Pennsylvania Primary Agent - October 2018 by Insurance Agents & Brokers Service Group Inc

OCTOBER 2018 | PENNSYLVANIA

THE FIGHT OVER HEALTH INSURANCE: H AN INTERVIEW WITH COMMISSIONER ALTMAN

AGENTPAC CONTRIBUTORS RESERVATION OF RIGHTS TECHNOLOGY SPENDS

IN THIS

10 INTERVIEW WITH INSURANCE COMMISSIONER ALTMAN

We sat down with Pennsylvania Insurance Commissioner Jessica Altman to discuss her background and priorities.

18 2018 AGENTPAC CONTRIBUTORS

These IA&B members’ financial support of AgentPAC helps make sure independent agents’ voices are heard during the legislative process.

20 HOW MUCH DO I NEED TO SPEND TO KEEP MY TECHNOLOGY HUMMING? Learn what healthy, operationally mature agencies should plan to spend to get the most out of their technology.

IN EVERY ISSUE 2 3 4 6 7 8 27 28 28 28

Chair of the Board’s Message Don’s Discussion Coverage Corner Message from Jason Ernest 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 # 2018-10, is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

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.

CHAIR OF THE BOARD’S MESSAGE

BOARD OF DIRECTORS INSURANCE AGENTS & BROKERS

THE MORE THINGS CHANGE

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

OFFICERS

Chair of the Board

John B. Hollister

hen you think of your state agents’ association, what comes to mind first? When IA&B last surveyed agency principals, the top three responses were “education” (28%), “lobbying” (22%), and “advocacy” (11%). Considering that these are the very reasons that industries first formed trade groups just proves the old adage: The more things change, the more they stay the same. This fall marks the start of my eighth year with the IA&B Board. During that time, I’ve seen the challenges facing the organization (no doubt similar to those facing the vast majority of industry trade groups). But I’ve also seen the innovative ways that the board and staff are positioning IA&B to remain responsive and relevant to the independent agent community. Offering tools to compete in an increasingly digital marketplace. Finding new talent to perpetuate the industry. Combining efforts with like-minded state associations to deliver new programs, products, and services. These are all new IA&B initiatives – ways that the organization is rising to the challenge and helping us meet our evolving needs. However, what I find most impressive is how the organization has not lost sight of what it has always done well – providing top-notch professional development and effectual legislative, regulatory, and carrier advocacy. Year in and year out, decade in and decade out, IA&B has remained at the forefront of industry education and advocacy. Bottom line: Change is inevitable, and when it’s managed well, it can mean more, not less. And at IA&B, I am confident that is what we’ll all continue to receive – the core products and services we have always relied upon, along with the tools we need to thrive into the future.

Milford, PA Vice Chair of the Board

Craig S. Mader

Crofton, MD Immediate Past Chair of the Board

Michael F. McGroarty Sr. Pittsburgh, PA

MEMBERS

Emory Stephen Burnett, CIC, ARM Wilmington, DE

Richard F. Corroon, CPCU Wilmington, DE

Michael P. Ertel Sr.+ Columbia, MD

Ashley M. Fitzsimmons, CISR Forest City, PA

Len Gieseler, LUTCF Pottstown, PA

G. Greg Gunn, CIC* Lemoyne, PA

Bryan C. Hanes, JD Hagerstown, MD

Lisa A. Leach Goth, CIC New Bethlehem, PA

Shannon Lipniskis Indiana, PA

Elizabeth H. Martin, CIC Millersville, PA

Mark J. Monroe

West Chester, PA

Richard M. Rankin, CIC Lancaster, PA

D. Bradley Rosenkilde Jr. Hunt Valley, MD

Tara S. Silfies, CPCU

All the best,

Bethlehem, PA

Robert L. Smyrl Jr., CIC Hatfield, PA

Glenn R. Strachan

John Hollister Chair of the Board

Ft. Washington, Md

Bryan S. Willey Dover, DE

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

J. Marshall Wolff, CIC, CPCU Easton, PA

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

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

Ask our experts!

QUESTION: A producer just retired. We’re worried about potential liability should a customer report a claim or attempt to modify coverage via an email to the retired producer’s agency email account. Are there any practical steps we can take?

ANSWER: Whether an employee leaves employment with the agency (for retirement purposes or otherwise), or is simply away for a short or extended period of time, it’s important to establish and implement standard policies, procedures, and workflows to address incoming email issues. From both E&O and customer service perspectives, you’re right to be concerned; and yes, there are a couple of practical steps you can consider.

OPTION 1 One option would be to keep the former employee’s email account open for a specified period of time, during which time a customer (carrier, vendor, etc.) who sends an incoming email should receive an out-of-office reply. The outof-office reply should include additional information, such as the contact information (name, phone number, and email address) of the individual within the agency to whom the customer should direct his or her inquiries. As part of this procedure, if your system has the capacity, emails should be automatically re-routed to the agency employee(s) assigned to handle

the former employee’s work. In the alternative, the agency would need to implement procedures whereby the former employee’s email account is proactively monitored.

