Resources Magazine Spring 2017 by resourcesmagazine

The Producer School is one of the most popular and transformative programs offered by The National Alliance. Whether it is mastering the technical aspects of insurance, or getting a boost in sales skills and sales management, the Producer School is renowned for delivering compelling insights from top, practicing industry sales professionals through proven, hands-on skills practice. This year, participants will have the opportunity to experience the same life-changing content and coaching, but in a slightly different configuration. The revised Producer School format will run Monday through Friday for two consecutive weeks. The first week will concentrate exclusively on the technical facets of both Commercial Property and Commercial Casualty insurance—including policy forms and how they apply—with the week broken evenly between the two. The second week will consist of one continuous, intensive sales training program, and examples and scenarios based on the technical information participants covered in the first week of the school will be used as a springboard. However, the second week of the school is not about theory—it is about dealing concretely with prospects, knowing when to pursue and when to walk away. Inspired and dynamic sales professionals share with participants what they actually do every day out in the field in this revolutionary program. Many insurance agency owners recognize the power of the Producer School. They know that the investment they are making in their producers will be returned to them in the near future. These producers are ready to hit the ground running when they come back to work, and they experience not only an increase in self-confidence, but a significant growth in the business they bring in. So mark your calendars for Oct. 1–13, 2017, and set your sights on Grapevine (Dallas area), Texas—registration for the Producer School is now open! Go to scic.com/courses/producer_school for more information and to register.

Producer School Oct. 1–13, 2017 Grapevine (Dallas area), TX Courtyard and TownePlace Suites by Marriott 2200 Bass Pro Court Grapevine, TX 76051 Phone: 817-421-6121

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Contents FEATURES

ALLIANCE NEWS

4 Defying the Odds:

8 2017 Call for Nominations

Climbing the Corporate Ladder

Timothy NeCastro of Erie Insurance describes his path

9 Ask Bettie

Ben Griffin

14 Success Story:

Online MEGAs; customer service award

The Duo Behind the Diplomas

19 The Sun Never Sets

Father and Son CRMs in Mexico

Who will be the next Outstanding CSR of the Year?

By María de San Juan García, CRM, MBA

An international anniversary and a unique update option

16 Historia Exitosa:

20 Train Your Team

Padre e Hijo CRMs en México

Map your career track and customize your learning experience

El Dúo Detrás de los Diplomas

Por María de San Juan García Díaz, CRM, MBA

26 Court Cases Prompt Coverage Changes ISO to limit coverage for designated premises or project

By Paul Burkett, J.D., CIC, CRM, CPCU, ARM, ALCM

20 Innovative Education High schoolers, Houston, and Higginbotham

35 The Orlando MEGA Fun and fascination in Orlando; online option, too

COLUMNS

36 In the Spotlight

Industry accolades and achievements

10 Tech Beat Property Damage to Electronic Data

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

22 By the Numbers Survey Results: Performance Evaluations and the Termination Process

Careers Wort h Considering

FEATURE …page 18

Industry Gro

wth

Great Pay

By Jon Persky, CPA, CIC, PHR, and Jenny Foster, CIC

Satisfying W ork

32 Coverage Corner Fiduciary Liability Coverage

By Chris Christian, CIC, RPLU

We b s i t e : TheNationalAlliance.com

Going to RIMS? Philadelphia • April 23–26, 2017 Come see us at booth #2509

EMAIL: alliance@scic.com

Phone: 8 00-6 3 3-2 165

n today’s competitive job market, employees face multiple challenges. Usually, the narrative goes that if an employee works hard, plays by the rules, and perseveres long enough to build sweat equity, then they can ascend the ranks to dizzying heights and become a Senior Partner, President, or a CEO. However, this dream of success too often fades into oblivion. Reality sets in when those rumbling rumors are proven true at an office meeting, and the senior management pronounces those dreadful words to a disillusioned staff, “We’ve decided to hire outside of the company.” We’ve all been there. Nevertheless, there are those rare occasions when an employee is able to climb to the top of the mountain—where, after putting in the time and energy, an individual is rewarded for his or her many sacrifices and accomplishments.

After what has been referred to as “the most thorough and extensive search process in Erie Insurance history,” Timothy NeCastro, CPA, CIC, a twenty-year employee and Erie, Pennsylvania, native, was able to defy the odds. Timothy was named President and CEO of Erie Insurance, making him the ninth CEO in the ninety-one-year history of the company. “As I worked for the company, I wasn’t on a conscious journey to progress through the ranks,” says NeCastro. “One of the things that I think is fantastic about Erie is that we recognize people’s accomplishments and that results in them being given different opportunities. So, what I’ve done in my career here is to really throw myself into the work I’m doing.” Like so many people in this industry, Timothy NeCastro never grew up thinking that someday he would one day work in the insurance industry. However, this selfproclaimed “finance guy,” joined Erie Insurance in 1996. He would be promoted to Senior Vice President and Controller the following year; eventually becoming Erie’s Senior Vice President of policy services in 2008.

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“Over that time frame, the company shifted focus in terms of talent management, and that was really attributable to our outgoing CEO, Terry Cavanaugh. We were—like a lot of organizations—very stove-pipe oriented. The flow of information was up or down, and this inhibited crossorganizational communication. Once an actuary, always an actuary. But Terry liked to move the talent around, creating a more collaborative atmosphere. He gave people opportunities to dive into the deep end.” Before Timothy NeCastro got into the operations side of the organization, he says the importance of this industry didn’t really occur to him. Once he got into the field, he realized that almost nothing can happen successfully without insurance.

“And then you begin to think about how important it is on a macro level—more importantly, on an individual level— for instance, when somebody loses their home due to a tornado or to a fire, and our industry helps bring that person back to where they were before the catastrophic event occurred. You start thinking about the dollars we return to communities each year and the claims money we pay out to reestablish our clients’ lives.” “I probably shouldn’t confide this, but I will… I didn’t voluntarily move over to the sales side of the organization. Terry asked me if I thought I should consider a sales position, which in CEO-speak means, ‘I think you should move over into the sales position.’ So that kind of pushed me to another dimension and level of personal growth. …continued on page 6.

“The reason we think that it is important for employees to embark on the CIC journey…is because these credentials have more of an external orientation and give our employees a broader perspective… CIC is also a credential that is universally recognized…”

Timothy NeCastro, CPA, CIC President and CEO of Erie Insurance

Resources | Spring 2017

Climbing the Corporate Ladder…continued from page 5. I guess the other aspect is that the sales team could have reacted and said, ‘Why is this guy now running half of our organization?’ Instead, they embraced the idea of someone new coming in and looking at their organization a bit differently. And they taught me to be a really good leader in sales.” Over the years, NeCastro’s leadership style has been shaped by his love for continuing education. Like many in the industry, he holds a CIC designation, which he is very proud to have achieved. He feels strongly that education should help people be more forward looking, and enable them to “lean in” to the changing world and take advantage of it. For Timothy and Erie Insurance, continuing education isn’t really an option; it is expected in the development of an employee’s personal growth. “The reason we think that it is important for employees to embark on the CIC journey—and I would also offer CPCU as important in this regard as well—is because these credentials have more of an external orientation and give our employees a broader perspective. It takes them outside of the four walls of Erie Insurance, and they make opportune, industry contacts. CIC is also a credential that is universally recognized, and so, in that regard, we think it’s extremely important, and we want to be sure it’s being undertaken in a productive capacity for our employees’ careers.” NeCastro spends much of his time helping out at church functions at St. Paul Parish with his wife Lisa. In preparation for their church festival, they both can be found rolling ten thousand meatballs a day for three days—a part of one of the church’s major fundraisers. “I tend to gravitate toward things that I feel really passionate about—where I feel connected to people and where I believe we can make an impact. It’s going to be meaningful to them, I guess more in a quiet way.” His message as new CEO of Erie Insurance: “If I have any early message in terms of my

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[NeCastro] feels strongly that education should help people be more forward looking, and enable them to “lean in” to the changing world and take advantage of it. tenure here, I think it’s important that Erie maintains a stable presence in the marketplace, a stable presence with our employees, a stable presence with our agents. One of the things it means to have been here for twenty years is that I understand what we offer in our value proposition—a big part of it is stability. And so, we are talking a lot and focusing a great deal on what’s coming and what we need to do to adapt and to get ready for the challenge. We’re going to spend a lot of time making sure we approve and take care of our existing five million policyholders, our fiftyfive hundred employees, and our ten thousand, five hundred licensed agents. We are going to make sure all those people are well cared for, because they are extremely important to us. So, maintaining a balance between what we have and what we need to create is something that I’m going to be heavily focused on and talking about in both public and private forums.” Timothy NeCastro succeeds Terrence Cavanaugh, who joined Erie Insurance in 2008. NeCastro earned a bachelor’s degree in accounting from Gannon University in Erie. He maintains his CPA and CIC designations and holds licenses in both property & casualty and life insurance. n

About the Interviewer: Benjamin Griffin With a background in International Relations, Benjamin joined The National Alliance in 2016 as Associate Director for The National Alliance Research Academy. He is now the Video Production Specialist in our Marketing department—a position in which he excels, having sharpened his skills behind the camera through his experience with the U.S. Army Public Affairs and the local news, here in Texas.

CERTIFIED PERSONAL RISK MANAGERS

Not all lifestyles are the same… and neither are their RISKS. The National Alliance’s Certified Personal Risk Manager (CPRM) designation program will take you cruising into new territory. Learn to navigate the challenging requirements of the high net worth and affluent client with a unique combination of risk management, technical expertise, and account development. CPRM courses present intriguing new update options for CICs and CRMs and a fresh perspective on risk management.

