Maryland Primary Agent - November 2016 by Insurance Agents & Brokers Service Group Inc

NOVEMBER 2016 | MARYLAND

STAKING CLAIM TO LEGISLATIVE

VICTORIES BLANK APP = E&O TRAP LOCATING LOST LIFE INSURANCE MANAGING ACROSS GENERATIONS WHEN “FOLLOW FORMS” STRAY

Employment Practices Liability Coverage for Property Owners 1. Protection specifically for small and mid-size property owners, including apartment owners

There’s more for you at Millers Mutual with our affordable and uniquely designed EPL protection for property owners and valuable policyholder resources.

We know that one size does not fit all, so we’ve designed a program that gives property owners just the coverage they need.

2. The option to purchase third party tenant discrimination coverage

Most industry EPL coverage forms provide EPL protection when a wrongful employment act is brought by employees and even employee applicants. Yet, often the EPL coverage fails to include discrimination or sexual harassment charges brought by a third party: customer, client, vendor. We offer the option of adding third party tenants or prospective tenants discrimination coverage to your BOPprime policy.

3. Access to valuable resources Besides having proper coverage, we believe property owners should understand federal, state and local civil rights and housing laws … and keep employees educated. That’s why Millers Mutual’s EPL Coverage comes with Legal Advice Helpline, Support Website, Model Employee Handbook, Sample Forms & Policies.

To learn more, contact Jonah Mull, Underwriting Leader, at jmull@millersinsurance.com or 717-237-7273.

MillersInsurance.com 800-745-4555

B US INE S S O W N ER S PO L I C Y | C O MM E RCI AL AUT O | COMME RCI AL UMBRE L L A | BUI L DE RS RI SK

IN THIS

POLITICAL ADVOCACY IN ACTION IA&B of Maryland lobbyist, Bryson Popham, shares how our association addressed the state’s problematic premium increase notification threshold – and illustrates the value of advocacy.

OVERVIEW OF THE LEGISLATIVE LANDSCAPE Here, we highlight a few of the insurance-related bills that passed during the 2016 legislative session.

HIRING THE PERFECT MATCH How to find — and manage — the right mix of employees.

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

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 # 2016-11, is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

Copyright 2016. 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.

CHAIRMAN OF THE BOARD’S MESSAGE

THE POWER OF YOUR ADVOCACY

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

OFFICERS

t’s easy to feel disgruntled – even disenfranchised – by politics. Lawmakers always seem to point fingers, politicizing and scrutinizing every move of those across the aisle. Key issues fall to the wayside, victims of partisan stalemates. Considering we’re in a highly regulated industry, it’s a recipe for frustration. I’m not going to sugarcoat it: Congress and even our state legislatures can be rather dysfunctional. But there are bright spots, too. Times that, through my association with IA&B, I’ve witnessed the process working. For proof, take the article on page 12. It illustrates how member agents brought an issue to light and successfully advocated for its resolution in the Maryland General Assembly. You are an expert on your small business, on your customers, and on insurance – all of which mean you have valuable perspectives to share with our elected officials. If you haven’t already, I encourage you to get involved with IA&B’s advocacy efforts. Whether it’s serving on IA&B’s government affairs committee, participating in grassroots action efforts or supporting AgentPAC, your participation can and does make a difference. n

Chair of the Board

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

Until next time,

Crofton, Md.

Elizabeth H. Martin, CIC Millersville, Pa.

Mark J. Monroe

West Chester, Pa.

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

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

Richard M. Rankin, CIC Lancaster, Pa.

April E. Ressler, CIC Altoona, Pa.

Scott C. Rogers, CPIA York, 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

NOVEMBER 2016

Ask Our Experts This month’s answer was provided by Claire Pantaloni, our industry affairs director.

Question: How can I find a lost life insurance policy?

Answer: Every year, we receive calls from members trying to help their customers locate a lost insurance policy for a relative. Sometimes, the carrier has merged with or been acquired by another company. In other cases, it is unclear whether the policy continued in force or was cancelled at some point. The reality is that many life insurance benefits go unclaimed simply because the beneficiaries are unaware of the existence of a policy or are unable to find it.

• R eview bank books and canceled checks. Look for any checks that were made payable to a life insurance company over the years.

Lately, a number of insurance regulators have tried to draw attention to the issue and have published press releases to encourage the public to investigate whether the deceased had a valid life insurance policy. If the survivors suspect a policy may have been purchased, the following steps can be taken:

• Check with the state's unclaimed property office. If a life insurance company knows one of its life insurance policyholders has died but cannot find the beneficiary, the company must turn the death benefit over as "unclaimed property" to the state in which the policy was bought. The National Association of Unclaimed Property Administrators (unclaimed.org) is a good place to start looking.

• Suggest they look for insurancerelated documents. We’re stating the obvious. The first thing to do is look through files, bank safes or deposit boxes, and other storage places to locate any insurancerelated documents. Checking address books for insurance agents or companies is also a good idea. The insurance producer who sold the deceased his or her auto or home insurance may also have sold a life insurance policy. • Contact the employer. If the deceased was still working at the time of death, an employersponsored life insurance policy may have been in place.

• If the difficulty stems from the fact that the insurance company is no longer in business, the individual can contact the state’s Insurance Department to find out which life company took over the book of business and is assuming the liabilities.

• T ry the MIB database. The not-for-profit MIB Group Inc. is a consortium of life and health insurers. It maintains a database of individual life insurance applications underwritten since 1996 by MIB member companies. There is a fee of $75 per search. More information is available at www.mib.com.

