Oregon Agent | Spring 2021

SPRING 2021 OREGON AGENT

EXPLORE THE BENEFITS OF A BIG I MEMBERSHIP ADVOCATE

BUILD

INSPIRE

TRANSFORM

STRONGER TOGETHER

Question: Is writing E&S insurance always this difficult?

Answer: Not if you come to Griffin.

P: 800.562.8095 I F: 425.453.8696

We make it EASY!

Griffin Underwriting Services has the expertise, customer service, and product availability to help you navigate the excess and surplus lines market with ease.

submissions@gogus.com Serving over 2,200 agents throughout Washington and Oregon, and a proud supporter of IIABW.

UFG Insurance celebrates 75 years In celebration of our 75th anniversary, we at UFG reflect on all the people who have had a hand in our success over the years. After all, our company was founded on the belief that the insurance business is a people business — and that remains at the heart of who we are today.

As we begin our next 75 years, we give our most humble thanks to our independent agents. We owe our success to you.

UFG INSURANCE | 118 Second Avenue SE, Cedar Rapids, Iowa 52401 | ufginsurance.com | 800-332-7977 © 2021 United Fire & Casualty Company. All rights reserved.

CONTENTS EXPLORE THE BENEFITS OF A BIG I MEMBERSHIP

Big I Oregon Office 6 Centerpointe Drive, #430 Lake Oswego, OR 97035 Phone: 503-274-4000 Fax: 503-274-0062 Toll Free: 866-774-4226 Big I Oregon Staff Tyra Dressel | Executive Director tyra@bigioregon.com LeeAnn Smelley | Director of Member Services LeeAnn@bigioregon.com Melissa Reed | Director of Agency E&O oregoneoteam@bigioregon.com April Pitz | RLI Administrator April.Pitz@iiaba.net Roger Beyer | Big I Oregon Lobbyist roger@rwbeyer.com

You’ve made the choice to build your agency on independence, but that doesn’t mean you’re alone.

We are stronger together.

PRESIDENT’S MESSAGE............................................5 Got a Plan?

THE DIRECTOR’S CORNER......................................10 Big I Oregon: Withstanding the Test of Time AGENCY GROWTH..................................................18-19 Grow Your Agency with The Connector’s Way in 2021 VIRTUAL UNIVERSITY...........................................22-23 One (Or Two) Key Property Loss Provision(s) Attorneys Keep Forgetting E&O.....................................................................................25-26 Determining the Value of a Property GOVERNMENT AFFAIRS....................................28-29 A Day in the Life of a Lobbyist

ADVERTISER INDEX Applied Underwriters.................................32 auw.com/us

Mutual of Enumclaw...................................31 mutualofenumclaw.com

Aspera Insurance Services........................5 asperains.com

Rothert Insurance.......................................29 rothertinsurance.com

Berkshire Hathaway GUARD.....................19 guard.com

UFG..................................................................3 ufginsurance.com

EMC.................................................................16 emcins.com

Western National.........................................8 wnins.com

Griffin Underwriting Services..................2 goGus.com Imperial PFS.................................................23 ipfs.com

For more information on advertising, contact Kaylyn Zielinski at kaylyn@iiaw.com.

The Oregon Agent is a publication of the Independent Insurance Agents and Brokers of Oregon and is published quarterly by Independent Insurance Agents of Wisconsin. Big I Oregon reserves the right in its sole discretion to reject advertising that does not meet Big I Oregon qualifications or which may detract from its business, professional or ethical standards. Big I Oregon and IIAW do not necessarily endorse any of the companies advertising in the publication or the views of its writers. The publisher cannot assume responsibility for claims made by advertisers, context provided by the editor, or for the opinions expressed by contributing authors.

4 | SPRING 2021 |

Got a Plan?

In 1983 a new prime time show, “The A-Team,” started it’s five year run on television.

It was about a misfit group of ex-special forces soldiers working together each week to bring about good in the world. Carefully By: Mark Atkinson executing the plan that Big I Oregon President had been designed by Atkinson Insurance Group their leader, Colonel John Hannibal Smith, they always prevailed in their mission. At the conclusion of each show, Hannibal would sigh and with a smile say, “I love it when a plan comes together.”

My insurance career started the year before The A-Team took to the airwaves. During those early years of my agency I never had time nor foresight to put a plan together so I could someday retire.