OPTION 2 In the alternative, the agency could opt to shut down the former employee’s email account completely, after which any customers sending an email to the former employee should receive an undeliverable notice. As with the first option, the undeliverable notice should include additional information, such as the contact information (name, phone number, and email address) of the individual within the agency to whom the customer should direct his or her inquiries. Following is a sample template for inclusion with either your out-of-office or undeliverable notice reply: Thank you for emailing [former employee’s name] at [agency name]. [Former employee’s name] has left employment with [agency name]. You are directed to contact [insert name, phone number, and email address of new contact person], or you may

Have a question? Rely on our team to find the answer. Contact Don: 800-998-9644 Ext. 603 DonB@IABforME.com IABforME.com

contact the agency at [insert primary phone number for the agency]. It’s also important to make sure outgoing emails include appropriate disclaimer language notifying recipients that coverage can’t be modified, or a claim submitted, via email, and that any requested changes will not be effective until confirmed by a licensed agent. In conjunction with these options, it would also be prudent to communicate directly with affected customers via regular mail, advising them (1) that the agent is no longer employed with the agency; (2) as to whom within the agency the customer should contact if they need to discuss anything (to include an applicable phone number and email address); and (3) that emails should no longer be sent to the former employee’s email address. Whatever practice you decide to implement, it’s never advisable to leave customers in a position where they believe someone within the agency has received, and is appropriately handling, their email request.

COVERAGE CORNER

UNDERSTANDING THE INSURER’S RESERVATION OF RIGHTS By Jerry M. Milton, CIC

our insured has caused a loss, resulting in an injury to another person. That person has filed a claim against your insured. The insured then forwards the claim to the insurer. Sounds pretty simple, doesn’t it? We follow that process every day. But, it may not be that simple. Upon receipt of the claim, the insurer reviews the facts of the claim and is not sure it’s covered by the insured’s policy. It may be covered. But, then it could be excluded.

Not having all the facts, the insurer is reluctant to say, “No covered.” If it turns out later that the claim is covered, the insurer could face a bad faith claim. Wanting to further review the facts, and limited by the amount of time the insurer has to respond to th e insured and claimant, the insurer sends a reservation of rights (ROR). An ROR letter should be sent as soon as any question of coverage is recognized.

OCTOBER 2018

An ROR is a means by which the insurer agrees to defend the insured against a claim or suit while simultaneously retaining its ability to evaluate, or deny, coverage for the claim. ROR letters typically recite a laundry list of reasons the insurer could have for denying the claim. These letters tend to frighten policyholders who purchased their policies thinking they would be covered in the event of a loss.

The insurer is obligated to notify the insured that it may not cover a particular claim in order to allow the insured ample time to prepare an adequate defense in the event the claim is denied by the insurer. The ROR letter must explain to the insured why a particular provision of the policy could result in the denial of coverage. The letter must quote the relevant policy language that will be the basis of any possible future denial of coverage. When the insurer’s coverage obligations are unclear, it is beneficial for the insurer to defend the insured subject to an ROR and then seek a declaratory judgment determining the obligations of the insurer. The issuance of an ROR allows the insurer to fulfill its obligation under the policy to provide a defense for the insured while protecting itself and further investigating the claim. Typically, when an insurer issues an ROR, it retains counsel for the insured while simultaneously monitoring the case and related coverage issues. However, the ROR may give the insured the right to choose its own counsel paid for at the insurer’s expense.

If the insurer defends the insured under an ROR, and it is later determined the claim is not covered, does the insurer have the right to be reimbursed by the insured for the costs and expenses defending this claim which was not covered? Probably not. However, if the insurer had the insured sign an indemnification agreement, then the insured could be held responsible for reimbursing the insurer. Any attorney defending an insured under an ROR must be extremely vigilant to ensure that it maintains allegiance to his client, the policyholder. 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 ABOUT REIMBURSEMENT OF DEFENSE COSTS The state where the insured is located may have a bearing on how reimbursement of defense costs will be treated. Case in point, Pennsylvania insurers used to rely on an implied principle that if an underlying claim was questionable, the insurer could seek reimbursement of the defense costs. In 2010, a Pennsylvania Supreme Court decision (American and Foreign Insurance Company v. Jerry’s Sports Center, Inc.) ruled that an express provision needed to be included in the policy for the defense-cost recovery to be valid. ISO introduced an endorsement (IL 01 20) for that purpose. These endorsements have since been added to a number of commercial policies in Pennsylvania.

Can the same attorney represent the insurer and the insured? In most circumstances where consent has been obtained from both the insurer and the insured after full disclosure, defense counsel can continue dual representation of both clients. However, this is not always a good idea since the insurer and the insured will have conflicting interests. When there is a conflict, the attorney representing both parties must promptly, fairly, and fully inform the insured of all the facts and legal consequences regarding the conflict so the insured can make the decision whether or not to retain independent counsel.

ONWARD & UPWARD: A MESSAGE FROM JASON ERNEST Every once in a while, IA&B will get an email or note from a member, saying they don’t agree with our political leanings, and they are no longer going to support AgentPAC, or worse yet, they are dropping their membership. IA&B has only one political leaning – and that is to protect the independent insurance agent in Harrisburg and Washington, D.C. We work with lawmakers on both sides of the aisle. What matters is if you are friendly to independent insurance agents and small businesses. If you are, we will support you. If you’re not, you won’t have our support, and we will actively oppose your legislation that is harmful to our members. As another contentious and unpredictable election plays out this November, we will be watching. Our advocacy team has been tracking the races, learning about the candidates, and supporting those that we feel will be most favorable to our issues. There may be questionable social platforms or personality flaws with some candidates we support – that’s inevitable in the business of politics. But at the end of the day, the only thing that counts is what is best for our members. The American democracy is a pillar to the success we all enjoy today. It’s by no means a perfect system – and the current political landscape is as fractured as we’ve seen in some time. But please know this one constant when it comes to politics: IA&B has your back, and we do so with no biases or favoritism. And I can’t let this pass – now, more than ever, we rely on your AgentPAC (IABforME.com/AgentPAC) and InsurPac (InsurPac.com/ form) contributions. There are many key races we are watching this year, and your contributions can help ensure our success.

