Primary Agent - September 2011 - PA Edition by Insurance Agents & Brokers Service Group Inc

PENNSYLVANIA

ALSO INTHISISSUE: _________________ Conducting an image audit Insuring an extreme home builder

TRUST.

For All That Matters

The Secret Is Out! Hanover Agents Love To Tell Their Customers Why They Are Happy To Be Associated With Us. HANOVER FIRE & CASUALTY serves the working families of the our region by offering the insurance they need. No games. No tricks. Just good, solid insurance available to those who really need it. We settle claims promptly and fairly, and we manage to hold our rates. And the fact is, for nearly 100 years, our customers return and renew with us; well, that just drives the point home, doesnâ&#x20AC;&#x2122;t it? Would you like to be a Hanover agent? For more information call 800-919-FIRE or visit www. hanoverfire.com. Learn more about our portfolio of products, our easy-to-use agent portal, and our competitive commission structure. Call today!

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HANOVER FIRE & CASUALTY serves the working families of the our region by offering the insurance they need. No games. No tricks. Just good, solid insurance available to those who really need it.We settle claims promptly and fairly, and we manage to hold our rates.And the fact is, for nearly 100 years, our customers return and renew with us; well, that just drives the point home, doesnâ&#x20AC;&#x2122;t it? Would you like to be a Hanover agent? For more information call 800-919-FIRE or visit www. hanoverfire.com. Learn more about our portfolio of products, our easy-to-use agent portal, and our competitive commission structure. Call today!

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Contents PRIMARY AGENT MAGAZINE Are you ready to brand? Great brands are built on consistently excellent customer experiences, so before you go too far out on the marketing limb, take a long, hard look at your agency’s operations. Your band is your pledge of performance to your customers, prospects and the world at large. And like all pledges and promises, it is only as good as your ability to fulfill it—consistently.

Page 12 Extreme makeover: insurance edition When America tunes in to the season premiere of “Extreme Makover: Home Edition” on September 25, it will have no idea what the builder had to go through to address numerous exposures. For Anthony Insurance, that will mean the show is a hit.

Page 18

Conducting an image audit One of the first steps your agency should take when committing to a branding program is the “image audit.” This important effort enables you to truly assess where your agency’s image needs work, and how best to communicate that message to your target audience.

Page 22 Mission Statement Primary Agent delivers ideas to help Insurance Agents & Brokers’ members negotiate their unique position as guardians of trust between insurance consumers and companies while facing the challenges of maintaining a small business. Primary Agent also supports IA&B’s mission to preserve and advocate the American Agency System.

Get social with IA&B

In every issue 3 4 5 6 8

Glance at Events Chair of the Board’s Message Member FAQ State News Preventing Errors & Omissions

10 15 24 24 24

Coverage Corner IA&B Partners Advertisers Index Classified Ads Last & Least

Subscriptions: Non-member price: $2.25 per copy or $15 per year. All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two months prior to publication. Advertising rates furnished upon request. Address inquiries to: Primary Agent Editor Mechanicsburg, PA 17055-0763 Phone (800) 998-9644 or (717) 795-9100 Fax (717) 795-8347 Periodical postage paid at Mechanicsburg, Pa. and additional entry post office. Postmaster: Send address changes to above address. Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2011-9) is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

Copyright 2011. 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 is 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 and 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 the 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.

Glance at Events S E P T E M B E R

C A L E N D A R

Date

Topic

Location

CISR-Personal Residential Course*

Mechanicsburg, Pa.

CISR-Personal Auto Course*

Mechanicsburg, Pa.

CISR-Personal Residential Course

Baltimore, Md.

Member Agent Panel

Gaithersburg, Md.

CISR-Agency Operations Course*

Mechanicsburg, Pa.

Member Agent Panel

Bowie, Md.

Member Agent Panel

Towson, Md.

14-17

CIC-Life & Health Institute

Harrisburg, Pa.

CISR-Commercial Property Course*

Mechanicsburg, Pa.

CISR-Commercial Casualty Course*

Mechanicsburg, Pa.

Member Agent Panel

Mechanicsburg, Pa.

19-22

CIC-Personal Lines Institute

Lehigh Valley, Pa.

Member Agent Panel

Altoona, Pa.

20-22

P&C Licensing Study Course

Lehigh Valley, Pa.

Member Agent Panel

Meadville, Pa.

Member Agent Panel

Mars, Pa.

Member Agent Panel

Greensburg, Pa.

William T. Hold Seminar

Altoona, Pa.

William T. Hold Seminar

Wilkes-Barre, Pa.

Member Agent Panel

Moosic, Pa.

Member Agent Panel

Breinigsville, Pa.

CISR-Commercial Casualty Course

Pittsburgh, Pa.

CISR-Agency Operations Course

Frederick, Md.

Insurance Contractors

Pittsburgh, Pa.

Member Agent Panel

Horsham, Pa.

Member Agent Panel

Frazer, Pa.

CISR-Commercial Casualty Course

Pittsburgh, Pa.

Member Agent Panel

Dover, Del.

*Marathon Week

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Board of Directors Officers Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P Chair of the Board West Chester, Pa. Norman Basso, CPCU Vice Chair of the Board York, Pa.

Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P

Chair of the Board’s M

David Rosenkilde, CIC Immediate Past Chair of the Board Reisterstown, Md.