The five courses of the CPRM Program are: • Personal Client Risk Management • Understanding Coverage Differences • Evaluating and Protecting the Lifestyle • Practical Application of Personal Risk Management • Winning the Business: The Art of Presentation

CPRM courses remaining in 2017: Mar. 8–10................ Winning the Business.................................. Universal City (Burbank), CA Apr. 4–6.................. Understanding Coverage Differences.................................Nashville, TN May 17–19.............. Practical Application of Personal Risk Mgt........Burr Ridge (Chicago), IL June 6–8................. Winning the Business........................................................... Tarrytown, NY June 27–29............. Evaluating and Protecting the Lifestyle.................................. Denver, CO July 18–20.............. Personal Client Risk Management........... Richardson (North Dallas), TX Aug. 8–10............... Understanding Coverage Differences.................................. Windsor, CT Aug. 29–31............. Understanding Coverage Differences............................Burlingame, CA Sept. 19–21............ Personal Client Risk Management.......................................... Atlanta, GA Oct. 31–Nov. 2....... Winning the Business..................................................Fort Lauderdale, FL Nov. 13–15............. Evaluating and Protecting the Lifestyle.............Round Rock (Austin), TX Dec. 5–7.................. Personal Client Risk Management...................................... Las Vegas, NV

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Get the recognition you deserve. Get the glory for your agency. Show your customers you care enough to be the very best. NOMINATE: Nominations are now being a ccepted for the 2017 Outstanding Customer Service Representative of the Year® award. Nominate yourself or a deserving colleague. ENTER: All it takes to enter is a nomination, a letter of recommendation, an entry form, a nd a 1,000-word essay written by the nominee on this customer service topic: “A friend who is a CSR has come to you for advice about a new customer service job opportunity in an agency in another city. What five factors about the employer and the position would you advise them to consider before accepting the job? Please discuss the most important factor first.” Entries are due no later than May 1, 2017. WIN: The national winner will receive a $2,000 cash award, a gold and diamond pin, and a framed c ertificate of recognition. National finalists win $ 500 and a gold and garnet pin. Nominate the national winner, and you will receive $1,000! For more information about the award and to download forms, visit: TheNationalAlliance/CSR_Award

2016 National Outstanding CSR of the Year Winner Kelly D. McGowan, CISR Elite Hear about the award in Kelly’s own words at youtube.com/watch?v=pC_XCVhgXuw

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Dear Bettie, I am very interested in participating in a MEGA Seminar, but due to business constraints, travel is difficult for me at present. I know The National Alliance conducted a pilot online MEGA Seminar last year. Are there any upcoming online MEGAs for 2017? —Josh Stephens, CIC Dear Josh, I am happy to answer, “Yes,” to your question! The National Alliance has two upcoming, web-based James K. Ruble Online Classroom MEGAs, scheduled for March 20–April 5 and the other for August 28–September 14. You will be able to choose four of eight topics; each topic will consist of two webinars per day (10:00 a.m.–12:00 p.m. and 2:00 p.m.–4:00 p.m., CST).

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.

You must attend both webinars for each topic (four hours per topic). Your full attendance at the four 4-hour topics of your choice (16 hours of instruction) will satisfy your annual CIC update requirement and provide state CE credit. The topics and faculty for the March online MEGA are available at TheNationalAlliance.com, James K. Ruble Seminars Main, MEGA Seminars. The August online MEGA Seminar agenda is being finalized. I hope one of these convenient options will work for you. —Bettie Dear Bettie, Over the years, I have read the essays of the Outstanding CSR of the Year® winners with great interest and curiosity. I have often considered entering the contest myself. I was wondering—how does the award affect the winners’ careers—does it make a difference?

—Carolyn Summerfield, CIC, CRM, CISR

Dear Carolyn, I heartily encourage you to submit an entry for the 2017 competition. The Outstanding CSR of the Year Award is one of the greatest professional honors a customer service professional can achieve, conferring recognition of the highest order—an acknowledgement of the recipient’s dedication and ability, commitment, and outstanding achievement. The award also has a career-building effect—it boosts confidence, garners much-deserved attention, and inspires greater accomplishments. I’ll let the words of some of our former winners speak for themselves: “The national recognition was the spark that led me to challenge myself professionally and attain my CIC designation. My focus changed from working at a job, to developing a career path in the insurance industry.” “Receiving this award has affected all aspects of my life. I was promoted to Assistant Manager in the Commercial Lines department. Also, I was elected to serve on The National Alliance’s CISR Board of Governors. It has been a tremendous honor.” And yet another winner observed, “After being in personal lines for a long time, the announcement came that I had won the award. That’s when the producer I work with discussed bringing someone new into our commercial lines team. I was offered and accepted that position in our commercial lines division. I now serve as the Account Manager for our Senior Living Facility book of business. I don’t know if I would have been brave enough to accept this challenge had I not won the award.” —Bettie

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T E C H B E AT

BY JERRY HARGROVE, J.D., CIC, CPIA, FCLA, SCLA, PICS, LICS, CBIA

Property Damage to Electronic Data

ISO Single Event Liability Insuring Agreements When considering the number of businesses that have work or operational activities that could result in damage to a third party’s electronic data, it is clear that protection for such liability is a key element of risk control. And, it is an element that is often overlooked. Types of loss to electronic data that a business may be liable to a third party for include: • Destruction of Data—Partial or Total Data Loss • Interruption of the Use of Data • Alteration of Data

Learn More, Earn More The National Alliance offers several avenues for learning more about electronic data-related liability issues. Cyber risk is one of the topics covered in the NEW CIC Commercial Multiline Institute. The James K. Ruble Cyber Risk Seminar also includes indepth discussions on security breach liability, privacy liability, and loss control solutions. Additionally, Cyber liability is covered in Chapter 12 of Risk Management Essentials and in Chapter 14 of Property & Casualty Insurance Essentials, both published by The National Alliance Research Academy (shop scic.com/store/publications.html).

Because of today’s extraordinary reliance on information and operational technology, data loss may result in a temporary or total cessation of operations. The result of loss can be financially adverse to the interests of the party responsible for the damage, as well as to the organization that suffers damage to its electronic data. A reading of the ISO Commercial General Liability Coverage Forms (CG 00 01/CG 00 02) reveals an absolute gap in coverage for work or operations that damage a third party’s electronic data. The policy definition of “property damage” requires that the property damaged must be tangible (2001 edition change). The definition includes the following statement: “For the purpose of this insurance, electronic data is not tangible property”. To reinforce that coverage is not granted in the Commercial General Liability Form for damage to electronic data, ISO added exclusion p. Electronic Data to Coverage A in the 2007 edition of the CGL Coverage Form, inclusive of a very broad definition of the meaning of electronic data. Exclusion p. has since been replaced by the mandatory endorsement CG 21 06 Exclusion – Access Or Disclosure Of Confidential Or Personal Information And Data – Related Liability – With Limited Bodily Injury Exception; however, the exclusionary wording for damages to electronic data that was introduced in 2007 is still maintained in the current endorsement: p. Access Or Disclosure Of Confidential Or Personal Information And Data-related Liability Damages arising out of:

This article includes copyright material of Insurance Services Office, Inc. – CG 00 01 04 13; CG 21 06 05 14; CG 04 37 05 14 and CG 00 65 04 13.

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(1) Any access to or disclosure of any person’s or organization’s confidential or personal information, including patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information or any other type of nonpublic information; or (Added in 2014 by mandatory endorsement CG 21 06) (2) The loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data. (Introduced in 2007 edition) This exclusion applies even if damages are claimed for notification costs, credit monitoring expenses, forensic expenses, public relations expenses or any other loss, cost or expense incurred by you or others arising out of that which is described in Paragraph (1) or (2) above. (Added in 2014 by mandatory endorsement CG 21 06) However, unless Paragraph (1) above applies, this exclusion does not apply to damages because of “bodily injury”. (Added in 04 13 edition) As used in this exclusion, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CD-ROMs, tapes, drives, cells, data processing

devices or any other media which are used with electronically controlled equipment. (Introduced in 2007 edition) ISO has two methods of addressing the exposure to damage to electronic data. One by endorsement and the second by a standalone coverage form.

Electronic Data Liability – Endorsement CG 04 37 05 14 The major terms of the endorsement related to damage to electronic data are: • A single Loss of Electronic Data Limit is scheduled on the endorsement or on the Declarations. • Exclusion p., paragraph (2) is replaced by the following: “Damage arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate “electronic data” that does not result from physical injury to tangible property. • A definition of “electronic data” is added to the Definitions Section of the CG 00 01 04 13. The definition is the same wording that appears in exclusion p. • A condition precedent for coverage for damage to “electronic data” is that tangible property must be damaged …continued on page 12.

Because of today’s extraordinary reliance on information and operational technology, data loss may result in a temporary or total cessation of operations.

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Property Damage to Electronic Data…continued from page 11. resulting in the loss of “electronic data”. That is, coverage for the consequential damage to “electronic data” arising out of damage to tangible property. The obvious concern with the CG 04 37 is the necessity that damage to “electronic data” must be a consequential loss arising from physical damage to tangible property. There is no coverage for direct damage to only “electronic data”. For example, if an electrical contractor is working on a system within a building or on a piece of equipment and caused a power surge, which did not damage the building or equip-

The obvious concern with the CG 04 37 is the necessity that damage to “electronic data” must be a consequential loss arising from physical damage to tangible property. There is no coverage for direct damage to only “electronic data”. ment, there would be no coverage for the resulting damage to the “electronic data”. However, if the work of the electrical contractor severs a cable, resulting in a loss of “electronic data,” coverage applies. The range of the types of loss to “electronic data” covered by the endorsement is noteworthy.

• Coverage is a single event as defined by “electronic data incident.” • “Electronic data” is the uniform ISO definition found in the CGL. • Annual Policy Period Limit (Aggregate) of Insurance • Defense Outside Limits • Optional Extended Reporting Period purchase within thirty days of policy expiration. The charge will not exceed 100% of expiring policy premium. (Applies to the limit remaining in the Limits of Insurance aggregate.) Two key definitions related to the single event coverage are: — “Electronic data incident” means an accident, or a negligent act, error or omission, or a series of causally related accidents, negligent acts, or errors or omissions, which results in “loss of electronic data”. — “Loss of electronic data” means damage to, loss of use of, corruption of, inability to access, or inability to properly manipulate, “electronic data”. While the majority of the exclusions would be those expected, there are several unique to the exposure.

Computer Products Or Services Exclusion “Loss of electronic data” arising out of a negligent act, error or omission, by or for you, or anyone acting on your behalf in providing “computer products or services”. The broad definition reads: 4. “Computer products or services” means: a. Manufacturing, developing, designing, creating, selling, handling, marketing, distributing, licensing, or disposing of computer or electronic goods, by you or on your behalf. Computer or electronic goods includes, but is not limited to: (1) Computer software or computer programming;

Electronic Data Liability Coverage Form – CG 00 65 04 13

(2) Electronic or computer equipment, components or peripherals;

Fortunately, ISO counters the CG 04 37 with this form for broader protection.

(3) Communications or broadcasting equipment; or

The major terms of the coverage form are: • The form is written on a claims-made received and recorded by any insured basis. • Coverage is for the single event of “loss of electronic data” resulting from an “electronic incident”. • Coverage responds when the damage is to “electronic data” with or without physical damage to tangible property, overcoming the shortcoming of the CG 04 37 endorsement. • There are two key definitions that apply to coverage: “Loss of electronic data” and “Electronic data incident”. The definition of “electronic data” is the same as used in the CG 00 04 13/CG 04 37 05 14.

