Pennsylvania Primary Agent - May 2018

MAY 2018 | PENNSYLVANIA

THE E&O ISSUE

HOW TO AVOID MAJOR LEAGUE ERRORS

5 WAYS TO REDUCE E&O RISK A CASE FOR CHECKLISTS DOCUMENTING TEXTS

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IN THIS

12 MAKING A CASE FOR COVERAGE CHECKLISTS Coverage checklists remain underutilized, despite their proven, positive impacts on sales, customer service and E&O prevention.

18 5 WAYS TO REDUCE YOUR E&O RISK

While there is no certain prevention of an E&O allegation, there are proven risk-reduction strategies.

Check out the IA&B Service Group’s top tips.

22 DOCUMENTING TEXT MESSAGES FOR E&O PROTECTION

As texting between producers and their customers becomes more common, how should an agency respond?

IN EVERY ISSUE 2 3 4 6 8 10 26 28 28 28

Chair of the Board’s Message Claire-ification Legal Corner Coverage Corner State News IA&B Partners 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 # 2018-5, is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

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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.

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CHAIR OF THE BOARD’S MESSAGE

BOARD OF DIRECTORS INSURANCE AGENTS & BROKERS

THE MEMBER BENEFITS CHAIN

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

OFFICERS

Chair of the Board

John B. Hollister

nsurance Agents & Brokers (IA&B) membership means different things to different agencies – and to different people within those agencies. For some, IA&B is simply a means to an end: E&O coverage. For others, membership equates resources and professional development. And yet for others, it means regulatory and governmental advocacy.

All of these are valid. And – as I’ve come to learn as my involvement with IA&B has grown – all of these are intertwined as well.

Agencies can receive comprehensive protection through IA&B’s E&O programs.

In turn, staff can reduce their risk of E&O by relying on the association’s agency management, legal compliance and coverages resources and by taking IA&B’s top-notch education courses. And finally, agencies can count on IA&B to monitor and advocate against proposed regulations, policies and statutes that would expose them to additional E&O. IA&B’s programs, products and services truly are symbiotic. If your agency isn’t taking advantage of everything membership has to offer, it’s time to start. I encourage you to visit IABforME.com or call 800-998-9644 to learn about the benefits I’ve mentioned here and about the many others available to you.

Vice Chair of the Board

Craig S. Mader

Immediate Past Chair of the Board

Michael F. McGroarty Sr.

MEMBERS

Emory Stephen Burnett, CIC, ARM Wilmington, Del.

Richard F. Corroon, CPCU Wilmington, Del.

Michael P. Ertel Sr.+ Columbia, Md.

Ashley M. Fitzsimmons, CISR Forest City, Pa.

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.

Elizabeth H. Martin, CIC Millersville, Pa.

Mark J. Monroe

All the best,

West Chester, Pa.

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

Richard M. Rankin, CIC

John Hollister Chair of the Board

Lancaster, Pa.

April E. Ressler, CIC Altoona, Pa.

D. Bradley Rosenkilde Jr. Hunt Valley, Md.

Tara S. Silfies, CPCU Bethlehem, Pa.

Glenn R. Strachan

Ft. Washington, Md.

Bryan S. Willey Dover, Del.

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

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

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

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MAY 2018

Claire-ification IA&B Vice President - Advocacy Claire Pantaloni, CIC, CISR provided this month’s answer.

QUESTION: One of our carriers wants us to have a disaster plan for the agency.

Does IA&B have a template we could use?

ANSWER:

Y

es, we do. We refer to it as the emergency and business continuity planning manual (EPM for short). It is designed to help you 1) gather, organize and store critical information you’ll need in case an emergency arises, and 2) evaluate your agency’s response options ahead of time. This can save you considerable time and money (not to mention clients) if a natural catastrophe or other disaster should strike your area. On the input side, you answer questions and enter agency information; on the output side, the agency’s customized EPM is created based on your responses and then is available online.

The major highlights of the EPM are that:

• It is a web-based tool, so it’s accessible anytime, anywhere (if you need to relocate your office during an emergency, you will be able to access it with your username and password); • Everything is in one place: agency principals who have lived through a disaster all agree that retrieving information is a terrible hindrance to operations, particularly when you also

have to deal with your own customers’ claims. By organizing key information and having it at your fingertips, you can more easily launch alternate processes that allow you to continue to service your customers and operate your business;

add a carrier appointment, lose a staff member, buy equipment, select a new accounting firm … you get the gist.

Once completed, you should update your emergency plan no less than once a year. Put it on your calendar!

• Pre-defining employee roles eliminates the stress of having to do research and make decisions on the fly and under intense pressure. Key information is available, and roles and responsibilities are assigned ahead of time.

To access the full guidance, go to IABforME.com/emergencyplanning-manual.

Some tips to remember: • You can delegate this project to a trusted employee. If necessary, put the plan on a multi-week schedule to allow the person some time to collect and input all of the information • Due to the sensitive nature of some of the information gathered, only those individuals identified with us as either the primary or the alternate contact in the IA&B database can access the tool.