For more assistance from the state Insurance Department: Pennsylvania: Go to http://www. insurance.pa.gov/Pages/Lost-LifeInsurance-Policy.aspx or contact the Pennsylvania Insurance Department’s Consumer Services Bureau at 877-881-6388. Maryland: The Maryland Insurance Administration can be contacted at 410-468-2000 to identify the successor company in the case of a merger or acquisition. Delaware: A new service allows an executor, beneficiary or legal representative of a deceased resident or former resident of Delaware to file a search request with the Department of Insurance. To submit a request, print out the Missing Life Insurance/Annuity Search Request Form on the DOI website at http://www.delawareinsurance. gov/services/missingpolicy.shtml. You can also call the department at 302-674-7300. n

Have a question? Ask our experts! 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.

PREVENTING ERRORS & OMISSIONS

E&O TRAP: ASKING A CUSTOMER TO SIGN A BLANK APP By Curtis M. Pearsall

F One of the common defenses in an E&O matter is that the customer will be held responsible for the contents of the application “provided” the customer signed the application.

NOVEMBER 2016

orty years ago in my days at an insurance agency in the Utica, N.Y. area, from time to time, one of the producers would ask the customer to sign a blank app. Apparently the customer would not be able to meet with the producer after the app was completed. So the scenario essentially was “just sign the app, and I’ll fill it in later.” Personally, I thought that having a customer sign a blank app was not occurring at all in today’s world, especially with the use of e-signature technology. I was wrong. I recently

reviewed an E&O claim where the customer signing a blank app was a part, and actually a huge part, of the fact pattern of the E&O matter. The producer had met with the customer to gather the necessary information to secure a quote. For some reason, the producer did not use the app to secure the information. They opted to just take notes with the intention of transferring the information to the app. When the quote was accepted, the producer then transferred the information from his notes to the application. The application was submitted, and the policy was issued. It is important to note that a copy of the “final” completed application was never at any time provided to the client. During the first year of the coverage, the client suffered a loss, and the claim was submitted to the carrier. The carrier identified a problem: During the investigation of the claim, the carrier discovered that the client had previously filed for bankruptcy. Although it appeared that the client provided the producer with this information, the producer never provided it to the carrier. The final outcome? The carrier paid the claim and brought an E&O action against the agency and won. One of the common defenses in an E&O matter is that the customer will be held responsible for the contents of the application “provided” the customer signed the application. Since the app was blank at the time of the signature, the customer could not be held responsible for any misstatements.

What could the producer had done better? How about some of the following? • Always provide the customer with the completed application, ask them to review it, and then – if everything looks in order – to sign the app. This should be the practice even if the app does not require a signature. • When securing information, use the questions on the app to secure the information. The questions should be asked “verbatim” and the information noted exactly as it was presented. • Don’t use the information from last year’s app to complete this year’s app. • Never sign a customer’s name to an application. Bottom line: Having the customer sign a blank app really is a bad idea. n

Curtis M. Pearsall is a consultant and national expert on errors and omissions for insurance agencies. He is president of Pearsall Associates Inc., which specializes in E&O risk management and loss control, and provides expert witness services for E&O claims and litigation. Read more from Curtis on his blog, Agents E&O Tips (agentsEOtips.com).

EVOLVING E&O EXPOSURES AS CURT explained, asking a customer to sign a blank app is a long-standing E&O trap. But in the ever-changing world of insurance, there are plenty of new and evolving exposures, too. Our “E&O Risk Management: Meeting the Challenge of Change” seminar provides insight into the exposures unimaginable just a decade ago, including those created by social media and data breaches. The seminar is available on-demand, so you can take it in your own place and at your own pace (within 30 days of registration). It is approved for loss-control credit for Utica policyholders in Maryland. IABforME.com/MyTraining (select “E&O Risk Management Courses”)

COVERAGE CORNER

IS IT REALLY A “FOLLOW FORM”? By Jerry M. Milton, CIC

t is not unusual to have an Excess Liability policy that is written on a “follow form” basis. When we see wording in the Insuring Agreement of the Excess Liability policy that provides coverage under the definitions, terms, conditions, limitations and exclusions of the underlying insurance, we assume the Excess Liability policy is “follow form.” If covered by the underlying insurance, covered by the excess policy. If excluded by the underlying insurance, excluded by the excess policy. Well, that may be an incorrect assumption. I am currently retained by an E&O insurer that is defending an insurance agency that is being sued by a third party.

The situation is all too familiar. The agency insures a contractor who signed a maintenance agreement with the owner of a large manufacturing facility. The agreement had the usual insurance requirements: Contractor must purchase and maintain Commercial General Liability Insurance which shall be at least as broad as the coverage provided by a standard form Commercial General Liability Policy (ISO CG 00 01 01 96 with standard exclusions “a” through “n”, ISO CG 00 01 07 98 with standard exclusions “a” through “o”, or ISO CG 00 01 10 01 with standard exclusions “a” through “o”,

NOVEMBER 2016

with minimum limits of $3,000.000 for Bodily Injury and Property Damage per occurrence and in the aggregate. List owner as an additional insured with respect to work performed for Owner, with such additional insured endorsement providing coverage for Owner with respect to liability arising out of Contractor’s work performed for Owner (including, but not limited to, liability caused or contributed to by the negligence of Contractor, its subcontractors, Owner, third parties, or one the following endorsements or equivalent: Additional Insured- Owners, Lessees or Contractors (Form B)