(4) Industrial or robotic equipment; and any containers (other than vehicles), materials, parts or equipment furnished in connection with such computer or electronic goods, by you or on your behalf; or b. Computer related services performed by you or on your behalf, including but not limited to: (1) Installation, testing, service, maintenance, technical support, repair, integration, networking, consulting or analysis of or training for: (a) Computer software or computer programming; (b) Electronic or computer equipment, components or peripherals;

This article includes copyright material of Insurance Services Office, Inc. – CG 00 01 04 13; CG 21 06 05 14; CG 04 37 05 14 and CG 00 65 04 13.

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Infringement of Intellectual Property Rights

(d) Industrial or robotic equipment;

“Loss of electronic data” arising out of or resulting from the actual or alleged infringement of trademark, copyright, patent, trade secret or other intellectual property rights.

(2) Processing, storage, transmission or other handling of “electronic data” for others; or (3) Provision of broadcasting or communication services for others, or consulting, evaluating or advising on such services, including but not limited to broadcasts or communications via television, cable satellite, radio, Internet, wireless transmissions or cellular transmissions. The CG 00 65 is not to be used for those in electronic data related businesses. The form is only for those that use electronic data in their business. When offering a proposal for this form be sure to include in the proposal the complete definition of “computer products or services” and have the prospect acknowledge in writing that the business does not engage in the excluded operations. This exclusion applies to those working on behalf of the named insured.

Contractual Liability This exclusion has the typical ISO exception for “liability for damages that the insured would have in the absence of the contract or agreement”. It does not have an exception for an “insured contract” as found in the CG 00 01 CGL Coverage Form.

Damage to Your Data “Loss of electronic data” that is owned by, developed by or for the named insured or that is the named insured’s product or work is excluded.

Performance of a Contract “Loss of electronic data” arising out of a delay or failure by the named insured or anyone acting on the named insured’s behalf to perform a contract or agreement in accordance with its terms.

Unauthorized Use of Electronic Data “Loss of electronic data” arising out of theft or unauthorized viewing, copying, use, corruption, manipulation or deletion, of “electronic data” by any Named Insured, past or present “employee”, “temporary worker”, or “volunteer worker” of the Named Insured. A review of the marketplace indicates that some insurers choose not to write the coverage. Others have established strict underwriting guidelines applicable to one or both of these ISO forms of coverage. However, do not overlook the available options in cyber liability policies that include a responding insuring agreement for the exposure. For risks “in the technology business” check out Technology Liability or Technology Errors and Omissions policies. Regardless of the source and title of an insuring agreement, carefully read the policy (endorsement) to confirm acceptable coverage. Don’t learn from the after effects of an errors and omissions claim. Practice safe insurance! n

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

President/Publisher William T. Hold, PhD, CIC, CPCU, CLU Editor-in-Chief/Senior Art Director Becky Keeling bkeeling@scic.com 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 JoAnn M. Clarke, CIC, CRM, CISR, CSRM, ARM, ARe, AAI, CPIW jclarke@scic.com Editor Donna Loughran Contributing Designer Chuck Lickert Resources is published by The National Alliance for Insurance Education & Research, P.O. Box 27027, Austin, TX 78755-2027, 800-633-2165, Fax: 512-349-6194, 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 © 2017, 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.”

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

Resources | Spring 2017

SUCCESS STORY

The Duo Behind the Diplomas Father and Son Certified Risk Managers in Mexico

t the heart of the 10-year history of the Certified Risk Managers International (CRMI) program in Mexico is a success story that gives us tremendous pride. We have the honor of recognizing the first combination of father and son CRM designees from Mexico. The father, Ing. José Eligio Castro, CRM, was a member of the first group of CRM designees from Mexico to earn the CRM designation nine years ago. Additionally, J.E. Castro has served as a CRM Faculty member in Mexico since 2007. J.E.’s son, Lic. Gabriel Castro, earned his CRM designation in 2016. Father and son are employed by Enterprise Risk Solutions, S.C., where Ing. J.E. Castro is the firm’s Director. On December 12, 2016, María de San Juan García Díaz, CRM, MBA, and Educational Consultant in Mexico, had the opportunity to interview J.E. and Gabriel Castro in their offices located in Monterrey, N.L. Mexico. This interview provides valuable insight on their CRM journey to success.

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María: What motivated you to earn the CRM designation? José: For me, it was an opportunity that allowed me to reaffirm my knowledge and practice of risk management in a systematic and orderly manner. In addition, I took advantage of an opportunity provided to me and several Mexican colleagues which was to participate in a committee reviewing the CRM curriculum for introduction to international students in Mexico and Central America. Gabriel: There were two reasons: First, I considered my father’s recommendation to earn the CRM designation wherein he highlighted the major benefits; and second, I wanted a resource that would help me broaden my knowledge in the field of risk management. María: What were the greatest challenges and obstacles that you had to overcome to obtain the designation? José: The main challenge that I faced was to assimilate and commit to memory a large amount of information presented in each one of the courses. Another challenge was focusing with full attention, in the two and a half-day courses, while simultaneously keeping up with the

regular day-to-day business responsibilities of providing risk management solutions to our clients. At that time, from 2006 to 2008, my son Gabriel was not working with me in the firm so I didn’t have his valuable support. Gabriel: I faced several challenges during my CRM studies. One of them was that I was working on obtaining my Master’s Degree in Administration and Finance while I was pursuing the CRM designation, so at times it was very difficult to divide my time between the two. My biggest obstacle, during my CRM studies was my availability of time because in addition to taking CRM courses and working on my Master’s degree, my wife was expecting and my daughter was born. María: What are the benefits the CRM designation has brought you? José: Earning the designation has primarily helped me to refine, conceptualize, and explain the risk management process to existing and potential clients in a way that is easy for them to understand. Organizations’ upper management must recognize and understand the relevance and importance of risk management in their business operations and must apply the process to each and every activity of the business.

Consequently, the process of risk management must be properly allocated in the budgeting process and human resources must be optimized to minimize the organization’s cost of the risk. Gabriel: It helped me better understand the role of an organization’s risk manager. In working with clients, I am better prepared to make risk management recommendations that will benefit their organization. María: What advice would you give to those who are working toward obtaining the CRM designation and what advice would you give those who are just beginning their CRM studies? José: Today, it is essential for a risk manager or insurance professional to keep up to date with current risk trends and issues beyond just relying on their years of personal knowledge and experience. This can only be accomplished through an independent, prestigious, and well-recognized education institution and designation program that certifies that the designee has the necessary knowledge to successfully apply risk management

“Earning the designation has primarily helped me to refine, conceptualize, and explain the risk management process to existing and potential clients in a way that is easy for them to understand.” — José concepts. The National Alliance’s CRM program provides this opportunity through its high quality curriculum and instruction.

despite the hard work I invested—I feel that there is no doubt that earning the CRM designation was well worth the effort.

My recommendation, for those who are currently working towards earning the CRM designation and those who are just starting their studies, is to never relent in earning the designation. The best reason is that through the CRM program’s systematic instruction and approach, you will be better prepared with knowledge and tools to face risk with the best opportunity to successfully identify exposures to loss and address them and treat them with optimal risk solutions. Looking back to when I began the CRM program—

Gabriel: For those who are just getting started, be patient and understand that the benefits of earning the CRM designation far exceed the investment in time and effort. For those who are in the process of obtaining the certification, I recommend that you finish the whole process. The content of each CRM course is distinct, yet interdependent. After completing all the courses, you will be able to provide effective and efficient risk management solutions for your organization or to your organization’s clients. n Resources | Spring 2017

HISTORIA EXITOSA

El Dúo Detrás de los Diplomas Padre e Hijo Certificados como CRM en México

n el centro de la historia de los 10 años que Certified Risk Managers International (programa CRM) lleva en México, hay una historia de éxito que nos da tremendo orgullo. Tenemos el honor de reconocer la primera combinación internacional de padre e hijo, ambos certificados como CRM en México. El Padre, Ing. José Eligio Castro, CRM, fue miembro del primer grupo de certificados CRM en México en obtener la misma hace 9 años atrás. En adición, J.E. Castro forma parte de la facultad CRM en México desde el 2007. El hijo de J.E., Lic. Gabriel Castro, CRM, obtuvo su certificación en el 2016. El padre e hijo son empleados de Enterprise Risk Solutions, S.C., donde Ing. J.E Castro es el Director de la empresa. El 12 de diciembre de 2016, María de San Juan García Díaz, CRM, MBA, y Consultora Educativa con domicilio en México, tuvo la oportunidad de entrevistar a J.E. y a Gabriel Castro en sus oficinas localizadas en Monterrey, N.L., México. La entrevista que encontrará a continuación proporciona una valiosa visión sobre el camino al éxito para lograr obtener la certificación CRM.

16 Resources | Spring 2017

María: ¿Qué los motivo a obtener la certificación CRM? José: En mi caso, fue una oportunidad que me permitió reafirmar los conocimientos y práctica de la administración de riesgos en una manera sistemática y ordenada. Además, aproveche la oportunidad que nos brindaron a mí y a varios colegas mexicanos, en cual era participar en un comité de revisión del currículo CRM para la introducción del material a estudiantes internacionales en México y América Central. Gabriel: Tuve dos razones, primero, considere la recomendación que me hizo mi padre para obtener la certificación CRM resaltando los beneficios que se obtendrían de ella; y la segunda, deseaba poder contar con una herramienta que me ayudara a tener mayor conocimiento en la materia de administración de riesgos. María: ¿Cuáles fueron los mayores retos y obstáculos que debieron superar para lograr la certificación? José: Los principales retos que enfrenté durante el proceso de certificación fueron el asimilar y retener en memoria la gran cantidad de información que se presenta en cada uno de los cursos. Otro reto fue el poder enfocarme con una atención completa, durante los dos días y me-

dio de asistencia a los mismos y a la misma vez atender el curso normal de trabajo que realizamos en el día a día de proveer solución de administración de riesgos a nuestros clientes. En ese entonces, 2006 al 2008, mi hijo Gabriel no trabajaba conmigo, por el cual, no contaba con su valiosa participación. Gabriel: Fueron varios los retos que enfrente durante mis estudios para la certificación CRM. Uno de ellos fue que a la misma vez de estar en el proceso de obtener la certificación CRM, me encontraba cursando la Maestría de Administración y Finanzas, por lo que en ocasiones me era complicado dividir mi tiempo entre los dos. Creo que el mayor obstáculo que tuve que superar durante mis estudios CRM, fue la disponibilidad de tiempo, ya que adicional a mis estudios; mi esposa estaba embarazada y luego el nacimiento de mi hija. María: ¿Cuáles son los beneficios personales y profesionales que ha traído la certificación a tu vida? José: Obtener la certificación me ha ayudado principalmente a refinar, conceptualizar y explicar el proceso de administración de riesgos nuestros clientes actuales y potenciales de tal forma que para ellos resulta de mejor entendimiento. La alta gerencia de las organizaciones tiene que entender y reconocer la

g kin ea -sp ish an Sp ur ro Fo rs! de rea

importancia de la administración de riesgos en las operaciones de la empresa y deben aplicar el proceso a cada una de las actividades del negocio. Por lo tanto, el proceso de la administración de riesgos debe ser asignado correctamente para una óptima elaboración de presupuesto y recursos humanos para que de esta manera se puedan minimizar los costos asociados a la exposición de los riesgos. Gabriel: En lo personal me ayudo a entender las funciones que debe desempeñar el administrador de riesgos dentro de una empresa. En cuanto a trabajar con los clientes, estoy mejor preparado para hacer recomendaciones de administración de riesgos que beneficiará a sus organizaciones. María: ¿Qué consejo darías a los que están en el proceso de obtenerla? ¿Para los que inician? José: Hoy por hoy, es esencial para un administrador de riesgos o profesional en seguros que se mantengan actualizados en las tendencias actuales de riesgos o situaciones van más allá de simplemente confiar en sus años de conocimiento personal y experiencia. Esto solo puede lograrse a través de una institución indepen