(Contact us if that’s an issue.)

Ask our experts!

Have a question?

Rely on our team to find the answer.

Contact Claire: 800-998-9644 Ext. 604 ClaireP@IABforME.com IABforME.com

• The EPM is a living and breathing document. Things change in an agency: You may open a new bank account,

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LEGAL CORNER

“GOOD DEED” OR PRODUCER LICENSING VIOLATION? Even experienced agents can make mistakes that jeopardize their license

By Christopher J. Knight, Esq.

B

en Adams knows what he’s doing as an independent insurance agent.1 He should. He’s been licensed for nearly 40 years, selling P&C and Life & Annuity products from the “Main St.” family-owned insurance agency his dad founded in a small town in eastern Pennsylvania. Ben and his brother have successfully operated the agency since dad retired years ago. They are well-respected in their community and in the industry. They have a nice, 1

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profitable book with good retention and respectable loss ratios. Naturally, Ben never had any licensing violations or trouble with regulators. And in his way of thinking, if a customer is unhappy, he will make it right.

That’s the way their dad did business, so going above and beyond in customer service comes naturally to the Adams brothers. This time, though, that’s the thinking that ended up getting Ben in trouble.

This is a true story; however, names have been changed.

MAY 2018

Ben didn’t know it at first, but a longtime customer named Joe Miller was unhappy. The company that insured Miller’s small commercial property for several years changed its underwriting appetite and would be non-renewing the policy. Ben had several customers in the same predicament and had found a competitive alternative to write the coverage for all of them. As Miller’s renewal date approached, Ben doublechecked the new company’s underwriting

guidelines, prepared an application, met with Miller to sign it, submitted it and bound coverage to pick up at the renewal date. He knew the underwriter wellenough to know that if there were any questions, he would hear about them, but there were none. The company would issue the policy and bill the customer; there was nothing left for Ben to do.

But, about three months later, Ben was surprised by a letter from the Pennsylvania Insurance Department.

Miller filed a complaint against him, and the department required Ben’s response!

Ben was floored. What had he done? It turns out, the new company was slow to issue the policy and Miller wondered if he had coverage. Instead of calling Ben, he bought coverage elsewhere. When Miller got the bill for the policy Ben had sold him, he tossed it in the trash. When the company sent it to collection, Miller filed a complaint with the Insurance Department saying Ben didn’t find him coverage and now he was being billed for a policy he didn’t need.

In reality, Miller did need the policy Ben sold him. Without it, there would have been a lapse, so the company was owed about $1,000 for several weeks of coverage. Ben sent his written response to the Department, explaining the situation.

Furthermore, the bill was no longer an issue – Ben had paid it – so Miller’s complaint was moot. Ben knew he hadn’t done anything wrong, but still felt bad about the mix-up, wishing he had tracked the issuance of the policy closer. Taking care of the premium was the right thing to do and would take care of having to deal with the complaint. “End of story,” he thought.

About six months later, Ben was surprised by another letter from the department.

This one stated: “The Enforcement Division has placed you under investigation for alleged violations of the Pennsylvania insurance laws” prohibiting

rebates and “for demonstrating a lack of general fitness, competence or reliability sufficient to satisfy the Department that the licensee is worthy of licensure.” What!?

What Ben thought was good customer service by resolving the complaint and paying the premium, was an inadvertent violation of the law prohibiting an agent from paying or refunding any portion of a premium. Now Ben had an even bigger problem. Could he really lose his license?

His career? The department was accusing him of not being “worthy.” “Holy smokes,” he thought.

After Ben called Insurance Agents & Brokers (IA&B), he hired me to represent him. We eventually helped the department recognize that even though Ben may have technically violated the anti-rebating statute, his intentions were pure, and it was an honest mistake by a good agent. We ultimately negotiated an outcome that didn’t create a blemish on his record and he didn’t have to pay a fine or penalty. He was spared the embarrassment of a formal, public, licensing action.

Ben learned some tough lessons through this experience. His story is a good reminder that no matter how long you’ve been in the business, it’s never too late to learn and to stay up-to-date with the laws and regulations governing your conduct as a licensee. An agent should never refund or pay any portion of a premium without good legal advice, no matter how pure the intentions. “Once bitten, twice shy,” Ben told me.

REBATING RESOURCES WHAT YOU don’t know can hurt you. The Pennsylvania producer licensing law – Act 147 of 2002 – includes specific prohibitions related to rebates and inducements. IA&B’s online resources include: • Statutory references • Compliance guidelines • Examples of permissible and impermissible offers Visit our website, or contact our Advocacy team, to discuss compliance.

Claire Pantaloni, CIC, CISR Vice President - Advocacy 800-998-9644 Ext. 604 ClaireP@IABforME.com

Don Bankus Legal & Corporate Affairs Director 800-998-9644 Ext. 603 DonB@IABforME.com IABforME.com/rebating

The author is an insurance regulatory attorney in private practice and former legal counsel to the Pennsylvania Insurance Department. He can be reached at CJKnight@hmslegal.com or 717-236-1300.

