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2013ComAD-IIABO-OR.pdf 1 6/17/2013 10:18:23 AM









We can help with both. With friendly underwriters who listen, and a full complement of products to serve your small-to-mid-size commercial insurance needs (including enhanced BOP, surety, and packaged coverages), Western National is your one-stop shop for getting business done. The proof is in the partnership.


FALL 2013

Advertiser Index

Official publication of Independent Insurance Agents & Brokers of Washington 11911 NE 1st St., Suite B103, Bellevue, WA 98005 Ph. (425) 649-0102 Fax: (425) 649-8573 Web:

American Modern

Officers of IIABW President: Mary Stien, CIC, Parker, Smith & Feek, Bellevue President-elect: Pat Otter, Otter Insurance, Lynnwood Secretary-Treasurer: Mike Button, AIP, Western States, Richland IIABA Director: Sue Knobeloch, CIC, CPIW, Lovsted Worthington, Bothell Executive V.P.: Daniel Holst, IIABW, Bellevue


Anderson & Murison


B C E Consulting


Burns & Wilcox


Capital Insurance Group


Board of Directors Mike Button, AIP (Benton), Western States Insurance, Richland Ryan Douglas (King), Propel Insurance, Seattle Craig Field (Chelan/Douglas), Mitchell, Reed & Associates, Cashmere Nancy Frost (At Large), Propel Insurance, Tacoma Duane Henson, LUTCF (Skagit/Island), First Insurance, Mt. Vernon Kim Krogh, ARM (At Large), Fidelity Insurance, Spokane John McDonald (Snohomish), McDonald McGarry, Edmonds Dave Merrill (At Large), DeFranco-Merrill Insurance, Seattle Darren McEuin, CIC, (Past President) Conover Insurance, Pasco Pat Otter (At Large), Otter Insurance, Lynnwood Melissa Power, ACSR, CIC (At Large), Homestreet Insurance, Spokane Michael Rydbom, CIC (SE WA) Associated Independent Agencies, Pullman Nick Stay (Pierce) American Underwriters Insurance, Tacoma Robert Trask, Jr. (Grant), Robert Trask Agency, Moses Lake Larry Trefry (Spokane), Andre-Romberg, Spokane Chris White, CIC, CRIS (At Large) Bell-Anderson, Anacortes

Grange Insurance Group


Griffin Underwriting


Staff Daniel Holst, Executive V.P. - Susan Scott, AAI, Sr. V.P. of Education - Ashley Kuaea, Director of Member Programs - Bill Stauffacher, Stauffacher Communications, Contract Lobbyist -

IES 31

Advertising For more information on advertising, contact Jim Aitkins, Blue Water Publishers, LLC 22727 - 161st Avenue SE, Monroe, Washington 98272 360-805-6474, fax: 360-805-6475, Big I Washington is the official magazine of the Independent Insurance Agents & Brokers of Washington and is published quarterly. News items from IIABW members are requested. IIABW does not necessarily endorse any of the companies advertising in this publication or the views of its writers.

Imperial PFS


Liberty Mutual


Mutual of Enumclaw


Preferred Property/JGS


Premier Marine


R-T Specialty, Inc.




Risk Placement Services


Ron Rothert Insurance Services


Superior Underwriters


Tapco 21 Western National Insurance Group Worldwide Facilities, Inc.

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Table of Contents



A Message from Mary Stien, IIABW President


Successful Young Agents Conference


Agency Strategies to Successfully Manage Change


Health Care Exchange Update


B&O Taxes - A Continued Battle


Impact of WA Supreme Court Ruling on P & C Agents


Licensing Improvements at the OIC


Need for Personal Umbrella


IIABW/PIA Conference Brochure


Big “I� Professional Liability Program


Industry Joins Together to Support Make-A-Wish Walk


IIABW Associate Members

Service: We never tire of hearing our loyal agents express how impressed they are with our service and speed.

Earthquake: Yes, we’re still writing EQ! We have new markets and additional capacity for both commercial and personal.

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

Contractors: Seeing more builders? We have great markets and low minimums, and we can write the bond, too! p: 866.562.8095 | f: 425.453.8696


IIABW President


The Entrepreneurial Spirit is Alive and Well in Insurance


y husband and I have been blessed with a bright 12-year-old grandchild on the cusp of womanhood. This summer, along with last year’s wardrobe, she also outgrew her summer camp. This gave her an opportunity to try something new and attend “Geek School.” Mornings were spent with algebra and marine biology; afternoons featured computers and fashion design. She did all this with a diverse crowd of local and international students, some of them still mastering English. Each day she came home with stories of entrepreneurial spirits working together to build community, share talents and unleash creativity. The school left her with a meaningful and lasting experience that expanded her world view, as well as provided the tools and encouragement needed to live up to her fullest potential. This is not just something I want for my granddaughter, but for the insurance industry that I love. In less than a month we will have our joint conference with the PIA. The goal of our conference is to create opportunity, to uncover challenges, and to spark the entrepreneurial spirit. It provides the opportunity to connect with others who are all personally invested in the success of our industry. • • •

The trade show offers a chance to discover innovative products to meet the needs of our clients. Our lobbyists will share the critical challenges impacting our business environment, and offer a plan of action. Our speakers will facilitate meaningful dialogue on issues facing each of us as we craft our business strategy for 2014 and beyond.