Endorsement CG 20 10 (10 93) Additional Insured- Owners, Lessees or Contractors Scheduled Person or Organization Endorsement CG 20 10 (03 97) Additional Insured-Owners, Lessees or Contractors Scheduled Person or Organization Endorsement CG 20 10 (10 01). The CGL policy was endorsed with the insurer’s proprietary Automatic Blanket Additional Insured endorsement which contains the following provision: The insurance provided to the additional insured person or organization applies only to “bodily injury”, “property damage” or “personal and advertising injury” covered under Section I – Coverage A – Bodily Injury And Property Damage Liability and Section I - Coverage B – Personal And Advertising Injury Liability, 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

Sounds like “follow form” to me. While working at the plant facility, an employee of the contractor was killed. His estate filed a wrongful death claim against the plant. The plant settled the wrongful death case. During the litigation, the CGL insurer tendered its policy limit of $1,000,000 on behalf of the plant, as an additional insured under the CGL policy. The coverage provided by the CGL policy was primary and noncontributory to any other coverage held by the plant. The plant then turned to the Excess Liability insurer for the additional amounts needed to fully cover the claim. The Excess Liability insurer denied coverage for the plant, contending that the contractor, nor anyone acting on its behalf, caused, in whole or in part, the employee’s death as required by the additional insured endorsement.

As a result of the Excess Liability insurer’s denial of coverage, the plant has sued the Excess Liability insurer for breach of contract, negligence and bad faith. The plant also sued the contractor for breach of contract-indemnity and negligence and sued the insurance agency for breach of contract, negligence and fraud/ misrepresentation. “Follow form”? I think not! Y’all take care! n

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.

SPECIALIZED COVERAGE FOR

2. The acts or omissions of those acting on your behalf. This restrictive provision was added to the ISO additional insured endorsements when they revised those endorsements in July 2004. Therefore, the ISO additional insured endorsements required by the maintenance agreement, which have edition dates 10/93, 3/97 or 10/01, do not have this provision. The Excess Liability policy’s Insuring Agreement states: The Company shall pay on behalf of the Insured those amounts of Loss for which coverage is provided under the definitions, terms, conditions, limitations and exclusions of the Controlling Underlying Insurance in effect at the inception of this Policy….

Agricultural Insurance Management Services Bow, NH 877.552.2467 • www.aimscentral.com Underwritten by member companies of Great American Insurance Group 301 E. Fourth Street, Cincinnati OH 45202 / GAIG.com

STATE NEWS

AUTO INSURANCE ID LAW IN EFFECT All Maryland drivers must carry proof of insurance while operating a vehicle, as of last month. Per a recent Maryland Insurance Administration (MIA) bulletin, the insurance ID card must include: • First named insured on the motor vehicle liability insurance policy • Vehicle covered under the motor vehicle liability insurance policy • Period for which coverage under the motor vehicle liability insurance policy is in effect

A LOOK BACK AT OUR INAUGURAL FUTURES CONFERENCE Our inaugural Futures Conference, “Sales Strategies for Young Agents,” was a success! We send our thanks to those who attended and supported the event – including those who encouraged their employees to attend. And we sincerely appreciate the sponsorship of Donegal, Penn National, Progressive and Westfield. Over 80 young agents from across the Mid-Atlantic region congregated Sept. 15-16 at the Chubb Conference Center in suburban Philadelphia to learn modern sales techniques and digital marketing tactics, as well as to network with fellow young producers. The conference was a component of our burgeoning Futures Program, which is devoted to developing today’s young agents into tomorrow’s leaders. Stay tuned as we continue to engage young agents and grow this program throughout 2017.

In addition, the MIA noted that the ID cards must be of a size that allows for the text to be easily read, i.e. at least the size of a Maryland driver's license and in 10-point font. The bulletin also confirmed that electronic ID cards are permissible under the new law and that the law applies to personal and commercial policies. The new requirement, which stems from the passage of House Bill 720/Senate Bill 544, is part of a group of bills passed by the legislature this year to address the state’s uninsured motorist rate. A person who violates the requirement is subject to a fine of $50, which may be waived but, if collected, must be deposited into the Uninsured Motorist Education and Enforcement Fund (UMEEF) established by the law.

CLOCK TICKING ON ELLICOTT CITY CLAIMS

IABforME.com/Futures

FEMA earlier this fall announced an extension to the time for submitting proofs of loss for standard flood insurance policy claims related to the July 30 Ellicott City flash flood. With the extension, NFIP policyholders have 120 days following the date of loss – or until Nov. 27 – to provide a completed, signed and sworn-to proof of loss to the insurer.

NOVEMBER 2016

MARYLAND LAW CONTINUES TO TRIGGER MINIMUM WAGE INCREASES The Maryland Minimum Wage and Overtime law continues to trigger a series of minimum wage increases. The latest increase (to $10.75/hour) took effect in Prince George’s County on Oct. 1. Next up will be increases for the rest of the state effective July 1, 2017. The law impacts all counties, but rates and effective dates differ slightly for Montgomery and Prince George’s Counties. Employers are required by law to post information on the state’s Minimum Wage and Overtime Law. An updated poster is available on the Department of Labor’s website (DLLR.state.md.us/ labor/wages/wagehrfacts.shtml). A complete list of the various incremental wage increases and timelines are available on our website, as an HR Bulletin (MD #8). HR Bulletins are a running tab of state and federal updates within our HR Solution© toolkit. Each HR Bulletin highlights an update and what’s important for member agencies to know and consider implementing as a result. IABforME.com/resource_center/ HR_bulletins

PRODUCERS-ONLY RECEPTIONS SOLIDIFY RELATIONSHIPS

PREMIUM INCREASE NOTICE REQUIREMENT AMENDED

Thank you to those who attended our legislative receptions last month in Carroll and Howard Counties. It’s events like these that solidify our relationships with lawmakers and pay dividends when it’s time to advocate on issues that are important to insurance producers and their customers.