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COVERAGE CORNER

WHO’S AT FAULT – WHOLESALE BROKER OR RETAIL AGENT?

By Jerry M. Milton, CIC

T

his little story involves three parties – the insured, a wholesale broker and a retail agent. It’s a sad story, but a true story. This case is currently being adjudicated. The insured had a loss. The loss was not fully covered. Who was at fault – the wholesale broker, the retail agent or both? You be the judge.

The insured owns several buildings. These buildings, the tenants’ improvements and betterments, and the loss of rents are insured on a replacement cost basis

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for $220 million. The roofs of several of the buildings were badly damage by a tornado. The cost to replace the damaged roofs totaled $900,000. The insurer offered $350,000. Why? Here are the facts of the case. The retail agent placed the property insurance for this insured through the same wholesale broker for 10 years. The broker had changed insurers two or three times during that 10-year period. New applications were completed and replacement cost coverage was always requested. The last

MAY 2018

change of insurers occurred approximately two years prior to the loss.

The policies were written on a replacement cost basis, but (and this is a big “but”) the property policy had an endorsement attached that limited coverage on the roof to actual cash value (ACV). At no time was the insured informed of this reduction in coverage which occurred two years earlier. The insured settled with the insurer for $350,000 and then sued the wholesale broker and the retail agent.

In his deposition, the insurer’s underwriter pointed out that their proposal to the wholesale broker listed the ACV roof limitation endorsement along with a list of other endorsements.

The wholesale broker took the insurer’s proposal, transferred it to the wholesale broker’s letterhead, and sent it to the retail agent. Again, the ACV roof limitation endorsement was listed along with several others.

The insurer’s underwriter stated that, upon request, the insurer would have removed the endorsement. Obviously, the wholesale broker did not make that request. The underwriter further stated that the insurer had no relationship with the retail agent or the insured.

The wholesale broker defended his actions, explaining that the broker had no relationship with the insured and that it was the retail agent’s responsibility to inform the insured of this reduction in coverage.

No doubt about it: Somebody was at fault. Was it the wholesale broker, the retail agent or both? You be the judge. In my deposition, I pointed to both parties.

I believe the following: • Both parties breached their duties.

• The wholesale broker should have discussed this endorsement with

the underwriter and requested removal.

Had it been removed, we would not be discussing this case.

• The wholesale broker should have discussed this endorsement with the retail agent.

• The retail agent should have informed the insured of this reduction in coverage.

None of these discussions took place. As I said earlier, this case is currently being adjudicated. Will the wholesale broker or the retail agent be deemed to be mostly at fault, or will they share fault? I believe both are at fault. I personally think this case will settle and never reach the court room. But, that’s just me. We’ll see.

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

MORE TO KNOW ABOUT E&O LEARN MORE about E&O case studies and risk management – and receive E&O loss-control credit – at our upcoming courses, available in classroom and webinar formats.

E&O Risk Management: Meeting the Challenge of Change May 16 | Mechanicsburg, PA May 31 | Pittsburgh, PA Aug. 16 | Erie, PA Sept. 12 | Mechanicsburg, PA Oct. 4 | Newtown Square, PA Nov. 8 | Newark, DE Nov. 13 | Pittsburgh, PA Nov. 28 | Bethlehem, PA E&O Risk Management: Part One & Two May 15 | live CE webinar June 27 | live CE webinar

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

WE WANT TO HEAR FROM YOU

IABforME.com/education

JERRY MILTON will pen his final Coverage Corner column for Primary Agent in December 2018. We want to hear from you: What topics would you like Jerry to cover in his final articles?

Submit your suggestions to IA&B Public Relations Director Karen Robison at 800-998-9644 Ext. 606 or KarenR@IABforME.com

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ONWARD & UPWARD: A MESSAGE FROM JASON ERNEST This is my favorite time of year – not only because spring means the return of baseball and playoff hockey – but because IA&B and a group of independent agents always meet in Washington, D.C. for our annual National Legislative Conference. For me, this event is always a perfect mix of fun, education and pride in the industry. Just a few weeks ago, I had the pleasure of joining members from Pennsylvania and Delaware, along with nearly 1,000 agents from around the country, in our nation’s capital to protect our industry.

This event showcases what our national association, the Independent Insurance Agents & Brokers of America (Big “I”), does on Capitol Hill for all independent agents. There is no better industry champion than the Big “I” government affairs team, and we all should be grateful for the work they do.

Their list of legislative victories is long, and they have saved you considerable money, work and headache in this industry.

To that point, I’m asking for a personal favor – please consider contributing to InsurPac, the political action committee (PAC)

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that supports the Big “I” lobbying efforts. Historically, Pennsylvania and Delaware have been near the bottom of the list when it comes to money raised for InsurPac, and I’m honestly embarrassed by that. We reap the benefits of strong lobbying by this team, yet we don’t contribute our fair share in PAC contributions.

WRITE MORE PRIVATE FLOOD INSURANCE The Pennsylvania Insurance Department continues to support the private flood insurance market as an alternative to the National Flood Insurance Program. If you write private flood insurance, consider requesting inclusion on the Department’s online list of agents available to discuss surplus lines with consumers.

