APRIL 2021
KATE DAWSON A NEW AGENCY OWNER LOOKS AHEAD
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CONTENTS
APRIL
2021
FEATURED 10
Q&A WITH KATE DAWSON IA&B Member Kate Dawson shares what prompted her to open her own agency – and how she overcame the challenges of starting a new business in 2020.
> > > > > 15 19 JOIN US ON SOCIAL MEDIA: Facebook.com/IABforME LinkedIn.com/company/IA_and_B Twitter.com/IA_and_B YouTube.com 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 # 2021-04, is published monthly by IA&B Service Group Inc., a subsidiary of IA&B. Copyright 2021. 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.
CYBERSECURITY: WHAT YOU DON’T KNOW CAN HURT YOU IA&B Technology Advisor Paul Kapadia shares why independent agencies are being targeted by hackers and how a cyber security vulnerability assessment offers piece of mind. DON’T BE SCARED OF E&O Learn how to respect, rather than be frightened by, E&O with six ways your agency can truly minimize its claims potential.
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CHAIR OF THE BOARD’S MESSAGE DON'S DISCUSSION COVERAGE CORNER PRESIDENT'S MESSAGE NEWS & NOTES PICS & POSTS WELCOME NEW MEMBERS UPCOMING LIVE WEBINARS 1
CHAIR OF THE BOARD’S MESSAGE
INSIGHT INTO MEMBERSHIP Welcome to April! While this month traditionally marks a turning point in the weather and activities (golf, anyone?), tax filings and the associated paid (or not), it also marks annual IA&B membership renewal for most agencies. I’d like to take a moment here to touch on association membership – something that has evolved over the years. What once felt obligatory (and often socially driven) is now a business decision: What is the value of belonging? As a fellow agency owner, I respect that thought process. For many reasons, this isn’t the same industry as it was a generation ago, and small-business owners must be prudent. On behalf of the IA&B Board of Directors – which is a group of our peers donating their time and talents – I can assure you that your membership is as valuable as ever. IA&B continues to deliver the legal and compliance insights, political and regulatory advocacy, competitive professional liability insurance, and awardwinning education you’ve come to expect. At the same time, the organization is evolving to meet the needs of today’s independent agencies, through cybersecurity vulnerability assessments (see page 15), Independent Market Solutions market access, and discounted Work At Home Vintage Experts contract staffing. For those of you who already renewed, thank you. I encourage others to follow suit and re-up for the 2021-2022 membership year. The minimal expense of your dues is dwarfed by the value added by these services! I emphasize, again, that these resources can cut out expenses you may incur by hiring or contracting with compliance and/or legal personnel or services. IA&B is your partner in business if you engage them. That would be prudent and smart! Respectfully,
INSURANCE AGENTS & BROKERS 5050 Ritter Road | Mechanicsburg, PA 17055 191 Main Street | Annapolis, MD 21401 800-998-9644 | IABforME.com
IA&B BOARD OF DIRECTORS OFFICERS Craig S. Mader, Chair Crofton, MD Richard M. Rankin, CIC, Vice Chair Lancaster, PA
MEMBERS Gregory H. Bennett
Bel Air, MD
Sarah M. Brown, CIC, CRM, AFIS Shrewsbury, PA E. Stephen Burnett, CIC, ARM Wilmington, DE N. Lee Dotson, CIC, AAI
Wilmington, DE
Andrew Enders, Esq.
Harrisburg, PA
Len Gieseler, LUTCF
Pottstown, PA
G. Greg Gunn, CIC
Lemoyne, PA
Bryan C. Hanes, JD
Hagerstown, MD
Jason R. Hess
Coraopolis, PA
Lisa A. Leach Goth, CIC
New Bethlehem, PA
Christopher J. Miller, CIC
Jonestown, PA
Michael A. Papa, CIC, MBA Hunt Valley, MD William H. Purdy
Sunbury, PA
Jason Rodriguez
Wilmington, DE
D. Bradley Rosenkilde Jr.
Hunt Valley, MD
Tara S. Silfies, CPCU
Bethlehem, PA
Robert L. Smyrl Jr., CIC
Hatfield, PA
J. Marshall Wolff, CIC, CPCU Easton, PA
NATIONAL DIRECTORS Craig S. Mader Chair of the Board
Michael P. Ertel Sr. (PIA) Columbia, MD G. Greg Gunn, CIC (IIABA) Lemoyne, PA Diane Hornung Hanby (IIABA) Wilmington, DE
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APRIL 2021
DON'S DISCUSSION
DON'S DISCUSSION IA&B Legal & Corporate Affairs Director Don Bankus
Are you a member with a question? Contact Don to find the answer at 800-998-9644, ext. 603 or DonB@IABforME.com.
QUESTION:
Is restrictive covenant language (such as non-compete and non-piracy provisions) enforceable in employment agreements?