Members Joyce M. Bailey, CIC, CRM, CPIW Newark, Del. Henry “Butch” Bradley, Jr. Forest Hill, Md. Timothy P. Burris Thompsontown, Pa. N. Lee Dotson, CIC, AAI Wilmington, Del. John L. Frankenfield Telford, Pa. G. Greg Gunn, CIC Lemoyne, Pa. Diana M. Hornung Hanby, ACSR Wilmington, Del. Jocelyn R. Howard-Sinopoli, CIC, CISR Butler, Pa. Robert S. Klinger, LUTCF, CPIA Germantown, Md. Michael F. McGroarty Sr. Pittsburgh, Pa. Ann Gallen Moll, CIC Reading, Pa. Scott C. Rogers, CPIA* York, Pa. David B. Wasson Sr., CIC State College, Pa. * IIABA National Director

Brand new As the new chair of IA&B Service Group, I am fortunate to come into this position at a time of great interest in new opportunities for our organizations and their members. The leadership team has listened to member concerns and responded with an agenda that will strengthen our associations and position member agencies to succeed in a competitive marketplace. High on the agenda is helping our members to market their agencies by giving them tools and strategic knowledge to brand themselves as the preferred choice for purchasing insurance. This will be particularly challenging in a market where coverage (at least for personal lines) has become somewhat commoditized. And, as you’ll read in this issue, the first step in effective branding is objective introspection that will help determine whether the agency is ready to make a brand promise it can keep. I’m embracing my new leadership role as an opportunity to shape the way we help members tackle the many challenges we face. I am particularly confident that — with member buyin — IA&B can help to enhance the brand of independent agents and provide tools and knowledge that will assist us in positioning ourselves as knowledgeable and trusted advocates for the individuals, families and businesses we serve. Now let’s get started! Bob

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Member FAQ

QUESTION:

I’m considering selling my agency and am about to begin discussions with another agency. Is there a non-disclosure statement that I could use?

ANSWER: It is important to use a non-disclosure/confidentiality agreement as part of your due diligence process. The agreement will prohibit the potential buyer from using or disclosing any of the information received as part of the sale discussion and negotiation, should the transaction fall through. These non-disclosure agreements come in many shapes and sizes. IA&B can provide you with a sample to review with your attorney or consultant and adapt as needed. In addition to the confidentiality agreement, your due diligence process should also map out the various stages of the transaction, so that each party knows what it is responsible for and what to expect. Finally, IA&B recommends using the services of a reputable agency valuation consultant. Commission multipliers are “static,” and do not differentiate between agencies, treating them all equally when, in fact, they are not. Whether you’re buying or selling, the consultant will be able to price your agency adequately, in a way that accounts for its profitability. A consultant will account for a number of factors which add, or reduce value. In addition, whichever side of the transaction you are on, using a consultant will add credibility to your offer. Do not assume that the agency is too small or that the consultant fees will be too high. Call and ask what they will do and how much they will charge. To access a sample non-disclosure agreement or a list of consultants, visit www.iabgroup.com (go to Agency Perpetuation) or call 800-998-9644, and select option 0.

DO YOU HAVE A QUESTION? E-mail it to us at iab@iabgroup.com. Please use “Primary Agent FAQ” in the subject line of your message. You can also fax your question to (717) 795-8347. We look forward to answering your questions! 3

1/18/11 11:29:18 AM

State News Primary Agent | September 2011

Trusted Choice® resources now available As of Sept. 1, most IA&B members became Trusted Choice® agents, and now have full access to the resources available for leveraging the national Trusted Choice® brand within their local marketing initiatives. But as you’ll read in the article “Are you ready to brand?” and “Conducting an image audit” (reprinted with permission from Trusted Choice®), there may be some internal workflow issues and personnel pitfalls you’ll want to address before engaging in a fullblown branding campaign. You’ll want to be certain you are ready to fulfill the Trusted Choice® pledge of performance (i.e. your brand promise) prior to launching promotional initiatives using the national brand. IA&B is committed to helping members gain value from Trusted Choice® and has a Web page dedicated to answering your questions and directing you to the various resources that are now available for your use. Visit iabgroup.com/trustedchoice.

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PCRB pipeline: manual revisions The Pennsylvania Compensation Rating Bureau (PCRB) announced upcoming manual revisions, effective Oct. 1. Changes to the Pennsylvania Construction Classification Premium Adjustment Program include: ◗ Qualifying wages based on the third quarter of 2010 ◗ Increase in the minimum wage eligible for premium credit to $25.60/hour ◗ Revisions in the increments in qualifying wages used to determine premium credits Read more at www.pcrb.com, circular No. 1587.

Members to talk industry issues

Thank You!

IA&B will monitor members’ needs at upcoming Member Agent Panels (MAPs) this month. MAP participants will talk industry issues and trends, share struggles and accomplishments, and chart the course of the association. Members of each panel meet with IA&B leadership and staff and give input on decisions impacting member services. MAPs are one way that IA&B gathers input from its membership. This information goes directly to IA&B’s leadership and is used to make the best possible decisions affecting programs, products and services offered to all members. In addition participants come away from each MAP session with valuable insights and information that can be applied to their own business. IA&B members – most often agency principals and producers – serve twoyear terms for a total of four meetings. The meetings will occur throughout the month at nine locations across the Commonwealth. For more information on MAPs, visit www.iabgroup.com.

A special “thank you” to our 2011 President’s Club ($1,000+) members (as of press time): Mark Dombrowski, Erie Insurance Group, Erie

AgentPAC contribution update AgentPAC of Pennsylvania, your voice for political action in Harrisburg, continued to receive contributions from engaged agents over the summer. The fundraising campaign to support agent-friendly legislators and candidates is now less than $10,000 from its annual goal. Independent agency principals, producers and staff are urged to help put this campaign over the top by giving to AgentPAC. With many voices competing for attention in Harrisburg, contributions to AgentPAC assure that your interests are heard loud and clear.

Greg Gunn, Gunn-Mowery LLC, Lemoyne Robert B. Hallman Sr., Hallman Agency, Freeport Charles P. Leach Jr., Charles P Leach Agency Inc., New Bethlehem Shannon Lipniskis, Hutton-Blews Insurance Services, Marion Center Roger J. Reschini, Reschini Agency Inc., Indiana

Read more and contribute online at iabgroup.com/AgentPAC.

EMC room discounts end Sept. 9 IA&B’s annual Executive Management Conference (EMC) will return to the Lancaster Eden Resort, Oct. 4-5. Reservations for overnight accommodations must be made by Sept. 9 to receive the discounted IA&B rate. This year’s topic is “Producer Management: Finding, Training and Retaining the Best Agents,” (see sidebar, page 13) and the event is expected to sell out.

WELCOME

New Members Options Insurance Group Ft. Washington, Pa. Certified Insurance Review LLC Malvern, Pa.

Read more and register at iabgroup.com/EMC2011. [7]

Preventing Primary Agent | September 2011

ERRORS AND OMISSIONS

BE CAREFUL IN ADMITTING LIABILITY

PAUL E. WALTERS Paul E. Walters is claims manager for the Errors & Omissions Department of Utica Mutual Insurance Co.