The agent listing is part of a larger set of consumer resources about private flood insurance on the PID website. The IA&B Advocacy team has been working with the Department for several years to advance the private flood market.

I mentioned earlier my love of baseball and hockey, and spring hopes. The problem is I root for two sad-sack organizations – the Pittsburgh Pirates and the Washington Capitals. They disappoint me year-in and yearout (yet I keep coming back).

So please, help me eliminate another disappointment: When I look at the InsurPac contributions by Pennsylvania and Delaware this spring, I would love nothing more than to see a significant increase in the money we have raised.

To request inclusion on the agent listing, visit insurance.pa.gov/coverage and select “Flood.”

Go here to make your contribution today: InsurPac.com/form.

Access Insurance policyholders were to find new insurance with a different company by April 12. In addition, they needed to file any claims before their current policy expired or by April 12.

These will be paid through the applicable state guarantee association, subject to statutory limits.

Jason Ernest, Esq. IA&B President & CEO

MAY 2018

ACCESS INSURANCE LIQUIDATED If you wrote with Access Insurance Company (and missed our alert in Agent Headlines), take note: A Texas court recently issued an order of liquidation for the auto insurer. This follows the Texas Insurance Department’s determination that the company is insolvent.

STATE NEWS

INTRODUCING PENNSYLVANIA’S NEW INSURANCE COMMISSIONER During her testimony before the Senate Banking and Insurance Committee in March, Altman told lawmakers: While making sure the Commonwealth’s insurance markets work well for consumers is always the department’s top priority, in the vast majority of cases I’ve found that the best way to make the insurance market work for consumers is to make it work for the insurers that serve those consumers.

Jessica Altman, who has been serving as Acting Commissioner of the Pennsylvania Insurance Department (PID) since August 2017, was unanimously confirmed by the state Senate earlier this spring. Prior to taking over as insurance commissioner, Altman served as chief of staff of the Insurance Department since June 2015.

She also discussed the PID’s efforts to promote the growth of the private flood insurance market in Pennsylvania, stating: In addition to providing consumers with more affordable choices, investing in the growth of the private flood insurance market dovetails with an overreaching goal of mine to grow insurance industry jobs in the Commonwealth.

Commissioner Altman was tapped by Gov. Tom Wolf last year to replace then-Commissioner Teresa Miller who left the department to serve as Acting Secretary of the Pennsylvania Department of Human Services.

Before joining the Insurance Department, Commissioner Altman worked in the federal government at the U.S. Department of Health and Human Services’ Center for Consumer Information and Insurance Oversight, and also served as a policy analyst for the health division of the White House Office of Management and Budget while completing her master’s degree in public policy from the Harvard University John F. Kennedy School of Government.

WELCOME NEW MEMBERS ATLANTIC UNDERWRITING AGENCY INC. Wayne, Pa.

LEWIS HOPKINS & WILLIAMSON INC. West Chester, Pa.

CENTURY INSURANCE CONSULTANTS Monroeville, Pa.

ROBERT A LAUBSCHER INSURANCE AGENCY Mt. Pocono, Pa.

KEEN RISK MANAGEMENT & INSURANCE LLC Philadelphia, Pa.

THE INSURANCE BUFFET LLC Taylor, Pa.

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

800-998-9644 Ext. 351 | TimW@IABforME.com | IABforME.com/membership

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PARTNERS PROGRAM

& through IA&B’s Partners Program.

Supporting Connecting

2018 Partners Program

Offering sincere thanks Among the IA&B Partners are the following top-tier sponsors, referred to as Platinum Partners. These companies offer the highest level of commitment to the program.

ACUITY Agency Network Exchange LLC Chubb Donegal Insurance Group Insurance Agents & Brokers Service Group Millers Mutual Group Penn National Insurance Plymouth Rock Assurance The Main Street America Group

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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 by contacting Jess McWilliams at 800-998-9644, ext. 503, or JessicaM@IABforME.com.

MAY 2018

PLATINUM PARTNER Insurance Agents & Brokers proudly recognizes Plymouth Rock Assurance as one of its Platinum Partners.

IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.

PLATINUM PARTNER Discover the Plymouth Rock Advantage COMMITTED TO YOU AND YOUR BUSINESS. Our mission is to provide agents and customers with superior service, innovative products, unique benefits and competitive rates.

For more than 30 years, Plymouth Rock Assurance has been a pioneer in redefining the way insurance companies do business.

Now we’ve brought a better way to do insurance to Pennsylvania.

This includes an easier-than-ever approach to home insurance with a breakthrough homeowner product.

We’re using big data to simplify the home insurance buying process.

That means no more long phone calls or questionnaires. In fact, you can now quote and bind home insurance in as little as 3 minutes.

That saves you — and your customers — time and frustration.

Our commitment to service doesn’t stop there. Our home and auto products come with exclusive features and benefits that put customers first: • Crashbusters® mobile claim service brings the settlement process right to customers. In many cases, they’ll get a check on the spot.