“Obtener la certificación me ha ayudado principalmente a refinar, conceptualizar y explicar el proceso de administración de riesgos nuestros clientes actuales y potenciales de tal forma que para ellos resulta de mejor entendimiento.” — José diente de reconocido prestigio que certifique que los estudiantes tienen los conocimientos necesarios para aplicar exitosamente los conceptos de la administración de riesgos. El programa CRM de The National Alliance for Insurance Education & Research provee esta oportunidad mediante la instrucción y currículo de alta calidad. Mi recomendación, para los que están en el proceso de obtener la certificación CRM y para los que están comenzando sus estudios, es no cesar en su esfuerzo de certificarse. La mejor razón, es que mediante la instrucción y acercamiento sistemático del programa CRM, estará mejor preparado con conocimientos y herramientas para enfrentar con mayor

probabilidad de éxito los retos de las exposiciones a pérdidas. Mirando hacia atrás a cuando comencé el programa CRM, a pesar de la ardua labor que he invertido, creo que bien vale la pena el esfuerzo. Gabriel: Para los que inician, sean pacientes y entiendan que los beneficios de obtener la certificación CRM son mucho mayores que el tiempo y el esfuerzo invertido. Para los que se encuentran en proceso de obtener la certificación, les recomiendo terminar todo el proceso. El contenido de cada curso es interdependiente. Luego de completar los cursos, usted podrá proveer soluciones eficaces y eficientes de administración de riesgos para la empresa a la que trabaja o a sus clientes. n Resources | Spring 2017

Careers Worth Considering

ow do you convince job seekers that a career in the insurance and risk management industry can be lucrative, satisfying, and worth serious consideration? Point them to CNNMoney’s 2017 Best Jobs in America list! (money.cnn.com/gallery/pf/2017/01/05/bestjobs-2017/2.html) CNNMoney recently gave their take on the top 100 careers in America—based on industry growth, great pay, and satisfying work. Three job positions in the top 20 of that list are in insurance and risk management! Number 20 on CNNMoney’s Best Jobs list is Actuary. Rated highly for personal satisfaction, benefit to society, telecommuting, and low stress, actuaries apply technical and mathematical findings to real-world issues. CNNMoney states, “Often found at insurance companies or financial firms, actuaries use high-level statistical analysis to calculate the financial impact of potential risks. Then they convert their findings into a digestible presentation for management and other stakeholders.” Coming in at number five, is Information Assurance Analyst—a job that falls within the vast realm of risk management careers. CNNMoney describes the position this way: “Think of them as data superheroes—out to protect the security of an organization’s hardware and software systems. Information analysts also assess current systems and threats and spearhead the response to any breaches or attacks.” And taking the number two spot on the list is Risk Management Director. CNNMoney points out that while risk management directors are traditionally thought of as the ones who jump into action following a natural disaster—directing cleanup and rebuilding efforts and filing the necessary insurance claims—the job has evolved in recent years to include the tasks of identifying, preventing, and planning for

18 Resources | Spring 2017

all the risks a company might face—anywhere from cybersecurity breaches to a stock market collapse. The National Alliance offers education opportunities for a wide range of insurance and risk management roles—from our online Introductory Series courses, designed specifically for those new to the industry (see details on page 31), all the way to our advanced CIC, CRM, and CPRM designation programs, and everything in between. For anyone seeking a career that contributes to businesses’ and individuals’ lives in meaningful ways, The National Alliance provides the best education in the industry, a means for career growth and recognition, a myriad of resources and support, and a network of colleagues dedicated to professionalism. n

Industry Gro

wth

Great Pay Satisfying W ork

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

Certified Risk Managers International (CRMI) Celebrates 10-Year Anniversary in Mexico

On October 19, 2016, the Certified Risk Managers International (CRMI) Program celebrated its 10th year of presenting CRM programs in Mexico. The celebration held in Mexico City was attended by CRM and Ruble Advanced Seminar program participants, CRMI Educational Consultants, and Faculty members. Leading the celebration was

The National Alliance’s Mary I. Husk, CIC, CRM, CPCU, Vice President of Risk Management Programs and Faculty Development, CISR Faculty member, and Educational Consultant, and María de San Juan García Díaz, CRM, MBA, and CRMI Educational Consultant and National CRM Faculty member. The CRM program was launched in Mexico in

2006 and now has more than 350 international program participants and 100 CRM designees who have earned their designation by attending CRM programs in Guadalajara, Monterrey, and Mexico City. This is an important milestone in the history of The National Alliance and the CRM program, which continues to grow its global community.

A Different Kind of Update: The 2017 Entrepreneurial Insurance Symposium Network. Learn. Be Inspired—and Get Update Credit! MarketScout’s 11th annual Entrepreneurial Insurance Symposium will be held Sept. 6–7, 2017, in Dallas, Texas, to promote innovation in the insurance industry. Until recently, our industry had long been in need of a think-tank, or incubator, supporting new insurance concepts and ideas. In response to that need, MarketScout, with support from The National Alliance, created the Entrepreneurial Insurance Symposium, where over 400 forward-thinking insurers, intermediaries, and agents come together to share new ideas, trends, and concepts related to insurance distribution, underwriting, and automation.

You won’t want to miss this exciting event—open to all insurance and risk management professionals. Business Insurance magazine will be this year’s recognized media partner. Participants who attend the entire two-day symposium will have the opportunity to receive significant CE credit, and CIC and CRM designees can receive update credit. For more details and to register, visit scic.com/courses/eis.

Panelists and attendees from the 2016 Symposium.

Resources | Spring 2017

Train Your Team with Our 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 new-to-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. • Increase customer (and employee) retention with valuable customer service skills. Our programs are known—first and foremost—for their “put-it-to-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. Visit TheNationalAlliance.com for complete schedules, details about our programs, and to register for your next update.

20 Resources | Spring 2017

Designation Programs Open to ALL INTRODUCTORY SERIES The Introductory Series is a good choice for those interested in finding out more about the industry and industry fundamentals.

CISR The Certified Insurance Service Representative (CISR) designation program provides quality insurance education ideal for any professional involved directly in customer service.

DYNAMIC SERIES The Dynamics Series offers career-changing sales training and is valuable and appropriate at any stage.

WILLIAM T. HOLD SEMINARS William T. Hold Seminars cover a variety of pertinent topics and are invaluable for expanding your insurance knowledge. And, they satisfy update requirements for CISRs and CSRMs.

CSRM The Certified School Risk Manager (CSRM) designation program fills a need for quality risk management education for those associated with schools.

Programs

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

Advanced Designation Programs CIC The Certified Insurance Counselor (CIC) designation program provides an in-depth, practical approach to education for agents and other insurance practitioners.

RUBLE SEMINARS James K. Ruble Seminars are advanced programs that offer a variety of specialty and niche topics. CICs, CRMs, and CPRMs can meet their annual update requirements with a Ruble Seminar.

Map your career track and customize your learning experience. College students, seasoned professionals, and everyone in between can look to The National Alliance for networking, publications, and dozens of career-building resources. Five 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)

CRM The Certified Risk Manager (CRM) designation is recognized as being the foremost education available in the field of risk management.

Programs for university students and those new to the industry: • University Associate CIC (UACIC) • University Associate CRM (UACRM) • Introductory Series World-class sales and producer training: • Dynamics Series Sales Training Programs • P&C School for Producer Development • Employee Benefits Producer Training Advanced education opportunities:

CPRM

• William T. Hold Seminars (open to all)

The Certified Personal Risk Manager (CPRM) designation program yields the best training for meeting the needs of an affluent clientele.

• James K. Ruble Seminars (exclusively for CICs, CRMs, and CPRMs) Publications, websites, and career assistance: • The National Alliance Research Academy (publishes books based on industry research) • Knowledge Alliance (irmka.scic.com) • Careers For Life (CareersForLife.com)

Remember to recommend National Alliance programs to your team members, friends, and colleagues!

Resources | Spring 2017

BY THE NUMBERS

BY JON PERSKY, CPA, CIC, PHR, and JENNY FOSTER, CIC

Performance Evaluations and the Termination Process HR Survey Results

his is the second of two articles based upon the survey results for Hiring, Managing, and Compensating Insurance Agency Personnel, authored by Jon Persky, CPA, CIC, PHR, and Jenny Foster, CIC. To supplement the authors’ material in the book, The National Alliance surveyed independent insurance agency owners. A total of 744 agency owners, office managers, and other agency associates with HR responsibilities participated in the online survey. This article presents a sampling of the survey findings related to adequate documentation and the termination process. When it comes to terminating an employee, documentation is critical. Employment agreements, employee handbooks, and performance appraisals are just a few of the items an insurance agency must have to protect itself from employmentrelated lawsuits.

Learn More, Earn More Attendance at a CIC Agency Management Institute presents great opportunities to learn more about the process of managing personnel, including following legal guidelines, establishing appropriate job descriptions, setting interviewing practices, giving performance appraisals and evaluations, and overseeing termination procedures. A must-have for every company and agency—Jon Persky’s and Jenny Foster’s NEW book, Hiring, Managing, and Compensating Insurance Agency Personnel, is published by The National Alliance Research Academy (shop scic.com/store/publications.html).

22 Resources | Spring 2017

Employment Agreements A non-piracy agreement is specific in terms of time and clientele. It prevents a former employee from writing, or attempting to write, their former agency’s accounts for a specific period of time. The acceptable length of time varies from state to state. A non-compete agreement is specific in terms of time and geographic scope. It is more restrictive than a non-piracy agreement in that it prevents a former employee from working in an agency or attempting to acquire clients within a specific geographic area or distance from the former agency. While non-compete agreements are more restrictive, they are much more difficult to enforce in a court of law. Courts typically say that a person has a right to earn a living in his or her area of expertise. What type of employment agreements do you utilize?