When an agent commits an error, it would be natural to assume that any resulting damages from that error are the agent’s responsibility. In the case where a customer is harmed because of agent error, the agency would want to ensure the customer is taken care of. While the tendency would be to tell the client the agency is at fault and the claim will be addressed, this approach and admission can impair the ability of your Errors & Omissions carrier to settle the claim at the best possible terms. Plus, it could – depending on what is promised to a customer – jeopardize your E&O coverage.

policies regarding obligations assumed by an insured without the carrier’s consent. It’s one thing to say, “I goofed up.” Yet it is another to say, “I goofed up and will pay you.” Be aware of the distinction. In fact, before uttering the words “I goofed up” to your client, first speak with your E&O claims specialist. There are many defenses available to agents — even when an agent may believe his or her E&O carrier owes the claim. Most states require an insured to read the policy. If there is a change in coverage on renewal, or a policy simply does not contain the agreed upon coverage grants, an agent may believe he or she is at fault because the change was missed. Depending on how long the policy was in front of the customer, though, the blame might be shared if the customer also missed the change. Many claims are settled on a compromise basis because of a duty to read.

A duty to read An E&O policy is a liability policy. It is not a first-party coverage. Like all liability policies, the E&O policy provides for payment of a claim when an insured is determined to be liable. A standard condition in an E&O policy mirrors other liability

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Shades of gray Carriers could be liable, too. Was the policy different than the quote? Was there a conditional renewal notice that points out a change in coverage? Is there another agent upstream to blame? Regarding carriers, even when an agent causes a policy to be issued that was not at the agreed upon terms, the legal theories of policy reformation and the agency/principal relationship can force a carrier to pay a loss for which it had earlier disclaimed coverage. Generally speaking, if an agent has binding authority for a particular risk or amount of coverage, carriers are forced to reform the policy if the agent and the client had earlier agreed upon certain terms of coverage and the policy issued did not contain those terms. Under laws governing the agency/principal (carrier) relationship, an agent’s

representations can bind a carrier, even if the agent did not have binding authority. The question then becomes, “What is the agent liable to the carrier for?” In many instances, if the carrier would have written the risk at the terms agreed upon between an agent and a customer, the agent is only responsible for the difference in premium. Of course, each case is different. There are shades of gray as to who owes what. Many parties may share in the blame: agents, carriers and insureds. Take, for instance, a client who had a policy with 50 percent co-insurance. The agent switched carriers and asked for a policy with 50 percent co-insurance. The policy was issued with 100 percent co-insurance. This was missed by agent and the customer. A loss occurred, with the co-insurance penalty assessed by the carrier totaling about $1,000,000. A lawsuit ensued. Communication to the carrier clearly reflected a request for 50 percent co-insurance. It was equally clear the intent of the agent and client was to have 50 percent co-insurance. After several rounds of negotiating, the case was settled for $700,000. The agent’s share was $104,000. Work with your E&O carrier An agent’s job can be stressful, and the need to take care of customers who have been wronged is crucial. However, that need must be tempered with the need for your E&O carrier to only pay what is owed. The entire claims process can sometimes appear to be daunting and confusing. Work with your E&O carrier to achieve an amicable resolution for all parties concerned.

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Coverage Primary Agent | September 2011

CORNER

NFIP AND THE COASTAL ACT

JERRY M. MILTON, CIC Jerry M. Milton, CIC teaches and consults on industry issues. The legal profession recognizes him as an expert on insurance coverages. He is also the education consultant for IA&B, working with CISR, CIC and continuing education programs.

The National Flood Insurance Program (NFIP), which is a publicly funded program, is nearly $18 billion in debt. Orice Williams Brown, a managing director of the Government Accountability Office (GAO), has testified before Congress that the program may have to borrow money just to make its interest payments. Obviously, the apparent solution is significant rate hikes. Some members of Congress have suggested these increases could be in excess of 25 percent, and maybe as high as 50 percent.

on September 30 before the changes are actually in place.

However, two senators have become outspoken advocates for reform of the NFIP. They are Sen. Richard Shelby of Alabama and Sen. Roger Wicker of Mississippi.

I agree with Sen. Shelby to some extent. However, I hope he has not overlooked the fact that many of us have our primary, and only, home in high-risk areas. These flood-prone areas are not limited to the coast. Remember all the terrible flooding that occurred along the Mississippi, Missouri and Souris rivers earlier this year?

Rather than allowing private insurers to decide how much damage to allocate to wind and how much to water, Sen. Wicker’s plan would create a standard formula to make that determination. The COASTAL Act would apply only to properties completely destroyed by a storm, with nothing left but the foundation slab.

The Flood Insurance Reform Act allows the private market to get more involved —

The formula would be based on data collected at the National Oceanic and

Sen. Shelby is one of the sponsors of the Flood Insurance Reform Act which calls for every aspect of the program to be revised. The kinds of revision he’s talking about may mean that NFIP’s current authorization expires

According to Sen. Shelby, “If that’s what has to happen for the NFIP to become actuarially sound, so be it. Ignoring the program’s financial woes isn’t going to help anyone – neither the taxpayers who fund it nor the homeowners who live in high-risk areas. Why should the American taxpayers subsidize these policies for people who — a lot of them — have second, third homes, knowing they’re in a risk area.”

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primarily through reinsurance, provides for more transparency for the Write-Your-Own program (suggested by the GAO), and a thorough examination of the properties insured under the NFIP. Sen. Wicker has introduced the Consumer Option for an Alternative System to Allocate Losses (COASTAL) Act. This act addresses the “wind versus water” debate between private insurers and the NFIP that are usually associated with hurricane claims.

