Maryland Primary Agent - June 2017

ST R S E ATE LL G I E IN S Pa G A FO ge PU R 18 P

JUNE 2017 | MARYLAND

G R AF T I N G MARKE TING AND T E CH FOR B US I N E S S G R OW T H

9 CYBERSECURITY BEST PRACTICES CGL EDITION DATE DANGERS WHEN BUYER’S REMORSE TRIGGERS AN E&O CLAIM

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Learn more at millersmutualgroup.com/vacantexpress, or contact Mike Ebert at 717-963-8566 or mebert@RiversideBrokerage.com

Vacant Express is brought to you by Riverside Brokerage Services & powered by JH Ferguson. Riverside is a wholly-owned subsidiary of Millers Mutual Group, a regional property and casualty insurer serving independent insurance agents with commercial policyholders in Pennsylvania, Delaware, Maryland, Virginia, Washington, DC and Ohio.

IN THIS

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FIRST IMPRESSIONS MATTER, ESPECIALLY ONLINE What message does your online presence convey?

Learn what counts, why it matters and how to give your website a facelift.

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BECOMING TODAY’S DIGITAL AGENT Advances in technology may turn our industry on its head, but they need not trigger the demise of the independent agent. Agents can capitalize on technology to build upon their offerings and expertise – and to further solidify their relationships with customers.

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BEST PRACTICES FOR CYBER THREAT PROTECTION Implementing best practices for cybersecurity will reduce your agency’s risk of lost productivity and lost data – and possibly help you comply with regulators’ requirements.

IN EVERY ISSUE 2 3 4 6 8 11 32 32 32

Chairman of the Board’s Message Ask Our Experts Preventing Errors & Omissions Coverage Corner State News IA&B Partners Advertiser’s Index My Events Classified Ads

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 # 2017-6, is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

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Copyright 2017. 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.

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CHAIRMAN OF THE BOARD’S MESSAGE

INSURANCE AGENTS & BROKERS

A BRAVE NEW WORLD

5050 Ritter Road | Mechanicsburg, PA 17055 800-998-9644 | IABforME.com

OFFICERS

S

Chair of the Board

ure, I reminisce about the good old days. I’m known to embarrass my kids with supposedly outdated slang. And I get stuck in my ways at times … or all the time, depending on whom you ask.

But I also recognize that the world is changing – with or without me! The same goes for you, my friends.

It’s well documented that the insurance industry at whole – and the independent agency system in particular – are a little behind the times. But what we sometimes lose sight of is the impact that has on our business.

Let’s take an example. We’ve established that I’m “old school” in some respects.

But when it comes time to make a purchase (whether it’s a pizza or a car) or when I need the services of a professional (from a landscaper to an attorney), I ask around, jump online or – most likely – do both. Just the same that a Millennial would, mind you! And I imagine that most of you would follow suit.

So it takes no stretch of the imagination to understand that when new business owners or homeowners begin their search for insurance, they do the same: ask around, jump online or – most likely – do both. While most of us have the wordof-mouth part down pat, our Internet presence tends to lack attention. And our reputation and, in turn, bottom line can take big hits from that.

I encourage you to check out the feature article on page 14. For some time now, the Board of Directors has been privy to the emerging partnership between Forge3 and IA&B and the addition of website services to Independent Agency Solutions.

We’re thrilled that the rest of membership is now in the loop, too.

Michael F. McGroarty Sr Vice Chair of the Board

John B. Hollister

Immediate Past Chair of the Board

Robert S. Klinger, LUTCF, CPIA

MEMBERS Emory Stephen Burnett, CIC, ARM Wilmington, Del.

Richard F. Corroon, CPCU Wilmington, Del.

Michael P. Ertel Sr.+ Columbia, Md.

G. Greg Gunn, CIC* Lemoyne, Pa.

Bryan C. Hanes, JD Hagerstown, Md.

David C. King Lancaster, Pa.

Lisa A. Leach Goth, CIC New Bethlehem , Pa.

Douglas A. Loesel, CPCU Erie, Pa.

Crag S. Mader Crofton, Md.

Elizabeth H. Martin, CIC Millersville, Pa.

Mark J. Monroe

West Chester, Pa.

Joseph R. Pastor, CPCU, AAI Oil City, Pa.

Richard M. Rankin, CIC Lancaster, Pa.

April E. Ressler, CIC Altoona, Pa.

Like it or not, the world is changing. And our willingness to embrace that shift is going to make the difference between success and failure in the insurance marketplace of tomorrow. n

Scott C. Rogers, CPIA York, Pa.

Glenn R. Strachan

Ft. Washington, Md.

Bryan S. Willey Dover, Del.

Until next time,

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

J. Marshall Wolff, CIC, CPCU Easton, Pa.

Michael “Mike” F. McGroarty Sr. Chairman of the Board

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

JUNE 2017

Ask Our Experts Don Bankus, our legal affairs manager, provided this month’s answer.

Question: Do my licensed employees qualify for the Learned Professional exemption under the FLSA?

Answer:

U

nfortunately, just because your employees are licensed, learned and professional doesn’t mean they qualify for the Learned Professional exemption.

Under the Fair Labor Standards Act (FLSA), most employees must be paid at least the federal minimum wage and be paid overtime (at the rate of one and one-half times the employee’s regular rate of pay) for all hours worked in excess of 40 hours per workweek.

However, much like an insurance policy, the FLSA contains exemptions (exclusions) to the overtime rule for certain types of workers. One is the Learned Professional exemption – an exemption that the U.S. Department of Labor has expressly stated “... does not apply to occupations in which most employees acquire their skill by experience rather than by advanced specialized intellectual instruction” (e.g. individuals working within an insurance agency).

QUALIFICATIONS FOR THE EXEMPTION In addition to the minimum salary, the Learned Professional exemption requires the employee to meet certain tests, dealing with their primary duty and field of advanced knowledge.

Employers who maintain a laissez-faire attitude regarding exempt/nonexempt classification of employees could find themselves burdened with liability for up to three years of unpaid back-pay for overtime wages, plus interest, statutory penalties and attorney’s fees.

Based on the FLSA, case law, and opinions rendered by the U.S. Department of Labor, use of the Learned Professional exemption is generally limited to doctors, lawyers, pharmacists, dentists, engineers, scientists, teachers and accountants, to name a few.

For a more comprehensive overview of the FLSA, visit IABforME.com/emp_ mgmt and select the link for the new overtime rule resources. n

Beyond the Learned Professional exemption, there are Administrative and Executive exemptions. Qualification depends on salary basis, salary level and applicable duties.

Have a question?

Ask our experts!

WHAT IT MEANS FOR YOU Since misclassification is a common reason for lawsuits against employers, it’s important to take employee classification for FLSA purposes seriously.

Rely on our experts to answer your most perplexing questions. Visit the Ask Our Experts section of IABforME. com (find the link in the website footer) to submit your question and review answers to other frequently asked questions. Or email your question to us at IAB@IABforME.com.

We look forward to hearing from you.