We look forward to connecting with old friends, meeting new members face-to-face, and sharing the experience with each of you. Mary Stien, IIABW President Parker Smith & Feek, Bellevue


There is not one good reason to choose American Modern.

There are many.

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We believe in you and the importance of the personal service you provide to customers. We look forward to you becoming an integral part of our business.

You should not be penalized for monoline business. At American Modern, we want you to write our DP-1 and DP-3 programs. In fact, we have decreased rates, increased coverage limits, and added new options.

bey o

monoline ď‚Ş we

nts are #1 e g a !!


Got hard to place vacant, rental and seasonal property? We want it. We also offer builder’s risk coverage for renovations. And for seasonal homes, we offer an occasional rental option.

s nd

tandard Do not settle for standard service on specialty products. We provide a specialized team of underwriters and claims adjusters for each line of business.

It all adds up to special benefits for you and your customers when you choose American Modern.

To become appointed with us, call or email: Kelli Woosley, Business Development Representative Ph: 513-947-6172

Agency Strategies to Successfully Manage

By Jeff Yates


ew would dispute that we are living in a time of rapid and profound changes. Consumer expectations are changing fast, often shaped by their experiences in other industries. More and more consumers are “connected” and will communicate with their business partners using any device that is handy to them at the time. These consumers are also empowered by social media and will use these tools to research their potential business partners, as well as to spread the word when they receive bad service. New technologies are enabling businesses to enhance the consumer experiences that they provide and to differentiate themselves from their competitors. Managing through all of this change has become a major challenge even for the most tech savvy agencies, as well as for our carriers and vendors. What are the key trends that will affect my business materially? Where will my major competitors be in five years? Which new technologies should I implement and when? Agencies can position themselves to prosper in this rapidly changing environment by creating a culture that embraces innovation and implementing a defined change management process. Below are several insights gleaned from ACT discussions to assist agencies in managing change successfully within their firms. Management Sets the Tone Agency management plays a key role in creating a culture where innovation is prized as a core value of the business. These agency leaders look at new technologies and other innovations 8

strategically, as tools that will give them a competitive advantage. They encourage ideas from every source – most especially from their employees and clients – as to how the agency can do things better. Clients are surveyed regularly and some agencies have even set up client advisory councils to test ideas and get fresh thinking. These agency leaders are involved in their associations and organizations like ACT, AUGIE (ACORD User Groups Information Exchange) and their user groups, as well as with their carriers, to keep up with the latest innovations available to them and the benefits other agencies are deriving from these implementations. The ACT website contains a number of resources to assist agencies in considering the key trends that are likely to affect them and how their fellow agencies are changing to position themselves for the future. (Examples include: 2012 Key Trends & Industry “Must Do” Issues (currently being updated); “Agency Perspectives on the Future” Video; How Consumers, Businesses & Agencies will Change; Attributes of Successful Independent Agencies of the Future.) Keeping up with Innovation in Other Industries Innovative agencies also are keeping up with the innovations taking place in other industries, because consumer and business expectations increasingly are being shaped by the experiences they have in these other industries. Agents can also learn from their business clients by asking them about their recent innovations and their resulting impact. Daniel Burrus, the author of Technotrends, notes that successful businesses of the future will not only need to be “agile” but “anticipatory.” Agility is important in reacting to competition. But being anticipatory enables you to become the competition because you are thinking through the “hard” trends that will affect you and you foresee where your consumers and your competitors

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will be in the future in light of these trends. (“Hard” trends are those that are certain and permanent.) The anticipatory firm begins to make the changes now to position itself to be where its consumers and competitors will be in the future. The other key for successful implementers of change is to create metrics, so that you can quantify whether the change has been a success or not. Employee Involvement & Training are Key The agencies that are implementing change successfully involve their employees in the shaping of that change. Employees – representing all of the disciplines affected by the change – work together in teams to implement it. Employees are empowered to innovate based upon the firm’s principles and are rewarded for doing so. There is an understanding that many innovations will not work perfectly at the start and will need to be modified and enhanced. These employees are also encouraged to work through these issues and to pursue problems with their carriers and vendors until they are fixed. The innovative agency makes sure it has the right employees in the correct spots. These agencies are looking for employees who are willing to embrace change and who know how to ask the right questions to get their jobs done correctly. These qualities have become the top factors these agencies look for in candidates – even more important than the individual’s insurance expertise. Some agencies also are striving to have a staff make up that reflects the multiple generations and ethnic groups their firm is serving, to encourage diverse thinking and more effective understanding of each of their client segments. These agencies are also more willing to delegate authority and responsibility to employees in areas where they have a special interest and skill (in social media, for example). In order to achieve a successful implementation, these agencies tell their employees the “why” for the change, how it fits with the agency’s vision (which the employees have bought into) and then thoroughly train them on how to implement the change effectively. Once the agency implements the new workflow or technology, the employees are expected to use it, so that there is consistency throughout the agency. Innovative agencies also provide their employees with training that helps them to become more effective employees in areas such as teamwork, leadership and management. “Slow Down in order to Speed Up” This expression, coined by Paul Fuller of Strategic Insurance Software, expresses so well the importance of the agency’s taking the time to make sure the change it is pursuing – whether a new technology, workflow, etc. – is the right solution. Employees should be given uninterrupted time to confirm that their defined solution is the correct one. In addition, rather than just automating a traditional workflow that was devised for a paper world, these agencies rethink the workflow from the ground up in light of the new possibilities that have been enabled by technology. 10

