Maryland Primary Agent - December 2018

DECEMBER 2018 | MARYLAND

IA&B PRESIDENT & CEO

JASON ERNEST

ON COMPETITION, LEADERSHIP, AND FUN

FUTURES CONFERENCE IN REVIEW RESOLVE TO UPDATE YOUR OPERATING SYSTEM

TO BUILD A BUSINESS IS TO BELIEVE IN TOMORROW Business owners believe in the promise of tomorrow. For more than 100 years, Grinnell Mutual has been there to help you protect that promise.

Trust in Tomorrow.® Contact us today.

grinnellmutual.com “Trust in Tomorrow.” and the “Grinnell Re” are registered trademarks of Grinnell Mutual Reinsurance Company. © Grinnell Mutual Reinsurance Company, 2018.

IN THIS

8

Q&A WITH JASON ERNEST

Hear from IA&B’s President & CEO a year into his tenure about leadership lessons learned, opportunities ahead for agents, and more.

14 FUELING THE FUTURE

The independent agent career feels like a best-kept secret.

Learn how IA&B is spreading the word and working to foster and retain young talent.

20 RESOLVE TO UPDATE YOUR OPERATING SYSTEM IN 2019

The extended support of Windows 7 ends in January 2020.

Learn what you’ll gain by updating your operating system to Windows 10.

IN EVERY ISSUE 2 3 4 6 10 12 16 18 26 28 28 28

Chair of the Board’s Message Don’s Discussion Preventing Errors & Omissions Coverage Corner News & Notes IA&B Partners Board of Directors Financial Reports Pics & Posts Education Classified Ads Advertiser’s Index

JOIN US ON SOCIAL MEDIA: Facebook.com/IABforME LinkedIn.com/company/IA_and_B Twitter.com/IA_and_B About IA&B IA&B is the premier resource and champion for independent insurance agents in Pennsylvania, Maryland, and Delaware.

Periodical postage paid at Mechanicsburg, Pa. and at additional mailing offices.

Postmaster: Send address changes to Insurance Agents & Brokers, 5050 Ritter Road, Mechanicsburg, PA 17055.

Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2018-12, is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

Scenes from the 2018 IA&B Futures Conference

14

Copyright 2018. 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 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. 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 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.

1

CHAIR OF THE BOARD’S MESSAGE

BOARD OF DIRECTORS INSURANCE AGENTS & BROKERS 5050 Ritter Road | Mechanicsburg, PA 17055 800-998-9644 | IABforME.com

FINDING PERSPECTIVE

OFFICERS

I

Chair of the Board

sit down to write this message with a heavy heart. A dear friend of mind, one I met through IA&B, has fallen upon the most tragic of times – life-threatening health woes and the death of a spouse. All of it was sudden.

I share this for perspective. Most of us are weighed down by the demands of our jobs. And most of us take our health and our loved ones for granted.

But I also share this because it exemplifies the community that independent agents share. While we may be competitors, we’re also friends. In fact, the friendships I’ve made in this industry and through my association with IA&B are some of my most cherished.

It’s a hectic time of year – professionally and personally. But I encourage you to take a step back, reflect, and find joy in it because life is fragile.

John B. Hollister

Milford, PA Vice Chair of the Board

Craig S. Mader Crofton, MD

MEMBERS

Emory Stephen Burnett, CIC, ARM Wilmington, DE

Richard F. Corroon, CPCU Wilmington, DE

Michael P. Ertel Sr.+ Columbia, MD

Ashley M. Fitzsimmons, CISR Forest City, PA

Len Gieseler, LUTCF Pottstown, PA

G. Greg Gunn, CIC* Lemoyne, PA

Bryan C. Hanes, JD Hagerstown, MD

Lisa A. Leach Goth, CIC New Bethlehem, PA

All the best wishes for happy & healthy holiday season.

Shannon Lipniskis Indiana, PA

Elizabeth H. Martin, CIC Millersville, PA

All the best,

Mark J. Monroe

West Chester, PA

Richard M. Rankin, CIC Lancaster, PA

John Hollister Chair of the Board

D. Bradley Rosenkilde Jr. Hunt Valley, MD

Tara S. Silfies, CPCU Bethlehem, PA

Robert L. Smyrl Jr., CIC Hatfield, PA

Glenn R. Strachan

Ft. Washington, Md

Bryan S. Willey Dover, DE

Lawrence A. Wilson, CIC, CPIA, CPCU, ARM** Newark, DE

J. Marshall Wolff, CIC, CPCU Easton, PA

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

2

DECEMBER 2018

Don’s Discussion IA&B Legal & Corporate Affairs Director Don Bankus provided this month’s answer.

QUESTION: Lenders are increasingly demanding that I include the phrase “replacement cost” in the remarks section of ACORD 27. Do the ACORD form instructions provide any guidance?

ANSWER: Great question. As you’re well aware, agents often are asked to include all kinds of information on the Evidence of Property Insurance form. It’s generally recommended that the information an agent enters in the remarks box be limited as per the ACORD 27 instructions guide.

The ACORD 27 Instructions for the “REMARKS (Including Special Conditions)” box provide as follows: Enter text: The additional comments or special conditions that may exist upon the policy.

ACORD 101, Additional Remarks Schedule, may be attached if more space is required.

As long as the information you include, or are being asked to include, in the remarks box isn’t illegal (meaning that it’s not a violation of an insurance or other law, regulations, etc.), and the information you include is not a misrepresentation of any policy terms or conditions, inclusion of such information is not expressly prohibited.

remarks section – it may be prudent to include a statement thereafter that the information being provided is “to the extent provided in the attached/enclosed forms” and then provide copies of the applicable policy forms/endorsements.

Given policy language may differ from carrier to carrier and the possible issues associated with co-insurance penalties, etc., simply typing a generic phrase such as “replacement cost” on the form, with nothing more, could be ambiguous in context and subject to interpretation.

Ask our experts!

Have a question?

Rely on our team to find the answer.

