Resources Magazine Fall 2016 by resourcesmagazine

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Contents ALLIANCE NEWS

FEATURES

4 The Evolution of D&O

What you need to know about Directors & Officers Liability Insurance—then, later, and now

BY CHRIS CHRISTIAN, CIC, RPLU

Do you know an “Outstanding CSR”? Nominations for the 2017 Outstanding CSR of the Year Award will be accepted starting January 1, 2017. Remember—you can win $1,000 just for nominating the national winner! Go to www.TheNationalAlliance.com/csr_award for details about how to nominate and WIN!

CISR Elite status and the NEW Insurance Essentials

The Sun Never Sets

Dynamics, job training for veterans, and podcasts

e’re pleased to present the national winner of the 2016 Outstanding CSR of the Year® award: Kelly D. McGowan, CISR Elite, Executive Commercial Lines CSR with NBT–Mang Insurance Agency, in Norwich, New York. After first competing on a state level, five finalists were selected for the national competition, with Kelly ultimately being chosen as the national winner—her dedication and commitment to personal and professional service earning her one of the highest honors in the industry.

Kelly receives a cash award of $2,000 and a gold and diamond lapel pin. Her name will be inscribed on a sculpture at The National Alliance headquarters and a scholarship for participation in a National Alliance program will be awarded to her employer. Angela Mattice, also of NBT–Mang Insurance Agency, receives a $1,000 cash award for nominating the national winner. Each national finalist (shown below) receives a $500 cash award and a gold and garnet lapel pin. The National Alliance extends a heartfelt congratulations to each of these deserving professionals.

Ask Bettie

20 Training for Everyone on Your Team National Alliance programs—education that drives successful careers

25 Free Webinars Outstanding topics—filling up quickly

12 The Three “R’s”

Home renovation, remodel, restoration

NATIONAL WINNER Kelly D. McGowan, CISR Elite NBT–Mang Insurance Agency Norwich, NY

See all of this year’s state winners on pages 38–39 of this issue. Read excerpts from Kelly’s and the four finalists’ essays in the next issue of Resources magazine.

NATIONAL FINALISTS

In the Spotlight

Movin’ on up!

BY JOANN CLARKE, CIC, CRM, CISR, CSRM, CPCU, ARM, ARe, AAI

COLUMNS

8 Legal Beat Social engineering: cyber or crime?

FEATURE

By Jerry Hargrove, J.D., CIC, CPIA, FCLA, SCLA, PICS, LICS, CBIA

26 Passing the Torch

16 Coverage Corner

What motivates Millennials?

Ride sharing, drones, and P&NC

By Jay Williams, CIC, CRM, AAI, AIP, ACSR

JACOB GARCIA INTERVIEWS THREE UP-AND-COMERS

22 On a Personal Note Black gold and the Homeowners Policy By Kathy Silvia, CIC, CPCU, CPIW, LIA

Robyn S. Henslin, CIC, CISR Cobb Stecker Dunphy & Zimmerman, Inc. Middleton, WI

Elizabeth M. Manley, CIC, CISR, CPIA, CWCC, PRIS Assured Partners NL Lexington, KY

Kelsey J. Purvis, CISR Ross & Yerger Insurance, Inc. Jackson, MS

Linda L. Wright, CIC, CRIS Rooney Insurance Agency, Inc. Tulsa, OK

28 International Dateline Mitigating travel risks An interview with Global Rescue

Website: www.TheNationalAlliance.com

EMAIL: alliance@scic.com

Phone: 800-633-2165

robust marketplace for Directors and Officers Liability coverage and its offshoots has been growing for over 50 years. Coverages and the marketplace have gone through many changes and transitions, and more are on the way. This article will acquaint you with the history of D&O coverage, the transitions it has gone through, and its current state. One of the most common misconceptions amongst closely held and managed company directors is that they have no liability because of the “corporate veil.” These directors are also quite frequently company owners, and when that’s the case, the corporate veil does protect them. However, it protects them only in their capacity as shareholders from personal liability for the corporation’s debts—it does not protect them in their role as directors or officers from the personal liability to which D’s and O’s are exposed. Please note that for purposes of duties, liability, indemnification, protection, and insurance, Limited Liability Companies (LLCs) are virtually interchangeable with corporations in the following discussion. Directors and officers have three duties recognized by common law: care, loyalty, and obedience. • The duty of care requires that the directors and officers exercise the same amount of diligence, skill, and attention in the performance of their activities as a similarly situated prudent person would. • The duty of loyalty requires that the directors and officers act in good faith and refrain from making decisions where the organization’s needs take a

It’s important to note that although corporations are generally able to indemnify their directors per the corporate by-laws, there are times they may choose not to, times they may not have the resources to do so, and times the law prohibits such reimbursement.

BY CHRIS CHRISTIAN, CIC, RPLU This article is the second in a series by Chris Christian and is provided for educational purposes only. The information presented is necessarily brief and paraphrased and is not legal advice. If any of the information here conflicts with specific policy language, the policy language holds. For part one of Chris’s series, see “The Wide, Wide World of Executive Liability” in the Summer 2016 issue of Resources magazine.

back seat to the directors’ and officers’ desires. • The duty of obedience requires that directors and officers conduct their business within the scope of the organizational documents, and in compliance with applicable laws. These duties are owed to the corporation, the shareholders, and any other stakeholders that may be affected by the directors’ and officers’ actions.

The History of D&O Coverage In addition to the long-recognized common law duties, The Securities Act of 1933 and the Securities Exchange Act of 1934 created both regulatory enforcement capabilities and the right of private action from investors, pertaining to securities transactions. The first D&O policy followed shortly thereafter from London. There was not a lot of interest in the coverage initially, but some unfortunate court cases that directly impacted directors’ pocketbooks provided a series of wake-up calls to the corporate world. By the 1980s, most publicly traded companies carried a D&O policy, comprised of two parts: 1) Coverage A: Indemnification of the individual Director or Officer 2) Coverage B: Reimbursement of the corporation for its indemnification of the Director or Officer. It’s important to note that although corporations are generally able to indemnify their directors per the corporate by-laws, there are times they may choose not to, times they may not have the resources to do so, and times the law prohibits such reimbursement. This is the reason we still have Side A coverage on policies today and a growing interest in that coverage; a fact which we’ll discuss a bit later. One of the critical concepts in D&O coverage is that of allocation. The principle is that each responsible party should bear a fair share of the loss. Some of the parties might be insureds; some might not. Some of the wrongful acts alleged might be covered, others might not. So, if the carrier expends defense money, or is involved in settlement negotiations at a certain dollar amount, they will expect to recoup those monies that reflect responsibility borne Continued on page 6.

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Resources | Fall 2016

The Evolution of D&O

…continued from page 5.

by a non-insured party, or damages and expenses resulting from an uncovered act.

Transitions That notion was turned on its ear in 1995 by the appellate decision in the Nordstrom v. Chubb case, and the resulting changes set the table for the birth of a robust marketplace for privately-held D&O insurance. In the case, Chubb tried to exercise the allocation provision to reduce its participation in a settlement, citing the corporation as a wrongful actor, and contending that the corporation needed to bear its share of the loss. Nordstrom disagreed, and the court found in their favor, concluding that (with some exceptions) the corporation could not have acted but for the Ds & Os, so there was no meaningful separation between the two for allocation purposes. This decision led to a cascade of responses in the marketplace, including naming an organization as an insured for securities claims on publicly traded D&O policies, and the launching of products that included an organization as an insured, and scaled down similar products for the privately held industry. Historically, most privately held companies had not purchased D&O insurance. It did not seem applicable to them, being perceived as focused on securities violations, and it was rare for a privately held company’s directors and officers to be named individually in a suit in their capacity as such. When privately held policies were first devised, underwriters added a few exclusions to the policy so they would not get drawn into predictable corporate disputes. Breach of contract, pollution, and product exclusions are some of the typical exclusions added. These exclusions applied solely to the entity, as the causes of loss were not normally seen as a threat against Ds & Os, and were not traditionally excluded in a D&O policy. From the mid-90s to the financial meltdown of 2008, this market segment enjoyed robust coverage, very competitive pricing, and explosive growth. Through the trials and

tribulations of 2008 and subsequent years, underwriters for privately held D&O insurance experienced significant claim activity. Interestingly, not many carriers withdrew from the marketplace. Rather, they tightened their underwriting practices, raised retentions and pricing, and most importantly, they started layering on exclusions. Many of the exclusions added or expanded in recent years apply to the individual insureds as well as the entity. This runs contrary to the historical purpose of D&O coverage and has significantly minimized coverage available under the privately held D&O form. The cure for this constriction of coverage is the purchase of Side A coverage. It may be purchased on a monoline basis, with or without a regular policy in place, or it may be purchased as an excess form over the primary D&O policy. In the latter case, a Difference in Conditions form will provide the needed coverage. Follow form excess Side A coverage is also available to preserve limits for the individual insured persons, but it will not help with coverage challenges.

Many of the exclusions added or expanded in recent years apply to the individual insureds as well as the entity. This runs contrary to the historical purpose of D&O coverage and has significantly minimized coverage available under the privately held D&O form.

Learn More, Earn More

The Current Landscape

The two-day James K. Ruble Executive Risk Seminar is a great place to learn about D&O coverages and endorsements, including fiduciary liability and employee benefits liability, employment practices, and operational management risks. Executive Liability Insurance, published by The National Alliance Research Academy, is also a good source of information about D&O exposures and insurance (shop www.TheNationalAlliance.com/bookstore).

Today, we still find a robust marketplace, but it’s a bit more conservative in its underwriting appetite and in coverage granted. Start-ups or insureds that have distressed financials are not welcomed with open arms, because underwriters can no longer assume that easy money is available to get an insured through a development phase or over whatever other humps may face them. More questions are asked about financial condition and business plans. Any mergers or acquisitions activity is carefully scrutinized. Retentions remain somewhat high, and the overabundance of overbroad exclusions continues to pose problems for coverage quality. Additionally, continuity of the prior and pending litigation date, the continuity date, or the application, are no

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longer a given, thus causing the danger of gaps when an insured moves carriers. The Securities and Exchange Commission recently cautioned that it would start turning its attention to securities transactions of privately held companies. For the time being, that attention will be focused on “unicorns,” which are privately held companies valued at over $1 billion. On the publicly traded front, there are continual expansions of SEC oversight and authority, which create an ever-shifting landscape for the insureds and their carriers. The marketplace is relatively stable, but the insured’s industry, financial condition, size, and any mergers and acquisitions activity will all impact market availability, as well as pricing and retention. Over the last three decades, there have been several major events for the D&O industry: • Court cases and evolution of the Side A/B form in the ‘80s, causing the percentage of insured publicly-traded companies to reach new highs; • A game-changing court decision in the ‘90s, launching coverage for the entity and, therefore, the privately held D&O industry; and • The financial meltdown and claims activity of the 2000s, causing retraction and a sobering of the industry. There’s no telling what will happen in the next decade or two, but you can be sure it will be something interesting. n

About the Author: Chris Christian, CIC, RPLU Chris Christian is a member of The National Alliance National Faculty. She stumbled into insurance in 1985 as a temporary worker in a bank-owned agency and got hooked on the delightful mix of legal concepts, contracts, sales, and services that comprise the industry. She has specialized in professional liability since 1991, working on the carrier and wholesaler sides. In addition to her daily practice of the art and science of wholesale brokering, Chris is a frequent contributor to industry publications, speaker at events and educational seminars, and the author of Cyber Insurance Basics, available on Amazon.

