2015 spring professional insurance agent, tennessee edition by PIA of Tennessee

Spring 2015 • Tennessee edition

PAGE 16

THE DIVERSE AGENCY

Identify opportunities to improve diversity

NEXT GENERATION 05

The insurance agent: Then and now

Hiring? Think outside the experience box And more …

Now In More States MidSouth Mutual provides regional Workersâ&#x20AC;&#x2122; Compensation insurance to customers in 7 states including Tennessee, Kentucky, Arkansas, Mississippi, Alabama, Georgia and North Carolina. Examples of clients we serve include: HVAC Contractors

Bricklayers

Carpenters

Masonry

Building Suppliers

Electricians

Framers

Insulation

Dozing Services

Plumbers

Dry Wallers

Cabinetry

Road Contractors

Painters

Landscapers

Flooring

Thank You to all the independent agencies representing MidSouth Mutual. We look forward to a great 2015 working with you.

States we serve:

www.midsouthmutual.com Contact Tom Perez at tom.perez@bwood.com or 615-379-8245 Administered by Brentwood Services Administrators, Inc. Proudly serving the members of the Home Builders Association of Tennessee since 1995.

Departments 04 In brief Spring 2015 • Tennessee edition

09 Case law 13 Tech 23 E&O 28 Readers’ service and advertising index 29 Officers and directors directory

Cover story 16 The diverse agency Identify opportunities to improve diversity

Feature 21 Hiring? Think outside the experience box Consider employees from all walks of life

Statements of fact and opinion in PIA magazine are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the Professional Insurance Agents. Participation in PIA events, activities, and/or publications is available on a nondiscriminatory basis and does not reflect PIA endorsement of the products and/or services. President and CEO of PIA Management Services Inc. Mark LaLonde, CPIA, CIC, AAI; Executive Director Kelly K. Norris, CAE; Communication Director Mary E. Christiano; Senior Magazine Designer Sue Jacobsen; Member Information Manager Jaye Czupryna. Postmaster: Send address changes to: Professional Insurance Agents of Tennessee, 504 Autum Springs Court, Suite A-2, Franklin, TN 37067. “Professional Insurance Agents” is published quarterly by PIA Management Services Inc. PIA Management Services, 25 Chamberlain St., P.O. Box 997, Glenmont, NY 12077-0997; (518) 434-3111 or toll-free (800) 424-4244; email pia@pia.org. ©2015 Professional Insurance Agents. All rights reserved. No material within this publication may be reproduced—in whole or in part—without the express written consent of the publisher. Cover design Patty Dykeman Vol. 59, No. 3, March 2015

In brief

Five minutes with …

Will Montgomery, CEO of Montgomery & Associates Tell us about yourself. I am the principal at Montgomery & Associates Insurance. Founded in December of 2010, our agency has a heavy focus on personal-lines insurance, which includes auto, home, investment properties, life insurance and disability. I began my career as a captive insurance agent with an emphasis on those areas of business. As we have grown in the independent agency channel we have branched out to include commercial, employee benefits and financial services for our local clientele.

at that time hired me and taught me the basics (i.e., the importance of maintaining client relationships; developing key referral partners in many different arenas of business; and always keeping a board of directors in business).

Why should Gen Y and Gen Z work in the insurance industry? Insurance is an ever-evolving business and has many areas in which a young person can focus and grow. The opportunities Will Montgomery are endless (e.g., producer, underwriter, CEO marketing representative, etc.). Being an Montgomery & Associates When you joined PIATN, what insurance agent isn’t a job—it’s a promInsurance, was an unexpected benefit? ising lifestyle and career. While it may be Brentwood, Tenn. The main unexpected benefit was the challenging at times, it also is rewarding. number and amount of connections What other industry can offer a person within the local independent community and introducstarting from ground zero the ability to own and operate tions to a wide range of useful products to help grow and a successful agency in a relatively short amount of time? retain current clientele. Not many. I personally encourage the agents within my agency to build their legacy, so it can be a rewarding What goals are you still trying to career year after year. accomplish? One of my main goals is to work on becoming a better leader for my team. Everything starts at the top and ends at the top. Who was your mentor? What was the person’s best advice? I came from the captive side of the industry when I was 22 years old, so I had many mentors. My main mentor

Do you have advice for the next generation? Of course. Develop a strong action plan and stick to it. Don’t be afraid to ask questions or think outside the box. Remember, developing residual takes time and the time and dedication to your industry will pay off in the long run. You have to grow new opportunities every day and count every client as a new gift. Most important part is to enjoy the journey. What’s something most people don’t know about you? I was the Tennessee bicycle road-race champion for two years in a row when I first opened my agency.

Professional Insurance Agents magazine

Generations

The insurance agent then and now

Then

Looked for in a job

Competitive salary, benefits

Now Salary and benefits are important, but so are work/life balance and potential for career advancement

What interests them Solving problems, work thatâ&#x20AC;&#x2122;s challenging, helping others

Working on own schedule, helping others, working with people Objective of working

To satisfy personal financial needs and live how I want

To satisfy personal financial needs and live how I want Expected work hours

Nine to five

Nine to five, but with some flexible hours Median pay1

$11,933 (1976)

$48,150 (2012) Source: Millennial Generation Attitudes About Work and the Insurance Industry, The Griffith Insurance Education Foundation and The Institutes. U.S. Bureau of Labor Statistics

www.piaTN.com

Association news

CPIA on the road You asked for it, and we are bringing it to you East Tennessee. We will be offering Certified Professional Insur-

ance Agent Course One, Two and Three in Knoxville on April 29-May 1. Location to be announced, so keep a look out and complete your designation.