The state’s commercial premium increase threshold for notification is now 15 percent. Your IA&B government affairs team spent much of the 2016 legislative session lobbying for the passage of this legislation (House Bill 1408), which took effect Oct. 1.

Once again, we partnered with the Maryland Health Underwriters and the Maryland chapter of the National Association of Insurance and Financial Advisors to sponsor producers-only receptions. Each event included a meet and greet with state lawmakers, followed by an hour of continuing education entitled “2016 Legislative Update.”

MIXED BAG FOR HEALTH EXCHANGE RATES Open enrollment in the Maryland Health Benefit Exchange began Nov. 1 and runs through Jan. 31, 2017. As a reminder, the Maryland Insurance Administration already announced approved premium rates for the 2017 small group and individual markets. Overall, health insurance rates in the small group market increased an average of 3.3 percent. Eleven carriers sell in this market, which enrolls 4.1 percent of Marylanders.

HB 1408 restores a single notification threshold for commercial renewal premium increases of 15 percent, removes the current unworkable formula and clarifies that insurers may comply with the law by sending a complete renewal policy 45 days in advance. This legislation follows a string of changes. In 2009, the Maryland General Assembly eliminated the 20 percent threshold for notices, therefore prompting policyholder notification in the case of any commercial premium increase. In 2012, IA&B successfully pushed for legislation that exempted certain premium increases from the notification requirement. The introduction of HB 1408 came at the insistence of insurance producers who found that the 2012 legislation did not go far enough to alleviate the administrative burden and consumer confusion caused by notices sent for de minimis increases.

For the individual market – which enrolls approximately 4.4 percent of Marylanders – the average premium change is a 25.5 percent increase, with the lowest rate change up 20.3 percent and the highest a 31.4 percent increase.

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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

ACUITY

Aegis Security Insurance Co.

Amerisafe

Agency Insurance Company

Berkley Mid-Atlantic Group

AmWINS Program Underwriters Inc

Donegal Insurance Group Erie Insurance Group Insurance Agents & Brokers Service Group Inc Liberty Mutual Insurance

Auto-Owners Insurance Company Bailey Special Risks Inc Berkshire Hathaway GUARD Insurance Companies Brethren Mutual Insurance Company Briar Creek Mutual Insurance Company

MAPFRE Insurance

Conemaugh Valley Mutual Insurance Co

MMG Insurance Company

Countryway Insurance Company

Millers Mutual Group

Encompass Insurance

Mutual Benefit Group

GMI Insurance

Nationwide

Goodville Mutual Casualty Company

Penn National Insurance

Grinnell Mutual Reins Company

Swiss Re The Main Street America Group

DO YOU SEE YOUR NAME?

United Fire Group

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.

Utica National Insurance Group

HM Workersâ&#x20AC;&#x2122; Compensation Insurance Alliance of Central PA Inc Insurance House Insurance Placement Facility of PA Lackawanna Insurance Group

GOLD LEVEL

Lebanon Valley Insurance Company

Progressive

Merchants Insurance Group

Universal Property & Casualty Insurance Company

Mercury Casualty

Westfield Insurance

PennPRIME Municipal Insurance

SILVER LEVEL

CM Regent Insurance Company Cumberland Insurance Group Farmers Mutual Insurance Company of Western Pennsylvania Frederick Mutual Insurance Co Juniata Mutual Insurance Co

Millville Mutual Insurance Co Reamstown Mutual Insurance Company Rockwood Casualty Insurance State Auto Mutual Insurance Company Strategic Comp TAPCO Underwriters Inc The Motorists Insurance Group The Mutual Service Office Inc Travelers

Keystone Insurers Group Inc

Tuscarora Wayne Group of Companies

Selective

Zenith Insurance

NOVEMBER 2016

POLITICAL ADVOCACY IN ACTION HOW WE CONQUERED DE MINIMUS PREMIUM INCREASE NOTICES

By Bryson F. Popham

What happens in Annapolis doesn’t stay there. On the following pages, our association’s lobbyist shares how government affairs work directly impacts independent agents and their customers.

dvocacy is a subject that most insurance agents don’t think about every day. Broadly defined, advocacy (which includes lobbying) is the process of educating public officials – both legislators and regulators – about our business and how we do it. We advocate to prevent those public officials from harming our businesses and our clients, and occasionally to seek help for our businesses and our clients. Advocacy is both valuable and necessary – perhaps the most important service that IA&B can provide its members. Why? Because our industry is one of the most heavily regulated industries in the United States, and the vast majority of that regulation takes place at the state level.

Our industry is one of the most heavily regulated industries in the United States, and the vast majority of that regulation takes place at the state level.