Contact Don: 800-998-9644, ext. 603 DonB@IABforME.com IABforME.com

As a rule of thumb, if the information you intend or are requested to add to the remarks section falls outside the four corners of the policy and/or applicable endorsements, you should refrain from including/adding it.

To assist in limiting the agency’s exposure – and as an added precaution if you do include information in the

3

PREVENTING ERRORS & OMISSIONS

IS EDUCATION ONE OF YOUR 2019 GOALS? IT PROBABLY SHOULD BE.

By Curt Pearsall, CPCU, AIAF, CPIA

A

round this time of year, most agencies start to give some thought to their goals for the next year. There is a good chance that they will come up with several initiatives, and since some of these may involve some degree of financial investment, the agency would probably want to budget for the anticipated costs. The same holds true for giving serious consideration to the establishment of a few E&O goals – goals that will enhance the E&O culture and provide a higher degree of E&O protection.

4

For every agency, the goals probably will be different based on where that agency is in their E&O loss prevention efforts.

One that I want to focus on involves staff education.

In preparing for a speech I will be giving, I read a report by McKinsey & Company that addressed what insurance might look like in the year 2030 (it will be here before we know it) and the impact of artificial intelligence. One of the predictions they arrived at was: The number of agents is reduced

DECEMBER 2018

substantially as active agents retire and remaining agents rely heavily on technology to increase productivity. The role of agents transitions to process facilitators and product educators.

It is that last statement that I want to focus on: Agents will have more of a role as product educators. Clients will want to better understand their exposures and how insurance can insure those exposures. This seems to strongly imply that those agencies that have a higher

level of education focus will be the agencies that will survive and thrive in tomorrow’s world.

Every day clients are looking to your agency for knowledge and expertise. To provide that, the applicable staff need to possess that knowledge. Growing in technical knowledge is certainly very important. Other staff education issues might include improved customer service skills and automation skills.

Agencies that have a higher level of education focus will be the agencies that will survive.

— Curt Pearsall

Without a doubt, staff and client education is today extremely important and will continue to grow in the level of importance towards the future survival of independent agencies.

Where does your agency stand on the issue of client education? Where does your agency stand on the issue of staff education? 2019 might be a good year to take the importance of this issue to the next level.

Curt Pearsall, CPCU, AIAF, CPIA, penned this article. He is a consultant and national expert on errors and omissions for insurance agencies.

Pearsall Associates Inc. specializes in E&O risk management and loss control by working with agencies to develop a “culture of E&O prevention” by understanding areas of potential liability and improving the focus on E&O loss control. He also provides expert witness services to law firms for E&O claims and litigation.

PLAN YOUR 2019 EDUCATION POISE YOUR agency for success – now and well into the future – by prioritizing education. Registration is open for our complete 2019 professional training schedule.

Why choose IA&B? You can count on our training schedule to meet every career stage and learning style. We offer classroom settings and online trainings, timely special topic seminars and designation programs.

And you can count on us to deliver expert trainers, quality venues, and comprehensive course materials.

IABforME.com/education

5

COVERAGE CORNER

WHAT IS “CARE, CUSTODY OR CONTROL” AND “PARTICULAR PART OF REAL PROPERTY”?

By Jerry M. Milton, CIC

E

xclusion j. under Coverage A – Bodily Injury And Property Damage of the Commercial General Liability (CGL) policy reads, in part, as follows: j. Damage To Property “Property damage” to: (4) Personal property in the care, custody or control of the insured; (5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the “property damage” arises out of those operations;

6

The “care, custody or control” portion of exclusion j. has been subject to the most controversy and litigation. The intent of this exclusion is to make it primarily apply to bailment arrangements in which one party temporarily takes possession of another’s property for some business purpose, such as repair, servicing, or storage of the property. The coverage issue centers on just how complete or active the insured’s possession of the property must be in order to constitute “care, custody or control.” Generally, the courts have insisted on a fairly high degree of control on the part of the insured before the exclusion can be invoked. For example, the

DECEMBER 2018

mere presence of property of others on the insured’s premises is usually not enough to defeat coverage.

Here are a few examples: • The Boy Scouts rented a shed to store their camping equipment. A fire occurred at the shed, and the property insurer paid for the loss. The property insurer then sought reimbursement from the shed owner’s liability insurer.

The liability insurer declined the claim alleging the owner’s CGL excluded property in the insured’s “care, custody or control.” The trial court ruled against the liability insurer on the basis that the

property stored in the insured’s shed was not in the insured’s “care, custody or control” since the Boy Scouts had free access to the property while it was stored on the insured’s premises and the insured exercised no active possession or supervision of the property. American Family Mutual Insurance Co. v. Bentley, 352 N.E.2d 860 (Ind. App. 1976)

contractors. It affects coverage for various trade contractors who perform work on existing property, such as home repairs.

• Band musicians arranged to leave their instruments between shows in the bar where they performed. A fire in the bar destroyed the instruments, and the bar’s liability insurer denied coverage on grounds that the musical instruments were in the “care, custody or control” of the bar. The court stipulated that the mere presence of someone else’s property on the insured’s premises did not place the property in the insured’s “care, custody or control.” (Bolanowski v.

McKinney, 581 N.E.2d 345 (Ill. 1991)

This exclusion is applied fairly easily when the damaged property consists of independent components. However, when the damage is to more integrated or complex property, it becomes difficult to discern the “that particular part” that is being worked on. For example, a contractor is in the process of repairing an air conditioning unit for a residential customer. While performing the repairs, the contractor causes a short circuit that results in fire damage to the house as well as the air conditioning unit. The contractor is clearly covered for the fire damage to the house. However, is the entire air conditioning unit covered or excluded? Can it be argued that only “that particular part” of the air conditioning unit on which operations were being performed, and not the entire unit, is excluded?