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

Non-compete (specific in terms and geographic 61% 45% 52% 50% 75% 74% scope) Non-piracy (specific in 51% 49% 51% 62% 49% 55% terms of time and clients) Neither of the above

20% 33% 26% 21% 11% 8%

Employee Manual The employee manual (also known as an employee handbook) is a critical component of the HR function in an agency. It is an effective and convenient way to ensure that all employees know and understand established policies and procedures. The majority of agencies surveyed stated they had an

employee handbook. The larger the agency, the greater the chance that an employee handbook was in place. Does your agency currently have an employee handbook?

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

Yes

81% 60% 77% 82% 96% 97%

19% 40% 23%

18%

The majority of agencies have had their employee handbooks reviewed by legal counsel. Has your employee handbook ever been reviewed by legal counsel?

Agency Size: Number of Employees

All

1–5 6–10 11–20 21–50 51+

Yes

73% 45% 61% 73% 82% 98%

27% 55% 39% 27% 18% 2%

The survey found the following common topics covered in the majority of employee manuals. Which items are included/addressed in your employee handbook?

Agency Size: Number of Employees

All

1–5 6–10 11–20 21–50 51+

Dress code

93% 87% 91% 92% 95% 98%

Signature form acknowledging receipt of handbook

92% 86% 91% 90% 98% 95%

Harassment

91% 86% 86% 87% 96% 98%

Statement that employment is “at-will”

90% 86% 86% 91% 93% 95%

Drug-free workplace

89% 90% 86% 83% 91% 97%

Internet usage

89% 84% 89% 82% 94% 97%

Disclaimer that the handbook can be unilaterally changed (by management)

83% 76% 82% 82% 82% 91%

the termination was justified and was not discriminatory in nature. Employees want to know if management is happy or unhappy with their work, yet many managers avoid or delay evaluations due to their own anxiety over the delivery process, or because they feel evaluations are confrontational. Sixty percent of respondents indicated that they have a formal, written evaluation process. The larger the agency, the greater the likelihood they utilize performance evaluations.

78% 69% 76% 67% 82% 95% Family Medical Leave Act

Do you currently have a formal, written, job performance evaluation process?

Alcohol-free workplace

77% 69% 77% 70% 80% 89%

Yes

60% 41% 47% 53% 75% 90%

Americans with Disabilities Act

78% 71% 74% 70% 84% 92%

40% 59% 53% 47% 25% 10%

Social media policy 67% 56% 68% 59% 71% 83% (Facebook, LinkedIn, etc.) COBRA

60% 39% 57% 47% 72% 82%

Fair Credit Reporting Act 56% 46% 52% 46% 66% 70% Marijuana usage

47% 46% 51% 39% 44% 54%

Immigration Reform & Control Act

45% 37% 44% 37% 49% 58%

Performance Evaluations When it comes to terminating an employee, it is critical that the employer have adequate documentation to prove that

Sixty percent of all surveyed agencies have a formal, written, job performance evaluation process.

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

The vast majority of performance appraisals are done on an annual basis. How often is the performance evaluation done?

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

Annually

71% 73% 64% 80% 70% 72%

Semi-annually

17% 8% 20% 7% 22% 21%

Quarterly

5% 14% 4%

Other

7% 4% 13% 9% 5% 3%

Continued on page 24. Resources | Spring 2017

Performance Evals and the Termination Process …continued from page 23. While most agencies evaluate all employees during a specific time period, almost 40% of agencies base performance review delivery on the employee’s hire date. When are the performance evaluations administered?

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

Everyone at the same time of year

58% 25% 57% 59% 64% 68%

Based on the employee’s hire date

38% 75% 39% 34% 32% 26%

Other

4% 0% 4% 7% 4% 5%

Terminating an Employee The decision to terminate an employee can raise many legal issues. Evaluate with legal counsel the risks of a potential lawsuit that may be brought by a disgruntled employee. Eleven percent of survey respondents indicated that their agency has been sued by a former employee for an employment related issue. The larger the employer, the greater chance it has been sued. This isn’t surprising since larger employers naturally have a greater number of employees and, therefore, a larger number of terminations. Has your agency ever been sued by a former employee for an employee related issue?

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

Yes

11% 2% 3% 5% 16% 37%

89% 98% 97% 95% 84% 63%

Of agencies that have been sued, over one-third have been sued multiple times. Again, larger employers are sued more frequently. How many times has your agency been sued by a former employee?

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

One time

64% 100% 67%

80% 82%

50%

Two or more times

36%

20% 18%

50%

33%

For employers who have been sued multiple times, judgment was always in favor of the employer or always in favor of the employee. There were no “split decisions.” Judgment was made in favor of:

Only one lawsuit filed

Two or more lawsuits filed

Employer

77%

59%

Employee

23%

41%

24 Resources | Spring 2017

Approximately half of all survey respondents never offer a severance package. The larger the employer the greater the chance it will offer a severance package. Do you offer a severance package to terminated employees?

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

Always

7% 6% 7% 6% 5% 11%

Sometimes

42% 17% 39% 37% 61% 65%

Never

51% 77% 54% 58% 34% 24%

If a severance package is offered, 44% of the time it is contingent upon the employee agreeing not to sue. Is the severance package contingent upon the terminated employee signing a form not to sue the employer?

Agency Size: Number of Employees All

1–5 6–10 11–20 21–50 51+

Yes

44% 31% 29% 43% 37% 70%

56% 69% 71% 57% 63% 30%

It should be noted that employees who are at least 40 years old must be given 21 days notice, and sometimes 45 days notice, to consider a severance package. If someone is not given the correct amount of time, the waiver of any age discrimination claim may be compromised and invalidated, and the employee can still sue the employer. While the following survey results are not limited solely to age discrimination, it is concerning to note that most respondents did not provide adequate time for the employee to make a decision.

How much time does the employee have to accept the severance package?

All

Agency Size: Number of Employees 1–5 6–10 11–20 21–50 51+

Immediately, during the termination meeting

44% 70% 53% 36% 49% 24%

1–3 days

23% 11% 22% 26% 20% 32%

4–6 days

12%

1–2 weeks

16% 15% 14% 17% 13% 23%

3–4 weeks

4% 0% 6% 2% 3% 6%

More than 4 weeks

1% 0% 0% 0% 3% 0%

19%

11%

15%

Hiring, Managing, and Compensating Insurance Agency Personnel is a 300+ page, human resources primer that covers and includes: • Best practices for hiring, managing, and terminating employees • Summaries of HR laws that directly impact agencies

Get the book that guides you through the challenges of hiring the right people, effectively managing their performance, and compensating them strategically. Hiring, Managing, and Compensating Insurance Agency Personnel—published by The National Alliance Research Academy and coauthored by Jon Persky, CPA, CIC, PHR, and Jenny Foster, CIC—does all that, and more. Compiling survey results from over 700 industry participants, this 350+ page HR guide delivers valuable insider information on:

• A sample employee handbook

• How to determine the type of employees you need and how to find them

• Sample job descriptions

• Tips on how to interview candidates

• Recommendations on how to compensate producers and staff n

• Checking out a candidate’s background

• How and what to test candidates for

About the Authors: Jon Persky, CPA, CIC, PHR, and Jenny Foster, CIC

• Guidelines on how to terminate employees

Jon is the President of Optimum Performance Solutions, LLC (optperform. com), an insurance agency consulting firm providing valuation, merger and acquisition, agency perpetuation, strategic planning, and marketing and retention services to insurance agencies nationwide. Jon is the author of Starting, Buying, Selling and Perpetuating Insurance Agencies as well as Hiring, Managing, and Compensating Insurance Agency Personnel, both of which are published by The National Alliance. He is also a National Alliance National Faculty member and CIC Mentor. Jon can be contacted at 813-835-7337 or jon@optperform.com.

• How to handle HOT topics, including marijuana use, gender identity, and social media issues

With over 20 years in human resources and 14 years as a licensed broker in both property and casualty and life and health insurance, Jenny Foster served for nine years as the Senior Employee Benefits Advisor and Human Resources Manager for Seattle-based agency, EHL Insurance (now Brown & Brown of Seattle). She has served on the board of her local SHRM (Society for Human Resources Management) chapter, and most recently served as an Associate Faculty member for The National Alliance, for whom she presented nationally. Jenny can be contacted at 360-621-1981 or jennyfoster.consulting@gmail.com.

• Performance evaluations

• Federal employment laws

• What motivates employees • How to compensate and incentivize employees In addition, you’ll receive many customizable sample forms and lists, including: • Employment applications • Offer of Employment letter • New employee checklist • Non-piracy agreements • Termination checklist • Job descriptions • Employee handbook …and many more! + s&h Paperback

eBook

Resources | Spring 2017

Court Cases Prompt Coverage Changes ISO to Limit Coverage for Designated Premises or Project BY PAUL BURKETT, J.D., CIC, CRM, CPCU, ARM, ALCM

n its Commercial Lines Forms Filing CL-2016ODPFR, the ISO is making a significant and unprecedented narrowing of coverage that impacts the ISO Businessowners Coverage Form, ISO Commercial Excess Liability Coverage Form, ISO Commercial General Liability Coverage Form, and the ISO Commercial Liability Umbrella Coverage Form. This filing will take effect in April 2017, and it revises the Limitation of Coverage to Designated Premises or Project Endorsements available with the above coverage forms. In response to two significant court cases, it was decided by the ISO to revise these endorsements. [C. Brewer & Comp. v Marine Indemnity, Inc., 347 P.3d 163 (Haw. 2105) and Western Heritage Insurance Company v. Cyril

Learn More, Earn More You’ll learn more about the CGL Policy and how liability coverage is applied when you attend a CIC Commercial Casualty Institute. Or consider taking the NEW CIC Commercial Multiline Institute, which includes casualty- related subjects such as Cyber Exposures and Coverage, EPLI, and Commercial Umbrella. And you may want to invest in a copy of Property & Casualty Insurance Essentials—published by The National Alliance Research Academy—it has chapters explaining the CGL policy and other commercial liability policies (shop scic.com/store/ publications.html).