I had a goal of creating a team that would serve the needs of our clients and give back to the community around us. That seemed to be enough.

It wasn’t until a number of years ago that I realized I needed a plan that would allow my team to continue in its purpose and allow me to relax a bit and eventually retire.

Over the years I have attended countless seminars regarding the subject of perpetuation, never allowing the idea to occupy much space in my mind.

My avoidance was largely due to the fact that I love the agency, the people it serves, the team I work with and couldn’t imagine not being a part of it. Why would I ever want to quit what I love so much? The answer is really quite simple. Life happens and perspectives and interests change. What I thought could not happen without me; actually functions quite well without me.

I have found that as much as I love the work of our agency and its involvement in the lives of our clients and community, there are other pursuits and interests that

PRESIDENT’S MESSAGE are calling out to me.

I am grateful for those that kept preaching the message of agency perpetuation because it eventually caused me to give it more thought and begin to create a plan for the agency to continue without me. I do have a team that is carrying on the work of the agency without my daily presence and although a change in ownership has not occurred, it has been well discussed and will come to fruition over the next few years.

If you are in my shoes as an agency owner, I encourage you to give perpetuation some thought. Allow it to occupy some space in your mind. Entertain what it might be like to not be a part of your agency. What would that look like and how would you mark it happen? Don’t wait until the last minute. Hastily made plans seldom turn out well.

Although it may take a few more years to complete, I understand how Colonel Hannibal Smith felt when he proclaimed, “I love it when a plan comes together.”

Response in hours, not days.

Aspera delivers quotes within 48 hours 75% of the time.

Aspera specializes in hard-to-insure risks for small and mid-sized businesses.

Making the hard-to-insure easy to please. www.asperains.com | SPRING 2021 | 5

OREGON BOARD OF DIRECTORS 2021 EXECUTIVE COMMITTEE

MARK ATKINSON

LYNDSAY KOOISTRA

RUSS SCHWEIKERT

President President, Atkinson Insurance Group Portland, Oregon 38 years

President-Elect Shareholder, LaPorte Insurance Portland, Oregon 19 years

Vice President Ashland Insurance, Inc. Ashland, Oregon 27 years

DEBBIE FLORES Immediate Past President KPD Insurance, Inc. Springfield, Oregon 35 years

BOB ROSSON

ED DAVIS

Finance Chair President, Timmco Insurance Portland, Oregon 27 years

National Director Maps Insurance Services Salem, Oregon 56 years

BOARD OF DIRECTORS

TYRA DRESSEL

TJ SULLIVAN

MICHELLE GALLARDO

Executive Director Big I Oregon Lake Oswego, Oregon 28 years

Legislative Chair BH Insurance Salem, Oregon 24 years

NextGen Chair The Partner's Group Portland, Oregon 17 years

6 | SPRING 2021 |

BOARD OF DIRECTORS 2021 (CONTINUED...)

DALLAS ROSS

KRISTON CORRELL

TIM CUNDARI

PayneWest Insurance Group Personal Lines Account Manager Beaverton, Oregon 7 years

JUUL Insurance Agency North Bend, Oregon 23 years

Cundari Insurance Portland, Oregon 26 years

TRISH FULWILER

GREG HORNER

MARTY KANTOLA

J.D. Fulwiler Insurance & Co. President Portland, Oregon 24 years

Insurance Partners, LLC Commercial Lines Producer Portland, Oregon 31 years

Chet Hill Insurance Owner Ashland, Oregon 37 years

STEVE LACESA

MATT PIDCOCK

JOHN POWELL

Oak Tree Insurance Owner/Agent Lake Oswego, Oregon 37 years

Valley Insurance Co-Owner LaGrande, Oregon 17 years

Hopp Insurance Owner/Agent Newberg, Oregon 11 years

BRETT SLATER

STEPHEN SMELLEY

JENNIE WEILAND

Slater & Associates Insurance, Inc. Tualatin, Oregon 28 years

Goldfinch Consulting President & CEO Beaverton, Oregon 34 years

PayneWest Insurance Managing Director, Small Busines Beaverton, Oregon 20 years

| SPRING 2021 | 7

CL_ConferenceCall.pdf 1 5/8/2018 9:15:38 AM

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EDUCATE & CONNECT VIRTUAL SYMPOSIUM 2021

Chris Boggs, Executive Director of Big "I" Virtual University Joins Big I Oregon for 12 HR CE!

