11 minute read
INDEPENDENT AGENT Top 6 Resume Red Flags
by bigioregon
By: Sara Strohm and Gregory Palumbo
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Verisk Analytics
After taking a sharp hit at the start of the pandemic, small business formation has rebounded, giving insurers an opportunity to target new customers.
The ISO Businessowners program was developed to help insurers support just such small-to-medium-sized enterprises. As part of the most significant update to the ISO Businessowners program since its inception, we’re introducing nearly 60 new, optional endorsements, revisions to dozens more, and updates to the base form. These updates will provide added flexibility during underwriting and help insurers address some of the new and emerging risk exposures that confront today’s businesses.
A strong base
Among the several changes we’re making to the base businessowners coverage form is a tenfold increase in the coverage radius for the insured’s business personal property (now 1,000 feet). This could also be particularly appealing to restaurant risks that expanded outdoor seating into parking lots and sidewalks during the pandemic—an expansion that may endure after the public health crisis abates. To allow for more flexibility, we’re providing the ability to increase the $10,000 limit applicable to the Personal Property Off Premises Coverage Extension. In response to the ever-increasing threat of ransomware, and to reinforce that coverage for those attacks is more appropriately provided under dedicated cyber coverage, such as the ISO Information Security Protection Endorsement (BP 15 07) or a standalone cyber policy, we’re specifically excluding ransomware under the Electronic Data and Interruption of Computer Operations Additional Coverages.
Additional enhancements have been made that generally track with updates to other ISO Insurance Policy Programs including our general liability, commercial property, and crime programs.
Endorsements aplenty
To help insurers tailor their coverages to fit the unique exposures or needs of their insureds, we’re introducing 57 new, optional endorsements. Here’s just a few of the highlights:
Unmanned Aircraft: Drone usage for commercial purposes is expected to soar over the next several years. We’re introducing an endorsement to provide limited property coverage (including
business interruption coverage) for drones on either a scheduled or blanket basis. Coverage will apply on or off the insured’s premises. The coverage provided via this endorsement will not apply to certain exposures including drone delivery, drone racing, drone rentals, or mechanical breakdowns. An additional endorsement is available to extend drone property coverage worldwide (with some exceptions). Companion rules and advisory prospective loss costs will also be introduced.
Cannabis: To help insurers fine-tune their approach to the growing cannabis market, the ISO Businessowners program will offer several new property and liability coverage endorsements as well as several exclusions. A cannabis property coverage endorsement will address cannabis stock and include business income and extra expense coverage. For cannabis liability exposures, we’re adding options that generally allow insurers to place a sub-limit on either cannabis activity as a whole or hemp specifically. Other endorsements will provide the flexibility to limit coverage for cannabis exposures that fall under the definition of products/completed operations.
Abuse or molestation: There can be several types of abuse, including sexual abuse, elder abuse, and other types of physical and/or psychological abuse. Civil actions seeking recovery of damages for sexual abuse against institutions, organizations, and private or public firms could have an increasing impact on liability insurers. To provide insurers with additional underwriting tools, we’re introducing new exclusions and coverage options to address liability risk exposures from actual, alleged, or threatened abuse or molestation.
Auto service risks: By adding the auto service risks endorsement to the ISO Businessowners policy, insurers will be able to address property exposures (including employees’ tools, loss or damage to customer’s property and loss or damage to lessor’s property) and liability associated with various, newly eligible, auto services classifications. Additionally, we’ll offer rules and advisory loss costs to address the unique exposures in this industry class.
Additional insureds: Ten new endorsements will let insurers extend coverage to additional insureds beyond the primary policyholder. These endorsements will encompass several business risks, including vendors, executors, and contractors, among others.
More support for international risks: The supply-chain bottlenecks of recent months have served as a salutary reminder of how many businesses rely on international trade. For insureds with international property exposures, we’re adding four new, optional endorsements that generally provide limited property, business income, and extra expense coverage under the businessowners program—including for property in transit between an international and domestic destination.
Emerging issues: Several new endorsements will provide greater underwriting flexibility when addressing emerging exposures related to electronic cigarettes (both manufacturing and health hazards), genetically modified organisms, and sport or athletic events (both sponsored and nonsponsored).
Coming soon
We currently plan to file the new base form and endorsements in the first quarter of 2022 with an 18-month lead time.
To learn more about all the upcoming coverage enhancements for the ISO Businessowners program, please email Sara. Strohm@Verisk.com.
DOES THE LEFT HAND KNOW WHAT THE RIGHT HAND IS DOING?
By: Annette Hollingsworth
Vice President, Swiss Re Corporate Solutions
As technology allows the ability to service large groups of clients more efficiently, many agencies are increasingly expanding their reach beyond the confines of one metropolitan area. In order to better service their customer base, agencies may open additional locations or may acquire existing entities to expand their business. The management of multiple locations creates new challenges and those challenges if not handled correctly may lead to increased opportunities for error.
Controlled growth whether organic or through acquisition can increase efficiencies and reduce cost. However, it is important to manage that growth. Be sure that the “right hand knows what the left hand is doing”. Consistent culture, compliance and communication throughout the agency at all locations, is essential to prevent confusion and potential claims which may otherwise arise from acquisitions and dispersed locations.