Jason Ernest, Esq. IA&B President & CEO

FLOOD INSURANCE: OPPORTUNITIES FOR AGENTS ABOUND The number of flood policies will double by 2023 if Pennsylvania meets the goal set by FEMA. The future of flood insurance was the subject of a roundtable meeting* we attended recently in Williamsport, PA. Bottom line: There are significant opportunities ahead for agents.

AGENT OPPORTUNITIES While there are many issues plaguing the National Flood Insurance Program (NFIP), there are an increasing number of private options – now in the admitted and non-admitted markets, as standalone policies, and as endorsements to the HO policy. At the same time, lenders and realtors are not as reluctant as they once were about private insurance. At IA&B, we will continue to monitor and report on new entrants into the market. Whether or not you currently sell flood insurance, consider your market options and how these new opportunities could align with your customer base.

MEETING HIGHLIGHTS • Every year, one flood in four occurs in low-to-moderate risk areas. • One inch of water in a home equals $25,000 of damage (this speaks more to consumers than mentioning a 100-year flood plain). • 61% of Americans don’t have enough savings to cover a $1,000 emergency. • Patterns of heavy rainfall (defined as 2 inches of rain in 48 hours) are showing staggering changes over three decades with a vast majority of those occurring outside Special Hazard Flood Areas (SFHAs).

OCTOBER 2018

STATE NEWS • With urban development and the increase in impervious paved surfaces all around us, there is nowhere for the water to go, causing more water runoff and flash floods.

The meeting was very positive, and one we hope will lead to continued dialogue with the PID on issues important to our members. Among the items we discussed were:

• Working with all stakeholders locally is key in making inroads

• Scenarios permissible under the new rebating statute

NOTE OF CAUTION

• Possible compliance seminars in tandem with the PID

The flood hazard also can be an E&O hazard. It is important to offer the coverage and to document the offer. (More often than not, agents are blamed for not offering the coverage.) If you can offer a quote, it is better yet. In that respect, some private markets are not requiring an Elevation Certificate to provide a quote – a significant plus. Finally, if you have questions, concerns, or issues related to the flood insurance market, please let us know by contacting IA&B Vice President – Advocacy Claire Pantaloni at 800-998-9644, ext. 604, or ClaireP@IABforME.com. * The panel included representatives from FEMA, PEMA, lenders, realtors, local government and communities, flood plain management, the Department of Community and Economic Development, and a Policy Director from the University of Pennsylvania.

• Implications of newly enacted travel insurance licensing legislation We will follow up on a number of these items and continue to update our member resource on examples of rebating and inducements. IABforME.com/rebating/PA_examples

WELCOME NEW PARTNERS & MEMBERS NEW SILVER PARTNER: FREDERICK MUTUAL INSURANCE COMPANY Frederick, MD

NEW MEMBERS: INSURANCE XCHANGE LLC Philadelphia, PA HUMPHRIES INSURANCE GROUP INC. Blue Bell, PA

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

THOMAS ROBINSON INSURANCE Jamison, PA REDMER INSURANCE GROUP White Marsh, MD MCAFEE INSURANCE AGENCY LLC Wilmington, DE

• Business Cards

IA&B TALKS SHOP WITH PENNSYLVANIA INSURANCE DEPARTMENT Our advocacy team recently met with the Pennsylvania Insurance Department’s (PID) deputy commissioner and legal staff at IA&B headquarters. Initiated by the PID, the meeting allowed us to meet some of our key contacts in person, as well as review several pending issues, namely clarification of the newly enacted law on rebating and inducements.

• Envelopes • Memos • Stationery/Letterhead • Website Review our logo usage guide to ensure proper use – including graphic standards to ensure consistency and accuracy – and then download the logo.

Learn more about membership by contacting IA&B Vice President – Membership Tim Wonder. 800-998-9644 Ext. 351 TimW@IABforME.com IABforME.com/membership

IABforME.com/IAB_member_logos

PARTNERS PROGRAM

& through IA&B’s Partners Program.

Supporting Connecting

2018 Partners

ELEVATING AGENTS

Program

Offering sincere thanks Among the IA&B Partners are the following Platinum-level sponsors.

PLATINUM PARTNERS ACUITY Agency Network Exchange LLC BBSI Chubb Donegal Insurance Group Erie Insurance Group Farmers Mutual Fire Insurance Company of Marble Insurance Agents & Brokers Service Group Millers Mutual Group Penn National Insurance Plymouth Rock Assurance The Main Street America Group

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

CALLING ALL COMPANIES Your support helps independent agents succeed and their agencies become more profitable — a win for your company and the independent agency channel. What’s more, you will find more value than ever before from our revamped Partners Program. Learn more by visiting IABforME.com/Partners or contacting Jess McWilliams at 800-998-9644, ext. 503, or JessicaM@IABforME.com.