Through their generous donations, Academy Research Associates help fund and participate in the research and publication activities of The National Alliance Research Academy, and also assist in outreach efforts to attract students to the insurance industry through career-oriented programs offered in cooperation with various educational institutions. For more information about the benefits of becoming a Research Associate, contact William J. Hold at wjhold@scic.com, or call 800-633-2165, ext. 3325. Companies: AAA, Inc. All Risks American Agents Alliance Assurex Global Bancorp South Insurance Services, Inc. BB&T Insurance Services Bowen, Miclette & Britt Brown & Brown, Inc. CRC Insurance Services, Inc. Calhoun, Thomson, & Matza, LLP Disabled Veterans Insurance Careers (DVIC) HR&R Intergovernmental Pool Administration, Safety & Loss Control HUB International Hylant Inspirus ISU Insurance Agency Network Insurance Technologies Corporation Jerry Montgomery Memorial Research Fund Keystone Insurers Group Marble Box MarketScout, Inc. McGriff, Seibles & Williams Patra Corporation Popular Insurance, Inc. Selective Insurance Group, Inc. State Auto Insurance Companies Synergy Comp Insurance Company United Valley Insurance Services USI Southwest

Velocify Westwood Trust Zurich North America Associations: Alabama IIA IIAB of Arizona PIIA of Colorado PIA of Connecticut IIAB of Delaware Florida AIA PIA of Georgia IIA of Illinois IIA of Indiana PIA of Indiana Kansas AIA IIA of Kentucky PIA of Kentucky IIAB of Maryland Massachusetts AIA Michigan AIA Minnesota IIAB Missouri AIA PIA of Nebraska and Iowa PIA of New Jersey PIA of New York State IIA of North Carolina Ohio Insurance Agents IIA of Oklahoma IIAB of Pennsylvania IIAB of South Carolina Insurors of Tennessee PIA of Virginia and D.C. PIA of Washington/ Oregon PIA of Wisconsin

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L E G A L B E AT

JERRY HARGROVE, J.D., CIC, CPIA, FCLA, SCLA, PICS, LICS, CBIA or financial information that will allow a transfer of funds to the scammer. It may be as simple as a collection scheme, a misdirection scheme, or a vendor payment ruse leading a business to forward funds to a scammer who appears to be legitimate.

The Claims

Social Engineering Cyber or Crime?

n all things cyber related there is a totally new lexicon that must be learned to be part of the “in crowd” in daily conversation. However, losses where a computer is used to commit a crime are not the typical losses covered by cyber policies. There is a difference between using a computer to commit a crime and loss arising from the misuse of hardware or software. Two terms frequently used in today’s business world are social engineering and social engineer. • Social engineering is the act of utilizing techniques, such as manipulation or deception, to influence people (or program computers) to perform functions that result in theft or other harm. • A social engineer is the scammer/hacker/con artist who utilizes techniques to deceive people and/or uses computers to engage in activities that allow for the theft of confidential information, money, securities, and other property or commit other wrongful acts. (Examples: convincing peo-

Learn More, Earn More The National Alliance offers several avenues for learning more about cyber liability and crime coverage. Starting in 2017 with the expansion of the CIC Program, both crime and cyber risk will be covered in the NEW CIC Commercial Multiline Institute. The Ruble Cyber Risk Seminar also includes in-depth discussions on security breaches, identity theft, and loss control solutions. Additionally, cyber liability and crime are both discussed in Risk Management Essentials, published by The National Alliance Research Academy (www.TheNationalAlliance.com/bookstore).

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Theft of Tangible Property Other Than Money and Securities I was recently involved in a claim involving the shipment of more than $400,000 in tangible business equipment by a wholesale supplier to a supposed national company userclient. A social engineer was successful in scamming the wholesale supplier business for the full value of the order, plus the cost of shipping. The scammer, posing as a previous purchasing agent, contacted one of the supplier’s sales associates by email and requested a bid on equipment. The communications between the parties was casual, but on-topic, as if between two players who had previously worked together. The bid process took

ple to disclose passwords to gain access to a business computer; providing banking information to misdirect funds; placing bogus orders for tangible assets (equipment) by “shadowing” as a legitimate customer; or engaging in other mischievous acts to cause harm).

place over a three-week period—surely by design, since scammers are patient in order to create the proper environment. The purchase order required the equipment to be dropshipped on a specific date to an address in the town where the wholesaler was located. All the correspondence and banking information received from the pretext purchasing agent appeared to be in order. Once the purchase order was received, the sales associate “verified” payment instructions by calling the identified funds transfer banking contact listed on the purchase order. The wholesaler’s employee placed the order for the equipment to be shipped to the warehouse. When the terms of payment from the wholesaler to the manufacturer were not met, payment was demanded immediately. The wholesaler advised the manufacturer that they would contact the buyer and remit in a timely fashion. Upon attempting to locate the buyer by going to the address where the equipment was supposedly shipped, the wholesaler realized it had been duped. When the manufacturer was not paid promptly, it sued the wholesaler for the cost of the equipment, shipping, and legal expenses.

Pretexting is when the scammer pretends to be someone else, using deception and lies to create an environment that deceives others into parting with assets.

Thus, social engineer is just a cool tag for a scammer who uses technology, along with a play on human emotions, to engage in old fashion crime or vandalism. Although the social engineer may use hacking skills or sophisticated software to carry out criminal or wrongful acts, his or her schemes are often with a deft human touch, through the use of telephonic or email interactions. The social engineer often poses as an actual client, a vendor, a banking contact, or an employee or manager of a business organization.

The claim was reported to the wholesaler’s crime insurance carrier. The policy insuring agreement in place was a Computer Fraud form applying to the “unlawful taking of Money, Securities or Property” resulting from a “Computer Violation.” In actuality, the loss did not result from a “Computer Violation,” as defined. In addition, the form contained a “voluntary parting” (false pretense) exclusion.

The primary possibility of loss comes from many angles: • Client impersonation • Executive or other management impersonation • Supplier or vendor impersonation • Malicious data mining While social engineering spans a broad array of bad actions, this article explores the peril of theft by false impersonation.

Theft Schemes: Pretexting and Spear Phishing Pretexting is when the scammer pretends to be someone else, using deception and lies to create an environment that deceives others into parting with assets. Such assets include money, securities, and other property. Pretexting is used to encourage a person(s) to trust the scammer and voluntarily part with intangible or tangible property under a false pretense.

Danielle Garcia of CNN recently reported on another example of social engineering leading to Theft of Trangible Property Other Than Money and Securities, describing how sophisticated criminals in California have utilized little more than laptops and cell phones to abscond with over 600,000 loads of nuts (almonds, pistachios, etc.) in the past year. Read the entire article at www. cnn.com/2016/07/31/us/nutthefts-california/index.html.

The insurer properly denied the claim, resulting in an errors and omissions claim, against the agency. The policyholder alleged that a specific request had been made for the crime coverage to include the type of loss sustained (a “socially engineered” loss). Further, the policyholder alleged that Continued on page 10.

Spear Phishing is when a social engineer pretends to be a legitimate and trusted party who is contacting a specific individual in an effort to trick that individual into releasing funds

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Social Engineering … continued from page 9. they were able to find the exact coverage needed from another agent and provided the agency’s counsel with a copy of the replacement policy. Upon review, the replacement policy had a Social Engineering endorsement without the requirement of the “Computer Violation” wording and did not have a voluntary parting exclusion. However, counsel for the policyholder did not carefully read the form and, as a result, failed to recognize that the grant of coverage applied only to “Money and Securities” and did not grant coverage for “Other Property.” (Note: The ISO program endorsement reviewed later in this article was not available at the time the agent secured the crime policy.) Theft of Money: Spear Phishing Wire Transfer Fraud A large regional law firm’s practice specializes in commercial real estate. The firm closes many loans on a daily basis and the closing calendar is extremely tight and frantic. Once each closing is complete, the firm must disperse the transaction funds to the respective recipients in a timely manner. The firm had its first scheduled closing for the morning of February 16, 2016, at 9:30 am. The seller had previously completed all the paperwork necessary for the closing and was not in attendance. Shortly before the closing was to occur, the firm’s paralegal closing coordinator received an email, purportedly from the seller’s real estate agent, that provided a change in bank-wiring instructions for the netpurchase funds. The email had all the correct information related to the loan, including the correct email address and the name of a known party at the real estate firm. Once the formal closing was completed, the funds were sent in accordance with the emailed instructions. Near the end of the day, the real estate agent called to inquire about the timing of the funds dispersal and was told it had been completed within an hour of the closing. Upon investigation, the firm determined that a third party had gained access to the closing information by hacking into the real estate firm’s computer system and collecting the necessary information to carry out the ruse.

Social Engineering Coverage Options A loss induced by a social engineer is clearly a crime exposure. However, that does not mean that the coverage cannot be included in a cyber-policy package or endorsement. The following coverage options are available: • A company-specific manuscript Social Engineering endorsement or insuring agreement is a crime policy that includes “Money or Securities” and “Other Property,” defined as any tangible property other than “Money and Securities” that has intrinsic value. Closely read these forms to rule out certain types of excluded property apart from the “Other Property” definition. Also, parse the wording for other surprises that might have an adverse effect on scope of coverage.

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• Company-specific technology forms with False Pretense – Additional Coverage will generally include a sublimit. Give close attention to definitions, exclusions, and property not covered.

UNLEASH THE POWER WITHIN YOUR NEW

PRODUCERS

• The ISO Crime and Fidelity Program introduced endorsement CR 04 17 11 15 – Fraudulent Impersonation to cover loss resulting “from an employee being deceived into transferring money, securities, or other property by someone impersonating an employee of the insured or a customer or vendor of the insured. The endorsement has two Insuring Agreements:

OCTOBER 2–14, 2016

1. Fraudulent Impersonation of “Employee” Included, and 2. Fraudulent Impersonation of “Customers” And “Vendors” Included. Both insuring agreements include an underwriting requirement check-off option related to verification. Verification is not defined in the policy. The Oxford Dictionary defines verification as: “the process of establishing the truth, accuracy, or validity of something.” Verification is a precondition to coverage. The verification options are: A. Verification Is Required For All “Transfer Instructions,” B. Verification Is Required For All “Transfer Instructions” In Excess of dollar amount shown (in the endorsement schedule), and C. Verification Of “Transfer Instructions” Is Not Required. —“Transfer Instruction” is defined as “an instruction directing you to transfer ‘money,’ ‘securities,’ or ‘other property.’” —“Customer” is defined as “an entity or individual to whom you sell goods or provide services under a written contract.” —“Vendor” means “an entity or individual from whom you purchase goods or receive services under a written contract.” As always, the key to properly insuring the client is to recognize the exposure and match the coverage to the need. Practice safe insurance! n

About the Author: Jerry Hargrove, J.D., CIC, CPIA, FCLA, SCLA, PICS, LICS, CBIA

PRODUCER SCHOOL. OCTOBER 2–14, 2016. DALLAS, TX. The National Alliance Producer School takes new producers and transforms them—with learned confidence,

Jerry Hargrove retired as president of Northside Insurance Services in December 2003, after 36 years as an independent agent. He continues as Principal of Insurance Litigation Counselors, LLC, EdTrak™ Insurance Seminars, LLC, and Bank Insurance Examiners, LLC. Jerry has been a member of The National Alliance’s National Faculty since 1986.

practical sales skills, and insightful insurance expertise that will improve their ability to identify valuable new prospects and grow existing ones. Producers learn how to sell better and smarter. After 2 WEEKS TRAINING & PRACTICE with the best coaches in the insurance industry, new producers return to the office ready to join the hunt! Seating for Producer School is limited. Be part of the next pack of elite producers. Register now!