PIA National Federal Legislative Summit 2015 Come join your association in Washington, D.C., as we sit down face to face with our Representatives and Senators on Capitol Hill. This is a once in a lifetime opportunity to experience firsthand how Congress works, and have your voice heard by those who represent us on the federal level. We will arrive in our nation’s capital on Wednesday, March 25, and everyone will have the opportunity to attend the PIAPAC Awards Dinner. On Thursday, March 26, we will hold a briefing in the morning, and then head over to Capitol Hill to meet with our Tennessee Repre-

sentatives in Congress. They want to see and hear from us, and you’ll be surprised at how much information they already know about some of the issues that we are working on at the national level. They want to know how these issues will affect the Tennessee agent and the local consumer.

PIA of TN Partners with Simplicity Division of EFG Cos. With increased pricing pressure from carriers and expanding competition, insurance agents across the U.S. are struggling to grow their business. To address this need, PIA of Tennessee chose to partner with EFG’s Simplicity Division and provide its members with three differentiating products: • Simplicity Home Protection, which protects customers from the unanticipated costs of home ownership by covering household systems and appliances; • Simplicity Vehicle Protection is a vehicle service contract, which covers many of the most expensive components on a vehicle; and • Simplicity Repair Protection, which negotiates vehicle repair costs on behalf of the agent’s customer. “PIA’s mission has always been to support the future of our insurance agents,” said Jeff Anderson, executive vice president of PIA of Tennessee. “EFG demonstrated the value of adding new revenue streams through its Simplicity Protection product line, and we expect our members to see an immediate impact to their business.” As part of the partnership, EFG’s Simplicity Protection division will provide the technology, training, marketing and sales support to ensure successful implementation. 0

PIA members also will have the security and the ability to profit from the knowledge that the products they are offering are backed by EFG’s nationally award-winning claims administration. “There is significant opportunity for independent agents to surpass their 2015 business goals,” said Mark Rappaport, president of Simplicity Division of EFG Cos. “The post-recession consumer is much more savvy with regard to protecting two of their largest investments, their home and vehicle. We haven’t met an agent yet who didn’t jump at the opportunity to grow their business by more than 20 percent.” With almost 40 years of enabling clients to move beyond industry standards in customer acquisitions and profit, EFG believes business success ultimately is measured by a simple premise: keeping a promise to customers at a time when they need it most. This commitment is reflected in EFG’s client satisfaction rate in which 92 percent of its clients would highly recommend EFG to their peers, as well as the company’s awards and certifications. EFG is the only product provider to be certified as a Center of Excellence by Benchmark Portal—customers service designation that less than 10 percent of companies achieve. In 2014, EFG was also the only product provider awarded the Automotive Service Excellence Blue Seal of Excellence, with EFG’s claims adjusters averaging 15 years of experience.

Professional Insurance Agents magazine

Acquisition Strategy

#15

MARKETING SUPPORT

“ Tell us where you’re headed, and we’ll help you get there.” Riley Tonkin, Omaha Branch Marketing Representative Are there certain accounts in your area you want to write? The more we know about your goals, the better we can provide the right expertise, online resources and other marketing programs and materials to grow your business. It’s just one of the many reasons you can Count on EMC®.

Birmingham Branch: 800.239.2005

Home Office: Des Moines, IA

10043_EMC_PIA_Tenn_Agent_Acquisition15_Riley_7.5x10.indd 1

12/19/14 4:43 PM

I AmTrusted Join our unmatched team of independent agents offering workers’ comp and commercial lines insurance, including:

• Small-Business, Multi-Line Coverage • 6th Largest National Workers’ Comp Provider • A.M. Best rating of “A” (Excellent) FSC “XII”

Get started with an application at amtrustnorthamerica.com or call 877.528.7878 for more information.

Connect with us A.M. Best rating of “A” (Excellent) FSC “XII”

How much do we have to pay? The title of our column this month is not a question arising from a meal at a fine restaurant or a toll collector at the George Washington Bridge in New York/New Jersey. Rather, we thought that it might be useful to examine the state of the law as it pertains to the amount of money that a court may award upon a finding that an insurance agent or broker had committed an error that led to the absence of insurance coverage to an insured. Simply put, what would be the measure of damages?

Stand in the shoes In general, in all of the states of our readership, New York, New Jersey, Connecticut, New Hampshire and Tennessee where an agent or broker fails in the undertaking to procure adequate insurance on behalf of an insured,

the measure of damages is the amount that the putative policy that is claimed should have been in force would have paid.1 For example, in one Tennessee case, a broker was asked by an insured, a package store, to procure a replacement for a Dram Shop policy. The old policy was a claims-made policy with a limit of $300,000. In the few months before that request, two young students at the University of

case law

robert m. sullivan, esq. Senior partner of Sullivan & Klein, LLP

Help Build Your Family’s Financial Future With

PIA Trust Insurance Plans INSURANCE PLANS DESIGNED WITH LOCAL AGENTS IN MIND As a PIA Member* serving Main Street America, you and your employees have access to a variety of highquality, competitively priced insurance plans. Plans available include:  Basic Term Life**  Voluntary Term Life  Dependent Term Life  Hospital Indemnity  Long Term Disability  Short Term Disability  Business Overhead Expense  Accidental Death & Dismemberment

PIA SERVICES GROUP INSURANCE FUND

*PIA National membership, when required, must be current at all times. **Only available if 100% employer paid and if the employer and 100% of the employees enroll. No medical underwriting necessary up to guaranteed issue limits.