Willingness to Experiment Successful agency innovators are willing to experiment with new technologies and continue to “tweak” them based upon feedback from clients and others. Creating a mobile friendly website and mobile apps provide great examples. There is no question mobility and the “connected” consumer are both “hard” trends that will increasingly affect us. Steve Anderson reports in a recent TechTips that 43% of Google searches are local and 74% are performed via a mobile device. So, it makes good sense for agencies to position themselves for this inevitable change, fully realizing they are going to have to enhance these mobile tools over time based upon the features that consumers ask for and use. Another good example where agents are experimenting with new technology tools involves Internet marketing. Agencies continue to measure the effectiveness of the social media ads they run and modify the criteria until they hit upon a strategy that attracts the most correct leads, most cost effectively. The keys for these innovative agencies are: (1) to be willing to experiment; (2) to measure the effectiveness of each change they make; and (3) to refine the implementation as needed. Innovations Save Time & Money Successful innovations often cut the time it takes to accomplish particular processes. For example, Stu Durland, a New York independent agent, found that he was able to cut his agency’s turnaround time to receive signed client documents from an average of 23 days to 3-5 days by implementing an electronic signature tool. Think about all of the time and follow ups this one innovation is saving his agency! Similarly, Applied Systems has been able to greatly speed up its responsiveness to customers by creating faster communications vehicles for reporting issues and implementing an Agile development process, which brings together multifunctional teams to work with customers to devise and implement solutions without delays. There are numerous technologies available to agencies today that can enhance their competitive position. None of these specific implementations, however, is as important as positioning the agency to implement change successfully. The agency that embraces innovation as a basic value, keeps up with key trends and opportunities both within the industry and in other industries, empowers its employees to participate in the change process and implements a defined change management process – will position itself effectively for an environment that will continue to experience rapid and profound change. Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. Jeff can be reached at jeff.yates@ ACT’s website is This article reflects the views of the author and should not be construed as an official statement by ACT.

Eric Sawyer |

VP Healthcare

Eric has been with the Seattle office for more than three years, but he came with an extensive background and over 10 years in the Healthcare insurance industry. With all the industry changes, you need a professional like Eric to guide you through the perils and pitfalls that your healthcare clients can encounter.

A Line Up You Can’t Ignore • (206) 538-5082 If you’re looking for experience,

Chris King |

Property Broker

With over 30 years of Property experience and most of it as a surplus lines broker, you’d be hard pressed to find someone to assist you with your property risks. In addition to Property, Chris is also available to assist you and your clients with Inland Marine risks. • (206) 538-5077

Stan Heydrick |

professionalism and service, look to Worldwide Facilities, Inc. Our Seattle office team will make you a winner with your clients for every quote, every time. Make the move and contact us, today.


With over twenty years as a retail broker, Stan has made the move to the wholesale brokerage side. He’s the person to call about your difficult-to-place accounts because as a former retailer, he knows what you need to get that sale. • (206) 538-5076

Ruth Boozer |


With more than 20 years in the property & casualty industry, Ruth has worked as a retail broker, MGA underwriter and now as a wholesale broker. She concentrates in the Financial Services arena and stands ready to help place your clients’ risks for: E&O, Management Liability, D&O, EPLI and Privacy/Cyber Liability. • (206) 538-5074

Erik Lindquist |


Concentrating on casualty placements, Erik can assist you and your clients for Construction, Products, Environmental, Products Recall and Umbrella/Excess to name a few. Erik has more than 20 years career experience as a retail broker, program manager and wholesale broker. If you need casualty risks placed, call Erik. • (206) 538-5078

Mike Stutsman |


Mike has over 30 years industry experience placing difficult Construction (Commercial and Residential), Products Liability, Environmental, & Energy accounts. If you have questions about the primary & excess non-admitted marketplace, call Mike. His strong national and international carrier relationships gives you the edge you need. • (206) 538-5083

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B& O


...A Continued Battle

egislators finally left Olympia in late June after a 105 day regular session and two special sessions and, as expected, agents DID NOT see their B&O taxes increased this year. This is a terrific political win for IIABW and other producer groups. We won this battle but the war to eliminate our special tax rate is far from over. IIABW’s top legislative priority for many years has been to keep agents’ B&O taxes low and we have been very successful. Agents currently pay B&O taxes on gross revenues (i.e. commissions) at a special rate of .484%. We were successful working with the state legislature to set up this special rate in 1983 at the rate of 1.1% and then reducing it two times since, most recently to .484% in 1998. We were successful explaining that our special rate is needed: • It would make independent agents less competitive with national direct–selling insurers who do not pay a commission-based B&O tax; • Agents are not able to change premium and commission rates to recover or pass along tax increases to the customer; • Agents’ commissions are taxed up to four different times throughout the insurance transaction.