1-800-633-2165

WWW.

TheNationalAlliance.COM Resources | Fall 2016

When a client mentions any one of the Three “R’s,” the ears of the insurance professional should immediately perk up—

BIG time!

The Three “R’s” Renovation, remodel, or restoration—while the Three “R” words are frequently used interchangeably, there are differences. • Renovation – To restore to a former better state. Updating or replacing old with new such as installing updated flooring, kitchen cabinets, lighting, countertops, bathroom fixtures, wall coverings, windows, etc.

BY JOANN CLARKE, CIC, CRM, CISR, CSRM, CPCU, ARM, ARe, AAI

lip through television channels any day of the week, any time of the day, and you are sure to run across at least one home improvement show on the topic of renovations, remodels, or restorations. These shows introduce new ideas and concepts to turn a house considered a “flop” into a cozy family home. Or, the construction project is undertaken because the homeowner is convinced the house can be improved to meet their needs, rather than moving. These construction projects may look easier than they really are, enticing viewers to take on similar projects in their own home. The increase in DIY (Do-It-Yourself) home projects may be evidence of this. Even a person who is not an expert in home construction projects can easily find directions and “how-to” videos on the internet or through social media. And don’t forget the advice available from the expert at the local building supply store. Of course, the homeowner may also choose to skip a DIY and instead hire a contractor. A recent survey by the National Association of Home Builders’ (NAHB) showed larger remodeling projects such as whole house remodels, room additions, finished basements, and bathroom additions are trending up in 2016.

Learn More, Earn More Attend a CIC Personal Lines Institute to learn more about the various Homeowners exposures and coverages. The CISR Insuring Personal Residential Property Course also covers aspects of the Homeowners policy. And The National Alliance Research Academy’s P&C Insurance Essentials book has extensive material on the Homeowners Policy.

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• Remodel – To change the structure, shape, or appearance of something. This is more complex than a renovation since it involves changing the structure or use of the structure, and may require the rerouting of plumbing, gas, or wiring. An example of this is removing walls between the kitchen and the living/family room to gain that popular “open concept” floor plan or extending an exterior wall to gain additional living space. • Restoration – The act of returning something to its original condition. Using materials and techniques, features, finishes, fixtures, etc., from the original construction time period to replace or update what is currently there.

The Three “R’s” and the Homeowners Policy When a client mentions any one of the Three “R’s,” the ears of the insurance professional should immediately perk up—BIG time! Why? In the event of a loss while the construction project is in progress, the property and/or liability coverage provided by a homeowners policy may be inadequate for the increased exposures introduced by a construction project. • If the insured moves out of the home during construction, coverage could be jeopardized if it is determined the home is vacant and/or the client is actually a resident of another household. • While HO-3 Homeowners policies may typically provide coverage under Coverage A – Dwelling for material and supplies used to construct, alter, or repair the dwelling, the material and supplies must be located on or next to the “residence premises.” This doesn’t include coverage for the material and supplies that may be located elsewhere. • Whether a DIY project or a project employing a contractor, the insured may have assumed the liability of another for a bodily injury/property damage loss. • There may be a workers’ compensation exposure associated with the project for which the insured may be responsible. While these are legitimate concerns and deserving of further analysis and discussion, the focus of this article is on

how any one of the Three “R” projects may reduce the amount payable to the insured based on the Section I – Property Loss Settlement Provision.

Section I – Property Loss Settlement Provision Most would agree that one of the greatest challenges in writing a Homeowners Policy is determining the current replacement cost of the home. While insurance companies may use the term rebuilding cost rather than replacement cost, both refer to the cost to repair or replace with like-kind and quality. Costimators have been around for well over 40 years. These use factors such as total square footage, number of stories, attached garages, fireplaces, quality of construction, and location when calculating the replacement cost of a home. Recently, costimators have become more sophisticated by including additional factors, such as types of flooring (hardwood, linoleum, tile, carpet, etc.) and the percentage of each type in the home. For example, the percentage of wallpaper can be factored into an estimate. These calculation tools provide an indication of the current replacement cost and enable you to have the conversation with your prospect or client that allows them to make an informed decision about the limit of insurance on their home. Of course, this is always subject to the insurance company’s underwriting requirements. While most insurance professionals do a great job of insuring their clients’ home for the full replacement cost by gathering accurate information from clients and using the best tools available, there is no guarantee that the replacement calculation is 100 percent accurate or that it will remain 100 percent accurate. For this reason, insurance professionals often rely on a “peace of mind” change to the loss settlement provision. This “peace of mind” is typically provided by an endorsement (which may be referred to as Extended Replacement Cost or Additional Limits for Coverage A – Dwelling) that removes the 80 percent insurance-to-value requirement and provides coverage in excess of the Coverage A – Dwelling limit shown on the declarations if needed at the time of a loss. Insurance companies offering these endorsements (or including in the policy as a coverage enhancement) typically require the home to be insured for 100 percent of its replacement cost. The endorsement then provides additional coverage, either unlimited or capped to a percentage of the dwelling limit (125%, 150%, or more) when the actual replacement cost or rebuilding cost exceeds the Coverage A – Dwelling limit at the time of a loss. The coverage provided by these endorsements, however, may lead to a false sense of security. Continued on page 14.

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theThree“R’s”… continued from page 13.

Do you have a question to “Ask Bettie?” Bettie Duff, Senior Vice President of Customer Care, has been with us more than 35 years and is the person to contact for information on just about anything related to operations and procedures. Email your questions to: bduff@scic.com.

The Insuring Agreement in endorsements such as these typically contains the following or similar language: To the extent that coverage is provided, we agree to amend the present limits of liability in accordance with the following provisions:

Dear Bettie,

A. If you have:

Being able to customize my learning track as I pursued my designation was what most attracted me to the CISR Program. I gained so much benefit from those first five courses that I’m now considering taking all four of the others. The prospect of rounding out my industry knowledge is very intriguing, and I heard from my colleague that if I complete all nine courses, I’ll even get some kind of special recognition. Can you tell me more?

1. Allowed us to adjust the Coverage A limit of liability and the premium in accordance with: a. The property evaluations we make; and b. Any increases in inflation; and 2. Notified us, within 30 days of completion, of any improvements, alterations or additions to the building insured under Coverage A which increases the replacement cost of the building by 5% or more; the provisions of this endorsement will apply after a loss, provided you elect to repair or replace the damaged building.

And Now, the Connection to the Three “R’s” If a client has a renovation, remodel, or restoration project, the “peace of mind” protection relied upon by both the insurance professional and the client may not be available IF the construction project both (1) increased the replacement cost of the dwelling by more than 5%; and (2) the client failed to notify the insurance company (or its agent) within 30 days after completion. Of course, the Coverage A – Dwelling limit and the extent of the construction project dictates whether or not the 5% has been exceeded. To further complicate matters, when the requirements of this endorsement’s Insuring Agreement have not been met, the insured will not have access to the increased percentage of coverage and may also face a penalty since the insurance-to-value requirement comes back into play. So what can insurance professionals do? 1. Risk management is the key! The first and most important step in the risk management process is risk identification. Incorporate questions into your renewal questionnaire that ask clients if they are planning any renovation, remodel, or restoration. When talking with clients during routine service calls, ask them if they have, or are planning, any home construction projects. Additional questions will determine the extent of the project—and identify which of the Three “R’s” best describes the clients’ project. 2. Remain aware of the real estate market in your geographic region. Tough market conditions may prohibit an insured from selling their home for the price they need to get, which may result in a decision to renovate, remodel, or restore their home to meet their needs. 3. Include information on your website or use social media to let clients know the importance of informing you if they will be renovating, remodeling, or restoring their home. The best time for you to know about it is before it begins!

14 Resources | Fall 2016

—Susan Bond, CISR Dear Susan, Congratulations on earning your CISR designation! We applaud your enthusiasm and commitment to professional education. The CISR Program has evolved to offer participants more options, and ultimately, more value. We believe that CISRs who choose to go that “extra mile” by successfully passing the four additional CISR courses DO deserve special recognition for such an ambitious accomplishment. By completing all nine CISR courses— in the classroom or online—you will have earned the distinction of “CISR Elite” and will be awarded a special certificate and gold CISR Elite lapel pin. In addition to rounding out your industry knowledge, you’ll become a model of drive and professionalism—to your employer, colleagues, and clients, alike. Now, go for it!

…let clients know the importance of informing you if they will be renovating, remodeling, or restoring their home.

ELITE Society of Certified Insurance Service Representatives The Board of Governors of the Society of Certified Insurance Service Representatives hereby recognizes that the herein named has gone above and beyond the academic requirements of the Certified Insurance Service Representatives Program, successfully completing all nine courses, and thereby designates as a duly accredited CISR Elite:

Lauren J. Ipsum, CISR Elite This individual shall have all the rights, responsibilities, and recognition pertaining to the CISR Elite status, and may continue to receive such so long as the designee meets the continuing education standards prescribed by the Society. May 25, 2013

President

Chairman

—Bettie Dear Bettie, The staff members in my agency possess a wide range of experience levels and exposure to insurance concepts—all the way from newcomers to seasoned pros. I’d really like to find some kind of comprehensive reference material—all in one place—that clearly spells out the basics of property and casualty insurance for our newbies, while also serving as a source of up-to-date information for our most experienced employees and everyone in between. What do you recommend?

4. Be cautious about over-relying on the protection provided by a “peace of mind” endorsement and passing that over-reliance to your clients.

Conclusion A working knowledge of how the Three “R’s” potentially affect your clients’ insurance protection has never been more critical with clients spending more money today on renovations, remodels, and restorations.

—James Martin, CIC Dear James, I know just the thing! The National Alliance Research Academy recently released its 9th edition of Property & Casualty Insurance Essentials. This publication is our #1 best seller, and is completely up-to-date, with over 500 pages of practical and thorough information. Discussions about the most important aspects of both personal and commercial lines insurance, along with detailed explanations of policy terms, coverage forms, conditions, endorsements, exclusions, and limits, makes Insurance Essentials an ideal publication for your entire staff. Utilizing powerful example scenarios to cover key aspects of Homeowners, Commercial General Liability, Workers Compensation, and dozens of other pertinent topics in easy-to-understand language, Insurance Essentials delivers foundational knowledge, as well as ready reference material. It also includes a CD study guide to help with mastery of the material.

The next issue of Resources will focus on how the Three “R’s” impact coverage provided by a homeowners policy designed for high net worth clients. n

About the Author: JoAnn Clarke, CIC, CRM, CISR, CSRM, CPCU, ARM, AAI, CPIW, ARe JoAnn is the Personal Lines Academic Director for The National Alliance, in addition to being a National Faculty member and an Educational Consultant. She has been in the insurance industry for over 40 years, with past experience as an agency CSR, a marketing representative for an insurance company, a state regulator, a college faculty member, and the owner of a consulting practice.