• Home insurance that offers Guaranteed Replacement Cost, Utility Service Line coverage, a Home-Sharing endorsement and more.

• Get Home Safe® accident prevention provides auto insurance customers with taxi fare reimbursement for a safe ride home.

FOCUSED ON RESULTS FEATURED PARTNER Plymouth Rock Assurance 2017 TOTAL REVENUES $1.24 billion OPERATING TERRITORY Regional experts doing business in New Jersey, Massachusetts, Connecticut, New Hampshire and Pennsylvania.

MORE THAN JUST INSURANCE Providing the highest level of service and care to agents and customers for over 30 years.

LEARN MORE plymouthrock.com

• Door to Door Valet Claim Service® takes the stress out of auto repairs.

We handle the process from start to finish.

You will find that Plymouth Rock offers unrivaled support to help grow your business. We provide a comprehensive suite of marketing programs, including: • The Sales Development Program, offering online and on-site sales training boot camps to develop expert sales skills for principals, producers and CSRs. • Website and social media reviews to enhance your agency’s online presence and meet the demands of the 24/7 digital consumer.

But don’t take our word for it — discover the Plymouth Rock difference for yourself.

To learn more about appointment opportunities in Pennsylvania, contact David Gant, Chief of Agency Marketing, New Jersey/Pennsylvania, at DGant@plymouthrock.com.

Plymouth Rock Assurance is a marketing name used by a group of separate companies that write and manage property and casualty insurance in multiple states. Insurance in Pennsylvania is underwritten by Palisades Insurance Company, Palisades Property and Casualty Insurance Company and High Point Preferred Insurance Company. Each company is financially responsible only for its own insurance products. Actual coverage is subject to the language of the policies as issued by each company. Certain restrictions and limitations apply. For a full description of the programs, features and coverages, please visit plymouthrock.com.

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MAKING A CASE FOR

COVERAGE CHECKLISTS

By Chris Amrhein, AAI

Coverage checklists remain underutilized, despite their proven, positive impacts on sales, customer service and E&O prevention. On the following pages, Chris Amrhein makes the case for giving checklists a shot.

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I

t’s spring! The smell of fresh flowers wafts through newly opened windows, and every baseball fan’s team still has a shot at the pennant. Perhaps the latter is the true origin of April’s fools.

Ah, if only all fools were merely captives of sports daydreams.

Unfortunately, it appears there are far more fools than suspected lurking within our own industry.

Those of whom I speak were revealed by recent articles and presentations from my friend and agency consultant extraordinaire Chris Burand. As one example, Chris wrote the following in his December 2014 Burand’s Insurance Agency Adviser newsletter, in response to the outpouring of agent derision following Google’s announcement that it was establishing an insurance quoting site: The fact is these opinions [agent pushback against Google] are hypocritical because while agents can definitely offer crucial and important education to consumers, in both personal lines and commercial clients, they too often choose to not offer any education, any coverage reviews, nor even review the

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Regular application of coverage checklists is a key driver of better coverage recommendations, higher sales, increased revenues and lower E&O exposure for the agency.

— Chris Amrhein

MAY 2018

insureds’ true coverage needs. I have been visiting agencies for 25 years, and I have been doing E&O audits for approximately 20 years. My experience is 90+ percent of agencies do not use coverage checklists of any kind on a consistent basis.

I freely admit that 90 percent is a stunner. E&O claims analysis has shown conclusively that the regular application of coverage checklists is a key driver of better coverage recommendations, higher sales, increased revenues and lower E&O exposure for the agency. What’s not to like? And yet other E&O auditors will tell you that Chris is right on the money.

How ironic. The vast majority of consumers want what agents have to offer. The vast majority of agents aren’t delivering it. Fools.

CONSUMERS WANT ADVICE AND COUNSEL Endlessly we are assaulted with Albert Einstein’s famous definition of insanity: “Doing the same thing over and over again and expecting different results.” Permit me to suggest an applicable quote for these “90 percenters”: “Insanity is doing nothing and expecting results.” Specifically, it’s expecting that consumers will continue to seek out the trusted advice and counsel of agents who provide neither.

The truly sad aspect of this is a simple truth: The fields of insurance, particularly in property & casualty (P&C), are not lying bleak and frozen under winter winds, but literally as white unto harvest as nature in the fullness of spring.

Just take a moment to consider the use of a checklist. Properly included within a fact-finding interview, proposal or policy renewal review, using a list takes no great additional time – in fact, I’d argue that it actually makes the time you do spend with the client or prospect more focused and better utilized.

Even if it does take a bit longer, what part of better coverage recommendations, higher sales, increased revenues (plus dare I say increased commissions?) and lower E&O exposure isn’t worth a few seconds of extra effort?

CREATE A CHECKLIST FOR YOUR CUSTOMER If your hang-up is a specific checklist you hate, find another.

Any checklist is better than none. Or heck, create your own!

For example, perhaps a list that consists totally of forms, endorsement or coverage names strikes you as confirmation of all the “dry insurance stuff” so many believe is typical of “boring” P&C. But instead of ignoring all those potential benefits, why not try another approach?