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PREVENTING ERRORS & OMISSIONS

HOW TO AVOID AN E&O CLAIM FOR BUYER’S REMORSE

By Daniel J. Hammond

W

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hen your client buys an insurance policy, their immediate concern may not be coverage limits but rather the premium. Agents routinely tell their errors and omissions (E&O) claims adjuster that they have discussed limits with the client, that the client selected the limits, and, often, that the client declined higher limits.

However, if you are not diligent in maintaining your records and recording your clients’ instructions, you may find that the client’s recollection of events is different from yours when a loss occurs.

Agent: Your limits are $100,000.

Client: Something terrible has happened.

What are my policy limits?

Agent: I gave you this proposal listing the limits you requested and sent it with a letter as well.

Client: This is a disaster. Why do I have such low limits?

Agent: You sat in my office and told me those limits were all you wanted because you didn’t want to pay a lot for insurance. Don’t you remember?

Client: No, I don’t. I was relying on you to tell me what limits to buy.

Doesn’t your website say that you are an insurance expert who will provide a custom insurance program that meets my unique needs?

JUNE 2017

Client: I don’t remember you ever showing this to me, and I never received this. Did you send it certified?

Agent: No, but you signed this application with the limits listed here.

Client: I don’t remember signing that. I don’t remember filling out this application. I am sure you filled it out.

Agent: That’s right. We sat here together.

I filled it out based on your answers.

Client: You must have misheard me. I think I said $1,000,000 in limits, and you filled in the wrong number. Plus, I don’t think you ever showed me the application. You just gave me the last

page to sign. I think I had forgotten my reading glasses.

Agent: But the carrier sent you a copy of the policy. The limits are on the first page.

OVERCOMING THE L-SYNDROME

Client: I’ve never seen this before. I don’t open my mail, and I never read my policy. In fact, I think you told me not to bother reading my policy and that I was covered for everything. I think I even called and asked your office to make sure my limit was $1,000,000.

“E&O CLAIMS all come from the L-Syndrome: lack of knowledge, lack of consistency, lack of communication or lack of documentation,” says Jerry Milton, CIC. Learn how to stay out of hot water when it comes to E&O by taking our on-demand “Ethical Behavior and E&O Program,” taught by Jerry himself.

Agent: We don’t have any record of that.

IABforME.com/MyTraining (select “E&O Risk Management Courses”)

Client: Maybe I stopped by and talked to the receptionist. Either way, you are going to hear from my lawyer!

TYPICAL POLICY LIMIT ALLEGATIONS INCLUDE THE FOLLOWING: • The agent selected the limits arbitrarily without consulting with the client.

• The agent undertook valuing the property, set the limit and undervalued it.

• The agent failed to insure to value, resulting in a co-insurance penalty.

• The agent failed to offer higher limits.

• The agent failed to offer an umbrella.

• The agent failed to offer higher uninsured motorist/underinsured motorist limits. This is a frequent claim when a client is injured by an uninsured or underinsured driver.

• The agent incorrectly indicated that higher limits or an umbrella were not available.

An agent typically does not have a duty to recommend limits without a special relationship. However, special relationships are routinely alleged in suits against agents. The client will attempt to establish a special relationship based on factors that include the length of the

The seminar is approved for loss-control credit for Utica policyholders in Delaware, Maryland and Pennsylvania.

agency-client relationship, whether the agent presented himself or herself as an expert, the complexity of issues involved, and whether the agency collected a separate fee for advice.

While an agent cannot prevent a client from making an E&O claim, defensive file documentation can be a deciding factor in a “credibility contest” between the agent and the client. To add another element to your defensive arsenal and clarify your customers’ requests on policy limits, consider having your client sign an acknowledgment of the limits they have purchased. Examples are below.

Acknowledgment of property limits I have selected the following property limits: Building Contents Business Interruption I understand that I am in the best position to understand the value of my property.

I understand that if I am unsure of the value of my property, I should independently consult with a property appraiser.

I understand that my agent has not undertaken a valuation of my property.

I did not rely on my agent to determine property limits.

Acknowledgment of liability limits I have selected the following liability limits: I understand that I am in the best position to determine what limits to carry.

I understand that I could have selected higher limits.

I did not rely on my agent to determine liability limits.

NAME: _________________________ DATE: __________________________

The material contained in this article is for informational purposes only and is not for purposes of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.

Daniel J. Hammond, CPCU, AIS, AIC, AINS, ARe, provided this content on behalf of Utica National Insurance Group.

IA&B’s My Agency 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@ IABforME.com.

NAME: _________________________ DATE: __________________________

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COVERAGE CORNER

WHAT IS THE EDITION DATE?

By Jerry M. Milton, CIC

Y

ou are a contractor, and you have been insured by the same insurer for the past 20 years. The insurer has always covered your liability exposures with the ISO Commercial General Liability (CGL) Coverage Form (CG 00 01). When required, your agent has endorsed your CGL with the Additional Insured – Owners, Lessees Or Contractors – Scheduled Person Or Organization endorsement (CG 20 10) and the Additional Insured – Owners, Lessees Or Contractors – Completed Operations endorsement (CG 20 37). Nothing has really changed. Or has it? What about the edition dates of the forms?

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A subcontractor signed a construction contract with a general contractor to perform operations at a large, public project in Philadelphia. The construction contract required the subcontractor to show evidence of insurance coverage for this project, and the contract included the following requirement: Additional insureds shall be endorsed on a primary and non-contributory basis via ISO Endorsement CG 20 37 (10 01) or equivalent and ISO Endorsement CG 20 37 (10 01) or equivalent.

An employee of the subcontractor was severely injured at the job site.

JUNE 2017

The injured employee then sued the general contractor for his injuries.

The general contractor filed this claim with the subcontractor’s CGL insurer, expecting coverage. The subcontractor’s CGL insurer denied coverage for the general contractor on the basis that the subcontractor did not cause nor contribute to its employee’s injury.

The general contractor was added to the subcontractor’s CGL as an additional insured under the CG 20 10 and 20 37 endorsements. However, these endorsements had an edition date of 04 13, not 10 01 as required by the construction contract. In July 2004 ISO

modified most of their additional insured endorsements and added the following: Section II – Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for “bodily injury”, “property damage” or “personal and advertising injury” caused, in whole or in part, by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on your behalf …

Would the general contractor have coverage if the additional insured endorsements had an edition date that was prior to 07 04? Absolutely!

The general contractor then sued the subcontractor for breach of contract. The subcontractor eventually settled this claim by the general contractor for an amount exceeding $800,000.

Why did the attorney who drafted this contract require the 10 01 or equivalent endorsements? Because that attorney knew the “caused by or contributed to by the named insured” wording was not in the pre-07 04 endorsements.

If the contract requires it, you must try to get it. If you can’t, you may have to use another insurer. If you still can’t get it, you must advise the insured.

JERRY TALKS CONTRACTORS

Y’all take care! n

LEARN MORE about the intricacies of contractor coverages at Jerry Milton’s upcoming “Insuring Contractors” seminar.

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. Catch him at one of our upcoming seminars: IABforME.com/MyTraining.

The 8-credit course reviews various property and liability exposures and discusses the policies needed to adequately insure contractors. This course is for anyone who writes contractors’ coverage – but especially for those producers who haven’t taken specific education on the topic over the past two years.

