the
TEXAS CONNECTION TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
JUNE 2016
In This Issue
Professional Liability—E&O Exposure When Cupid Strikes at the Office 2016 Convention Highlights Travel Insurance to the Rescue
PLATINUM PARTNERS
GOLD PARTNERS
BRONZE PARTNERS
Shirley Almany
……..……………....……..… Presidents Corner …………………....….… Professional Liability—E&O Exposure …… By The Numbers ….….…………...…….… When Cupid Strikes at the Office …..….... Convention Highlights ……………....….... Travel Insurance to the Rescue .……….... Word Scramble ……...….…………..….… Classifieds ………………………..……….… TDI Enforcement Actions …….……..….…. The Last Word …………………………….… Our Partners
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Thanks to everyone that made this year’s Convention & Trade Show a big success. Rain cancelled the Golf Scramble & Skeet Shoot, but we still had some great CE Classes, Speakers, and the “Meet Me at the Fair” Trade Shows were exciting.
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Agents could play some type of carnival game at each booth and win some pretty good prizes!
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AmWINs had Cotton Candy.
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Aspen had a Photo Booth.
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Empower had a Money Machine.
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TIPS had Dill Pickles & Peanuts
You know… Let’s look at the numbers:
EF1—65 to 85 MPH EF2—86 to 110 MPH EF3—111 to 135 MPH EF4—166 to 200 MPH
Aggressive had Popcorn and little cokes with peanuts in them. It was all fun… but most important was the interaction between the agents and the companies… which, after all is the whole purpose of us getting together. Next year, it’s “Margaritaville” at Moody Gardens in Galveston… May 10-12, 2017… See you there!
EF5— > 200 MPH
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As producers look to place coverage for their clients, there is a good chance that professional liability could be one of the exposures needing attention. When most agency sales staff think of professional liability (a/k/a errors and omissions), the following classes of professional business come to mind: travel agents, real estate agents, lawyers, medical professionals, accountants and others. While these the more common, there are over 100 additional professional occupations including appraisers, engineers, pharmacists, court reporters, funeral directors, speech pathologists, consultants, therapists and teachers that have a professional liability exposure.
Identify the Exposure How do you know if the account has a professional liability exposure? Although you can ask the prospect, he or she could be unaware of this aspect of the exposure or may believe his or her general liability (GL) policy will afford the necessary coverage.
A great way to start determining if a professional liability exposure exists is through the use of an industry exposure analysis checklist. When placing the general liability exposure, ask your carrier underwriters whether they will include a professional liability exclusion on the GL policy. This will provide some indication that there is a professional liability exposure and that the GL does not intend to cover that exposure.
Complete the Necessary Apps Most professional liability carriers will require a completed application to provide a proposal. (continued on page 6) THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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The carrier will have its own specific application in many cases, so it is best to secure those necessary apps upfront. As with any app, accuracy is extremely critical. A producer should not look to complete these apps based on the belief that he or she knows the “correct answers.” It is highly suggested to meet with the client, ask the questions and document the answers accordingly. The client should be asked to review the app and, if the responses to the questions look correct, the client should then sign the app.
Sufficient time Most professional liability carriers will request the app 30-45 days before the expiration date. There may have been times in the past where a carrier could turn around the app in less time, but don’t count on it … especially in a hard market where the application activity could be on the rise.
Review of the proposal This is an extremely important part of the process. Professional liability coverage is normally written on a claims-made form. A key aspect of claims-made policies is that it is rare to find two policies that are similar. Plus, the differences can be extremely significant. For these reasons, producers should always secure a complete specimen policy from the market. This specimen policy should be provided to the prospect for review and comments. Issues that should be reviewed include: What activities are covered? A key area for a potential significant difference involves the description of covered professional services. This area must be reviewed by the agency and the client when coverage is being placed initially or being moved to a new carrier at renewal time. Is everything that your client does included? Just because the activity was mentioned on the application does not mean coverage for that exposure is being provided. In addition, every professional liability policy has exclusions, so these should be reviewed by the agency and the client to determine, to what degree, those exclusions are of concern.