Resources | Spring 2017 26

Hoover DBA Okanogan Valley Transportation, No. C15-115RSM, 2016 WL 1242091 (W.D. Wash. Mar. 30, 2016)] The following forms are being revised: • BP 04 12 – Limitation Of Coverage To Designated Premises, Project Or Operation (Formerly: Limitation of Coverage To Designated Premises or Project) • CG 21 44 – Limitation Of Coverage To Designated Premises, Project Or Operation (Formerly: Limitation of Coverage To Designated Premises or Project) • CU 21 11 – Limitation Of Coverage To Designated Premises, Project Or Operation (Formerly: Limitation of Coverage To Designated Premises or Project) • CX 21 10 – Limitation Of Coverage To Designated Premises, Project Or Operation (Formerly: Limitation of Coverage To Designated Premises or Project) The CG 21 44 07 98 – Limitation Of Coverage To Designated Premises, Project Or Operation Endorsement has provided a way for insurance companies and insureds to limit the policy’s coverage to exposures associated with specified business premises or operations. This CGL endorsement historically was applied to injury or damage arising out of the ownership, maintenance, or use of the insured premises, as designated in the policy declarations, “and all operations necessary or incidental thereto.” This endorsement language, and the reference to operations “incidental” to the use of the designated premises, has been consistently interpreted by the courts and understood by insurance company adjusters to include any off-premises exposures that were legitimately connected to the business conducted on the premises. The CG 21 44 04 17 Limitation Of Coverage To Designated Premises, Project Or Operation revisions modify and replace selected sections of the Commercial General Liability Coverage Form: (1) Coverage A – Bodily Injury and Property Damage Liability; (2) Coverage

…the ISO is making a significant and unprecedented narrowing of coverage… B – Personal and Advertising Injury Liability; and (3) Coverage C – Medical Payments. 1. The new endorsement deletes coverage for injury or damage arising out of the “ownership, maintenance or use of the premises shown in the schedule.” 2. The new endorsement deletes scheduled premises coverage for injury or damage related to “operations necessary and incidental to those premises.” 3. For greater flexibility with respect to risk specific underwriting associated with operations related to the scheduled premises or other operations unrelated to endorsement scheduled premises: the revised endorsement explicitly incorporates the term “operation” into the endorsement’s Schedule, and it is separate from the Premises section of the endorsement’s Schedule (see exhibit below). SCHEDULE Premises: Project Or Operation:

Information required to complete this Schedule, if not shown above, will be shown in the Declarations.

4. The ISO endorsement revision explicitly states that certain Coverage B – Personal and Advertising Injury Liability offenses (intentional torts) are location based only: (1) “False arrest, detention, or imprisonment; or (2) The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor.” The new language goes on to state that “…such offense must arise out of your business performed on the premises shown in the Schedule and the offense must have been committed on the premises shown in the Schedule or the grounds and structures appurtenant to those premises.” 5. The ISO endorsement revision clarifies under Coverage C Medical Payments, that bodily injury caused by an accident must occur on the premises shown in the endorsement schedule and/or Continued on page 28.

Resources | Spring 2017

Learn Proven Methods for Selling Employee Benefits Employee Benefits Producer Training Program April 24–May 4, 2017 International Foundation Training Center Brookfield (Milwaukee), Wisconsin The Employee Benefits Producer Training Program is an intensive ten-day course for those who want to succeed as employee benefits sales professionals. Blending the International Foundation’s respected employee benefits curriculum with that of The National Alliance’s acclaimed Dynamics of Selling Program results in an unprecedented opportunity to learn the best in selling techniques and about the complexities of health care, retirement, and ancillary benefit programs. Taught by seasoned practitioners, you will learn a proven sales process, successful selling skills, and the technical side of employee benefits.

Visit ifebp.org for more details and to register.

Court Cases Prompt Coverage Changes must arise out of the project or operation listed in the endorsement schedule. This is consistent with the changes made relative to Coverage A – Bodily Injury and Property Damage. The changes are intended to not extend coverage anywhere in the Coverage Territory as the two previous court decisions allowed. The intent is to limit coverage to decisions made on the scheduled premises, project, or operation and limit the resulting injury or damage only to the scheduled premises, project or operation. The endorsement is a restriction of coverage and it will start arriving on new and renewal business in April 2017. Agents and brokers should get copies of the new endorsement and review it carefully. Additionally, they should also determine when and if their insurance company underwriters will implement the use of this revised endorsement. Be aware. n

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…continued from page 27.

About the Author: Paul W. Burkett, J.D., CIC, CRM, CPCU, ARM, ALCM Paul is the President and CEO of Snoaspen Insurance Group, Inc. He is a risk management consultant and performs policy/risk management program audits for commercial clients and agents/brokers. Paul also provides insurance coverage and agent/ broker standard of care expert witness opinions and testimony. He is a National Faculty and Ruble Seminar faculty member, a CIC and CISR Committee member, and past CIC board member. n

Recognition from Your Colleagues Means SO Much!

tarting this year, each participant who earns a National Alliance designation will receive a Credentials Package by mail. This package will contain his or her diploma, designation pin, and membership card/mini diploma, along with a link (through MyPage) to a Membership Portfolio—loaded with benefits, self-promotion tools, and useful update information. The inside of the box includes a special message of congratulations from the President of The National Alliance, Dr. William T. Hold, CIC, CPCU, CLU.

As a designation holder, you fully grasp the significance of this proud achievement. We encourage you to recognize and celebrate your colleagues when they receive their Credentials Packages. Their pursuit of the best professional insurance and risk management education in the industry benefits not only them, but also your clients and entire organization. We ask that you, your team members, and coworkers “make a fuss” over your associates’ accomplishments and honor the tangible results of their hard work, dedication, and commitment to professionalism.

Resources | Spring 2017

EDUCATION INNOVATION

High Schoolers, Houston, and Higginbotham

n 2013, Texas passed House Bill 5 which paved the way for Texas high school students to earn credit for specific areas of study outside of their standard classroom curriculum. In the Spring 2016 issue of Resources magazine (page 16), we covered the “Success Story” of an innovative, new educational program that fit the House Bill criteria. Following the devastation to their area caused by hurricanes Ike and Rita, Kathleen Hicks, thenChairman of the CIC Board of Governors, and Kristi Heid, Superintendent of Sabine Pass Schools, worked together to create a model patterned on The National Alliance’s University Associate Program and applied it at the high school level, using courses from the CISR Program. Long-time National CIC Faculty member and President of Cedar Lake Consulting, Bob Rogers, CLU, ChFC, generously stepped up to provide some financial assistance to help get the program started. After the first group of students completed the pilot program using the CISR curriculum, The National Alliance’s Introductory Series was selected as a

“The ‘Big I’ Day was incredible, as always. Everyone is always so friendly, welcoming and excited to speak with my students. It’s such a unique opportunity for us…” —Ms. Delsatte better entry point for high school students to learn about insurance concepts and subject matter. Pictured below is the third group of students from Sabine Pass High School to earn credit by participating in this ground-breaking, insurance education program. This group of students participated by taking four National Alliance online Introductory Series courses, making a field trip to an insurance agency (Higginbotham’s Houston office hosted this group), and attending the Houston Insurance Day (“Big I Day”) trade show, with Bob Rogers and Sabine Pass High School instructor Ashleigh Deslatte on hand to guide and encourage the students along the way. n

Go to youtube.com/watch?v=tlZPEa2EFo4 for some background on how the program began and to hear reactions from a few of the student participants.

Pictured L to R: Mark Lee, CIC, Managing Director of Higginbotham Insurance—Houston office; Jesse Rouly; Bob Rogers, CLU, ChFC; Andres Ceja; Adrian Galvan; Marissa Peltier; Juan Rodriguez; Adolfo Oseguera; Lexi Gonzales; Luis Medina; Sabine Pass High School instructor Ashleigh Deslatte; Israel Cantu; Sabine Pass High School instructor Tia Marshall; and Paige Cokinos, VP of Higginbotham Insurance—Houston office.

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Self-Paced Online Courses Introductory Series courses are a low cost, flexible way to learn the fundamental aspects of the business—great for a head-start on a career in the insurance industry. Courses include: General Topic: • Introduction to Property & Casualty Insurance Personal Lines Topics: • Introduction to Personal Auto Insurance • Introduction to Personal Residential Insurance Commercial Lines Topics: • Introduction to Commercial Property Insurance • Introduction to Commercial Casualty Insurance • Introduction to Commercial Miscellaneous Exposures and Coverages • Introduction to Property & Casualty Insurance Life, Health, and Benefits Topics: • Introduction to Life & Health Insurance • Introduction to Employee Benefits—An Overview • Introduction to Employee Benefits—Retirement Plans • Introduction to Employee Benefits—Health Care

Benefits of the Introductory Series: – 3:1 ratio of content vs. interactivity – 60 days to complete each course – Access to courses 24/7

EACH

– Mentor who is accessible through email – Structured learning objectives with linked assessments

TheNationalAlliance.com

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 Trusted Choice Insurance Agents 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 Association 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

Resources | Spring 2017

COVERAGE CORNER

BY CHRIS CHRISTIAN, CIC, RPLU

Fiduciary Liability Coverage as it relates to Benefits Malpractice

iduciary liability coverage is a chronically undersold and misunderstood insurance product. Many employers believe they do not have a fiduciary exposure because they offer no retirement plan or because they have outsourced benefits administration to a third party. They are not only wrong, but certain executives with that employer stand the chance of being made aware of their erroneous reasoning through the rude awakening of uninsured personal liability, fines, and penalties. Before we dive into the details of fiduciary liability and exposures, let’s clarify exactly what we mean by “fiduciary” for purposes of this article. It’s important to note that the term “fiduciary” broadly refers to a legal relationship one person has with another where a

Learn More, Earn More For an in-depth look at employment practices liability and fiduciary liability, attend a James K. Ruble Executive Risk Seminar. For a basic overview, consider taking the four-hour online William T. Hold Employment Practices Liability Seminar. The National Alliance Research Academy’s book, Executive Liability Insurance, is a good reference with sections on both Employment Practices Liability and Fiduciary Liability (shop scic.com/store/publications.html).

