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SPRING 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: www.wainsurance.org 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

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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

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Charity First Insurance Services

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Hull & Company, Inc.

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IES 31

Staff Daniel Holst, Executive V.P. - dholst@wainsurance.org Susan Scott, AAI, Sr. V.P. of Education - sscott@wainsurance.org Ashley Kuaea, Director of Member Programs - akuaea@wainsurance.org Bill Stauffacher, Stauffacher Communications, Contract Lobbyist - gocougs@billstauffacher.com 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, jima@bluewaterpublishers.com 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

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Liberty Northwest

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Mutual of Enumclaw

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Preferred Property/JGS

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Premier Marine

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RESTORx DKI

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Risk Placement Services

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Ron Rothert Insurance Services

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Superior Underwriters

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Tapco 17 Trustco, Inc.

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Verity Risk Management

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Western National Insurance Group Worldwide Facilities, Inc.

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Table of Contents

4

6

A Message from Mary Stien, IIABW President

21

Industry Updates: Legislative Issues & Underwriting Tools

8

Mike Kreidler - Key Insurance Issues In the Year Ahead

24

Washington Continues Leadership in InsurPac Giving

10

The Danger of Not Reporting Claims

26

Young Agent Corner

16

Agencies Grow As Economy Recovers

29

2013 IIABW Conferences

18

Big I’s Top Agent Issues of 2012


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IIABW President

MARY STIEN

Reaching Out

W

e understand our biggest commodity at IIABW is you, the member. Yes, your dues keep the lights on, but we also recognize that you are our top advocate and greatest recruiter. With this in mind, our IIABW staff and Executive Committee are taking to the road to reach out and connect with members and prospective members throughout the state. To achieve this, we have collaborated with the Washington Surveying & Rating Bureau to kick off a tour of highly informative seminars this spring. We will be hosting nine dates in different regions of the state. These intensive 2-hour CE sessions will cover a gamut of topics including updates from both organizations on our latest projects and initiatives that affect all insurance agents throughout the state. The seminar will not only be informative to you, but we urge you to bring your local non-member colleagues to show them the great work IIABW does for the whole industry and that there is truly power in numbers. We will share how the actions of the U.S. Congress, the WA state legislature, and the state Insurance Commissioner’s office will impact your business and your income. Washington State currently faces almost a billion dollar shortfall in the 2013-2015 biennium and the legislature is expected to target hundreds of loosely defined tax “loopholes,” which includes the insurance producers’ B&O tax rate paid on commissions. We will give you the real numbers behind these tax changes and show you how it could pull as much as $6,600 out of your pocket this year if we don’t act.

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Another top priority of IIABW is to make sure that agents can sell health insurance through the state health exchange with fair compensation. IIABW members serve on key state committees that will determine agents’ fate in the exchange. We are actively lobbying to ensure the role of navigators is distinct from agents. We in the insurance industry spend a lot of time and money to get the proper credentials in order to provide customers with the best products to fit their needs. The Big I points out that the Obama Administration has made it possible for unlicensed navigators to provide consumers with impartial information about the exchange and “help the consumer understand how each plan aligns with the consumer’s or families’ health-related issues and needs.” This means many small businesses and individuals may settle with the advice of a navigator rather than a consultation from a properly certified and experienced insurance professional. We feel that this creates a decidedly uneven playing field. We will also provide valuable sales tools by introducing the latest information on the Big I’s largest marketing initiative in years: Project CAP. We will share how agencies are using Project CAP to reach out to new customers through Facebook, Linkedln and their own web site. We’ll introduce Project CAP’s new consumer portal as well, which is a website consumers can use to get quotes on their personal lines and then be referred to agents to finalize the transaction. I encourage you to take a couple hours out of your busy schedules to attend the seminar near you and to find at least one non-member colleague to attend with you. There will be a raffle for a fine dining experience in your area and we promise that you will walk out far more informed about your industry and the issues that affect you most. Mary Stien, IIABW President Parker Smith & Feek, Bellevue


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Key Insurance Issues In The Year Ahead

By Mike Kreidler Washington State Insurance Commissioner

I

’m writing this shortly after New Year’s, and I feel very confident predicting a lively year for insurance issues. First and foremost, this is the year that health care reform implementation really has to take shape. Behind the scenes, there is a huge amount of work going on at the state and federal level to make reform work. On other fronts, we’re proposing new legislation this year, working to make things easier for producers, and keeping a close eye on an issue – climate change – that could dramatically affect property/casualty insurers. Here’s how things look so far: The Affordable Care Act and the Exchange: 2014, which sounded so far off when Congress passed health care reform in 2010, is now just around the corner. The biggest of the reforms is the state’s new Health Benefit Exchange. People – including hundreds of thousands of Washingtonians who today have no health coverage at all – should be able to get insurance through the Exchange starting in October 2013. The details are not all worked out, but I continue to advocate that producers be a part of this process, and be compensated accordingly. One model that’s being considered would be for the Exchange to act as a general agency, affiliating with producers who wish to sell health plans through the exchange. At our office, we’re expecting a flood of rate and policy filings as insurers comply with the changes in state and federal law. Our hotline staff, which deals with tens of thousands of consumer inquiries a year, is up to speed on what the changes mean for consumers. And our policy staff has been working hard to establish the essential benefits under the new policies. Surpluses: As is widely known, my office reviews rates for a wide range of insurance. What’s not as well known is that under current law I have to ignore the huge surpluses that some nonprofit health insurers have built up. Two of the state’s largest nonprofits, for example, are sitting on surpluses totaling more than $1 billion each. That’s $1 billion above and beyond what they already have in their reserves. It’s hard to square these huge, rapidly growing surpluses with 8