Who is covered? This issue, typically addressed in the definition of “who is insured,” is a common area where professional liability policies can vary from one carrier to another. The differences can include positions such as the board, temporary staff, former employees, spousal coverage etc. (continued on page 7)
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Is there “full prior acts” or a “retroactive date?” This issue is huge and has been a major issue with professional liability coverage. For coverage to potentially apply, the date of the “error or omission” must be after any applicable retroactive date as noted on the policy. In other words, there is no coverage for any wrongful act that occurred prior to the retroactive date. For the customer to have coverage for all prior wrongful acts, he or she should look to secure “full prior acts” coverage. If the professional liability contains a “retroactive date,” this should be brought to the customer's attention and the significance explained. If the coverage is moved to another carrier at renewal time, the new policy should have the same retroactive date as the expiring policy. If the carrier is providing a more current retroactive date, this is significant and potentially extremely damaging to your customer. Don't be misled by the premium differences because chances are the premium will be less because, essentially, the coverage is less.
The limits and how they work. Since there is probably no “right” limit for your client, it is best for agencies to provide options for the client to consider. In the world of professional liability, limits are provided on a per-claim and aggregate basis, so options involving both should be presented. To avoid your client exhausting his or her limits because of one claim, it is suggested to provide options where the aggregate limit is a multiple of the per-claim limit.
The deductible. Professional liability policies will typically require the policyholder to pay a deductible in the event of a claim. The deductible can involve defense costs and the judgment, or possibly only require payment of the deductible if the client is determined to be liable. This is an important coverage issue that should be reviewed with the client so he or she understands his or her obligations at claim time.
E&O claims involving professional liability can be huge The professional liability line of business has generated a significant amount of E&O claims activity. When they happen, they can be extremely large, well into the multi-million dollar arena. Agency staff dealing with this exposure should be well trained on the product and how it works.
by Curtis M. Pearsall, CPCU, AIAF, CPIA President – Pearsall Associates, Inc. and Special Consultant to the Utica National E&O Program THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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This has been a bad year so far for big storms in Texas and it is probably going to get worse before it gets better. We have seen devastating flooding and tornadoes but I wanted to look at lightning and it’s impact on property damage and bodily injuries. Let’s look at the numbers. An average of
people die each year in the United States from direct lightning strikes.
of lightning fatalities in the United States are men. Odds of being struck by lightning in your lifetime,
in
.
of those struck by lightning live through the experience but many suffer permanent disabilities. On average, On average,
cloud to ground lightning flashes occur each year in Texas. fires are started by lightning each year in the United States.
On average, wildland fires are started by lightning each year in the United States and tend to be much larger than fires started by human causes. acres—average land area burned in a lightning caused fire. In claims,
, Texas was third in the nation for Lightning related insurance losses with paid, averaging just over
The U.S. Agricultural Department estimates lightning strikes.
per claim.
of accidental livestock deaths are a result of
If these numbers don’t scare you, you don’t scare easy. If they do, you may be suffering from Keraunophobia, an irrational or abnormal fear of lightning. THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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In a CareerBuilder poll released a couple of years ago, 39 percent of workers said they have dated a co-worker at least once over the course of their career; 30 percent of those who have dated a co-worker said their office romance led them to the altar. It’s the ones that don’t that more likely cause problems for employers.
A soured relationship can lead to claims of sexual harassment, particularly when it involves co-workers on different rungs of the corporate ladder. Sexual harassment in the office, pervasive a generation or two ago, has become less acceptable due to changing social norms and more employer awareness and training. However, that does not mean it is not a problem. A generation ago, the victim of sexual harassment probably would have quit her job. Now, she (or he) can sue. In 2011, the last year for which complete figures are available, the U.S. Equal Economic Opportunity Commission (EEOC) reports that it received 11,364 sexual harassment complaints. Of these, 10.9 percent came to a settlement, 9.1 percent were withdrawn “with benefits,” and 26.1 percent were resolved “with merit.” Complainants won $52.3 million in monetary benefits, which does not include monetary benefits obtained through litigation. In addition to the cost of settlements and litigation, employers facing a sexual harassment claim can suffer a hit to their reputation and staff morale. As the EEOC says, “Prevention is the best tool to eliminate sexual harassment in the workplace.”