In Maryland, there are four complete volumes of the Annotated Code (our state statutes) that deal exclusively with insurance. There are additional volumes of regulations. And over the past few years, the primary role of the insurance commissioner has changed dramatically. Years ago, commissioners were primarily responsible for the solvency of insurance companies. Today, their primary role is one of consumer protection. Because independent agents are on

NOVEMBER 2016

the front line between consumers on one side, carriers on another, and regulators and legislators on still another, effective advocacy is vitally important. There is a Maryland story that nicely illustrates the value of advocacy, and it has a happy ending for the independent agents who comprise IA&B. PREMIUM INCREASE NOTICES POSE RECURRING PROBLEMS For many years, Maryland had a statute requiring that advance notice be given by carriers to commercial insureds whenever a policy premium would experience an increase of 20 percent or more at renewal. This law was associated with the liability crisis of the mid-1980s, when commercial casualty coverages experienced enormous increases, if those policies were even offered a renewal at any price. Commercial insurance buyers experienced sticker shock, and they went to their legislators for help. The 20 percent threshold that triggered a premium increase notice on renewals was a compromise everyone could live with: agents, carriers, insureds and regulators. There was no groundswell of industry opposition to, or complaint about, this statutory requirement; however, in 2009 the Maryland Insurance Administration (MIA) decided to introduce legislation that would completely eliminate the 20 percent threshold and would instead require notices of premium increase to be issued on all renewals, even where the increase was a little as $1! There was no documented evidence of hardship for commercial insureds (remember, this was more than 20 years after the liability crisis of the 1980s). Nevertheless, in its role as protector of insurance consumers, the MIA advised legislators to change the law.

Time passed, and things changed – a little. IA&B participated in a coalition with carriers in 2012 that granted some relief to the 2009 legislation, but the formula adopted by the legislature was difficult to understand, complicated to automate by carriers and not very effective. Our members continued to complain, because their insureds continued to suffer. PRODUCERS, CARRIERS RESPOND BY FORMING LIKE-MINDED COALITION Led by our our Maryland Government Relations Committee, IA&B identified this as a priority for 2016. What changed? Perhaps most important, new Insurance Commissioner Al Redmer – a former agent himself – recognized the problem. He changed the position of his agency to “no position,” meaning that the MIA would not object to an industry initiative to change the law. IA&B went to work immediately, recruiting a coalition from carriers such as Erie and Selective, which then added additional carriers such as Harford Mutual and State Auto. This coalition approach is a proven “rifle shot” method of advocating legislation that places the focus of legislators on the problem and allows us to simplify our message. We drafted a bill that would take the threshold up to 15 percent before a renewal premium notice would be required. This was, all agreed, a reasonable compromise. Other carriers, though not active in the coalition, cheered us from the sideline.

DO YOUR PART

Recognizing the market disruption this would cause, IA&B fought back hard. We were joined by other producer groups and the American Insurance Association. Although we led the fight, we were not successful. MIA officials claimed that “mom & pop” businesses suffered under the 20 percent threshold, even though no aggrieved businesses appeared in Annapolis to support the bill. Legislators understood that the safe course of action would be to accept the advice of the regulators. The bill passed.

CONVENTIONAL WISDOM in the world of political advocacy says that any effective government affairs program is like a three-legged stool made up of direct lobbying, grassroots action, and a political action committee. Support our lobbying and grassroots action efforts, such as those shared in this article, with a contribution to AgentPAC of Maryland.

We predicted turmoil in the market, and that is exactly what happened. Agents and carriers were contacted by frightened insureds, who viewed the new premium increase notices and feared the worst. Not infrequently, a renewal premium on one policy in a commercial account would go up and another policy premium would go down, so even if the insured experienced a net reduction in renewal premiums, the notice created a wave of consumer angst.

IABforME.com/MdPAC

Because independent agents 3281 are Summit onAdthe front line between 7.25X4.625 PropManconsumers on one side, carriers on another, and regulators and legislators on still another, effective advocacy is vitally important.

In addition to our simplified message, the messengers were different this time. Our coalition membership was led by producers – all IA&B members – together with carriers that specialize in the small commercial market. Our producer contingent was led by local Erie agent Craig Mader, who also happens to chair our IA&B of Maryland Government Relations Committee. Craig met with legislators, testified in bill hearings, and was an essential ambassador between the carriers and producers in our coalition. With his leadership, we were able to prove to legislators that the 2009 change in the law had been unnecessary and that our bill this year would simply restore balance to the small commercial market. And what about consumers? How about the “mom & pop” shops that were the original cause for the bill? The MIA acknowledged that there had been few complaints that fall into this category. Nevertheless, our coalition had to deal directly with organizations representing small business who were concerned about the possible effect on their members. We met with the National Federation of Independent Business and the Maryland Retailers Association to make our case. Although initially inclined to oppose the legislation, both organizations withdrew their opposition.

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NOVEMBER 2016

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AG R I CO - O P S an d FEED, S EED, G R A I N , an d FERT I LIZER D E A LER S Agri co-ops and feed, seed, grain, and fertilizer dealers have unique insurance needs that a standard business or farm insurance package won’t cover. Make sure your commercial agribusiness customers are properly protected. Grinnell Mutual is now writing commercial business in Pennsylvania, and if you’ve never heard of us, it’s time you did. We offer lots of packages tailored to commercial businesses. Contact Harry Larkin to find out how we can help extend your commercial reach.

Harry Larkin Pennsylvania native and your Pennsylvania-based Grinnell Mutual representative. 412.682.9964 | hlarkin@gmrc.com | grinnellmutual.com/harry

And on a personal note, this bill provided me with one of the most interesting experiences in my decades of lobbying for IA&B.

was on television newscasts for days. And this bar owner was located on the edge of downtown Baltimore.