OCTOBER 2018

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

PLATINUM PARTNER

FOCUSED ON RESULTS OUR COMPANY CHUBB

CHIEF EXECUTIVE OFFICER Evan G. Greenberg Chairman & CEO

NORTH AMERICA HEADQUARTERS Whitehouse Station, NJ

A.M. BEST RATING

Issuer Credit Ratings: “A++”

WEBSITE

Chubb.com

Chubb is the world’s largest publicly traded P&C insurance company and the largest commercial insurer in the U.S. With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. We are more than an insurance company. We are a true partner to our clients, constantly striving to provide the best solutions and services possible. We believe that insurance is a craft and that each client has unique needs — whether they are a multinational company, a mid-market firm, small business owner or individual policyholder. Our team of professionals is highly skilled and trained to help clients stay protected, avoid risks and mitigate those risks as situations occur. We stand out from the competition because we are extremely passionate about what we do and genuinely care about our clients. Across our many divisions, we can address a broad range of risks through our core and situational coverages, our services and claims delivered by technology and our innovative delivery options. Along with our main coverages, we also provide a full line of top-rated insurance products, services and expertise in just about every industry. Chubb is well-known for its exceptional service and attention to each and every client.

Our Field Operations team consists of experienced leaders who work hard to maintain these long-term client, agent and broker relationships across North America. These leaders help Chubb successfully deliver world-class insurance products and services at the local level in 8 regional offices and 40 additional branch offices throughout the United States and Canada. In the Mid-Atlantic, our offices include:

Baltimore St. Paul Plaza, 23rd Floor 200 St. Paul Place Baltimore, MD 21202-2038 T 410-659-6500

Harrisburg 4999 Louise Drive Suite 203 Mechanicsburg, PA 17055 T 717-791-6000 T 412-391-6585

Richmond 4470 Cox Road Suite 150 Glen Allen, VA 23060 T 804-935-6300

Washington DC 1001 G Street NW Suite 400 Washington, DC 20001 T 202-822-3200

Philadelphia 436 Walnut Street Philadelphia, PA 19103 T 215-640-1000

Pittsburgh Fifth Avenue Place 120 Fifth Avenue Pittsburgh, PA 15222-30008 T 412-391-6585

If you’re an agent interested in an appointment with one of the Chubb Mid-Atlantic branches, please visit: https://www2.chubb.com/us-en/agents-brokers/mid-atlantic-region.aspx.

OCTOBER 2018

INTERVIEW WITH

INSURANCE COMMISSIONER ALTMAN Late this summer, the IA&B Advocacy Team and Primary Agent editorial staff sat down with Pennsylvania Insurance Commissioner Jessica Altman to discuss her background and priorities. Read highlights on the following pages.

IA&B: You first worked in Washington, D.C. for the federal government. What drew you to Harrisburg and state government? Altman: I have really only wanted to work in the public sector. My personal drive for my career and my choices comes from wanting to be a part of fixing the problems that the people in our country are facing and to be wherever in government I can do that to the best of my ability. In many ways government is about timing. I was privileged to be working in Washington, D.C. following the passage of the Affordable Care Act and to be a part of building that out and expanding coverage to millions of people across the country. Then fast forward to 2014: I was following Gov. Wolf’s campaign while I was trying to figure out what I wanted to do next. I was always interested in coming to the state level, and when he won the election in 2014, I got a call from Teresa Miller, who was a colleague of mine in Washington, D.C. and a friend. She said, “I’m moving to Harrisburg. Why don’t you come with me?” And so I did.

The federal government and the scope of what the federal government can do is amazing, but coming to state level, I get to feel every day the sense of the work we’re doing and how it directly impacts the people of Pennsylvania.

I think it’s clear to anyone who knows Gov. Wolf or who is able to hear him speak that he’s the type of leader who wants to do

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— Jessica Altman

the right thing and is not afraid to make the difficult decisions to achieve what he believes is the right thing. On consumer side, he and I are aligned in everything we’re trying to achieve. The federal government and the scope of what the federal government can do is amazing, but coming to state level, I get to feel every day the sense of the work we’re doing and how it directly impacts the people of Pennsylvania. At the federal level, you’re just a little more removed from the day-to-day impact of your work, and it’s something I really have enjoyed in transitioning to the state level. IA&B: What are your biggest concerns about the healthcare marketplace, and what are your plans to address them here in Pennsylvania? Altman: At the most macro level, I want to see our health care system move forward and get better and cover more people and provide more care to result in better health. Unfortunately, I think some of the things that are happening at the federal level are really moving us backward instead of forward. As a state regulator, my job is to look out for the consumer, to do everything within my power to make sure we have an insurance market that is providing options to consumers that are of value – that they can afford and also cover the things they need to be covered. I find myself feeling like I’m on the defense right now, particularly related to the Affordable Care Act. It was really designed to be a partnership between the federal government and the states in moving all of that work forward. And right now I have a supposed partner who isn’t holding up their end of that bargain. So instead of working alongside the federal government to help achieve all of those goals moving forward, I’m trying to hold what we have together and keep it on a good path and not let it go backward. That all being said, our health markets here in Pennsylvania are in a really good place. Even the individual market – which is what we tend to talk a lot about (while it’s where there have been significant problems, we also always have to talk about the fact that it only covers about 5 percent of people in the Commonwealth). We have statewide average rate increases of just 0.7 percent this year, which is incredibly low and certainly the lowest we’ve seen since the ACA came into place and fundamentally changed the way the individual market works. We’re also seeing a really unprecedented expansion of choice. Thirty-one of Pennsylvania’s 67 counties will have more insurers

