The Anchor The Independent Insurance Agents of Rhode Island Magazine
Special Feature
A Review of the Law on the Statute of Limitations for Malpractice Claims Against Insurance Agents and Brokers in Rhode Island pg. 20
Also in this issue: FloodSmart: Testimonials Can Help Clients Understand Their Real Risk pg. 17 FloodSmart: FloodSmart Agent Referral Program Makes Selling Flood Insurance Easier pg. 27 113th Annual Convention pg.36
First Quarter 2014
Your Next Client is Looking for You.
Will They Find You? The New TrustedChoice.com
Nearly 75% of personal lines consumers now begin their search for new coverage online. Will they find you? TrustedChoice.com helps ensure they will.
With enhanced agency profiles, expanded consumer resources and comparative quoting now available, TrustedChoice.com is unlike any other insurance website. And more new prospects are discovering that difference every month.
project
cap
Best of all, basic participation is free to IIABA members and enhanced programs to help new clients find you are available for a limited time at just $39 per month. The sooner you enroll, the sooner you’ll be seen – and the more you’ll save.
Subscribe Now at ProjectCapMarketing.com Independent Insurance Agents
contents Independent Insurance Agents of Rhode Island
The Anchor
March 2014
7 11 15 20 22 24 25 28 30 34
From the President EVP Perspective WC Update E&O Corner HR Corner Marketing Thoughts Company Spotlight Legislative Wrap-Up Young Agents Legal Briefs
special features 17
FloodSmart: Testimonials Can Help Clients Understand Their Real Risk
20
A Review of the Law on the Statute of Limitations for Malpractice Claims Against Insurance Agents and Brokers in Rhode Island
27
FloodSmart: FloodSmart Agent Referral Program Makes Selling Flood Insurance Easier
36
113th Annual Convention
3 First Quarter, 2014
The Anchor
events
The quarterly magazine of the
2400 Post Road, Warwick, Rhode Island 02886 TEL 401.732.2400 | FAX 401.732.1708
MARK YOUR CALENDARS!
2014 Awards Luncheon 2014 Annual Convention
OFFICERS
9 9
President Gregory Troy CIC, CLU, AAI President Elect Robert T. Hartnett Vice President Gary Mansfield, CIC National Director Robert Slocum, CPCU, CIC Immediate Past President Howard Thorp, AAI, CIC
BOARD OF DIRECTORS Central East Bay Southern Northern
advertisers INDEX
2014 Partners Program Big “I” E&O Umbrella Big “I” Flood Big “I” Personal Umbrella Big “I” Professional Liability Program Big “I” Virtual Risk Consultant EMC Insurance Companies Enviro-Clean, Inc. Hospitality Mutual IIARI Professional Liability JH Communications Partridge Snow & Hahn LLC Project CAP RLI Personal Umbrella Policy ServPro of Providence Shred It The IIARI Store UPC Insurance Utica National Insurance Group
6 29 38 23 14 10 16 26
back
33 13 37 2 31 19 35 5 18 12
District Vice President Andrew Palazzo Richard B. Paquin Tom Regan, AAI David White, AAI At Large District Vice Presidents John Kaull, AAI Kenneth Thompson Jr. David Woodmansee, CIC District Representatives Central Edward F. Bishop, CIC Maureen Rotondo, CIC East Bay John T. Edge Jr., CIC Northern Marc Nadeau, CPIA Denise Smith Southern Kimberly Raymond, CIC Stan Tabak
STAFF Marcia L. Berthiaume, AAI, ACSR, CPIA State Account Manager Helen Collins E&O Administrator & Member Coordinator Josette Cournoyer Administrative Assistant Sean R. Donaghey, CPCU Senior Vice President, State Account Executive Mark A. Male Executive Vice President Maureen McNamara Finance & HR Manager Jean E. Nagle, AAI, ACSR, AIS Assistant Vice President, Director of Education Sarah Van Grootheest Membership & Administration The Anchor is published by the Independent Insurance Agents of Rhode Island (IIARI). Statement of fact and opinion is made based on the responsibility of the authors alone and does not imply an opinion on the part of IIARI, it’s officers, directors or members. Subscription rate for members is $15, which is included in dues. Subscription rates for non-members is $75 per year (single copies $10). Reprint requests should be referred to IIARI. Copyright© 2014, Independent Insurance Agents of Rhode Island.
4 The Anchor
First Quarter, 2014
Thank You Again to Our 2013 Partners
Diamond Sponsor
Gold Sponsors
Silver Sponsor
Bronze Sponsors
Quincy Mutual Group
American Commerce Insurance Co. EMC Insurance Companies Phenix Mutual Fire Insurance Co. The Andover Companies
2014 PARTNERS PROGRAM
Companies are invited to become a “Partner” of IIARI. We created this program for insurance companies, wholesalers, and vendors who support IIARI on an on-going basis. Becoming a Partner guarantees you high-profile, year-long exposure to members of IIARI. Four levels of participation are available: Diamond, Gold, Silver and Bronze. It’s a win-win for IIARI and its Partners - by providing a “one-stop” approach to supporting IIARI and its members, it saves you from repeated solicitations and maximizes your visibility to the Rhode Island agent community throughout the year.
PARTNERS BENEFITS Support the Agency Distribution System Significant Savings Unique Perks
First Pick
Your support makes it possible for IIARI to deliver affordable, quality programs that enhance the professionalism of Rhode Island’s independent agents. The value of the various benefits you receive as an IIARI Partner far exceeds the individual costs associated with those services (see table for details). Many of the perks you receive as an IIARI Partner are only available to the Partners Program companies. Perks include: discounted ad rates, website recognition, and convention sponsorship. Diamond, Gold, and Silver Partners are guaranteed first opportunity of sponsorships and selection of exhibit space at the Annual Convention.
6 The Anchor Online pledge available at www.iiari.com
Phone: 401-732-2400 ◊ Fax: 401-732-1708 ◊ Email: sarahvg@iiari.com
First Quarter, 2014
from the president What Are Your Thoughts? Ed Koch the former Mayor of New York was famous for asking “How am I doing?” Other than a minimal need for shampoo, Mr. Koch and I have little in common, however I would like to paraphrase him and ask you to let the Board know how we are doing. As we stride into 2014 the Board is looking at some items we believe will provide additional support and value to you our members. We want to hear from you to know if these will be of help. One area we are looking at is account manager support developing a school for training otherwise quality individuals who do not have the insurance knowledge needed to work at an agency. We recognize that when looking for support employees for your office finding good people is not always a problem, finding trained quality people is a problem. We understand that most agencies are not staffed to provide the necessary training. Our concept is to develop a curriculum that includes product knowledge; computer and phone skills, and producer licensing as well. It would be a 2 to 3 month school. Members could either send someone to the
?
!