For more information about PIA Trust Insurance Plans, please contact your local PIA Affiliate or call the Plan Administrator at 1-800-336-4759. Additional information is also available on-line at www.piatrust.com. Policies or provisions may vary or be unavailable in some states. Policies have exclusions or limitations which may affect any benefits payable. Underwritten by Unimerica Insurance Company, Portland, ME. Administered by Lockton Risk Services.

www.piaTN.com

Tennessee were struck and killed by a drunk who, although underage, was sold alcohol by the package store. The replacement policy for the Dram Shop that was placed in the summer had a $1 million limit of liability. However, the replacement policy, although it had a higher limit of

liability, was an occurrence-based policy. When suit against the Dram Shop was eventually brought, the claims-made insurer denied liability because the claim was made after the expiration of the policy. Of course, the insurer with the occurrencebased policy denied liability because

Sometimes, it’s what’s underneath that counts ®

We’ve got you covered Experienced Agents PIA agents have been providing agents’ umbrella coverage longer than anyone else. We can craft a policy — or a combination of policies — to cover you, while leaving your wallet in one piece.

E&O Options PIA has access to numerous E&O programs, so we can offer you a choice of underlying E&O coverage. Combine this with our agents’ umbrella’s excess E&O coverage, and you can get more coverage — and more value — for your money. The PIA/Penn National Insurance agents’ umbrella offers: ■ Excess limits on a followingform basis for E&O ■ Business operations: Auto, Liability ■ Optional personal umbrella coverage ■ Optional EPL

For details, contact your local PIA affiliate or PIA National at 800.742.6900 x 382 or visit the PIA Main Street Store at www.PIANET.com

Professional Insurance Agents magazine

the “occurrence,” the accident that killed the students, occurred prior to the inception of the policy. In calculating the award of damages, at issue was whether the Dram Shop was entitled to coverage in the amount of $300,000, which was the limit carried by the claims-made policy, or whether the $1 million limit applied. As the evidence was clear that the package store expected, and paid for $1 million in coverage, the court concluded that the $1 million measure of damages was appropriate as it “puts (insured) in the exact situation it would have been had the (broker) not been negligent.”2 In a Connecticut case, an insured was notified that her fire insurance on her property was not going to be renewed by the insurer and she asked her broker to replace the coverage. The property was up for sale and the insured told the agent that she only needed coverage until the property was sold. The broker accepted a deposit and issued a receipt although no quote had yet been obtained. The broker had some difficulty placing coverage, but finally was able to obtain coverage from the state’s insurer of last resort, the so-called FAIR Plan. The agent filled out the application using the address of the insured property as the insured’s address, even though the broker knew that it was not the correct address as the insured did not live there. The FAIR Plan sent the notice of approval and request for payment of the premium to the insured location and the broker and, although the broker previously accepted a deposit from the insured, the broker never paid the requested premium and the policy was never put in force. Naturally, a fire occurred and the property was destroyed.

After the fire, the insured sold the property for the same amount as the insurance policy limit. The broker argued that because the property was sold after the fire for what the policy would have paid, the insured was not damaged and should not recover any amount. The trial, appellate and ultimately the Connecticut Supreme Court, rejected the broker’s argument holding that the subsequent sale was irrelevant. In determining the insured’s damages, the amount receivable was to be fixed as of the date of the fire. The contract of insurance provided coverage in the amount of its limit of liability and as the broker’s failure to properly place the coverage was the direct cause of the insured’s inability to collect the insurance proceeds, the insured was damaged in that amount.3

and as a result, the insured purportedly was forced out of business. Clearly, the insured is entitled to recover the amount due under the policy, but what about the damages covered by the delay in adjusting the loss? The New York court, consistent with how we believe the other states

(i.e., Connecticut, New Hampshire, New Jersey and Tennessee) might rule, held that the damages outside of the amount recoverable under the policy, the so-called “consequential damages” also would be recoverable if they were related to the breach of the contract of insurance, were

Stability. Longevity.

Integrity

Most of us would agree that when an agent’s or broker’s failure to procure requested coverage on behalf of an insured results in a gap in coverage, the agent or broker is responsible for filling that gap and “stands in the shoes” of the insurer whose coverage should have been in place. What becomes more nuanced is the measure of damages that is applicable to the situation when an insured suffers a loss due to the error or omission of the broker or agent, and this loss would not be covered under the coverage of the putative policy of insurance—so-called consequential damages.

Outside the policy What constitutes consequential damages and when, if at all, are they recoverable? In one New York case,4 an insurer allegedly unduly delayed the adjustment of a business-interruption loss

1-800-971-2667 • www.summitholdings.com Coverage available in Alabama, Arkansas, Georgia, Florida, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas.

www.piaTN.com

capable of being calculated and most important, were readily foreseeable at the time the underlying contract was made. Here, the court found all of the criteria were met because, particularly in the business-interruption context, the insurer knew that a delay in adjustment would likely impose hardship on an insured. In the context of a claim against a broker, let’s take our Tennessee example about the Dram Shop discussed above. What would happen if one of the UT students who was killed was a UT football player who had been selected as a first-round draft pick in the NFL by the Titans or the Patriots or the Jets or the Giants or the Bills or the Eagles (we have to please all of our readers), with an attendant $20 million per year salary. Can the Dram Shop seek recompense from the broker for the millions of dollars of damages incurred beyond the limit of the policy that should have been placed? The answer is no. The extent of the Dram Shop’s damages has nothing to do with the failure of the broker to place coverage. The Dram Shop would have been subjected to the excess exposure, less the insurance coverage it asked for, regardless of the broker’s error. However, what about a case in which the broker is asked to place coverage for a cookie baker who developed a new vegan cookie (that actually tastes good) and is ready to market the product nationally. The baker goes on The Shark Tank and obtains a $1 million investment from all five sharks that would allow him to ramp-up production and set up a national distribution network for the cookies beyond his small town in upstate New York.