the fact that many people are struggling to afford their premiums. I would like consumers to get some relief. The legislation I’m proposing would allow me to take these surpluses into account when I review rates. Long term care legislation: We’re also proposing a bill this year that would set prompt payment standards for long term care insurance. While this would do nothing about the rate spikes we’ve seen in this market in recent years, prompt payment of claims is clearly helpful to consumers. Electronic fingerprinting: For years, my office gathered producer fingerprints for background checks by using paper cards. Most of you are familiar with this process: a technician rolled your inked fingers onto a card that’s submitted to the State Patrol. It was old technology, and as a result, there was a 30 percent rejection rate by the State Patrol. So producers often had to go through the process repeatedly. It was clearly a pain. Last fall, we began offering a system that uses electronic devices to capture an applicant’s fingerprints. There are more than 30 locations around the state. And the rejection rate has plummeted. Instead of 30 percent, it’s now less than 3 percent. The new process also costs less. It used to cost $42.50 to submit a paper fingerprint card. It costs $10 less to do it electronically. Finally, the process takes less time. In the past, it could take weeks. Background checks are now often back within a day or less. We’re very happy with the changes, and hope you are as well. Climate change: I’ve long been concerned about the risk that climate change presents to insurance, particularly on the property/ casualty and reinsurance markets. And while there are some holdouts who maintain that climate change is a figment of the imagination, it’s hard to dispute the growing mountain of data and near-consensus by the scientific community. At the state and national level, I’m calling on insurers to be ready for these changes with better modeling and forecasting, wise investments and advocacy. The industry has played a critically important role in fire and automobile safety over the decades, and I think there’s a similar role for it when it comes to severe weather exposure, particularly on things such as building construction and land-use policy. I don’t want to see insurers pulling out of markets, a situation that often leads to government programs as the insurer of last resort. The good news is that we’re seeing a growing acknowledgment among insurers that climate change is a game-changer for them. And I’m optimistic that they will respond. Mike Kreidler, a former state legislator and member of Congress, is serving his fourth term as Washington’s insurance commissioner.


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Danger

The of Not Reporting Claims By Virtual University Faculty QUESTION: ”When automobile claims come into our agency, we always talk to the insured about the benefits of self-insuring the loss if they can, but more and more we are seeing lawsuits being filed for claims sometime down the line. “My question is, if the insured reports the claim to us (the agency) and we note their account, but they decide to selfinsure (not report the claim to the insurer), are we in any way jeopardizing their coverage down the line if, for example, they get sued for 1 million dollars by the party they hit 2 years later? Will they have coverage since it was actually not reported to the insurance company? “Another scenario is, what if the insured calls us (the agency), they decide to self-insure, we never note their account, and 2 years later they are sued - will they have coverage? “In my scenarios, I am assuming they have auto liability coverage and excess liability coverage at the time the accident occurred. I guess I am really questioning whether we are doing more harm than good by recommending self-insuring auto accidents when possible. Any feedback would be much appreciated. Thank you!” QUESTION:”A contractor was working a job on Lois Lane. Months after the job was finished, the agency was contacted by AT&T stating that while contractor was working on Lois Lane he cut a cable on Clark Kent Rd. a block away. We contacted the contractor to get details since no record of any claim was ever made. AT&T is a certificate holder - nothing more. The total claim was about $1,100 and the contractor has a $1,000 PD deductible including loss adjustment expense. “He does not want the claim filed since he was not even in the area. He suspects they are hitting him since he was one of the last few even close to the area. No damages or reports have been sent to the insured, just to the agency. Understanding he cannot do anything to prejudice the company, must we or can we even file a claim without his cooperation, agreement, or approval?” QUESTION:”Our agency contracts typically stipulate that we must report either a ‘claim,’ or ‘an event that could give rise to’ or ‘loss’ to the carrier as soon as practicable or within 10

some other time frame. However, for certain types of claims, both third party and first party primarily within Personal Lines, we have not reported certain ones given that the insured after discussion with us decided against doing so. “Do we have an obligation to our client not to report a first party claim that they have indicated they do not want reported? Obligation meaning either a legal (which might create an E&O for us), moral or fiduciary obligation? The thought being that an insured does not have an obligation to claim damage to their own property unless they want to and that we, as their agent, must preserve that right. “Have there been any studies, research legal or otherwise etc done that would help us draft an appropriate procedure? Second question, is there any information on agency E&O procedures or self audits that we could obtain?” ANSWER: Thanks for raising this issue. As soon as I regained consciousness, I posed your question to the VU faculty. Below are their “candid” (and edited) suggestions. Faculty Response: This is not a good practice. Not reporting claims for any reason violates policy conditions (read that section of the policy) and could definitely create future problems. Report the claim...if the customer wishes not to accept money for the settlement of the claim, he/she can discuss it with the company representative handling the claim. I understand in today’s marketplace that avoiding incidents on the customer’s driving record is a concern to some. Being nonrenewed or paying a higher rate due to accidents/incidents is the way of the world. Often, you have to live with it. In any event, your E&O carrier will be much happier if customers aren’t counseled in such a manner. REPORT THE CLAIM, as it’s an agent’s duty ethically and professionally.. Faculty Response: You are engaged in a very dangerous — to your personal finances as well as that of the insured — practice. You are advising your clients to violate a material condition of the policy. In response to your questions:


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First, you are jeopardizing the insured and possibly your E&O coverage. Read the policy, it is a condition of the policy that the insured report losses. Why did they pay premium to you and the insurer if they then decide to “self-insure”? That selfinsurance could go all the way to a massive judgment that is not insured and they will come looking for you for indemnity. Second, if you record it and are an agent of the company, they had notice but will probably look to you for the damages the insurer incurs. I suggest you contact your errors and omissions insurer for guidance. Faculty Response: You didn’t indicate whether you are telling personal or commercial customers (or both) to pay the claim themselves, I am working on the assumption that you are talking about personal lines customers. I only make this assumption because I am a parent of teenagers who drive. My son had the “misfortune” to have two accidents and one speeding ticket within 12 months of getting his license, and his premiums are now out of sight. If we had made the decision to pay the two accidents, he would still have coverage in the standard market and our out of pocket expenses over time would be less. The reason that we didn’t pay the accidents are two fold. We, like all consumers, purchase insurance to transfer our risk of loss to the carrier who will pay covered claims, if we

12

have any. If you are telling your customers, after a loss, to pay the claims themselves, why are you selling insurance to them in the first place? If your agency believes that insurance should only be purchased for large catastrophic losses, why are you not discussing this with the client before the sale? Customers can then purchase a policy that includes premium saving options up front, such as high deductibles. They then have made an active decision to “self insure.” Most important, the PAP contains loss conditions (Insured’s Duties after an Accident). In the PAP, the loss conditions start out with, “We have no duty to provide coverage under this policy unless there has been full compliance with the following duties... (1) We must be notified promptly of how, when, and where the accident or loss happened....” If you look at the rest of the loss conditions, you will see that the carrier is looking for cooperation in investigating the loss, protection of their legal rights, etc. All of this is intended to protect the insurer’s rights, duties and ability to investigate, verify the validity of the claim, and settle the loss. By advising your insured to pay the loss without notice, they have violated the condition to “promptly” report the claim. You asked if the insured would have coverage two years later for suits that may be brought for these accidents. They would have coverage, but not under their PAP...it can be found under your agency’s E&O policy. When they report the loss to you, they are reporting it to the carrier. You have failed to transmit the information to the company, not because your


insured has decided not to report it, but because you are advising them not to report the loss. Check your agency’s E&O limits to see how much coverage the insured would have. Faculty Response: Either scenario is an E&O claim waiting to happen! All I can visualize is a Reservation of Rights letter. The first situation is clearly the fault of the agency. The wording of the policy conditions calls for prompt notification. The policy is a contract between the insured and the carrier. When the agency takes the notice and does not convey the information to the carrier, they are in violation of their contract with that carrier which calls for notifying them of all material facts. The carrier has not had the opportunity to investigate the claim and possibly make a settlement. The second situation is not quite as clearcut as the first, but there are many similarities. In this scenario, the client has made the decision to self-insure. Unfortunately, when the suit papers are delivered, the insured will probably say, “I told my agent about it when it happened.” Even if this doesn’t happen, the agent has still violated his contract by failing to notify the company of a material fact. Always notify the carrier of any claim that the agent becomes aware of. If the insured wants to pay the initial costs out of their pocket, let that be between the claims department and the insured.

Faculty Response: This becomes a legal question. Two issues are implied. First, is the notice to you notice to the company? If so, they are protected, but the company may take issue with you if their position was prejudiced by the delay. The second is, if the company is successful in denying coverage (notice to you was not notice to them and they can show the delay was prejudicial), then the insured will have issues with you. Either way if it blows up from what is perceived as a little claim into a major claim. The agency’s position is one of peril. Faculty Response: This is probably more of a legal question than a coverage question. The problem is “prompt reporting.” The policy says that the company (“we”) must be notified promptly of how, when and where the accident or loss happened. The policy is a contract between the insured and company. The agent is not a party to the contract. The agent is not “we” as defined in the policy. Is reporting a loss to the agent the same as reporting the loss to the company? If the agent gives the insured advice about not reporting a loss, the company could say that the agent was operating as an agent of the insured and not the company. If a suit is filed two years later, the company could deny coverage because they were unaware of the loss. I think your practice is very dangerous. Have you talked to your insurers about this?

