “any day now” technology for at least a decade. This technology has finally become a useful tool. If you tried it in the past and gave up, you should give it a fresh look. I use and recommend Dragon NaturallySpeaking (version 10 preferred). After installing the software, you will need to spend about 15 or 20 minutes to train it to your voice. After that, accuracy should be about 95 percent. And as you use the software to correct recognition mistakes, it learns from the mistakes, and recognition accuracy improves. The software works seamlessly with Microsoft Word, Excel, Internet Explorer and Outlook. It is available at many retail stores and through http://www.nuance.com/. Send & receive large files Being able to attach large files to an email to send to someone else is becoming more difficult as organizations place limits on the size of received emails. This problem can arise when trying to send a submission to an underwriter or with a client who needs to send you a picture or large spreadsheet. SendThisFile.com and YouSendIt.com are Web-based services that streamline the process of sending and receiving large files.

Tech tips to spare There’s more where this came from. Read the rest of Steve Anderson’s technology tips online. Delaware: www.iabgroup.com/de/10_tech_tips Maryland: www.iabgroup.com/md/10_tech_tips Pennsylvania: www.iabgroup.com/pa/10_tech_tips

Using either service is as easy as entering the recipient's email address into a form, selecting the file you want to send and clicking the send button. The recipient receives a link to his or her file via an email message and then clicks on the link to download the file to his or her computer. There are no email attachments and no software to install. There are no file size limits so any file up to 2 gigabytes (a browser limit) can be sent. A free account is available to test the service and for sending a small number of files. (http://www.sendthisfile.com/ or http://www.yousendit.com/) Easily manage website passwords Managing multiple website passwords is one of the more difficult tasks for agency personnel. While tools like Transformation Station and TransactNOW help with this process, there continues to be many sites that [ 24 ]

your staff goes to daily where they have to manually enter user ID and password information each time. RoboForm is a tool that can help. I've been using it for a while and don't know how I got along without it! The program installs as part of your Web browser (either Internet Explorer or Firefox) and manages login and passwords for you. When you log into a Web site, RoboForm offers to save the online login information into a passcard after you click the login/submit button. The passcard is saved into a fully encrypted file that requires a master password to access. Once the login information page is saved, a true one-click login is available by clicking on the website name in the passcard list. The program automatically navigates to the website's login page, fills the stored login information into the form and clicks the submit button. You are logged in with one click. (http://www.roboform.com/) ______________________________ Steve Anderson provided these tips on behalf of the Agents Council for Technology (ACT). To subscribe to Anderson’s free weekly email newsletter, visit steveanderson.com/act. For more information about ACT, contact Jeff Yates at jeff.yates@iiaba.net. The article reflects the views of the author and should not be construed as an official statement by ACT.

Bonus!

Tools

YOU CAN USE

GOOGLE TAKEOUT oogle allows extensive storage of personal data. You can amass contacts, documents, photos, audio files and more. Google Takeout, a Data Liberation platform, allows you to archive some â&#x20AC;&#x201D; or all â&#x20AC;&#x201D; (your choice) of the data stored in your account by downloading it as a zip file that can be saved elsewhere.

Gmail contacts Google+ Circles

Picasa photo albums Google Docs

Back up your Google data at google.com/takeout. Have yet to explore what Google has to offer beyond a search engine? Open a free account at accounts.google.com/SignUp.

[ 25 ]

Primary Agent | August 2012

Technology U P DATE

THE REALITY OF TEXTING FOR INSURANCE AGENCIES practices for managing these communications, and the technology options for managing texts and importing them into your systems as I understand them. There may be other options and not everyone uses Microsoft Outlook. Your technology professional should be able to assist you with the details.

PATRICIA ALEXANDER, CIC Patricia Alexander, CIC, is a consultant, coach and mentor with many years of experience in retail agency and MGA settings. She may be reached at pat@patalexander.com. Alexander developed this article for the Agents Council for Technology

Agency concerns 1. If clients are texting staff members on their personal phone, a number of issues come to my mind:

(ACT), part of the Independent Insurance Agents & Brokers of America. ACT’s website is www.independentagent.com/act. This article reflects the views of the author and should not be construed as an official statement by ACT.

Empowered clients are going to communicate with agents in the manner most convenient to them, so the real issue becomes how is the agency going to manage texting if the client prefers to use it? In this article, I discuss several concerns agencies have with texting, current best

During every meeting I have attended in the last few months, there have been questions and discussions on “should an agency allow texting by its clients and staff, and if so, how do we control errors & omissions and documentation in our agency management system?”

[ 26 ]

a. What if your staff member is on vacation where their phone is not functioning or they are just too busy to take care of the issue? b. What if your staff member is ill and not able to pay attention to incoming messages on a real-time basis?

Primary Agent | August 2012

c. What if the individual is actually no longer a staff member? d. What if the individual says they will take care of the request and does, but doesn't document it in the system and something is not correct? I have heard more than one agency principal flatly state that they weren't going to allow any texting. Others don't see any way to stop people from texting but don't know what to do with it and how to set parameters. A number of people commented that it was seamless to attach an email, voicemail or other documentation in their agency management system, but not so for texts. Since it is difficult to manage the capture of the text information, they want to ban receiving texts. We need to remember that capturing email information in an agency management system was not always easy. Once upon a time we copied the emails and pasted them into an activity or note since we couldn't attach anything to our agency management systems. Through communication with the various agency management vendors from their user groups, the vendors enhanced their systems to handle email attachments. From this grew the ability to easily attach various other attachments, and we hope vendors will create streamlined workflows for capturing texts as well, possibly as a part of their mobile apps. The initial attachment functions were "clunky", but as time and technology have progressed, this function has become more streamlined.