However, a snowstorm hits and collapses the baker’s roof. It turns out that the property and business-interruption coverage that the insured requested the broker to procure was never placed due to the broker’s error. The sharks pull out of the deal, the baker’s plans are dashed and the cookies are now only sold at the insured’s vegan store in the Catskills. What is the measure of damages here? Is the broker responsible for the damages resulting in the loss of The Shark Tank deal and the possible millions that would have resulted? Under another recent New York case, and we believe the law of the other jurisdictions of our readership, probably not.5 In order to recover, the loss had to be from the lack of coverage and the amount of loss, had to be established with certainty with the prospect of such an extensive loss foreseeable by the broker. Here, none of the criteria is met and recovery would be barred.

Loss-control issues So what does all of this mean? Don’t insure Dram Shops or vegan bakers? No. Obviously, follow the standard losscontrol protocols that we have persistently talked about in our columns in this magazine. However, in placing coverage, perhaps affording umbrella coverage and ensuring that it is the insured, not you, that determines the level of coverage to insure the businessinterruption exposure. Maybe even ensuring your own errors-and-omissions coverage limits are in order.

Professional Insurance Agents magazine

At the end of the day, the response to the question of how much do I pay? Hopefully, the answer will be nothing. Sullivan is senior partner of Sullivan & Klein, LLP. He can be reached at (212) 695-0910. Tips Package Store Inc. v. Commercial Insurance Mgrs. Inc., 86 S.W.3d 543 (Tenn. Ct. of App., 2001) (Tennessee); Rametta v. Stella, 244 Conn. 484, 572 A.2d 978 (1990) (Connecticut); Rider v. Lynch, 42 N.J. 465, 201 A.2d 561 (1964) (New Jersey); Sintros v. Hamon, 148 N.H. 478, 810 A.2d 553 (2002) (New Hampshire); Milgrim v. Royal & Sun Alliance Ins. Co., 75 A.D.2d 587, 906 N.Y.S.2d 572 (2nd Dept., 2010) (New York) 1

Tips, supra, 86 S.W.3d at 560-561

Rametta v. Stella, 214 Conn. 484, 572 A.2d 978 (1990)

Bi-Economy Market Inc. v. Harleysville Ins. Co. of New York, 10 N.Y.3d 187, 856 N.Y.S.2d 505 (2008)

Biotronik A.G. v. Conor Medsystems Ireland Ltd., 22 N.Y.3d 799, 988 N.Y.S.2d 527, 11 N.E.2d 676

Tech

jim pittz, cic, cpia PIA Management Services Inc.’s business issues director

Is it vacant or is it unoccupied? It seems every spring there is a surge in the buying and selling of houses as people move, relocate, or if they are fortunate enough, to move from a house in one climate to a house in another climate. With all of this coming and going, there seems to be confusion among all involved in the process regarding what is vacant and what is considered unoccupied. The goal of this article is to shed a little light and to help differentiate between the two terms. Courts have ruled that the terms “vacant” and “unoccupied” are not synonymous. According to precedent,1 vacant is defined as entirely empty (i.e., lack of animate or inanimate objects), while unoccupied is defined as the lack of habitual presence of human beings (i.e., lack of animate objects).

Vacant The term vacant applies to land or a building. When an insured wants to insure a plot of vacant land, the first question you have to ask is, “Is there anything on the land?” If the land is considered forever wild, there is a good chance it’s vacant. However, if the land has a fabricated structure, then it’s no longer considered vacant. Remember, the term structure isn’t restricted to a building, it could be a

EXPLORE THE BENEFITS OF THE CERTIFIED PROFESSIONAL INSURANCE AGENT DESIGNATION Earn E&O credit while earning Tenn. credit. Plot your course below.

The CPIA program is an excellent way to earn your state‑mandated CE credits; participants need not pursue the designation to receive CE credit. The CPIA designation is approved by Utica Mutual for E&O loss prevention credit. This credit is applied once the designation is achieved. To earn the designation, developed by the American Insurance Marketing and Sales Society, candidates are required to complete all three, one‑day Insurance Success Seminars (in any order.) Participants leave with fresh ideas that will produce results.

CPIA 1: POSITION FOR SUCCESS 4/29/2015 Knoxville, TN CPIA 2: IMPLEMENT FOR SUCCESS 4/30/2015 Knoxville, TN CPIA 3: SUSTAIN SUCCESS 5/1/2015 Knoxville, TN *The CPIA designation is approved by Utica Mutual for E&O loss prevention credit. This credit is applied once the designation is achieved. Please call PIA for details.

TIMES

Sign-in: 8:45 a.m.; Class 9 a.m-5 p.m.

CE CREDIT GUIDE CPIA 1: POSITION FOR SUCCESS 7 hours CE CPIA 2: IMPLEMENT FOR SUCCESS 7 hours CE CPIA 3: SUSTAIN SUCCESS 8 hours CE

REGISTRATION FEES $135/$155 for members; $175/$195 for non‑members, per session. Registration fee includes refreshments, instruction & materials.