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Faculty Response: Here’s an actual claim we had from one of our member agents. The insured left the bath tub to fill and she took a phone call. Thirty minutes later she had a lake in her bedroom. She called and reported the claim and the company paid out on it. Six months later the exact thing happened. When she called to report the claim, she asked the agent, “Will I get cancelled because of this?” The agent said, “It’s hard to tell but the company will look at this and may nonrenew the policy.” The insured instructed the agent not to report the claim. A few months later, the company sent a nonrenewal due to the one claim. The insured was ticked, and called the agent to say, “If they are going to dump me, then I want to file that second claim.” The agent did that and the insurer denied for lack of prompt notice. The client looked to the agent and said, “Well I reported it to you, so you pay me.” We submitted an E&O claim for the agent. Promptly report all losses to the carrier…as hard as that may be today.

Faculty Response: I think the proper answer is actually whatever your E&O carrier states. It is always dangerous to not report any possible liability claims. I would report all of them. The insured can choose to not make a claim for a first party loss that does not have any third party possible liability but I would want written instructions from the insured for the file.

Faculty Response: Your fear is correct. If the insured pays under liability to a third party, they can be prejudicing the insurance company’s future defense of a claim. In those cases, the insurance company does not have to pay the claim. In some states, the very fact that you paid anything to a third party is an automatic denial of coverage if the loss comes back. By the way, the agency is putting itself in line for an E&O lawsuit by making those recommendations.

Printed with permission from IIABA’s Virtual University. For more information about the Virtual University, go to www.iiaba. net/vu

Faculty Response: Give me an easy question next time. The easy part, if there is any hint of liability or question of liability, report the incident. On reporting a typical first party claim, there are two schools of thought. My own philosophy is to turn a loss in so the company adjuster can determine if there is damage and if the damage is covered. The problem with this thought these days is that most companies don’t underwrite so a CNP (closed no pay) that shows in an underwriting system is a bad thing and could or will result in an up-pricing or non renewal of a policy (God forbid you ever use your policy).

Faculty Response: An agency should report every claim it is advised of by the insured. If the insured wishes to withdraw the claim then he or she should do so directly to the insurer. Giving advice to an insured to not report a claim -- for any reason -- is fraught with danger and an invitation for an E&O claim. Faculty Response: What can happen if the incident isn’t reported? 1. Discovery of hidden damage discovered at a later date and beyond the time permitted by the carrier to report the loss. 2. One insured doesn’t want to report the loss while another does. 3. The insured changes their mind too late for the claim to be accepted by the insurance carrier. 4. The incident involves matters other than those reported by the insured. If the insured has an incident, but doesn’t want to file a claim, submit an incident report with notice to the carrier from the insured stating they do not want to file a claim under the policy. 14

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Agencies Grow as

Economy Recovers

Top 10 Agency Universe Study Findings

A

mid a continuing sluggish economy, independent agencies boosted their ranks in 2011 for the first time in five years, the new 2012 Agency Universe Study shows. The latest Agency Universe Study examines the operations and business strategies of independent agencies during the 2010 and 2011 calendar years, based on responses from more than 2,500 agencies surveyed between May and July. Future One, a collaborative of the Big “I” and independent agent carriers, sponsors the biennial study, which this year was conducted by the Big “I,” Zeldis Research of Pennington, N.J., and consultant Maynard Robison, who worked on the previous six reports. The number of independent agencies totaled 38,500 by the end of 2011—a 3% increase over 2009 year-end levels, according to the study. Interestingly, 18% of the survey respondents worked at agencies founded during the past five years. Geographically, 44% of these new agencies are located in the South (compared with 36% of older independent agencies), showing a significant shift in concentration. Who are the people running these startups? Half of them (9%) are entrepreneurs who previously worked for exclusive carriers that winnowed their ranks or exited markets like the Southeast that the new agency owners now serve. 16

The number of independent agencies has grown.

The system as a whole is dynamic.

Like the 2010 Agency Universe Study, the 2012 study derived the distribution of agencies using a combination of sources.

Business conditions for independent agencies improved between the 2010 and 2012 studies.

The average marketing budget has decreased about 35% over the past two years (and 42% since 2008).

Many agencies continue to focus efforts on marketing to a more diverse clientele, as well as developing a more diverse staff.

Agencies in all revenue categories are placing increasing proportions of their revenue through market access providers.

Agencies have fewer direct relationships with carriers, except for standard personal lines carriers.

Systems and data security are now the most important technology challenges facing agencies.

In 2012, agencies are just beginning to use the Internet to obtain new customers.