ABOUT THE COMMISSIONER JESSICA ALTMAN was appointed Acting Insurance Commissioner in August 2017 and unanimously confirmed in March 2018. Previously she served as chief of staff for the Pennsylvania Insurance Department. Prior to joining the Pennsylvania Insurance Department, Altman worked at the U.S. Department of Health and Human Services’ Center for Consumer Information and Insurance Oversight, as well as the White House Office of Management and Budget. She holds a master’s degree in public policy from Harvard University, with a concentration in health care policy from Cornell University.

offering coverage compared to the current year based on our proposed filings. So that says to me that what we’re doing here at the state level, to provide answers and stability at a time of questions and instability from the federal level, is helping. IA&B: What are your thoughts on the future of state’s flood insurance market and the role of private insurance? Altman: Flood insurance continues to be a huge priority of mine and the governor’s because it’s a major issue in Pennsylvania. When I talk to some of my colleagues around the country about flood, they almost look at me like, “Why is Pennsylvania talking about this?” because we’re not a coastal state and we’re not often thought of as a high flooding state. But we are actually third in the country in terms of the most flooding. We’ve had flooding during the past decade in 66 of our 67 counties, so this is an issue that will continue to face us for a long time. As we look toward the federal level, we’re seeing this change over time where the federal government is phasing out the subsidization of National Flood Insurance Program, because due to that subsidization, the program went significantly into debt. So Congress has made the decision to do that to get it back to a more fiscally sound structure. And what that has done, for the first time in a long time, as the NFIP approaches what those of us insurance folks know as actuarially sound pricing, the private

market is actually able to come in and compete at a price level in a way they haven’t been able to do for some time. From our perspective as the insurance regulator, choice is great. Competition is great. It benefits consumers. We’re seeing options that didn’t exist. We’re seeing, in some cases, significant savings for consumers who are looking at the private market as an alternative to the National Flood Insurance Program. I would never say the private market or the NFIP is better. There are pros and cons and different things available, and affordability is always a big factor. Our role here is to make sure consumers know they have options and understand the differences between options so they can make informed decisions about flood coverage. I also think we don’t do the best job in this country about talking to consumers about the risk of flooding. It tends to be presented as a yes or no question. Either you are mapped into Special Flood Hazard Area, or you’re not. Either your mortgage lender requires you to have flood insurance, or they don’t. However, one in five dollars that the NFIP spends on claims goes to properties outside of Special Flood Hazard Areas, and 30% of federal disaster spending goes to areas outside of Special Flood Hazard Areas. So we do see significant amounts of flooding in those areas that are not mapped, where there is very low prevalence of flood coverage. And Hurricane Harvey in Texas is a good example of a bad circumstance, where less than 20% of impacted homes had any coverage whatsoever because the flooding largely happened outside of the Special Flood Hazard Areas. We need to look for ways to expand the footprint of who is protected from this risk more broadly than we have today, and I’m hopeful that the private market can help us do that. IA&B: What are your thoughts on the different insurance distribution models coming into play and producers’ role moving forward? Altman: People look at my background and know that I have a historical focus on health insurance. But in the world I live in today, health insurance is where we’re playing defense. But the P&C lines – and particularly around innovation and technology – we’re in this really exciting time where we have a lot of opportunity to play some offense. We can think strategically about how technology can be leveraged to improve the 360-degree experience for

In the coming years, it’s going to be very important that producers are leveraging and learning the new technologies as they become available. — Jessica Altman

consumers – how they shop for insurance, how they enroll in insurance, how they use their insurance. And as a regulator, ensuring that we have a regulatory framework that allows for and encourages innovation, while also ensuring that innovation doesn’t cross the lines we have always held above reproach as regulators, such as discrimination in rating and appropriate claims processes. The technology is really going to improve the consumer experience. Now producers, of course, play this critical role and in many ways, I believe, a role akin to what the Department does in terms of educating consumers, answering their critical questions about insurance, and assisting them through all of those processes. So in the coming years, it’s going to be very important that producers are also engaging in that process, leveraging and learning the new technologies as they become available, and assisting consumers. I think it’s all quite exciting where we can go. IA&B: We recall you saying at your confirmation hearing that, as a regulator, you choose some of your priorities, while others choose you. What are your priorities – those that you chose and those that chose you? Altman: I find the priorities that choose me come from unfortunate occurrences in the marketplace, like natural disasters, like cyber breach events, and things like that we have to be responsive to. Or quite frankly, things that are happening at the federal level that we at the state level have to be responsive to or perhaps even try to mitigate the negative impacts of. I put our work on flood and our work to protect our health care markets and trying to increase affordability and access in health

OCTOBER 2018

care as priorities that– while I would probably choose them anyway – have chosen me. They are things that all regulators across the country have to be dealing with right now, whether they want to or not. In terms of priorities that I choose, I’ll start talking about two areas. One is, I believe the best way that we can determine priorities is to listen to the consumers who contact us and understand the problems that they are facing. I meet every quarter with my consumer services staff who answers the phones and talks to consumers every day. I say, “Tell me what you’re hearing, tell me what the trends are, and perhaps most importantly, tell me if you’ve had any cases where you believe the consumer deserved to be helped but we don’t have the protections in our laws to have helped them.” One of our core initiatives, which I have carried over from Commissioner Miller, is working with the legislature to address the issue of surprise balance billing in health care. It occurs when a consumer receives health care services at an in-network facility or with an in-network provider, but somewhere along the way a

HOW IA&B ADVOCATES FOR YOU DID YOU know IA&B has a team dedicated to industry, legal, and legislative affairs? The IA&B Advocacy Department is available to offer advice and assistance and to represent you everywhere that independent agents’ voices need to be heard – at the state capitol, with insurance regulators, and beyond. To facilitate this, our team maintains a strong working relationship with the Insurance Department, meeting regularly to discuss the latest issues and offer independent agents’ perspectives. Look for timely updates in the IA&B Agent Headlines Week in Review e-newsletter.