To register, call PIA at (800) 875-7428 or log on to www.piatn.com/index.php/Education-and-Events/cpia.html

www.piaTN.com

110297 3/14

ncy

Agency

E&O

Has a

for

market for

ency

your agency

onal

Utica National

Risk

Business Risk Partners PIAPRO

Navigators

Rockwood

kets

E&S markets

Contact

rson

Jeff Anderson

7428

800-875-7428

road, a fence, or even an abandoned well. The following would not be considered vacant: • a plot of land on a lake with a dock on it; • a plot of land with a fence around it; • a roadway cutting across land; and • a piece of land overlooking a lake with a bench or a gazebo on it. Now, let’s examine vacant buildings, houses or structures. The term is used most with real-estate transactions. The insureds are relocating and have purchased a new home somewhere else. However, their old home has not sold and they already have moved all of their belongings from the first house and will not be returning to it. When this scenario occurs, how should an agent handle it? Many carriers will allow the homeowners insurance to stay intact for the remainder of the policy period, after that it becomes a nonrenewal. Don’t forget that many homeowners policies have a coverage exclusion for glass breakage if the home has been vacant for more than 30 or 60 days (depending on the policy). The insureds still have the exposure because they still are the owners on the property. Most likely, a bank still holds a note on the property, and the insureds still have a liability exposure if someone happens to be injured on the property. So how do you insure it? The easiest way is to write a dwelling policy, and see if you can extend liability from the insureds primary homeowners to a second location. If the carrier is unwilling to do this, there are markets out there that specialize in insuring vacant properties.

Professional Insurance Agents magazine

Unoccupied Now, let’s look at unoccupied or “the snowbird special”—when an insured owns two separate residences, and lives in each for a portion of the year. Since the homeowners policy has not even addressed the issue of unoccupied since its 2000 edition, this makes the unoccupied really a non-issue. However, here are a few specific cases to consider, such as when a named insured still has most of his or her belongings in a residence, but now lives in a nursing home. In this case, it is not vacant because the belongings are there, so it must be unoccupied. Since the homeowners policy does not address unoccupied it must be all right, right? Wrong. In this case, it also is no longer owner-occupied, so it would not meet the underwriting criteria. How about the situation in which the insured has moved into a new house (in the same town), but left a few items to help sell the house? The insured visits the first house every week to check on the dwelling (e.g., mow the grass, check the water, etc.). This house would still be considered unoccupied and like the last example, would be classified as no longer owner-occupied. The bottom line on this is: If no one is living there anymore it is a vacant building. Jelin v. Home Insurance Co., 72 F.2d 326, 327 (3d Cir.1934); Hemenway v. American Casualty Co., 215 F.Supp. 103, 104 (W.D.La.1963); Boyette v. Underwriters at Lloyd’s London, 372 So.2d 592, 594 (La.App.1979)

Pittz is PIA of New York, New Jersey, Connecticut and New Hampshire’s business issues director.

PIA Tennessee 7.5x10 Date.pdf

1/23/15

9:00 AM

Professional Insurance Agents magazine

DON PHIN Vice President of Strategic Business Solutions, ThinkHR

The diverse agency Identify opportunities to improve diversity

here are three main reasons why a professional, independent insurance agency would want to diversify its workforce: 1.) It expands the available talent pool; 2.) The demographics of customers are changing. With greater diversity, there is a better chance of fully understanding customersâ&#x20AC;&#x2122; needs; and 3.) Diversity helps generate innovation and creativity.

www.piaTN.com

The challenges around diversity are not just race-related, but also evoke concerns around age, gender and sexual preferences. Agency principals should keep an open mind when it comes to hiring employees. Insurance agency demographics are getting older and the industry needs to bring younger employees into the system. These younger employees will be better at using technology systems designed to support sales, promoting social-media efforts and relate to younger customers.

Diversity means differences The root word for diversity means different. The interesting thing is that despite the amount of diversity in this country and throughout the world, we still are very much alike. All of us have to work, eat, sleep, raise children, take care of parents and secure our long-term future. We are far more alike than we think. It is only that the differences get more attention than our commonalties. Nature needs diversity to remain strong. In nature, when there is the least amount of diversity there also is the lowest rates of survival, evolution and change. From a risk manager’s perspective, embracing diversity can reduce the discrimination-type claims filed against an agency. Then there is the ability to celebrate our differences. Whether it is different music, food, entertainment, holidays or something else, our agency is guaranteed to be a pretty boring place if we never get to venture outside of our own cultural norms.

Four levels of interaction There are four different levels of interaction between people. This is true whether we come from similar or diverse backgrounds. 1. The first level is fear. At its essence, discrimination or prejudice toward people is fear-based. We tend to fear that which we do not know. 2. The second level is tolerance. “While I may not like you, I will tolerate you.” This is the level of interaction required by the law. It is the bottom floor of moral and legal responsibility. 3. The third level is acceptance. “While you are different from me, I accept that difference because of my open and understanding nature. I judge you not for who

you are, but for what you do. I will deny no opportunity based on anything other than your abilities.” 4. Lastly, there is the concept of unconditional love. Understand however, that unconditional love is not about having unconditional relationships. It means I can love and celebrate our differences, but you still have a job to do and I will hold you responsible for doing it. While I am sure you can develop classifications that are different from these, they provide a good reference point for further discussion about diversity. Developing a cultural competence does not mean that you have to learn how to yodel or play conga drums. It is about coming back to the understanding that we are all different for a reason. It is about accepting our differences as opposed to fighting over them.

The ‘glass ceiling’ The “glass ceiling” is a term coined in a 1986 Wall Street Journal article to identify the inability of women and minorities to attain jobs in upper-level management. For example, currently, women and minorities occupy less than 11 percent of this country’s board of director positions. The Equal Employment Opportunity Commission, state agencies and a number of nonprofit organizations are working to break through the glass ceiling, so that there is full opportunity for advancement for everyone. Since the term glass ceiling was coined, two other terms have emerged: the “glass wall” and the “sticky floor.” The first refers to the inability of women and minorities to obtain challenging job assignments and responsibilities within equal pay ranges. The second term refers to the inability to move beyond rank-and-file positions into any level of management. Glass ceiling, glass wall and sticky floor phenomena are the result of disparate treatment and adverse impact discrimination. Many of the barriers in the way of advancement are unintentional consequences of historical development. For example, it is hard for a woman or a minority to obtain a high-level managerial or board position when a company has never had a minority or woman in those positions. The same can be said for hiring a female broker or a male customer service representative. Sometimes it is hard to get past our own references, whether we realize it or not.