• Some degree of safekeeping is usually required by the courts before the “care, custody or control” exclusion will be enforced. A court found that the jewelry of a hotel guest kept in a hotel wall safe was in the “care, custody or control’ of the hotel even though the owner had full free access to the jewelry at all times. The court ruled the exclusion applied since “the protection of customers’ valuables constitutes an intrinsic part of the hotel’s work as an innkeeper.” Liberty Mutual Insurance Co. v. Zurich Insurance Co., 930 N.E.2d 573 (Ill, 2010) These are similar “care, custody or control” claims, but they have different court opinions. That’s the problem!

The damage to “that particular part of real property on which operations are being performed” applies primarily to

What are the problems? The CGL does not define “that particular part of real property” or “operations.” This leaves the door open for dispute. What is “that particular part?” What are “operations”?

The question of how narrow the phrase “that particular part” should be interpreted has constantly been litigated.

There are general guidelines, but no ironclad rule. The most often cited court decision is Vinsant Electrical Contractors. v. Aetna Casualty & Surety Co. 530 S.W.2d 76 (Tenn. 1975).

The insured in Vinsant was an electrical contractor hired to install some circuit breakers in a shopping center switchboard. In the course of installing the breakers, a Vinsant employee

caused a short that destroyed the entire switchboard. The insurer denied coverage, maintaining that the entire switchboard, not just the circuit being worked on, was a part of the property on which operations were being performed. The court agreed with the insurer, reasoning that the phrase “that particular part” could easily be narrowed in scope to the point at which the exclusion would cease to exist altogether.

A demolition contractor was hired to tear down a carport. The contractor also demolished part of the dwelling to which the carport was attached in the mistaken belief that the contract called for demolition of the entire structure.

The contractor’s CGL insurer denied coverage for the homeowner’s resultant claim for damage to the dwelling. The insured argued that the property damage in question was to “that particular part of real property” on which the contractor was performing operations, and “that particular part” was the carport, not the dwelling. The court agreed with the insured’s argument.

When is the personal property in the insured’s ‘care, custody or control”? What is the “particular part of real property on which operations are being performed?” I don’t know. I guess the courts will tell us.

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 also serves as our education consultant, working with our CISR, CIC and continuing education programs.

JERRY MILTON’S FAREWELL TOUR

THIS ARTICLE marks Jerry Milton’s final Primary Agent contribution. Jerry will continue to serve as an education consultant with our CIC program through 2019.

Watch IA&B Agent Headlines emails for opportunities to celebrate Jerry’s impending retirement with him.

7

Q&A

WITH JASON ERNEST

Jason Ernest began as president and CEO of IA&B on Jan. 1, 2018. Nearly a year into his tenure, he sat down with the Primary Agent editorial staff to discuss the organization’s accomplishments, his goals and leadership lessons learned, and – yes – his favorite meal.

T

ell us about IA&B’s year. What accomplishments are you most proud of? What has changed at the organization – and what hasn’t – over the past 12 months?

Well, I’ve been able to keep the wheels on this first year…. But in seriousness, it was a good year. Through 2018 we have been able to set the foundation –our internal structure, culture, and strategy – to

8

position us for new things. It was a year to learn and to consider where IA&B sits and where it needs to go.

What hasn’t changed is our core. We are a member-centered organization that meets the needs of independent agents.

We continue to focus on our award winning education, our E&O sales, and our advocacy – government, legal, and industry. That will continue.

However, the independent agent needs more in order to compete – now more than ever. IA&B has to offer new, cutting-edge solutions to agents. As we continue to do what we’ve always been good at, we are going to add some new things to the mix. We are very excited about 2019.

In total, you’ve been with IA&B for 13 years. How has the industry – and the IA&B organization along with it – evolved during that time?

there. Two years ago, $20 billion of new insurance business entered the market.

However, there is a lot more competition for that business. Online and direct writers are part of it, but more sophisticated agencies, that often cross state lines, are also a big part. Agents need to work hard for business, and I’ve seen that drastic shift over the 13 years I’ve been in this business. I’m not saying agents never had to work hard – it’s just a much more competitive landscape today.

It is the agency that is efficient, smart, and technologically savvy that will take this business. Agents have to focus on producing new business and creating time to allow for that.

What are your goals for IA&B in 2019? How about your goals for IA&B members in the year ahead?

As I just noted – competition. No doubt about it.

My singular goal for 2019 is to deliver to our members. We’ve talked a lot about some exciting things – now it’s time to put it in the hands of members.

From the agents’ perspective, there is a lot of market out there. Meaning, as the economy improves and there is more spending, there is more insurable risk out

First, IA&B will take the next step in acquiring fresh blood to address the industry’s talent gap. I’m extremely excited about our partnership with the

DECEMBER 2018

Future Business Leaders of America (FBLA), a national high school program for students interested in a future in business. We have been working with the FBLA throughout 2018, and we will ramp this up in 2019. We will be meeting with students, and we will be telling them just how good a career as an independent agent can be. Plus, we have a new scholarship program in place to get these students licensed and trained and to deliver them to good member agencies.

Second, the insurance industry thrives on data analytics, and it’s time for our members to start taking advantage of the same. We will work to provide data that enables our members to make better business decisions. From benchmarking figures, to salary guides, and a lot in between, we want to share with our members how they are doing compared to their counterparts, on a local and regional basis.

My goal for IA&B members in the year ahead is to allow them to begin competing in better ways. Be it new, young talent, benchmarking data, or our standard offerings, IA&B is going to help our members run more efficient, smarter shops. That’s what’s needed for an agency to win today.

Time for an elevator pitch: Why should an independent agency belong to IA&B? I’ve been asked to speak by multiple carriers this year about what it takes to be a winning independent insurance agent. To simplify that speech – it takes an agency finding additional time to write new business. And in order to find that time, the agency needs to create efficiencies. An independent agency should belong to IA&B to create those efficiencies. IA&B is an extension of your staff, and if you use us fully, we will save

you time and money. When an agency then invests that added time and money into writing new business, it will be winning. It’s a simple concept but one that agencies sometimes neglect to see.

What was the best piece of advice someone gave you as you took assumed your new role at IA&B? Have fun. These are stressful times that we are in, and we have a lot of work ahead of us in order to stay relevant. But through it all, you’ve got to have fun.