Source: The 2012 Agency Universe Study Management Summary


“These new agency owners are well-trained, already have some traction and [are] ready to get started on building a book of business,” says Madelyn Flannagan, study manager for Future One and Big “I” vice president of agent development, education and research. The growth in the overall volume of independent agencies and in the number of startups struck Robison, president of Maynard Robison Consulting, by surprise. “This is happening despite gloomy economic times and continuing consolidation among independent agencies, although the latter is occurring primarily among the truly large or jumbo firms,” he says. “It is interesting, too, that there is a trend toward captive agents becoming independent agents, where they can own their own businesses and be true entrepreneurs. Compared to startups in the past, these are experienced people able to get traction fast.” Meanwhile, many agencies that had previously characterized their businesses as small now describe them as medium-small. “Obviously, they’re doing well and getting more clients,” Flannagan says. “In the 2010 study, we saw that a lot of agencies that had been in business for five years or less had perpetuation plans, were well-run and well-staffed, and making money. Those smaller agencies are now medium-small and are continuing to grow.” The study notes: “Compared to older agencies, new agencies appear to be better managed [and] following formal business planning steps more regularly. New agencies [also] tend to grow more rapidly. On the whole, new agencies founded since 2008 are much more dynamic than older small and medium-small agencies.” These and other developments appear to be driving higher agency revenue. Sixty percent of respondents said their agencies had generated revenue increases between 2010 and 2011, compared with 42% between 2008 and 2009. Only 26% had experienced decreases in agency revenue between 2010 and 2011, compared with 37% between 2008 and 2009. This rather robust revenue picture contrasts with declines in total direct written premiums for the propertycasualty industry in 2010, the last year of actual data. The industry recorded $459.8 billion in premiums, a 0.7% decline since 2009. In other words, agencies are building revenues despite industry premium declines and a sluggish economy. “Not all is doom and gloom,” Flannagan says. Russ Banham is an IA senior contributing writer. To preorder an electronic copy of the 2012 Agency Universe Study Executive Summary, please go to www.iiaba.net.

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The TAPCO Service Pledge • “A”-rated non-admitted carrier • $10 credit to your personalized TAPCO EZ Bucks Visa debit card • Competitive pricing with each policy • Fast policy turnaround • Visa, MasterCard and ACH • In-house financing available payments accepted • Quick claims handling

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More than 1,000 classes of P&C business written under binding authority.

877-TAPCO-99 www.gotapco.com

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Big I’s Top Agent Issues of 2012 The Independent Insurance Agents & Brokers of America have picked the top 7 of the year’s most influential issues for the independent agency system.

Independent insurance agencies boost revenue and ranks in a soft economy. While profitability remained flat for most agencies, organic growth helped produce new revenues for firms of all sizes, the 2012 Best Practices Study Update shows, based on 2011 data. And the number of U.S. independent agencies rose by 1,000 to 38,500 over two years—a small but significant gain that was the first uptick after six years of stagnant levels, the 2012 Agency Universe Study reports. Former captive agents founded many of these new independent agencies in the South, where captive companies are becoming reluctant to write because of hurricane exposures. Superstorm Sandy rocks the Northeast, likely ranking as one of the world’s most expensive insurance disasters. Even though the October storm’s private insured losses—that is, claims other than those for federal flood insurance—could rack up to $25 billion, the industry remains financially sound. Still, it will be sorting out Sandy’s effects for some time because of the unprecedented values exposed to loss; a combination of damaging storm surge and tricky flood perils; pollution, mold and indirect loss resulting from business interruption; diminution of value and government-restricted access to businesses. Agents are helping clients navigate such claims, while coping with damage to their own offices and homes. 18

Health care reform takes further shape. Details and implementation of the Patient Protection and Affordable Care Act (PPACA) continued to trickle out in 2012, even as the law survived challenges for repeal. The U.S. Supreme Court upheld the law, and the 2012 election results—which maintained the balance of power in Congress—translate to no realistic chance at wholesale repeal. Many states are expected to or are already moving forward with their portion of implementation, including state exchange creation and navigator programs. The Big “I” continues to call for changes to PPACA provisions that harm the association’s small business members and consumers, and it is working toward solutions that will address agent and consumer issues through the regulatory process and legislation where appropriate. Property-casualty pricing trends upward—though there’s no hard market yet. Composite p-c rates for commercial and personal lines continued to increase in 2012 since turning positive in late 2011 after years of negative pricing. One key factor influencing property pricing is a multi-year trend of interior and coastal losses from U.S. disasters. Agents have faced the challenge of explaining rate hikes to cash-strapped clients, who are continuing to deal with a tough economy.


For Nov. 2011

Our Umbrella Programs Have Just Gotten Better Preferred Property Purchasing Group NFP has partnered with XL Insurance as a carrier for our umbrella products Our umbrella liability policies are now written by XL Insurance, with Chubb Insurance Group for the Excess Layer. We offer four umbrella limits, and flexible, broad coverage: • $5 to $25 Million in umbrella coverage with up to $50 Million in total limits. • Hi-Rise apartments up to 35 stories eligible, with higher eligible by referral. • Excess of D&O, General Liability, Auto, Employers Liability, Employee Benefits and more. • Developer-sponsored boards eligible.

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11716 WA IIABA ad.pdf

Following the election, a status-quo Congress and White House will address agent issues. With the election over, the Obama Administration is expected to forge ahead with implementing health care and financial services regulation reforms. The Big “I” will continue to tackle these and other issues that are expected to be addressed by the 113th Congress, including terrorism risk insurance, tax reform, insurance regulation, agent licensing and crop insurance. The Big “I” is positioned to be a key player in the upcoming session. Its political action committee, InsurPac, distributed $1,843,500 in support of 282 U.S. Senate and House races in the 2012 election, winning 236 of them for an 84% victory rate. This participation affirmed the association’s reputation as a leading industry voice in the nation’s capital.