This new 9th edition of Property Casualty Insurance Essentials is perfect for office giftgiving and affordable too: $65 for paperback and $55 for e-book. Visit our bookstore at www.TheNationalAlliance.com to purchase your copies. —Bettie

Resources | Fall 2016 2016

COVERAGE CORNER

JAY WILLIAMS, CIC, CRM, AAI, AIP, ACSR

Ride Sharing, Drones, and Primary & Noncontributory

ISO has recently filed endorsements for these emerging exposures for both the Commercial Auto and Commercial Umbrella/Excess programs…

New Endorsements for Emerging Exposures

ne thing I’ve always enjoyed about being in this crazy business called insurance is that just when you think you know everything, it all changes! To me, that’s good for two reasons: 1) I love to learn new things; and 2) there is a never-ending source of information to teach. Since the turn of the century (don’t you love saying that?), we have certainly had our share of new things to learn, and then, in turn, teach to others. Ride sharing with Uber, Lyft, and others has become quite popular. I confess that I actually use them after resisting for a couple years. Drones are becoming popular in the business world. One of our local TV network stations proudly touted themselves as “the only station in Florida with a drone camera” as they gave us a bird’s eye view into a sinkhole. Being an avid golfer, I love to watch the drone views they show of each hole during a tournament. I think they are spectacular!

Learn More, Earn More Both of the CISR Commercial Casualty courses and the CIC Commercial Casualty Institute offer education about unique commercial liability exposures and coverages. Commercial liability exposures and coverages are also discussed in P&C Insurance Essentials, published by The National Alliance Research Academy. Shop for this title, and many others, at www.TheNationalAlliance.com/bookstore.

16 Resources | Fall 2016

Then there’s the primary and noncontributory issue. While this is not exactly new, the idea of adding such an endorsement to the Business Auto and Commercial Umbrella Policies has become a pressing issue.

• CA 23 44 – Public Or Livery Passenger Conveyance Exclusion

ISO has recently filed endorsements for these emerging exposures for both the Commercial Auto and Commercial Umbrella/Excess programs with an expected effective date of November 1, 2016. Of course, each state will need to approve the use of the forms, and companies will need to subsequently adopt the forms. As a result, it will be important to keep an eye out to see if and when those forms will impact your insureds.

• CU 21 89 – Public Or Livery Passenger Conveyance Exclusion

Let’s take a look at these endorsements.

Ride Sharing (or TNCs) The most commonly referenced TNCs (Transportation Network Companies) are Uber and Lyft. Via a mobile application, passengers can request a vehicle, the request is then accepted by a driver, and the passenger is then picked up and dropped off at the requested location. At the end of the ride, payment is usually handled through the mobile app rather than through a direct credit card transaction or with cash. In addition to the now typical TNCs, there are on-demand providers of delivery and courier services that are becoming popular. Services such as UberEats, GrubHub, Instacart, and Postmates will deliver food or other products to customers. Similar to TNCs, the on-demand delivery is arranged via an online or digital platform. The coverage and rates for the Commercial Auto and Commercial Umbrella/Excess programs do not adequately address these emerging exposures. ISO, therefore, has developed the following exclusionary endorsements:

• CA 23 45 – Public Or Livery Passenger Conveyance And On-Demand Delivery Services Exclusion

• CU 21 90 – Public Or Livery Passenger Conveyance And On-Demand Delivery Services Exclusion • CX 21 46 – Public Or Livery Passenger Conveyance Exclusion • CX 21 47 – Public Or Livery Passenger Conveyance And On-Demand Delivery Services Exclusion These endorsements address the insurance exposures related to public or livery conveyances for passengers, including any period of time that an insured is logged into a “transportation network platform” as defined in the endorsement. The exclusions that include the on-demand delivery address the public and livery conveyance issue as well as the exposures related to providing on-demand “delivery services” through a “transportation network platform” or “delivery service platform” as defined in the endorsements.

Drones In 2014, ISO introduced endorsements to both the CGL and the Commercial Umbrella/Excess programs to address dronerelated liability exposures that were underwriting factors at the time. Two years down the road and it’s already time to make some necessary changes. As a result, ISO has introduced four new endorsements and modified two others. Let’s take a look at the CU 21 74 – Exclusion – Unmanned Aircraft – Limited Following Form Exception. This is a new

endorsement that expressly excludes Bodily Injury, Property Damage, and Personal and Advertising Injury arising out of the ownership, maintenance, use, or entrustment to others of any unmanned aircraft. The exclusion contains a definition of unmanned aircraft that includes aircraft that is not designed, manufactured, or modified after manufacture to be controlled directly by a person from within or on the aircraft. As it relates to Coverage A – Bodily Injury and Property Damage Liability, the endorsement replaces and delineates Exclusion j. in the Commercial Umbrella form. Unlike the current Exclusion j. in the umbrella form, j.(1), which specifically relates to unmanned aircraft, it does not contain limiting language concerning any aircraft owned or operated by or rented or loaned to any insured, nor does it contain any exceptions with respect to liability assumed under any insured contract for the ownership, maintenance, or use of aircraft. Additionally, Exclusion j.(1) does not contain an exception for aircraft chartered by, loaned to, or hired by the named insured with a paid crew and not owned by any insured. Exclusion j.(1) contains an exception to the above language to the extent that it follows any underlying form where coverage exists, or would have existed, if the limits have been exhausted. In other words, if the CGL or other coverage form listed in the underlying coverage schedule provides for such coverage, this exclusion does not apply to the extent that it matches the underlying coverage. Exclusion j.(2), on the other hand, is specifically for aircraft (other than unmanned aircraft) or watercraft. This portion of the exclusion generally tracks the exclusion in the current form and maintains its limited exceptions. In addition, the Continued on page 18. Resources | Fall 2016

Ride Sharing, Drones, and P&NC … continued from page 17. exclusion also includes an exception for unmanned aircraft, since unmanned aircraft is addressed in j.(1). With respect to Coverage B – Personal and Advertising Injury Liability, an exclusion is added for liability arising out of the ownership, maintenance, use, or entrustment to others of any unmanned aircraft. The exclusion does not apply to the extent that there is valid underlying coverage that exists, or would have existed, but for the exhausting of the underlying limits. The next new endorsement, CU 21 81 – Unmanned Aircraft – Limited Following Form Exception (Coverage A Only), is similar to the CU 21 74. As noted in the endorsement title, the exclusion only applies to Coverage A. Similar in nature, the CU 21 91 – Unmanned Aircraft – Following Form Exception (Coverage B Only) leaves Coverage A unmodified and only applies to Coverage B. Two other commercial umbrella endorsements have been modified to apply when the CU 21 74 or the CU 21 81 are also attached. Those endorsements are CU 21 24 – Exclusion – Non-Owned Aircraft and CU 21 05 – Exclusion – Employees And Volunteers As Insureds. The final new endorsement applies to the Commercial Excess Liability Coverage Part. The CX 21 48 – Exclusion – Unmanned Aircraft – Exception For Scheduled Controlling Underlying Insurance applies with respect to unmanned aircraft to Section I – Coverages, Paragraph 2. Exclusions. The endorsement provides exceptions to the exclusions for the following, provided any policies shown in the underlying insurance schedule on the endorsement provides coverage: • Insurance does not apply to injury or damage arising out of the ownership, maintenance, use, or entrustment to others of any aircraft that is unmanned aircraft • The exclusion above does not apply with respect to any controlling underlying insurance listed in the schedule of the endorsement • A definition of unmanned aircraft is added similar to that discussed above • Loading or unloading is defined as handling of property after it is moved from the place where it is accepted for movement into or onto an unmanned aircraft, while it is in or on an unmanned aircraft, or while it is being moved from an unmanned aircraft to the place where it is finally delivered. Loading or unloading does not include the movement of property by a mechanical device, other than a hand-truck, that is not attached to the unmanned aircraft.

Primary and Noncontributory Many agents, especially those who deal with construction risks, are familiar with the primary and noncontributory issue. From the CGL perspective, an ISO endorsement has been available for the past three years. The Business Auto Coverage Form (CA 00 01 10 13) Other Insurance Condition says: Regardless of the provisions of Paragraph a. above,

18 Resources | Fall 2016

Updates on new opportunities and hot topics The National Alliance is developing to help you stay competitive, today and tomorrow.

this Coverage Form’s Covered Autos Liability Coverage is primary for any liability assumed under an “insured contract”. In essence, the liability assumed under a written contract or agreement is primary for that situation. Recently, there has been a push to include an endorsement for the Commercial Auto program similar to the CGL that specifically

Dynamics of Selling–Sweet 16

Recently, there has been a push to include an endorsement for the Commercial Auto program similar to the CGL that specifically states the name of the person or organization to which the extension applies.

Within the 16 full hours of interactive training you’ll get when you attend a Dynamics of Selling program, you’ll learn how to implement a winning insurance-specific sales process, super-qualify your prospects, demonstrate value, overcome objections, set goals, cultivate competitor-proof relationships, and close the sale! Formerly 20 hours, the new 16-hour Dynamics of Selling format delivers all the same benefits, same expert instructors, and same street-tested sales skills— with the added benefit of only two days away from the office. Full attendance at a Dynamics program qualifies for one year of update credit for dues-paid CICs, CRMs, and CPRMs, and up to two years credit for dues-paid CISRs and CSRMs. Register today for one of these Dynamics of Selling programs: Plymouth/Minneapolis, MN.......................Sept. 12–13, 2016 San Antonio, TX........................................... Oct. 11–12, 2016 St. Charles/St. Louis, MO...................... Oct. 31–Nov. 1, 2016

states the name of the person or organization to which the extension applies. The endorsement makes the named insured’s policy primary and noncontributory provided that: 1) the person or organization is named on other insurance available to them; and 2) there is a written contract or agreement that makes the named insured’s policy primary and will not seek contribution from any other insurance available to the person or organization named in the endorsement.

Kenner/New Orleans, LA.....................................Dec. 5–6, 2016

Hire A Veteran! Careers For Life and Disabled Veterans Insurance Careers (DVIC) are Working Together to Benefit Veterans and Our Industry

In addition to the new endorsement above, ISO is also introducing CU 24 78 – Noncontributory – Other Insurance Condition for Commercial Umbrella and CX 24 33 – Noncontributory – Other Insurance Condition for Commercial Excess. This change was also made because of requests from agents and insurers in order to comply with the terms of many construction agreements.

Have you found it challenging to find the “right” person to hire for your agency or company? We can help! Having visited major U.S. military installations, we have found many great Americans who have served our country and are interested in careers in the insurance and risk management industry. Careers For Life and DVIC are working together to provide those career opportunities to veterans, military service men and women, including their spouses and family members, by offering employment opportunities along with the insurance education and training that will allow them to succeed. The National Alliance is leading this effort by offering CIC, CRM, and CISR education and designation programs to prepare them for a strong, professional civilian career.

Final Comment I think we can expect more changes soon since these exposures, and others like them, continue to arise and evolve. n

We can connect you with these fine men and women who are mission-focused, disciplined, trainable, and team oriented. They are ready to be interviewed! We need your help in identifying career opportunities for them. Please join us in this effort! If you have an open position—or will in the future—and would like to explore the possibility of hiring one of these veterans, please email your contact information and position description to CareersForLife@scic.com.

About the Author: Jay K. Williams, CIC, CRM, AAI, AIP, ACSR Jay has been in the insurance industry since 1979 and has served on the agency, association, and company sides of the business, giving him a uniquely rounded perspective. Jay is both a CISR faculty member and a member of the CIC National Faculty.

State and federal tax benefits may be available when hiring a veteran. Training costs may also be reduced if VA Benefits are available.