Contribute to IIABW’s Big I Pac. IIABW members give over $60,000 every election cycle to our state political action committee. These contributions help us get access to legislative leaders so we can educate them about the importance of our special rate. Attend the All Industry Day at the Capitol. IIABW collaborates with the insurance industry on a day to educate agents and legislators on issues. Reach out to your state legislators. IIABW launched its largest grassroots lobbying campaign in a decade this past session. The response from members was

overwhelming. We can continue this success if agents establish closer relationships with their elected officials. The state will continue to need additional revenue in the coming few years to cover their basic services in addition to the new health care exchange and required increases in K-12 education spending. Legislators have been focusing on ways of raising revenues without appearing to be raising taxes. They will look to ‘reduce loopholes’ to raise taxes on certain industries which put agents at risk.

B C E Consulting, LLC Our mission is to help you grow your business and improve your bottom line. Our team of professional and experienced consultants has assisted insurance companies and agencies in achieving their goals and objectives for many years. We focus on the following areas of business development. • • • • •

Strategic, succession and contingency planning Business growth and development Market feasibility studies Education, sales training and professional development Operational efficiency and process improvement

For further information or details please see our website: or contact: Jeff Bronaugh, CPCU, CLU, ChFC, CIC (520) 343-4394

Licensing improvements at the By Jeff Baughman



s the licensing and education manager for the state insurance commissioner’s office, I’d like to take a moment to bring the Big I membership up to date on what’s happening within my program – and to ask for your input. Online Licensing – The OIC has prioritized moving the licensing processes online since 2007. Progress over the past six years has been steady, building our online services piece by piece. I am pleased to inform you that at the end of May 2013, more than 99 percent of all state insurance licensing transactions are being completed online. As a result, in most cases it’s now significantly faster to obtain or renew an insurance license. I would also like your feedback on your experiences with the online licensing system. What can we do to make it better or easier for you to use? Most of our best ideas for improvements come from those that use our system. Send us your suggestions! Electronic Fingerprinting – The latest piece of the online initiative has been electronic submission of fingerprints. Washington residents are required to submit fingerprints for a state and federal background check as a part of the application process. As a result, background results have been returned to the OIC within the same day as the fingerprints were submitted for a large percentage of applicants. This is a significant improvement over the 2-3 week for returned results for hardcopy fingerprints. At the end of May 2013, 94% of all fingerprints were submitted electronically. Should you or your agency decide to hire additional licensees, I would encourage you to recommend submitting electronic fingerprints. A potential hire can schedule their fingerprinting appointment at the same time as their licensing exam (the equipment is located in the Pearson VUE exam centers) or choose from more than 20 other locations around the state . For a complete list of locations, please visit our website ( Free-form Email project – This project was created to allow the insurance commissioner’s office a streamlined method to

directly email our licensees, and this is another situation in which we’d like to get your feedback. Here’s the background: While we have been able to send mass email out previously, the process was antiquated and time consuming. To remedy that, we had a free-form email function built directly into our computerized licensing system. This allows us to create, send, and document correspondence to our licensees. It also provides us with many filtering options to reach different sets of recipients. For example, we can choose recipients by license type, by state, by lines of authority, by education provider type, or even limit it to specific counties in WA. The choices can be very selective or include all licensees, and will automatically note on each licensee’s record the date and subject of the email sent. We will be soft-launching the project very soon with an email to all licensees regarding travel licenses. Going forward, we’ll assess how to best utilize this tool and I’m asking for your feedback: 1. What types of notices would you prefer to receive from the OIC? (Examples – law/rule changes, change in licensing processes, etc.) 2. How often would you want to receive email notices from the OIC? (Suggestions include sending a notice whenever there is an update, only sending notice once per month with multiple updates, only once per quarter with multiple updates, or some other frequency) No one appreciates having their inbox routinely flooded with messages. On the other hand, no one wants to discover being out of compliance due to not being informed of changes. We want to strike the right balance so that we have an informed community of producers without sending too much. This is why I’m asking you to take a moment to consider the options and provide your feedback. If you have any questions or concerns, please feel free to contact me or my staff. Jeff Baughman is the Manager of the Licensing & Education Program of the Office of the Insurance Commissioner. You can contact him by calling 360-725-7144 or by emailing jeffb@oic. or 13