You have to enjoy what you do.

I’ve had the good fortune of three things this past year that have provided fun: 1. I have met so many of our members. It’s the part of the job I like the most. I have had great conversations, learned a lot, and thoroughly enjoyed spending time with them.

2. I have also spent a lot of time with counterpart state executives this year. We are working as close together as we ever have, developing solutions for our members. But we are having fun doing it – I’m a firm believer that you can produce a better product if you are having fun doing it.

3. Finally, a wonderful, receptive, and fun staff. We have 25 professionals at IA&B, and they have been extremely supportive of my new role. They’ve been open to change. More importantly, we’ve had fun on the ride.

What lessons in leadership have you learned over the past year?

My favorite has been 21 Irrefutable Laws of Leadership by John Maxwell. And in it has been the lesson I’ve focused on my fist year – lead by example. Work hard, but play hard. Exhibit a work/life balance. Think outside the box, and be open to all ideas, and criticism. And don’t be afraid of mistakes. Maxwell states that when a leader can exhibit consistent qualities, they will begin to show in those he’s leading. It takes time, but leading by example will pay off.

You’ve traveled all over the region (and beyond) during the past year – to attend conferences and meetings, to visit with member agents and companies. Where did you have the best meal, and what was it?

Based on a loose calculation, I’ve logged approximately 25,000 miles of travel in 2018. Exhausting at times, but completely beneficial. Lots of meals on the road, as well. Some very good – some very bad.

My best meal (not based on food quality – though it was good barbeque) was at our Futures Conference at the Bedford Springs Resort this September. Along with 65 young agents, we had some of our closest carrier partners, our board of directors, and a lot of our staff. I mentioned fun earlier – well, we had fun at this dinner. There was energy in the room from the young agents, and there was many years of experience in the room from our board of directors and carrier partners. It was one of those dinners where you truly appreciated the industry you were in, and where the future was going.

One of my passions is reading. I try to read a book a week. Through 2018, those books have tended to be about leadership (mixing in a mindless Stephen King here or there).

9

NEWS & NOTES

COVERAGE CLARIFICATION FOR MISMATCH CLAIMS Policy language takes precedence when it comes to coverage of mismatch siding and roofing claims.

The Maryland Insurance Administration (MIA) this fall alerted carriers that mismatch claims (and diminution of value due to mismatched siding) in property claims must defer to policy language. The MIA’s original bulletin – which required carriers to offer some type of indemnification for policies written on a replacement cost basis and that were silent on the issue of mismatch – may no longer apply to carriers that have amended their policy language.

The MIA’s original guidance, Bulletin No. 97-1, dates back to 1997. The new Bulletin No. 18-23 provides clarification in light of policy changes over the past 20 years.

WHEN COVERAGE APPLIES FOR SEWER AND DRAIN BACKUPS The Maryland Insurance Administration (MIA) is proposing to update the language within the Insurance Article related to sewer or drain backup. The draft regulation would update Title 31 Chapter 14 Coverage for Loss Caused by Water That Backs Up Through Sewers or Drains from “this chapter does not apply to a loss that is caused by a flood” to “this chapter does not apply to loss that is directly caused by a flood.”

We consulted with our MIA contacts about the proposal, and they reported that it is not a change in position, but rather a clarification in light of recent Ellicott City claims (and denials).

10

According to the MIA, if a house concurrently has an infiltration of water through walls, doors, etc. and the policy has an anti-concurrent causation provision, the exclusion of coverage would apply, and the policyholder would not find coverage under backup of sewer and drains. However, if the house is “dry” and only suffers backup of sewer and drains because the water system is overwhelmed downstream, the coverage does apply, as the loss is not directly caused by flood.

BEWARE OF HURRICANEDAMAGED VEHICLES

The comment period ran through Nov. 23. At the time this issue of Primary Agent went to print, we anticipated that it would be adopted as proposed. Watch Agent Headlines for updates.

How to Identify a FloodDamaged Vehicle

Cox Automotive estimates the number of vehicles lost to Hurricane Florencerelated flooding between 20,000 and 40,000. And, as typically occurs after a mass-flooding event, there are concerns about these vehicles being resold throughout the country – to unsuspecting buyers and to those who don’t understand the financial repercussions of purchasing a flood-damaged car.

The National Association of Insurance Commissioners (NAIC) offers a consumer alert with tips for identifying a previously flooded car, including:

MARYLAND RAISES REBATING THRESHOLD

• Check the National Motor Vehicle Title Information System, a database of total loss and junk/salvage vehicles

Agencies’ promotions and raffle items now may carry a value of up to $50.

Maryland increased the rebating threshold as of Oct. 1.

• Look for suspicious signs of a flooded vehicle (e.g. rust, corrosion, mildew smell)

Passed during the 2018 legislative session, House Bill 1083/Senate Bill 673 increased the maximum value of “educational materials, promotional materials, or other articles of merchandise” (i.e. may not be cash) that can be offered from $25 to $50. It also added a provision ensuring that the receipt of any such item does not carry an obligation to purchase insurance.

Non-compliance continues to run rampant. Review our (newly updated) online resource on rebating and inducements to learn more about the rules and regulations.

IABforME.com/rebating

DECEMBER 2018

• Demand to see the title, as some car wholesalers will claim to have lost the title or will transfer it to avoid disclosing flood damage

What to Expect from Carriers, Lenders Insurance companies likely will not provide comprehensive and collision coverage on a flood-damaged car because its value and the extent of repairs are uncertain. In turn, without securing comprehensive and collision coverage, consumers likely cannot secure a car loan.

RULES CHANGE ON ADJUSTING COMMISSION RATE ON COMMERCIAL PROPOSALS The ability to request a lower commission rate on a commercial account has been officially restricted. While the Maryland Insurance Administration’s (MIA) position on the permissibility of variable rate filings had gone back and forth in the past, two bills (HB 1078 and HB 1127) and Bulletin 18-13 shut the door to the practice, unless: • the commercial account meets specific criteria and • the commercial account has executed a document to evidence that it meets those criteria (Certificate of Qualification as an Exempt Commercial Policyholder).