TUESDAY MARCH 9TH

WEDNESDAY MARCH 10TH

How to Understand CL Property Underwriting & COPE 3 Keys to Getting Named insured Correct 9 Rules for Reading Insurance Policies & Contracts

Properly Calculating/Insuring Business Income Exposure Why Certificates of Insurance? Just Why? 4 keys to PL/CL Exposures Every Agent Should Know

Big I Oregon Members: $99 each day or $175 for both days Non Members : $300 each day

LIVE Q & A BOTH DAYS Live Q & A with Chris Boggs!

He has more letters following his name than any expert we know!

This is a unique opportunity to get your questions answered !

Register at

www.bigioregon.com click on Education & Events Calendar

THE DIRECTOR’S CORNER

BIG I OREGON: WITHSTANDING THE TEST OF TIME By: Tyra Dressel Executive Director of Big I Oregon

Sports have always been a personal passion of mine as well as my family’s. I have missed watching our youngest son playing football, as well as the other misses during the season of COVID-19. While middle and high school have not able to partake in football in most of Oregon, we managed to have Superbowl Sunday. While so much has changed this past 12 months; the way we work, educate and network; the Superbowl has proven to be an institution that withstood the COVID-19 test and the game convened on February 7th without a hitch. It struck me that the Independent Insurance Agents & Brokers of Oregon has both stood the COVID-19 test, and the test of time, not unlike the game of football. The first U.S. insurance company, The Philadelphia Contributionship was co-founded by Ben Franklin in 1752. While the types of insurance have expanded in reaction to our world such as disability, business, auto and cyber; the idea that sprung over 200 years ago is still alive and thriving through war, disaster and pandemics. Independent Insurance Agents and Brokers began in 1896 as a national organization to provide resources, education and advocacy to the independent agency. And the same mission continues today with the dedicated expansion of benefits and resources to meet the needs of our agency members.

At the state level, this past year I have seen our association come together on the “field” with each fine-tuned position to execute plays that have been adjusted to meet the moment. Our Associate and Allied Members have stepped up (what I would refer to as special teams) to support, connect and engage with the association in meaningful ways to differentiate our association as the oldest and most responsive in the state. As we look ahead to the many plays ahead of us and our goals firmly in mind, your association staff is your front line offensive, dedicated to bringing you the latest news, changes, information, legislative advocacy and a plethora of resources that impact your way of doing business.

10 | SPRING 2021 |

As we head into our membership renewal period, I’ve asked myself the “Why?” Why would an agency member continue on the Big I Oregon Team or sign up for the first time? My answer is simple, because Big I Oregon has your back in good times and in bad.

We have proven that we are adaptive through virtual interactive events and education, pro-active through weekly e-newsletters containing vital information for your business and communities you serve, as well as being an association you can count on when the chips are down. We “stomped out the flames” and raised over $10,000 to give back to our agency’s communities during the disastrous fires during the fall of 2020.

Additionally, our members join in gratitude as they give back to Make A Wish Oregon, totaling $14,000 in 2020. We are dedicated to bringing your voice to the halls of the capitol in Salem as well as the steps of D.C. We have realigned our event/education pricing to enhance our membership benefits, giving our members deep discounts or complimentary access through the generous underwriting of our 2021 Premier Partners. Big I Markets, RLI, Diversity Council, Ask An Expert, ACT and Trusted Choice Brand are all available with your membership without any additional fees or qualifications. E&O, Education, Virtual University, Legislative Advocacy, ACT, TrustedChoice.com, Big I Hires are just a few of the resources that you can access with deeply discounted membership pricing.

As your Executive Director, I can honestly say I feel as though we are just warming up, and the best is yet to come as we plan for Educate & Connect Virtual Symposium March 9th and 10th and hold tight to the excitement of gathering in October for our “All In” Big I Oregon Connect, in person. We are your front line and no matter the play, at the end of the day our passion and dedication for the independent agency channel drives everything we do. We promise to continue to find new ways to support the independent agent and drive value to your membership by exploring programs and resources that will enhance your agency, so you continue to make positive gains and eventually 1st downs, never loosing site of the goal line. We will be reaching out this year, to our agency members, to assist you in expanding the value you receive belonging to Big I Oregon and I look forward to connecting with you!

| SPRING 2021 | 11

TAKE A SCROLL THROUGH OUR SOLUTIONS. www.bigimarkets.com

CYBER LIABILITY

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Big “I” members enjoy exclusive online market access FOR independent agents, FROM independent agents.