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Industry Joins Together to Support Make-A-Wish Walk


ooking for a way to give something back to your community and get some good PR for your company? Join others in the insurance industry at the Walk for Wishes - a family-friendly 5K walk and festivities with music, food and fun. IIABW/Trusted Choice is a major sponsor of this year’s walk at Marymoor Park in Redmond on September 15 and Mirabeau Meadows in Spokane on October 5. The industry will meet at IIABW’s tent before the event and walk together as a group. Great networking opportunity! We’ll provide Trusted Choice hats to insurance industry walkers to show the strong support the event received from our industry. You can participate as follows: • Form a team of walkers. This is an excellent way for your company to support a great cause and get positive PR in the community. Sign up for a team at and your team will get its own web site in which you can raise money and sign up walkers from. • Join IIABW’s team or another insurance industry’s team. Choose the team on the walk website and click the button ‘Join Our Team’ to sign up. • Contribute to IIABW’s team or another insurance industry team. All you need to do is choose the team on the walk website and click on the ‘Give Now’ button. Make-A-Wish Washington has granted wishes to more than 5,200  local children with life-threatening medical conditions and will grant another 300 more wishes this year. For more information about Make-A-Wish, visit 19



ver 65 agents, marketing reps, underwriters and others attended the Young Agents Conference in Chelan in June. The conference provided seminars on sales, digital marketing, ethics and perpetuation as well as networking social activities. Mark your calendar for next year’s conference which will be held June 12-13 in Leavenworth. IIABW’s Young Agents is an informal group of people fairly new to the industry (and young at heart) who focus on professional growth through educational achievement, leadership development, legislative involvement, consumer advocacy, and insurance career perpetuation. If you are interested in being added to the mailing list for future networking events, contact our committee co-chairs Brian Fassburg ( or Jillian Fassburg ( at Pacific International Underwriters (800-562-8403).



YOUNG AGENTS CONFERENCE SPONSORS Platinum Liberty Mutual Safeco Gold Encompass RLI/CBIC   Silver AAA Washington American Modern Ins Group B C E Consulting, LLC Grange Insurance Group Griffin Underwriting Services Mutual of Enumclaw QBE the Americas Superior Underwriters   Bronze Capital Premium Financing Cochrane and Company Parker Smith & Feek Pacific International Underwriters Swett & Crawford Tepco Travelers WSRB   General Sponsors AFCO Premium Finance Berkley North Pacific Darren McEuin Otter Insurance Service Master of Tacoma Southwest Business Corp.

HEALTH CARE EXCHANGE UPDATE SELLING THROUGH THE EXCHANGE Insurance Producers who intend to write business through the Washington Health Benefit Exchange must be trained and certified to do so. The Exchange Insurance Producer half-day training and certification programs will be held in: Yakima on August 20; Bellingham on August 21; Kennewick on August 22; Tacoma on August 27; SeaTac and Wenatchee on August 28; Vancouver on August 29; Spokane and Everett on September 3; Bellevue on September 4; Yakima on September 5; SeaTac and Kennewick on September 10; Everett on September 11; Spokane on September 12; Wenatchee and Bellingham on September 17; Spokane and Bellevue on September 18 Go to for a schedule of times and locations.  To register send your name, agency name, phone number and preferred date to THE WASHINGTON EXCHANGE SMALL BUSINESS PROGRAM The Washington Health Benefit Exchange announced in a May 8th letter that because of a lack of carriers filing to provide coverage through the Small Business Health Options Program (SHOP) Exchange, the SHOP implementation will be delayed. The SHOP was previously scheduled to begin January 1, 2013 along with the individual exchange. 31 INDIVIDUAL PLANS APPROVED BY THE OIC The Office of the Insurance Commissioner has approved the individual health plans and rates of four health insurance companies to sell 31 individual plans in Washington’s new health insurance Exchange. The four companies will each work in a mix of different counties: Bridgespan – King, Kitsap, Pierce, Skagit, Snohomish, Thurston, and Spokane counties Group Health Cooperative – Benton, Columbia, Franklin, Island, King, Kitsap, Kittitas, Lewis, Mason, Pierce, San Juan, Skagit, Snohomish, Spokane, Thurston, Walla Walla, Whatcom, Whitman, and Yakima counties 22

Lifewise – All 39 counties Premera Blue Cross– All counties except Clark The board of the Washington Health Benefit Exchange will now review the approved Exchange plans to determine if they meet their Qualified Health Plan standards. A final announcement is expected at the Aug. 21 board meeting. The OIC did not approve plans from 5 health insurance companies. DELAYS IN HEALTH CARE LAW IMPLEMENTATION The Obama Administration made two major delay announcements recently regarding the Patient Protection and Affordable Care Act:  • To delay the enforcement of employer mandate for one year because of technical difficulties and to give employers more time to comply. The mandate requires employers with 50 or more employees to provide health insurance comparable to the minimum coverage in the new state exchanges and for coverage to be affordable (premiums no greater than 9.5% of an employee›s income). • The federal government will not be verifying individuals’ eligibility to receive subsidies through the new health insurance exchanges for 2014. These subsidies will be available to individuals earning between 100% and 400% of the federal poverty level in order to assist with the purchase of insurance through the exchanges. Random checks will be done to verify income status, but essentially customers will almost entirely rely on an “honor” system. 