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Personal Umbrella endorsed by IIABA

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Congress passes a long-term extension and reforms for the National Flood Insurance Program. Years of hard work by the Big “I” finally came to fruition in July when President Obama signed a new law that extends the National Flood Insurance Program (NFIP) for five years, until Sept. 30, 2017, and aims to modernize the program. The law includes changes that the association advocated for, such as phasing out subsidies for many properties, raising the cap on annual premium increases to 20% from 10%, imposing minimum deductibles for flood claims, requiring the NFIP administrator to develop a plan for repaying the debt incurred from Hurricane Katrina and establishing a technical mapping advisory council to deal with map modernization. The balanced, bipartisan law protects both consumers and taxpayers, and as discussion regarding the impact of Hurricane Sandy continues in 2013, the association is staying on top of this critical debate. CMY

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The benefits market evolves. The trend of major long-term care insurance providers ceasing to write new business or exiting the market continued in 2012. One of the primary motivating catalysts was the long-term position of the Federal Reserve Board to keep interest rates low. This affects “long-tail” and interest-sensitive insurance products like LTCi and universal life insurance because an insurer’s general account fixed-income portfolio cannot generate an investment return that satisfies the assumptions used to develop the product. Also, while it appears the stock market will have meaningful gains, its volatility continues to scare many investors from allocating their savings to achieve real rates of return in excess of the rate of inflation. And the overhanging “fiscal cliff” has continued to keep investor anxiety high. Authors: Paul Buse, Dave Evans, Madelyn Flannagan and Margarita Tapia from the Independent Insurance Agents & Brokers of America.

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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. • • • • •

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


Industry Updates: Legislative Issues & Underwriting Tools Free Continuing Education Workshop (2 ce) The Independent Insurance Agents & Brokers of Washington (www.wainsurance.org) and the Washington Surveying and Rating Bureau (www.wsrb.com) are joining forces to provide a free workshop which will give participants 2 ces in addition to updates from both organizations on new initiatives and programs. This is your opportunity to find out how you can better utilize the services of two organizations that have collectively been in existence for over 200 years! Get an update from IIABW on how insurance issues will be impacted this legislative session in Olympia. Learn how:

Schedule of Workshops: March 5:

Vancouver - 2 pm

• agents will work within the new health care exchange.

March 7:

Tacoma -2 pm

• new rules on surplus lines, certificates of insurance, and premium funds impact your operations.

March 12:

Bow - 9 am

• Project CAP’s consumer portal will drive business to you through search engine optimization and a powerful consumer web site.

March 12:

Lynnwood - 2 pm

March 14 :

Bellevue - 2 pm

March 27:

Spokane -2 pm

April 3:

Wenatchee - 2 pm

April 4:

Richland – 9 am

April 4:

Yakima- 2 pm

• your agency’s B & O taxes could triple.

Learn how you can use WSRB’s wealth of tools to make it easier to write business. You will learn: • how to improve the accuracy of your clients pricing and assess risk on properties. • about WSRB’s changes to automatic sprinkler systems - their ‘No Sprinkler Left Behind’ campaign. • how WSRB’s exciting new PropertyEDGE service will help you more effectively serve your clients by aggregating many tools, including information on property risk, fire protection, flood zones, earthquake risk, census data, aerial maps, and more.

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Industry Updates Registration Form To register for the free workshop, complete this form. Please complete separate form for each individual attending. You will receive a follow up email with additional details, exact location, and driving directions.

If you have questions, call 425-649-0102, ext 224 or email sscott@wainsurance.org.

Name: __________________________________WAOIC#___________ Firm: _____________________________________________________ Address: __________________________________________________ __________________________________________________ Phone: ______________________Email: ________________________ Workshop Date & Location ___________________________________

IIABW 11911 SE 1st St, Suite B103 Bellevue, WA 98005

22


Market your agency with the new Member Marketing Activity Center www.independentagent.com/MMAC

Washington Product Availability: Commercial Lines:

Personal Lines:

www.bigimarkets.com

Big “I” Markets (BIM) is the IIABA member’s online market access program with no fees, no volume commitments and competitive commissions.