Meet our team:

Shopping your E&O? IA&B offers coverage that agents need. Contact David today. For personalized service, CONTACT DAVID WERTZ 800-998-9644, ext. 506 DavidW@IABforME.com IABforME.com/agency_insurance

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 Lauren Brinjac Government Affairs Director LaurenB@IABforME.com 800-998-9644, ext. 607 GET INVOLVED! If you’re interested in the political process or personally know a legislator, contact Lauren to see how you can lend a hand.

service is provided out of network, and the consumer is on the hook for a large portion or even the entire cost of those bills. We’re making some good progress there. We have bipartisan bills introduced in both chambers. I’m really excited to see where that can go. One of the most common calls that we get is from consumers who have trouble when they change their auto insurance. They don’t notify PennDOT of their new coverage, but their previous insurer notifies PennDOT that they have left their insurance. So they end up with a problem with the status of their driver’s license – and potentially even a revocation or a requirement of a fine for not maintaining insurance coverage related to their driver’s license. We’ve spent a lot of time working with PennDOT trying to improve the communications, but also trying to get information out into the hands of producers especially – the people who are going to be on the ground helping consumers when they are navigating these issues to make sure we’re preventing that from happening in the first place.

Coming from, first and foremost, a career in public service but also becoming commissioner from being chief of staff, I am very keyed into the challenges of the Department from an operational and a resourcing perspective, as well as the broader policy perspective. I care a lot about making the investments in the Department now that ensure we continue to operate at level of regulation that we need to be operating at – not just during my tenure but also once I leave here.

IA&B works on your behalf to ensure that Pennsylvania legislators and regulators understand the issues affecting agents. But it is your financial support that helps our message to be heard loud and clear. Please consider contributing. More information at IABforME.com/AgentPAC

Acuity Loves You! PROU D TO PARTNER WITH THE BEST I N DEPEN DEN T AG ENTS IN THE BUSINESS!

2018 AgentPAC of Pennsylvania Contributors We sincerely thank everyone below for contributing at every level.* Your financial support of AgentPAC helps make sure your voice, collectively with other agents, is heard during the legislative process, and helps us as we advocate for ways to strengthen agents’ political interests on key insurance and business issues in Pennsylvania. Learn more at IABforME.com/AgentPAC. PRESIDENT’S CLUB ($1,000+)

GOVERNOR’S CLUB ($500 - $999)

SENATE LEVEL ($250 - $499)

Tod Aronson E.R. Munro and Company

Joanne Bankos Collens Wagner Agency

William J Griffin Jr Griffin & Griffin Financial Services

Norman Basso E K McConkey & Company

R Kent Anthony Anthony Insurance Inc Randall Close Wise Insurance Agency

Douglas Loesel Loesel-Schaaf Ins Agency Inc

David Imschweiler DJI Insurance Agency

Donald Enders Enders Insurance Assocs

Michael McGroarty McGroarty & Bradburn Insurance Inc

David King Horst Insurance

James Enders Enders Insurance Assocs

Shannon Lipniskis Hutton-Blews Insurance LLC

Jason Ernest Insurance Agents & Brokers

Kim Troast-Singley Troast-Singley Insurance Agency LLC

James Fitzsimmons Fitzsimmons Ins Agency Inc

Dean Wimmer The Weimer Group

Jocelyn Howard C W Howard Agency Inc

J Marshall Wolff Kressler Wolff & Miller Inc

Elizabeth Martin Martin Ins Agency Austin Morris Austin R Morris & Associates

OCTOBER 2018

HOUSE LEVEL ($100 - $249) R Jeffrey Coup Coup Agency

Duane Epting Strausser Insurance Agency

Owen Myers Wenger and Myers Ins

Eugene Bartoli Assured Partners of Northeastern Pennsylvania

Robin Fetterolf-Dunckley Steely & Smith LLC

Claire Pantaloni Insurance Agents & Brokers

Angela Franchi The Lunar Agency Inc

April Ressler Teeter Insurance Agency Inc

Donald Hamm Donald Hamm & Sons Insurance LLC

Tara Silfies Hampson-Mowrer Agency LLC

Randall Hart Annie W Metzler Insurance Agency Inc

Mark Sitler The Hartman Agency Inc

Glenn Hatfield Hatfield Group LLC

William Slovik Slovik Insurance Agency

George Heigel Swift-Hopkins Inc

Robert Smyrl Robert L Smyrl Inc

Matthew Hill Logan Branch Insurance Inc

Harry Triolo TLC

Robert Hogue Walker & Associates

Cathleen Wink DSC Inc

John Hollister Sheeley Insurance Agency

Tim Wonder Insurance Agents & Brokers

Jay Lemelin Berlanco Insurance Agency Inc

J Greg Zinn Zinn Insurance, LLC

Erik Bergdale Bergdale Insurance Agency Inc Jeffrey Brown Keller Brown Insurance Srvcs Gary Dix Boardman & Hamilton Co Henry Dunn Henry Dunn Inc

Richard Rankin Murray Insurance Assoc Inc David Ross American Insuring Group Ltd William Simpson Simpson & McCrady LLC Robert Walbeck R E Walbeck Agency Inc Chadwin Yoder Franconia Ins & Financial Svcs Kyle Zehr Franconia Ins & Financial Svcs Douglas Williams Williams Insurance Agency

Cynthia Matter Allen B Chubb Agency Inc Karyn Miller Hinkle Insurance Agency Inc Roger Myers Roger W Myers Insurance Agency LLC

UP TO $99 Ryan Cunningham Kellar Insurance Agency Inc

* Contributors between Jan. 1 and Aug. 15, 2018.