Most Popular Podcasts The National Alliance Research Academy’s Insurance and Risk Management Knowledge Alliance website (http://irmka.scic.com) hosts a series of podcasts called “Speaking Insurance.” New podcasts are posted regularly and feature interviews with insurance and risk management professionals—industry experts who “talk the talk” and “walk the walk.” These professionals provide practical knowledge and ideas listeners can apply to become more successful in their careers. What is their background and how did they achieve their success? What industry developments and trends do they foresee? How can we take advantage of new developments and technologies? What habits contribute to the effectiveness of industry experts? What resources do they recommend? Some of the most popular podcasts from 2016 include: The Power of Training, with Taylor Romrell Attracting Millennials to the Insurance Workforce, with Linda Luka, CPCU, CIIP, CISR, AIS, DAE, AAI Demystifying Multinational— A Global Insurance View, with Donna Pankotai, CIC, CRM, ARM The Value of the Independent Agent, with Mike Becker Young CISR, with Kelsey Pervis, CISR These, and many more highly relevant topics (each podcast is about 15 minutes long), can be found at http://irmka. scic.com.

Resources | Fall 2016

Train Your Team with Our Programs

www.TheNationalAlliance.com Call toll-free: 800-633-2165 • Email: alliance@scic.com

National Alliance Programs offer prestigious designations and career development for all insurance and risk management professionals. As a National Alliance designee, you already understand the value and pride of obtaining a professional insurance or risk management designation. Reaching far beyond mere CE requirements, your commitment to life-long continuing education is a symbol of your dedication to your customers, your employer, and yourself. What will be your next move? Dozens of National Alliance education opportunities await you and your team. Pursue an additional designation to broaden your repertoire; let us help train your producers and bring your newto-the-industry employees up to speed; reduce your E&O risks by training your team; fine-tune your sales culture for profitable results; stock your reference library with top-notch reference materials and publications; and increase customer (and employee) retention with valuable customer service skills. Our programs are known—first and foremost—for their “put-itto-use today” practicality, as well as their affordability and accessibility. Some provide the best networking value when presented in a classroom setting, while many others maximize convenience with a choice of classroom or online formats; and the majority of our programs can be customized for in-house group training. All are taught by practicing industry professionals, using regularly-updated curricula. The National Alliance now offers five highly respected and internationally recognized professional designations: • Certified Insurance Counselor (CIC) • Certified Risk Manager (CRM) • NEW Certified Personal Risk Manager (CPRM) • Certified Insurance Service Representative (CISR) • Certified School Risk Manager (CSRM)

20 Resources | Fall 2016

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Insuring Flood Exposures— NFIP Review

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In many states, The National Alliance partners with professional state organizations to present certain CE programs in that state. We appreciate these licensee organizations and their spirit of cooperation as we work together to bring the number one insurance and risk management continuing education programs to their areas. Alabama IIA, Inc. IIAB of Arizona, Inc. IIA of Arkansas PIIA of Colorado, Inc. PIA of Connecticut, Inc. Florida AIA PIA of Georgia, Inc. IIA of Illinois IIA of Indiana, Inc. PIA of Indiana, Inc. Kansas AIA IIA of Kentucky, Inc. PIA of Kentucky, Inc. PIA of Louisiana, Inc. Massachusetts AIA Michigan AIA Minnesota IIAB Missouri AIA Montana Insurance Education Foundation IIA of Nebraska PIA of Nebraska & Iowa PIA of New Jersey, Inc. PIA of New York State, Inc. IIA of North Carolina Ohio Insurance Agents Association IIA of Oklahoma PIA Western Alliance Insurance Agents & Brokers of PA, MD, & DE PIA of Puerto Rico and the Caribbean IIAB of South Carolina Insurors of Tennessee TASBO Utah AIIA PIA of Virginia & DC PIA of Wisconsin, Inc. Wisconsin Association of School Business Officials Washington Association of School Business Officials Association of Wyoming Insurance Agents

Resources | Fall 2016

ON A PERSONAL NOTE

KATHY SILVIA, CIC, CPCU, CPIW, LIA

Can clients protect themselves from an uncovered property loss or an inadequately covered liability loss for situations such as this?

Oil, that is…black gold, Texas tea …and the Homeowners Policy

hil and Terri came home after a weekend at the beach. As soon as they walked through the front door, the odor hit them. Investigating to find the source, they discovered a puddle of oil on their floor that was finding its way into seams between the floorboards. Going outside, Phil discovered oil bubbling up through the ground and the sheen of oil clearly visible on the lawn. The cause of all this damage? Oil was leaking from the pipe connecting their 200-gallon oil tank to their furnace! While Phil and Terri may complain about the cost of $2.25 per gallon to replace the lost oil, there is a bigger problem for them to worry about. Who is going to pay for the cleanup of their house, personal property, and yard? These types of losses can also become an environmental nightmare when the oil that leaks into the ground eventually finds its way to a stream or an adjacent property. How does Homeowners insurance respond to these types of property and liability

Learn More, Earn More Attend the CIC Personal Lines Institute for an in-depth study of Homeowners exposures and coverages. The CISR Insuring Personal Residential Property Course covers many aspects of the Homeowners policy, as well. And the NEW P&C Insurance Essentials, published by The National Alliance Research Academy, contains a full chapter devoted to the Homeowners policy.

22 Resources | Fall 2016

losses? Is there an endorsement an insured can purchase to protect them when something like this happens? Let’s find out.

Property Coverage Under the Homeowners Policy The ISO Homeowners 3 – Special Form covers building and other structures on an “open peril” basis, which means that any direct physical loss is covered unless it is specifically excluded. So the question is whether or not there is an exclusion for the damage to the dwelling caused by the oil. We soon find there is a pollution exclusion. This exclusion takes away coverage for a loss caused by the discharge, dispersal, seepage, migration, release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape is itself caused by a Peril Insured Against named under Coverage C.

Oil is a pollutant Since the pollution loss in this as defined in the scenario was caused by a pipe wearing out, the resulting dam- Homeowners Policy since age to their dwelling is not pollutants is defined as covered since the cause of loss— any solid, liquid, gaseous, wear and tear—is not one of the or thermal irritant or 16 Coverage C Named Perils. contaminant, including Likewise, any damage to per- smoke, vapor, soot, fumes, sonal property is not covered for acids, alkalis, chemicals, the same reason. And the carrier and waste. Waste certainly will not pay the cleanincludes materials to be up costs involved in removing recycled, reconditioned, the oil or any additional living or reclaimed. expenses incurred while the homeowners live in a hotel during the cleanup and repairs.

Liability Coverage Under the Homeowners Policy What about liability? What if the oil leaks into the ground and ultimately ends up in the groundwater or in a stream that runs below the home? What happens when the groundwater of neighboring premises is polluted due to the oil spill? Will Phil and Terri’s Homeowners policy cover the bodily injury or property damage caused by the oil pollution? The Insuring Agreement in Section II – Liability Coverages of the ISO Homeowners Policy states the policy will cover a claim caused by an occurrence to which the coverage applies, up to the limit of liability for the damages for which an insured is legally liable. The good news is that there is NO pollution exclusion in Section II of this policy. But, do they have enough coverage? Even $300,000 or $500,000 may not be enough, especially considering a leak could go undetected for an extended period of time. And often, the Personal Umbrella/Excess Policy excludes pollution.

Why Additional Coverage May Be Needed To recap the coverage provided by the ISO Homeowners Policy: Unless the loss was caused by one of the Coverage C Named Perils, the unendorsed ISO Homeowners Policy DOES NOT provide Section I Property Coverage. However, Section II Liability Coverage IS PROVIDED up to the Limit of Liability, for an insured that is legally responsible for bodily injury or property damage caused by the fuel leak (pollution). Can clients protect themselves from an uncovered property loss or an inadequately covered liability loss for situations such as this? It seems the answer is maybe!

ISO’s Property Remediation For Escaped Liquid Fuel And Limited Lead And Escaped Liquid Fuel Liability Coverages (HO 05 80) Endorsement This endorsement to the HO-3 is both good and bad, which is important for insurance professionals to understand. Good for a Section I Property loss, but potentially bad for a Section II Liability loss. What a dilemma this causes!

ISO also has similar endorsements for the HO-4 Contents Broad Form (Tenants Form) and the HO-6 UnitOwners Form.

Good For the client concerned with a property loss, this endorsement can be used to provide property coverage from $10,000 up to $100,000. The selected limit is shown in the endorsement’s Schedule and is an Aggregate Limit for all locations, for all damage that is incurred during a single policy year. Coverage is provided for loss to real property (including land owned by an insured—other than farm land—on which a building or structure is located) “Residence Premises” and personal property. (Both real is redefined only for property and personal property the coverage provided are defined terms in the endorseby this endorsement to ment.) In addition, it provides coverage for expenses incurred to: • Take temporary measures to stop any further escape from the fuel system; and to hold back or stop the spread of fuel already escaped;

include any location shown in the Schedule of this endorsement. Coverage could be extended to an additional location. Continued on page 24.

Resources | Fall 2016

Oil, that is…black gold, Texas tea…continued from page 23. • Clean up, remove, or treat loss to covered property; and • Test, monitor, or assess the effects of escaped fuel in, on, or away from covered real property as required by law or in response to a request, demand, or order by a governmental authority or court of law. Limited coverage is also included for trees, shrubs, and plants, still subject to 5% of Coverage A. However, unlike

endorsement, the limits on the Schedule replace the limits on the Declarations! This is potentially a reduction in coverage!! Let’s examine this more closely. Without this endorsement, your client has coverage up to their Section II Limit for legal liability due to bodily injury or property damage (as long as the loss is not otherwise limited or excluded). And

President/Publisher William T. Hold, PhD, CIC, CPCU, CLU Editor-in-Chief/Senior Art Director Becky Keeling bkeeling@scic.com

Clients need to weigh the good of gaining property coverage against the bad of potentially reduced Section II limits when deciding whether or not to add this endorsement to their HO Policy. the unendorsed policy that limits coverage for any one tree, plant, or shrub to $500, this endorsement also applies the $500 limitation to lawns. An advantage of this endorsement is that Coverage D – Additional Living Expenses is provided when a loss payable under this endorsement makes the residence not fit to live in. Of course there are exclusions for loss due to diminution or reduction in market value, cost to replace the fuel; and the cost to demolish, remove, repair, rebuild, or restore any part of a “fuel system.” The endorsement also spells out that it will not pay for escape from a container, tank, or vessel that are, or were, used to hold liquid fuel and part of a motor vehicle or watercraft, or related lines or parts that are, or were, connected to a motor vehicle or watercraft. Bad The Section II Liability coverage automatically provided by this endorsement is $50,000 on an Aggregate Basis. (Coverage can be increased to either The Section II limit $100,000 or $300,000.) Loss assessin this endorsement ment coverage is also provided up does not apply to to the full aggregate limit available a fire or explosion for a loss assessment charged beresulting from the cause of damage from the escape of escaped fuel. For fuel.

these situations, the Section II Liability Limit on the Declaration applies.

Aggregates are not common in personal lines, so it is worth a reminder that an aggregate is the maximum that will be paid during the policy period, regardless of the number of separate occurrences.

Liability coverage is provided for bodily injury and/or property damage caused by the escape of liquid fuel from a “fuel system” for which an insured is legally responsible. Medical Payments To Others is also included. So what makes this bad? Simply stated, for losses covered by this

24 Resources | Fall 2016

Department Editors Mary I. Husk, CIC, CRM, CPCU mhusk@scic.com Beverly A. Messer, CIC, CRM, CISR bmesser@scic.com D. Darelle White III, CIC, CPCU dwhite@scic.com Elsa C. Sanchez, CIC, CRM esanchez@scic.com

remember, pollution liability from an oil tank was not excluded. If your client has a $500,000 Section II limit, the entire $500,000 is available. However, once this endorsement is part of the policy, the coverage for pollution liability arising out of a fuel system is limited to the amount shown in the Schedule—and the maximum amount available is $300,000.