school or hire someone when they complete the program. Details are still in the works, but if this is done, do you have a need and would you consider hiring a graduate? In that area, the Association periodically receives resumes and members do ask for them. Currently we just pass them on, buyer beware. An idea is to create a vetting test of some sort to qualify these people. Again, details to follow but is this a value to you? Another item being addressed is the Board itself. The current configuration was established in the 1940’s and the districts were established to prevent one area (Providence) from dominating the Board. Times change and populations shift. We know that the old time district meetings used to mean more and were certainly better attended. Your Board works just as hard as they always have, but it seems there has been a reduction in the luster and a continued view by some that it is a closed venue. We are exploring all areas of the Board
Greg Troy, CIC, CLU, AAI President
CONTINUED ON PAGE 9
First Quarter, 2014
7
The Anchor
PAC
2013 Honor RollThank You! Richard Blackman Edward L. Blais David Brush John J. Daly David Gates Robert T. Hartnett Brian M. Hunter Robert B. Loiselle
SILVER
Cristie A. Hanaway Doug Mayhew David Soucy Howard Thorp Gregory Troy
David V. Andrade David E. Bates John T. Edge, Jr. Brenda Loiselle-DuClos Melanie Loiselle-Mongeon Mark Matrone
Linda Lunghi Prizito Garry Mansfield Marc Nadeau Lawrence A. Natale Andrew Palazzo Gregory Paquin Richard B. Paquin Kimberly Raymond
David V. Andrade David E. Bates Robert B. Loiselle Melanie Loiselle-Mongeon Doug Mayhew Roger L. Messier Howard Thorp
FOUNDERS CLUB
Edward F. Bishop Mark A. Male Robert G. Padula Frank Richard
GENERAL
PIONEER CLUB
GOLD CLUB
INSURPAC
Thomas J. Regan Mark Revens Barry Sutcliffe Kenneth Thompson, Jr. Donna Towers Lemos David Woodmansee Ralph Woodmansee
Colette L. McKeon Roger L. Messier Robert G. Padula Frank Richard Stan Tabak
GENERAL
BRONZE
GOLD
Independent Insurance Agents of Rhode Island PAC
Charles S. Balfour Edward L. Blais David Brush John J. Daly John T. Edge, Jr. David Gates Cristie A. Hanaway Robert T. Hartnett Brian M. Hunter Brenda Loiselle-DuClos Linda Lunghi Prizito Garry Mansfield Russel Martorana Collette L. McKeon Marc Nadeau William Apicerno Richard Blackman Christopher Hadley Alan A. Oliver Andrew Palazzo
William Apicerno Alan A. Oliver Denise Smith Cheryl Upshall William R. Warburton, Jr.
Lawrence A. Natale Gregory Paquin Richard B. Paquin Thomas J. Regan Mark Matrone Mark Revens Richard Rheinberger Robert G. Slocum David Soucy Stan Tabak Kenneth Thompson, Jr. Donna Towers Lemo David White David Woodmansee Ralph Woodmansee
Kimberly Raymond Maureen Rotondo Ernest Shaghalian, Jr. Denise Smith
from the president
CONTINUED FROM PAGE 7
and want to stress that all Association agencies have opportunity to be on the Board. Any thoughts regarding the Board are welcome. A new item recently sent via email is an update on company personal lines filings including direct writers. We are looking to send these out monthly and wonder if you find them helpful. Project CAP continues to be a major item on the National agenda. Agencies should have received correspondence inviting them to sign up for the upgraded listing. All statistics are pointing to internet use as the predominate starting point for personal insurance sales and we urge members to get involved. National
is also looking to extend CAP to include small commercial coverage as well. Contact us with any questions. Finally, the various committees continue to meet and assist members in many ways. This is a particularly busy time for the Government Affairs group as bills get submitted. If you have an item of concern you can let us know and see that it is addressed. The annual outing committee is planning a great event for May and we hope to see many if not all of you there. We will be as good as we can in serving you, but we need your input. Please respond to Mark (mark.male@iiari.com) with your thoughts and ideas.
MARK YOUR CALENDARS!
April 3, 2014 at the Providence Marriott.
Wednesday, May 28 to Thursday, May 29, 2014 at the Hyatt Regency Newport.
SLUGGISH SALES? HIGH E&O EXPOSURE? We prescribe the Big I Advantage
®
Virtual Risk Consultant
VRC Facts Active ingredients: Commercial and personal risk assessment tools (Exposure identification surveys and coverage checklists) Coverage reference resources and proposal tools (PF&M, ACORD forms, insurance glossary) Marketing and prospecting tools (Client letter templates and web site content) Use: Use liberally for relief of lethargic agency sales and lack of producer confidence. Dosage: Subscribe annually (or get four years for the price of three). Available online 24/7. Side effects: Dizzying improvement in knowledge and professionalism of agency staff. Inoculation against E&O claims from failing to offer proper coverage or identify customer exposure. Rejuvenated content to market your agency’s services. Warning: Prolonged exposure to VRC will result in agency success.
Available for purchase exclusively to Big “I” members over the counter at www.iiaba.net/VRC. Big I Advantage® Virtual Risk Consultant Powered by Rough Notes
10 The Anchor
First Quarter, 2014
executive vice president perspective Where Do We Fit on the Product Life Cycle Continuum, Are We Arm & Hammer Baking Soda or Kodak? As a marketing major in college, my fascination with how business survives and sustain themselves has always been intriguing. My marketing classes always talked about the life cycle of a product and where that product stood in relation to that continuum. When I think of Arm & Hammer Baking Soda, I am reminded of how a traditional company looked at its main product and realized that it was at the end of its life cycle and quickly becoming obsolete. Rather than die, it reinvented itself and re-branded its product as a solution to smelly refrigerators, and as an alternative laundry detergent, deodorant and toothpaste. Kodak, on the other hand was caught flat footed and ill prepared for the rapidly changing camera industry that went from film to digital photography. Despite a late attempt to segue into printers and ink, it was too late to stop the momentum. The company has downsized significantly and is a mere shadow of it’s former self. Where does the independent agency distribution system fit on this product life cycle continuum? When I started in the insurance industry, sales were driven by independent agents or captive/direct distribution. At that time, if the industry looked at consumers as a pie, it would have had essentially two parts: independent agency and captive/direct. With the explosion of the internet and online sales,
the distribution pie has changed and will continue to change. Younger consumers tend to purchase things online and some companies have taken advantage of that trend and have grown as a result. The independent agent has lost marketshare to the captives/directs because they figured out a way to do this better than we do. However, the independent agency system is more complex than your typical captive/ direct agent in that we deal with multiple companies, rather than one. Creating an on-line, or 800 number purchasing system has proven to be a little more difficult for us and we have paid the price as a result. How insurance is procured is dictated by so many variables that it makes my head spin. Traditional captive/direct writers have begun to acquire independent agency companies. Why do they like our system better? Some independent agency companies have begun competing with their agents by offering direct access to customers. Is this a direct result of losing market share to the captive/directs? Over $1 billion is spent every year on advertising for automobile insurance. Are you kidding me!? Today’s consumer pie has so many slices that our industry will never look the same. The danger is if we remain complacent and work against each other rather than together, our piece of the pie will continue to shrink. The fact is that distribution, advertising, and processing of insurance is changing at
Mark A. Male Executive Vice President
CONTINUED ON PAGE 13
11 First Quarter, 2014
The Anchor
stronger
from
customer satisfaction
stronger
coverage
stronger
loss control
stronger defense
rhode island association of insurance agents 2400 Post Road Warwick, RI 02886 Phone: 401-732-2400 Contact: Helen Collins
the people who
know. Continuous E&O protection since 1966.
executive vice president perspective
CONTINUED FROM PAGE 11
light speed. The “keep the status quo” competitively. The independent agency attitude is not an system offers to appropriate response. consumers what the “Although consumers The old days will never captive/directs do not – may change the method return. If we collectively a choice. A Trusted by which they purchase stand still, the rest of the Choice. insurance, there is one marketplace will move I personally predict basic fundamental need past us and we will no that the online and 800 that will never change...” longer have relevance. shoppers of today will That’s not to say we won’t eventually want a “live” always have a slice of the pie that prefers human being to transact their business personal relationships and professional with in the future. But that leaves today service – it’s just that it’s being redefined for us to react and refine who and what whether we like it or not. we are to our clients. IIABA started down Our greatest opportunity as a a path – not without significant potholes distribution system is to come to terms along the way – with Project CAP. CAP with digital marketing and social media. looks to tap into the evolving consumer Creating and maintaining a dynamic purchasing habits and position indepenonline presence and integrating social dent agents for growth. It was designed to media with current and prospective help us help ourselves. customers is no longer an option – it’s a We will transact business differently in must. Although consumers may change the future, that’s a given. Our migration the method by which they purchase as a distribution system into digital insurance, there is one basic fundamental marketing and making efficient use of need that will never change - consumers social media tools will be tough, but will always want to talk to someone rewarding. Change is tough but without about something as important as their it, we cannot move forward. I encourage insurance needs. In spite of the captive/ everyone to make the tough decision to directs attempt to commoditize insurance, embrace digital marketing and evolve to consumers still want to trust that the the disappoint of the pundits and product they purchase does what it is naysayers. supposed to do and that it is priced
Who's Directing Your Marketing?