ANSWER: As you’re aware, restrictive covenants in an employment agreement are contractual provisions with the purpose of protecting the agency’s primary asset – its book of business. Restrictive covenants most commonly found in an employment agreement are: 1. a “covenant not to compete,” which prohibits an ex-employee from competing with a former employer for a certain period of time, and usually within a defined geographical area, after the former employee has left the business (competing either by way of joining forces with a competitor, or by way of establishing his or her own agency), and 2. a “non-piracy” provision, which generally prohibits an ex-employee from soliciting or accepting business from customers and prospects of the former employer for a specified period of time. COURTS’ PERSPECTIVES In most jurisdictions, covenants not to compete remain legal and enforceable, so long as the specific restrictions are not egregious or deemed to be against public
policy. Examples of egregious restrictions would be attempting to contractually prohibit a former employee from working anywhere within 200 miles of your agency for five years. In Pennsylvania, Maryland, and Delaware, in order to be enforceable, a covenant not to compete should be limited in time and geographic scope. Courts generally will not disturb a covenant not to compete if it is limited to an enforcement period of between six months and one year and a geographic radius of 20 miles. RECENT LEGISLATIVE ACTION Legislatures in Pennsylvania and Delaware have not enacted legislation addressing “covenants not to compete.” However, Maryland enacted Senate Bill 328, effective Oct. 1, 2019, which is very narrow in scope and would primarily be applicable to employment agreements “concerning an employee who earns equal to or less than … $15.00 per hour; or … $31,200 annually.” With regard to such classification of employees, the legislation further provides that: A noncompete or conflict of interest provision in an employment contract or a similar document or agreement
that restricts the ability of an employee to enter into employment with a new employer or to become self-employed in the same or similar business or trade shall be null and void as being against the public policy of the state. Notably, Maryland’s statute does not infringe upon or limit an employer’s right to use “non-piracy” language in an employment agreement (no matter the income or salary level) and is not retroactive. Other states which have enacted legislation limiting the scope of covenants not to compete include Maine, New Hampshire, Illinois, Oregon, Virginia, and Washington, as well as most recently the District of Columbia. In large part, the recent increase in legislation has been spurred by the use of covenants not to compete with regard to low-wage employees (e.g. fast food and retail industries), wherein departing employees are contractually prohibited from working with another employer in the same geographical area. Learn more about employment agreements by accessing IA&B’s Producer Agreement Toolkit at IABforME.com.
This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.
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NEW RULES TAKE FLIGHT, MORE DRONES IN SIGHT By Kevin C. Amrhein, CIC A year ago, I wrote a column for Primary Agent discussing the insurance concerns in an ISO CGL regarding a commercial insured’s use of drones. At the time of this writing, the relevance of that article (and its referenced ISO form numbers) is unchanged. That said, some regulatory changes announced recently by the feds are noteworthy. In short, with the loosening of a few long-standing rules, it’s possible – dare I say, likely – that you as an agent will notice an expansion of 4
drone use across different industries within your commercial book.
WHAT’S UP? (Besides the drone, of course … ZING! *adjusts necktie*) In late December 2020, the Federal Aviation Administration (FAA) released an executive summary describing significant changes regarding the commercial use of small drones. Much of the attention regarding the FAA’s announcement regards compliance with a APRIL 2021
controversial ID/monitoring system that will be phased in over the next several months. However, a few other changes described below took effect in March 2021. Agents should expect the results of these changes to be swift and, dare I say, risky.
FLYING OVER MOVING VEHICLES OR PEOPLE For years, operators who did not receive specific exemption from the FAA were forbidden from piloting drones over moving vehicles or
COVERAGE CORNER groups of people. The new rule, aptly titled Operation of Unmanned Aircraft Systems Over People (Final Rule), does the following: 1) establishes four categories of small unmanned aircraft and removes the exemption requirement depending on which category applies to the operator’s drone, and 2) applies those same categories to a drone with which its operator wants to fly over moving vehicles.
NIGHT FLIGHTS, NIGHT LIGHTS For years, operators who did not receive specific exemption from the FAA were forbidden from piloting drones at night. Under the same rule discussed above, operators wanting to conduct night operations are now able to do so contingent on the completion of updated testing and/ or online training. Further, before taking flight, the drone must be equipped with operational anticollision lights that are visible for three statute miles and have a flash rate sufficient to avoid a collision. It’s important to note that while these changes clearly reflect the FAA’s evolving efforts to ease restrictions, commercial operators must still be appropriately certified and in compliance with Part 107. Further, the FAA’s Visual Line of Sight Rule – a rule oft-criticized by businesses hoping to broaden their use of drones for services such as product delivery – remains in effect.