No fees. No minimums. Own your expirations.

Big “I” Markets, featuring Big “I” Eagle Agency, is uniquely positioned to meet your agency’s market access needs. It’s our mission as your national association to bring you the best solutions to help your agency thrive. We know you because we are you. Log in, sign up and begin quoting immediately. It’s that easy! Visit www.bigimarkets.com to plug into the power today.

BIGIMARKETS.COM Updated June 2020

How to Register.

What is Big “I” Markets?

Big “I” Markets is an online market access program where members enjoy exclusive access to top tier products with no fees, no volume commitments and with competitive commissions. Plus, they own their own book of business. As long as you’re an active Big “I” member, you’re able to plug into the power of Big “I” Markets.

Ready to register?

Your agency can register for Big “I” Markets online and be quoting business in as little as 10 minutes. First, assemble the following information:      

The Agency Tax ID number Bank routing and account number (to receive commissions via EFT) Agency errors and omissions insurance policy information Your agency license number, if your state assigns one In South Carolina, the broker license(s) License numbers and email addresses of those who will be submitting business

Go to www.bigimarkets.com (Do not log in just yet; you’ll do that on the next screen) and click “register/update prole” at the top right corner of the page to start the process.

Enter your user ID, which is your email address. Your default password is your six-digit member ID. If you don’t know it, simply select ‘’forget your password’ and it will be reset. If the system doesn’t recognize your email address, contact us at (703) 647-7800.

Complete information on the following pages. Here’s what we’re looking for: Page 1 Information on the rst page is populated from our member database. Double check it for accuracy.

Pages 2 and 3 Enter requested data including agency business structure, banking and E&O information.

Updated June 2020

Page 4 Answer the seven background information questions.

Responding “Yes” to any of these will stop the registration process, but it doesn’t necessarily mean you cannot register. A Big “I” Markets team member will contact you within one business day for more information. Or, call them at (703) 647-7800.

Page 5 This page will populate with staff who appear in our member database. Click on the “Enter License Info” button for each person who should have permission to submit business. In South Carolina, at least one user must provide a Broker license. Unlicensed staff will have “view-only” access as long as their name and email address are recorded. Select ‘add user’ at the bottom right to add staff not listed. (You can enter other staff information later.)

Page 6 Registering for Big “I” Flood gives you access to Selective Flood’s agency portal. Indicate if you would like to receive an appointment and enter ood information.

Clicking “No” for either question will not prevent you from using the Big “I” Flood program in the future.

Page 7 Read and e-sign the Agency Sub-Producer Agreement by entering your initials in the box at the bottom then select “Accept.” You are encouraged to printout the agreement for your records.

You’re in! Each person should login with their own email address and password; user credentials should never be shared.

On the last screen you will be prompted to send an email to everyone in your agency about the new ability to Plug into the Power of Big “I” Markets. Choose one, after which you will automatically be directed to the Big “I” Markets login page.

Questions?

View the brief demonstration video on the Registration login page. Big “I” Markets team members are on hand at (703) 706-5408 or bigimarkets@iiaba.net.

OREGON We Are Lucky TO HAVE THESE DEDICATED 2021 PREMIER PARTNERS!

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14 | SPRING 2021 |

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| SPRING 2021 | 15

From buttons to bread EMC has it covered.

EMC offers comprehensive coverage tailored to the needs of 98 different types of light manufacturers. This line offers optional coverage for manufacturers and delivery errors or omissions, plus employment practices liability.

Certain coverages are even bundled automatically — meaning whatever your clients make, EMC makes insuring their businesses easier.

emcins.com/lightmanufacturing

16 | SPRING 2021 |

©Copyright Employers Mutual Casualty Company 2021. All rights reserved.

| SPRING 2021 | 17

AGENCY GROWTH

Grow Your Agency with The Connector’s Way in 2021 By: Patrick Galvin Chief Galvanizer

Ask any great relationship builder about the secret to success and sooner or later they will mention the word momentum. People who achieve business momentum have taken the time and energy to build strong connections—and momentum is the thing that fires them up and keeps them going.

Great, you might say. But what happens when a global pandemic comes along and threatens to take the wind out of your sails?

Just twelve months ago, it would have been nearly impossible to predict what the year 2020 would bring. I think it is fair to say that COVID-19 brought momentum to a grinding halt for many of us—at least temporarily.