Instead of doing it all yourself, call JH Communications.
www.jhcom.net 401.831.6123
First Quarter, 2014
13
The Anchor
GET WISE about your agency RISK MANAGEMENT.
Swiss Re Corporate Solu ons policyholders: Don’t miss out on the invaluable risk management resources available exclusively to you. Log in to www.iiaba.net/EOHappens to access claims sta s cs, preven on tools, insigh ul ar cles and more.
the Big “I” Professional Liability Program Prevent.
Our exclusive risk management resources help your agency avoid making common preventable mistakes.
Protect.
Our superior coverage through Swiss Re Corporate Solu ons and our experienced claims teams are in your corner in the event of a claim.
Prosper.
When you know you have the best agency E&O Protec on, you can focus on growing your most important asset–your business.
The Big “I” and Swiss Re Corporate Solu ons are commi ed to providing IIABA members with leading edge agency E&O products and services. The IIABA and its federa on of 51 state associa ons endorse the comprehensive professional liability program offered by Swiss Re Corporate Solu ons.
Visit www.iiaba.net/EOContact to connect with your state associa on today.
Insurance products underwri en by Westport Insurance Corpora on, Overland Park, Kansas. Westport is a member of the Swiss Re group of companies is licensed allstates 50 states District of Columbia. © 2012 Big “I” Advantage, Inc. and Swiss Re ons andand is licensed in allin50 andand the the District of Columbia. © 2012 Big Swiss Re Corporate Solu . “I” Advantage, Inc. and Swiss Re
wc update Workers’ Compensation: What is Going On? The Interplay of the Affordable Care Act with Workers’ Compensation As insurance professionals, we should all be acutely aware of the significance of medical treatment and its expense in workers’ compensation insurance. The Patient Protection and Affordable Care Act (hereafter “Act”) is intended to dramatically affect both of these elements in the entire health care arena. Nothing in the Act directly targets workers’ compensation. There is no doubt however, that there will be indirect implications. This article is intended to touch upon the potential implications of the Act on workers’ compensation and encourage continued communication by all of us to best handle the potential effects to the benefit of our customers – the businesses of Rhode Island. Medical treatment is provided by the employer/carrier in the event of a compensable work-related injury. Nothing interferes with this statutory and contractual obligation. Many times, uninsured employees will seek medical treatment for nonwork-related injuries, under the guise of a workers’ compensation injury, to avoid personal responsibility. If the stated goal of the Act is to insure the uninsured, there will be less of an inclination by employees to try and establish the nexus to work. This would directly reduce medical expense and indirectly reduce indemnity exposure (as indemnity drives medical), litigation and other claims costs associated with
these fraudulent claims. Of course, with the practical reality of high deductibles and co-pays, the theory may be greater than reality as the incentive still exists. The general premise in workers’ compensation in regards to pre-existing physical conditions is that you take the employee as you find him. The Act “This article is intended to touch has a blanket upon the potential implications of the prohibition to Act on workers’ compensation and a health insurer refusing to encourage continued communication by all of us...” insure someone with a pre-existing condition. This is a dramatic change nationwide. In the past, workers’ compensation claimants would work to keep their claim open because of the difficulty in securing health insurance. This is no longer an issue and could potentially result in the closure of more Michael Lynch Vice President, Legal claims. Beacon Mutual Another indirect effect relates to the ongoing claim issue of comorbidities. In the past, injured workers with complex systemic issues would lose the opportunity to have ongoing treatment as a lengthy incapacity would cause them to lose company sponsored health insurance. Now, with affordable coverage under the Act, injured workers’ who lost their jobs and health benefits should continue CONTINUED ON PAGE 16
15 First Quarter, 2014
The Anchor
wc update
treating for the comorbidities thus hopefully reducing the length of incapacity. Also, wellness initiatives are encouraged along with greater access to health care. This should speed recovery and reduce claim frequency. All of this will lead to safer and healthier workplaces, reducing the chances of a work related injury. Another perspective beyond the injured worker relates to the medical community and its interplay with all of the players in the typical workers’ compensation situation. Doctors and workers generally prefer health insurance applicability as there is less oversight and more freedom to treat. For example, workers’ compensation requires more reports, in teraction with claims representatives and in claims litigation, interaction with lawyers. Likewise, patients, while liking the statutory coverage of workers’ compensation, do not like having to deal with claims representatives. (We know this is one factor in driving settlement interest). Offset this with reductions in Medicare reimbursements, which are many times
CONTINUED FROM PAGE 15
a component of workers’ compensation fee schedules, and you can see why providers may prefer health insurance. Thus, on a close call, a provider may not choose work-relatedness. From a systemic view, there are of course non-medical implications. Employers may be encouraged to label employees as independent contractors (opening themselves up to potential workers’ compensation fraud with its associated civil and criminal penalties) to avoid compliance and the penalties called for under the Act. To avoid the Act completely, some employers will be incented to use more temporary workers. This means less control over workplace safety and audit challenges. In summary, there are no direct Affordable Care Act implications on workers’ compensation. However the indirect effects could be many and meaningful. As always, please reach out to anyone here at Beacon Mutual with questions on workers’ compensation.
Acquisition Strategy #4 LIGHT MANUFACTURERS
“ Light manufacturers
like our heavy-duty insurance program.” Tanya Wentzel, Des Moines Branch Marketing Manager
With a range of insurance coverages including errors or omissions, extensive loss control resources, expert claims knowledge and local service from an independent agent like you, EMC offers an insurance program designed specifically for light manufacturers. It’s just one of the many reasons why you and your commercial clients Count on EMC ®.
Providence Branch: 800.556.7010
|
Home Office: Des Moines, IA
www.emcins.com © Copyright Employers Mutual Casualty Company 2014. All rights reserved.
Testimonials Can Help Clients Understand Their Real Risk
Bollenbachers knew it came with a financial risk when the bank required them to purchase a flood insurance policy. After two devastating floods caused by snow melt and heavy rains, they learned how beneficial their flood insurance was.
“The water was up to probably about 2 or 3 feet below the bottom of the bridge,” Chris Bollenbacher said. “That translated inside to water over the top of our bar and water up over our knees inside the dining room… “The flood insurance coverage was something that we knew was there. It surprised me how well they did support us. ”
Like many of your clients, the Bollenbachers never thought a flood would happen to them. Luckily, they were able to recover quickly with the help of flood insurance.
“The amount of money that the flood insurance has paid us, I think it’s made the difference of us choosing to rebuild and stay in business.”
special feature
With winter rainy season in full swing, it’s time to talk to your clients about their flood risk. As an agent, you can ensure that they are covered for flood by offering them flood insurance policies. Flooding causes damage and distress at any time of year, but during winter rainy season the risk of flooding is elevated. Along the East Coast, Nor’easters can bring heavy rains, snow and wind- driven waves that can lead to flooding and beach erosion. The frozen ground can’t absorb the melting water, which results in flooding. Be sure to tell your clients about these risks and encourage them to purchase flood insurance. Often, clients are more motivated when they hear someone recount a personal, life-changing experience. FloodSmart testimonials can provide that personal perspective. Share Chris and Ellen Bollenbacher’s story about surviving two floods caused by snow melt and heavy rains to help clients relate to a real-world situation and understand the importance of purchasing flood insurance. Owning a restaurant along a river in the Northeast was a dream, but the
Everyone is at risk for flooding, even during the winter months. Whether your clients live in a high-risk flood zone or a CONTINUED ON PAGE 19
17 First Quarter, 2014
The Anchor
Providing Responsive, Stable and
Innovative Coastal Insurance Solutions Since 1999
Homeowners • Plan • Purchase • Protect Call Pete today or visit www.UPCIC.com Peter J. Hutchinson, CIC Direct Line: 413-875-5712
Your Preferred Choice for Homeowners Insurance Protection Programs
www.UPCIC.Com 18 The Anchor
First Quarter, 2014
CONTINUED FROM PAGE 17
our direct mail program. Visit Agents.FloodSmart.gov for more resources and tips for talking to clients about their flood risk.