Following its 2017 debut in Wilmington, Del. in mid-May, “Insuring Contractors” will be offered across the region in the months ahead: June 15 – Mechanicsburg, Pa. Aug. 16 – Ellicott City, Md. Aug. 29 – Pittsburgh Oct. 4 – Frazer, Pa. IABforME.com/contractors

Would the subcontractor’s CGL insurer write the 10 01 or equivalent endorsement? I don’t know. Maybe. Did the subcontractor’s agent request the 10 01 or equivalent endorsement? I don’t know. Maybe. Did the subcontractor sue its agent for failure to provide the proper coverage? I don’t know. Maybe.

By the way, at the time of this loss there were 11 different subcontractors on the job. All 11 signed the construction contract, but only three were in compliance. The other eight had additional insured endorsements that had the “caused by or contributed to by the named insured” wording.

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STATE NEWS

N.Y. NON-RESIDENT LICENSEES SUBJECT TO NEW CYBER REQUIREMENTS The New York Department of Financial Services (NYDFS) recently published the final version of its Cybersecurity Requirements for Financial Services Companies. The regulations are applicable to all agencies licensed to conduct business in New York.

ISO FORM ADDRESSES PIP REJECTION As of last fall, certain applicants and policyholders could fully reject PIP coverage in Maryland. ISO responded to the change in March with the introduction of the Maryland Required Notice of Personal Injury Protection (PIP) Coverage and Options Selection Form (IL U 075). The form carries an April 2017 effective date, but as with all ISO forms, actual implementation will vary by carrier adoption.

BACKGROUND Senate Bill 784, passed by the state legislature in 2016, was part of a package of legislation that sought to address the state’s uninsured motorist problem. Under SB 784, a Maryland Automobile Insurance Fund (MAIF) applicant has the option to reject PIP coverage only if he or she has not been insured continuously by MAIF for at least one full year prior to the application.

Other insurers may offer a first named insured, at the time of application, the option to reject PIP coverage only if his or her prior insurance policy (1) was not a MAIF policy and (2) was canceled by the insurer before the end of the policy’s term.

This legislation was intended to provide a way for a certain subset of motor vehicle liability insurance applicants to lower their premiums, making coverage more affordable.

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JUNE 2017

These regulations, which are the first of their kind to be established independently by a state’s insurance department, are designed to promote protection of customer information. They require each affected agency to assess its specific cybersecurity risk profile and to design and adopt a cybersecurity program which proactively addresses its risks.

Good news: The regulations include “limited exemptions,” which will excuse many licensed agencies from the more costly and burdensome requirements.

However, even “exempted” agencies still will be required to comply with a number of the regulations’ provisions.

Bad news: For agencies which don’t qualify for a “limited exemption,” complying with the entirety of the new regulations will be more onerous, costly and burdensome.

While the effective date of the regulations is March 1, 2017, actual compliance deadlines vary by section and are staggered over the next two years. Access our synopsis of the compliance deadlines by visiting IABforME.com and searching “New York cybersecurity.”

FRACKING BAN REDUCES INSURANCE RISKS Maryland recently became the third state to enact a law to ban hydraulic fracturing (known as fracking). Gov. Larry Hogan signed the ban into law in early April.

Insurance coverage issues stemming from fracking claims first came to light about five years ago. Initial concerns centered around groundwater contamination, but since then, the focus has turned to earthquakes. (Just this spring, Pennsylvania officials confirmed the state’s first earthquakes related to fracking and the resulting waste-water disposal.)

Insurance regulators responded to the quake conundrum. In 2015, the Oklahoma insurance commissioner highlighted the importance of insurers not abusing earthquake policies’ humanmade earthquake and pre-existing damage exclusions to deny claims. The same year, the Pennsylvania insurance commissioner officially prohibited insurers from enforcing exclusions for earthquakes triggered by human activity.

Western Maryland is rich in natural gas reserves, but a moratorium on fracking had been in place for two years. That freeze was set to end in October 2017.

LONG-TERM CARE INSURANCE WORKGROUP PROPOSES REFORMS The Maryland Insurance Administration (MIA) recently announced the preliminary results of its long-term care insurance workgroup. Made up of lawmakers, consumer advocacy groups and insurance industry stakeholders, the workgroup is intended to guide the MIA in its consideration of the following issues related to the long-term care market: • Ways to establish more transparency for long-term care consumers during the rate review process

filed with the commissioner, enhance consumer contingent nonforfeiture benefits, and improve consumer disclosures.

• Consumer education: The MIA developed and released to the public a consumer FAQ. • Consumer disclosure requirements: MIA staff will review the 2016 amendments to the National Association of Insurance Commissioners model regulation for long-term care insurance with respect to consumer disclosure requirements.

Upon final review, the MIA will make recommendations for the Maryland marketplace.

• Maryland’s 15 percent cap on rate increases • Consumer communications and education • Legislation In its recent press release, the MIA lists the following accomplishments to date of the work group: • Rate reviews: The MIA held public rate review hearings in October 2016 and January 2017. The MIA also issued Bulletin 17-01 on Jan. 3 to notify carriers that all long-term care rate increases will be subject to a public review rate hearing and that all actuarial memoranda will be published on the MIA website for public review.

• Regulatory amendments: The MIA amended long-term care regulations (effective Feb. 27, 2017) to encourage more conservative pricing, require an annual actuarial statement be

#IABVISITS HIT THE HALFWAY MARK Our member agency visits continued this spring with informal check-ins across Western Maryland. Our goals are simply to thank you for your membership and to ask if there’s anything else that IA&B can do for you.

We began in early 2016 and won’t quit until we’ve stopped by all 1,200+ IA&B member agencies throughout Delaware, Maryland and Pennsylvania. We’re at the halfway mark and already seeing dividends: Our efforts are more membercentric and better aligned with your needs than ever before.

If we haven’t visited your agency yet, watch in the months ahead for an IA&B staffer or two to knock on your door.

And follow along in Agent Headlines and on Twitter (#IABvisits) as we document our trek through the region.

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PLATINUM PROFILE

Insurance Agents & Brokers proudly recognizes the Berkley Mid-Atlantic Group as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.

THE BERKLEY MID-ATLANTIC GROUP DIFFERENCE

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Berkley Mid-Atlantic Group offers commercial property casualty coverage to small and mid-sized businesses in the Mid-Atlantic region.

t Berkley Mid-Atlantic Group, we insure the future of business by partnering with select independent agents to provide commercial insurance products and services backed by local expertise and financial stability.

Our teams of expert underwriters, territorial managers and loss prevention consultants deliver product and service solutions that cater to mid-sized companies in more than 1,000 classes of business. Our mid-sized appetite is complemented by small business insurance products that offer coverage flexibility, competitive pricing and quick, bindable quotes for 400 classes of business.

Our regional presence in key Mid-Atlantic states gives us the ability to provide local accessibility, availability and, above all, responsiveness to agents and policyholders. With this unwavering commitment to customer service, we are able to fulfill our goal of effective claims execution and delivery, all done with a personal touch.