What Exactly Is Sexual Harassment? The EEOC defines two types of sexual harassment: quid pro quo harassment and “hostile environment” harassment. In quid pro quo harassment, someone in power exchanges something (such as a raise or promotion) for sexual favors. This type of harassment is usually initiated by those in supervisory positions. (continued on page 13) THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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A “hostile work environment” can occur whenever unwelcome sexual conduct creates an environment that employees view as hostile or intimidating. Such conduct can include making unwelcome sexual advances or sexually offensive remarks, displaying sexually explicit pictures, or making crude jokes or obscene gestures. Affairs between co-workers can sometimes lead to problems with other workers. Some courts have recognized “sexual favoritism” as sexual harassment because it creates a “hostile work environment” for the other workers.
What Action Steps Can Employers Take? Until the 1970s and early 1980s, many companies banned employee dating outright. As of 2005, only 18 percent of human resource managers surveyed by the Society of Human Resource Management said their employer had written policies on workplace romances. Of those that did have written policies, 20 percent permitted romances among co-workers, 48 percent “permitted but discouraged” them, 31 percent forbade them, and 2 percent did not know. Some companies take a proactive approach to dealing with interoffice romances. When an interoffice romance comes to light, some have the parties involved sign a “love contract,” which stipulates that the relationship was entered into willingly and that, if it ends badly, neither party will hold the employer liable for sexual harassment. If the relationship involves a subordinate and supervisor, some companies provide the parties a notice stating sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964. Other companies prohibit these relationships outright and require the transfer of one of the employees to another department when a relationship occurs or becomes public. However, employers should be careful not to violate employees’ privacy. Even if you suspect an interoffice romance, do not overstep. You probably will not want to make inquiries unless the relationship is between a supervisor and subordinate, has triggered complaints from one of the parties or other employees, or has affected work performance. If you’re interested in developing a written workplace romance policy, see the website of the Society for Human Resource Management (SHRM)’s template at www.shrm.org/ TemplatesTools/Samples/Policies/Pages/CMS_006713.aspx. If you have concerns over a particular situation, though, you might want to consult an attorney experienced in employment matters. Your commercial general liability policy does not cover sexual harassment and other employment-related lawsuits. THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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While you carry many different insurance products in your agency, travel insurance is probably not something you offer. If you are planning a vacation, you might want to consider travel insurance. Travel insurance can help protect families from the cost of changing or cancelling travel plans due to unexpected events such as illnesses, bad weather and sometimes extensions of the school year or work emergencies that require you to change plans. The typical travel insurance policy includes one or more of these coverages:
Interruption coverage: This coverage reimburses you for nonrefundable costs due to trip cancellation, interruption or delay in situations arising from conditions such as carrier delays, illness, bad weather or baggage loss. To receive reimbursement, the reasons for cancellation, interruption or delay must meet policy terms.
Medical insurance: Travel medical insurance policies cover emergency or urgent medical care you need while traveling outside the U.S. and its territories. This often includes coverage for medical evacuation to the U.S. or to a facility that can handle your condition.
Emergency assistance: Perhaps the fastest-growing type of coverage, this offers 24-hour assistance, provides help finding doctors, helps arrange accommodations, contacts your family or arranges other assistance in case of emergency.
Travel insurance can be purchased on either a per-trip or annual basis. The U.S. Travel Insurance Association notes that more than 80 percent of travel insurance purchased by Americans is purchased THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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on a per-trip basis and covers trip cancellation; interruption; travel delay; baggage delay; lost, stolen or damaged baggage; medical expenses and medical evaluation expenses. Frequent travelers may want to consider purchasing an annual plan. These plans typically include medical and medical evacuation coverage. Many HMO plans do not cover anything except emergency treatment out of their service area; Original Medicare and many Medicare supplement plans do not cover medical services rendered outside the U.S. and its territories.