TECHNOLOGY UPDATE

OCTOBER 2018

HOW MUCH DO I NEED TO SPEND TO KEEP MY TECHNOLOGY HUMMING? PART II By Greg DiDio

On the following pages, Greg DiDio follows up on his September Primary Agent article – Are You Strategically Investing in Your Technology? – with a look at how much you need to spend to maximize the value you get from your technology.

TECHNOLOGY UPDATE

n the last issue of Primary Agent, I provided advice on how healthy, operationally mature agencies should be investing their IT spend to achieve high performance. In this issue, I will review how much you should expect to spend to maximize the value you get from your technology. I will review costs associated with six major categories that require IT investment: 1) agency management systems, 2) sales automation, 3) office productivity software, 4) user/desktop experience, 5) proactive management and support, and 6) security and compliance.

AGENCY MANAGEMENT SYSTEMS Market-leading agency management systems, such as Applied Systems’ EPIC or Vertafore’s AMS360, will cost around $150 per month per user to obtain the comprehensive functionality of a modern agency. This includes features such as policy download, invoicing, claims tracking, sales/renewal management, and financial reporting.

Agencies who try to cut corners to reduce costs are often disappointed with the results. We strongly warn agencies not to cut corners...

Deploying these applications or migrating to a new system is a significant undertaking requiring a large investment in

OCTOBER 2018

— Greg DiDio

both labor and capital. For a successful agency management deployment, agencies typically spend about $2,000 per employee in project implementation costs. Agencies who try to cut corners to reduce costs are often disappointed with the results. We strongly warn agencies not to cut corners, especially when it comes to data-conversion preparation and employee training.

SALES AUTOMATION Sales automation is generally included in the full-featured, industry-leading products from Applied Systems and Vertafore. If you have one of these products, your out-of-pocket costs are covered above, but you still need to take the time to build workflows and train staff to deploy best practices. If you choose to go a different route and deploy a niche market product, you will likely see much lower rates for agency management. This might be the right solution for you depending on your needs and your willingness to complete the solution through other processes or third-party applications. Depending on the agency management system you select, some of these

savings need to be earmarked for a third-party sales management tool such as Salesforce.com, along with consulting to successfully integrate the application and processes with your agency management solution.

OFFICE PRODUCTIVITY SOFTWARE Generally, office productivity software is provided via Microsoft Office 365 subscription service. A typical agency requires business email and Office applications including Word and Excel. The Office 365 service bundles that include these components start at $12.50 per user per month. If you need data encryption and archiving, your subscription costs will rise to about $20 per user per month. Most agencies will require a technology consultant to effectively perform the initial deployment of Office 365. Also, since Office 365 data (email, documents, etc.) are not backed up by default, make sure you add a backup service so that your data is fully protected. This will add $2-$4 per user per month. Finally, these Office 365 bundles include applications such as SharePoint, OneDrive, Skype, and Teams which

TECHNOLOGY UPDATE

WHAT ABOUT YOUR WEBSITE? YOUR AGENCY’S website is an additional – and integral – component of your agency’s technology investment. First impressions matter, today more than ever, and they’re happening online. Forge3’s ActiveAgency website platform is designed to help your agency look great, reinforce credibility, and build relationships. Plus, it’s easy to use, cost effective, and streamlined – integrating seamlessly with Rocket Referrals and any agency management system. In addition to ActiveAgency’s built-in, bestin-class sales and servicing tools like Clickable Coverage, Hello Producer, and live-chat integration, IA&B members have full access to several exclusive features. Pricing is just $250/month, and there are no upfront setup fees or long-term contracts for IA&B members. Learn how you can benefit by visiting https:// forge3.com/iab/ or by contacting Zack Yurch.

Zack Yurch Director of New Business Forge3, Ltd. 484-275-0983 Zack.yurch@forge3.com

allow employees to share files, conduct videoconferences, and collaborate. Speak to your technology partner about how to get the most from these tools.

USER/DESKTOP EXPERIENCE This will vary depending on the specific user requirements but for simplicity, we will consider two examples: a typical office-based user and a typical mobile user. Minimum requirements for a typical office-based user includes a business class PC with an Intel Core i5 class processor, 16 GB RAM, 250 GB Solid State hard drive, running the Windows 10 operating system. This system currently costs about $1,000 plus approximately two hours of set up time for your technology provider. For high-quality monitors that reduce eyestrain, provide ergonomic benefits, and improve user productivity, expect to pay about $400 for a pair of goodquality, 22-inch widescreen monitors suitable for business use. The tool of choice for mobile employees including producers is the two-in-one laptop. These devices are convertible from standard Windows 10 laptops to touchscreen tablets. Depending on features, these devices can vary greatly in price. A typical two-in-one device with a 13- to 15-inch screen provided by a major vendor (Dell, HP, Lenovo, Microsoft) will cost between $1,300 and $1,600. Our agency clients typically add a docking station, so they can seamlessly transition to their office environment. This usually adds about $300.