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INDUSTRIES WE SERVE • Breweries & Wineries • Commercial Real Estate • Contractors • Hotels • Manufacturers • Medical Offices • Museums & Art • Galleries • Nonprofit & Human Services • Professional Offices • Restaurants • Retail • Service Industry • Wholesalers PRODUCTS • Advantage Package for Small Commercial • Commercial Auto • Commercial Multiple Peril/Package • General Liability • Products Liability/ Completed Operations • Property • Workers’ Compensation • Umbrella n

JUNE 2017

FOCUSED ON RELATIONSHIPS FEATURED PARTNER Berkley Mid-Atlantic Group PRESIDENT Susan N. Grady, ARM, AMIM GEOGRAPHY Delaware Kentucky Maryland New Jersey Ohio Pennsylvania Virginia Washington, D.C. West Virginia (800) 283-1153 A.M. BEST RATING A+ Superior WEBSITE wrbmag.com SOCIAL MEDIA twitter.com/WRBMAG linkedin.com/company/ berkley-mid-atlantic-group

PARTNERS PROGRAM

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.

PLATINUM LEVEL

BRONZE LEVEL

Agency Network Exchange LLC

Aegis Security Insurance Co

ACUITY

Agency Insurance Company

Amerisafe

AmWINS Program Underwriters Inc

Berkley Mid-Atlantic Group

Auto-Owners Insurance Company

Brethren Mutual Insurance Company

Bailey Special Risks Inc

Donegal Insurance Group

Berkshire Hathaway GUARD Insurance Companies

Erie Insurance Group Insurance Agents & Brokers Service Group Inc

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 IABforME.com to get started.

BrickStreet Mutual Insurance

Liberty Mutual Insurance

Conemaugh Valley Mutual Insurance Co

MAPFRE Insurance

Countryway Insurance Company

MMG Insurance Company

Encompass Insurance

Millers Mutual Group

GMI Insurance

Mutual Benefit Group

Goodville Mutual Casualty Company

Nationwide

Grinnell Mutual Reins Company

Penn National Insurance Swiss Re

DO YOU SEE YOUR NAME?

Briar Creek Mutual Insurance Company

The Main Street America Group United Fire Group Utica National Insurance Group GOLD LEVEL

Progressive Universal Property & Casualty Insurance Company Westfield Insurance

Insurance Alliance of Central PA Inc Insurance House Insurance Placement Facility of PA Johnson & Johnson Kite Technology Group Lackawanna Insurance Group Lebanon Valley Insurance Company Merchants Insurance Group Mercury Casualty Millville Mutual Insurance Co PennPRIME Municipal Insurance Reamstown Mutual Insurance Company

SILVER LEVEL

Rockwood Casualty Insurance

CM Regent Insurance Company

State Auto Mutual Insurance Company

Cumberland Insurance Group

Strategic Comp

Farmers Mutual Insurance Company of Western Pennsylvania

TAPCO Underwriters Inc

Frederick Mutual Insurance Co

The Mutual Service Office Inc

Juniata Mutual Insurance Co

Travelers

Keystone Insurers Group Inc

Tuscarora Wayne Group of Companies

Selective

Zenith Insurance

The Motorists Insurance Group

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PLATINUM PROFILE

Insurance Agents & Brokers proudly recognizes MAPFRE Insurance as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.

A

t MAPFRE Insurance we build relationships based on trust.

We’re committed to providing high quality products, valuable services and exceptional experiences for our agents and their customers.

MAPFRE Insurance offers a full range of insurance solutions for the home, vehicle, life, and business, operating in 19 states across the country. We are the 19th largest private passenger auto insurer and the 21st largest Property-Casualty Insurer. MAPFRE Insurance also recently received “A+” Accreditation from The Better Business Bureau (BBB) in all of the 19 states where we conduct business.

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a presence in the Keystone State.

MAPFRE offers Pennsylvania agents a range of innovative products, including passenger and commercial automobile lines, homeowners, umbrella, commercial lines - BOP, and life insurance. With enhanced personal lines product features, we are committed to providing our agency partners with a competitive advantage in the marketplace.

Globally, the MAPFRE Group is the benchmark insurer in Latin America and one of the top 10 insurance companies in Europe in terms of premium volume.

MAPFRE employs more than 38,000 professionals and services approximately 34 million clients.

Since MAPFRE Insurance is in the business of taking care of people, we understand the importance of working together to accomplish great things. For many years, our company and employees have made meaningful contributions to where we live and work through our Community Partners Volunteer Program.

This past year, MAPFRE employees in Pennsylvania partnered with agents and brokers for an array of events ranging from a volunteer day at Cradles to Crayons to food and toy drives, and community walks.

Entering Pennsylvania in 2014, market stability and historical performance were key factors in our drive to establish

Learn more about becoming a partner of MAPFRE Insurance by visiting mapfreinsurance.com. n

JUNE 2017

FOCUSED ON RELATIONSHIPS FEATURED PARTNER MAPFRE U.S.A. Corp.

CHIEF EXECUTIVE OFFICER Alfredo Castelo CORPORATE HEADQUARTERS Webster, Mass.

A.M. BEST RATING A Excellent WEBSITE mapfreinsurance.com PHONE (800) 922-8276 OPERATING TERRORITORY

Independence isn’t easy You could have sold the agency, but you didn’t.

Success rests squarely on your shoulders and the path forward isn’t always clear.

Independence means freedom, but it also means responsibility. It is about staying true to the commitments you’ve made - to your clients, your colleagues, your community, and your family.

Keystone is for people who believe that powerful partnerships generate prosperity. Our mission remains unchanged: to provide access to the expertise, resources, and relationships that sustain independent insurance agencies over the long haul.

Keystone. Independence works better together.

©2016 Keystone Insurers Group ®. All rights reserved. This does not constitute an offer to sell a franchise in any state in which the Keystone Insurers Group franchise is not registered.

Contact Julie Webb for more information: 570.473.2702 jwebb@keystoneinsgrp.com keystoneinsgrp.com

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14

F I R ST I M PR ESSIONS ,

MATTE R ESPECIALLY ONLINE

By Jeff Teschke

First impressions are lasting – and more and more often, those first impressions occur online.

H

i there! Over here. See me?

I’m the guy who hasn’t shaved in three weeks, with holes in my jeans and a tattered, untucked shirt I bought in 2000. I did shower last week, so that’s good, but haven’t touched my hair since.

Nice to meet you!

Can you imagine if I stopped into your office like this?

What would you think? What kind of impression would I make? How likely would you be to do business with me?

Fortunately, most of us care enough not to act like this, so in the “real world,” something like this doesn’t typically happen.

At Forge3, we create innovative website and digital marketing solutions exclusively for the insurance industry.

Since opening our doors in 2004, I’ve visited countless agencies and carriers across the country. Most folks are

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nicely dressed, sporting “business casual” attire. Some even take it up a notch and wear suits. Looking professional is expected.

It’s part of the job.

Of course, we all know this, so let’s move on, shall we?

A FIRST IMPRESSION, IN 100 MILLISECONDS Princeton psychologists Janine Willis and Alexander Todorov discovered it only takes 100 milliseconds to form an impression of someone when looking at a photo of their face.