Atmospheric Administration (NOAA), plus academic institutions and private institutions. The formula would take into account the timing, location and magnitude of wind speeds before, during, and after a coastal storm. Any appeals would be handled by an independent arbitration panel. Sen. Wicker’s plan has received the support of other members of Congress as well as some state insurance commissioners. However, not everyone is a fan. The National Association of Mutual Insurance Companies issued a written statement that stated in part, “Notwithstanding its laudable intent, we fear that this plan could cause more confusion for insurers and consumers in the aftermath of a major natural disaster. The American Insurance Association warned of unintended consequences from the inclusion of a wind calculation “This is a significant departure from long-standing NFIP and wind claims adjusting and how they are governed by federal and state law, respectively. As with any new idea that could impact a large, important program, AIA believes this allocation proposal needs proper consideration and study,” the association said in written testimony. Additionally, Travis Plunkett, legislative director of the Consumer Federation of America, said, “Charging FEMA, which has had trouble managing simpler aspects of the program, with creating this formula, and doing it right and doing it fair, is too much for them to handle.” Will the COASTAL Act gain enough traction in Congress to be enacted into law? If so, what will be the consequences? All I can say is, “Stay tuned.”

IA&B FLOOD CE at your office, home, hotel, etc. What: Who: When: Where: Why: CE: URL:

Understanding the National Flood Insurance Program National flood expert Rita Hollada, CPCU, CIC, CPIA Anytime Anywhere there’s Web access Most agents need it Del.: 3 GEN/FLD Md.: 3 PC/FL Pa.: 3 FLD iabgroup.com/on-demand

Why our contracting coverages are built better than the rest:

We offer protection others don’t. We’ve custom-built special liability coverages that meet the unique needs of the contracting industry. ■ Blanket Additional Insured for Written Contract coverage ■ Blanket Waiver of Subrogation protection ■ Consolidated Insurance (Wrap-up) Program — limited exclusion ■ Electronic Data — $10,000 each occurrence/$10,000 aggregate ■ Limited Pollution Liability expanded limits up to $1 million each occurrence with legal costs included ■ Voluntary Property Damage — $5,000 limit per occurrence/$10,000 aggregate ■ Limited mold and bacteria coverage with limits of $10,000 and $25,000 available. Legal expenses are included, subject to limits. (Not available in NJ)

Automatic endorsement protects against damage to your work. We clarified the policy to state that property damage to a contractor’s work performed on a contractor’s behalf by subcontractors, within the products-completed operation hazard, is an occurrence. Subject to all other general liability terms and conditions. This summary does not constitute a part of the insurance policy. See policy for complete terms and conditions.

Y’all take care! Visit us at www.PennNationalInsurance.com to find out how you can become an agent with big opportunities for growth.

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MARKETING

Is Your Agency Ready to Brand?

Your pledge of performance to your customers, prospects and the world at large is your brand promise. And like all pledges and promises, it is only as good as your ability to fulfill it â&#x20AC;&#x201D;consistently.

Primary Agent | September 2011

any an agency has its sights set on branding, or re-branding, its business only to discover that the agency staff, workflows and technology are not up to the challenge. After spending thousands on marketing, the owner(s) discover that the agency infrastructure isn’t able to handle the promises being made by their own ads. The result? A situation worse than if they hadn’t done anything at all: actively sought, yet disappointed, “coulda-woulda-shoulda-been” customers. ___________________________________________________________

Before you go too far out on the marketing limb, take a long, hard look at your agency’s operations. ___________________________________________________________ Great brands are built on consistently excellent customer experiences, so before you go too far out on the marketing limb, take a long, hard look at your agency’s operations: ◗ Do your workflows enable staff to deliver exemplary customer service, or are they simply the way you’ve always done things? ◗ Is your technology current, functional and being used appropriately, or is your team having to work around sub-par systems? ◗ Are your employees fully committed to your agency’s brand promise, and are they the right people to fulfill it? Independent agent Andy Shifflett asked a single, tough question of each employee when he took over his father’s firm several years ago: “If you didn’t do what you are doing now, would it matter? If it didn’t matter, we quit doing it,” he says. The agency is now paperless, with hands-free headsets, desktop scanners and faxes, and a high-speed Internet connection for everyone. And his revenue-per-employee number tops $130,000. ___________________________________________________________

Start by talking with your staff about branding — what it means, why it’s important, and what steps they will be taking in the coming weeks and months. ___________________________________________________________ To get your own house in order, start by talking with your staff about branding—what it means, why it’s important, and what steps they will be taking in the coming weeks and months. This will give them ownership in the process,

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Are your producers BULLDOGS or LAPDOGS? The best agents are both “bulldogs” (assertively chasing down leads) and “lapdogs” (able to cozy up to clients and be their best friend). Whatever “breed” you need, your agents should be trained to embody your brand. They should also be strategically rewarded (“thrown a bone” if you will) for consistently fulfilling your brand promise and helping to build your business. IA&B’s 2011 Executive Management Conference (EMC 2011), scheduled for October 4-5 at the Lancaster Eden Resort, will focus on the science of producer management and the art of inspiring agents to build lasting client relationships. “Producer Management— Finding, Training and Retaining the Best Agents,” will provide recruiting resources, training techniques, motivational methods and retention strategies for hiring and inspiring producers. EMC 2011 will feature nationally recognized agency consultants Al Diamond and Lorie Guthrie Phair who will help principals to unleash their producers’ potential — regardless of their “breed.”

Read more and register at iabgroup.com/EMC2011.

MARKETING

assuage their anxieties, and discourage grumbling. To ensure you are looking at every brand touch-point, have your staff list each product and service your agency offers, from complete risk management of large commercial clients to answering the phone. Then determine which activities have a positive impact on your customer (and therefore on your brand), which activities could be positive if modified, and which activities fall into the “Why the heck do we do that again?” category. Drop the stupid stuff right away. _________________________________

Employees are the heart and soul of any brand, and you cannot retain just-average people if you expect aboveaverage success. _________________________________ Then ask your staff to look at all remaining workflows and re-tool those they deem inefficient (their heads are probably already filled with lists of things they would do differently if they owned the place). Try to achieve a onetouch system, whereby every customer or internal activity is touched by one employee, one time. It’s the back-and-forth, round-and-round nonsense that nobody thinks about that creates hobgoblins of inefficiency. Ask them to think in ideal terms: What would be the very best way to get this transaction done?