THE NEW LOOK OF YOUR BOOK When I discuss drone technology in my classes, I enjoy hearing from agents how their insureds have sought-out the use of drones to improve operations. To some, strict regulations have historically hindered high hopes. However
(have I mentioned that alliteration is my jam), I’m confident these rule changes will create new opportunities for insureds and their agents. For example, it’s easy to imagine how businesses involved in photography, surveillance, or media will benefit from the ability to fly over groups. Engineering firms could see the ability of piloting over traffic as a boon. Night flights could boost efficiency for industries like construction and utilities. Opportunities abound! Too often, agents focus on the negative. We can’t help it – it’s the nature of our business. It’s not brilliant, but I’ll say it anyway: As more insureds take to the skies, their risks will evolve. Here are a few suggestions: ▲ Review the article from the April 2020 edition of Primary Agent titled “Commercial Drone Liability: Flight or Fight?” (Visit Issuu.com/ primary_agent for an archive.) The ISO form numbers and discussion on the CGL should serve as a primer before you review exposure changes and coverage with insureds. ▲ Review any communications your agency and carriers provide to your insureds regarding commercial drone use, and ensure that it adequately addresses exposures based on current rules. ▲ Reach out to carrier contacts to see if new rules are expected to impact underwriting or renewal restrictions and if so, what their suggested solutions are. That’s all for now. Until the next round…cheers!
Kevin C Amrhein, CIC, is IA&B‘s education consultant. He works with our CISR and CIC programs, as well as our special topic seminars and live webinars. Catch him at one of our upcoming professional training offerings: IABforME.com
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5
PRESIDENT'S MESSAGE
ONWARD & UPWARD A MESSAGE FROM JASON ERNEST It’s nice to see the spring sun and the warming weather. It was a difficult winter in many ways, and this spring seems to have more rejuvenation to it. At IA&B, we begin a new fiscal year and a new set of strategic initiatives. One of those is technology. It is a persistent topic raised by our members, and one we are choosing to deliver tailored assistance on. First, we now have a dedicated Technology Advisor at IA&B – Paul Kapadia. You can learn more about Paul and read his timely article in this issue. We are good at a lot of things at IA&B – but we also need to know our limitations. Paul brings a wealth of knowledge and experience when it comes to technology, and he will be offering this to members. This includes our Cyber Security Vulnerability Assessment tool (CSVA). Each week, we are reading more and more instances of insurance agencies being targets of cyberattacks. They are becoming more sophisticated, more frequent, and more damaging. IA&B’s CSVA tool helps you identify deficiencies that could allow for these attacks to happen. After completing a short questionnaire about your agency, the assessment is completed behind the scenes, with a comprehensive report of concerns, and ways to address those concerns, delivered to you. An ounce of prevention is worth a pound of cure, and that applies here. Paul assisted in developing this resource and can work with you in getting your agency assessed.
policy for the agency, please reach out to our sales team for an analysis of needs and a quote. Finally, as you may recall, IA&B has been undergoing a significant technology build of our own. Over the last two years, with the help of Paul, we have built a custom software system that replaces our association management system and our agency management system. This has been a monumental task, but we are going to come out of it with a software system that works for us. For the member, it will result in a much better user experience when interacting with IA&B. However, beyond just that, Paul and I have noticed how the efficiencies we are creating for IA&B can be translated to the member. We are in the pilot stages of developing dashboards for members, like what we will be using at IA&B. These dashboards can provide members with a different way to look at the agency – with a focus on revenue. Stay tuned. Enjoy the spring weather, and make it a point to look at how technology can help with your 2021 goals. IA&B is here to help, as always.
While on the topic of cyber, I also want to mention one of the new partner carriers on our Independent Market Solution (IMS) platform. Cowbell Cyber is a very unique, cutting-edge cyber insurance carrier. Continuous analysis of data (including inside-out proprietary data) generates factors for risk exposures, enabling accurate coverage selection and optimized premiums. You have the ability to offer your clients this protection by writing through IMS. And, IA&B’s own agency now offers Cowbell Cyber for our members. We feel that conducting the CSVA assessment, combined with a comprehensive cyber insurance policy, is the best course in protecting your agency. If you currently don’t have a cyber insurance 6
APRIL 2021
Jason Ernest, Esq. IA&B President & CEO
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NEWS & NOTES you with the information prior to the course.” Carrie Ann’s favorite was the CIC Personal Lines Institute, but she considered the Agency Management Institute a close second. “Ultimately, I just really enjoyed the subjects covered,” she said.
IA&B President & CEO Jason Ernest, Esq. presented Carrie Ann Bush with her IA&B scholarship in March 2020
CONGRATULATIONS, CARRIE ANN We extend our congratulations to Carrie Ann Bush, CIC, personal lines underwriter with W.N. Tuscano Agency Inc., in Greensburg, PA. Carrie Ann received IA&B’s CIC Designation Scholarship in early 2020, and within six months, she took five CIC Institutes and passed the exams to complete her designation. Carrie Ann attended IA&B’s Futures Conference in October 2019, where she learned about the scholarship program and first began contemplating the CIC designation. She didn’t waste any time. That fall she applied for the IA&B CIC Designation Scholarship and was selected in January 2020. Soon after, COVID-19 forced the cancellation of all in-person seminars. By summer, IA&B launched an alternative – live CIC webinars – and Carrie Ann took advantage of the opportunity, taking a new institute each month. “I thought the [online] format was very well put together,” she said. “There were minimal technical issues, and I liked that they provided 8
For those considering the CIC designation, Carrie Ann admits it can be stressful studying and waiting for the test results but adds, “It is very much worth it!”