Professional Insurance Agents magazine

Getting it done When it comes to expanding the diversity of an agency there is no substitute for a strongly worded message from the top. If you want a diverse workforce, then that desire has to be a core business objective and communicated by the CEO or president of the agency. This message can be communicated from your website’s “About Us” page to your employee handbook and quarterly reports. You also need to make sure that you have the necessary policies and procedures in place so you don’t face claims as a result of diversifying. You should include an EEOC statement, grievance mechanism, investigation procedure, appropriate discipline and ongoing education and training.

Diversity and your agency The strategies discussed below can help you bring people into your agency. Strategy No. 1: Expand your hiring sources. If you use word-of-mouth hiring, chances are you will have a fairly homogeneous workforce. To attract a more diversified workforce you have to go to a diversified candidate pool. Consider recruiting from predominately minority schools and neighborhoods. Strategy No. 2: Remove invisible barriers in the interviewing process. Here is a classic example. For many years, women musicians complained that they were not being hired on par with their male counterparts despite the fact they sounded just as good (if not better). To remove any element of sexist bias, auditions at many orchestras are now

done behind a curtain. Because of these “blind auditions” women are now being hired at a greater rate than they were previously. In most cases, discrimination was not intentional but more stereotypical. The breaking down of those stereotypes may result in an orchestra, which looks differently than expected, but certainly sounds a whole lot better. Strategy No. 3: Engage in career planning at the outset. What are the advancement opportunities at the agency? Where can employees be in five years? How should they go about getting challenging job assignments and moving up the ranks? If there are few or no women or minorities in upper-level management what is the reality of that person ever obtaining such position? Often businesses have invisible barriers to advancement, including the informal networks that tend to develop within an organization. Agencies have to find ways to move from informal networks to formal ones that help nurture promising employees of all backgrounds along their career path. Another way to avoid hidden biases is to form diverse committees to make promotion and compensation decisions. And lastly, internship and mentorship programs are another proven method of breaking past informal barriers to advancement. If you want a diverse workforce you now have the methods necessary to get there. The choice is yours. Phin is vice president of Strategic Business Solutions, ThinkHR. ThinkHR is a comprehensive HR resource center that offers a unique combination of online compliance and employee training solutions, and a Diverse Workforce Checklist, as well as a live HR hotline staffed by seasoned HR advisors to help companies address risk-management exposures. With this combined approach, ThinkHR delivers the fastest, most personalized issue resolution and learning platform in the industry. Phin is vice president of Strategic Solutions of ThinkHR. He has three decades of experience as an industry expert, published author and speaker. He is the editor of Employment Practices Liability Consultant (EPLiC) published by IRMI. For more information, visit www.ThinkHR.com.

Online Education

• Pre-Licensing • Training and Education for the New Employee • Continuing Education from CEU.com

www.piatn.com/education Education at your convenience

www.piatn.com/education For more information, call Pam Cass, CPIA, at 800-875-7428

www.piaTN.com

Earn Your CE Credits Without the Expense of Travel and No Test Required! Webinar Success Formula Live Instruction + Internet Connection =

How It Works: Step 1: – Register. Step 2: – At date/time of Webinar, click link provided in email invitation. Step 3: – Enjoy the presentation. Verify attendance when prompted.

Why It’s Great: Earn CE without the expense of travel. Earn CE without having to take a test. Earn CE while participating in a live (not pre-recorded) presentation.

www.piatn.com

By carletta clyatt Omnia Group’s senior VP of sales

Hiring? Think outside the experience box Consider employees from all walks of life Look out … the face of your top-talent employee is changing. And, because of this change a new, fresh approach to hiring, managing and motivating must be adopted by insurance leaders. Many insurance recruiters still favor seasoned professionals, those listing years of experience and eager to tell engaging stories about their past business encounters. However, experience alone does not necessarily translate into a win-driven performer. I have personally seen leaders in the insurance industry make the expensive mistake of hiring individuals with extensive work backgrounds, but no real substance. Often these are job hoppers with years of experience who claim they frequently switched companies to feed their own desire to explore new work opportunities. What they don’t say is that they fell short of employers’ expectations; were terminated or otherwise forced out of their previous positions. Today’s overflowing pool of job applicants makes it possible and probably beneficial to consider not only seasoned workers, but also younger ones and those from diverse ethnic backgrounds. Younger workers can bring to you their spirit, fresh perspectives and comfort with technology, while people from other cultures potentially can build your client base, perhaps reaching out to a community of eager and well-suited business prospects you overlooked previously. So, what can you do to encourage a broader spectrum of workers to join your company? What are the steps you need to take to appeal to, recruit and retain a new brand of top insurance professionals?

www.piaTN.com

Young workers Young, energetic workers abound so finding them is not the concern. Promote your agency on socialmedia sites and let young family members and friends know you’re hiring. It’s easy enough to find these employees. However, retaining these 20- and 30-somethings often is the real challenge. Keep in mind the long-standing belief that a person will work for only one company throughout his or her career is gone. It’s rare to find workers below the age of 40 who have worked for a single business since graduating high school or college. Graduates accept this trend throughout their career, so that makes them ask, “What is the company going to do for me?” Younger workers also are valuesbased, and will leave companies they do not believe “walk the talk” of those values. For example, 20-some2

thing employees have been known to quit a job on the spot, while in contrast, 30-somethings may try to fight for change before quitting. The sudden departure of the youngest workers can have a real effect on a business’s operations. This often is related to a lack of a “values fit.” To hedge against this, offer them some challenges, but stay accessible, as problems and questions are sure to arise. Young professionals tend to respect the words of their superiors, though it will likely take just a minimal effort to coax them into thinking on their own and assuming responsibility. They are ambitious. Developing a mutually agreed upon career path within your company often piques their interest and maintains their enthusiasm. Members of the youngest work group are more likely than seasoned workers to look for feedback regarding their performance especially when it includes praise and recognition of their skills and talents. Most were weaned on some form of technology and adept at using cuttingedge computer software, fast-track communication and processes. They may be eager to share their expertise, and others (provided they have open minds) can learn from them. Knowing they have a voice and will be viewed as an equal part of the team, despite their youth, gives these eager workers a much needed sense of worth, reassurance and pride.