Once you have streamlined your workflows, determine whether your technology is in sync with those processes. Do you need to upgrade your agency management system or create more functionality on your Web site? Does your phone system allow for the new process of directing calls and voicemails? Should you take it to the next level and invest in a system that brings up customer information on the CSR’s screen based on the caller ID? A more difficult—but oh-sonecessary—part of your infrastructure evaluation focuses on your staff. Employees are the heart and soul of any brand, and you cannot retain just-average people if you expect aboveaverage success. Does your current staff have the specific skill sets to succeed in this new workplace? If you don’t think you can be objective (especially when it comes to long-term employees), use a personality profiling system to help you determine if they have the disposition to handle their responsibilities in the new environment. Determine who can be re-trained and who cannot. Be clear and direct in discussing with your team what you expect of them. Mike Carroll put his small agency under the microscope several years ago, and found he could reduce his staff to three people if he streamlined activities and instituted more efficiency in workflows. “We make more money now than when we had

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11 employees. Revenues are down, but profit is up. You do the math.” Carroll is projecting 25 percent growth this year. _________________________________

Determine if your agency is doing its part to attract and retain the very best employees. _________________________________ Finally, determine if your agency is doing its part to attract and retain the very best employees. Is your pay scale commensurate with the marketplace, or could it be better? Does your benefits package make employees feel loved or simply covered? Does your agency encourage ongoing training and professional development? An agency in California offers profit-sharing to its entire workforce and is considered an excellent workplace. The result? The average staffer has been there 14 years, and “I have the best employees in the world,” says the owner. Remember: They aren’t just workers; they are your brand. Are they ready to live it?

Listed below are those companies that strongly support the independent agency system and Insurance Agents & Brokers. Thank you for your continued sponsorship.

WHAT IS IA&B PARTNERS? The IA&B Partners program gives company and allied businesses the opportunity to demonstrate their commitment of support to independent agents and receive maximum market exposure. As an IA&B Partner, you will also realize the benefits of IA&B membership to help you succeed in the insurance industry.

DO YOU SEE YOUR NAME?

PLATINUM LEVEL

BRONZE LEVEL

ACUITY Berkley Mid-Atlantic Group Donegal Insurance Group Erie Insurance Group Harleysville Insurance Highmark Casualty Insurance Co Insurance Agents & Brokers Service Group Inc

Aegis Security Insurance Co

MMG Insurance Company Millers Mutual Group Millville Mutual Insurance Co Mutual Benefit Group Ohio Casualty Penn National Insurance Selective Swiss Re The Main Street America Group Utica National Insurance Group

Encompass Insurance

GOLD LEVEL

choose the sponsorship

Progressive

package that matches your

Contact the Member Sales Center at (800) 998-9644, (717) 795-9100 or visit us online at www.iabgroup.com to get started.

AmWINS Program Underwriters Inc Auto-Owners Insurance Company Briar Creek Mutual Insurance Company Builders Insurance Group Chubb Group of Insurance Companies Countryway Insurance Company First General Services Foremost Insurance Group Goodville Mutual Casualty Company Guard Insurance Group Harford Mutual Insurance Co Hanover Fire & Casualty Insurance Company Insurance Alliance of Central PA Inc Insurance Placement Facility of PA Keystone Insurers Group Inc Lebanon Valley Insurance Company

To become an IA&B Partner,

commitment of support.

Agency Insurance Company

Mercer Insurance Group Merchants Insurance Group Mercury Casualty

SILVER LEVEL

Penn PRIME Municipal Insurance

Access Insurance Company Allied Insurance American Mining Insurance Co Cumberland Insurance Group Frederick Mutual Insurance Co Juniata Mutual Insurance Co PSBA Insurance Trust The Philadelphia Contributionship Westfield Insurance

Rockwood Casualty Insurance

Reamstown Mutual Insurance Company State Auto Mutual Insurance Company TAPCO Underwriters Inc The Brethren Mutual Insurance Company The Motorists Insurance Group The Mutual Service Office Inc Travelers Tuscarora Wayne Insurance Company Zenith Insurance Primary Agent September 2011

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

FEATURED PARTNER Highmark Casualty Insurance Company PRESIDENT Mike Sullivan President & Chief Operating Officer COMPANY LOCATION Home Office – Pittsburgh, with regional locations in Camp Hill and Philadelphia A.M. BEST RATING A- (Excellent) VIII WEBSITE www.highmarkcasualty.com

Workers’ Compensation offers a smart approach to coverage – helping to control loss through dedicated service teams; a preferred, cost-saving network; and effective physician-to-physician case management. To ensure the best outcome for all involved, we work side-by-side with our clients, helping to reduce the incidence of injuries in the workplace and return employees to their jobs as quickly as possible.

We know that effectively managing Workers’ Compensation coverage is essential to our clients’ financial success. Using our expertise to control and reduce Workers’ Compensation costs from all angles, we develop and implement customized, effective programs that incorporate loss control, case management, network discounts, proactive risk management techniques and return-to-work programs. We manage the entire

process to help keep employees safe and healthy, while generating cost savings that our clients depend on to help keep their companies financially strong. The outcome is clear in our operational performance results and our approach to service. Through our network savings program, total claims costs were reduced by 55 percent in 2010, and we passed that savings on to our clients. We also achieved greater than 99 percent technical and financial accuracy when processing both lost time and medical claims.* Such accomplishments, along with our commitment to service excellence, have helped us earn high levels of client satisfaction. HM Workers’ Compensation coverage is marketed in Pennsylvania, and we target low-to-medium hazard industries with four wall exposure, including health care, social services,

Mike Sullivan administrative offices, banks, physicians, service industries, property management, machine shops, restaurants, retail/wholesale stores and manufacturing. Our loss cost multiplier ranges offer flexibility that helps price each account on its own merits. HM Workers’ Compensation is underwritten by either Highmark Casualty Insurance Company or HM Casualty Insurance Company, member companies of HM Insurance Group. Both Highmark Casualty Insurance Company and HM Casualty Insurance Company are rated A- (Excellent) VIII by A.M. Best Company. *HM Insurance Group internal reporting, 2010

55% reduction in total claims cost

over

HM Workers' Compensation*

Workers’ compensation solutions for both loss control and claims control. (That’s using our head.)