We couldn’t have done this without you #1 nationwide for handling claims promptly and fairly Top 100 Best Places to Work in Washington State Big things happen in small towns 23

Impact of WA Supreme Court Ruling on P & C Agents By Thomas C. Stratton, Esq.


n August 1, 2013, the Supreme Court for the State of Washington issued its decision in Chicago Title Ins. Co. v. Washington State Office of the Ins. Commissioner, holding that a title insurance carrier is vicariously liable for its general agent’s violations of anti-inducement laws. The court’s decision appears to have been driven by the unique facts in the case and should not have a significant impact on independent property and casualty insurance agents. The court explained that title insurance is different in many ways from typical insurance. Title insurance protects against past claims against insured real estate as opposed to future claims. Title insurance is also unique in how it is provided to the ultimate customer and in how it is marketed and regulated. The court noted that the ultimate consumer of title insurance has little real opportunity to shop or make an informed decision on what title insurance to buy. The customer normally just buys the title insurance recommended by a real estate agent or bank. As a result, the insurance is not marketed to the ultimate customer. Instead, the marketing is directed at middlemen such as real estate agents, builders and mortgage lenders. Chicago Title Insurance Company (“CTIC”) had entered into an agency agreement with Land Title. Land Title was the exclusive agent for CTIC in four Washington State counties. Land Title was only allowed to issue title insurance through CTIC. (The situation was similar to a captive agent.) All of Land Title’s customers were required to buy a title insurance policy from CTIC. The office of the insurance commissioner conducted an investigation of the marketing practices involved in title insurance. The investigation revealed that CTIC had co-advertised with middlemen on over 150 occasions involving costs as high as $4,300. CTIC had also bought food for hundreds of middlemen meetings and sponsored golf tournaments for amounts exceeding $3,000. CTIC had hosted receptions ($13,000) and purchased professional football game tickets ($2,400). The office of the insurance commissioner did 24

not take any action directly against CTIC for these violations. The court observed that this documented that CTIC was aware that large amounts were being spent to solicit middlemen. The office of the insurance commissioner concluded that CTIC’s agent Land Title was also soliciting real estate agents, builders and mortgage lenders with meals, golf tournaments, advertising and game tickets in amounts exceeding $25. The insurance commissioner determined that this was being done on behalf of CTIC and ordered CTIC to pay a fine of $114,500 for Land Title’s violations. CTIC maintained that it was not responsible for Land Title’s actions in violating anti-inducement laws. The Washington Supreme Court concluded that Land Title’s actions were unlawful and that CTIC was responsible as the principal of Land Title. The court held that CTIC was liable under both Washington statutes and Washington common law. The court explained that the statutes provide that an agent has the authority to solicit insurance, which means that an agent has the authority to market such insurance. It stated that under common law, Land Title had implied or apparent authority on behalf of CTIC to do any acts that are necessary and customary in the business. This was especially true because Land Title had a long-standing and exclusive relationship with CTIC, which was documented by the fact that Land Title only sold CTIC policies and every one of Land Title’s customers bought a CTIC policy. The court said that Land Title’s actions were intentional and not negligent. Under such circumstances, it was not unreasonable to hold CTIC vicariously liable for Land Title’s actions when the evidence demonstrated that CTIC itself was involved in improper marketing and it could be assumed that CTIC was aware that Land Title was using the same tactics. The court explained that CTIC had never taken any action to stop Land Title’s marketing practices and had not investigated Land Title’s operations to determine the marketing practices that were being utilized.

The court concluded by stating: “[f]ormer WAC 284–30–800 means what it says: an insurer may not make inducements exceeding $25, “directly or indirectly,” through its own channels or through an appointed agent that carries sole responsibility for soliciting and effectuating the parent insurer’s policies in a locality.” The court’s decision serves to emphasize the Washington State office of insurance commissioner’s focus on enforcing the antiinducement statutes. The insurance commissioner simply does not want agents spending more than $25 to solicit business. However, the facts in this case are unique and it is unlikely that they would be replicated in a situation involving independent property-casualty agents who represent many carriers. Land Title was essentially a captive agent for CTIC. It sold only CTIC policies to each of its clients. It is obvious that the Supreme Court was troubled by the fact that CTIC itself had engaged in improper marketing. This probably provided the impetus for the court to conclude that it was fair for CTIC to be held vicariously liable for Land Title’s actions when CTIC was aware of such practices, had not taken any action to stop the practices and had not itself been penalized. Thomas C. Stratton has been a practicing attorney since 1984. He is a shareholder of Rockey Stratton, P.S., a Seattle law firm. For 25 years, his practice has focused on the defense of insurance agents in Washington.


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Personal Umbrella Policy (PUP) is a necessary addition to insurance protection for most insureds. One of the best ways to understand the need for a personal umbrella is to review actual claims examples. It is very clear that an incident arising from just normal daily activities can expose all of us to the potential for a large claims suit. Claim Scenario #1 The Insured’s 18 year old son was driving the Insured’s car on a short trip to the store with his girlfriend, the Claimant. The car left the roadway and struck a tree. The Insured’s son told the police that a vehicle cut him off, but there were no witnesses and no evidence of any impact with another car. The Claimant has no recollection of the accident. The Claimant, a 19 year old college student, was hospitalized for over a month with multiple fractures and internal injuries. She was in a wheelchair but is now able to walk with crutches and continues with physical therapy. She has a right drop foot as a result of the injuries. The Insured’s personal umbrella policy limit was paid.