The changes became effective on Oct. 1, 2018. Carriers and producers may no longer adjust a commission rate unless the insured qualifies as an Exempt Commercial Policyholder, which means it meets at least two of the following characteristics:

new filings that comply with the changes. Producers need to be mindful of the change and properly secure a signed Certificate of Qualification for each applicant or policyholder for which a reduced commission is going to be applied.

NEW IA&B EDUCATION SCHOLARSHIPS Want to become licensed, earn a designation, or gain CE, but funds are tight? We’re providing over $10,000 in education scholarships to individuals and member agencies this year. Apply today!

IABforME.com/scholarships

DOWNLOAD THE NEW "PROUD IA&B MEMBER" LOGO We’re excited to provide you with the new “Proud IA&B Member” logo to showcase your membership. Common usages include: • Business Cards

• Has a net worth in excess of $2,500,000

• Memos

• Employs at least 25 full-time employees

• Website

• Is a municipal corporation with a population of at least 15,000 Carriers that previously used variable commission rates were asked to submit

NEW MEMBERS ABA INSURANCE NOTARY & TAG Bangor, PA BROWN-MCMAHON INSURANCE Carnegie, PA CHESAPEAKE TRUST INSURANCE INC. Manchester, MD EDWARD J. KENNEDY INSURANCE Churchville, MD PHILIP W. TAWES INSURANCE AGENCY INC. Crisfield, MD SHANNON AND LUCHS INSURANCE AGENCY Gaithersburg, MD

• Advertising

• Generates more than $5,000,000 of annual revenue or sales

• Is a non-profit organization or public body with an annual budget of at least $5,000,000

WELCOME

• Envelopes • Stationery/Letterhead

Review our logo usage guide to ensure proper use – including graphic standards to ensure consistency and accuracy – and then download the logo.

Learn more about membership by contacting IA&B Vice President – Membership Tim Wonder.

800-998-9644, ext. 351 TimW@IABforME.com IABforME.com/membership

Have questions? Contact Brand Manager Megan Fioretta at 800-998-9644, ext.

605, or MeganF@IABforME.com.

IABforME.com/IAB_member_logos

11

PARTNERS PROGRAM

& through IA&B’s Partners Program.

Supporting Connecting

2018

Partners Program ELEVATING AGENTS

The IA&B Partners Program allows companies to support and connect with independent insurance agents and brokers in Pennsylvania, Maryland and Delaware. Through their sponsorship, Partner companies allow IA&B to offer the programs and services that help member agencies succeed.

CALLING ALL COMPANIES

Your support helps independent agents succeed and their agencies become more profitable — a win for your company and the independent agency channel. What’s more, you will find more value than ever before from our revamped Partners Program.

Learn more by visiting IABforME.com/Partners or contacting Jess McWilliams at 800-998-9644, ext. 503, or JessicaM@IABforME.com.

12

DECEMBER 2018

PLATINUM PARTNERS Acuity Agency Network Exchange LLC BBSI Chubb Donegal Insurance Group Erie Insurance Group Farmers Mutual Fire Insurance Company of Marble IA&B Service Group Inc. Millers Mutual Group Penn National Insurance Plymouth Rock Assurance The Main Street America Group

GOLD PARTNERS Berkley Mid-Atlantic Group EMC Insurance Keystone Insurers Group MMG Insurance Company Mutual Benefit Group Progressive Zenith Insurance Company

We offer our sincere thanks to all of our 2018 Partners.

SILVER PARTNERS Aegis Security Insurance Company Amerisafe AmWins Program Underwriters Inc. Berkshire Hathaway GUARD Insurance Companies Brethren Mutual Insurance Company Briar Creek Mutual Insurance Company CM Regent Insurance Company Capital Premium Financing Cincinnati Insurance Company Countryway Insurance Company Cumberland Insurance Group Encompass Insurance Farmers Mutual Insurance Company of Western PA Frederick Mutual Insurance Company Goodville Mutual Casualty Company Grange Mutual Insurance Company Grinnell Mutual Reins Company Hospitality Insurance Group Insurance Alliance of Central PA Johnson & Johnson

Lackawanna Insurance Group Lebanon Valley Insurance Company Liberty Mutual Insurance Millville Mutual Insurance Company Nationwide Insurance Company Peninsula Insurance Company PennPRIME Municipal Insurance Reamstown Mutual Insurance Company Rockwood Casualty Insurance Selective State Auto Insurance Companies Tapco Underwriters Inc. Tuscarora Wayne Insurance Company The Hanover Insurance Group Travelers UFG Insurance Universal Property & Casualty Insurance Company Westfield Insurance Windsor Mount Joy Mutual Insurance Company

13

FUELING THE FUTURE The independent agent career feels like a best-kept secret. It allows us to earn a comfortable living while making a difference in our communities. To build relationships and to help others, all while enjoying flexibility and independence.

IA&B is on a mission to spread the word about the benefits of becoming an independent agent. We’re working to find talent for our member agents, and then to foster those young professionals and retain them in our industry.

During 2018, we stepped up our efforts: We entered into a partnership with the Future Business Leaders of America to expose high school students to our industry. We launched a new scholarship program to support those entering the industry, as well as those advancing their independent agent careers.

And we built upon our Futures Program for young agents, hosting a third annual conference in late September.

Stay tuned as we build upon these initiatives in 2019. The future is bright, and we’re here to help fuel it.

14

DECEMBER 2018

2018 FUTURES CONFERENCE

Attended: 100+ incredible young agents, company partners, and mentors Accomplished: 1 1/2 days of skills training and networking Ahead: Save the date for the 4th annual IA&B Futures Conference, Oct. 8-9, 2019 at the Bedford Springs Resort in Bedford, PA.