ACTIVEAGENCY, A POWERFUL NEW WEBSITE PLATFORM ActiveAgency is a powerful new website platform beautifully designed to help you look great, reinforce credibility and build relationships. It’s a streamlined, easy-to-use solution based on our 12+ years working within the industry, and includes best-inclass sales and servicing tools including: • Mobile-responsive website • Clickable Coverage

Why does this matter? Google yourself. What do you see?

• Hello Producer

For most of us, our LinkedIn profile is at the top of the search results. Click it. What do you see?

• Notification bar

• Integrated forms

When was the last time you updated your profile photo? You do have one, right?

What does the rest of your profile look like? Have you updated it within the last year? Does it reflect you and the type of business you’re looking to grow this year?

• Live chat integration • Social media ready • Top-tier hosting and SSL security • + Exclusive features for IA&B members (see sidebar on page 17)

Simply put, this stuff matters more than ever.

Your prospects, clients and partners use Google. Sorry. They do.

And, what they find is often the first impression they have of you, your agency and what you do.

Think about this the next time you’re getting dressed in the morning - fancy clothes and all.

ALL ROADS LEAD HOME(PAGE) Here’s a true story.

A few weeks ago, one of your fellow IA&B agency owners called me. He wanted to sign up for our new ActiveAgency platform.

ActiveAgency is a new website platform designed to make the agency look great online while also providing a bunch of integrated sales and servicing tools. More on this in a bit.

Anyway, when I asked him why he wanted to sign up, he shared something that blew me away.

He had a prospect tell him that the reason he wasn’t going to use the agency was because of their outdated website. Really.

This happened.

Wow. Deep down, I think we all understand that people form impressions of us and our companies based on what they see online. What’s amazing in this case is that the prospect actually had the guts to tell the agency principal!

Time for a new website.

16

ActiveAgency offers a complete website solution Let’s take a quick look at Clickable Coverage, just one of the many sales tools included within ActiveAgency. Clickable Coverage is a powerful (and cool!) sales tool that helps educate people on the importance of the proper insurance coverage.

Interactive graphics are integrated throughout the agency website and encourage visitors to click-and-learn about their unique risks and coverage options. In doing so, it focuses the conversation on the best coverage, not merely on the cost of the policy.

We’ve seen prospects spend almost seven minutes exploring a single graphic – learning about their risks and coverage options in the process. That’s quite amazing, especially considering that most people simply don’t care about insurance!

Clickable Coverage is perfect for supporting your existing sales process, too. For example, you can: • Email the graphics to your clients and prospects

JUNE 2017

• Send a follow-up email to prospects after a meeting with a link to the graphics • Email clients with relevant graphics at renewal time (helps identify coverage gaps) • Share the graphics on social media and via email • Walk prospects through the graphics on your iPad

INDEPENDENT AGENCY SOLUTIONS EXPANDS TO INCLUDE ACTIVEAGENCY Forge3 created a very special version of its popular ActiveAgency platform just for IA&B members. In addition to Clickable Coverage and all of the other built-in tools, IA&B members have full access to these exclusive ActiveAgency features, as well.

• Custom design and layout: Your website is customized to reflect your agency. No cookie-cutter templates here!

• I A&B resources: A wide selection of IA&B’s exceptional tools and client resources are seamlessly integrated.

Clickable Coverage “Auto” graphic, one of 18 included with ActiveAgency THE BOTTOM LINE First impressions matter — both online and offline.

I realize it’s easy to get lost in the complexities of running the agency or doing your job. Chances are, you’ve been doing it a certain way for many years and change is difficult.

I get that. However, change is also necessary — and represents an opportunity to look and work better than the agency down the street.

So whether it’s ActiveAgency or making a few simple tweaks to your LinkedIn profile, take this stuff seriously.

It really does matter.

And, remember, chances are as you read this, someone is looking at you or your agency online.

What are they seeing? n

• Engaging videos: As an IA&B member, you have access to a collection of videos showing the power of being independent.

• Powerful branding: Show your commitment to IA&B, Trusted Choice and Make-A-Wish Foundation with brand logos.

In other words, ActiveAgency is the simplest way to update your website - without breaking the bank. Pricing is just $250/month, and there are no upfront setup fees or long-term contracts for IA&B members. Nice and simple!

About Independent Agency Solutions ActiveAgency is the latest offering of Independent Agency Solutions – a wholly owned subsidiary of IA&B that lifts the burden of complex or cumbersome projects from the shoulders of independent agencies. In addition to website solutions, Independent Agency Solutions offers compliance and regulatory consultations.

IABforME.com/IAS

Jeff Teschke, founder and CEO, Forge3, Ltd., provided this article.

WHAT’S AHEAD FOR PRIMARY AGENT

IN NEXT month’s Primary Agent, we turn our attention to employee management. Watch for a feature article from our HR consultant, Karen DiGioia, who will walk you through the full employment lifecycle and share tips and tools along the way.

17

Strategies for selling Personal Umbrella policies Four real-life claim scenarios

W

orking in the insurance industry, we know how litigious our society has become. We know that juries and judges hand out multi-million dollar awards in response to injuries all the time. And we know that underlying insurance policies’ liability limits can be exhausted easily.

But when it comes to Personal Umbrella policies, many customers balk. Sometimes a dose of reality is just what the doctor ordered. Take the following real-life claims (hat tip to RLI and Jerry Milton, CIC, for supplying them) and consider sharing the scenarios with your customers.

SCENARIO NO. 4 An 18-year-old man, driving his 19-year-old girlfriend in his parents’ car, left the roadway and hit a tree. The woman suffered multiple fractures and internal injuries which left her hospitalized for over a month and prompted extensive physical therapy.

The Personal Umbrella insurer settled with the girlfriend for the policy limit. n

SCENARIO NO. 1 A couple hosted a pool party for their teenage children. While they didn’t provide alcohol, guests brought some. One guest was severely injured in an auto accident after leaving the party, and the injury was attributed to the consumption of alcohol.

The state Supreme Court decided that, because the homeowners did not prevent the consumption of alcohol by minors on their premises, they were responsible for the guest’s injuries.

The Homeowners’ and Personal Umbrella policies responded to the claim.

SCENARIO NO. 2 A driver (who was not intoxicated, speeding or using a cell phone) traveling on a two-lane road struck a pedestrian walking home from work. The pedestrian suffered serious head trauma.

The claim wiped out the driver’s underlying Auto Policy limit of $5,000 and triggered a $2 million payout from his Personal Umbrella policy.

SCENARIO NO. 3 A ski boat operator made a sharp turn just as a gust of wind hit, and an inner tube blew out of the boat. A rope connected to the inner tube caught a passenger’s leg, launching him onto a dock.

The passenger sustained substantial knee and hip injuries, disabling him for six weeks and leading to a business-income loss.

The primary insurance company tendered its full policy limit – which was $500,000 short of the total claim. The Personal Umbrella policy covered the remaining amount.

18

JUNE 2017

EASY SOLUTION FOR TOUGH PERSONAL UMBRELLA POLICIES SURE, a personal umbrella policy is one of the best ways to protect your customers from losing their home, savings and future earnings if they’re found liable for an accident. But placing an umbrella for certain personal lines accounts can be a challenge.

Enter the RLI Personal Umbrella Program, available through IA&B My Markets. The RLI Program is available for tougher personal lines risks that other carriers won’t cover, and there’s no requirement that underlying coverage be with the same carrier.