Many years ago my good friend Mike Edwards and I teamed on a multi-week tour of Florida to teach agents the wonders of the

newly minted ISO HO-84 program. One of the highlights was teaching from a comprehensive text of coverage analysis, claims examples and court case references created by one of the truly brilliant insurance gurus of this industry’s history, Bob Smith

COVERAGE CHECKLISTS UNCOVER YOUR customers’ exposures. The Virtual Risk Consultant is a comprehensive sales and service resource. It includes the Risk Analysis System for personal and commercial lines, which helps you and your team: • Understand the exposure of businesses in 650+ industries • Create comprehensive questionnaires with info to complete ACORD apps • Learn from succinct definitions of an extensive list of coverages • Properly document the customer file with a comprehensive checklist of coverages offered, accepted, rejected or not applicable Receive discount pricing on the Virtual Risk Consultant through our affiliation with the Big “I”.

Visit our website, or contact our Advocacy team to discuss the Virtual Risk Consultant.

IABforME.com/discounted_services/VRC

Claire Pantaloni, CIC, CISR Vice President - Advocacy 800-998-9644 Ext. 604 ClaireP@IABforME.com Don Bankus Legal & Corporate Affairs Director 800-998-9644 Ext. 603 DonB@IABforME.com

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(perhaps better known to many of you as the inventor of the Rapid Rater).

When writing the chapter about perils, the natural point arose to explain the advantages of what was then referred to as “all risk” versus “named peril;” specifically in that day, why the HO-3 over the then more popular HO-2; and why the HO-5 instead of the HO-2 or 3? The additional premium was often significant.

The traditional approach, favored by nearly every article or textbook, was classic insurance: Here are the exclusions.

Overlooked was what seemed to be the obvious question for many agents, if not every consumer even to this day: I see what you don’t want to cover; what’s left?

Bob decided that question was worth an answer, particularly in answering another key question: What makes this “all risks” worth the higher cost?

HEAR MORE FROM AUTHOR CHRIS AMRHEIN CHRIS IS one of the industry experts who (entertainingly) teaches our live CE webinars.

Join him in May for “E&O Risk Management” and “Finding and Fixing Commercial Lines Coverage Gaps.”

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IABforME.com/webinars

16

This approach was not totally unknown.

Here are two “covered by all risk, not covered by named-peril” examples regularly cited by insurance publications and textbooks of the day: • A wounded deer crashed through a living room window and bled all over the carpeting.

• A circus elephant escaped from a train and trampled buildings and property.

A Daytona Beach client spoke for multitudes when he responded to the first with an exaggerated eye-roll: “Oh, yeah, happens around here all the time.” His response to the second was simply to look at me blankly, then quietly but firmly suggest I cut the “nonsense” (not his word) and renew his HO-2.

Smith, understanding that for the list to have value it must include things that really happen to everyday folks, came up with a plethora of such events. Here are just a few of his examples: • Ruptured waterbeds. Such beds were extremely popular back then, and no, we weren’t going to ask what they were doing when it ruptured.

• Leaking or ruptured fish tanks.

And not just the five- and 10-gallon hobby tanks; 50- and 100-gallon indoor aquariums popular in dentists’ offices.

• Overflowing toilets, particularly when due to a child attempting to flush his new toy submarine – you get the picture.

• Damage done by kids. Think about “artwork” on the walls; chemistry experiments; “fun with pets.”

• The weight of objects, or falling objects that didn’t damage the exterior first. Have you ever worked in an attic and stepped “just a bit too far or shy” of the rafter? “Honest, I was reaching

MAY 2018

for the air conditioner and next thing I know I was sitting on a broken table in the living room.”

Here’s a suggestion: Follow Bob’s lead and create your own checklists – or modify others – to identify the specific realities of your applicable prospects and clients. Do you need ideas? Convene an office meeting and swap common consumer questions and claims. Peruse articles for coverage stories, claims examples or just to trigger your own ideas. With apologies to a popular movie hero of that year, Mr. Miyagi (The Karate Kid, 1984): 1. Close eyes; picture real-life examples of coverage needs.

2. Open eyes; make checklist.

3. Use checklist.

Make this spring the time you seize the checklist. Profit from the opportunity of that 90 percent’s failure by providing your targeted prospects and clients with real knowledge, counsel and trusted advice.

And for those 90 percenters? Permit me to honor the remembrance of 1984, by giving the last word to then-monster rockers Def Leppard: You better stop “F-f-f-fooling.”

hris Amrhein, AAI, is C an insurance educator and speaker, and serves as the chief fun officer at insuranceisfun.com.

This piece first appeared on PropertyCasualty360.com.

There when it matters most.

with

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Superior technology - another way Donegal is “There When It Matters Most” for independent insurance agencies.

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E&O MITIGATION

FIVE WAYS TO REDUCE YOUR RISK

Failure to provide proper coverage is the No. 1 cause of agency E&O claims. — Kevin Hord, Sr. Director of the IA&B Service Group

18

Ben Franklin’s old axiom, “an ounce of prevention is worth a pound of cure,” holds true today – particularly in an independent insurance agency. Read on for ways to reduce your agency’s risk of an E&O claim.