15

2018-2019 Board of Directors

E. Stephen Burnett, CIC, ARM Insurance & Financial Services Wilmington, DE

Ashley M. Fitzsimmons, CISR

Fitzsimmons Insurance Agency, Inc. Forest City, PA

Bryan Hanes, JD

Antietam Insurance Associates, Inc. Hagerstown, MD

Shannon B. Lipniskis

16

Hutton-Blews Insurance, LLC Indiana, PA

Richard F. Corroon, CPCU

Weymouth, Swayze & Corroon Insurance, Inc. Wilmington, DE

Len Gieseler, LUTCF

Evans Hauseman & Richard, Inc. Pottstown, PA

John B. Hollister

Michael P. Ertel, Sr.

PIA National Director The Jacobs Company, Inc. Columbia, MD

G. Greg Gunn, CIC

IIABA National Director Gunn-Mowery, LLC Lemoyne, PA

Lisa A. Leach Goth, CIC

IA&B Service Group Chairman Sheeley Insurance Agency Milford, PA

Charles P. Leach Agency, Inc. New Bethlehem, PA

Craig S. Mader

Elizabeth H. Martin, CIC

IA&B Service Group Vice Chairman Craig S. Mader Insurance Agency, Inc. Crofton, MD

Martin Insurance Agency Millersville, PA

Mark J. Monroe

Richard M. Rankin, CIC

D. Bradley Rosenkilde, Jr.

IA&B of Pennsylvania Chairman Griffith Insurance, LLP West Chester, PA

Murray Insurance Associates, Inc. Lancaster, PA

Tara S. Silfies, CPCU

Robert L. Smyrl, Jr., CIC Robert L. Smyrl, Inc. Hatfield, PA

Strachan Insurance Agency, Inc. Ft. Washington, MD

Bryan S. Willey

Lawrence A. Wilson, CIC, CPIA, CPCU, ARM

J. Marshall Wolff, CIC, CPCU

Hampson-Mowrer Agency, LLC Bethlehem, PA

Harrington Insurance Agency Dover, DE

Delaware Association of IA&B Chairman IIABA National Director S. T. Good Insurance Newark, DE

IA&B of Maryland Chairman R&A Insurance, Inc. Hunt Valley, MD

Glenn R. Strachan

Kressler Wolff & Miller, Inc. Easton, PA

17

IA&B Financial Reports INSURANCE AGENTS & BROKERS COMBINING STATEMENT OF ACTIVITIES March 31, 2018

IAB OF PA Revenues: Membership Dues Professional Training Events & Member Products Publications Royalties & Commissions Consulting Other Total Revenues

IAB of MD

Combined IAB Associations

DAIAB

380,812 1,481,979 28,715

75,489 293,775 5,692

17,878 69,568 1,348

701,910

139,094

32,938

1,036 2,594,452

205 514,255

49 121,781

Expenses: Membership Commission Professional Training Events & Member Products Publications Advocacy Corporate & Management Governance Total Expenses

21,144

4,192

993

1,252,297 67,119

248,245 13,306

58,786 3,149

89,567 1,127,611 26,378 2,584,116

17,756 223,529 5,230 512,258

Net Operating Income (Loss)

10,336

1,997

Other Income (Expense): Contributions & interest to designated funds Depreciation & amortization Interest & dividends on cash equivalents Net investment income (loss) Life insurance income Deferred compensation expense Income tax benefit (expense) Total Other Income (Expense) Change in Net Assets

IAB Service Group

474,179 1,845,322 35,755 0 873,942 0 1,290 3,230,488

(1,369) 7,839 141,191 1,614,610 25,066 1,593,798 3,382,504

4,204 52,936 1,239 121,307

26,329 0 1,559,328 83,574 0 111,527 1,404,076 32,847 3,217,681

2,950,570 30,330 3,207,589

474

12,807

174,915

2,823 0

(87,174) 1,924 5,350 177,134 (90,252) (215,348) (208,366) (33,451)

2,823

18,841 148,899

3,735 24,092

884 8,318

170,563

27,827

9,202

23,460 181,309 0 0 0 207,592

180,899

29,824

9,676

220,399

Intercompany Eliminations

(22,197)

(1,419,695) (1,443,261)

119,649 4,200 102,840

(35,595) (882) (882) (1,412,428) (1,449,787) 6,526

Combined IAB

472,810 1,845,322 43,594 118,994 2,488,552 25,066 175,393 5,169,731

26,329 119,649 1,523,733 86,892 102,840 110,645 2,942,218 63,177 4,975,483 194,248

2,823 (87,174)

(6,526)

(6,526) 0

25,384 180,133 177,134 (90,252) (215,348) (7,300) 186,948

IA&B maintains a strong combined statement of financial position with $9.8 million in assets, $6.4 million in member equity, and no third-party financed debt. Over $194,000 of net operating income is reflected on the combined statement of activity for the year ended March 31, 2018.

IA&B supports the activities that our members value – effective advocacy, timely compliance resources, and quality education.

We’re almost 1,200 members strong across three states. Approximately 5,600 participants attend over 171 IA&B classes annually. And members buy over 1,600 policies through us for their agency insurance coverage.

This allegiance to IA&B, combined with our carrier partnerships, supports the financial strength of the organization.