Our House bill sponsor, Del. Susan McComas, received a handwritten letter from a small business (a bar) in Baltimore City expressing concerns about the bill. Apprehensive at the possibility of the bar owner appearing at the bill hearing in Annapolis to oppose our initiative, I decided to make a road trip. One wintery Saturday afternoon before the bill hearing, I drove to Baltimore City, parked outside the bar and waited for it to open at 4 p.m. When I knocked on the door, the bar owner was quite surprised to be greeted by an Annapolis lobbyist inquiring about his letter to Del. McComas. After spending a couple of minutes at the door presenting my bona fides, the owner invited me in, and we spent 30 minutes discussing the bill, our need for the bill, and also his business insurance issues. (Regrettably, no alcohol was consumed.)

Picture for yourself the insurance company underwriter considering the renewal of that account. You can understand that it may have been a challenge.

Why was this bar owner concerned? You can put the pieces together yourself. Do you remember the civil unrest that occurred in parts of Baltimore City on April 27, 2015? Anger over the actions of some Baltimore police officers resulted in substantial destruction of property in some parts of the city, coupled with other lawless acts. The National Guard was summoned. Baltimore

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A SENSIBLE COMPROMISE PREVAILS Nevertheless, our conversation bore fruit. The bar owner simply wanted to tell his story. In turn, I wanted to tell our story. Bottom line? He did not come to Annapolis to oppose our bill. In fact, support for the bill was unanimous in the Senate and overwhelming in the House. Gov. Larry Hogan signed it into law on April 12. All in all, the alliance of producers and companies was enormously effective. And with an interesting twist to the story, we prevailed. n

Bryson F. Popham is the contract lobbyist for IA&B of Maryland and a partner with the Annapolis law firm Popham & Andryszak, P.A.

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OVERVIEW OF THE

LEGISLATIVE LANDSCAPE

A number of insurance-related bills passed the General Assembly and received Gov. Larry Hogan’s signature this year. On the following pages, we highlight a few of the laws that recently took effect and others that soon will be implemented.

VOLUNTEER DRIVERS (HOUSE BILL 501) This legislation prohibits motor vehicle liability insurers from cancelling or refusing to issue an insurance policy solely because the insured or applicant is a volunteer driver. It also prohibits insurers from imposing a surcharge or increasing policy rates because the insured or applicant – or someone else who normally operates the insured’s or applicant’s vehicle – is a volunteer driver. The change applies to motor vehicle liability insurance policies issued, sold, delivered or renewed in Maryland beginning Jan. 1, 2017. HOMEOWNERS’ INSURANCE DEDUCTIBLES (HOUSE BILL 557) Among other items, this legislation authorizes an insurer to issue a policy of homeowners’ insurance that includes a deductible that is equal to a percentage of the Coverage A-Dwelling limit and to require a percentage-based deductible in a policy of homeowners’ insurance or to offer a percentage-based deductible as an option. It also provides new guidelines for insurers that issue a homeowners’ policy that includes a mandatory percentage-based hurricane deductible. They many only apply the deductible beginning at the time the National Hurricane Center issues a hurricane warning and ending 24 hours following the termination of the last hurricane warning issued in the state. It takes effect Jan. 1, 2017. PROOF OF MOTOR VEHICLE INSURANCE COVERAGE (HOUSE BILL 720/SENATE BILL 544) This legislation requires – effective Oct. 1, 2016 – that a driver of a motor vehicle carries proof of insurance while driving. In turn, it requires insurers to provide insurance identification cards or the information in an electronic format (with consent of the insured). The ID cards must show the first named insured, vehicles covered and the coverage period. REJECTION OF PIP COVERAGE (HOUSE BILL 900/ SENATE BILL 784) This legislation provides a MAIF applicant with the option to reject PIP coverage – 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.

ENABLING, INCENTIVIZING MOTOR VEHICLE COVERAGE (HOUSE BILL 912/SENATE BILL 888) This legislation, which took effect on July 1, 2016, assists uninsured vehicle owners with delinquent uninsured vehicle penalties to become insured. It creates a program under the Motor Vehicle Administration which waives 80 percent of vehicle owners’ penalties that became delinquent before Jan. 1, 2014 – and then requires the owners to purchase and maintain insurance coverage. PREMIUM INCREASE NOTIFICATION (HOUSE BILL 1408) This legislation amends the commercial premium increase notification requirement by restoring the single notification threshold for renewal increases of 15 percent, removes the recent unworkable formula and clarifies that insurers may comply with the law by sending a complete renewal policy 45 days in advance. It took effect Oct. 1, 2016. n

LEGISLATIVE RECAP FOR A complete summary of the 2016 insurance legislation, access the Maryland Insurance Administration’s Bulletin 16-18 (insurance.maryland. gov). Copies of specific laws are available by visiting the General Assembly’s website (mgaeg.maryland. gov) or by contacting the Department of Legislative Services at 410-946-5400.

Editor’s note: Our IA&B government affairs team championed HB 1408 – our association’s priority legislation for the session based on member agent feedback. See page 12 for more details on our advocacy.

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HR HEADQUARTERS

THE PERFECT MATCH HOW TO FIND – AND MANAGE – THE RIGHT MIX OF EMPLOYEES By Karen H. DiGioia

Match.com … eHarmony … It’s Just Lunch … the list goes on. Dating services and websites – all designed to find you (or someone) the perfect match. (Yes, I am going somewhere with this.) Isn’t that a lot like what you’re doing when you’re looking for a new employee? Aren’t you looking for the “perfect match” for your agency?

IA&B JOB BOARD

hile I honestly haven’t used any of these services, I am guessing that the process starts out something like this: A new user provides information about themselves and also information about their “perfect match.”