Affluent 4:1 Package (Four Carriers) Business Insurance Bonds ACE Bid Chartis Contractor Chubb Performance Fireman’s Fund Surety At-Home Business Other Collector Car Policy Commercial Auto Event Liability Commercial Builders’ Risk Fine Art & Valuable Articles (Stand-alone) Community Banks Business Insurance Program Flood Insurance Employers‘ Practices Liability Excess Environmental Impairment-Pollution Coverage NPC Event Cancellation (EXPO Plus) Event Liability CBRA Fidelity/Crime (Wrap+) Marine Insurance Financial Advisors’ E&O Charter Boat Fine Art & Valuable Articles (Stand-alone) Mega-Yacht Flood Insurance (Excess also available) Performance Boat Habitational Markets Personal Watercraft Apartments Small Boat under 27 feet Condo and Homeowner Associations Yacht Hartford Markets  Non-standard Homeowners Alarm Contractors Note: Big “I” Markets is not accepting new non-standard property Arborists Insurance Program business until 1/1/13. Excavation Contractors Insurance Program Affluent Non-standard Homeowners Orthodics and Prosthetics Insurance Program Coastal Homeowners Septic Contractors Insurance Program Non-standard Condos Specialized Truck Equipment Program Specialty Pool & Spa Non-standard Homeowners Highly Protected Risks Non-standard Rental Dwellings Insurance Company Professional & Business Insurance Program Non-standard Renters Miscellaneous Professional Liability Personal Builders’ Risk Mobile Food Vendors Seasonal Homeowners Motor Truck Cargo Unprotected Homeowners Non-Profit D&O Liability Unsupported Secondary Homeowners Outdoor Markets Vacant Dwelling Guides & Outfitters  Personal Builders’ Risk Rod & Gun Clubs Personal Excess Policy Fishing and Hunting Lodges & Plantations Personal Umbrella Policy proliability Program Property Manager E&O Recreational Vehicles Real Estate E&O Supplemental Natural Disaster Protection Recreational Vehicles Travel Insurance Restaurant Fine Dining and More - Fireman’s Fund Vacant Property Program (Admitted) Travelers Select Accounts Apartment Pac Building Pac Business Pac Condominium Pac Contractors Pac We’ve made it easier than ever to Plug into the Power of Big “I” Garage Pac Markets! Register online today and discover a fresh new way to do Office Pac business. All products are only accessible online and coverage is subject Religious Pac to licensing compliance and underwriting approval. To register online Restaurant Pac you will need your login ID and password, your agency tax ID number, Store Pac your agency E&O policy, and your state agency/agent license Technology Office Pac information (where applicable). Log on to www.bigimarkets.com today Technology Consultants Prof. Liability to begin the registration process and start quoting in minutes! Wrap+ Executive Liability for Private Companies ACEC

Online Registration

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Washington Continues Leadership in

InsurPac Giving

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ashington state agents and brokers collectively contributed over $22,000 in individual contributions for our national political action committee, InsurPac. Nationally, $920,000 was raised in 2012, which is the second most ever raised by the Big I. Washington State again reached our overall fundraising goal and also our Young Agent goal. Thank you to Sue Knobeloch of Lovsted Worthington who serves on our national association’s Board of Directors and is our state’s InsurPac Chair. Also thanks to the agencies who raised the most from their employees and owners (in order of giving): Propel, Conover, Argus, Unity Group, Stonebraker McQuary, Brown & Brown, and Lovsted-Worthington.

Centennial Club Kurt Carlson Brad Green Peter Hendrick Darren McEuin Don McQuary Jim Rogers Eric Zimmerman Gold Club John Carmody Alan Cottle Robb Dale Michael Ferreira Nancy Frost David Hargreaves Duane Henson Barbara Johnson Terese Moon Michael Rydbom Tom Taylor Jr Robert Trask Jr Dean Young 24

InsurPac is the largest P & C agent insurance industry PAC and is one of the reasons why the Big I is routinely rated in Fortune magazine’s top-25 list of most successful lobbying groups in Washington D.C. By pooling individual contributions, InsurPac helps elect candidates and re-elect members of the U.S. Congress who share the Big I’s business philosophy. While contributions do not buy solutions to legislative debates, they do allow the Big I significant ‘face time’ with very busy elected officials to give us an opportunity to educated them. Thank you to the 57 agents and brokers who have contributed to InsurPac in 2012.

Pioneer Club Catherine Bakamus Bill Gellor Jim Gibbons Daniel Holst Kim Impecoven Duncan Kirk Susan Knobeloch Kimberly Krogh Kris Lawrence Suzanne Lewis Steve Marinkovich John McDonald Dave Merrill Brian Roberts Alex Rule Brad Scott Jim Slaugenhaupt Nick Stay Mary Stien John Teske

Founders Club Rob Bush Robert Connor Craig Field Barry Hanson Patrick Otter Larry Petersen General Contributor Michael Button Randy Foiles Lynette Grandy Garth Hamilton Garn Kemp Phil Latendresse Fred Loffer Cindy Phillips Melissa Power Larry Trefry Chris White


inspired by

creativity

CHALLENGING NEEDS, CREATIVE SOLUTIONS imperial pFs, the leader in premium financing, continues to focus on the success of our agency partners. in today’s volatile credit environment, our experienced staff finds creative solutions to your most complex transactions. We focus on getting the deal done while providing you the highest standards in customer service. ipfs.com

marketing@ipfs.com

Bothell: 800-888-2750

Spokane: 800-234-7373

25


Young Agent Corner By Brian and Jillian Fassburg, co-chairs YOUNG AGENTS DONATE 2,000 LBS OF FOOD 90 producers, CSRs, marketing reps and underwriters attended the annual Young Agents Holiday Networking Reception in November. Participants gave 2,000 pounds of food plus cash donations to Northwest Harvest.  We would like to congratulate and thank Superior Underwriters for donating the most food this year. YOUNG AGENTS BOWLING NIGHT March 14th The next event of the Young Agents will be a night at the bowling alley on March 14th at ACME Bowling in Tukwila. Take a few hours to network with your insurance colleagues and have some fun. Go to our Facebook page for more information. YOUNG AGENTS ANNUAL CONFERENCE The Young Agents Annual Conference will be held at Campbell’s Resort in Chelan on June 6-7, 2013. This is a wonderful opportunity for professionals new to the industry to learn, network and have fun. We are going to focus on sales and service this year. WHO ARE THE YOUNG AGENTS? We are a statewide network of insurance professionals striving for professional growth through educational achievement, leadership development, legislative involvement, consumer advocacy, and insurance career perpetuation. Working with other insurance professionals allows us to discuss industry concerns, programs, sales, and other insurance related topics with colleagues who have had or are having similar experiences. For more information contact the Young Agents Committee cochairs, Brian Fassburg (brian@piuinc.com) and Jillian Fassburg (jillian@piuinc.com), at Pacific International Underwriters (800562-8403) or go to the Young Agent Facebook page at http://www. facebook.com/IIABW.YoungAgents. 26