When There’s Only Time for One Phone Call, Don’t Make the Wrong One. of Providence
Fire & Water - Cleanup & Restoration™
of Weymouth - Hingham, Quincy & Brockton
Fire & Water - Cleanup & Restoration™
We’re committed to taking care of your customers!
of Boston - Downtown, Back Bay & South Boston
SERVPRO of Providence understands that any water damage, especially spring flooding, can have major consequences. When your clients’ home or business requires professional disaster restoration services, you can rely on the company that has set the standard for others to follow for over 20 years.
Fire & Water - Cleanup & Restoration™
Like It Never Even Happened.®
of Providence
401-941-5500 Servproofprovidence.com
• Emergency Water Extraction
• HVAC/Air Duct Cleaning
• Fire & Smoke Damage Cleaning
• Vandalism & Biohazard
• Document Drying
• Mold Mitigation & Remediation
• Drying & Dehumidification
• Board-up/Securement
• Deodorization and Odor Removal
• Reconstruction
• Contents & Structural Cleaning
• Pack Out/Inventory Storage
of Weymouth - Hingham, Quincy & Brockton
Independently owned and operated.
special feature
moderate- to low-risk flood zone, encourage them to be financially prepared by purchasing flood insurance. More than 20 percent of all flood insurance claims come from areas outside of high-risk flood zones. From the date of purchase, there is typically a 30-day waiting period before a policy goes into effect, so it is important to have insurance in place before a winter storm strikes. Finally, be sure to register to participate in the NFIP Agent Referral Program. Show proof of two hours of flood insurance training in the past two years, and receive free, qualified leads from FloodSmart.gov, the NFIP Agent Referral Call Center and
special feature
e&o corner A Review of the Law on the Statute of Limitations for Malpractice Claims Against Insurance Agents and Brokers in Rhode Island
Christopher B. Weldon, Esq. Partner Keidel, Weldon & Cunningham, LLP
For most people, a statute of limitations is simply something that allows clearly-guilty perpetrators to escape justice on television crime dramas. However, for insurance agents and brokers, statutes of limitations allow you to have some peace of mind that you won’t begin your day visited by an E&O ghost from the distant past, in the form of a Summons and Complaint. By setting a specific amount of time for a plaintiff to file a claim, a statute of limitations keeps out many claims where memories have faded and physical evidence has been lost. However, while the concept is simple, Rhode Island’s legal system has managed to inject a good bit of complexity into how statutes of limitations are applied. In this issue of the E&O Corner we will provide
an overview of the Rhode Island statutes of limitations governing claims against insurance agents and brokers. To begin with, Rhode Island is essentially unique among the states in that its state statutes, the Rhode Island General Laws (“R.I.G.L.”), do not specifically provide statutes of limitations for many types of claims, such as those alleging breach of contract or negligence. Rather, statutes of limitations involving a number of specific types of claims are spread throughout the voluminous R.I.G.L., and any claims not specifically covered elsewhere are governed by one brief section of the R.I.G.L., section 9-1-13(a). This “catch-all” provision states that “except as otherwise specifically provided, all civil actions shall be
James C. Keidel, Esq. Partner Keidel, Weldon & Cunningham, LLP
20 The Anchor
First Quarter, 2014
CONTINUED FROM PAGE 20
certainly good, as with many legal issues, the devil is in the details, and there are at least two major questions to consider. The first question is: what happens if you are served with a Complaint that lists more than one cause of action? For instance, what if Count I of the Complaint alleges professional negligence, but then Count II of the Complaint alleges a breach of contract claim, based on the same or similar underlying facts? It is well settled under Rhode Island law that even if you do not sign a contract with one of your customers, simply agreeing to procure coverage on a customer’s behalf constitutes a binding oral contract. See, for example, Kenney Manuf. Co. v. Starkweather & Shepley, Inc., 643 A.2d 203, 208 (R.I. 1994). It is easy to imagine how a “creative” plaintiffs’ attorney may try
to fit a claim into a cause of action, such as breach of contract or negligence (without using the words “professional negligence” or “malpractice,”), in order to attempt to qualify for the 10-year statute. While no Rhode Island court has considered such a scenario in a case involving “The good news is that insurance the Rhode Island agents or legislature explicitly brokers, state included insurance courts have agents and brokers in weighed this a separate statute of question in the medicallimitations governing malpractice malpractice actions.” arena, which is governed by the same 3-year statute of limitations. In Bowen Court Assoc. v. Ernst & Young, the Rhode Island Supreme Court admonished one plaintiff by stating that “a claimant cannot evade these CONTINUED ON PAGE 32
21 First Quarter, 2014
The Anchor
special feature
commenced within ten (10) years next after the cause of action shall accrue, and not after.” Rhode Island courts have held that this 10-year statute of limitations applies to breach of contract actions and negligence actions where personal injury does not result. See, for example, Am. States Ins. Co. v. LaFlam, 69 A.3d 831 (R.I. 2013) and Levin v. Kilborn, 756 A.2d 169 (R.I. 2000). The bad news is that this lengthy statute of limitations is the longest in the country. The good news is that the Rhode Island legislature explicitly included insurance agents and brokers in a separate statute of limitations governing malpractice actions. In addition to medical personnel, insurance and real estate agents and brokers are named in R.I.G.L. § 9-1-14.1, which provides a 3-year statute of limitations. While this is
hr corner Do You Have A Communication Strategy With Your Workforce? This is a continuing article in the series of human resource articles for the “Independent Agent.” My goal is to bring value to your organization in accomplishment of the Essentials of Human Resources. In past articles, we dealt with a variety of topics from hiring to termination. Hopefully, your organization has an effective communications process for members of your workforce. For this article, we want to discuss or review the importance of eight (8) ways to communicate better with your employees. Consider developing and maintaining a communication strategy to keep your employees fully engaged.
Number One…insure a system is in
Dave Nichols Quality Transitions, Inc.
place in recognizing and dealing with problems. Make sure employees understand the process. Number Two…set goals for the employees. Make sure the goal is specific, measurable, realistic, timely and attainable. Number Three…communicate in writing as a follow-up, at times communication is lost when we only do it verbally.
Number Four…expect and welcome
questions, insure you have an open door for employees at all times. Number Five…limit industry jargon, particularly for new employees this can be a problem. Number Six…keep morale high, it has been proven that there is a high correlation between morale and productivity. Number Seven…insure there is emphasis with communications what the priorities are in order to avoid unnecessary stress or being overwhelmed. Number Eight…open the lines of communication where you have an environment where opinions are valued and not judged or punished. Hopefully, upon this review of these eight items, you are in good shape. If not, look at this as an opportunity for continuous improvement in your organization. Focus, performance and high morale is the name of the game.
Dave Nichols is the principal of a human resource management business, Quality Transition, Inc. located in Charlestown RI. He has 25 years of experience in the field and also retired from the US Army as a Lieutenant Colonel. If you are interested in learning more, please visit his website at www.qualitytransitions.net.
22 The Anchor
First Quarter, 2014
Wondering where your clients went?
Increase client retention now.
Cross sell with Big “I” Personal Umbrella. Everyone in the insurance industry knows that the more lines of business a client has with you, the less likely they are to leave you for a competitor. Is your agency taking the extra step to secure an additional line of business with your auto and home sales? As a Big “I” member, you have access to two stand alone personal umbrella markets which enables you to write most any risk you will run across. Whether the risk qualifies for the Preferred Market with RLI Personal Umbrella or the Alternative Market for more difficult to place risks via Anderson & Murison, you can support your state Big “I” association by placing your stand alone umbrella business with the Big I Advantage® Umbrella Program.
