Big I Washington, Winter 2014 by Blue Water Publishers, LLC

WN-2013FallAd-(IIABWA-(WA)).pdf 1 10/25/2013 8:17:24 AM

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WINTER 2014

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

Anderson & Murison

B C E Consulting

Officers of IIABW President: Pat Otter, Otter Insurance, Lynnwood President-elect: Mike Button, AIP, PayneWest, Richland Secretary: Kim Krogh, ARM, Fidelity Insurance, Spokane Treasurer: Lori Reed, Mitchell Reed & Schmitten Insurance, Inc., Wenatchee IIABA Director: Sue Knobeloch, CIC, CPIW, Lovsted Worthington, Bothell Executive VP: Daniel Holst, IIABW, Bellevue

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Board of Directors Pauline Black, ACSR (Exec Comm At Large), Rice Insurance, Bellingham Mike Button, AIP (Benton-Franklin), PayneWest, Richland Ryan Douglas (King) 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 Pat Otter (At Large), Otter Insurance, Lynnwood Melissa Power, ACSR, CIC (At Large), Homestreet Insurance, Spokane Michael Rydbom, CIC (SE WA) Hub International, Pullman Nick Stay (Pierce) American Underwriters Insurance, Tacoma Dave Street (Grant), Martin-Morris Agency, Wenatchee Larry Trefry (Spokane), Andre-Romberg, Spokane Ron Tripple (Exec Comm At Large), Tripple Tripple & Tripple, Edmonds Chris White, CIC, CRIS (At Large) Bell-Anderson, Anacortes

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 Kimberly Ostling, Member Programs Assistant - kimberly.ostling@wainsurance.org

Capital Insurance Group

Grange Insurance Group

Griffin Underwriting

Imperial PFS

Liberty Mutual

Mutual of Enumclaw

Preferred Property/JGS

Premier Marine R-T Specialty, Inc.

RESTORx DKI

Risk Placement Services

Ron Rothert Insurance Services

Superior Underwriters

Western National Insurance Group

Worldwide Facilities, Inc.

About the Cover: This photo was taken by Dan Holst from the top of Granite Mountain overlooking Robin Lake and Mt. Daniels in the Alpine Lakes Wilderness.

Table of Contents

Tapco 11

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.

A Message from Pat Otter, IIABW President

IIABW - THE Source of Quality Insurance Education

Balance Key to Accessing Quality Health Care

Q & A with Healthplanfinder

E&O and Checking Policies

Trusted Choice© Sponsors Make-A-Wish Walk

IIABW Receives Education Award

Guarding for Carrier Claims Against Agents

Agency Trends

2014 IIABW Conferences

IIABW and PIA Joint Conference Wrap Up

7 Ideas to Get All the Prospects You’ll Ever Need

A Consumer Connection You Won’t Want to Miss

Big I Professional Liability Program

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IIABW President

PAT OTTER

t is a pleasure and an honor to serve as your association’s President this year. My year started on the right foot with a strong Joint Conference in Seattle last month. We appreciate the generous support we received from our company sponsors and exhibitors. I am glad that IIABW and the PIA could collaborate so successfully for our third Joint Conference. I hope we can use this as a springboard to work closely on other projects in the coming years. I am excited about IIABW’s ambitious agenda for the upcoming year. Here are some of our goals from our annual strategic plan: Maintaining a strong and active membership IIABW will be doing another series of free road shows around the state to reach out to the industry with CE and information about our association. Last year we had over 500 people registered for the series we did with WSRB. We will also continue to grow our successful young agent program to be sure new professionals in our industry have success so they make it their career. We all know how important perpetuation is to every agency in the state. Influence laws and regulations Bill Stauffacher, who has lobbied for us for 16 years, continues to work with our active membership to protect our industry for harmful taxes and regulations. Our industry showed how powerful we can be when we collaborated to this past Sping to defeat the initiative to triple our B & O taxes. To be successful, we need to continue to grow the contributions to our political action committees, Big I Pac in the state and InsurPac for Congress. Effectively communicating with our members I know how busy we all are and how overloaded we are with mail and email. IIABW’s goal is to synthesize much of the industry and association information to keep you informed and save you time. We are reaching out to members through email blasts, Facebook, in-person meetings and through our website, which will be going through a major overhaul this year. Get involved I encourage you to get involved in your state association. I learned from my dad how important it is to give back to the industry so that is why I volunteered for IIABW’s Govt. Affairs Committee back in the late 90s and the Board after that. I can tell you from my experience that I have gotten much more professionally and personally from my volunteering with the Big I than I have given. I have learned so much from my fellow leaders and company reps. 6

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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.

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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.

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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.