Seeking Entrepreneurial Producer/Manager Fully licensed and appointed retail P&C insurance agency seeking producer/manager/partner. Are you an independent go-getter interested in running your own insurance business? This opportunity is unique and the income potential is virtually unlimited. Run and grow an established independent P&C agency, with access to specialty small contractor products and traditional markets. We have lost a key individual in this young but growing business and need to find the right person to take over and drive it forward, and make it your own. Opportunity: • Existing agency • Proven model • Outbound advertising campaign established • Up to 100% of commissions earned • Own your book of business -- lucrative residual income • Potential equity – own and manage your own business Qualifications: • Property and Casualty Insurance license • Track record of success in insurance and sales • Management and leadership experience marym@verityrisk.com


FOR AN AGENCY APPOINTMENT OR QUOTE CALL, FAX OR EMAIL: T 800.589.4208 F 800.522.4461 E dennis.burgess@premiermarineusa.com *No volume requirements

Premier Marine Insurance Managers Group (USA) Inc. 3302 Fuhrman Ave E, Ste 300, Seattle, WA 98102-7115

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2013 Conferences

Young Agents Conference June 6-7, 2013 Campbell’s Resort, Lake Chelan

Joint IIABW/PIA Business October 21-22, 2013 Seattle Sheraton

Scalable Insurance Software Solutions Agency Software Inc has software solutions designed to match virtually any sized agency and any budget

Come visit us at www.agencysoftware.com See if EasyApps, EZAgent, or AgencyPro are a right fit for your agency Your Local Insurance Software Solution since 1988

215 W Commerce Dr, Hayden, ID 83835

800-342-7327 29


Big “I” Professional Liability Program

Insurance Agents Errors and Omissions Coverage That’s Right for Your Business Why the Big “I” Professional Liability Program? Superior customer service and expertise by your state association Professional Liability Committee comprised of IIABA members that oversees and has a direct influence in the program Nationally endorsed program with 25 years experience The largest independent insurance agency E&O program in the country Supports lobbying efforts protecting your industry by contributing a percentage of every premium dollar to the funding of important advocacy efforts of the IIABA

Swiss Re Corporate Solutions As the nationally endorsed carrier of the Big “I” Professional Liability program for 25 years, Swiss Re Corporate Solutions has created the strongest coverage form in the marketplace. The largest writer of agents E&O insurance in the country, it provides solid core coverage as well as coverage units to insure against other exposures of concern. Review the preferred policy form and you will find that these are just a few of the coverage benefits of the Corporate Solutions policy: Coverage for the sale of both Property/Casualty and Life/Health insurance products Limits of liability up to $20 million Broad definition of covered professional services and activities Comprehensive definition of “who is an insured” Aggregate deductibles Defense cost outside the limit Available first dollar defense Full prior acts available Coverage for punitive damages (where available and covered by insuring agreements) Multiple extended reporting period options True worldwide protection Coverage for advertising, including libel and slander Protection for related consulting services Expert witness testimony covered Teaching formal insurance courses included Premium finance services placement built-in Additional coverages include catastrophe extra expense, subpoena and regulatory expenses Choice of Defense Counsel - by endorsement Real Estate Agent Activity - by coverage unit Employment Practices Liability - by coverage unit Cyber Liability Coverage - both first and third parties

Why Swiss Re Corporate Solutions? Exclusive loss prevention resources including: o risk management website, E&O Happens o risk management newsletter, E&O Claims Advisor An exclusive policy form and premium credits filed on a Risk Purchasing Group basis give Big “I” members tailored coverage Dedicated claims staff focuses solely on defending insurance agents E&O claims - 70% of claims personnel are attorneys Rated “A” (Excellent) by A.M. Best All policies are underwritten by Westport Insurance Corporation, a member of Swiss Re Corporate Solutions.

The information provided is for general informational purposes only and you should review the policy form and any applicable endorsements for complete policy language. Please note that all applications are subject to review, underwriting and approval by Westport Insurance Corporation, a member of Swiss Re Corporate Solutions. If you have any questions please contact your state administrator.

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Liberty Northwest® has been creating insurance solutions and providing superior services for businesses in the Northwest since 1923. We know how important it is for our agents to have the right resources to support the needs of their clients, which is why we pride ourselves on strong agent relationships and act with integrity and responsibility. Your success is our success – we are proud to support the Independent Insurance Agents & Brokers of Washington.

www.libertynorthwest-ins.com Liberty Northwest, 650 NE Holladay Street, Portland, OR 97232 ©2012 Liberty Mutual Insurance


Big I Washington Spring 2013