Preferred Market - RLI Personal Umbrella
Limits up to $5 million available Excess UM/UIM available in all states You can keep your current homeowner/auto insurer New drivers accepted - no age limit on drivers Up to one DWI/DUI per household allowed Auto limits as low as 100/300/50 in certain cases Competitive, low premiums for increased limits of liability Simple, self-underwriting application that lets you know immediately if the insured is accepted E-signature and credit card payment options Immediate coverage available in all 50 states plus D.C.
Alternative Market - Anderson & Murison
Limits up to $10 million available Ideal for risks that have drivers with multiple violations/accidents Will consider high profile personalities such as elected officials, athletes, media personalities & entertainers Will consider risks with prior liability losses exceeding $25,000 Drivers over age 75 acceptable with two violations Drivers under age 22 can have minor violations Driver exclusion endorsement available for drivers with unacceptable driving records Written on A rated Scottsdale paper
To access log onto www.bigimarkets.com or visit www.iiaba.net/Umbrella.
23 First Quarter, 2014
The Anchor
marketing thoughts What Are You Waiting For? It’s Time to Market.
John Houle JH Communications
You continue to see the barrage of TV ads from direct writers and have witnessed their domination of online searches. So, how can you compete, and what are some real marketing solutions you can implement to regain market share? Join the Trusted Choice Campaign. If you could be part of a campaign that for each dollar you invested, you received back more than two additional dollars in value, why wouldn’t you? Thirty-six of your fellow agencies participated in the 2013 campaign, and an additional seventeen agencies continued their campaign by placing 100 ads each on cable for only $500. Where can you invest $1250 for a return of $4250, or $2500 for a return of $8500, or $5000 for a return of $17,000? Where can you have a professionally produced television ad created and then have 100 cable television ads placed in your local area for $500? Only IIARI’s Trusted Choice campaign offers the visibility and value that every Rhode Island agent can benefit from. Put the power of video to further use for you. For those of you who have been involved in IIARI’s video shoots, or for those of you who will see for the first time how easy it can be, you should consider what else can be accomplished once you tape your on-camera appearance. You could have a videographer return to your office and tape you explaining why consumers are better off buying their home
and auto as a package. Or why not show visitors to your website why they have made the right choice in selecting your agency? With today’s technology, professionally produced videos cost about the same as custom designed brochures. However, a video is more interactive and dynamic and vividly shows the consumer exactly who they are selecting. In addition to developing a more compelling message through video, you will also benefit through Search Engine Optimization (SEO). Any videos produced should be placed on YouTube and your website. Remember that YouTube is only second to its parent company Google in terms of searches, and will greatly improve traffic to your website, where you should be selling to your consumers. Connect with your customers. E-mail marketing trumps social media in Return On Investment. Today’s consumers spend more time in their email than they do on Facebook, Twitter or LinkedIn. Yes, that may change when younger consumers come of age, but that is the reality today. If you’re not engaged in email marketing, you’re missing one of the best vehicles to directly connect with your customers. And if you really want your email marketing to stand out, add a professionally produced video into your message. Instead of telling your customers why they should add umbrella CONTINUED ON PAGE 26
24 The Anchor
First Quarter, 2014
company spotlight Heartland Ovation Payroll Has your agency ever had a client who’s workers’ compensation coverage or other lines of insurance were moved to their payroll company’s “insurance agency?” If not, chances are it won’t be long until you see it happen. These other payroll companies are setting aggressive goals to gain big market share in all insurance and benefit lines. Health Insurance plans, Worker’s Compensation Insurance and Property and Casualty lines, nothing is off limits. No wonder it’s tough to keep your clients, much less win new business. But when you partner with Heartland Ovation Payroll, you can protect your book of business, gain a competitive edge, and at the same time expand your client base. Ovation Payroll is the new Insurersendorsed partner for payroll services. With Ovation, you can insulate your book of business, receive referrals and maintain ownership of the clients you refer. All while earning commission on your clients that use Ovation for their payroll services. Product Offering Full service payroll processing that focuses on growing your client’s business rather than worrying about the everchanging complexities of payroll. With Ovation Payroll you get personalized service, superior technology and the industry’s only three year price lock. We also provide everything business owners need to get their staff paid accurately, on time and with minimal effort, including: • Gross-to-net employee payroll processing • Compliance with taxing guideline (local, state & federal tax) to eliminate penalties • New hire reporting to the appropriate state & federal agencies
• Employee
pay by check, direct deposit and/or Pay Advantage card • Restaurant Payrolls (Fica Tip Credit, Tips to Minimum, Tip Sign off, Tip Allocation Reporting) Ovation Payroll has a web-hosted payroll platform, which provides the ability to customize the payroll processes from web-based submissions to completely paperless processing.
Rhode Island Contacts Douglas Kendall Senior Product Advisor dkendall@ovationpayroll.com 401.491.9994 Randy Pumputis Director of Business Developments rpumputis@ovationpayroll.com 585.341.3526
Ovation Payroll Plus Employee resources and expertise About Heartland eliminate the HR tasks that take over the Ovation Payroll day. With Ovation Payroll Plus, customers get the turnkey Ovation Payroll service, Heartland Ovation Payroll plus a fully integrated human resources is headquartered in solution that offers a complete range of HR Rochester, NY and tools to support their business, including: Princeton, NJ. Led by Heartland • My HR Support Center - customizable Chairman & CEO Robert O. documents for hiring, managing and Carr and Ovation CEO Anthony paying employees, plus alerts that keep Tortorella, the company currently has over 250,000 customers you up to date on the laws, regulations nationwide. In January of 2013, and court decisions that could impact Ovation was purchased by your business Heartland Payment Systems, • My Employee Files - built-in electronic Inc. The acquisition allowed the employee file system, which replaces opportunity for Ovation to paper files accelerate growth using • Our Info Center - secure employee Heartland’s built-in nationwide access to pay records, messages, distribution channel. schedules, policies, job-related website and more to keep them informed and They offer a full range of payroll and HR solutions coupled with up-to-date award winning customer service • Business Partner Reporting - secure to deliver the ultimate user and efficient access to data for their experience. Their superior CPA, insurance broker, financial technology allows client’s payroll advisor and benefits administrator Get Started Today Don’t wait until those “other” payroll companies start cutting into your client base. Contact Ovation Payroll today to learn more about how you can protect your clients, your book of business and expand your offerings.
25 First Quarter, 2014
data to be securely accessed by providers for a variety of services related to payroll.
Wether your client is starting a new business or are a seasoned veteran, Ovation Payroll will provide them with the tools to stay on track. The Anchor
marketing thoughts
coverage, show them why in a one-minute video. Revisit that website of yours. Your website from three to five years ago may already be stale. Websites are meant to be interactive and informative, not repositories of out-dated information. Add a blog, integrate your social media feeds onto your front page, and update your site. Websites are not a one-and-done project, but are robust communications tools that need to be maintained, upgraded and improved on a regular basis. Use social media that really works for you. For your personal lines customers, Facebook is a strong connection tool, but don’t inundate people with useless information. If you really want to connect with your business customers, then you may want to put more effort into LinkedIn. Many agents have their own personal LinkedIn
CONTINUED FROM PAGE 24
page, but have not built out their own company page. Just like with Facebook, a LinkedIn company page can be followed by clients and spheres of influence, and regular updates and important information can be posted. There are many easy-to-follow strategies to grow a social media following as well as best practices for posting content. In addition, it’s relatively inexpensive to expand your posts through paid advertising on social media, so for those really important announcements, you should consider a modest investment. The time to act is now. Ineffective marketing is bogged down by inaction. It’s time to move many of these items up on that priority list of yours.
Expect the unexpected. When your customer needs help in a hurry, it’s your time to shine. Make the right call and look like a hero. Make problems disappear for your customers. And for you.
FIRE • WATER • WIND • MOLD • BIOHAZARDS
Who’s on your speed dial? Toll-free
Quick Response. Quality Results.