INSURANCE AGENTS & BROKERS COMBINING STATEMENT OF FINANCIAL POSITION March 31, 2018 ASSETS IAB OF PA Cash & Cash Equivalents Cash, Premium Fiduciary Account Accounts Receivable Prepaid Expenses Deferred Income Tax Inventory Inter-corporate Loans, current portion Investments - Mutual Funds & ETFs Total Current Assets

IAB of MD

Combined IAB Associations

DAIAB

2,701,880

83,928

248,323

938,778 27,409

737,285 5,442

180,764 1,289

5,973 52,539 1,720,319 5,446,898

281,903 1,108,558

97,327 527,703

Property & Equipment, net Cash Whose Use is Limited, Board & Donor Designated Inter-corporate Loans, net of current portion Investment in Big I Reinsurance Co. Investment in IAB Service Group Other Assets, Net of Amortization Cash Value, Life Insurance Deferred Income Tax Total Other Assets

IAB Service Group

3,034,131 0 1,856,827 34,140 0 5,973 52,539 2,099,549 7,083,159

239,998 236,323 452,877 59,097 24,400 897 65,546 1,079,138

0

1,063,774

Intercompany Eliminations

(2,069,940)

(52,539) (2,122,479)

Combined IAB 3,274,129 236,323 239,764 93,237 24,400 6,870 0 2,165,095 6,039,818 1,063,774

310,319

310,319

263,264 90,000 486,082

33,837 1,663,505 523,202 2,220,544

(863,364)

0 120,000 0 33,837 1,663,505 523,202 3,714,637

4,363,456

(2,985,843)

9,754,455

1,149,665

102,013

42,005

263,264 120,000 600,100 0 0 0 1,293,683

Total Assets

6,596,563

1,210,571

569,708

8,376,842

Total Current Liabilities

2,267,349

102,013

30,000 12,005

310,319 (263,264) (600,100)

LIABILITIES & NET ASSETS

Inter-corporate Loans Retirement Obligations Total Long-term Liabilities

Net Assets, unrestricted Capital Stock Additional Paid-in Capital Designated Funds Undesignated Total Net Unrestricted Assets Total Liabilities & Net Assets

18

0

781,993

0

178,273

3,227,615

613,020

(2,122,479)

1,718,156

263,264 1,660,842 1,924,106

(263,264)

0

0 0 0

0 1,660,842 1,660,842

100 600,000

(100) (600,000)

1,226,230 1,826,330

(600,100)

0 0 309,758 6,065,699 6,375,457

4,363,456

(2,985,843)

9,754,455

309,758 4,019,456 4,329,214

428,578 428,578

391,435 391,435

0 0 309,758 4,839,469 5,149,227

6,596,563

1,210,571

569,708

8,376,842

(263,264)

DECEMBER 2018

The accountants’ review for the fiscal year ended March 31, 2018 is on file at IA&B headquarters. These statements are a summary of that report.

TECHNOLOGY UPDATE

20

DECEMBER 2018

RESOLVE TO UPDATE YOUR OPERATING SYSTEM IN 2019 4 REASONS TO ADOPT WINDOWS 10

By Chip Seelig

Time’s running out to update your operating

What? Where the heck is Start?

system before the extended support of

User paranoia is real. As a veteran help desk manager, I’ve seen firsthand the anxiety created by computer replacements. My hope is this article will quell your fears by explaining the benefits of updating from Windows 7 to Windows 10.

Windows 7 ends. But good news: Adopting Windows 10 will be worth it. Even beyond security and support, the system provides useful benefits for small businesses.

Read on to learn more.

I

t’s time to replace your workstation. Just imagine …

You come into work one day, and there’s a brand-new (albeit smaller) PC at your desk. You press the power button and hear a pleasant beep. A few swirling dots later, and you’re greeted with a serene image. You enter your password, which prompts a series of messages: “Hi.” “We’re happy you’re here.” “Getting things ready, please don’t turn off your PC.” Moments later, you see a clean desktop image with a sleek black task bar. Muscle memory kicks in and you move to click the Start button.

Windows 7 is a good operating system. It’s reliable, familiar, and still supported by Microsoft and third-party vendors. While these are all true, July 2019 will mark the 10-year anniversary of its launch. Over the past decade, the technological landscape has changed – primarily due to security and mobility. So it shouldn’t be a big surprise that, beginning in January 2020, Windows 7 will no longer be supported. All the more reason to make 2019 the year you make the jump to Windows 10. On the following pages, I share four benefits of updating your operating system.

SECURITY Enter the more secure Windows 10. In their 2018 Threat Report1, security firm Webroot declared Windows 10 twice as secure as Windows 7. Windows 7 continued the Microsoft tradition of releasing security updates on a weekly update schedule. IT administrators liked this because they could

21

TECHNOLOGY UPDATE

control the rollout of updates and block any which may have unintended consequences. However, this meant there could be up to a week’s delay before a fix would be made available to patch a security hole.

Windows 10 resolves this by checking for updates every 17-22 hours and automatically deploys the updates with no opportunity for IT support intervention. More secure? Yes. (There is more potential for something to go wrong when you come in the next day, as well.

Unfortunately, this is the price we must pay for improving the protection of your systems and data….)

DESIGN Windows 10 is going to feel more familiar with time, partly because we’re getting accustomed to using smartphones. You might recall that Microsoft first tried to introduce a touch user interface (UI) with its “Metro” UI as part of Windows 8.

Windows 8 and Metro never gained mainstream acceptance. But with more and more touchscreen laptops, tablets, and smartphones, Microsoft is highly motivated to build a single UI that works well with both a touchscreen and the conventional mouse and keyboard.

To accommodate this transition, Windows 10 combined the tactile philosophy of Windows 8 with the ease of use of Windows 7.

When youclick on the Start menu, you have icons which allow you to shut down and restart your PC, as well as access the PC settings, your pictures, and your documents. If you ever forget what they do, you can simply hover over them and a help box will appear. Another new feature of the Windows 10 Start menu is when opened, you can type the name of the application you want and select it from the results. There are also “live

22

committed to mutual success.

Harford Mutual Insurance partners with independent agents in Maryland.

We insure restaurants, contractors, mercantile, and other commercial entities. We’re committed to protecting your client’s business and building yours.

INSURING BUSINESSES SINCE 1842

HarfordMutual.com | 800.638.3669

DECEMBER 2018

TECHNOLOGY UPDATE

tiles” which update in real time for things like news, weather, recent emails, and photos.

CONCLUSION Hopefully your paranoia has subsided and your focus is now less on “How will I get my work done in this new environment?” and more on “Let’s see how this new environment can help me get my work done faster!” After all, your time is better spent on obtaining and retaining clients, making sure renewals are started far enough in advance, and being able to service that 4:45 PM call on a Friday from the dealership about the new car your insured just picked up.