Today, we find ourselves adapting to everchanging circumstances and learning how to build and maintain relationships even when we are unable to meet face to face 18 | SPRING 2021 |

For independent insurance agents and brokers, resilience and flexibility are nothing new. That is why I am so pleased to be partnering with Big I Oregon to bring you an exclusive, year-long program based on the relationship-building principles in my book, The Connector’s Way. If you joined us for the January 12th kickoff presentation, you learned about the program and its benefits. You also heard stories and best practices, including those from a panel of Big I Oregon leaders, to help your agency stay at the top of its relationship building game.

Missed the kick-off event? Not to worry! On April 13th I will be moderating an interactive, 60-minute presentation featuring a panel of NextGen members who will share their relationship building success stories.

Attendees will have multiple opportunities to connect and engage and we will use breakout rooms and other collaborative online tools to make this one of the year’s most dynamic and lively virtual events.

You can learn more about this event, as well as other The Connector’s Way events scheduled throughout the year, at www. theconnectorsway.com/bigioregon. This is also where you will find details about The Connector’s Way Online System.

Through a combination of short videos, exercises, and downloadable resources, this online curriculum will sharpen the relationship building skills of everyone in your agency. Courses are fully optimized for desktop computers, laptops, tablets, and smartphones, so everyone on your team can access them at their own pace. You can use the downloadable materials to lead your own group discussion or team event, too.

Need one more reason to sign up? Big I Oregon members who register for the online system will also get access to the audio version of The Connector’s Way: A Story About Building Business One Relationship at a Time.

It is the only bestselling business parable that features an independent insurance agent as its main character, and the lessons he learns are applicable to anyone looking to transform their business through better relationships.

I hope you will join me and Big I Oregon in making 2021 a year filled with relationship building momentum!

--------------------------------------------------------Patrick Galvin (patrickgalvin.com) is a TEDx speaker, presenter, and business relationship building coach who wrote The Connector’s Way: A Story About Building Business One Relationship at a Time. Patrick is collaborating with Big I Oregon and its partners to give agency members exclusive access to the curriculum and materials of The Connector’s Way in 2021. Learn more at https://www. theconnectorsway.com/bigioregon

Thank You! Agents

We appreciate your support in 2020 and wish you all the very best for the new year.

Commercial Lines | Personal Lines

See state availability at www.guard.com

| SPRING 2021 | 19

The Connector's Way Online System : Exclusive Member Program Access for 2021 Sign-up your agency today!

Pricing is per agency location size:

$195 (1-5employees) $245 (6-15 employees) $295 (16 plus employees)

Questions? Contact leeann@bigioregon.com Presented by Patrick Galvin Galavanizing Group

Virtual Connector's Way Interactive with Patrick Galvin!

Save the Dates!

April 13th 10am (virtual) July 13th 10am (TBD) Oct 12th 10am These virtual events are complimentary

to ALL Big I Oregon Members! Go To: www.bigioregon.com-events 20 | SPRING 2021 |

| SPRING 2021 | 21

VIRTUAL UNIVERSITY

ONE (OR TWO) KEY PROPERTY LOSS PROVISION(S) ATTORNEYS KEEP FORGETTING By: Chris Boggs IIABA Executive Director of Risk Management and Education Are you tired of talking about COVID? I am. Are you as tired of the COVID business income coverage debates? I am.

Because I’m so worn out, this article focuses on ONE, ok two, key policy provisions every attorney and most judges seem either to forget or are purposely ignoring. Maybe it is because these provisions apply only when two conditions meet: The policy does not contain a virus exclusion; and The court holds that the presence of the virus ON the surface of the property qualifies as “direct property damage.”

A judge in Ohio recently denied one insurance carrier’s request for dismissal in two separate suits because both conditions were present.

Cuyahoga County Court of Common Pleas Judge Maureen Clancy allowed the argument that the presence of the virus on the property caused damage. Plaintiff attorneys contend that is was essentially the same as smoke damage. Thus, the presence of the virus on the surfaces (if it can be proven) results in direct property damage triggering the property policy and business income coverage to respond. More detail on this discussion and decision can be found in the Claims Journal article, The Key to Winning COVID BusinessInterruption Claims: Say the Virus is Present.

Although this seems to be an unusual allowance, it must now be addressed.