JoAnn M. Clarke, CIC, CRM, CISR, CSRM, ARM, ARe, AAI, CPIW jclarke@scic.com Contributing Editor Carol Crysup, CISR Elite ccrysup@scic.com Donna Loughran

Conclusion

Contributing Designers Chuck Lickert

Clients need to weigh the good of gaining property coverage against the bad of potentially reduced Section II limits when deciding whether or not to add this endorsement to their Homeowners Policy. To do so, insurance professionals need to provide their clients with enough information to make an informed decision. And, that is where you come in!

Resources is published by The National Alliance for Insurance Education & Research, P.O. Box 27027, Austin, TX 78755-2027, 800-633-2165, Fax: 512-3496194, Internet: www.TheNationalAlliance.com, email: alliance@scic.com. At present, Resources is available to dues-paid Certified Insurance Counselors (CICs), Certified Insurance Service Representatives (CISRs), Certified Risk Managers (CRMs), Certified School Risk Managers (CSRMs), Certified Personal Risk Managers (CPRMs), and affiliates of The National Alliance Research Academy. Entire contents Copyright © 2016, The National Alliance for Insurance Education & Research. All rights reserved. Material in this publication may not be reproduced in any form without permission. Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by The National Alliance, provided that the following words are included on any copy: “Reproduced from Resources with permission of The National Alliance for Insurance Education & Research.”

NOTE: This article does not address every aspect of the endorsement. Please refer to the actual policy and endorsement language to determine the coverage provided, limited, or excluded. In addition, states may change the endorsement language, or carriers may have a proprietary form that differs from the coverage discussed in this article. n

About the Author: Kathy Silvia, CIC, CPCU, CPIW, LIA

Resources is designed to provide accurate and timely information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in providing legal, accounting, or other professional services. If legal advice or other expertise is required, the services of a competent professional should be sought. The publisher has taken all reasonable steps to verify the accuracy and completeness of information contained in Resources. The publisher may not, however, be held responsible for any inaccuracies or omission of information in any article appearing in Resources.

Kathy is the owner of The Fair Insurance Agency in Centerville, MA, and has been in the insurance industry for over 40 years. She is a CISR faculty member, a member of the CIC National Faculty, and a past CISR Board member. Kathy also teaches courses for the Massachusetts Association of Insurance Agents.

The National Alliance Standards of Conduct: www. scic.com/about/Standards_of_Conduct

The National Alliance conducts FREE monthly webinars presented by outstanding faculty. Each webinar is conducted live from 12:30 pm–1:30 pm CST. Join us—for FREE—as we explore current topics of interest in insurance and risk management. September 15—Grasping the Impact of Risk Management in Schools • Presented by Judith Ann Robinson, CSRM October 11—Cyber Crime—What You Need to Know • Presented by Chris Christian, CIC, RPLU November 1—Affordable Care Act Update • Presented by Jerry E. Rhinehart, CIC, CLU, ChFC, RHU December 8—Lifestyle Exposures of the High Net Worth Client • Presented by Nicole Nouhra

Webinars fill up quickly. Register online: www.TheNationalAlliance.com/webinars You can also go to http://irmka@scic.com to listen to the archived recordings of these recent webinars: Additional Insured Endorsement in the CGL Policy: Problems of the Named and Additional Insured Presented by Dwight Kealy, J.D., CIC Construction Defects and the ISO CGL: A Matter of Policy Terms, Law, and Facts Presented by Gerald T. Hargrove, J.D., CIC, CPIA, FCLA, SCLA, PICS, LICS, CBIA Uncertainty: Underwriting Unmanned Aerial Vehicles Presented by Richard S. Pitts, J.D. The Risks of Hyperconnectivity—The Internet of Things Presented by Jesús Levy Salustiano, CRM

Resources | Fall 2016

finance, sales, etc. It is a very fast-paced environment and it needs to do a better job pulling back the curtain and revealing its true nature to the younger generation. Insurance of today is not your grandfather’s industry. Q: Why did you choose a career in insurance?

BY JACOB GARCIA he baby boomer generation is retiring at a rapid rate—with about 10,000 boomers exiting the workforce every day. The insurance industry, which has historically benefited from an older, experienced workforce, is especially feeling the impact of this exodus. Now, more than ever, we need to attract a younger generation of professionals to join the ranks and carry on the torch. But for this to happen, Millennials need to know what careers in insurance and risk management have to offer. Are we, as an industry, doing all we can to spread the word and make our industry attractive to the younger generation? What more can we do to encourage Millennials to join the ranks? To answer these questions, we went straight to the source and interviewed three successful Millennials employed in the insurance field. Here’s what they had to say… Q: In your view, is insurance an attractive field for Millennials? Why or why not?

Ashley McCreadie, CIC, CRM Assistant Vice President Woodruff-Sawyer & Company Denver, CO

David Fishel, MBA Associate–Business Insurance Higginbotham Fort Worth, TX

Ashley: The insurance industry is gaining attention. As a whole, the industry continues to accelerate its marketing to Millennials. We have seen this especially within the past three to five years, with more universities offering risk management and insurance degrees. It is growing in popularity and attractiveness as Millennials are becoming exposed more and more to the many benefits of an insurance career. These benefits include job stability—as insurance is recession proof—many different career paths within the industry, fun networking opportunities, a challenging and consistently changing environment with new risks to insure developing daily, and often, a financially competitive career opportunity. David: On the surface, I do not believe insurance comes off as an attractive field for Millennials because too many Millennials think of insurance as an old person’s industry. However, for those Millennials who find their way into this industry, they quickly realize that this industry is one of the best-kept secrets. Q: What are Millennials looking for in a career? Ashley: I believe they are looking for flexibility to create work-life balance, decent starting pay with room for advancement, ability to be challenged, a career that is impactful and makes a difference, and freedom to develop new ideas.

Kyle Ranney, AFIS, CIC Account Executive Lyman & Sheets Insurance Agency Lansing, MI

Kyle: Millennials are looking for flexibility and steadiness. My biggest fear is being out of a job or not being able to put food on the table. We saw what happened in 2008 when the economy

26 Resources | Fall 2016

Kyle: I chose this career for the opportunity. There is an abundance of opportunity in insurance with the baby boomer generation beginning to enter its retirement stage. Someone has to manage and take care of that book of business. Another reason why I chose insurance is because you’re helping people at their time of need. You’re providing risk management solutions to protect businesses from loss so they can pay their employees to feed their families. If your client suffers a loss, you’re doing everything you can to help them get indemnified so they can return to where they were before the loss. You’re helping families.

“The biggest thing the industry as a whole needs to do is dispel the notion that insurance is boring.”

crashed. Our parents were stressed and people lost their jobs. Insurance has a track record of being stable and not having major layoffs. Q: Does a career in insurance offer the things Millennials are looking for? Ashley: Certainly. There are so many different roles that take place in the insurance world— from owning your own agency, to underwriting, to risk management, to brokerage negotiating with company underwriters. In regards to new ideas and creativity, risks are ever-evolving, and therefore, the need is continuous for new policies and other forms or risk management solutions. The insurance industry never remains static. Kyle: Insurance offers both flexibility and steadiness. You are not necessarily stuck in underwriting or claims your entire career. There are opportunities to move horizontally across the ladder as well as vertically. If a particular opportunity does not fit you, there are always other avenues you can explore.

Ashley: When I was choosing my career/major, there were five things that led me to insurance sales: 1. Making a difference/helping people: When a client actually sustains a covered loss, it can save their business, help replace their home, help them avoid bankruptcy, etc. 2. Benefiting from a recession proof career: Everyone, including companies, will always be required to have insurance. 3. Allowing for flexibility in schedule: This is a huge benefit and will become especially important to me once I settle down and start a family.

Q: What can an insurance agency do to attract and retain younger talent?

About the Interviewer: Jacob Garcia

Ashley: Provide interactive training, attractive benefits, and engage with young talent to understand their goals and help them build towards those goals. Also, the culture of a company is paramount, so ensuring that a new hire is truly a great fit will only benefit all parties.

Jacob is an Associate Research Director with The National Alliance Research Academy. He has a background in media and journalism and produces the weekly podcast, Speaking Insurance, which can be found on The Knowledge Alliance website (http://irmka.scic.com).

David: The biggest thing the industry as a whole needs to do is dispel the notion that insurance is boring. As an insurance broker, I am one of the most important resources to my clients, because insurance protects their business assets. Insurance deals with marketing,

4. Experiencing no ceiling on pay: It’s an industry that offers tremendous potential in terms of salary and commissions. 5. Enjoying a job that gives me a different day, every day: I simply wouldn’t want to be stuck in the same routine, day-in and day-out. Every day is a new one, visiting with new prospects and clients who pose different challenges specific to their businesses. Then I work with my team to put the customized protection program puzzle in place. Q: Do you see yourself making insurance a longterm career? Why or why not? Kyle: Yes. There is always the opportunity to learn or do something new. Whether it is going after a particular market or meeting a new group of individuals you enjoy helping out. You are always being challenged to bring reasonable solutions to solve people’s problems. It’s the farthest thing from boring. You’re always on your toes. David: I plan on being in insurance until I retire. I love what I do and who I work for. The average age of a producer is around 59, so there is a lot of opportunity in the very short future. Ashley: YES, 100 percent—for all the reasons mentioned above. n

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Resources | Fall 2016

I N T E R N AT I O N A L D AT E L I N E

AN INTERVIEW WITH GLOBAL RESCUE

It is important for an organization to work with their travelers to create a Traveler Profile that will help establish awareness…

Mitigating Travel Risks Protecting your organization’s most valuable assets

ith the potential of finding new business opportunities in the global market, many organizations are facing an increase of risk exposures associated with their employees who travel abroad. While all stakeholders are at risk, the most common perspec-

Daniel L. Richards—Chief Executive Officer, Global Rescue Mr. Richards has served as the CEO of Global Rescue since he founded the company in 2004. He also serves as the President of Crisis Services Company, a Vermont-based captive insurance company. In these roles, he has implemented and led risk management and crisis response services for hundreds of organizations during thousands of events worldwide. Mr. Richards has been a featured speaker on CNN, Fox News, NPR, and other major media outlets regarding crisis response, mitigation, and travel risk management topics.

Lisa Arredondo—Manager, Enterprise Response Services, Global Rescue Ms. Arredondo is Manager of Enterprise Response Services at Global Rescue where she works with global organizations’ medical, security, and intelligence services to mitigate travel risks. She joined Global Rescue from ABM Industries, where she was a business development manager for the Northeast Region. Ms. Arredondo has also spoken at numerous national conferences about travel risk and mitigation.

28 Resources | Fall 2016

tive would, in all probability, point to women as being somewhat more at risk than their male counterparts. However, commonalities can be found between all demographic groups when considering how to apply risk mitigation and risk control techniques when dealing with world travel issues. To get a better perspective, we first asked Dan Richards, CEO of Global Rescue, LLC, for his take on the topic. Global Rescue was created in the aftermath of 9/11 to address a gap in emergency services available for travelers, companies, academic institutions, and NGOs (non-governmental organizations). So how can a company such as Global Rescue address the issues of risk exposures of employees traveling abroad—especially female employees? Mr. Richards briefly explained, “Global Rescue and its clients work together to perform a final risk assessment to ensure that the level of risk is relatively low; otherwise, there will be a separate discussion to potentially cancel or postpone a specific trip until the regional situation is more stable.” We then asked Lisa Arredondo, Manager of Enterprise Response Services at Global Rescue LLC, for a more in-depth explanation. During the 2016 RIMS Conference held last April in San Diego, CA, Ms. Arredondo gave a presentation titled, “Mitigating the Risks of International Travel for Women.” This article focuses on the findings of her presentation, along with answers she gave to interview questions about travel risk mitigation for women, as well as all stakeholders, within a given organization.