PROACTIVE MANAGEMENT AND SUPPORT A competent technology provider is extremely valuable in advising you on your technology investment and keeping your agency running effectively. Rates for such service can vary greatly depending on how comprehensive the services are. Proactive, high-quality services cost about $100 per user per month (excluding backup/disaster recovery services). At this rate, your provider should be conversant in agency operations and should provide strategic technology reviews. Also included should be help desk support and basic security products such as spam filtering, endpoint protection, computer updates, firewalls, and gateway security. Finally, your provider should interact on your behalf with your other technology vendors such as phone system supplier, internet service provider, and agency management system vendor. Backup and disaster recovery costs can vary depending on agency requirements from simple “file-based” backup solutions to very expensive high availability alternatives. An in-between solution that will keep your data safe and secure with an “image-based” backup of your systems should cost between $300 and $600 per month depending on the amount of data. Continued on page 26

OCTOBER 2018

PREPARING YOUR CUSTOMERS FOR TOMORROW’S THREATS TODAY. Cybersecurity breaches are unfortunately common — and mishandling them can have lasting consequences on a business’ future success. If your policyholders become targets, Cyber Liability and Data Breach Response coverage helps them keep their customers’ trust. Trust in Tomorrow.® Talk to us today. * Products available in Pennsylvania only

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

TECHNOLOGY UPDATE Continued from page 24

SECURITY AND COMPLIANCE This area has evolved a great deal in the last few years and will continue to do so as the threats, compliance requirements, and tools all continue to change. Today, enterprise tools are being repurposed for smaller businesses, so new tools and methods are becoming affordable all the time. Some of the services you should expect to procure include: annual security assessments, security awareness training for your employees, and security event log management. A basic managed security service will add approximately $400 per month to your proactive managed support. Adding mobile device security, data encryption, advanced endpoint protection, dark web searches, and a more sophisticated security incident and event managements system can add a lot more.

CONCLUSION I hope this overview gives you a sense of the costs associated with key aspects of your agency’s technology. Strategically planning the best use of your technology dollars will go a long way in improving your agency’s productivity and making you more profitable.

Greg DiDio is CEO of Kite Technology Group, a Maryland-based IT services and consulting company serving the needs of over 100 insurance agencies across the country. He has 25 years of leadership experience, with the last 18 focused on information technology management. Greg has a passion for developing leaders and creating corporate cultures that facilitate high performance and employee growth.

committed to mutual success. Harford Mutual Insurance partners with independent agents in Pennsylvania. We insure restaurants, contractors, mercantile, and other commercial entities. We’re committed to protecting your client’s business and building yours.

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OCTOBER 2018

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PICS & POSTS

Education

CLASSIFIED

OCTOBER 2018

ADVERTISEMENTS SOUTHEAST PA PRODUCERS & AGENCIES

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Ocean City, MD Lancaster, PA Pittsburgh, PA Frederick, MD Newtown Square, PA Macungie, PA Breinigsville, PA Blairsville, PA Mechanicsburg, PA Pittsburgh, PA Ellicott City, MD Newark, DE Wilkes-Barre, PA York, PA Pittsburgh, PA Reading, PA Wilmington, DE Salisbury, MD Phoenixville, PA Newtown Square, PA Baltimore, MD Erie, PA Wilkes-Barre, PA Erie, PA Ft. Washington, PA

James K. Ruble Graduate Seminar CISR Commercial Casualty I Life & Health Licensing Study Course CISR Commercial Casualty I E&O: Meeting the Challenge of Change W.T. Hold: The Good Life (P&C Coverages) P&C Licensing Study Course CISR Personal Lines Miscellaneous W.T. Hold: The Good Life (P&C Coverages) CISR Personal Residential W.T. Hold: The Good Life (P&C Coverages) I Screwed Up and My Insured is Toast CISR Life & Health CISR Personal Residential James K. Ruble Graduate Seminar CISR Life & Health CISR Personal Residential W.T. Hold: The Good Life (P&C Coverages) CISR Commercial Casualty II P&C Licensing Study Course Construction Issues and Court Cases CIC Agency Management Institute W.T. Hold: Contracts & Leases CISR Personal Auto W.T. Hold: The Good Life (P&C Coverages)

WEBINARS DATE TOPIC

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1-4 PM 9 AM-Noon 1-4 PM 1-4 PM 1-4 PM 1-4 PM 9 AM-Noon 1-4 PM 9 AM-4 PM (w/1 hour lunch) 1-4 PM 1-4 PM 2-5 PM 2-5 PM

Insuring the Building Project Long-Term Care Funding with Life Insurance Health & Disability Insurance: Just the Facts Mastering Medicare & Social Security Cyber Liability: The 21st Century Peril Farm Property Considerations Scary CGL Exclusions Commercial Property Claims That Cause Problems E&O Road Map: Part One & Two Home Business vs. Home Insurance New Technologies, New Risks On Ethics: Data, Dilemmas and Knuckleheads The Homeowner and Auto Marketplace

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

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 ACUITY.............................................................17 AmTrust of North America........................... IFC Applied Underwriters.................................OBC Berkshire Hathaway Guard Ins Cos...............23 Grinnell Mutual Reinsurance Co.................. 25 Harford Mutual Insurance Co....................... 26 IA&B Service Group........................................15 IA&B AgentPAC............................................. 16 Millers Mutual Group...................................IBC Preferred Property Program.......................IBC

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