In reality, this accusation is quite easy to defeat. Well, the intent is not really “defeating” the ruling, but rather to use the ruling to prove that little to nothing is owed by the insurance carrier, even if the presence of a virus is similar to smoke.

Business Income Truism One fact about business income coverage rarely discussed during these “COVID court days” is that business income is not stand-alone coverage.

Business income is triggered only when there is first a direct loss to property.

At least two judges to this point have seemingly ignored the generally understood meaning of “damage” applied by most 22 | SPRING 2021 |

courts – a change in the physical condition necessitating repair - holding that presence of the virus causes direct damage to the property. If direct damage has occurred, business income coverage can be triggered.

Policy Conditions Within insurance contracts there are policy conditions.

Some are “conditions precedent” and others are “conditions subsequent.”

“Conditions precedent” are conditions the insured must comply with BEFORE a loss occurs to assure coverage is available WHEN a loss occurs (i.e. being truthful in the application, paying the premium, etc.). “Conditions subsequent” are conditions that must be complied with AFTER the loss to protect coverage (i.e. reporting the loss and providing a proof of loss). Violation of a condition subsequent can negatively affect coverage, up to and including voiding coverage.

Two “conditions subsequent” found in ISO property policies apply specifically to the claim that the presence of a virus on the surface causes direct property damage. These read: 3. Duties In The Event Of Loss Or Damage a. You must see that the following are done in the event of loss or damage to Covered Property: (4) Take all reasonable steps to protect the Covered Property from further damage, and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination.

(6) As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records.

Also, permit us to take samples of damaged and undamaged property for inspection, testing and analysis, and permit us to make copies from your books and records.

Notice that the insured MUST take reasonable steps to protect the covered property from further damage. What does this entail in the case of or in the presence of a virus? Cleaning the surface.

Once the surface is cleaned, there is no more damage. If there

is no longer damage, the period of restoration ends. Once the period of restoration ends, there is no longer a covered business income loss. This is how the policy is designed.

direct property damage. If/when the insured proves that the virus is ON the property (and thus is causing “damage”), the insurance carrier owes the cost of cleaning the premises.

How long does it take to clean the property to repair the “damage”? The answer depends on the size and complexity of the building. One to three days maybe? Most ISO-based business income policies have a 72-hour deductible, so if the property is cleaned within 72 hours, the virus that caused the “property damage” is no longer present, thus there is no longer damage. Once the damage is repaired, business income is no longer owed.

wIf it takes longer than 72 hours (or whatever the subject business income policy’s time deducible is) to clean the premises (ultimately “repairing” the “damage”) the insurance carrier owes the loss of income during the time of the “repair” – only. If the insured cannot reopen because of a governmental order, that is still excluded because of other provisions in the policy (re-read condition a.(4), paying attention to the “subsequent loss” wording).

(Side note: Many scientific studies have concluded that the virus is viable on most surfaces for between one to three days; so even if it’s not cleaned, there is no “damage” after three days.)

But if there is no virus detectible, there is nothing to clean and no “damage.” In this case, the insurance carrier owes nothing.

Sub-paragraph a.(6) above is fascinating. The insured is required to allow the insurance carrier to take samples for testing. If no virus is detected by these tests, how is the loss proven? The insured cannot simply say that the virus is present, some proof must be provided by the insured, and the insurance carrier must be allowed to undertake its own tests to prove the insured’s assertion.

While the effort expended by plaintiff’s attorneys is understandable and even admirable, nothing is netted for the insured using the argument that a virus compares to smoke and is causing damage. The “damage,” if there is any, is temporary and “repaired” by cleaning (a policy condition) or ceases at the loss of the virus’ viability (death). Further, the insurance carrier has the right to test for the presence of the virus to prove it is present.

The ability of the insurance carrier to undertake these tests is reasonable when coverage is written on a “risk of direct physical loss basis” (“all risk” as the courts like to call it). Remember, when coverage is written on a “risk of direct physical loss” basis the insurance carrier has to prove coverage does not apply. How can the carrier prove it if they are not allowed to test?

It’s a Good Try, But Nothing is Gained

If the insured fails to comply with these two conditions, the insurance carrier is within the rights granted by the contract to apply the relief allowed.

(Note: Policy language used in this article is ISO language from the CP 00 10 10 12.)

Policy Conditions Matter Insurance policies are contracts that place specific requirements on both parties to the contract – the insurer and the insured. If either party violates any of the policy conditions, remedies are available to the harmed party.