99%

technical & financial accuracy in claims processing

client retention

90%

Reduce risk. Increase ROI. Keeping your clients’ employees healthy and on the job takes a lot of hard work. You need an experienced partner with a smart approach to control and reduce workers’ compensation costs. With HM Workers’ Compensation, you get a dedicated, experienced service team focused on account management, loss control, aggressive claims management and return-to-work programs customized to each client’s needs. We help you take better care of clients by identifying more effective ways to control and reduce workplace injuries. We also offer a unique physician-to-physician service that helps get people back to work faster – and healthier. For more smart ideas, call 1-800-328-5433 or visit smarteranswersfaster.com.

*Performance statistics based on Highmark Workers’ Compensation Operational Performance – 2010 Report, April 2011. Coverage is underwritten by Highmark Casualty Insurance Company, Pittsburgh, PA, or HM Casualty Insurance Company, Pittsburgh, PA. Highmark Casualty Insurance Company may provide certain administrative and customer support services. The coverage or service requested may not be available in all states. MTG-2197 7/11

COVERAGE

Member agency insures builder for high-profile renovation When America tunes in to the season premiere of â&#x20AC;&#x153;Extreme Makover: Home Editionâ&#x20AC;? on September 25, it will have no idea what the builder had to go through to address numerous exposures. For Anthony Insurance, that will mean the show is a hit. ony owner of Anth y, on th n A t en K ient with served his cl c. In , ce n ra Insu d his nce advice an sound insura support ith volunteer community w e Makeover." for an "Extrem

Anthony stan ds in front of the finished h interior will ouse. The be revealed on ABC's season "Extreme Mak p remiere of eover: Home E dition" on Sep tember 25.

Primary Agent | September 2011

hen Ty Pennington led the march to the end of an obscure cul-de-sac in York County, Pennsylvania to give his “Good Morning….!” wakeup call, nobody thought twice about whether the builder was properly insured.

But if you figuratively rewind the tape several weeks, you would see a contractor frantically preparing for a job unlike any other while his independent insurance agent busily works behind the scenes to make sure his client is protected. ABC-TV’s hit series “Extreme Makeover: Home Edition” will kick off its ninth season with the heart-warming story of the Keefer family, which was struggling to meet the needs of a son paralyzed from the neck down in a gymnastics accident. After choosing the Keefer home for a makeover, the show’s producers quickly identified a local builder, Musser Home Builders, as a potential contractor for the job. The production company was also quick in its demands to be indemnified for the job. Musser owner Jeff Musser, who had done smaller “makeovers” for other deserving families in central Pennsylvania, wanted the job. But with unique coverage concerns, he turned to his long-time insurance agent Kent Anthony, owner of Anthony Insurance, in nearby Lewisberry. “The whole issue was: rush, rush, rush,” remembers Anthony, a long-standing member of IA&B. “So it’s not only ‘Can you do it?’, but ‘Can you make it happen quickly?’ “Jeff said, ‘Just make it happen,’ and he knew it would. That’s all part of a relationship — knowing each other and anticipating the needs,” notes Anthony. But he’s quick to add that some of the needs for this project could not be anticipated and were, in fact, extreme.

Readers can see how Musser Home Builders and the legions of volunteers coordinated by Kent Anthony and others transformed the Keefer home when “Extreme Makeover: Home Edition” airs on ABC at 7 p.m. on Sunday, September 25.

“Getting into the project, I had to determine exactly who was responsible for what,” notes Anthony, “I had to work with an attorney to set up insurance provisions and rework those provisions. I was actually working with two different insurance brokers out of California who represented the production company and another company associated with it. Neither was fully aware of what we had before us and we had about two hours to figure it out.” As part of his research, Anthony contacted IA&B to find language he could use in volunteer release forms to limit his client’s liability when working with 4,000 or so volunteers. IA&B Industry Affairs Director Claire Pantaloni, CIC, CISR was able to help. “I researched the topic and found various examples from similar charitable construction projects (e.g. Habitat for Humanity),” she recalls. “I sent these examples to Kent for consideration by his attorney and to amend as necessary.”

[ 19 ]

Thousands of volunteers sh owed up to h throughout th elp e week of the build in June.

COVERAGE PRODUCER MANAGEMENT Anthony adds that this was crucial information he needed during this challenging period. “It was not just placing insurance like a lot of people would like to believe it is. It’s risk management for all phases of the operation, including a tremendous involvement with volunteers.

Finding, Training Retaining the

The best agents are both bulldogs (assertively chasing down leads) AND lapdogs (able to be their clients’ best friend).

“To work on a project like this as an independent agent sounds thrilling when you think of stars like Ty Pennington, Jillian Harris and all these fantastic people,” says Anthony. “But then all-of-asudden you have a two-hour timeframe, working with an attorney and trying to get answers e-mailed back and forth from California. Making it happen was very unique and very challenging and frustrating at times.” In addition to helping Musser Home Builders with its unique insurance needs, Anthony volunteered his free time during several evenings of the build, which took place in late June. Anthony served as a volunteer coordinator, directing hundreds of volunteers to wherever they were needed on the job site. “Getting people in and out among all the people scurrying around was kind of neat.” Anthony’s son attended the same high school as Brian Keefer, the paralyzed athlete whose independence is greatly improved thanks to the extreme makeover. “It was really kind of neat because we were able to do something to give back to the community as well as help a good family.” To read more about Anthony Insurance, visit anthonyinsuranceinc.com. ______________________________________

Brent Heard is marketing communications director for IA&B.

[ 20 ]

2011 EXECUTIVE

MANAGEMENT CONFERENCE OCTOBER 4-5, 2011 LANCASTER EDEN RESORT

Read more and register at iabgroup.com/EMC2011.

EMC 2011 will provide recruiting resources, training techniques, motivational methods and retention strategies for hiring and inspiring producers. You count on your agents to build your business, and you can count on nationally ecognized agency consultants Al Diamond and Lorie Guthrie Phair to help you unleash your producers’ potential— regardless of their “breed.”

Driving members to distinction.

Platinum Profile Insurance Agents & Brokers proudly recognizes The Main Street America Group as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.