2021 IA&B YOUNG AGENT AWARD IA&B will recognize three rising stars in the independent insurance community in Pennsylvania, Maryland, and Delaware. Recipients receive: • Featured on the October 2021 IA&B Primary Agent magazine cover • Featured in a video on the IA&B website and social media • Recognized at 2021 IA&B Futures Program events • And more! Award criteria includes: • Employed by an IA&B Member Agency for one year or more • 39 years old or younger (throughout 2021) • Made community contributions through volunteering or service • Example of becoming an up-andcoming leader in the field • Participated in IA&B events, education, or other happenings The application is coming soon! Watch IA&B communications in the weeks ahead for more information. APRIL 2021
LICENSING PREP SCHOLARSHIPS Are you or someone you know interested in becoming a licensed P&C insurance agent? IA&B is accepting scholarship applications for our self-study guides for the Pennsylvania, Maryland, and Delaware licensing exams. The scholarship also may be used toward our licensing study live webinar for the Pennsylvania licensing exam. Questions? Contact IA&B’s Melissa Telesha at 800-998-9644, ext. 104 or MelissaT@IABforME.com. IABforME.com
NEW YORK CYBERSECURITY FILING DEADLINE If you conduct business in New York, act quickly! You must refile a fresh certificate of compliance annually with the New York Department of Financial Services. Agencies and individuals currently entitled to the limited exemption and those who are subject to the full requirements have until April 15, 2021 to comply. dfs.ny.gov/industry_guidance/ cyber_filings/requirements
PA WC COVERAGE EXTENDED BEYOND ACTIVE FIREFIGHTERS If you write workers’ compensation in Pennsylvania for a Firefighter – Volunteer Fire Company (code 994), take note of the revised definition of “employe” which could impact your customers. The Pennsylvania Compensation Rating Bureau (PCRB) Circular No. 1759 details these changes which expand the definition of “employe” to include certain persons associated with volunteer fire departments, volunteer ambulance corps, and select other organizations engaged in rescue, emergency response, and similar activities. These changes are the result of Senate Bill 94, signed into law as Act 108 of 2020 by Gov. Tom Wolf in November. As part of the new law, the PCRB was instructed to review and evaluate the impact of these changes. In addition to the initial modification of classification code 994, the PCRB is undertaking a “file-by-file review” which may lead to changes in classification scope and associated loss costs to be determined by June 2021.
®
PCRB.com
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Q&A with
KATE DAWSON Kate Dawson is president of Ferri Dawson Insurance Group, an independent agency based in Murrysville, PA. She is also the recipient of IA&B’s 2021 CISR Designation Scholarship. Q. You’ve worked in the industry for 10 years. Tell us how you got your start and what led you to begin a scratch agency. A. Out of college, I took a job as a Relocation Housing Specialist, where I worked with customers and adjusters from various insurance companies. Working with their Loss of Use, I found clients housing and furniture, and guided them through their temporary housing process until their home was habitable. I grew increasingly concerned with how many clients were significantly underinsured, with not enough Loss of Use coverage to comfortably provide for them. I realized that I would rather be the one preparing them with appropriate coverage than the person picking up the pieces afterwards when it became clear they would exceed their limits. After nearly a decade in the industry, with experience on the claims side, followed by years with both captive and independent agencies, my inherited entrepreneurial streak pushed me to go into business for myself. My father’s side of the family is full of business owners, and my maternal grandfather was an insurance agent, who spent 17 years as a Prudential Insurance agency owner, followed by another 18 with Nationwide. I have his wooden, painted office sign displayed in my office and his achievement pins from the ‘50s in my desk. My family’s entrepreneurial drive, mixed with my Pap Pap’s love for insurance, is in my blood. In hindsight, opening my own agency seemed like a natural step. I was lucky enough to have an ideal example of entrepreneurship in my father. Spending my childhood 10
working for my dad at his restaurant, I learned business management and ownership. But I also watched how he operates, understanding business-owner logic. My dad teaches without realizing it. I had picked up far more than I realized as I embarked on beginning a scratch agency on my own. I chose to name my agency Ferri Dawson Insurance Group recognizing my maiden name, as a tribute to all that I have learned from him. I had a vision of reinstating the old-fashioned relationship between a client and insurance agent. So much was lost with the departure from the tradition of a consultant being welcomed into your home to assess your situation and guide you with recommendations, so I’m taking the old-school approach of sitting with clients at their kitchen table, getting to know them. From my experience, the relationship is what the client values. Particularly with first time homebuyers who are seeking guidance and education. Q. You opened your agency in November 2019 – the calm before the storm! What lessons can you take away from navigating your new business through a pandemic and economic crisis? A. While 2020 brought much uncertainty and a seemingly endless string of setbacks, it taught me confidence. It forced me to be open to new ways of interacting with customers and proved that flexibility was paramount. In 2019 I attended a session at the IA&B Futures Conference on video, and last year I forced myself to use this medium. In times when I could not meet with customers face-to-face, I could interact and show personal touch through educational and promotional videos. While we couldn’t sit across the desk from each other, I provided online consultations via Zoom.