E

rrors & omissions (E&O) claims are as common as ever.

According to the Insurance Journal’s 2017 Agency E&O survey, 57 percent of respondents had experienced an E&O claim (43 percent of them within the past decade).

So how are these agencies impacted? Turns out that the costs may be higher than you think. There are out-of-pocket expenses, such as their E&O policy deductible and the time spent gathering documentation to assist their E&O carrier in its defense. And at renewal, the costs mount: They face potentially higher premiums and even the possibility of non-renewal, which could push them toward a more expensive carrier and policy.

While there is no certain prevention of an E&O allegation, there are proven risk-reduction strategies. Read on for the IA&B Service Group’s top tips and suggested member resources.

1. COVER YOUR (COVERAGE) BASES. Recognizing prospects’ and customers’ exposures can prove challenging. After all, unless you’re an expert in their field – or cater to a niche market exclusively – you likely have a thing or two to learn about how their business operates.

Here’s where industry-specific coverage checklists come into play. In addition to helping you recognize potential exposures, these checklists and questionnaires serve as documentation for client files.

Check out the Virtual Risk Consultant, an online sales and service tool that shares common exposures for over 650 industries and includes comprehensive questionnaires. Your IA&B membership entitles you to discount pricing.

IABforME.com/discounted_services/VRC

2. DON’T LET HISTORY REPEAT ITSELF. Knowledge is power. And learning from others’ mistakes is just plan smart.

Loss-control seminars provide insight into common E&O triggers, as well as what works – and what doesn’t – to limit an agency’s exposure. What’s more, some agency E&O carriers offer loss-control credit for taking these courses. (Plus, underwriters typically can consider the impact of loss-control seminars at their discretion.)

Register for a risk management seminar to learn about your duties and responsibilities and your requirements to avoid a claim. IA&B offers classroom courses and live webinars – at a discount for members.

IABforME.com/education

3. TEACH INSURANCE CONSUMERS A LESSON. Insurance is complicated. And chances are that your prospects and customers (individual and business consumers alike) are uninformed – or possibly misinformed – about their risks, industry terms, policy exclusions and more.

The benefits of consumer education are multifold: a solidified agency-customer relationship, possible cross-selling opportunities, and reduced risk of E&O claims, to name a few.

Teaching opportunities can take myriad forms … a webpage or mailer, an envelope stuffer or social media post, even a glossary or explanation included with a policy proposal.

Rely on vetted consumer-education content, available as customizable flyers and raw content in IA&B’s online library and incorporated into ActiveAgency – a complete website solution now offered to members through Independent Agency Solutions.

IABforMe.com/consumer_education, IABforME.com/IAS

4. GAIN SOME PERSPECTIVE. Forming an objective analysis of your agency can be next to impossible. After all, most agency principals are too involved in day-to-day operations to step back and evaluate their business’s opportunities and risks.

Hiring an outside expert to audit your agency may seem extravagant, costly or intimidating. But the auditor’s insight and customized E&O mitigation tips, as well as your agency E&O carrier’s potential loss-control credit (or underwriter’s consideration), can make the investment well worth your while.

Contact the IA&B Service Group to learn about potential agency audit offerings from your E&O carrier and for leads to other reputable auditors.

IABforME.com/E&O Continued on page 20

19

Continued from page 19

5. GET YOUR DUCKS IN A ROW. Running an agency typically takes priority over formally documenting how to run the agency. But a procedures manual can help to improve operations, compliance and consistency – all of which can mitigate E&O risks.

While you likely don’t have time to document all of your agency operations, there’s no need to. Rather than reinventing the wheel, consider customizing a template manual to incorporate your specific policies and procedures.

Explore template agency procedure manuals, such as the one IA&B offers. It contains over 120 forms, worksheets and checklists; links to IA&B resources; and is available at a member discount.

IABforME.com/procedures

EXPECT MORE FROM AN E&O AGENT THE IA&B Service Group will provide you with the information and service you need to reduce your risk and protect your agency. Our team will find programs that offer you the best value. IA&B works with reputable, established carriers to find top-quality coverage.

IA&B protects your business through: • Industry leading claims service • Highly trained, licensed professionals • Relationships with with established carriers • Options for agencies of any size Insurance Placement Specialist David Wertz is ready to find the best programs for you. Contact him to get started.

David Wertz IA&B Insurance Placement Specialist 800-998-9644 Ext. 506 DavidW@IABforME.com IABforME.com/E&O

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MAY 2018

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TECHNOLOGY UPDATE

DOCUMENTING TEXT MESSAGES FOR E&O PROTECTION

By Steve Anderson, CIC

22

As texting between producers and their customers becomes more common, how should an agency respond? Here, Steve shares management considerations and software recommendations.

Y

ou know as well as I that the adoption of text messaging as a communication channel is not going to slow down and certainly is not going away.