(888) 231-3130
w w w. e n v i r o c l e a n i n c . n e t
FloodSmart Agent Referral Program Makes Selling Flood Insurance Easier
Flood insurance can be a difficult and uncomfortable sell. Most people are unsure if they need it, underestimate their actual flood risk, or think it’s too expensive. But with weather patterns that include yearly hurricanes, consistent heavy rains and storms, and an ever-changing landscape from wildfires, it is becoming more of a necessity for homeowners, renters and business owners to financially protect their assets. It is easier and more beneficial to have these challenging conversations with people who are already familiar with flood insurance. The FloodSmart Agent Referral Program can help connect you, the flood savvy agent, with clients who are actively seeking information about flood insurance policies. Agent Referral Program Benefits include: • Listing in direct mail pieces sent to prospects in your area • Free transfers from prospects who call the National Flood Insurance Program (NFIP) Agent Referral Call Center
• Access to a host of sales and marketing tools and resources • Eligibility to participate in the co-op advertising program (re-launching in 2014)
• Through FloodSmart’s mailings and advertising, people learn about the risk of flooding and are directed to visit FloodSmart.gov, contact the NFIP Agent Call Center, or talk with their insurance agent to learn about flood insurance. They are then connected with an agent in the FloodSmart Referral Agent database. • FloodSmart.gov and the NFIP Agent Referral Call Center both use the Agent Referral Database to offer prospects contact information for flood insurance agents (like you!) in their area. • Customers who contact the NFIP Agent Referral Call Center have the opportunity to be transferred directly to a participating agent, who will be given the consumer’s contact information. • Voila! A potential new customer. Enroll online today so your contact information will be available via FloodSmart.gov, the NFIP Agent Referral Call Center and NFIP mailings after enrollment. And remember that in order to be a part of the FloodSmart Agent Referral Program, you must participate in two hours of flood insurance training every two years and provide written proof of training completion to FloodSmart. Upload proof of training to your profile on Agents.FloodSmart.gov, or email it to certificates@nfipfloodsmart.com, or fax it to (703) 891-9866.
27 First Quarter, 2014
The Anchor
special feature
• Free referrals from prospects who use the One-Step Flood Risk Profile or the Agent Locator tool on FloodSmart.gov
How does it work?
legislative wrap-up Unfair Claims Settlement Practice Regulation 73 Finalized Amid Controversy and Threat of Law Suit
Ernest Shaghalian, Jr., CPCU, AAI Government Affairs Committee Chairman
The Division of Insurance just released the revised version of Regulation 73 which becomes effective 2/18/14. A contentious hearing was held on 9/9/13 at the Division of Insurance. The main point of dispute revolves around the Regulation’s definition of “fair market value”. Insurance companies have threatened to sue the Division of Insurance over the provision. The new Regulation requires that auto insurance claims for total losses be settled using as a basis for valuation “fair market value”. The definition in the regulation is “the retail value of a motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values commonly used by the automotive industry to establish values of motor vehicles”. Simplified this means insurers must now use a national car dealer type book value system, used in the auto industry like the NADA. Until now most insurers had their own valuation system that they used to determine the value of a car when it was a total loss. The book values used in the automotive industry are generally higher than the valuation methods that insurers generally use which is the basis for the dispute. If insurers sue the Division they will claim that the Division
exceeded it’s regulatory making authority by requiring the book value method in the regulation. The Division will counter that the authority is based on legislation that was passed last year by the General Assembly. Last year the body shop lobby was able to get enacted into law a new provision as an unfair claim settlement practice. That law prohibited an insurer from deeming a vehicle a total loss if the vehicle has damage that is less than 75% of “fair market value”. That law designated the definition of fair market value as noted above and which is now in Regulation 73. Insurance companies thought they would be able to comply with the total loss provision in the new law by using the “car dealer book value” to determine if the vehicle was a total loss or not. If the vehicle was deemed to be a total loss the insurance companies wanted to be able to then use their own, different valuation system (usually a lower value) to determine how much the claim payment would be. In other words two valuation methods for the same claim. The Division’s interpretation is that if you use the car dealer book value for determining if it’s a total loss then the statue requires insurers use the same method for determining the claim payment value. CONTINUED ON PAGE 31
28 The Anchor
First Quarter, 2014
?
DID YOU KNOW AGENCY E&O UMBRELLA IS NOW AVAILABLE THROUGH BIG “I” PROFESSIONAL LIABILITY
A commercial umbrella underwritten by Swiss Re Corporate Solutions (rated A+ by A.M. Best) is now available exclusively to Big “I” members.
Designed in collaboration with IIABA to meet the needs of independent insurance agents Broad coverage over primary casualty lines, including E&O Limits available up to $10 million over underlying primary E&O policy
Available nationwide
May be written over a variety of E&O carriers
Contact us to receive a proposal: IIAV/VFSC Linda S. Loving, CIC, AISM, AIAO 804-747-9300 / 800-288-4428 lloving@iiav.com
PROTECT your business with an E&O umbrella endorsed by IIABA CONSOLIDATE coverages with one carrier and avoid potential gaps SECURE your agency’s future with the largest writer of agents professional liability in the country SUPPORT your state association while protecting your business
Insurance products by Westport Insurance Corporation, Overland Park, Kansas. Westport is licensed in all 50 states and the District of Columbia. 29 First Quarter, 2014underwritten Insurance products mentioned may not be avaailbale in all states. Please contact your state administrator or Westport for availability in your state.
The Anchor
young agents Forming the Leaders of Tomorrow Being a Young Agent in Rhode Island brings with it many challenges. Our small state has not had a lot of job growth over the last several years, the housing market has yet to make its way back, unemployment has risen again, and businesses are struggling to stay open making organic growth difficult. Add to that struggle, the general perception of the younger generation, their fight to find the right work/life balance as technology creates new challenges and opportunities and we find these Young Agents fighting to find a place to fit in and flourish. The challenges of age and inexperience mean we have to work harder to earn the respect of not only our clients and prospects, but those of our mentors, managers, peers and co-workers; but it can be done. The keys are the same for any age group really.
Kelly Townsend Young Agents Chair
Always be learning. You don’t need to know everything, no one does. What you need to know is how to find out. I have yet to find someone who was upset when I told them I wanted to double check an answer and get back to them. The Rhode Island Young Agents work hard to offer all Young Agent Members the opportunity for education credits.
Always be consistent. Now this
is a big one, it is imperative that you follow through, follow up and finish the job. If you commit to something make sure it happens, if you promised a call back you need to make sure it’s done, and if it is part of your job description, learn it inside and out and always make sure you’ve done your very best. This will go a long way towards earning the respect of everyone you come into contact with.
Get Involved. Find something your passionate about and get involved. Get involved where ever you can, in your child’s class room even if you can only volunteer once per school year, help with a fund raising event for the charity of your choice, and be active with the Young Agents and other IIARI committees. Set yourself apart and define who you are.
Quite simply Young Agents are the future of the independent agency system, but we’re not just the future, we’re the present, and we can offer a valuable perspective and new opportunities. What we need to CONTINUED ON PAGE 35
30 The Anchor
First Quarter, 2014
legislative wrap-up
CONTINUED FROM PAGE 28
At the hearing in September the insurance companies and their association protested the inclusion of the book value method for paying the claims on total losses. Other testimony was heard from the customer of a well know auto body shop. Her vehicle was deemed to be a total loss. She was initially offered $12,900 for her vehicle. The auto body shop testified that after they got involved for their customer that she was paid almost $18,000 for the vehicle. After a public hearing on a proposed regulation the Division of Insurance takes into consideration comments from the public and
often makes changes. The original version of the proposed Regulation was not going to allow insurance agents to submit complaints about unfair claims settlement practices on behalf of our clients. IIARI submitted written testimony at the hearing and the Division changed the final version which does allow us to submit complaints for our clients. Regulation 73 also incorporates many new provisions which are included in the National Association of Insurance Commissioners (NAIC) model act. The entire Regulation can be viewed at www.dbr.ri.us and search “Insurance Regulation 73.”