Plus, it boasts competitive commissions and no production requirements.

IABforME.com/MyMarkets

Hanover is here.

The

For Pennsylvania, and for you.

It just got a lot easier to find innovative, industry-leading insurance protection and service. Just look for The Hanover, now providing personal insurance in Pennsylvania with our network of partner agents. With more than 165 years of experience and award-winning claims service, it’s hard to miss us‌ or our advantages.

Visit hanoverishere.com to learn more about becoming a Hanover agent.

PERSONAL AND COMMERCIAL INSURANCE

hanoverishere.com

B ECOM I NG TO D AY ’ S DIGITAL AGENT

By Jim Gardner

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Advances in technology may turn our industry on its head, but they need not trigger the demise of the independent agent. Author Jim Gardner shares how agents can capitalize on technology to build upon their offerings and expertise – and to further solidify their relationships with customers.

I

f you take anything away from Uber or Airbnb, it should be that de-constructing an entire industry can be done by a single player. By stripping away all that used to be and distilling it down to the basic customer needs, disruption can almost seem easy.

As an agent, have you ever thought about what you would do if you had the resources and the power to re-invent the way you sell and service policies? There are things you would take away, but what would you keep? What would you add that is not currently present?

Today’s agent must be digital or face being pushed aside or made irrelevant. The good news is that you have hundreds of new tools to choose from to prepare your agency for the next chapter.

I believe that the art and science of being an insurance agent will drive the ultimate outcome. It will not be just technology. The agent will not be replaced by the robot. Technology only has real value for the agent when it creates a new user experience which equally deepens the connection and improves the interaction.

Recently, while I was in Des Moines for a week at the Global Insurance Accelerator (GIA), we took an Uber to GIA in the morning and back to our Airbnb at night. I found my connection to Des Moines grew as each Uber driver weaved their tales of the city from their unique perspective. My connection to Des Moines was very driven by our drivers! To me, the drivers are the “art” of the Uber platform.

Similarly, the agent uses the art of relationship to provide risk consulting and guidance to their client. Rather than the demise of the agent, I see the renaissance of the agent. It will happen through the art of being an agent.

Of course, being a successful artist in any medium, requires a wide range of mastery and continual learning of skills. I believe the following 5 Cs are part of being a relevant agent in today’s digital world.

CONNECTION Agents were the front line of risk selection and risk mitigation.

With commoditization and competitive pressures, the agent complains that they are unable to maintain the level of contact they had in the past. There seems to be no time to connect with the policyholder, to get to know their needs.

Today, much of the art of connection can be facilitated with technology. The bonus is that it can be done faster and more completely than it could in the past.

You, or your staff, can learn about current or targeted clients easily with Facebook, Twitter and Instagram. It may not be the same as a chat on the sidewalk on Main Street, ... but there is real value there.

CONQUERING THE BACK-OFFICE BACKLOG AUTHOR JIM Gardner suggests handing off customer and prospect research to back-office staff or an “off-shore virtual assistant.”

Along those lines, consider Work At Home Vintage Employees (WAHVE), a remote contract-staffing solution for the insurance industry. It partners agencies in need of staffing support with experienced, “pre-retired” insurance professionals who now work remotely from their home office.

IA&B members receive a 50 percent discount on the one-time set-up fee.

IABforME.com/WAHVE

21

Using a CRM which integrates social media, like Nimble, Batchbook and Salesforce to name a few, can supply great information for connecting more deeply with your clients.

I currently use Base (getbase.com) as my relationship tracking platform. It works great on the desktop and more importantly on my phone, and it is about $10/user.

This is a great process to task out to your CSR or other back-office staff (have you thought about off shore virtual assistants?). Just spending one hour a day on researching your current or future clients will pay off in new knowledge on what is changing in their lives and where new opportunity exists for you.

John Jantsch from Duct Tape Marketing says, “The more you know about your customer’s world, the more you can help them get what they want out of life.”

CONVERSATION Take back the risk conversation. As the agent, you know your client, you understand their exposure, and you benefit most from building that relationship.

22

However, in a way, the inspector has taken over the conversation around risk. It is not until the recommendation letter is delivered to the policyholder that the risk conversation is on the table.

How can it be if you have never visited the property?

Digitize the process with an app. Do a digital property tour.

Invite your client to complete a DIY inspection on their home or business. They will give you information on both the outside and inside of the property. What value can you unlock from that data? Might there be any upsell or cross-sell opportunities there?

Apps which let you share video like Periscope (periscope.tv) or FaceTime (Facetime.com) can be used to have your client digitally “walk” you through their property.

Another option built just for the agent is ViewSpection (viewspection.com). With the ViewSpection app (disclaimer: I am CEO and co-founder of ViewSpection), you can view your client’s home or property from your desk and have a conversation on how they can make their property and family safer.

JUNE 2017

CAPABILITY A hunger for learning will help move you from a legacy agent to a digital agent. What do you know about behavioral psychology, digital marketing, copy writing, business finance ...? The list goes on. There is so much to learn that will change how you see the world and will change how you do business.

Too busy for that online MBA? CE units not driving growth for you? Lots of people state that audible books, pod casts (iTunes, Sticher, Podcast Addict), online classes (Coursera) and blogs (Google “insurance blogs”) have taught them more than they ever learned in college or business school.

While it is said it takes 1,000 hours to become a master guitar player or musician, we all can travel towards mastery one step at a time.

I have this one route I like to walk behind the Home Depot near my home where I just go back and forth, listening to some of the podcasts I list below. I sort of lose myself in the monotony of the surroundings as I walk and learn. It is also good for about 3,000 steps on my Fitbit!

CIRCLES It is said that we are the sum of our five closest friends. Are they pushing you ahead, dragging you down or just keeping you in the same old rut? Well, my social circle aside, I have found new friends in the digital world. I leverage these digital channels to connect to mentors, thought leaders and information in general that has greatly opened up how I see the insurance eco-system.

These are some of my favorites: • Ryan Hanley, Agency Nation – podcast (agencynation.com/podcast) • Jason Cass, Grow Program – podcast (stitcher.com/podcast/grow-podcast) • Gregory Bailey, Denim Rivet– podcast (denimlabs.com/category/podcast) • Brian Appleton, Insurance Agent Summit – four weeks of interviews with agents and experts on all things insurance (insuranceagentsummit.com)

Today, the agent force is besieged by direct writers, online quoting engines and carrier-driven changes to the very distribution system which has remained unchanged for so long. With those constant pressures, it is easy to lose touch with the core principle of an agent, which is the role of the risk consultant.

Don’t let Big Data make you lazy. You or your carrier might have 80 data points on the house you are working to write, but getting inside the place and looking around beats a credit score, zip code and CLUE report every time.

Whether you or your CSR physically visit a property or digitally visit, that detailed knowledge will differentiate you from the online agency or quote machine. What value can you unlock from that data? Might there be any upsell or cross-sell opportunities there? Bring deep value as a risk consultant to your client, and be top of mind when they think insurance.