Diversity Finding a large pool of ethnically diverse job candidates will likely prove more challenging than locating younger ones, so plan to take a highly proactive approach to your search. First, clarify your definition of diversity. Conduct a culture assessment of your existing organi2

zation or department by speaking to employees or asking them to complete anonymous surveys. Then develop a viable strategy and implementation plan for a realistic diversity initiative. Change your recruiting tactics. Incorporate not only traditional methods but new ones, such as inquiries into universities, technical schools or organizations drawing large numbers of people from different backgrounds. Be active in your community. Network with diverse local organizations and let them know you’re hiring and will offer the right individuals great opportunities within your company.

What everybody wants Whether you manage seasoned workers, young people or employees from other cultures, you need to provide the specific means they all need to stay happy, challenged and productive. Keep in mind individuals all have unique hot and cold buttons that, when triggered, elicit a positive response and help maximize performances. Management is not one-size-fits-all. By knowing the individual needs of one person over another, you can help buy employee loyalty and satisfaction.

Often, it proves both challenging and insightful to find common ground with people who are not like us. Uncovering the specific expectations and typical behaviors of both young people and those of various ethnic backgrounds can help, though.

Management tools, such as behavioral assessments, can provide easy and accurate insight into the inherent behaviors of all your subordinates. While there are many assessments on the market available, The Omnia Profile® offers a unique benchmarking feature, in which individuals can be compared to one another and indications of one person’s needs over another’s are made. Additionally, these Profiles are interpreted by trained analysts—not computers—who know how to allow for the specific quirks of individuals or factors in employers’ needs.

Encourage casual discussions about the cultural, generational and ethnic differences among your team. Sometimes, when management implements policies to obtain and maintain a diverse workplace, employees may get the impression that asking respectful cultural or generational questions is inappropriate. However, workers benefit from learning about the different backgrounds, cultures and expectations of their co-workers. Knowing about each other helps workers avoid accidental insults and slights and fosters a community feeling.

Clyatt is senior vice president of sales for the Omnia Group, an international company specializing in employee selection and motivation. She is also a popular seminar speaker within the insurance industry and can be reached at (800) 525-7117, ext. 1226, or via email at carletta@omniagroup.com.

Promote your agency via its website as one that sets diversity as an ongoing objective.

Establish relationships

Professional Insurance Agents magazine

Replacing your top-talent investments can be expensive and timely. Be sure you’re doing all you can to employ people—whether experienced, young or culturally diverse— who are well-suited to the job, your work environment and your agency’s mission.

Is documentation important? For some reason, agency staff always asks about the importance of documentation. For staffers who have never experienced an errors-and-omissions claim, it might be hard for them to comprehend the value of good quality documentation. I hope that the agency veterans can emphasize how documentation can shape the direction of an E&O claim.

An important element Documentation is one of the most important elements of a quality E&O culture and commitment within an agency. However, for an agency staff member to state that he or she documented the conversation in the file may not be good enough. What does the documentation say? What story does it tell? A number of components are essential for documentation to possess its true value, such as the following: Document promptly This does not mean when the person has a minute to spare or at the end of the day. Ideally, it means as soon as the conversation has concluded. For those who can multitask, documenting the discussion while you are having it is great as it enables you to note the various items/topics discussed accurately. Document details The documentation should include details such as with whom you spoke; what was discussed; whether there are open items; and who has what responsibilities moving forward. Document proficiently The documentation should be professional. This may fall into the commonsense category, but there is the possibility that the discussion was emotional in some manner. The agency staff member should be careful to ensure the documentation does not reflect this emotion. The saying, “don’t put anything in the file that you wouldn’t want a jury to read” comes to mind. For example, the following statements recovered from actual files did not help the agency’s defense: “I’m sorry I could not get back to you sooner” and “I’ve been too busy.” Document the process The documentation should tell a story. If the customer calls back and the initial staff member is not available, the staffer helping the customer will be able to read the documentation, know what was discussed and determine the next steps. Document all communication The file should reflect some form of written communication (e.g., email, letter, www.piaTN.com

etc.) that memorializes the conversation. When a person documents a conversation, he or she is documenting his or her version of it. Is it possible there was a misunderstanding or that the customer didn’t provide the information he or she thought? This does happen, so documenting the details of the conversation back to the customer is a solid E&O loss-prevention tool. The goal is to make the customer accountable for his or her insurance decisions.

E&O

Curtis m. pearsall, cpcu, cpia, au, arm, aiaf President of Pearsall Associates Inc.