Do We Really Need Travel Insurance? Travel insurance costs roughly 4 to 8 percent of the cost of a trip. Is every trip worth insuring? The U.S. Travel Insurance Association recently released a survey that found one in six Americans (17 percent) have had their travel plans affected by medical conditions, natural disasters including severe weather, or mechanical or carrier-caused problems. Only you can decide your appetite for risk, but things to consider include the cost of the trip, ease of rescheduling and your health. In addition, bad weather, financial instability among airlines and other travel providers and political situations such as strikes and protests can all increase the likelihood of travel delays or cancellations. Travelers should be familiar with the cancellation policies of their hotels, tour providers, cruise lines or other travel service providers. Before purchasing any travel insurance, you will want to review your home and auto policies and credit card agreements. Some of these policies/agreements might cover certain travel-related items, such as lost luggage and car rental liability. This coverage might be sufficient, especially for short or domestic trips. Consider what you plan to pack as well. Common carriers typically provide low reimbursements for lost or damaged luggage. Certain items should never be put into checked baggage, including cash, credit cards, expensive jewelry, cameras, heirlooms, passports and critical documents, medicines and fragile items, such as eyeglasses. Check coverage under your homeowners policy, since travel insurance policies might also exclude coverage for some of these items. Finally, you will want to ensure that the insurance company underwriting your travel policy is in good financial standing and meets industry standards. Make sure that the coverage offered includes reasonable limits for medical expenses and personal liability. The U.S. State Department notes that medical evacuation alone can cost more than $50,000, on top of any emergency treatment you may require. THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL
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Arrange each of the following anagrams to form a single insurance related word. Keep in mind that the anagram is not a clue. It has nothing to do with the insurance related word. Send us your answers to be entered in a drawing to win a fabulous CASH prize! Feel free to call us if you’re stuck.
972.965.2025 Email to: Joe@piatx.org or fax to 972. 307.7888
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TEXAS DEPARTMENT OF INSURANCE ACTIONS Scherff, Bradley Date of Action: 1/27/2016 Location: Dallas County Action Taken: Indicted Violation: Insurance Fraud, State Jail Felony Sinno, Badr Date of Action: 1/27/2016 Location: Bexar County Action Taken: Indicted Violation: Insurance Fraud, 3rd Degree Felony Vasquez, Annette V Date of Action: 1/27/2016 Location: Bexar County Action Taken: Indicted Violation: Insurance Fraud, State Jail Felony Thomas, Shanteri T Date of Action: 1/25/2016 Location: Houston Action Taken: Sentenced to 4 years deferred adjudication, 140 hours community service and ordered to pay $5,915.60 in restitution. Violation: Insurance Fraud, State Jail Felony
Contact Us Need more information on the benefits of membership? Have a question about member services? Give us a call: Texas PIA & Young Insurance Professionals 3632 Frankford Rd 200B Dallas, Texas 75287 (972) 862.3333 joe@piatx.org www.piatx.org
Allen, Cheryl R Date of Action: 1/21/2016 Location: Dallas Action Taken: Sentenced to 30 months incarceration. Violation: Organized Criminal Activity, 2nd Degree Felony Mason, Kenneth Date of Action: 1/11/2016 Location: Harris County Action Taken: Sentenced to 1 year deferred adjudication. Violation: Insurance Fraud, Class A Misdemeanor Moss, Nanyamka Date of Action: 1/11/2016 Location: Fort Bend County Action Taken: Indicted Violation: Insurance Fraud, State Jail Felony Levine, Randy Date of Action: 1/6/2016 Location: Hondo Action Taken: Sentenced to 5 years deferred adjudication, 350 hours community service, fined $150.00 and ordered to pay $30,958.23 in restitution. Violation: Theft, State Jail Felony
If you kick the person in the pants responsible for most of your problems, you wouldn't sit for a month. Theodore Roosevelt
: https://wwwapps.tdi.state.tx.us/inter/asproot/fraud/indictments/clips.asp
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Pa ge 33
the
Last word
A special wish and congratulations to the Award Winners at the convention this year. We have a lot of people in our industry that work hard, and they deserve to be recognized. Congratulations to all!
Company of the Year: AGGRESSIVE INSURANCE, Irving Texas
Company Rep of the Year: PATSY HYSQUIERDO, Aggressive Insurance CSR of the Year: NOEMI GAMBOA Priority Auto Insurance Agent of the Year: DON MILLER, Texian Insurance And Winner of the David Almany, Volunteer of the Year Award: ED LACK, Empower Insurance Words fail me…