APRIL 2021
ON THE COVER Creativity was key as I had barely put my systems in place before the world was turned upside down. My husband frequently reminds me that if my agency could succeed in 2020 as year one, I can get through anything.
to be more than minimally complaint. Now, as an agency owner, the drive to be a better agent is even stronger. Both personally and professionally, self-development is one of my strongest interests.
Q. Your agency focuses on new home buyers. What prompted that niche?
Last year I obtained three specialist designations. The CISR Designation was the next logical step for me in my career. It’s tangible proof of my commitment to this industry and dedication to obtaining the further knowledge to advocate more effectively for my clients.
A. I love the educational side of insurance. First-time home buyers generally need more guidance and direction, which is where I feel I have always been strongest. I’m building relationships, explaining coverage line by line. Using examples from my years as an agent and on the claims side, I’m showing them the value of peace of mind. What I do is meaningful: It’s making sure families and financials are protected. I also saw a need in the market for an insurance agent who is willing to take the time to explain coverage, lay it out in layman’s terms, defining coverage without insurance jargon. Q. Ferri Dawson has an engaging, consistent online presence, from a blog to social media (including Instagram!). In what ways has it benefited your business? A. Social media inadvertently became my platform to introduce my business to the community. Unable to host an open house to launch my agency and with most community events cancelled last year, I used social media to familiarize the community with my operation. My degree was in Communication, focusing on Marketing and PR, which has served me well as I strive to use social media for education and as a resource for the public. For a period of time, it was my only opportunity to interact with customers, which lead me to be candid and open with my content. My posts evolved to incorporate more of a personal flare, including content about my own interests, such as environmental topics and recycling with #EcoWednesday. My professionalism and expertise were still evident, but the less business-specific the content was, the more approachable I became. With separate strategies for each platform, I found creating content for my blog and website has improved my SEO, garnering inquiries from clients throughout the state. Q. Congratulations on receiving IA&B’s 2021 CISR Designation Scholarship! Why did you decide to pursue the designation? A. I love this industry, and I immerse myself in it. I realized years ago that 24 CE credits is never enough, and I want
Q. Starting a new business can be a grind. What have been your most valuable resources? And how do you stay motivated? A. Certainly, my membership with IA&B has been intrinsic, particularly as the sole employee at my agency. Having trusted professionals to bounce ideas off of and consult for guidance has been a lifeline. Beyond that, the support and encouragement from the staff at IA&B has been so meaningful, as I navigated the challenging year solo. Additionally, I’m president of the local chapter of Business Network International. Our community of business owners support and motivate each other, while continuing to pass business and grow our chapter. I also practice mindfulness, consistent yoga, and listen to a rotating list of podcasts. My one word theme of this year is “forward,” as I leave 2020 behind me, not dwelling on what could have gone differently, but looking to the future and what I can make happen next. Q. You’re an active member of the community. Tell us about Westmoreland County. A. Demographically speaking, Westmoreland County is due east of Pittsburgh. I can see the county line from my office, which is 20 minutes outside the city. What I have always loved about the area is that it’s large enough to have a broad option of activities, from theater to concert venues, museums and history, yet still small enough to not feel overwhelming. It still feels like a big, small town. Born and raised here, I’m involved in the community. From volunteering at the local museum and with various non-profits, to continuing to help part time with my father’s business, I have established a lifetime of organic connections. I’m fortunate to have so much naturally occurring support as I ventured off on my own. 11
IA&B PARTNERS PROGRAM
OUR FEATURED PLATINUM PARTNER Insurance Agents & Brokers proudly recognizes Erie Insurance as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.
It’s the rare individual who is motivated by a genuine desire to help others. And it’s the rare company that puts that principle into practice. At Erie Insurance, we’ve been helping people make things right since 1925, working side-by-side with the best independent agents in the business. Our agents and employees are energized by a clear sense of purpose, performing to the best of their ability, because they know the work they do benefits millions of customers’ families and businesses. It’s part of being Above all in SERVICE® and it’s why we’re so committed to the independent ERIE agents who live and work in the communities they serve. On the strength of these relationships, Erie Insurance has risen to become one of the nation’s most respected property/casualty and life insurers.
CHIEF EXECUTIVE OFFICER Timothy G. NeCastro, President and CEO CORPORATE HEADQUARTERS Erie, PA A.M. BEST COMPANY A+ Superior WEBSITE erieinsurance.com
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Insurance Agents and Brokers proudly recognizes Erie Insurance as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization. Today, we’re a FORTUNE 500® company operating in 12 states and the District of Columbia. ERIE has more than 5.9 million policies in force. We’re the 16th largest property/casualty insurer in the United States, based on total lines net premiums written, and the 11th largest homeowners multiple peril insurer and 12th largest private passenger auto insurer based on direct premiums written. Erie Insurance Group is a Barron’s 500 company and has been recognized by Confirmit with an Achievement in Customer Excellence Award in the Voice of the Customer category for claims service. APRIL 2021
/Partners2020
Thank You
Erie Insurance’s founding principle is: “To provide our policyholders with as near perfect protection, as near perfect service as is humanly possible, and to do so at the lowest possible cost.” That same principle guides us today.