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certain standard of trusted conduct must be met. This standard is generally considered the highest standard of care that can be expected in a relationship. Directors and officers have a fiduciary responsibility to their shareholders, sometimes their creditors, and sometimes other stakeholders. Trustees have a fiduciary duty to the beneficiaries of the trust. However, when we use the term “fiduciary liability coverage” in the insurance world, we are nearly always talking about the liability that accrues to persons who fall within the definition of “fiduciary” under the Employee Retirement Income Security Act of 1975 (aka, “ERISA”), when they are engaged in overseeing plans offered by their employer. When it comes to business management and decisions, even those related to healthcare or other benefit plans and retirement plans, there are many levels and layers of liability that fall short of the “fiduciary” moniker, and which are not subject to ERISA’s influence. There can be crossover or gray areas between directors’ and officers’ liability and ERISA/fiduciary liability, and we’ll touch on that topic lightly. A fiduciary is generally defined as a person exercising discretion over a plan. The “plan sponsor” is the employer that has put together the plan for its employees. (For purposes of this article, we will ignore the intricacies of multi-employer and multiple employer plans.) Plan sponsors have liability, the plans themselves can have liability, and the fiduciaries, personally, can have liability. That’s a lot of liability! Interestingly, even the Department of Labor doesn’t try to specifically identify who is a “fiduciary,” but rather sets forth examples of the types of things a person might do that would

… it is possible to be a fiduciary and not realize it. Lack of awareness of one’s obligations as a fiduciary doesn’t relieve one of those duties.

cause him or her to be classified as a “fiduciary” when the time comes to determine responsibility. For example, a person who selects a third-party service provider might be a fiduciary. A person who determines what investments will be offered in a plan might be a fiduciary. Any person named in the plan documents as a fiduciary is most definitely a fiduciary. The important thing to remember is that a person is a fiduciary due to the function they perform for the plan, not just their job title, so it is possible to be a fiduciary and not realize it. Lack of awareness of one’s obligations as a fiduciary doesn’t relieve one of those duties. Common sources of claims are varied and most frequently arise from negligence, not intentional wrongdoing on the part of the fiduciaries. These claims include: • Selecting imprudent investments • Selection of an improper service provider • Failure to monitor/supervise a service provider • Failure to fund/insufficient funding • Insufficient/improper plan documentation • Insufficient/improper communication regarding plans • Plan non-compliance (statutory non-compliance, or lack of compliance with plan documents) • Choosing plans that are not in the participants’ best interests • Excessive fees These errors and omissions can occur for retirement plans or for “welfare benefit” plans. Welfare benefit plans include

all manner of healthcare, life, accident, disability, and other plans that are offered to support the participants. ERISA sets forth personal liability for violation of its provisions. Fiduciaries can be claimed against by beneficiaries and participants of plans (individually or en masse), by governmental agencies, including the Department of Labor and the Internal Revenue Service, or by other fiduciaries. Certain provisions of ERISA have been expanded by the Affordable Care Act and HIPAA over time, making compliance more complex and challenging. Many employers offer plans that do not fall under ERISA. The employers’ actions with regard to those plans are not subject to ERISA oversight or the fiduciary standard of care, but participants may still take exception to errors or omissions in the management, funding, or administration of those non-ERISA plans. A few employer types (such as municipalities) may be exempt from ERISA, but may find themselves liable to enrollees for other reasons. Once a plan sponsor and its fiduciaries figure out they do not want to self-insure these exposures, they can look for a fiduciary liability policy to protect against some of the more common causes of loss. In addition to coverage for breach of duty as a fiduciary, a policy may cover several other causes of loss. Employee Benefits Liability (EBL) coverage is frequently found embedded within a fiduciary liability policy, under the guise of coverage for plan “administration.” Many policies …continued on page 34. Resources | Spring 2017

Fiduciary Liability Coverage …continued from page 33. will provide contingent bodily injury/property damage coverage, which can be quite helpful when an insured is faced with a claim related to an employee not having expected healthcare coverage. This is a more generous approach than is found in the EBL coverage provided by General Liability policies.

In addition to covering these specified penalties, some policies may also offer coverage for the insured’s expenses and contributions to voluntary correction/compliance programs (a self-reporting protocol to remedy violations discovered by the employer) and for investigations or hearings by regulatory bodies.

Employers that are in the process of deciding whether to offer plans, what those plans should look like, or making changes to existing plans have exposures that are related to the plan, but which are not “fiduciary” exposures. These exposures are considered business decisions, not fiduciary responsibilities. This kind of decision is referred to as a “settlor activity” and is one of the areas where there is potential crossover or a gap between a fiduciary liability policy and a directors’ and officers’ liability policy. Some fiduciary liability policies will endorse “settlor activity” into coverage.

Some D&O policies will cover business decisions related to benefit and pension plans so long as those decisions do not fall under ERISA’s purview. When placing D&O and fiduciary, an agent must look at the variables around these non-fiduciary plan-related exposures and be sure they are picked up on one policy or the other. Governmental fines and penalties may or may not be subject to coverage, depending on what area of ERISA has been violated. There are three major regulatory provisions that can give rise to fines which are often covered in today’s forms: 502(c)(2) – Penalties assessed for failure to provide plan documents as requested by participants 502(i) – Penalties assessed for engagement in transactions prohibited by section 406 of ERISA 502(l) – Penalties assessed for violation of Part 4 of Title I of ERISA

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 bankowned 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.

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Many policies also offer a sublimit of coverage for HIPAA violations. Although this coverage can be handy, it should not be used as a substitute for a robust privacy liability (“cyber”) program, because the sublimits are generally quite low compared to the potential for damages. quite low compared to the potential for damages. Typical sublimits range from $50,000 to $250,000, whereas the maximum fine which can be assessed under HIPAA is $1,500,000. In spite of all the exposures attendant upon retirement and welfare benefit plan management and all the coverages provided by today’s fiduciary liability forms, premiums for this class of business are quite competitive. Premium is based on the size of plan assets, and some carriers will only write coverage for insureds that have retirement plans so they can use that rating basis. Employers that only have welfare benefit plans are generally rated on number of enrollees or at a minimum premium. A typical small risk placement will be around $1,200 for a $1 million limit, including all the bells and whistles—quite a good deal for your main street business that’s large enough to offer healthcare and a 401k. If an employer does not offer any welfare benefits or retirement plans, they will have no need for this coverage. But as soon as they step into the world of providing any form of benefits, it will be time to add fiduciary liability coverage to their risk management menu. n

Market focused. Cutting-edge. Customizable. Real-world. Orlando James K. Ruble MEGA Seminar • June 12–15, 2017 • Lake Buena Vista (Orlando), FL The Orlando Ruble MEGA Seminar is jam-packed with flexible, practical learning—immediately usable and market focused. With four full days of topic choices for $450, it offers an unmatched value in the industry. Choose from more than 20 four-hour topics and design your own personal seminar to fit your interests and professional focus. Pay only for your required 16 hours and attend as many sessions as you wish—customize your schedule, balancing just the right amount of class time with leisure time. The MEGA has topical sessions that focus on property and casualty subjects, as well as classes in life and health, risk management—and so much more. You can even meet the Florida-specific five-hour CE requirement while you are there. Packed with plenty of powerful presentations and sessions for many specializations, the MEGA is exclusively for dues-paid CICs, CRMs, and CPRMs. You can reconnect with peers, network with industry experts, and get in touch with what’s happening around the country—all while participating in America’s most advanced insurance CE. MEGA Seminars cover a tantalizing variety of high-interest topic choices, including: • Women: The Emerging Entrepreneurial Elite • Cyber, EPL, Additional Insureds/CGL, D&O, Workers Comp • Personal Lines topics • Advanced Risk Management • Five-hour Florida update • Financial Institutions • And So Much More! (A complete agenda can be viewed at TheNationalAlliance.com/20170615FLRMG.)

Disney’s BoardWalk Resort Go back in time and experience turn-of-the-century Atlantic City at this charming Orlando-area waterfront resort hotel. Refresh yourself at Luna Park Pool and delight in a massage or workout at the state-of-the-art fitness center. Stroll the Coney Island-style boardwalk and sample the fine restaurants, lively nightlife, and exciting carnival attractions. Then, explore the many shops and venues along glittering Crescent Lake. Visit disneyworld. disney.go.com/attractions/ for more information. Disney’s BoardWalk Resort 2101 North Epcot Resorts Boulevard Lake Buena Vista, FL 32830 Call 407-939-4686 for reservations. Ask for The National Alliance room block to receive the special rate of $205 for single or double accommodations (based on availability— cutoff 5/9/17). Parking is complimentary. The resort provides an airport shuttle through Disney’s Magical Express Service. Shuttle arrangements should be made with your guest-room reservation. Internet access is included in guest-room rate.

Online Ruble MEGA Seminar • Aug. 28–Sept. 14 In addition to our celebrated classroom MEGA Seminars, we’re now offering MEGAs online. Satisfy your update requirement by selecting the four 4-hour sessions that insterest you most, from a list of eight topic choices. Visit scic.com/courses/RUBLE/mega_seminars. Resources | Spring 2017

ONLINE OPTION

• Long Term Care

Cultural options in Orlando offer a mix of traditional and modern entertainment for visitors. With some of the world’s most creative theme park settings, it’s no wonder that Orlando attracts such a vibrant local arts scene. Enjoy everything Orlando has to offer and create a get-away that keeps your work life and play in harmony!

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

IntheSpotlight New Execs Join National Alliance Leadership Team

High Achievers at Correll Insurance Group

We’re proud to introduce two new members of The National Alliance executive team: Mitch Dunford and Walt Johnson, MBA,CPA, CITP, MCP.

John “Chappy” Chapman, CIC, CPCU, Chief Growth Officer of Correll Insurance Group in South Carolina, proudly pointed out to us recently that their organization has 10 CISR Elites among their ranks! The CISR Elite status is awarded to ambitious customer service pros who have gone above and beyond—successfully completing all nine CISR courses (four more than required to earn the CISR designation). Their names are:

Mitch joined The National Alliance in December 2016, following a 16year stint as President and CEO of Wells Media Group, Inc.—publishers of Insurance Journal, Claims Journal, Carrier Management, and MyNewMarkets.com, and operator of Insurance Journal’s Academy of Insurance Education. Mitch has a reputation in the insurance media community for successfully overseeing the building of new and innovative technology tools to deliver top quality industry content to insurance professionals at every level of the industry. Under his leadership, Wells Media Group grew from a single-brand regional print magazine to a full service, multi-brand print and digital media group.

Tammie H. Blackwood, CISR Elite, AIAM Kelley S. Cash, CISR Elite Pamela J. Day, CISR Elite, CPIW Janet H. Garrett, CISR Elite, ACSR Ann Marie George, CISR Elite Kelly W. Hall, CISR Elite Elizabeth F. Hinen, CISR Elite Amy McCabe, CISR Elite Lori Painter, CISR Elite

Walt joined The National Alliance in November 2016, as the strategic leader of three functional areas: finance (CFO), operations (COO), and information (CIO). With over 25 years of experience driving efficient business processes, software solutions, and productivity in both complex and fast-growing insurance business environments, he brings a diversely blended skillset of accounting, finance, enterprise resource planning, operations, and technology. Considered an “Entrepreneurial Visionary” and “Idea Fuser,” Walt has launched products from concept to market by creating, developing, prototyping, marketing, negotiating, and licensing products and their intellectual property.

Courtney L. Young, CISR Elite, CPIW

The National Alliance is excited to welcome these two individuals to the team, and looks forward to benefiting from their fresh perspectives and strategic creativity.