Baby Boomers (born roughly 1946 – 1964)

Let’s look at the hiring process the same way – with an employee “perfect match” wish list. While your list may not be exactly like mine, I’m guessing that you’d be looking for someone who is:

• In-depth knowledge and experience

• Productive and hardworking

• Revenue generator

• Energetic and enthusiastic

• Relationship builder

• Adaptable • Collaborative • Multitasker • Revenue generator • Relationship builder • Able to deal with change • Team player • Tech-savvy • Lots of in-depth industry knowledge • Loyal The list looks good, right? So where do you find that “perfect” employee who has it all? The bad news is, you probably can’t. The good news is, with the right mix of employees, you truly can have it all. While I’m not a fan of stereotyping, there are generational groupings that our employees and prospective employees fall into. We’ve all heard the terms Baby Boomer, Generation X and Millennials. Each generation has unique strengths (and, of course, some challenges) to offer employers. Let’s look at the wish list above as they typically apply to these generational groupings.

• Productive and hard-working (possible “workaholic”) • Loyal • Team players Generation X (born 1965 – 1978) • Adaptable • Collaborative

Millennials (born 1979 or later) • Tech-savvy • Energetic and enthusiastic • Multitaskers • Good at dealing with change So, as you see, those traits on our “perfect match” employee list all show up. You just need a mix of the generations to get them all. Chances are good that you, the agency owner, are a Boomer or maybe a Generation Xer. You know what makes you tick and are probably pretty good at attracting, managing and motivating employees who are like you. However, as the balance of the workforce is tipping, it’s important to look at all groups to ensure you are positioned to attract and motivate employees in all generations. While we’ll talk about each, we’ll focus a bit more on the Millennials, as this group tends to be the biggest “mystery” for earlier generations.

The ask is common, and with the average age of an insurance agent reaching 59, the ask is increasingly urgent: Where can I find new talent? The new IA&B job board aims to meet member agencies’ recruitment needs and to introduce the independent agency system to job seekers. AIDING EMPLOYERS Hiring agencies can use the job board in two ways: to post their job openings and to review the resume bank of job applicants REACHING APPLICANTS Driving job seekers to the job board won’t happen overnight, but efforts are underway. Over the summer we alerted career services centers at regional business schools, colleges and universities to the job board, and this fall we met with faculty in risk management departments at area universities. ADDRESSING THE BIGGER PICTURE The job board is part of our Career Center, a broader effort to address the industry’s perpetuation and talent concerns. Also included are the Futures Program to engage young talent and our career paths to integrate new hires into an agency and the industry as a whole. IABforME.com/CareerCenter

BABY BOOMERS Baby Boomers are known for their tendency to work hard and work as part

HR HEADQUARTERS

of a team. However, this group is also starting to transition toward retirement (or semi-retirement). They don’t tend to need a lot of feedback (although, you should be giving it anyway!) and are motivated by things like money and title. As you would expect, health and retirement benefits are important to this group of employees. Chances are you won’t have too many challenges attracting and managing your Boomers. These employees know the ropes. You may be a bit hesitant to hire Boomers, knowing that their retirement may not be far away. Keep in mind that employees from this group still have a lot to offer your company. They are willing to work hard, are likely to loyal to your organization and have a lot of knowledge developed over the years. And, of course, as you are well aware, it’s against the law to discriminate because of age. Don’t count them out when you are recruiting talent! GENERATION XERS Generation Xers are known to be entrepreneurial in nature. While they appreciate some degree of structure and direction, they also appreciate freedom and the opportunity to create/innovate. They are strong relationship builders and value the opportunity to work collaboratively. They are looking for work/life balance and are motivated by freedom and flexibility. When rewarding Generation X employees, the faster the turnaround between the accomplishment and the reward, the better! MILLENNIALS Millennials are known for their high levels of energy and are tech-savvy multitaskers. Because of their strong tie to social media, it’s important to many Millennials that their employer have a strong and active social media presence. Make sure you are maximizing your use of various social

media outlets like LinkedIn, Facebook and Twitter. If you don’t have a strong social media presence, you’re going to have a challenge even getting Millennials to apply for the jobs you have. Company sites should be mobile-accessible, and your online application process should be easy to find and easy (and fast) to use. Once they are on board, your Millennials can help you strengthen your social media strategy and implementation. When you’re interviewing Millennials, you’ll need to focus on things like recognition and advancement opportunities, collaboration and work/ life balance opportunity. It’s not that Millennials aren’t willing to work hard – they are. However, unlike many Boomers, they aren’t looking to sacrifice their personal life for their job. They are willing

to work hard but also want to play hard. If you offer fitness or health program benefits to employees, make sure to stress this. Do you have a ping-pong table in the breakroom? By all means, talk about it. Softball team? Community involvement? Social gatherings after work to de-stress? Perfect! Your interview process should put these things front and center. Be honest; Millennials expect transparency. Feel free to talk about the upsides and downsides of the job you may be offering them. Once you’ve hired a Millennial, you need to focus on the best ways to manage and motivate them. Millennials are born multitaskers. This can be a strength but can also provide a challenge – multitasking can easily segue into distraction. When

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NOVEMBER 2016

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To learn more visit www.donegalgroup.com or call Rick Kelley at 800-877-0600.