Interview with Lisa Arredondo Q (The National Alliance): What are the responsibilities of an organization to their employees in the context of Duty of Care while employees are conducting business abroad? A (Lisa Arredondo): The corporate definition for the term Duty of Care is, “The obligation that an organization has to provide its stakeholders with the necessary information,

resources, and reasonable care to ensure their safety and security.” It is an organization’s responsibility to develop and follow all proper travel protocols and policies. Is the employee being taken care of, and has the organization taken all reasonable steps to ensure that? The term “reasonable” is used within the Manslaughter Act (U.K. Law) in which corporations can be found liable and guilty of manslaughter as a result of serious negligence in the corporate management of the health and safety of employees that resulted in a fatality (www.hse.gov.uk/corpmanslaughter/). The U.S. does not currently have specific federal or state laws like that of the U.K.’s Manslaughter Act, but the term Duty of Care is being used more and more in the U.S. and is implied in OSHA regulations, for example.

A: Recently we (Global Rescue) conducted a “Train the Traveler” event for our clients in which we brought in safety, security, and medical professionals to highlight what to do and what not to do while traveling. This included an exercise to help people think critically by role-playing how individuals should handle specific situations. An example might be how to plan evacuation routes while staying at a hotel or at the place of business; in what situations might one use Plan A vs. Plan B vs. Plan C, and what are the benefits of each option? This line of discussion really helped our clients start thinking about what types of situations to look for. Training is key!

Q: What are the traveling employee’s responsibilities towards Duty of Loyalty while conducting business abroad? A: An individual employee’s responsibility towards Duty of Loyalty is that they should act in a prudent manner to protect themselves and the reputation of the organization they represent while conducting international business abroad. Take, for example, the Arab Spring protests and resulting civil unrest that occurred in Islamic nations around the Middle East and in North Africa. An employee’s Duty of Loyalty would be expressed by not directly participating in the protests while conducting company business, and/or by not going into a dangerous environment while on company time.

Q: Explain the significance of a business traveler’s predeparture mindset so that they know what to expect abroad. A: It is important for an organization to work with their travelers to create a Traveler Profile that will help establish an awareness, so the employee knows what to expect before departing. It also establishes a baseline for creating a pre-travel education program. Establishing a Traveler Profile takes into consideration an employee’s:

Q: Describe a real-world scenario with examples of how an organization can prepare and support their female employees who will be traveling abroad.

• Medical needs

Q: What are the top risks faced by female employees while conducting business abroad? A: Based on a benchmarking report conducted by OSAC (Overseas Security Advisory Council, U.S. State Department), the top three types of incidents that should be of most concern for women traveling abroad are sexual harassment, verbal harassment, and physical assault.

• Risk tolerance • Physical attributes • Mental readiness • Language capabilities

• Road warrior experience vs. novice traveler experience • Frequency of conducting international travel

Continued on page 30.

Resources | Fall 2016

Mitigating Travel Risk … continued from page 29. risks around the world. They can provide detailed answers and real-world scenarios for questions like, “What is the cultural landscape of the country I am going into?” Also, government resources on the internet can help, such as the CDC (Centers for Disease Control and Prevention) for healthrelated information or the Department of State for general information about a country. Vetted media and social media outlets on the internet, should also be considered.

Top 10 Risks Faced by Women During International Travel 1. Sexual Harassment 2. Verbal Harassment 3. Physical Assault

Q: What specific types of situations or scenarios should be avoided when women are considering their safety abroad? A: The traveler should always use their best judgement when considering areas to avoid while traveling abroad. Some considerations that a female employee and her organization can take into account while conducting business at their foreign destination are:

4. Rape or Attempted Rape 5. Crime (Grievous) 6. Groping 7. Stalking 8. Kidnapping/Abduction 9. Drugging

• Should a driver or driving service be hired?

(Overseas Security Advisory Council)

For example, for most of us, engaging in small talk is seen as a cultural norm. However, in the United Arab Emirates (UAE), engaging in small talk can be viewed as a form of propositioning and puts the traveler at a greater risk of assault. In some countries—particularly the Middle East—the criminalization of the victim is commonplace. How should a female employee traveling in such countries safely communicate and report an incident? The first step should be for the female employee to contact her embassy or consulate for further direction and assistance. At the same time, she should contact her supervisor/manager immediately in order to contact their organization’s risk management, HR, and legal offices, or a travel risk management provider. Q: Should an organization provide a “tool kit” for the traveler as part of their preparation plan? What should that kit contain? What items should be on a pre-departure and departure checklist? A: Yes. Items which might be in a travel tool kit or travel checklist are: • Pre-trip assessment • Country-specific medical assessment • Communication abilities (cell phone and internet capabilities, international calling cards)

30 Resources | Fall 2016

Global Rescue CEO Dan Richards and Enterprise Response Services Manager Lisa Arredondo have given us a better understanding of the risk outlook for employees—and for female employees, in particular—who are conducting business travel around the world. This invaluable information will assist risk managers and corporate leadership in strategizing, establishing priorities in an organization’s travel policy, and implementing preparedness plans and training to manage current and future travel risks. n

• Is the hotel or business location within walking distance to restaurants?

10. Robbery

Q: What are some examples of how a Cultural Immersion Mentality can impact risk for female employees traveling abroad? A: For women traveling abroad, they need to adapt to their environment. Can the traveler have too much or too little cultural understanding? What I mean by this is, are you at greater risk by having so much understanding that you feel too comfortable and forget that the risks are real? Or do you have too little information versus having no information— just enough information to be dangerous, because it is not enough to understand the full weight of the situation?

Conclusion

• A “clean cell phone” and/or “clean laptop”—no personal or company secure information; just emergency or relevant contact information and company non-secure data and information • Immunization records and medical emergency response card information • Hotel reservations (Ideally, choose rooms that are on the second story up to the fifth story, depending on the height of the building.) • Maps of the city, regional, and national highway system • Thumb drive with pertinent information • Travel-sized first-aid kit • Doorstop to prevent intrusion into a room that lacks adequate door locks • Travel itinerary/arrangements Also, the traveler can create their own “go-bag.” For example, a go-bag can be placed on your nightstand, ready to go for an unexpected need to evacuate the building. Examples of items to include in a go-bag might be: • Passport/Visa • Airline departure ticket • Cash-on-hand, in both local currency and internationallyvalued currency (dollars, pounds, euros) • Flashlight or glow sticks for evacuations, power failures, or other emergencies Q: What types of pre-travel resources are available for female employees to review before traveling abroad? What kind of training can be provided prior to international travel? A: The best resources and advice an organization can get would be from a dedicated travel risk management services provider. Such agencies are on top of what are the current

• Should the organization send another person along with the primary female traveler, depending on the destination risk assessment? • How are women perceived in the destination culture? Q: How do the risks involved in short-term business travel differ from those of extended travel? A: This is an excellent question that every traveler needs to consider. During short-term traveling, most people have a heightened awareness and are not yet road-weary, nor are they are truly acclimated or culturally immersed. During extended travel, travelers often become too comfortable and more immersed in their surroundings, potentially allowing them to fail to see the risk, and thereby increasing their exposure to those risks. Q: Could the risk mitigation techniques utilized for the female traveler apply to all stakeholders in a particular organization? A: Raising awareness and benefit and be applied to all stakeholders involved. However, some identified risks simply are women-centric. Organizations need to ensure that all of their stakeholders not only have an awareness, but that women’s travel awareness is increased and understood, as well. Q: Are there any points you’d like to add or reiterate to make your message even clearer? A: I would suggest that readers consider these key points and take them back to their respective risk management program or company’s travel policy administrator. Companies and travelers need to be aware of the cultural landscape of their destinations. Organizations, as well as individual travelers, need to be vigilant and responsible in taking care of their health and safety while conducting international business. Organizations—don’t just address your road warriors and frequent travelers! Remember to prepare the novice traveler, as well. Finally, companies need to take a holistic look at their travel policy and travel plans to mitigate risks.

Larry J. Welch, CIC Emeritus 1934–2016 It is with deep sadness that we inform you that Mr. Larry J. Welch passed away July 31, 2016. Larry joined the Society of CIC after a 26-year career with Grain Dealers Mutual Insurance Company. He was a Senior VP of the Society from 1979–1989. After leaving The National Alliance, Larry continued a long relationship with our organization, serving as an Educational Consultant as well as faculty member for the CIC, Ruble Seminar, and CISR programs. Larry touched the lives of many insurance professionals who greatly appreciated and benefited from his depth of technical insurance knowledge that he so generously shared. Dr. William T. Hold and the entire National Alliance family express our sincerest condolences to his wife, Barbara, his son, Tom, and daughter, Leesa. For those who did not have the pleasure of knowing Larry, we invite you to read “From the Podium—Larry J. Welch, CIC,” on page 18 of the Spring 2005 issue of Resources magazine, which can be found on The National Alliance website, at: www.scic.com/resources_magazine/2005_issues1

Resources | Fall 2016

A Collection of Success Stories and Press Clippings from Around the World

www.TheNationalAlliance.com

IntheSpotlight Ripley Nominated for NARAB Angela Ripley CIC, CRM, AIS, LUTCF, and Big “I” Agent Leader, has been nominated by the White House to the Board of Directors of the National Association of Registered Agents and Brokers (NARAB). Her nomination joins five others for the board. Having served as President of V.W. Brown Insurance Service in Columbia, MD, since 2000, Angela is an active member of the Big “I” and has held numerous leadership positions, including serving as chair of the IIA of Maryland and InsurPac chair for Maryland. She currently serves on the national association’s Government Affairs committee as the State Government Affairs Chair and represents Maryland on the national board. NARAB will provide agents and agencies with a vehicle for obtaining the authority necessary to operate on a multistate, nonresident basis. It is designed to establish true licensing reciprocity and create a one-stop compliance vehicle for nonresident licenses.

Ostrander Earns Florida’s Highest Honor Ted R. Ostrander Jr., CIC, AAI, has been honored with the Florida Association of Insurance Agents’ highest honor—the Mitchell Stallings Memorial Award. Ted is a past CIC Board member and is currently President and Chairman of the Board at LassiterWare, Inc., in Leesburg, FL. Ted has been in the insurance industry for 40+ years and served in many leadership roles for both FAIA and in his community. Florida State University named the Ostrander Family Florida Catastrophic Storm Risk Management Center after him in appreciation of his role as a generous and active alumni.

32 Resources | Fall 2016

Setting the Pace for Success State Auto is celebrating the 20-year anniversary of its highly successful PaceSetter Program. This intensive sales program—which incorporates the Dynamics of Selling and Dynamics of Sales Management curricula—is the brain child of State Auto’s Ken Fields and Diane Masterson. Refer to the Spring 2016 issue of Resources magazine (page 35) for a detailed write-up about the program and this milestone anniversary.