While some things in the insurance world rarely change, technology does. I encourage you to take the advantage of technological advancements – Windows 10 included – to better the experiences of your employees and customers alike.

SPEED Not only has Windows 10 become more secure, and more touch friendly, some would say the best improvement is Windows 10 loads and wakes from sleep much faster than Windows 7. This advantage may continue to increase, since Windows 10 is still being improved by Microsoft developers.

USABILITY

As the Tier 2 Help Desk Manager for the Kite Technology Group, Chip Seelig has over 15 years’ experience in the insurance and IT industry.

Independent agencies find benefit from Chip’s suggestions on workplace efficiencies and his philosophy of “asking the better question.” When Chip isn’t working, he’s hanging out with his wife and daughter, making memories.

Contact Chip at chip@kitetechgroup.com or 410-356-3113.

Lastly, Windows 10 is bringing a friend to the party. Her name is Cortana. Like Apple’s Siri, Google’s Assistant, and Amazon’s Alexa, Cortana is a voice-activated virtual assistant. She can be summoned by saying, “Hey Cortana.”

Cortana is my favorite virtual assistant out there. Not only does she do most of what the others do, but she has more personality.

Try it out. Ask Cortana, “Open Word,” “What’s my schedule today?”, “What’s the weather?” or for a laugh, “What does the fox say?” If you ask her, “What’s new in Windows 10?”, she’ll return several YouTube video results for you to see all that is new.

One other key feature I have come to enjoy from Cortana are the “heads up” emails. As an example, Cortana will review my emails and notice if I mention to someone that I’ll take care of something by Wednesday. Cortana will remind me on Tuesday with an email in the morning.

1 Https://www-cdn.webroot.com/9315/2354/6488/2018-Webroot-Threat-Report_US-ONLINE.pdf

24

DECEMBER 2018

Shopping your E&O? IA&B offers coverage that agents need.

Contact David today.

For personalized service, CONTACT DAVID WERTZ 800-998-9644, ext. 506 DavidW@IABforME.com IABforME.com/agency_insurance

SAFEGUARD AGAINST

data breach & cyber attacks with our specialized coverage and immediate response.

DATA RESPONSE & CYBER LIABILITY Contact one of our Underwriting Leaders, Scott Billett (sbillett@millersinsurance.com) at 717.237.7202 or Derek Shaffer (dshaffer@millersinsurance.com) at 717.237.7244

A data breach is only one click away. Small businesses of all types are targets for cyber attacks. In fact, roughly 50% of small businesses say they have experienced a data breach during the past year, and even more report being hit by a cyber attack.

MULTIFAMILY HOUSING

I

COMMERCIAL REAL ESTATE

800.745.4555 millersinsurance.com Rated A- (Excellent) by A.M. Best Rated A Prime (Unsurpassed) with Demotech Š2018, Millers Mutual Insurance, Harrisburg, PA

I

AFFORDABLE HOUSING

Find your (Carrier) Match Introducing

the match hub for IA&B members and Partner companies IABforME.com/AppointmentLink

25

PICS & POSTS

26

DECEMBER 2018

Facebook.com/IABforME LinkedIn.com/company/IA_and_B Twitter.com/IA_and_B

27

Education

CLASSIFIED

DECEMBER 2018

ADVERTISEMENTS SOUTHEAST PA PRODUCERS & AGENCIES

CLASSROOM DATE TOPIC

LOCATION

3 3-6 4 4 5 6 11 11-13 12 13

Pittsburgh, PA Philadelphia, PA Pittsburgh, PA Mechanicsburg, PA Ellicott City, MD Trevose, PA Reading, PA Pittsburgh, PA Mechanicsburg, PA Hagerstown, MD

Construction Issues and Court Cases CIC Personal Lines Institute CISR Miscellaneous Personal Lines Construction Issues and Court Cases *CISR Personal Auto *CISR Personal Auto William T. Hold – Contracts & Leases Property & Casualty Licensing Study Course CISR Commercial Property William T. Hold – Contracts & Leases

* This course is state-specific. It is recommended you attend the course in the state you write the most business.

WEBINARS DATE TOPIC

TIME

4 Health & Disability Insurance Flood Insurance 4 5 Home Business vs. Home Insurance E&O Road Map (Parts 1 & 2) 6

The Things Kids Get Us Into 11 11 Farm Liability Considerations 12 Long-Term Care Funding with Life Insurance 12 Catastrophe – Coverage Expertise 13 Street Level Ethics 18 Coverage Gaps in Home, Work and Auto

9 AM – 12 Noon 1 – 4 PM 1 – 4 PM 9 AM – 4 PM (Break: Noon – 1 PM) 9 AM – 12 Noon 1 – 4 PM 9 AM – Noon 1 – 4 PM 2 – 5 PM 2 – 5 PM

Professional agency since 1926 located in Feasterville, Bucks County, Pa. Call for confidential information and a review of our services.

Contact Ray Reinard at 215-357-8600, Ext. 119.

If you would like to place a classified advertisement, please contact Laura Gaenzle at Laura.gaenzle@theygsgroup.com or 717-430-2351.

AD INDEX AmTrust North America ................................23 Applied Underwriters.................................OBC Berkshire Hathaway Guard Ins Cos.............IBC Grinnell Mutual Reinsurance Co................. IFC Harford Mutual Insurance Co ...................... 22 IA&B Service Group....................................... 24 IA&B AppointmentLink................................. 25

To register or ask questions, contact us: 800-998-9644, option 1 IAB@IABforME.com IABforME.com/education

Millers Mutual Group.................................... 25 Plymouth Rock Mngmnt Co of NJ................ 19 Preferred Property Program.......................IBC

28

DECEMBER 2018

Expect big things in workers’ compensation. Most classes approved, nationwide. It pays to get a quote from Applied.® For information call (877) 234-4450 or visit auw.com/us. Follow us at bigdoghq.com.

©2018 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best.

Insurance plans protected U.S. Patent No. 7,908,157.