The insured is required to comply with these “conditions subsequent.” If the insured does not comply, the insurance carrier has the right to a remedy – up to and including the denial of coverage.

If the insured has not undertaken to protect the property from further “damage” by cleaning it, they have violated a condition of the policy. But this matters only if they can prove the virus is present. Some testing must be done for proof to exist – and the insurance carrier is allowed to test.

Only while the virus is causing “damage” does the period of restoration exist. Once the virus is no longer viable or is removed, it is no longer “damaging” the property and the period of restoration ends. Once the period of restoration ends, business income payments end.

What the Carrier Owes As stated previously, business income coverage is triggered only when there is

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| SPRING 2021 | 23

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Contact Mallory Cornell IIAW Vice President mallory@iiaw.com

E&O

DETERMINING THE VALUE OF A PROPERTY By: Mallory Cornell IIAW Vice President & Swiss Re Approved Auditor

Recently, we have seen an E&O claim trend around insurance limits based on values. The customer’s property has not been properly evaluated, but who should be responsible for determining the value? The advice from Swiss Re Corporate Solutions has long been that the customer is responsible for determining the value of the property. The agent should then take the value provided by the customer and provided insurance based on that amount. Many times, the agent takes on the role of the advisor and a customer will look to the agent to assist with the valuation. In this situation, the agent is likely creating a “special relationship” and has greatly increased their standard of care. If agents are using valuation tools, they must realize the answers they provide are only as good as the information that is entered into them. The agent also then assumes the responsibility of making sure the values are regularly updated to reflect any changes to the property.

Here is an example of what can go wrong and what an agency can do to avoid a $2 million E&O claim.

Andrew, an experienced agent at a large insurance agency, placed Commercial Property coverage for

his client who was a real estate developer. Among the properties he owned, the real estate developer owned a shopping center. The agent and his client had verbal discussions when the policy was initially placed regarding the value of the property.

According to the agent, the value of the building was ultimately determined by the real estate developer, but nothing was put in writing by the agent to reflect how the value was determined or whether the client agreed with the valuation. The agent procured a replacement cost property policy with $2.5 million in replacement cost for the building.

The policy was then renewed each year for 5 years.

During this time period, neither the agent nor the client re-visited the issue of the valuation of the property or considered or discussed possible increases in the value of the property.

The shopping center then burned to the ground.

When the client submitted the claim, the carrier paid the limit of the policy. However, the property owner claimed that the replacement cost of the property was actually $7MM and claimed that the property was undervalued. The real estate developer admitted receiving the renewals each year but not reading them. He further claimed that he completely relied on his agent to determine the appropriate insurance coverages, that it was the agent that set the initial value of the property and that the agent never recommended an appraisal at any point.

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The real estate developer proceeded to file suit against Andrew and his agency.

What could have been done differently by the agency?

What are the major issues in this case?

• Yearly review of property values with sign off by client • Written documentation of valuation with client sign-off • Written recommendation that the client have the property appraised

• Agent’s failure to document property valuation process in writing • Agent’s undertaking to set the value of the property when that is potentially outside his/her area of expertise and the agent may not have a duty to undertake this task. In addition, the property owner is in a superior position to know the value of his/her own property • An insurance broker is not required to ascertain the levels of coverage for a risk. However, if the agent assumed this obligation even though he didn’t have to, he thereby created a special relationship that obligated him/her to exercise a greater degree of care and diligence.

• Agent’s failure to consider and discuss increases in value of the property over time i.e. by not performing a yearly analysis of coverages and making necessary modifications to the level of coverage.

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What do you think was the outcome?

The case was tried and the agent paid almost $2MM in damages for taking on the responsibility of valuing the property and not doing it properly as well as failing to review the value.

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GOVERNMENT AFFAIRS

A DAY IN THE LIFE OF A LOBBYIST By: Roger Beyer IIABO Lobbyist

I am often asked “what do you do”? My standard response is “I am a lobbyist”. The follow-up is then, “but what does a lobbyist do”? The answer to this question many times depends on who is asking and what their perspective of a lobbyist is. Pictures, they say, “paint a thousand words” so here is a great response:

As is usually the case, the truth lies somewhere in between the extremes depicted by the next couple pictures.