HR HEADQUARTERS

managing Millennial employees, it’s important to focus on goals and expectations. Establishing daily or weekly goals and deadlines is a great way to keep employees in this grouping focused and on task (and off their iPhones!) Provide feedback and rewards regularly. Millennials are looking for meaning in their work, and your feedback will provide the message that their work is important and will let them know if they are (or aren’t) on the right track. While other generations aren’t looking for this much feedback with this degree of regularity, quite honestly, it’s the best way to manage all your employees! If you’re looking for a way to reward your Millennial employee, look at providing extra time off (although, all employees appreciate cash!). Ensure that you are maximizing your use of technology. This means looking at the software that you are using to crunch customer (and potential customer) data but also use of mobile services and apps to

redefine the way you attract and interact with customers. This won’t just position you to attract Millennial employees – it will also be powerful in your ability to reach Millennial customers. In spite of what we’ve talked about here, never lose sight of the fact that each of your employees is an individual – an individual who may or may not fit into the generational groups above. Understanding the traits of these groups can be helpful, but it should never override your ability to manage each employee individually. Sound like a lot of work? I’m not going to tell you otherwise (sorry!) But, as we all know, finding the “perfect match” is just the beginning. Just like you do with the other “perfect matches” in your life – your family, your customers – you have to actively manage your relationships with your employees. Your employees are your company’s biggest resource, the folks that serve your customers each and every day – now and into the future.

NOVEMBER 2016

And if, at any point, you need more assistance with those employee relationships, I’m just an email or phone call away. I can be reached at 610-779-3870 or karen@mostellerhr.com. n

Karen H. DiGioia provided this article on behalf of Mosteller & Associates, IA&B’s contracted human resources consulting firm. Reach out to Karen for more information on conducting classifying workers or with other human resources questions. IA&B’s HR Solution© is a compilation of products and services – available exclusively for our member agencies – that simplifies establishing or improving your human resources program. It includes base-level consultation and discounted professional services from Mosteller & Associates. Learn more at IABforME.com/emp_mgmt.

CLASSIFIED A DV E R TI S E M E N TS

My Events

SOUTHEAST PA PRODUCERS & AGENCIES

November & December 2016 DATE TOPIC

LOCATION

NOVEMBER 2016 2

CISR Personal Residential

Philadelphia, PA

Directors & Officers and Professional Liability

Mechanicsburg, PA

CISR Agency Operations

Wilkes-Barre, PA

Directors & Officers and Professional Liability

Baltimore, MD

CISR Agency Operations

Frederick, MD

E&O Risk Mgmt: Meeting the Challenge of Change

Bethlehem, PA

8-10

Life & Health Licensing Study Course

Mechanicsburg, PA

9-12

CIC Commercial Property Institute

Hunt Valley, MD

CISR Personal Residential

Pittsburgh, PA

E&O Risk Mgmt: Meeting the Challenge of Change

Newark, DE

E&O Risk Mgmt: Meeting the Challenge of Change

Philadelphia, PA

CISR Personal Residential

Altoona, PA

14-15

James K. Ruble Graduate Seminar

Lancaster, PA

CISR Personal Auto

Waldorf, MD

*CPIA 1: Position for Success

Pittsburgh, PA

William T. Hold: Commercial Coverages

Mechanicsburg, PA

Directors & Officers and Professional Liability

Bethlehem, PA

*CPIA 2: Implement for Success

Pittsburgh, PA

*CPIA 3: Sustain Success

Pittsburgh, PA

William T. Hold: Condo Concepts& Coverage

Lancaster, PA

CISR Commercial Casualty II

Salisbury, MD

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 Agriculture Ins Mngmnt Services.........................7 Applied Underwriters..................................................10 Berkshire Hathaway Guard Ins Cos .............18

*Attend all 3 CPIA seminars to earn the CPIA designation.

Donegal Insurance Group.......................................27 DECEMBER 2016 1

CISR Commercial Property

Philadelphia, PA

CIC Commercial Casualty Institute

Philadelphia, PA

Grinnell Mutual Reinsurance Co.......................17 Harford Mutual Ins Co...............................................26

CISR Agency Operations

Mechanicsburg, PA

6-8

Property & Casualty Licensing Study Course

Pittsburgh, PA

CISR Commercial Casualty II

Reading, PA

Interstate Insurance Mngmnt Inc.................OBC Millers Mutual Group.................................................IFC

William T. Hold: Condo Concepts & Coverage

Baltimore, MD

13-15

Property & Casualty Licensing Study Course

Mechanicsburg, PA

IA&B Partners Program............................................11

Motorists Mutual Ins Co...........................................23 Penn PRIME Municipal Ins....................................22 Preferred Property Program.................................20 PSBA Insurance Trust...............................................19

New Truckers Workers Comp Program

Exclusive to Agents of Interstate Insurance • The existing automobile coverage must be written with Interstate. • Coverage will be placed with an A.M. Best rated A+ XV rated carrier • Program available in Maryland, Virginia, Pennsylvania, Delaware and North Carolina. • 5-50 power units but larger exceptional high quality accounts may be considered. • Target account will be regional for hire trucker (some long haul exposure acceptable). • $25,000 minimum premium. * Since we will loss control every account we prefer to receive submissions at least 60 days in advance. - Smaller accounts that underwrite well will be quoted ‘subject to inspection’

* Accounts we will not consider: • Accounts with owner operators • Gasoline/fuel haulers • Moving and storage companies • Trash/refuse haulers with any residential collection • Any operation with extreme loading/unloading exposures

* Very attractive and flexible payment plans available: • Monthly Payroll Reporting • Electronic Pay-As-You-Go • Installment Plans • We will be especially flexible on large accounts

For more information contact Jeff Thomas: jeff@interstate-insurance.com Email all submissions to: submissions@interstate-insurance.com