APPS In my research, I have not found many apps that are built just for agents. Without a doubt, there are great lists of apps which

BRANCH OUT WITH PROFESSIONAL TRAINING Feed your hunger for learning, as author Jim Gardner recommends. Beyond general insurance concepts, our online introductory training courses include: business communication fundamentals, client management essentials and emerging leaders courses.

IABforME.com/IntroTraining

CONSULTANT Embrace your value as a risk consultant. Get beyond the sale.

Get out of the trench of day-to-day agency operations.

23

make us, as business owners, much more productive. Most apps for agents are from the agency platform providers, niche products from the carriers or are mobile apps which create versions of your website.

HOW WE’RE SUPPORTING THE DIGITAL AGENT Being a “digital agent” is about capitalizing on today’s technology while staying true to the independent agent’s value proposition. Our new project – Two Connected Stories – does just that.

Two Connected Stories uses engaging, two-minute videos to highlight the meaningful relationships between independent agents and their customers. Stay tuned to IA&B communications in the weeks and months ahead to learn more.

A highlight of carrier-developed apps comes from Kelly Sheridan with Information Week. Check out the eight apps on her list at insurancetech.com/channels/mobile-strategy-8-cool-insuranceapps/d/d-id/1319600 There are plenty of apps out there that support being in business.

There are less that are focused on being a digital agent. Here are three that I suggest: • Insurance Agent (goinsuranceagent.com) – The Insurance Agent smartphone app helps customers stay in touch, manage policies, log accident reports, create a home inventory and ask better coverage questions.

Personalized with every use. Stronger connections with every touch point.

Come Grow with Us!

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GUARD

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We’re the quote you could come up against, so why not join us? Go to www.guard.com/apply

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We now feature more lines of business in most states (including a One-Stop Insurance Shopping solution via BizGUARD Plus).

We are a stable open market for your commercial Property & Casualty accounts that provides the qualities you seek: Competitive Pricing • Unique Coverage Extensions • Excellent Commission Potential • Broad Underwriting Appetite • Easy Submission Process • Superior Customer Service Visit www.guard.com for product availability in specific states.

24

JUNE 2017

• HootSuite (hootsuite.com/mobile) – Not uniquely for agents, staying top of mind with your clients is a daily task. Use Hootsuite’s free mobile apps to schedule, publish and monitor conversations from anywhere. Whether you’re editing a scheduled post on the train or capturing a video at a conference, you’ll have one seamless Hootsuite experience from desktop to mobile.

• Feedly (feedly.com/i/welcome) – The pulls the content you need to accelerate your research, marketing and sales. This is where I aggregate all my insurance-related feeds from PC360, Insurance Journal, etc.

CONCLUSION The role and life of an insurance agent is changing faster than we may want to admit.

The demise of the agent is overstated; however, the need to transition to the new digital agent is unassailable. Going back to Uber and Airbnb, do you want to be a hotel owner in New Orleans who lost 20k rooms to Airbnb during Jazz Fest? Are you thinking the taxi industry is a high-growth opportunity anymore?

Best of luck adjusting to this new normal.

Safe. Strong. Stable.

Insuring businesses for 175 years.

Jim Gardner is CEO and co-founder of ViewSpection (viewspection.com). The ViewSpection app lets agents invite policyholders to complete a digital tour of their property and connect in a new way. Jim is a second generation loss control provider and is actively involved in digitally transforming all things loss control related. Connect with Jim at LinkedIn or jim@viewspection.com.

The Mutual Fire Insurance Company in Harford County was founded in 1842 to protect the citizens and businesses in the small rural town of Bel Air outside Baltimore, Maryland. As a mutual company, we’ve always put our policyholders first, working with our independent agents to grow responsibly and cautiously. Now a large regional carrier serving seven states and Washington, DC, we are celebrating 175 years of always being Committed to Mutual Success.

HarfordMutual.com | 800.638.3669

25

grinnellmutual.com

WHY GRINNELL MUTUAL? The future doesn’t always keep its promises.

Fortunately, we do.

W

e understand that you have a lot of choices when it comes to selecting who you want to do business with for your auto, home, farm, and business customers.

Although we have a history of providing quality insurance going back 109 years, Grinnell Mutual is always looking forward. We’ve made a commitment to keep pace with the rapidly changing landscape of the insurance industry through progressive practices, innovative thought, and trusted relationships. Everything we do serves a single purpose — keeping our promise to take care of our agents, mutuals, customers, and employees.

YOUR SUCCESS IS OUR SUCCESS. Our focus on great service and strong relationships has helped us build over a billion dollars in assets, $132 billion in total risk protection, and 40 years of A or better ratings from A.M. Best.

Our mission — to provide superior products and service that protect the assets of our policyholders, agents, and mutual members — is at the core of everything we do.

UTTING YOU FIRST. UILDING RELATIONSHIPS HAT LAST.

nt to work with people who understand what’s important to you.

WE BELIEVE INall else. Trust in Tomorrow.™ why we protect and value trust above NEIGHBORHOODS. t us today.

From our boardrooms to our backyards, we live and do business in | HOME | FARM | BUSINESS communities just like yours, working with 250 mutuals and more than 1,600 local independent agencies in Illinois, Indiana, Iowa, Minnesota, Missouri, Montana, Nebraska, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, and Wisconsin. Having neighbors you can rely on is invaluable.

26

Rest assured that Grinnell Mutual will be your trusted partner in protecting what matters most — your valued customers.

Trust in Tomorrow.TM

JUNE 2017

PAID ADVERTISEMENT

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PUTTING YOU FIRST. BUILDING RELATIONSHIPS THAT LAST. You want to work with people who understand what’s important to you.

That’s why we protect and value trust above all else. Trust in Tomorrow.™ Contact us today.

AUTO | HOME | FARM | BUSINESS

TECHNOLOGY UPDATE

CYBER THREAT

PROTECTION 9 best practices for agencies

By Greg DiDio

Implementing best practices for cybersecurity will reduce your agency’s risk of lost productivity and lost data – and possibly help you comply with regulators’ requirements.

28

JUNE 2017

B

y now you are probably aware of New York State’s new cybersecurity law, DFS 23 NYCRR 500. This regulation went into effect in March and applies to all insurance agencies doing business in the state of New York. For the last decade, it seems like every time you turn around there’s another onerous security compliance requirement. If it’s not HIPAA, it’s Graham-Leach-Bliley. If it’s not something new in California, it’s something new in Massachusetts.

Many of the agency principals that I speak with are growing weary of hearing about new regulations. You, too, may feel overwhelmed, annoyed or perhaps just plain skeptical of what the ramifications will be for non-compliance. After all, you’re a risk management professional. It’s your job to quantify risk and advise your clients on wise strategies to limit exposure.

Unfortunately, when it comes to non-compliance of new regulations, there just isn’t much real data on the risks of non-compliance. As a technology professional, I cannot help you speculate on the actual penalties for non-compliance. But what I can do is inform you of the very real threats to your business that these regulations hope to address.

Cyber threats are still growing exponentially. Based on Symantec’s 2106 Internet Security Threat Report, email phishing attacks aimed at getting recipients to open an email ostensibly from a known sender increased 55 percent in 2015. The report furthermore notes that companies under 250 employees are increasingly the targets of these attacks.