Documentation is critical If agencies followed these straightforward concepts, there would be fewer E&O claims and a greater percentage of E&O claims that did develop would be closed for no pay. Unfortunately, this does not always occur and, invariably, the most important document in the E&O matter is the one that is not in the file. It involves those declinations/ deletions of coverage and explanations or answers to various insurance-related questions. It is amazing how at the time of an E&O claim, one of the parties (typically the insurance professional) will be adamant that he or she had a conversation with the customer and can almost recite chapterand-verse details of that conversation. Ironically, the other party (the customer) will have a different version of that conversation or actu2

ally may allege that he or she does not even remember the discussion ever happening. Therefore, is it to be assumed that this will happen and that everyone will have a different story? Perhaps. This shows the value of good quality documentation. Imagine an E&O claim has occurred and you are asked to produce various documents, as is typically the case.

As the agency producer/customer service representative on the file, you produce records of detailed conversations with the customer. Let’s presume that your customer, who will be asked to produce his or her various documents, has nothing. Who do you think will have more credibility in the eyes of the court? Showing a solid track record of

providing consistent quality documentation certainly will enhance your credibility. Now take the opposing perspective. As the agency staff member, you comment that you remember the exact conversations you had with your customer. However, when you are asked to produce details of those conversations, you have nothing. A common phrase used by attorneys in E&O matters is, “If it’s not in the file, it didn’t happen.” Your memory of those conversations will not carry the same weight as the necessary detailed documentation. A number of E&O claims are determined by documentation. In fact, many E&O carriers state year after year that they close two out of every three E&O claims for no payment. That impressive statistic speaks to the quality of the defense counsel; the agencies the carrier insures; and the agencies’ strong commitment to solid E&O loss prevention.

AMERISAFE successes in TENNESSEE Workers’ Comp for Working People

Unfortunately, a significant number of E&O claims have lacked documentation causing the agency to be responsible for the damages when it probably should not have been. In some of these cases, the CSR stated he or she was just too busy to do the proper job of documentation. Imagine being on a jury and hearing that statement. Clearly, good quality documentation is important. As Aristotle once stated, “Excellence is an art won by training and habituation. We are what we repeatedly do. Excellence, then, is not an act but a habit.” Sounds like a pretty smart man. Pearsall is president of Pearsall Associates Inc. and special consultant to the Utica National E&O Program.

Professional Insurance Agents magazine

Can’t afford to order MVRs when quoting automobile insurance policies?

Reduce Your Agency’s MVR Expenses and Improve Your Customer Experience

Real-time, comprehensive driver’s

With DocIT for Agents You Can:

violation reports are now available

Help an applicant’s recollection of traffic violations

for as little as 75¢ per transaction. DocIT for Agents contains traffic and criminal traffic violation information on drivers sourced directly from court records (not the MVR). Exclusively to PIA members.

Discover violations for additional drivers in household Generate more accurate quotes and align applicant to the right carrier the 1st time Reduce occurrence of rate changes on subsequent quotes Have a more positive customer experience Enable customers not interested in price to selfselect out earlier in the process Significantly reduce your MVR expenses

Learn More About Drivers History’s DocIT for Agents To learn more about DocIT for Agents PIA members can contact Erin Reilly at Drivers History at 856.673.1286 or pia@drivershistory.com. Additional information including the dates and times of upcoming PIA member webinars can also be found on PIA National’s website at www.pianet.com/DocITforAgents.

1 year subscription required with a $50/

DocIT for Agents is

month minimum. See Terms of Use for

available exclusively

complete details. Not available in all states.

to PIA members.

CYBER‐LIABILITY 1.0

The basics of a typical cyber‐liability policy include two types of coverage. A quick snapshot of what is included in each policy is clearly deﬁned below.

Typical Loss Coverage Components

Typical Liability Coverage Components

Will cover costs the insured incurs to...

Will cover claim expenses and damages the insured is legally obligated to pay as a result of the following:

Breach Response/Crisis Management ‐

respond to a network or privacy breach. Includes: Breach notiﬁcation, PR, forensic consultants, and credit monitoring costs

Cyber Extortion Loss ‐ respond to a threat by third party to commit a network security or privacy breach Business Interruption/Extra Expense Loss ‐ loss of income resulting from a network security breach or a network attack and extra expenses incurred to restore network to original condition

Data Loss ‐ cost to restore data destroyed or altered

as a result of a network security breach

For more information call: Adam Felton PIA Services, Inc. adamfe@pianet.org

Network Security Liability ‐ Provides coverage for actions that the Insured is legally liable for claims made against the Insured for a Network Security Breach Privacy Liability ‐ Provides coverage for actions that

the Insured is legally liable for claims made against the Insured for a Privacy Breach of PII, PHI or Corporate Conﬁdential Information

Regulatory Coverage ‐ Provides coverage for actions/proceedings and fines/penalties against the Insured by a regulatory agency resulting from a violation of a Privacy Law

Website Media Content ‐ . Provides coverage for actions that the Insured is legally liable for claims made against the Insured for a Media Peril of content on the Insured’s Internet Site Professional Liability‐ . Provides coverage for acts, errors or omissions in the rendering or failure to render professional services to a client of the Insured

Sagemark Consulting

Auto Club Group

NAI

Insurance House

National Security Fire & Casualty

HICI - Haulers Insurance

N-Surance Outlets

Mapre Insurance

Penn National Insurance

Mid South Mutual Insurance Co.

Risk Innovations, LLC

Accident Fund Ins. Co. of America Bituminous Insurance Donegal Insurance Group EMC Insurance Cos. Erie Insurance www.piaTN.com

GAINSCO Auto Insurance J.M. Wilson Safeway Insurance Co. United Fired Group

from the people stronger

who

customer satisfaction

know.

stronger

coverage

stronger

loss control

stronger

defense

TENNESSEE

Continuous E&O protection since 1966.

504 Autumn Springs Court Suite A-2 • Franklin, TN 37067 Phone: 615-771-1177 • Fax: 615-771-3456 Contact: Kristopher Fisher Visit: www.piatn.com