In todayâ&#x20AC;&#x2122;s world, texting is a reality. It is not only your young clients that are engaging in this act. Texting eliminates telephone tag, and results in an almost instant response. This is what many of us are programmed to want.

4. If your client and someone in your agency are friends, inevitably there will be a text on a person phone. Define, train and implement the process to get this moved to an agency level as quickly as possible.

Current best practices I recommend you consider taking the following approach with regard to texting:

I donâ&#x20AC;&#x2122;t see that there is any more of an errors & omissions exposure in receiving and responding to texts than there are in phone calls, emails or face-to-face conversations. The biggest issue I believe agencies have at this time is how to make this format work for them as seamlessly as possible.

1. Do you want to be relevant to your client base? If so, then you must embrace this technology.

Texting eliminates telephone tag, and results in an almost instant response. This is what many of us are programmed to want.

2. Set standards and best practices. These really are no different than handling face-to-face conversations, phone calls, emails, etc. Your standard should be that all conversations with the client or with others about the clientâ&#x20AC;&#x2122;s account are to be documented in the agency management system or the system which you are using to collect client data. 3. Be pro-active and determine how to best receive texts at the agency level and educate your staff and clients.

[ 27 ]

Forwarding texts to email Here are some thoughts I have on this process that I have picked up from users who have already addressed this issue: 1. As soon as the initial text is received on a personal phone, forward it to your business email address. Text a response back to the client from your business Outlook account. The client's text response will come back into the email which will let you accumulate the stream of the conversation which can then be attached to the agency management system. 2. Some phones will allow you to capture an entire text conversation. In this case it could be acceptable that the conversation continue on that phone and then be captured and sent to the business email address for attachment into the agency management system. This would be the best approach when the conversation is just a question and answer session.

TECHNOLOGY UPDATE

3. It is important for everyone in the agency to learn how their specific phone works for text forwarding: a. iPhone — http://iphonefaq.org/archives/ 97335. Another approach is to take a picture of your iPhone screen when the text is showing, by pressing the on/off button on the top of the phone simultaneously with the application change button on the bottom front of the phone. This approach creates an image of the entire text message and the picture can then be emailed to your Outlook account. b. Android phones — Each manufacturer handles this in a different way, and I even find some differences within a manufacturer between their phones. It is best to check the operating information for your specific phone for this function. Sending texts from email Microsoft Outlook can be used as a tool to manage text messaging with your client. There are several steps to setting up and implementing the use of Microsoft Outlook. However, like anything else that you do, if you invest the time to research, implement and train a process, the rewards will be great. The best place to start the research is on the Web at Set Up Text Messaging (SMS) in Outlook. http://office.microsoft.com/ en-us/outlook-help/send-andreceive-text-messages-smsHA101823438.aspx#_Toc261416088

Microsoft has done a really good job here of explaining the options available for using Outlook and providing lots of screen shots.

there is a number that is attended during business hours and would get attention even when the employee is not available.

Implementing an agency text address I also recommend that the agency implement a way to receive text messages directly. I understand from my tech friends that many VoiP phone systems can have a number set up for receipt of text messages. I am also advised that this works differently with every system and that you will need to work with your phone system provider to get this set up and implemented. Once set up, someone in your agency will need to monitor this number during business hours so that the expected immediate response can be managed.

Conclusion Finally, some important points about texting to keep in mind:

If your agency does not have a VoiP system, another option available for receiving texts at a number that you control is to set up a Google Voice number at https://www.google.com/voice. In the Settings section of your Google Voice account, you will find a place to show the email address for text forwarding. When you receive these text messages, they should then be forwarded to the Outlook email address of the individual in your agency who will be handling this client. Once the number is set up, you should promote it to your clients, so that those who want to communicate in this manner can do so. When agency employees receive text messages on their phones, they should let that individual also know

[ 28 ]

1. If the client texted you, that is how they would like to communicate, so at least your initial response should be in a text. 2. If the client texted you, they expect an immediate response as that is what the common expectation is with texting. 3. Your employees should know the agency’s procedures for documenting text messages in the agency’s system, just as they would other communications from clients and business partners.

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Autonomous cars anticipated by end of decade “Look ma, no hands!” The refrain likely will take on new meaning within the next five years as driverless vehicles take to the highways and byways and maneuver thanks to radar, cameras, sensors and GPS. State governments are intrigued: Nevada and California already passed legislation allowing for road testing of self-driving cars, and legislatures in Arizona, Hawaii, Florida and Oklahoma have it under consideration. But how the insurance industry will respond remains unclear. As Carroll Lachnit, of Edmunds.com, questions, “The people in autonomous cars are in the mindset of not being a driver. In an accident, who has liability?” At the same time, others point to the cars’ potential safety record, theorizing that accidents will decline since humans — and their distractions (Text on, those sitting in the driver’s seat!) — will no longer be factors.

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----------------------------------------------------------------———————------The Last & Least column is dedicated to the industry’s oddities — from creative claims and kooky coverages, to (tasteful) jokes and strange stories. Submit yours to iab@iabgroup.com, subject line: Last & Least. The editor will happily protect sources’ anonymity upon request.

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