Likewise, “crypto-style” ransomware attacks are still on the rise, increasing 35 percent according to Symantec’s latest report.

As a result of cybersecurity breaches, agencies are suffering countless lost hours of productivity and seeing business-critical data lost and/or stolen.

The good news is that at the core of virtually all of these cybersecurity regulations are the same commonsense practices that directly address the most significant threats. Here are nine essential steps that will better prepare your agency for threats regardless of which cybersecurity regulation has your attention at the moment: 1. Develop a written cybersecurity policy. “Develop” is a bit of strong word. IT Security professionals, including your current IT service provider, should be able to provide you with a standard cybersecurity policy template that requires you to make only modest changes to meet your needs.

2. Establish a cybersecurity program to ensure ongoing compliance with your cybersecurity policy. This program

consists of your ongoing practices that ensure the confidentiality, integrity and availability of your information resources.

3. Engage a qualified third-party to conduct periodic risk assessments. Require that the third party perform penetration testing as part of their assessments.

4. Implement industry-standard user access controls. These standards include: requiring “strong” user passwords and routine password changes, quickly disabling user accounts for terminated employees, and restricting the rights of necessary “service” accounts that are needed for various business applications.

N.Y. NON-RESIDENT LICENSEES SUBJECT TO NEW CYBER REQUIREMENTS YOUR IA&B Industry & Legal Affairs Department has been following along with the New York Cybersecurity Requirements for Financial Services Companies, which is referenced in this article. As reported in Agent Headlines, the first-of-its-kind regulation is applicable to all agencies licensed to conduct business in New York.

Good news: The regs include “limited exemptions,” which will excuse many licensed agencies from the more costly and burdensome requirements. However, “exempted” agencies still will be required to comply with a number of the regulation’s provisions.

Bad news: For agencies that don’t qualify for a “limited exemption,” complying with the entirety of the new regulation will be more onerous, expensive and difficult.

While the regulation’s effective date was March 1, 2017, actual compliance deadlines vary by section and are staggered over a two-year period. Our website includes a synopsis of key compliance deadlines, as well as an overview of requirements and links to additional information.

IABforME.com (search “New York cybersecurity”)

29

TECHNOLOGY UPDATE

5. Establish real-time monitoring for detection and notification of vulnerabilities and security breaches. Such notifications should go to a qualified security engineer capable of analyzing the alert and responding to any associated threat.

6. Keep your servers and PCs up to date with the latest security patches and desktop anti-virus programs.

7. Invest in a business-class firewall at each of your office locations with an active unified threat management (UTM) subscription. A UTM subscription provides enhanced features, such as malware filtering, content scanning and intrusion prevention.

8. Regularly train your employees on security awareness.

A great way to accomplish this is through third-party software that can simulate email phishing attacks and notify you if your employees take the bait by clicking on “infected” weblinks or opening “infected” files.

9. Make sure that all business-critical data is backed up at least daily and routinely verified to be recoverable.

While these nine steps may not be everything you need to do to comply with a particular regulation, you can bet that they will be mandatory elements of any regulation that comes down the pike. More importantly, they will provide you with the very real benefit of reducing the risk of lost productivity and lost data, no matter what your perspective is on the regulations that are enforcing them.

If you review these items and think, “I’d rather be selling insurance”, don’t despair. There is no need to tackle these tasks alone. Many IT providers are recognizing the necessity for specialization in security and compliance services and are doing just that. This places them in the best position to help your agency from cyber threats, as well as to ensure compliance with the latest regulations. n Greg DiDio is CEO of Kite Technology Group, a Maryland-based IT services and consulting company serving the needs of 90 insurance agencies across the United States. He has 25 years of leadership experience, with the last 18 focused on information technology management. Greg has a passion for developing leaders and creating corporate cultures that facilitate high performance and employee growth. When he is not working, Greg enjoys reading, traveling and spending time with his wife and seven children.

30

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For more information, visit our website at CMRegent.com or call toll-free 1-844-480-0709.

31

My Events

CLASSIFIED A DV E R TI S E M E N TS SOUTHEAST PA PRODUCERS & AGENCIES

DATE TOPIC

LOCATION

JUNE 2017 1

William T. Hold: Commercial Lines

Ellicott City, Md.

1-2

James K. Ruble Graduate Seminar

Annapolis, Md.

6

Webinar: Workers’ Compensation Issues

1 – 4 p.m.

6

CISR Personal Residential

Reading, Pa.

6

*Insuring Success Seminar: Position for Success (CPIA 1)

Mechanicsburg, Pa.

6-8

Property & Casualty Licensing Study Course

Allentown, Pa.

7

William T. Hold: Protect Your Client, Protect Yourself

Philadelphia, Pa.

7

*Insuring Success Seminar: Implement for Success (CPIA 2)

Mechanicsburg, Pa.

8

*Insuring Success Seminar: Sustain Success (CPIA 3)

Mechanicsburg, Pa.

8

Webinar: “Sharing” and the Homeowner and Auto Marketplace

1 – 4 p.m.

12-15

CIC Commercial Casualty

Lancaster, Pa.

13

CISR Elements of Risk Management

Altoona, Pa.

14

CISR Miscellaneous Personal Lines

Hagerstown, Md.

14

Webinar: Executive Management Liability

1 – 4 p.m.

15

Insuring Contractors

Mechanicsburg, Pa.

15

Webinar: Additional Insureds—The Quandary

2 – 5 p.m.

20

CISR Commercial Casualty II

Pittsburgh, Pa.

20-22

Property & Casualty Licensing Study Course

Mechanicsburg, Pa.

21

CISR Elements of Risk Management

Pittsburgh, Pa.

21

Webinar: Top Twelve Coverage Countdown

1 – 4 p.m.

22

Webinar: Commercial Liability Endorsements for Watch Out For

1 – 4 p.m.

27

CISR Elements of Risk Management

Wilkes-Barre, Pa.

27

Webinar: Man vs. Machine—Cyber Exposures & Insurance Solutions

2 – 5 p.m.

28

CISR Commercial Casualty I

Mechanicsburg, Pa.

28

CISR Personal Residential

Philadelphia, Pa.

28

Webinar: Closing Coverage Gaps in Home, Work and Auto

9 a.m. – Noon

29

PA Auto Coverages

Allentown, Pa.

*Attend all 3 seminars to earn the CPIA designation

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 Applied Underwriters............................................... IBC Berkshire Hathaway Guard Ins Cos...............24 CM Regent LLC..............................................................31 Grinnell Mutual Reinsurance Co............. 26, 27 Harford Mutual Insurance Co..............................25 IA&B.........................................................................................30 IA&B Partners Program............................................11 Insurance XDate.......................................................OBC Keystone Insurance Group ..................................13 Millers Mutual Group.................................................IFC Preferred Property Program.................................31 The Hanover Insurance Group...........................19

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JUNE 2017

Expect big things in workers’ compensation. Expect to save a third of your clients 30% or more. Most classes approved, nationwide.

For information call (877) 234-4450 or visit auw.com/us. Follow us at bigdoghq.com.

Š2017 Applied Underwriters, Inc., a Berkshire Hathaway company. Our insurance carriers are rated A+ (Superior) by A.M. Best.

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