Thanks to these partners for supporting the independent agent network.
We still adhere to disciplined underwriting, fair pricing and a prudent investment philosophy. We still practice the Golden Rule–treating others as we want to be treated.
PLATINUM PARTNERS
We still thrive on the ERIE family spirit, employees and agents working together as a team for the good of our customers and the communities we serve. At our core, we still believe the truth in our founder H.O. Hirt’s words:
Acuity Erie Insurance The Main Street America Group Millers Mutual Group
Success in business is not a matter of tricks or gimmicks… it is just a matter of simple common sense, mixed with just plain decency. - H.O. Hirt Erie Insurance Founder
Nationwide Penn National Insurance Plymouth Rock Assurance BECOME A PARTNER TODAY Interested in becoming a partner? Reach out today. Tim Wonder IA&B VP-Membership 800-998-9644, ext. 351 TimW@IABforME.com 13
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CYBERSECURITY: WHAT YOU DON’T KNOW CAN HURT YOU By Paul Kapadia We all experienced how the pandemic changed personal and professional aspects of our lives. As the world quickly adapted to the situation to accommodate the constraints created by COVID-19, we leveraged technology for operational flexibility and efficiencies. For our industry, like many others, remote working was the only viable option, and we all availed that to the fullest with the help of technology.
NEW TECHNOLOGY, NEW RISKS In general, businesses survived, and many of us did better than what we anticipated. But we achieved this at the cost of negotiating the privacy and security of information – on a personal as well as a professional front. Personally, we adapted, from online grocery shopping, to banking and signing important documents online. Some of these changes that we assumed to be temporary are now here to
stay permanently. On a professional front, businesses have realized the true potential of technology and how it could be effectively leveraged for cost savings and growth. Unfortunately, this hasty transition is exactly what cyber criminals were hoping for, and they are taking full advantage of it. As seen in recent events, they have been targeting insurance agencies purely because of the quality and quantity of data they can get with relatively less effort … hence why the overall risk for agencies has increased significantly.
BEYOND TRADITIONAL IT INFRASTRUCTURE Every business has an IT team (internal or external) that manages the IT infrastructure needs and IT security for that business. Yet despite their efforts and the Continued on page 17 15
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CYBERSECURITY Continued from page 15 preventive measures in place, many agencies have been the victim of a cyberattack and have suffered heavy losses and business disruptions. Some of them have been victimized multiple times. Cyber insurance provides reimbursements of these quantified losses – with a caveat that the policyholder adhered to and documented preventative measures. In some cases, business have failed to secure damages when their IT team was not able to establish proof of these measures, as per the compliance guidelines of the insurance policy. In fact, insurance carriers have started implementing assessment of a policyholder’s IT infrastructure to calculate cyber premiums.
A CUSTOMIZED APPROACH While the easy solution is to have a comprehensive cyber security audit done by a certified third-party auditor, this is a very expensive proposition for small agencies (which is a large part of our member base). That is why IA&B put together a very cost-effective Cyber Security Vulnerability Assessment (CSVA) service. A number of IA&B members already have availed this service and benefited by a comprehensive analysis of the current security vulnerability situation of their business. In addition, over 90 member agency representatives attended our January 2021 webinar on the topic. CSVA is designed to test the robustness of an agency’s basic infrastructure security and review preventive measures and adherence to industry best practices. The assessment is based on the National Institute of Standards and Technology framework designed by the U.S. Department of Homeland Security (DHS), and it is aligned with the New York Department of Financial Services requirements to help our member agencies that are writing business in New York State. This is important as some of the same compliance guidelines are making their ways into other states’ requirements, as these states become more stringent in response to an increase in cyberattacks.
INSIGHT INTO THE PROCESS This assessment is designed to be carried out without involving an agency’s IT team. This allows us to find the vulnerability in an “as is” state. An agency representative – usually the agency owner or office manager – is asked questions per the DHS guidelines,
and then based on the captured information, we tailor the test to meet your organization’s specific security criteria. The vulnerability assessments use industryrecognized tools and take place in parallel without disturbing your agency’s day-to-day operations. For a small agency (typically one location with less than 10 employees), this process takes anywhere from three to five business days. At the end of the process, a comprehensive report is created and presented to the agency with the findings and recommendations for the identified vulnerabilities. The agency then can engage their IT support team – or rely on the IA&B team – to execute the recommendations. With cyberattacks, cyber insurance policy requirements, and regulatory guidelines all on the rise, I encourage IA&B members to be aware of their current security vulnerabilities and ensure that adequate preventive measures are in place for safe and secure work environment. IA&B Technology Advisor Paul Kapadia works on behalf of IA&B to offer products and services that make independent agencies safer, smarter, and more profitable. Paul is available to consult with IA&B members. Contact him at 732-423-9991 or PaulK@IABforME.com.