Make sure all staff understands your agency
culture. Owners, producers, agents, CSR’s and all staff must understand the focus of the business. If the agency’s stated focus is on personal lines, then the agency should not deviate into complex specialized lines. If the agency focus is on certain niches of business, the agency should train their agents and supporting staff on how to service those markets. Often claims begin when the agency attempts to sell insurance products with which it is unfamiliar. Understand your focus. If you are acquiring agencies, acquire those that fit your vision. Then share your vision with all staff at every agency location on a regular basis. Help your team see what the agency is trying to accomplish and how each
person can contribute by staying focused on the goals of the entire organization.
When the workload is heavy and clients demand your attention at your primary agency location, it can be difficult to give your attention to the other office locations. But in order to keep those other locations in line with your vision, you must provide them with the attention they need. You should try to visit your other agency locations frequently, at least once a month. Visit each site for a long enough time that the each site does not put on a front for you but actually reveals to you its true method of operation. By allowing each office to become comfortable with your visits, you can build trust and familiarity. The agents and staff at each location must feel close enough to the primary agency to be able to ask questions, share problems and seek feedback.
Establish uniform office procedures and a
standard system of compliance. Each province has regulations to protect their own citizens. If you locate a branch office or even a teleworker, in another state, you must research licensing and other business regulations impacting your insurance operation. Failure to comply with regulatory requirements could lead to regulatory investigation, disciplinary action, or even the possible revocation of your license.
If adjustments are needed to be made as a result of the regulations do not begin operating your business until you comply with the law.
For example, an agency had a CSR move to another state and began working remotely as a clerical assistant to their Personal Lines Manager. This employee’s job description did not entail discussing or recommending coverage with clients, and the agency believed that her job description was in line with the requirements of the state department of insurance.
However the department viewed it differently and fined the agency $7,000 for the employee not having the proper license and viewed the tasks performed by this employee as “effectuating the sale of coverage”. As soon as the agency was notified of the infraction, they made changes to her job description and directed her to acquire the proper license. They then established a Director of Compliance and Compliance Committee to monitor the activities on an ongoing basis.
Standard operating procedures will enhance the efficiency and management of multiple agency locations. Staff can transfer among agencies, without extensive readjustment. The essential procedures should not vary. Each agency should have similar procedures regarding date-identification of communication with clients and carriers. Additionally, documentation of coverage offered and rejected, and maintenance of expiration lists should be standardized.
This excerpt from a letter we received from the attorney retained to defend an insured, reveals the difficulties in offering a defense when procedures are not followed. The litigation arose from damage sustained by a commercial enterprise where the carrier argued that the agency had not provided the necessary information for the carrier to quote coverage, despite several requests. Counsel stated the agency “has no documentation that it sent the proper information and the agent who worked on the account left the agency several years ago on unfavorable terms. The agent’s CSR says the agent was not detail oriented, was not good about providing information, and often made mistakes.” Defense counsel opined that it was highly likely the judge will rule that the agency failed to provide the necessary information. The agency itself had a strong culture of compliance but suffered from one agent who had not followed the standard office procedures established and who, thus, created a significant problem for the agency.
In addition to implementing uniform procedures around the process of file documentation,the agency should also implement uniform procedures for diary and suspense systems. There should be a centralized agency management system and computers in each location should be compatible with one another. In fact, it is likely that computer systems will become a backbone for your organization as offices are spread out geographically. Additionally, it is essential that you ensure adequate security of personal information acquired from your insureds, and that you provide proper privacy training to all employees. The use of encryption and other measures to protect personal data when transmitted is important. If employees use smart phones, verify the phones are password protected. As part of the establishment of standardized procedures, make sure the staff in each location knows the method to report an errors and omissions situation. Establish and discuss the procedure with all agents and employees. Do so regularly to prevent hesitation in reporting at the time of occurrence. Don’t let problems linger. Delays could create coverage issues with your professional liability carrier.
Communication is a key to successfully running
multiple locations. Free and open communication with all staff is very important when you have multiple locations. Neither the culture nor the compliance can happen if you neglect to focus on communication. Have weekly staff meetings by phone or webinar. Have your office personnel get together at least once or twice a year to enhance communication between people on all levels.
Communicate your vision to all managers in all locations and they in turn must commit to clearly communicating your vision to others in the off-site agencies. Regular audits and evaluations of the manager and the office are critical to making sure your vision is being carried out according to your expectations.
While striving for positive energy in your organization, do not avoid discussing problem situations. Consider learning opportunities which may present themselves from potential claims situations. Educate your employees about the situations which have created problems in one office so other office sites can avoid the same mistake.
Growth is positive when controlled but be sure that the “right hand knows what the left hand is doing”. Consistent culture, compliance and communication throughout the agency at all locations, can be essential to preventing confusion and potential claims which may otherwise arise from acquisitions and dispersed locations.
Annette Hollingsworth has spent over 30 years in the insurance industry. While with ERC /GE Insurance Solutions/Swiss Re, Annette Hollingsworth has served in a variety of capacities ranging from claims to underwriting, legal to regulatory services and global compliance. Annette now serves in the Products unit where she supports the Insurance Agents Professional Liability underwriters in both the US and Canada. She attended Washburn University undergraduate and KU Law School. She has her JD., CPCU, CLU, and ARC designations.
This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders.