FEATURED PARTNER The Main Street America Group CORPORATE HEADQUARTERS Jacksonville, Fla. CHIEF EXECUTIVE OFFICER Tom Van Berkel, Chairman President and CEO Northeast Region Headquarters Syracuse, N.Y. Northeast Region President Mark Berger Northeast Region Sales Director John Hwilka Northeast Region Markets New York, Pennsylvania, Maryland, Delaware A.M. BEST RATING “A” (Excellent)**

he Main Street America Group’s Northeast Region is comprised of four states – New York, the carrier’s largest premium state, as well as Pennsylvania, Maryland and Delaware. Main Street America’s rich history began in 1923 when we formed our company to serve the insurance needs of Grange fraternity members. Today, Main Street America provides a full line of competitively priced personal lines and commercial lines products and services, as well as fidelity and surety bond products, to individuals, families and small businesses in 27 states. We annually write nearly $900 million in premium.

Through our seven “A” rated property and casualty carriers – NGM Insurance Company, Old Dominion Insurance Company, Main Street America Assurance Company, MSA Insurance Company, Main Street America Protection Insurance Company and Great Lakes Casualty Insurance Company, as well as our Grain Dealers Mutual Insurance Company affiliate – we partner with more than 2,000 independent agents to provide superior, personal service to more than 600,000 policyholders. As the founding company partner of Trusted Choice®, Main Street America is 100 percent committed to the independent insurance agent, as you are our sole channel of distribution. We strive to meet the needs of our

Mark Berger Northeast Region President customers (agents), and our customers’ customers (policyholders), better than anyone else in the market. To become our customer and represent Main Street America, please visit www.msagroup.com and click on the “Become a Main Street America Agent” link. ** A.M. Best’s rating of “A” (“Excellent”) applies to The Main Street America Group. Ratings listed herein are as of June 30, 2011, are used with permission of A.M. Best, and are subject to changes by the rating service. For more information about ratings, please access www.ambest.com.

MARKETING

Conducting an image audit O

ne of the first steps your agency should take when committing to a branding program is the “image audit.” This important effort enables you to truly assess where your agency’s image needs work, and how best to communicate that message to your target audience. So, before you start spending big bucks on a local ad campaign, take some time to establish solid branding groundwork for your agency. The image audit actually involves three activities: ◗ Comprehensive analysis of your agency’s current reputation, ◗ Detailed review of all “image bearers”— anything that the public will identify with your firm, and ◗ Comparison of your status quo image to your competition and to your agency’s branding goals.

Feedback Let’s start with a look at your agency’s reputation in the marketplace. Don’t assume that you know how your

agency is perceived. As the principal, you’re a little biased, and you probably aren’t taking most of the day-to-day customer service calls. So, ask. Ask your current customers (and not just your favorites) what they think your agency does well and what they think needs work. Ask former clients why they left — and get beyond price. Quiz your staff, especially the CSRs and front-desk employees, to discover what people say about your agency when they call in. Seek out your colleagues in the area’s business community, and even ask your company partners how they perceive you. Questionnaires can work effectively in gathering this data, but if you have the time and resources, one-on-one interviews or a small focus group can be very helpful. Since people might be shy about criticizing your business in front of you, it would be worthwhile to hire someone to conduct the interviews or facilitate the focus group for you. Professional marketing firms are a good source for this expertise, or even ask

[ 22 ]

the local college to recommend a top marketing student who could help you with the project. Once you’ve gathered information about your agency’s current image, try to break the data down into some key descriptive phrases. Is your agency considered solid and steady or fly-bynight? Old-fashioned or cutting-edge? A generalist or specialist? Apathetic or customer-focused? Working with a handful of key phrases — instead of volumes of feedback — will make the next couple of steps more manageable.

Image Bearers Next, take a hard look at all your agency’s “image bearers.” That is anybody or anything that communicates something about your agency to customers. This includes your employees, your physical office space and all promotional materials. Start with the agency promotional items: signage, brochures, stationery, callson-hold messages, Website, calendars, print ads, radio and TV commercials—even

the golf shirts and coffee mugs with your logo. Lay them all out on a conference table and evaluate their accuracy, currency and consistency.

two-year-old magazines in the lobby, or publications that indicate you are professional and up to speed on financial services issues? Even if you donâ&#x20AC;&#x2122;t get a lot of walkin traffic, how your office appears will affect how your employees behave â&#x20AC;&#x201D; and ultimately how they will treat your customers.

If everything looks like it comes from a different creative agency, itâ&#x20AC;&#x2122;s time to start from scratch. It is critically important to have a consistency of look, feel and message for a brand to be effectively communicated.

And, while weâ&#x20AC;&#x2122;re on the subject, how does your staff look? Has the casual dress code gone a little too far, or do your employees look crisp and competent? Ask yourself: â&#x20AC;&#x153;If I didnâ&#x20AC;&#x2122;t know these people, would I trust them with my financial well-being?â&#x20AC;? Your staff must be able to communicate the image you want your agency to have. Research shows that the employees of agenciesâ&#x20AC;&#x201D;your peopleâ&#x20AC;&#x201D;rank most important in building consumer trust. Thus, itâ&#x20AC;&#x2122;s vitally important that in all your communications materials you show your staff: principals, producers and the service staff.

Once youâ&#x20AC;&#x2122;ve finished this image audit phase and determined your branding goals, hire a writer and designer to coordinate your overall look and message, and then stick to it. Now look at your agency offices. Stand back and look at the space as if youâ&#x20AC;&#x2122;ve never seen it before. From the outside, does it look welcoming and successful? Inside, is it clean, professional and organized? Or are desks cluttered with piles of paper, bulky binders and half-dead plants? Do you have

Comparison Once youâ&#x20AC;&#x2122;ve assessed your agencyâ&#x20AC;&#x2122;s current image, determine how it holds up against your own branding goals. Is your agencyâ&#x20AC;&#x2122;s reputation close to your ideal, or do you have significant â&#x20AC;&#x153;repair workâ&#x20AC;? to do? Are your goals realistic given your agencyâ&#x20AC;&#x2122;s resources and current image? Now look at your competition. How do these agencies describe themselves in their â&#x20AC;&#x153;image bearers,â&#x20AC;? and how do others view them? How do you measure up to these competitors, and will the attributes youâ&#x20AC;&#x2122;ve chosen to promote be able to overcome their position in the marketplace? How you answer all these questions will help you determine which communication vehicles to utilize in your agency branding efforts.