Claim Scenario #2 Claimant, age two, was on the Insureds’ property with his grandparents who were there to care for two horses owned by the Insureds. The Insureds were out of town on vacation. The Claimant was kicked by one of the horses, taken to the emergency room, and then life flighted to a larger hospital. The Claimant was given a five percent chance of survival and underwent surgery for a cracked skull (a piece of which was missing) with 30% damage to the right side of his brain. He survived and is residing in a neighboring state at a rehabilitation center. A

large payment was made under the personal umbrella policy.

Claim Scenario #3 The Insured hosted a party at his home. Among the guests was the Claimant, a family friend who was also the Insured’s financial advisor. The Claimant brought his wife, infant, and two year old child to the party. The Insured gave the Claimant a jug of spring water for him to use to mix formula for the infant. The two year old child also had a drink. Shortly thereafter, the children became ill. The family left the party, and then took the children to the hospital. The hospital requested the water jug which was found to contain arsenic. An old label was found wrapped around the handle with the word “weed killer” printed on it. The Insured had apparently mixed a solution of weed killer in a jug similar to the ones used for spring water and mistakenly given it to the Claimant. The infant died and the two-yearold child survived after being in critical condition. The Personal Umbrella policy limits were paid out. Claim Scenario #4 The Claimant and Insured have been longtime friends, live on the same street, and the Claimant had been to the Insured’s home on many occasions. The Insured lives in a home with a brick patio which had been constructed in the 1960s. Bricks were replaced one year before the incident. An area of the patio is bordered by an 18 inch retaining wall with a flower bed between the wall and the brick patio. The Insured, Claimant, and another Friend met at a club, had a few drinks, and

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all returned to the Insured’s home where they sat on the patio in lawn chairs and continued drinking. At approximately 11:00 PM, the Insured went inside to the kitchen. The Friend also entered the house to call a cab. When the Friend went back outside, the Claimant was no longer on the patio. He found the Claimant unconscious on the ground on the other side of the patio retaining wall. The Claimant remembers falling, but does not remember how it happened. According to the Insured, on other occasions when the Claimant had been at the home, a patio table was in front of the retaining wall. The table had been removed, exposing an area of the wall. The Claimant, age 56, sustained a spinal cord injury which rendered him an incomplete quadriplegic. He underwent surgery and was on a feeding tube for several months. He was able to return home six months after the incident, but continues to suffer partial paralysis of his arms and legs. He uses an electric wheelchair to get around his house and requires assistance with some activities of daily living. The Claimant owned his own business and was married one month before the incident. His wife now cares for him at home. The settlement to the Claimant exhausted the underlying coverage limits and payment was made under the personal umbrella.



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IIABW Associate Members The Independent Insurance Agents & Brokers of Washington would like to thank the following companies for their support of Your association. AFCO Premium Finance Steve Palmer 3400 188th St SW, #630 Lynnwood, WA 98037 (425)778-7099/Fax(425)672-4230

Capital Premium Financing Garn Kemp 12235 South 800 East Draper, UT 84020 (801)244-2008/Fax(800)700-3170

Hull & Co. Jenny Lupescu 5775 Soundview Dr, Ste 202B Gig Harbor, WA 98335 (253)857-1050/Fax(253)857-1054

Pacific Internat’l Underwriters, Inc Randy Blanchard P.O. Box 2007 Edmonds, WA 98020 (425)771-8988/Fax(425)775-9046

Superior Underwriters Joe Kelly P.O. Box 97024 Redmond, WA 98073 (425)643-5200/Fax(425)643-2337

Alaska National Insurance Co Bob Alexander 1111 Third Avenue, #2600 Seattle, WA 98101 (206)515-1835/Fax(206)525-0311

Chubb Group of Ins. Cos. Greg Monroe 701 Fifth Avenue, Ste 3700 Seattle, WA 98104 (206)224-4744/Fax(206)224-8856

Imperial PFS Joe Zimmer 22102 17th Ave SE, Ste 202 Bothell, WA 98021 (425)951-7800/Fax(800)888-1205

Pacific Interstate Ins Brokers, Inc Ashley Bernardi PO Box 4529 El Dorado Hills, CA 95762 (916)941-0518/Fax(916)941-0547

Surplus Line Assoc. of WA Robert Hope 1710 One Union Sq. 600 University S Seattle, WA 98101 (206)682-3409/Fax(206)623-3326

All Risks Ltd Corky Weber 11911 NE 1st St, Ste B-205 Bellevue, WA 98005 (425)372-0038/Fax(425)372-0039

Cochrane & Company Brian Carney P.O. Box 19150 Spokane, WA 99219 (509)838-0655/Fax(509)838-1710

Insurance Producers’ Service Corp. Ashley Kuaea 11911 NE 1st St, Ste B103 Bellevue, WA 98005 (425)649-0102/Fax(425)649-8573