The RLI Personal Umbrella Policy Take a Second Look
RLI's Personal Umbrella Policy (PUP) provides the coverage your customers need: • Expanded underwriting opportunities including DUI/DWI • Properties in multiple states and outside the U.S. eligible • Excess UM/UIM coverage available nationwide • Policies written above 100/300 auto • Drivers of all ages accepted — including new drivers • No A.M. Best Rating requirement for underlying carriers • Easy online quoting • Electronic signatures and online credit card payments accepted And Don't Forget... Be sure to check out the RLI PUP Access online system. It makes it easy for you to manage multiple accounts and allows insureds to quickly and conveniently complete new business submissions, submit electronic signatures and pay bills. Visit us online at www.iiaba.net/RLI.
special feature
e&o corner
time bars merely by failing to mention the word ‘malpractice’ when drafting the pleading in question.” 818 A.2d 721, 727 (R.I. 2003). More directly, in Vigue v. John E. Fogarty Mem. Hosp., the Court stated the following: “If the acts complained of constituted a necessary, essential, and integral part in the rendition of professional services to the patient, they are subject to the shorter statute of limitations provided for actions of professional negligence.” In essence, this should mean that as long as what the plaintiff in an E&O matter is complaining about pertains to you providing professional services, the 3-year statute of limitations should apply, no matter what label the plaintiff attempts to put on its claim. That being so, while this issue has not yet been addressed by the Rhode Island courts in a case against an insurance agent or broker, we would argue that the 3-year statute should be applied to the E&O claim. The second major question regarding the 3-year statute of limitations concerns from what date the three years should be measured. In many cases, there is a clear point in time where a plaintiff has a claim that accrues. For example, in a slip and fall in a supermarket, the plaintiff has to file its suit within 3 years from that date. However, the law recognizes that sometimes, a person may have suffered harm but not even had reason to realize it until it was too late. So, statutes of limitations, including the one governing insurance agent and broker malpractice, typically begin the countdown at the time when the
CONTINUED FROM PAGE 21
plaintiff should have discovered that something was wrong. The question a court will ask is: When would a reasonably diligent plaintiff have discovered that he or she had a claim? This is one of the most important questions that comes up in statute-of-limitations cases and it is a situation where you can take active steps to protect yourself. Along with the discovery rule, the Statute, R.I.G.L. § 9-1-14.1 (1), also has a disability exception for age, incompetence, among others which hold that the 3-year statute of limitations will not commence until removal of the disability has occurred. Most E&O cases involving insurance agents and brokers involve the procurement of a policy of insurance. Most of these cases involve a claim that the agent or broker either failed to get the type of coverage or limits of coverage that the customer wanted or needed. The best way to get the statute of limitations period to start running for any potential E&O claim is to be sure to promptly deliver the insurance policy to a customer along with a policy transmittal letter that specifically advises the customer to thoroughly review their coverage, and to let you know immediately if they have any questions or if any changes need to be made to their policy. The prudent insurance agency or brokerage that follows this practice will be in a good position to argue that the insured should have read their policy as of the time that they received it and therefore, any statute of limitations to be applied to
32 The Anchor
First Quarter, 2014
CONTINUED FROM PAGE 32
a potential claim started to run when the insured received the policy. The Rhode Island Supreme Court, in Burns v. Connecticut Mut. Life Ins. Co., held that the plaintiff ’s claim was barred by the 3-year malpractice statute of limitations in large part because accurate policy documents were sent to him at the time of procurement, directing him to “read your policy carefully!” 743 A.2d 566 (R.I. 2001). In your cover letter, don’t try to tell your customer exactly what coverages are provided,
with what limits, or anything along those lines—let the policy documents speak for themselves. But, you can go a long way towards protecting yourself just by putting a clear, unequivocal statement down in writing reminding your customers that they have a responsibility to read, understand their insurance coverage and advise of changes they want made to the policy. After all, they just might do it—and the easiest lawsuit to defend is the one that’s never filed.
Keidel, Weldon & Cunningham, LLP concentrates its practice in the defense of agents’ and brokers’ errors and omissions litigation and insurance coverage litigation Kindly direct comments to Christopher B. Weldon or James C. Keidel at Keidel, Weldon & Cunningham, LLP, at 925 Westchester Ave., Suite 400, White Plains, New York 10604. Copyright© 2014, Keidel, Weldon & Cunningham, LLP. All rights reserved
IIARI Professional Liability Are you among the two-thirds of Big "I" members who are part of the Big "I" Professional Liability program? If not, ask yourself, "Why not?" For over two decades, the Big "I" Professional Liability Program underwritten by Westport Insurance Corporation, a member of Swiss Re Corporate Solutions (rated A+ Superior by A.M. Best), has been the premiere choice of IIABA member agents for insurance agents and brokers E&O insurance. The Big "I" Professional Liability Program offers not just a policy, but a comprehensive program for insurance agents. The program has grown into the largest and most stable insurance agents E&O program in the nation. Our member agents and brokers nationwide look to the program for stable rates and a long-term market that they can rely on to protect their greatest assets-their businesses. Working with our partners at Swiss Re Corporate Solutions, we have created one of the strongest coverage forms in the marketplace. And ours is the only P/C insurance agents and brokers E&O program in the marketplace that contributes a percentage of every premium dollar to the funding of important advocacy efforts of the IIABA. Connect with your dedicated Big "I" state administrator to learn more at www.iiaba.net/EOContact.
legal briefs New Employee Act in Rhode Island
Michael A. Gamboli Partner Partridge Snow & Hahn LLP
Kimberly I. McCarthy Partner Partridge Snow & Hahn LLP
Alicia J. Simolis Partner Partridge Snow & Hahn LLP
We usually write on insurance topics of interest to independent agents in Rhode Island. In this issue, we wanted to alert you, as Rhode Island employers, to a significant development in human resources and benefits laws that impacts all businesses. Additional Time Off for Caregivers Under New Law Effective January 1, 2014, all Rhode Island employers must allow employees four (4) weeks of time off per year under the Temporary Caregiver Insurance (“TCI”) Law. Like Temporary Disability Insurance (“TDI”), the program will be financed through employee payroll deductions and administered by the Department of Labor and Training (“DLT”). The TCI law allows employees to collect state benefits for any time in which the employee is unable to perform his or her regular and customary work because he or she is: (1) bonding with a newborn child or a child newly placed for adoption or foster care; or (2) caring for a child, step-child, child of a domestic partner, child to whom the employee stands in loco parentis, parent, parent-in-law, step-parent, parent of a domestic partner, an individual standing in loco parentis to the employee, grandparent, spouse, or domestic partner who has a “serious health condition.” The TCI law
defines “serious health condition” as any illness, injury, impairment, or physical or mental condition that involves inpatient care in a hospital, hospice, residential healthcare facility, or continued treatment or continuing supervision by a licensed health care provider. Employees are not allowed to collect TCI if they can work part-time or require leave for less than seven (7) days. The law has several significant – and detrimental – implications for employers across the state. First, the law applies to all employers, no matter how small. Thus, employers with less than fifty (50) employees who had no previous obligation to provide time off for caregiving reasons under the state or federal Family Medical Leave Act (“FMLA laws”) will now be required to give such leave. Second, unlike the state and federal FMLA laws, the new TCI law covers all employees – even those who just began employment for their company. Thus, while employers can craft policies to ensure other leaves will run concurrently with TCI leave, they cannot avoid the fact that in many circumstances, new employees will be able to tack on the TCI leave to later leaves under FMLA laws. For example, it is quite conceivable that an employee will be able to take four (4) weeks TCI leave after being with an employer for ten (10) months, but CONTINUED ON PAGE 39
34 The Anchor
First Quarter, 2014
young agents
CONTINUED FROM PAGE 30
embrace what makes us different and use it. What you thought was a negative may just be your biggest positive. Who better to manage your online presence then the generation who made it what it is today? Need a fresh set of eyes on your marketing materials, ask a Young Agent for feedback. That trendy new business down the road that you’re trying to secure a meeting with? Take a Young Agent with you. The truth is being a Young Agent isn’t a bad thing, it’s an opportunity and when we all treat it as such
we’ll start forming the leaders of tomorrow’s insurance world. No matter what your age, start this year off right and get involved with the Rhode Island Young Agents today.