That, in a normal year, is a pretty accurate response. This year, due to the Covid-19 pandemic, the picture would need to be changed to me sitting in front of a computer trying to participate in multiple committee hearings at the same time while talking on the phone and sending text messages. I cannot wait for the state capitol to be reopened to the public (which includes lobbyists) so I can get back to running from meeting to meeting instead of all being electronic.

So, to get back to the original question, what does a lobbyist do? I am going to focus on when we are not in a pandemic and try to give you a glimpse into the daily activities of a lobbyist during a legislative session here in Oregon.

My days in the capitol are normally 7:30 AM to 5:30 PM, Monday through Thursday. Afternoon committees are not typically scheduled on Fridays allowing legislators to go home for the weekend. Add to that a 45-minute commute time each way, typically spent on the phone either with legislators or other lobbyists. There is some time in the day during committee meetings to work on emails or messages, but most of the writing for documents, newsletters and testimony happens in the evenings, Friday afternoon and weekends.

Committee meetings dominate my days. In Oregon, committees are where the action is. Once a bill leaves the committee going to a floor vote, it is typically a done deal.

Unlike other states and US Congress, no amendments or changes are allowed in the full chambers. Committees are where I need to be to testify and monitor the outcome of legislation.

Sadly, at least for me, this next picture has more truth than many in my profession care to admit.

When I do not have the luxury to show these pictures, I sum it up in this manner, “My clients pay me to attend meetings that they don’t want to attend themselves.”

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Committee times are 8:00 AM, 1:00PM and 3:00 PM; normally three Senate and three House committees at each time. It is not uncommon to have bills scheduled in multiple committees simultaneously. When that happens, I sit in one committee waiting and at the same time watch a different committee on my laptop computer, ready to jump up and run to the other meeting when the bill I am working on gets to the top of the agenda. Fortunately, Oregon’s capitol building has the committee rooms near each other, so the sprint down the hall is not long.

This is the scenario when having a positive relationship with committee staff is critical. I will let the staff know prior to the meetings that I am double booked and ask that they give me a call or send a text when my issue is getting close to the docket. They are normally very accommodating and willing to help in those situations, providing you have developed the relationship.

While the committees have the public action, meeting with legislators privately about those issues is where you have the opportunity to have in-depth discussions. These meetings, whether formally scheduled or while walking to and from committee meetings are most important. I schedule formal meetings daily, beginning with committee members on a topic. On a normal day, meetings will begin at 7:30 AM and continue until about 5:30 or 6:00 PM. This can be tricky when these are scheduled in advance and then a bill is scheduled during that meeting time.

Flexibility on both sides is always needed. Many times, the early or late meetings are to make up for when something is canceled due to committee action.

For House members, the time scheduled for floor session is when missed meetings can be made up. Most House members allow for notes to be sent into the chamber asking for a brief conversation. They then come into the hallway and you can make your case. There are normally 50 or more lobbyists doing the same thing, so it isn’t private, but is better that nothing.

The process works like this: Floor session starts at 10:00. I send in a note for Representative X at 10:00. Rep X comes out, normally 15 -20 minutes later, it could be immediately or maybe not at all. Etiquette doesn’t allow for me to send a note to more than one person at a time, so if the Rep doesn’t come out, you are left hanging the entire session, normally until noon. This becomes time to catch up on emails and text messages.

Once Rep X’s meeting is over, if time allows, another note is sent to Rep Y and the process starts over.

To be a lobbyist, you also must become good at lurking.

Near the end of every committee meeting a group, gaggle or pack (I don’t know the correct plural for lobbyists) of people begins to gather near the exit of the room. As the senators or representatives come out, you compete with other lobbyists asking one if they would allow you to walk with them. If approved, you have just secured a two to five-minute meeting while they walk to their next appointment. This is likely the only opportunity to discuss the issue, so you better become proficient at making your case in less than the time it takes to get back to their office.

In our society, a lobbyist is not considered a “noble” occupation. Public opinion polls normally show congress and state legislatures have less than 20% approval rating, and lobbyists are below that. Winston Churchill famously said “that democracy is the worst form of Government except for all those other forms that have been tried from time to time…” I don’t believe our system of government could work without lobbyists. Legislators, at least in our state, don’t have the time, staff or expertise to know about all the issues they must vote on. The role of a lobbyist is to educate and inform them on the issues important to our clients. Without us, they would still be making decisions but with less information, and I don’t think anyone wants a government run via ignorance.

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