Pemco Insurance Company Steve Milliren P O Box 778 Seattle, WA 98111 (206)628-4080/Fax(206)676-0383

Allied Insurance Erika Dufenhorst 7979 E Tufts Ave, Ste 1700 Denver, CO 80237 (303)843-4715/Fax(303) 843-4920

Countrywide Brokerage Services Anne Brennan P.O. Box 2011 Edmonds, WA 98020 (425)774-2237/Fax(425)775-1023

AmWINS Brokerage of Washington Joe Constantine 600 University St, Ste 510 Seattle, WA 98101 (206)922-1801/Fax(206)922-1819

Encompass Insurance Rick Staten 18911 North Creek Pkwy, Ste 200 Bothell, WA 98011 (425)489-5583

Ashbaugh Beal Tristan Swanson 701 Fifth Ave, Ste 4400 Seattle, WA 98104 (206)386-5900/Fax(206)344-7400

Foremost Insurance Group Robert Hoogendam 23798 Copper River Court Mount Vernon, WA 98274 (360)840-0892

Bales Restoration DKI Bill Leak PO Box 446 Marysville, WA 98278 (800)492-2537/Fax(425)745-8480 BCE Consulting LLC Jeff Bronaugh 12464 N Paseo Penuela Marana, AZ 85658 (520)343-4394

GMAC Insurance Robyn Christian PO Box 3199 Winston-Salem, NC 27102 (336)435-2357/Fax(336)435-0125

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Grange Insurance Group Steve Stogner PO Box 21089 Seattle, WA 98111 (206)448-4911/Fax(206)448-2687 Griffin Underwriting Services Van Griffin P.O. Box 3867 Bellevue, WA 98009 (425)453-8599/Fax(425)453-8696 HCIT/Trustco, Inc Eric Kingdon 2063 E 3900 South, Ste 100 Salt Lake City, UT 84124 (801)278-5341/Fax(801)278-9051

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Patricia Brown 1191 2nd Ave, Ste 900 Seattle, WA 98101 (206)473-3405 MetLife Auto & Home Chris Nachtsheim 20825 SR 410 E, #122 Bonney Lake, WA 98390 (253)447-4408/Fax(253)447-4409 MULTICO Rating Systems, Inc Charlie Anderson 4200 Stone Way N Seattle, WA 98103 (206)357-3928/Fax(206)357-3939 Mutual of Enumclaw Ins. Co. Rich Hawkins 1460 Wells Street Enumclaw, WA 98022 (360)825-2591/Fax(866)853-4813 NW Insurance Council Karl Newman 101 Elliott Avenue W, Ste 520 Seattle, WA 98119 (206)624-3330/Fax(206)624-1975 Oregon Mutual Insurance Co. Mary Emerson PMB115 13619 Mukilteo Speedway D5 Lynnwood, WA 98087 (206)419-5409/Fax(360)403-7763

Premier Marine Insurance Troy Moreira 625 Howe Street, Ste 650 Vancouver BC Canada (604)669-5211/Fax(604)669-2667 Progressive Insurance Shelley Rogers 19909 120th Ave NE, Suite 200 Bothell, WA 98011 (800)274-4055/Fax(425)745-9053 QBE the Americas Arne Chatterton P.O. Box 90701 Bellevue, WA 98009 425)945-5902/Fax(425)644-2975 Red Shield Insurance Company Jim Brown 1411 SW Morrison St, Ste 400 Portland, OR 97205 (503)226-4146/Fax(503)226-6017 Risk Placement Services, Inc. Doug Rutherford 8700 E Northsight Blvd, Ste 100 Scottsdale, AZ 85260 (480)860-5572/Fax(480)860-5561 RT Specialty LLC Ed Bukovinsky 1200 5th Ave, Ste 1910 Seattle, WA 98101 (206)708-2000/Fax(206)708-2001 Safeco Insurance Diane Mink 1001 4th Ave, Ste 1600 Seattle, WA 98154 (206)473-5412

Swett & Crawford Mike Hamby 720 Olive Way, 18th Floor Seattle, WA 98101 (206)448-9400/Fax(206)448-1757 Tepco Premium Finance Andy Hansen PO Box 19127 Spokane, WA 99219 (509)624-5146/Fax(509)622-4702 Travelers Property Casualty Scott Gilliland 1501 4th Avenue, Ste 400 Seattle, WA 98101 (206)464-3493/Fax(206)464-3430 Ucentris Tim Kussie 7001 - 220th St SW Mountlake Terrace, WA 98043 (425)918-4264 WA Surveying & Rating Bureau Brian Upton-Rowley 2101 4th Ave, Ste 300 Seattle, WA 98121 (206)217-9772/Fax(206)217-9329 Western National Assurance Co. Dick Hobbs 9706 4th Avenue NE, Ste 200 Seattle, WA 98115 (206)526-5900/Fax(206)524-9549 Worldwide Facilities, Inc. Michael Stutsman 601 Union St., Suite 1630 Seattle, WA 98101 (206)749-9151/Fax(206)749-9152











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Big I Washington, Fall 2013  


Big I Washington, Fall 2013