MEMBER TESTIMONIAL “The legwork on our end was minimal. The cyber security vulnerability assessment provided an audit, as well as a roadmap to improving our defenses. At the end, they gave us a plan to share with our IT provider and offered to work directly with them. We’re insurance people, not cyber security experts, so I appreciated their patience in answering our questions. We have to translate insurance to our customers, and I really appreciated that they translated cyber to us.” - Sarah Brown, CIC, CRM, AFIS President & CEO, Keller-Brown Insurance Services IA&B Member & Cyber Security Vulnerability Assessment Client
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DON’T BE SCARED OF E&O – RESPECT IT! By Curtis M. Pearsall, CPCU, AIAF, CPIA If one were to ask 100 agency staff members that just came out of an errors and omissions (E&O) class, how many do you think would comment how scary the world of E&O is? How many agency owners would now be tempted to put a “For Sale” sign on the front lawn of their agency? The answer to both questions would probably reveal how frightening they find E&O. This is truly unfortunate. While E&O can, at times, be somewhat intimidating to agency staff, embracing it and understanding how the agency can truly minimize its E&O claims potential are key to addressing that fear. After all, an agency needs to sell insurance. Being petrified of E&O could cause one to hesitate to talk with customers for fear of an E&O claim lurking around the corner. Being scared of E&O is not the answer. Respecting E&O is the answer, working to fully understand the world of E&O, what drives E&O claims, and what the agency can do to meet this challenge head on. Looking at all E&O claims over the course of any given year, it is common to find that 50-60% of those claims
against agencies are closed with no loss payment. This statistic shows the difference an agency can make in minimizing the potential for it to be found negligent if an E&O claim is made.
MAKE THE COMMITMENT A common theme of E&O classes is “Document, Document, Document.” However, there is much more to the equation. A great starting point is to understand the legal liability standard of insurance agencies. Just because it is alleged that the agency committed an “error or omission” does not necessarily mean that the agency was negligent, and the legal standard for agencies is heavily built on the premise of negligence. An important element within this legal standard of care includes the agent being responsible for procuring the insurance requested by Continued on page 21 19
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E&O Continued from page 19 the agency customer, or advising the agency-customer of their inability to do so. For example, if the agencycustomer did not ask for flood insurance, there is a good chance the agency will not be found to be negligent for not providing it.*
Be honest. As Warren Buffett stated: “It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you’ll do things differently.” The more one understands E&O and what drives E&O claims, the more they will respect it and not be scared of it. It is up to the agency as a whole and each staff member to make that commitment.
Other fundamental issues include the following: Be aware of the words/phrases you use. As an agent you can be held responsible for what you tell a customer, whether it’s spoken or in writing. This also speaks to the importance of knowing your product and accurately representing it. Remember all facets of documentation. This is not simply documenting the conversation with the customer, but also memorializing back to the customer, in writing, the essence of that conversation. In addition, the documentation in the agency system should be handled promptly and with sufficient detail. Every agency staff member should live by the motto “if it is not documented in the file, it didn’t happen.” Perform exposure analysis (for new and renewal business). This process is designed to identify any changes/issues that your customers are experiencing so there can be a conversation on how to address those exposures. While the agency is technically going to be held responsible for procuring the coverage the customer requests, how much insurance will you sell if you wait for the phone to ring?
Curtis M. Pearsall, CPCU, AIAF, CPIA, president of Pearsall Associates Inc. and consultant to the Utica National E&O Program, penned this article, which was provided by Utica National. Continued on page 24
E&O WEBINARS Commit to education to help staff truly understand and, in turn, minimize E&O claims potential. Join us this month for a live CE webinar geared to E&O prevention. AGENT’S E&O: DUTIES, OPERATIONS, CHECKLISTS & MORE APRIL 13 9AM - NOON
CE
Execute your role based on the manner in which it is detailed in the agency procedure manual. Consistency is vital. Customer accountability should be every agency’s goal. This includes requiring the customer to sign the application attesting to the accuracy of the information. What’s more, when a customer declines various coverages / limits, confirm their decision back to the customer. This will be key if a customer “changes their story” after a problem develops. Commit to education. The agency and each staff member should be committed to furthering their education, whether that involves technical information or various soft-skills issues.