Don’t throw your reputation in the garbage Our secure collection process starts when your employees place documents to be shredded in our secure consoles.
What are you throwing away? Clien
t file
Agent o
s
r adjus tor reports
Law reviews
Go vernment filings ns nfirmatio Trade co Bank
s
tail nt de
accou
ts Contrac Tax rel ated correspondence
Research reports Financial statements Cl aim pr
ocessin
Legal
Statu
cont
g
tes
racts
Shred-it secure consoles contain a wide, beveled feed slot and internal security plate, to ensure that no one can remove documents after they’ve been deposited. Your Shred-it security-trained expert arrives on schedule to remove and then close the sturdy nylon bag inside each console. Your secure documents are destroyed inside our truck - right at your location and you can watch the process. A Certificate of Destruction is provided to you after each service.
Did you know?
Call Shred-it today:
401.383.8866
• 1 out of every 10 • Cases of insurance • 85% of companies in the 35 Second Quarter, consumers has 2014 fraud increased by U.S. have experienced already been a victim 40% from 2010 - 2011 at least one information of identity theft security breach
The Anchor www.shreditprovidence.com sales@shredit.com
special feature
ur r yo n! o f ch tio Wat vita n i on Beac
Continental Breakfast at the Hyatt Regency Newport
Classes with Bill Wilson
Team Building Activities
Wednesday Morning - “Ethical and Legal Obiligations for Insurance Professionals...Or 24 Ways to Get Into So Much Trouble Event Agent Jack Bauer Can’t Save You” Wednesday Afternoon - “The VU Top 20 Countdown” Thursday - “Hot Topics, Emerging Issues, Infuriating Claim Denials, and Catastrophic Coverage Gaps No One Else Ever Told You About”
Clambake
Golf at Newport National
→ Yard Yahtzee → Bean Bag Toss → Puzzles → Minute to Win It
Social Media Session
→ Bocce Ball → Horseshoes → Obstacle Course → Trivia
Gubernatorial Panel
Work Hard, Play Harder May 28 & 29 are the dates for this year’s convention at the Hyatt Regency Newport!
Bill Wilson will deliver 9 hours of CE at this year’s event. Bill will present two programs on May 28: “Ethical and Legal Obligations for Insurance Professionals” and “VU Top 20 Countdown.” Newport National Golf Club is the venue for the convention golf outing. After golf and continuing education it’s time to get your sneakers on and prepare for some healthy competition. While enjoying cocktails and hors d’oeuvres on the pavilion overlooking Narragansett Bay, teams will compete for event medals (see previous page).
On Thursday, May 29 there are two options: Bill Wilson delivers one more session called “Hot Topics, Emerging Issues, Infuriating Claim Denials, and Catastrophic Coverage Gaps No One Ever Told You About,” or you can do the Agency Principal Track. Ryan Hanley will discuss specific, high-level opportunities for growth through Social Media followed by a Rhode Island Gubernatorial candidate session (Ken Block, Allan Fung, Clay Pell, Gina Raimondo, and Angel Taveras invited). Each candidate has a 5 minute intro/5 minute Q&A. Tom Minkler, IIABA National Chairman, will wrap up with an update on federal/national issues at the closing luncheon.
special feature
Following the competition and reception, we continue with a good, old-fashioned clambake (lobster, steak, chicken, corn on the cob). Enjoy the sunset while networking with friends, colleagues, associates and company representatives.
Insurance law is: more about creating versus resolving. A good insurance lawyer knows how to resolve disputes and protect your interests. A great one also sees the law as an opportunity to create value and build your business. With Jenn Cervenka’s knowledge and skills on your side, you’ll be free to focus on the future — confident that you’re moving forward within the boundaries of the law.
Jennifer Cervenka Insurance, Chair
CLOSER TO THE ISSUES www.psh.com • 401-861-8200
Just a guppy
when it comes to selling flood?
www.iiaba.net/Flood
Don’t be shy - Big “I” Flood is here to help. There’s a lot to understand when it comes to flood insurance. We admit it! From changing flood zones to determining the best level of protection for our client, there is a lot to navigate. So even though you’re a big fish when it comes to selling other coverages, flood can make you feel like a guppy! But don’t let this prevent you from offering flood coverage to your clients. We’re here to help you understand and sell flood. Big “I” Flood provides: ACCESS - In, Above & Outside of the NFIP! EDUCATION - Classroom CE or the new Flood Learning Center on VU ADVOCACY - Representation on Capitol Hill & NFIP advisory committees Learn more at www.iiaba.net/Flood, or contact Big “I” Flood Program Manager Linda Mackey at linda.mackey@iiaba.net or (800) 221-7917. Let us explain how we operate in, above, and outside the NFIP!
legal briefs
because the leave would not yet be properly classified as FMLA leave, the employer would have to give another thirteen weeks for the same care giving purpose two (2) months after the TCI leave (when the employee becomes eligible for FMLA leave). Third, while employers are not responsible for paying employees during this time, employees will be paid at least part of their normal salary from the government through the existing state TDI program. Undoubtedly, employees will be taking more time off to care for family members because for the first time they will be compensated for the leave. Employers must continue to provide health insurance to enrolled employees during the leave, but employees remain responsible for any employee-shared costs associated with the health insurance benefits. Finally, the practical application of the law is likely to lead to easy abuse and misuse of the leave by employees. Unlike FMLA laws, the employer has no right to seek independent corroboration of either the employee’s relationship to the ill family member or documentation of the family member’s serious health condition. Rather, the protection for the leave stems solely from the DLT’s approval of the application for benefits. Furthermore, although the law purports to require the employees to provide employers with written notice of their intent to take a leave of absence at least 30 days before the leave will begin unless the
CONTINUED FROM PAGE 34
leave was unforeseeable, in reality the only way to challenge the lack of notice would be for the employer to file a potentially expensive lawsuit. In other words, there is no way for an employer to block the employee’s receipt of the benefits (and corresponding leave protection) because of lack of notice by filing an objection with the DLT. What Should Employers Do Now? Employers must amend their policies to comply with the new TCI law. Employers are required to display the new TCI leave notice immediately. Employers should also modify their leave policies to indicate TCI leave will run concurrently with any other leave and to require documentation of DLT approval of any application of TCI benefits. Further, employers can require vacation or Paid Time Off (“PTO”) leave be used during TCI leave and pay only the difference between the employee’s usual rate and the TCI benefits if, and only if, the employer modifies their PTO/vacation policies to provide such reduced payment in other situations where employees are receiving compensation for their leave (such as jury duty leave). This revision may reduce the likelihood employees take unnecessary TCI leave given that it has a negative effect on their vacation accrual. Finally employers should be aware that they can – and should – request medical documentation if (and only if) the leave would potentially also be protected under FMLA or disability discrimination laws.
Michael A. Gamboli (mag@psh.com), Kimberly I. McCarthy (kim@psh.com) and Alicia J. Samolis (ajs@psh.com) are attorneys with Partridge Snow & Hahn LLP, a Providence based business and litigation law firm. Mr. Gamboli is a partner with the firm, member of the firm’s Executive Committee, Chair of its Employment Law group and member of the Litigation group. Ms. McCarthy is a partner with the firm, Chair of the Non-Profit Law and Tax Law groups and member of the Business Law group. Ms. Samolis is a partner with the firm and member of its Employment Law and Litigation groups.
39 First Quarter, 2014
The Anchor
The Anchor
IIARI 2400 Post Road Warwick, RI 02886
PRSRT STD U.S. Postage PAID Providence, R.I. Permit No. 1398