& ! 4 m ! m # < PennPRIME is the municipal entity specialist that can clearly illustrate ways to reduce risk. Formed, owned, and governed by our members, PennPRIME offers an array of products and services that are custom-tailored for Pennsylvaniaâ&#x20AC;&#x2122;s cities, townships, boroughs, and authorities. Composed of two insurance Trusts, PennPRIME provides comprehensive property, liability and workersâ&#x20AC;&#x2122; compensation coverage as well as unique service programs like grants, training opportunities and sample loss control policies. Imagine a relationship with an organization with the leadership, advocacy, and Pennsylvania-specific expertise to take the burden of risk management off your clientâ&#x20AC;&#x2122;s shoulders. Get into the swing of reducing your clientâ&#x20AC;&#x2122;s risk. Imagine them as a client of PennPRIMEâ&#x20AC;Ścall today!

800.848.2040

â&#x20AC;˘

717.236.9469

â&#x20AC;˘

www.pennprime.com

PennPRIME is a service program of the Pennsylvania League of Cities and Municipalities & ! 4 m ! m # < PennPRIME is the municipal entity specialist that can clearly illustrate ways to reduce risk. Formed, owned, and governed by our members, PennPRIME offers an array of products and services that are custom-tailored for Pennsylvaniaâ&#x20AC;&#x2122;s cities, townships, boroughs, and authorities. Composed of two insurance Trusts, PennPRIME provides comprehensive property, liability and workersâ&#x20AC;&#x2122; compensation coverage as well as unique service programs like grants, training opportunities and sample loss control policies. Imagine a relationship with an organization with the leadership, advocacy, and Pennsylvania-specific expertise to take the burden of risk management off your clientâ&#x20AC;&#x2122;s shoulders. Get into the swing of reducing your clientâ&#x20AC;&#x2122;s risk. Imagine them as a client of PennPRIMEâ&#x20AC;Ścall today!

800.848.2040 â&#x20AC;˘ 717.236.9469 â&#x20AC;˘ www.pennprime.com PennPRIME is a service program of the Pennsylvania League of Cities and Municipalities

[ 23 ]

Classified ADVERTISEMENTS

DISCOVER THE BENEFITS OF A PARTNERSHIP WITH FAYETTE INSURANCE ASSOCIATES Uniontown, PA 15401 Website: www.fayins.com Email: info@fayins.com

SOUTHEAST PA PRODUCERS & AGENCIES 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) 375-8600, Ext. 119.

If you would like to place a Classified Advertisement, simply fax your ad on company letterhead to (717) 795-8347, and we will take care of the rest.

Ad Index ACUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .IFC Atlantic Specialty Lines Inc . . . . . . . . . . . . . . . . .5 Brokers Surplus Agency . . . . . . . . . . . . . . . . .IBC Guard Insurance Group . . . . . . . . . . . . . . . . . . .5 Hanover Fire & Casualty . . . . . . . . . . . . . . . . . . .1 Highmark Casualty . . . . . . . . . . . . . . . . . . . . . .17 Harford Mutual Insurance Co . . . . . . . . . . . . . .9 IA&B Exec Management Conference . . . . . . . .20 IA&B Partners Program . . . . . . . . . . . . . . . .16, 21 Interstate Insurance Mngmnt. . . . . . . . . . . . .OBC MMG Insurance Company . . . . . . . . . . . . . . . . .1 Penn National Insurance . . . . . . . . . . . . . . . . . .11 PennPRIME Municipal Insurance . . . . . . . . . . .23 Preferred Property Program . . . . . . . . . . . . . .IBC Philadelphia Contributionship . . . . . . . . . . . . . .9 [ 24 ]

Judge finds use of pollution exclusion fishy When Theo Bohn purchased a cooperative apartment on New York City’s West 87th Street, he didn’t take into account a downstairs tenant – the famed Barney Greengrass deli, known as The Sturgeon King. Bohn claimed that the odors left him unable to work and caused him to lose money on the subsequent sale of his apartment. A legal domino effect ensued, eventually including a complaint against the deli. So Barney Greengrass turned to its Lumberman’s Mutual Casualty Co. CGL policy. The insurer, however, balked and cited its pollution exclusion. In her ruling, Southern District of New York Judge Buchwald wrote: “[W]hile the quality of the plaintiff’s restaurant smells may be in the nose of the beholder, defendant’s ‘pollution’ argument – as addressed to the odors here, is malodorous to the court…. [New York courts have] demonstrated a general reluctance to apply such exclusions literally in cases that do not involve traditional environmental pollution.” In the end, Lumberman’s was on the hook for the deli’s defense costs.

Source: Insurer ordered to defend ‘Sturgeon King’ against odor allegations, Mark Hamblett, law.com ----------------------------------------------------------------———————------The Last & Least column is dedicated to the industry’s oddities — from creative claims and kooky coverages, to (tasteful) jokes and strange stories. Submit yours to iab@iabgroup.com, subject line: Last & Least. The editor will happily protect sources’ anonymity upon request.

Our Apartment Program offers a great combination of

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Five or more units are eligible for this great program. An optional Apartmentizer Coverage Endorsement is also available which includes 34 additional coverages such as: Landlord/Owner Furnishings Loss of Earnings Lock Replacement Utility Interruption Water Back-Up of Sewers & Drains and much more! Apartment program available in DE, MD, NJ and PA

Residential Contractors with up to five employees can find great deals on liability and tools insurance at Brokers Surplus Agency! We represent UTICA First Insurance, one of the largest writers of small contracting firms in the Northeast!

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Blanket Additional Insured coverage and UTICA’s own “Toolbox Endorsement” which includes 7 bundled additional coverages saves your customers hundreds of dollars! Call or e-mail us today for a quick quote. Artisan program available in DE, MD, NJ & PA

Brokers Surplus Agency, P.O. Box 2849, Warminster, PA 18974 Call (215) 443-9900

In Pennsylvania & West Virginia 2307 Menoher Boulevard Johnstown, PA 15905 814-255-7878 1-800-452-0297 Fax: 814-255-6010

In Maryland 111 Warren Road Suite 1B Cockeysville, MD 21030 410-628-1744 1-800-759-7779 Fax 410-628-6914