3 CREDITS LOSS CONTROL CREDIT for Utica, Westport (PA/DE), and Allianz policyholders (PA/DE)
CULTURE, ETHICS, AND E&O: THE RIGHT WAY TO RUN AN AGENCY APRIL 27 1 - 4 PM
CE
3 CREDITS
Register today. IABforME.com | 800-998-9644, option 1
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APRIL 2021
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E&O
W E L C O M E
Continued from page 21 This assumes that the legal liability standard of an insurance agent in the jurisdiction in question is to merely procure the requested coverage in a timely manner, and notify the agency-customer if the insurance agent is unable to procure the requested coverage; and that there is no “special relationship” between the insurance agent and the agency-customer. *
This information is provided solely as an insurance risk management tool. Utica Mutual Insurance Company and the other member insurance companies of the Utica National Insurance Group (“Utica National”) are not providing legal advice, medical advice, or any other professional services. Utica National shall have no liability to any person or entity with respect to any loss or damages alleged to have been caused, directly or indirectly, by the use of the information provided. You are encouraged to consult an attorney or other professional for advice on these issues. © 2021 Utica Mutual Insurance Company
Bridgeway Insurance Group LLC N Huntingdon, PA Broadbent Insurance Newark, DE Ferullo Insurance Agencies LLC West Chester, PA Limestone Insurance Inc Fallston, MD Marvel Agency Inc Jenkintown, PA Michael J. Kandravi Agency LLC Media, PA Tamaqua Insurance Center Tamaqua, PA Wyshock Insurance Inc Lewes, DE
CYBER SECURITY VULNERABILITY ASSESSMENT
RETURNING MEMBERS Ifft & Palmer Pittsburgh, PA
PROTECT YOUR AGENCY FROM HACKERS
James J. Sassa Insurance Agency Inc West Chester, PA
We partnered with Radiant to offer your agency a lowcost, fee-based cyber security vulnerability assessment without disrupting your daily operations.
Have a question about your member benefits? Contact: Tim Wonder, VP-Membership 800-998-9644, ext. 351 TimW@IABforME.com
To learn more, contact: Paul Kapadia 732-423-9991 | PaulK@IABforME.com IABforME.com/Radiant 24
NEW MEMBERS
APRIL 2021
T R A I N I N G & E D U C AT I O N |
EDUCATION UPDATE All IA&B classes are online. We will continue to monitor COVID-19 conditions and resume classroom options when appropriate.
UPCOMING WEBINARS APRIL 2021 Connect with Other Agents & Get CE Credits Online Register today! 800-998-9644, option 1 IABforME.com DATE
TOPIC
TIME
Apr 1
CISR Commercial Property
8 AM-4 PM
Apr 6-8
PA Property & Casualty Licensing Study Course
8 AM-5 PM
Apr 6
Flood Insurance and the NFIP
1-4 PM
Apr 7
3 Commercial Property Insurance Problems/Solutions
2-3 PM
Apr 7-8
CIC Commercial Property
8 AM-5 PM
Apr 8
CISR Miscellaneous Personal Lines
8 AM-4 PM
Apr 13
Agent’s E&O: Duties, Operations, Checklists & More
9 AM-NOON
Apr 13
Dead or Alive: The Many Functions of Life Insurance
1-4 PM
Apr 14
CISR Elements of Risk Management
8 AM-4 PM
Apr 15
CISR Commercial Casualty I
8 AM-4 PM
Apr 15
Understanding Social Security & Medicare
1-4 PM
Apr 20
Insuring Commercial Transportation Exposures
1-4 PM
Editor: Karen Robison KarenR@IABforME.com 800-998-9644, ext. 606
Apr 21
Homeowners Loss Settlement Issues
2-3 PM
Apr 21
William T. Hold: Personal Lines
8 AM-4 PM
Apr 22
Personal Lines Coverage Concerns
9 AM-NOON
Contributing editors: Jennifer Ross Megan Fioretta Melissa Telesha
Apr 22
Homeowners in Real Life-Tales of Claims & Coverage
1-4 PM
Apr 27
Coverage Problems Your Contractors Hate
9 AM-NOON
Apr 27
Culture, Ethics and E&O-Right Way to Run an Agency
1-4 PM
Apr 28
CISR Miscellaneous Personal Lines
8 AM-4 PM
Sales Account Executive: Laura Gaenzle laura.gaenzle@theygsgroup.com 717-430-2351
Apr 28
Truly Awful CGL Endorsements
2-3 PM
Apr 29
Test Your Knowledge of Personal & Commercial Lines
9 AM-NOON
Apr 29
Why ALL Employers Need EPL Coverage
1-4 PM
Apr 29
CISR Life & Health Essentials
8 AM-4 PM
For all 2021 classes, go to IABforME.com
PRIMARY AGENT
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TAKE FULL ADVANTAGE OF YOUR MEMBERSHIP Our goal is to save you time and money. LEGAL & COMPLIANCE - #1 Most Used Member Resource Have questions regarding carrier or coverage issues, agency management, or compliance? Save time (and frustration) by contacting IA&B’s Claire and Don.
INSURANCE FOR YOUR AGENCY IA&B members have more options when it comes to professional liability programs that provide better value & protection.
ACCESS MARKETS With IA&B Membership comes access to independent markets.
CARRIER RELATIONS We have tools for members to build relationships with companies.
CE
ONLINE WEBINARS FOR CE & DESIGNATIONS Receive member discounts to our award-winning education and online trainings.
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