Scholarships for National Alliance Programs Awarded at IAIP Convention The National Alliance recently presented 18 scholarships to IAIP members at the 75th Annual Convention of the International Association of Insurance Professionals (IAIP) held in Richmond, VA, in June. Each scholarship grants full tuition to one program conducted by The National Alliance for Insurance Education & Research. “The National Alliance has partnered with IAIP to award these scholarships to deserving IAIP members,” Danielle Janecka, Senior VP, said. “The recipients are all actively involved in the insurance and risk management industry and committed to advanced education.” CIC Update Scholarship: Beth Wilkerson, CIC, CIS BB&T Insurance Services, Inc. Durham, NC CIC Scholarships: Debra A. Gillis P & C Insurance Biddeford, ME Virginia S. Hosley Pinckney Carter Co. Mt. Pleasant, SC Daphne C. Thibodeaux Regions Insurance Lafayette, LA CRM Scholarships: Angelia Poyner Van Zandt, Emrich & Cary Louisville, KY Laurie M. Fite Wm. R. Timmons Agency Greenville, SC

Pictured L to R: State Auto Coordinator Trisha Ray; State Auto Coordinator Peg Fullwiler; State Auto CEO Mike LaRocco; State Auto AVP/Director of Sales Development, Academy Board member, Research Associate, Ruble and National CIC faculty member Ken Fields, MSM, CIC, CPCU, CLU, ChFC; State Auto PaceSetter Sales Manager Diane Masterson, CIC, CPCU; State Auto Senior VP John Petrucci; State Auto PaceSetter Sales Manager Pam Kusma, CIC; and Casswood Insurance CEO, National, Specialty Ruble, and Dynamics faculty member, Ed Consultant, and past CIC Board member, Jeff Wodicka, CIC.

CISR Update Scholarships: Jolene A. Gilbert Winton Ireland Strom Green Turlock, CA Brenda Jo Hornyak Hendry Insurance, LLC Plano, TX

CIC Charter Members Attend 40th Anniversary Conferment

CISR Scholarships: Diane Cline Strickler Agency, Inc. St. Thomas, PA

National Alliance President and CEO William T. Hold (center) reminisces with four fellow CIC Charter members at the Insurance Agents & Brokers of PA, MD, & DE’s 40th Anniversary conferment ceremony held in Lancaster, PA, in August. Pictured L to R: Owen Ashbrook, CIC; Bruce Mattheiss, CIC; Dr. Hold, CIC, CPCU, CLU; Benjamin Cloud, CIC, CRM, CPCU; and H. Duncan Creelman, CIC.

Cassie Fostun F. A. Peabody Lincoln, ME Miriam Michelle Franks Messer-Bowers Company Enid, OK

Amy V. Nunez Poirrier Group, LLC Lafayette, LA Heather L. White HUB International Gulf South Limited Lafayette, LA

Karla Schoeni Associated Insurance Services Anchorage, AK

Tracy Bourgeois HUB International Gulf South Limited Lafayette, LA

Tammie H. Smith Correll Insurance Spartanburg, SC

At its recent Annual Meeting, held this year in Lake Oconee, GA, the PIA of Georgia elected Hamilton Tillman, CIC, CRM, to serve as President, and Victor (Vic) Hamby, CIC, as National Director. Tillman is President of Tillman Insurance Agency in Valdosta, GA, and Hamby is a VP at Hamby & Aloisio in Atlanta.

Tillman

Hamby

Krause Steps Up in Connecticut

Krista Reed Gunn Mowery Camp Hill, PA

CISR Online Scholarships: Lisa Marie Clark F. A. Peabody Company Perry, ME

Leadership in Georgia

During its Annual Convention in March, PIACT and PIACTYIP announced Michael A. Krause, CIC, as the Committee Chair of the Year. Michael is a VP at Anderson-Krause Insurance, Inc., in Bramford, CT.

Designees Represent We’re delighted to announce that three National Alliance designees have been awarded honors by the International Association of Insurance Professionals: Carol McManus, CISR, CRIS, MLIS, CLP, CIIP, was named the winner of the Confidence While Communicating Speak-Off. Carol is an Account Manager at Guy Hurley of Florida, LLC, in Lakewood Ranch, FL. Kathleen M. Bianculli, CIC, CISR, CIIP, CLP, DAE, ACS, ASF, was named Insurance Professional of the Year. Kathleen is the owner of Sterling Insurance Consulting, LLC, in Sterling Heights, MI. Professional Underwriter of the Year went to Paige Denise Stiefel, CIC, MBA, CIIP, CLP. Paige is a Senior Manager of Underwriting at Asurion, in Nashville, TN.

McManus

Bianculli

Stiefel

Resources | Fall 2016

A Collection of Success Stories and Press Clippings from Around the World

Congratulations to the State Winners of the 2016 Outstanding CSR of the Year® Award!

Ohio

Mary K. Prenger, CIC, CPSR Community Insurance Group Sidney, OH

Learn about the award and this year’s national winner and finalists on page 2 of this issue of Resources magazine. Alabama

Edna A. Newcomer, CIC, CPIW Thompson Insurance, Inc. Montgomery, AL

Alaska

Susan M. Blum, CISR Elite, AIC, LPCS Alaska USA Insurance Brokers Anchorage, AK

Arizona

Cynthia A. Munksgard CoBiz Insurance, Inc. Phoenix, AZ

Arkansas

Georgia

Alana M. Tompkins, CIC Norton, Lewis & Goro, LLC Alpharetta, GA

Idaho

Courtney Mitchell, CIC Associated Insurance Services, LLC Boise, ID

Illinois

Oklahoma

Michigan

Terri L. Majeski, CISR Ottawa Kent Insurance Agency Holland, MI

Linda L. Wright, CIC, CRIS (2016 National Finalist) Rooney Insurance Agency, Inc. Tulsa, OK

Minnesota

Oregon

Nattalie J. Rolland-Vath, CISR North Risk Partners CO Brown Division Red Wing, MN

Gladys M. Boutwell, MBA KGM International dba PBP Insurance Portland, OR

Mississippi

Pennsylvania

Cynthia Jordan, CISR, MLIS, NcAM The Plexus Groupe, LLC Deer Park, IL

Kelsey J. Purvis, CISR (2016 National Finalist) Ross & Yerger Insurance, Inc. Jackson, MS

Tamika L. Thomas Berlanco Insurance Agency, Inc. Ephrata, PA

Indiana

Missouri

Puerto Rico

Isabel M. Smith Ellerbe, CISR Aon Risk Solutions San Juan, PR

Jordan C. Cross, CIC, CISR Regions Insurance Group, Inc. Fayetteville, AR

Gina M. Floyd, CISR, AAI Old National Insurance Evansville, IN

California

Iowa

South Carolina

Jennifer Cook, CIC, CISR TrueNorth Companies Cedar Rapids, IA

Montana

Christina Snyder, CIC, CISR, AINS Poms & Associates Insurance Brokers Woodland Hills, CA

Sherry Hill, CISR (was also the state winner in 2013) Hobson Insurance Hobson, MT

Karen D. Fenters, CISR Strovis Insurance Agency, LLC Georgetown, SC

Colorado

Kansas

South Dakota

Stacey M. Neff, CIC, CISR Madison Insurance Group Denver, CO

Lindsay D. Culver, CISR Truss, LLC Overland Park, KS

Nevada

Nixie M. Hyslop Alpine Insurance Associates Reno, NV

Selda Baumberger, CIC, CISR Fischer Rounds & Associates Sioux Falls, SD

Connecticut

Kentucky

New Mexico

Tennessee

Jami L. McDonald, CISR (was also the state winner in 2011) Goodman Insurance, Inc. Shelton, CT

Delaware

Gail A. Wilkinson Williams Insurance Agency, Inc. Rehoboth Beach, DE

Florida

Kellie S. Brandes, CRIS ThompsonBaker Agency St. Augustine, FL

Elizabeth M. Manley, CIC, CISR, CPIA, CWCC, PRIS (2016 National Finalist; was also state and national winner in 2008) Assured Partners NL Lexington, KY

Louisiana

Tanya A. Nel Gendusa Insurance Hammond, LA

Maryland

Bethany Miller Atlantic Smith Cropper & Deeley Willards, MD

Beth A. Mann, CISR Capstone Insurors, Inc. Bolivar, MO

Danielle D. Montes High Country Agency, Inc. Ruidoso, NM

Suzanne E. Seaton, CIC, CISR The Allison Insurance Group Jackson, TN

Texas

New York

Tiffanie L. Parker, CIC, CISR, API INSGROUP, Inc. Houston, TX

Kelly D. McGowan, CISR Elite (2016 National Winner) NBT-Mang Insurance Agency, LLC Norwich, NY

Utah

North Carolina

Kristi K. Lawson, CIC Poulton Insurance Services, Inc. Salt Lake City, UT

Kimberly H. Hurd Rakestraw Insurance Center, Inc. Madison, NC

West Virginia

Virgin Islands

Brenda A. Sells, CIC, CISR (was also the state winner in 2015) Theodore Tunick & Company Saint Thomas, VI

Matthew J. Stalnaker Pioneer Insurance Agency, Inc. Elkins, WV

Virginia

Freida J. Cooper, CISR, CPIA (was also the state winner in 2012) USI Insurance Services, LLC Norfolk, VA

Robyn S. Henslin, CIC, CISR (2016 National Finalist) Cobb Stecker Dunphy & Zimmermann, Inc. Middleton, WI

Washington

Wyoming

Wisconsin

Wendy J. Elmer, CIC Wyoming Financial Insurance Casper, WY

Anthony Schulz Prostar Insurance Bothell, WA

Excerpts from the 2016 national winner and finalists’ essays will be featured in your next issue of Resources magazine.

Winners in Wisconsin Five National Alliance designees were honored during the PIA of Wisconsin’s 67th Annual Convention in August. Three were elected as officers for the 2016–2017 term: Jodi Cordes, CIC, CRM, of A.F. Glass Insurance Center in Lake Geneva, was elected VP; Matt Cranney, CIC, CRM, of M3 Insurance Solutions in Madison was elected Treasurer; and Sean Paterson, CIC, of Allied Insurance Centers, Inc., in Brookfield, was elected Secretary. In addition, Michael Ottman, CIC, of Partners Mutual Insurance Company in Milwaukee was presented the Company Representative of the Year Award, and Ryan Von Haden, CIC, AIS, of TRICOR Insurance in Madison, WI, was awarded the Stony Steinbach Achievement Award and named the 2016 PIA National Young Insurance Professional of the Year. Von Haden

Ottman

Cordes

Cranney

Paterson

Burkholder Wins Award John Burkholder, CIC, CPCU, CLU, ChFC, ARM-P, ARM, of Burkholder Law in Fort Lauderdale, FL, won the prestigious 2016 Public Risk Manager of the Year award, presented at PRIMA’s (the Public Risk Management Association) Annual Conference in Atlanta, GA.

Have you been “IntheSpotlight”? To submit an item for editorial consideration, send article with photo to: The National Alliance/Resources, P.O. Box 27027, Austin, TX 78755-2027, or email bkeeling@scic.com.

www.TheNationalAlliance.com 34 Resources | Fall 2016

Resources | Fall 2016

The first conferment ceremony for the Certified Personal Risk Managers Program will be conducted in February 2017. Be among the first group of CPRM designees in the nation to be recognized at the inaugural ceremony. Opportunities to take all five CPRM courses before yearâ&#x20AC;&#x2122;s end are within your reach. Take your place among this group of market-savvy, visionary agents who are expanding their knowledge, professionalism, and skill sets to meet the unique and complex needs of affluent and high net worth clients. Take that step to be recognized as one of the bestâ&#x20AC;&#x201D; Become a CPRM. View a full schedule and register at www.TheNationalAlliance.com