We’re proud to announce that Philip B. Wise, CIC, Senior VP of Insgroup, Inc., in Houston, TX, was recently named to PropertyCasualty360’s 2016 list of “Best Insurance Pros Under 40.” Wise has been in the insurance industry for ten years and taps into his entrepreneurial background and training to connect with clients, educating them about risk financing alternatives, while focusing on total cost of risk.

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.

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“Chappy” is both a CISR Faculty and National CIC Faculty member, an Education Consultant, and a Mentor for the CIC Program. In addition to their 10 CISR Elites, Correll Insurance Group—clearly a strong supporter of continuing education and high levels of professionalism—employs an impressive 68 CISRs, 21 CICs, and two CRMs! Which organization in your state has the MOST National Alliance designees? Send an email with your headcount to bkeeling@scic.com, and we’ll announce the highest achievers in print!

Wise Makes the List

TheNationalAlliance.com

Designees Step Up at Sterling

Sells Shines

Sterling Risk Advisors, of Cumberland, GA, announced recently that Matthew Carey, CIC, CISR, and Mark Mason, CIC, have each been promoted to Managing Director positions. Matthew joined Sterling in 2013 as an Account Executive and serves in construction, real estate, hospitality, and manufacturing processes, assisting clients with coverage interpretation and claims. Mark joined Sterling in 2014, also as an Account Executive, and he serves in the construction practice, assisting clients with risk transfer and insurance needs.

Having won the Virgin Islands’ 2016 Outstanding CSR of the Year® award, Brenda Sells, CIC, CISR, of Theodore Tunick & Company in St. Thomas, was recently selected by The National Alliance as the first Virgin Islander CISR Faculty-inTraining. In addition, Brenda is a member of the PIA of Puerto Rico and the Caribbean and has been invited by their General Manager, Lilybeth Sosa Cotto, to become a member of their Education Committee.

Carey

Mason

Do you know an outstanding customer service professional? Nominate them for one of the industry’s highest honors! See page 8 for details.

Congratulations to Our Newest Designees in Mexico! In Mexico City, D.F., on October 20th, 2016, The National Alliance welcomed 19 new Mexico designees (18 CRMs and one CISR) into the fold. Participation in National Alliance programs in Mexico has been growing by leaps and bounds, with 338 individual participants and 100 designees, as of the printing of this issue (two CICs, 97 CRMs, and one CISR).

Standing, Left to Right: Mauricio Guirette (accepting on behalf of Lic. Georgina Maricela Alcántara Serrano, CRM); Instructor CRMI Ing. Alejandro Dorantes Gonzáles, CRM; Lic. Juan Manuel Basáñez Porcel, CRM; Instructor CRMI Lic. María de San Juan Garcia Díaz, CRM; Lic. Rafael Islas Molina, CRM; LAF Mayra Patricia Escobar Madrigal, CRM; Lic. José Raymundo Medrano Martínez, CRM; Ing. Mauricio Ramírez Esteban, CRM, CISR—first CISR in Mexico!; Lic. Gonzalo Ornelas Vidrio, CRM; Lic. Héctor Valdés Vaca, CRM; Assistant Academic Director, International Programs, for The National Alliance, Carol Ripoll, CISR; Kneeling: Lic. Miguel Rosas Cárdenas, CRM; Ing. Bernardo Basáñez Leyva, CRM …continued on page 38.

Resources | Spring 2017

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

IntheSpotlight Sherman Earns Industry Accolades

Ewing Shares Expertise

CPRM Faculty member, Laura Sherman, CPRM, CAPI, has been named a Risk & Insurance “Private Client Power Broker” for 2017 (and 2016), and was named by Insurance Business America magazine to their 2016 (and 2015) list of “Elite Women in Insurance.” Sherman is a founding partner of Baldwin Krystyn Sherman Partners (BKS-Partners) in Tampa, FL. She serves on the board of the Council for Insuring Private Clients (CIPC) and is actively pursuing her CRM designation. In addition, BKS-Partners was named by Insurance Journal magazine “Overall Best Agency to Work For” in 2016. BKS employees named educational opportunities as one their most valued benefits.

The Claims and Litigation Management Alliance (CLM) recently welcomed the highlyaccomplished Lance J. Ewing, CRM, ARM, ERMP, as a speaker to their 2017 Annual Conference in Grapevine, TX. Ewing, who is EVP of Global Risk Management & Client Services for Cotton Holdings, Inc., spoke on “Standard Operating Procedures for Indemnity Claims Management in Retail, Restaurant, and Hospitality Litigation.” Lance served as RIMS National President in 2003–2004. He is a CRM National Faculty and CRM mentor. He is also a past CIC and Academy Board member, and has a CRM scholarship in his name (Lance J. Ewing Educational Scholarship).

CISR’s International Appeal Expanding Rapidly Dr. William T. Hold, CIC, CPCU, CLU, cofounder and President of The National Alliance for Insurance Education & Research, and William J. Hold, CRM, CISR, Senior Vice President of Business Development and The National Alliance Research Academy, traveled to Manila, Philippines, and Qingdao, China, to personally welcome new CISR participants and designees into The National Alliance’s global community of professional education. The journey was also a fact-finding trip—with the goal of learning more about the designees and participants in Asia, and the company positions they hold, while introducing them to other National Alliance programs.

The Willis Towers Watson conferment of 44 new CISRs took place in Manila, Philippines, on October 31, 2016, at the Bonifacio One Technology Tower. Willis Towers Watson is a leading global advisory, brokerage, and solutions company. The company has 1,387 CISR designees worldwide. ReSource Pro held their ceremony on November 2, 2016, at ReSource Pro in Qingdao, China, to honor and congratulate its 13 current and two new CISR designees. ReSource Pro is a global provider of integrated operational solutions for insurance organizations.

Guan

Above: Willis Towers Watson’s new CISR designees—Manila, Philippines; Right: ReSource Pro’s two newest CISR designees, Philip Xu and Grace Guan—Qingdao, China.

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TheNationalAlliance.com

Benner Joins Board

McCoy Takes the Lead

Brian S. Benner, CIC, President of Warren Weiss Insurance Agency, Inc., in Quakertown, PA, was recently elected to the Upper Bucks Chamber of Commerce Board of Directors. Brian has owned Warren Weiss for 13 years, and has earned the Erie Insurance’s Founder award many times over, as well as Erie Family Life Recognition awards.

Universal Group, LTD, based in Omaha, NE, has named Mike McCoy, CIC, as President of its newly-formed business unit in Arizona. McCoy is currently in the process of earning his CRM designation and brings 20 years of sales experience to the job. He was previously Regional Director for Pearl Insurance Group, LLC.

Welcome: New National Alliance Board Members and Officers The National Alliance recently elected new members and officers for the Society of CIC Board of Governors; the Society of CISR Board of Governors; and The National Alliance Research Academy Board of Directors. Members serve six-year terms and Officers serve oneyear terms in their executive board positions. CIC Board of Governors Chairman: Steven C. Pearson, CIC, CRM, of ISU International in San Francisco, CA Vice Chairman: Jeannie Y. Hylant, CIC, of Hylant Group, Inc., in Ohio Member-at-Large: Jill Lowder, CIC, CRM, of RJF, a Marsh & McLennan Agency, LLC, in Minneapolis, MN Member-at-Large: Edward J. McGrath, CIC, CRM, CPCU, of Wilcox & McGrath in Oklahoma City, OK Immediate Past-Chairman: Craig Sparks, CIC, of Irving, TX Members: Ana Brusco, CIC, CPRM, of AIG in New York, NY Griff Griffith, CPA, CIC, CRM, of GMGS Risk Management in San Clemente, CA Aimee E. Kilpatrick, CIC, of BancorpSouth Insurance Services in Baton Rouge, LA Philip T. Kramer, CIC, CPCU, of The Cincinnati Insurance Company in Cincinnati, OH Rhonda “Sharon” Posman, CIC, CPRM, AFIS, of Lipscomb & Pitts Insurance in Memphis, TN CISR Board of Governors Chairman: Melvin A. Russell, CIC, of Russell Insurance Consulting, LLC, in St. Petersburg, FL Vice Chairman: Linda H. Luka, CISR, CPCU, AAI, AINS, AIS, CIIP, DAE, CLP, of West Bend Mutual Insurance in West Bend, WI Secretary: Nicole Lyn Keck, CIC, CISR, of AW Welt Ambrisco Insurance, Inc., in Iowa City, IA

Treasurer: Pamela S. Adams, CIC, CRM, CPCU, of ISU Insurance Services of Colorado, Inc., in Denver, CO Immediate Past-Chairman: Kathleen A. Fraley, CIC, CPIW, in Medical Lake, WA Members: Suzanne M. Baillargeon, CIC, CISR, AIC, of Main Street America Group in Keene, NH Amber M. Bosma, CIC, CISR, of Prins Insurance in Sanborn, IA Ronie Foronda, CIC, CISR, of Finance Insurance, Ltd., in Honolulu, HI Brenda L. Grow, CIC, ARM, of ReSource Pro in Mission Viejo, CA Donna W. Wilson, CIC, of Bowen, Miclette & Britt Insurance Agency, LLC, in Houston, TX National Alliance Research Academy Board of Directors Chairman: Kenneth L. Fields, CIC, MSM, CPCU, CLU, ChFC, of State Auto Insurance Company, in Columbus, OH Members: Cristina Pedraza-Martinez, J.D., CPA, CIC, of Popular Insurance in Guaynabo, PR Eduard J. Pulkstenis, CIC, FCAS, CPCU, of Hamilton Insurance Group in Princeton, NJ Beverly Tyrrell, of Patra Corp in Novato, CA

“Each of these new board members and officers are top industry professionals and leaders with extensive knowledge of our programs and designations. Their contributions to the growth of The National Alliance and practical understanding and experience of the insurance and risk management industry is invaluable. The guidance they provide for enrichment of the programs will benefit our participants and designees for years to come,” said William T. Hold, Ph.D., CIC, CPCU, CLU, President of The National Alliance.

Resources | Spring 2017

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There’s great power in knowledge. Step up to play a critical role in industry research. Since 1988, The National Alliance Research Academy has been publishing in-depth insurance industry research which has become an invaluable tool for agency owners. The Growth & Performance Standards (GPS) study allows agency owners and managers to compare their agency to others of a similar size and location, with respect to income and expense averages, productivity measures, and balance sheet ratios. These comparisons provide insights into strategies used by best performing agencies, as well as industry benchmarks that highlight where variances may exist—data that can reveal

powerful methods for fine-tuning and improving processes. We’re excited to announce that plans are in the works to publish the next edition of GPS. In the near future, The Academy will reveal specific plans for making this 11th edition the largest study to date. We are asking YOU to step up and play a critical role in this valuable research. The Academy maintains total confidentiality for every participating agency. Contact mdunford@scic.com at The National Alliance Research Academy to learn about incentives and to secure your participation.