The key to proper documentation of these conversations is training staff on how to make sure copies of text messages get to someone who can make sure they are attached to the client file. Documenting this way is currently cumbersome. There are documentation gaps. You know this, I know this, and your agency E&O underwriter knows this.

THE PROCESS IS IMPROVING – SLOWLY While the process is improving, it is slow, and there are some gaps in your current process. Here are some thoughts on where we are now and steps you can take to improve: Find out who is texting: While outside salespeople might text clients and prospects more than inside staff, don’t assume.

Device being used: It is likely all staff is currently using their personal phone for text messages. Personal phone for business use may create problems.

Electronic communication policy: What is your organization’s electronic communication policy? Is it clear what is expected of staff who use their personal device to communicate with clients? What documentation is acceptable?

Upgrade management system: Several management system vendors have upgraded or are upgrading their platforms to handle inbound and outbound texts.

Typically, these texts are sent to an agency phone number and imported into the system for documentation.

Train all staff: When your management system can take over text communication, you will continue to have individual personal phones used by clients. Decide if you will require (and how you will enforce) the use of the agency text number of all “official” agency/client communications.

Train your clients: It is going to be hard to get your clients to move to the agency text channel. Old habits are hard to break. An option might be to train staff on how to forward a received text on their personal device to the agency number to more easily get it attached to the client file.

matters, the following details should be visible in your text message documentation: • Date and time of the messages.

• The real contact information for the other party or parties in the text message conversation. For SMS this is a phone number. For MMS or iMessages, this is either a phone number or an email address.

Continued on page 24

GET SOCIAL WITH IA&B CONNECT WITH your agents’ association and fellow independent agents through IA&B’s social networking accounts. It’s a great way to kick around solutions to common issues, such as texting with customers:

My key point is to begin the discussions now for how you want to handle these communications in the future.

SOFTWARE RECOMMENDATIONS FOR DOCUMENTING TEXT MESSAGES There are a couple of software options that allow creating a document (typically PDFs) of text conversations. I have previously written about using iExplorer to create PDFs of text conversations. Another option I recently came across is Decipher TextMessage.

Capturing phone screenshots of the text message and emailing to someone in the office continues to be a favorite method of sending documentation. For many, this can be a cumbersome multi-touch process.

No matter how you preserve text messages for client documentation, you should make sure the records have all of the information necessary for them to be admissible in court if the need arises. Always consult a lawyer for the specifics for your region about what information is required. For most legal

Join IA&B online: Facebook.com/IABforME LinkedIn.com/company/IA_and_B Twitter.com/IA_and_B

23

TECHNOLOGY UPDATE Continued from page 23

APPS FOR TEXT DOCUMENTATION Mail to Self and Workflow are two apps I use to send information to myself for text documentation. Both can be used to streamline and automate sending screenshots of text message conversations back to the office for attachment to the client/prospect record.

The Mail to Self app has a simple function.

It adds a Mail to Self extension in the share menu of iOS so that you can email yourself directly with a single quick tap.

Whenever you have a link or other content you want to send to yourself, you merely tap the Mail to Self icon in the share extension, and an email with the body text will automatically be sent to your email address. For Android users, another app I came across was Mail Myself.

The Workflow app (only available on iOS platforms) allows you to create a series of actions that accomplish a particular task. For sending screenshots of text conversations, Workflow will allow you to “get the latest screenshot,” include the picture into an email with a predefined email address and send it using your phone email app.

Creating automated workflows can be very powerful and will help reduce the number of taps necessary to send information which increases the likelihood it will get done. I do realize these apps will only save a few taps on your phone. And, I also realize the easier you can make the process the more likely text conversations will get added to the client file.

Steve Anderson, CIC, provides information to the insurance industry on how they can use technology to increase revenue and reduce expenses. Learn more or contact him at steveanderson.com.

24

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MAY 2018

PICS & POSTS Keep up with industry happenings – and share your own news! We want photos of your agency’s milestones, community involvement and fun. Submit them via email (KarenR@IABforME.com) or tag them on social media (Facebook, LinkedIn or Twitter) using #IABpics.

“Two great reasons to celebrate (and eat cake) at this morning’s staff meeting: Blair Aylward’s 20-year work anniversary and the addition of Michele Quattrocchi to our team! #ilovemyjob”

“Another great Pittsburgh I-Day with Cusumano Insurance Agency at Wyndham Grand Pittsburgh Downtown” - IA&B posting from Pittsburgh I-Day

- IA&B posting on LinkedIn

“One of the many benefits of working with an independent agent!”

“Thanks for your time yesterday! We enjoyed catching up and learning about all of the great things you have going on.”

- I A&B retweeting @SheeleyIns’s post

- Chris Cline, distribution specialist leader at Westfield Insurance, replying to IA&B’s post

#IABpics 26

MAY 2018

You Worked Hard to Build Your Agency.

IA&B will Protect It. IA&B Offers Coverage that Agents Need.

Contact us today.

For personalized service, contact Placement Specialist David Wertz 800-998-9644, Ext. 506 DavidW@IABforME.com IABforME.com/agency_insurance

27

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