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Balance key to ensure consumer access to quality health care

COST QUALITY RESULTS

By Mike Kreidler, Washington Insurance Commissioner

s health care reform takes shape under the Affordable Care Act, a new trend is emerging that offers both a challenge and opportunity for controlling costs and ensuring access to quality care in our state. It is also at the heart of a recent legal maneuver that a major medical provider in the Northwest has filed against my office. Eight Insurance companies now offer coverage through 46 plans in the new Health Benefit Exchange, which began enrollment Oct. 1. Ten insurers and 51 plans are available in the market outside the Exchange. Within the Exchange, insurance companies are employing a business model that is trending toward more limited access to medical providers while working to keep premiums low. This is understandable since the companies had a short time frame to revamp their previous plans to meet the required – and long overdue – expanded range of benefits under the Affordable Care Act. Building an adequate network normally takes considerably more time than was available this year. In the insurance and medical fields, reasonable access to provider care is known as “network adequacy.” Translated, this refers to having a substantial selection of doctors and care facilities available to consumers. My office regulates insurance companies to ensure the networks they have truly serve consumers. In this new market for health care, consumers must be vigilant about checking plans to ensure the doctors and facilities they want are actually included. Recent legal action by Seattle Children’s Hospital has helped shed light on the new trend by insurers to reduce costs by not contracting with all providers they once did business with. Consumers have noticed this and have contacted me after learning that some doctors and facilities are no longer included in their plans. As my office reviewed the new health plans during the summer, we noticed the trend toward thinner networks and started the rule-making process for creating new standards that 8

we believe will address this issue. We are working to complete this by early spring. My challenge as a regulator will be to find the proper balance among cost, quality and results. The market response to narrow the networks to reduce premium costs is understandable. But low price cannot be the sole consideration. I also believe the pressure on insurers to control finances will drive them to negotiate with medical providers with proven records of successful treatments and keeping their patients healthy. The result will be to move away from paying for the unnecessary procedures that provide scant to no benefit and jack up costs to unsustainable levels. To protect their bottom lines, insurers will contract with doctors and facilities that have the evidence to back up the care they provide. This is the sensible direction. Without the Affordable Care Act, there would be little incentive toward this effort to control costs and improve the quality and results of health care. Market forces – the foundation of the act – are driving this. An important step now is to ensure that reasonable networks are available for the individuals and families who want and need health care coverage. My charge as insurance commissioner is to work with all parties to find a reasonable balance. This will evolve over time as we gain a better understanding of what works best to keep people healthy. Insurers and those in the medical profession have business interests to protect. I get that. I also know they are committed to quality care. I am ready to work with them to make sure that low price is not the only factor in health coverage. While the networks that insurers have put in place are legal, I share the concerns about whether they provide reasonable access to care. The new range of plans and networks were crafted under existing regulatory tools. My goal going forward is to determine what constitutes an “adequate” network. Protecting consumers will be my guidepost. Mike Kreidler, the insurance commissioner for Washington, is serving his fourth term.

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E&O and Checking Policies Virtual University’s Ask an Expert

n agent asks, “With the advent of download from the carrier websites directly into our agency management system, do we need to check the renewal policy for accuracy? We are currently investing a lot of time and money into this process and rarely find that the company makes a mistake on the renewal policy.”

QUESTION:

”I would like some feedback regarding whether or not we should check renewal policies. With the advent of download from the carrier websites directly into our agency management system and most ‘paper’ being shut off, do we need to check the renewal policy for accuracy? We are currently investing a lot of time and money into this process and rarely find that the company makes a mistake on the renewal policy.”

ANSWER: Quality control efforts can be expensive. However, mistakes in the form of E&O claims can be catastrophic. Below are a number of observations from the VU faculty, concluding with an article from agency management consultant, Al Diamond. Faculty Response My experience is not as good at not finding errors. I have seen an insurer deny a claim on the basis of a mistake they made on a policy. They stated that if the mistake was not reported to them when the policy was issued, it is the agent’s fault. I would not stop checking policies. Faculty Response Not an easy one to answer. Unfortunately it depends if you maintain only electronic files and the agency management system allows for alerts and or exception reports providing for both the previous image and the new image to be retained then based upon your internal process you can evaluate the necessity. If you use transactional filing or you have a procedure for scanning documents identifying and attaching to the electronic file then again you can evaluate the necessity. If, on the other hand, you maintain a separate and distinct paper file and you have bits of notes, correspondence, etc. 10

in that file, then again you need to evaluate your internal processes. As an independent agency, you can operate under whatever internal and external processes you deem appropriate. It is not possible to provide the advice you are seeking based upon the information provided. Faculty Response Agency E&O 101: Policy check, both new and renewals, is fundamental. Faculty Response I’m sure that since the companies rarely make a mistake, that when they do, the agency will be held harmless by the carrier if it has a really good hold harmless agreement with the carriers. Faculty Response Just because something arrives electronically doesn’t mean it is more likely to be accurate. In fact, its chance of being wrong now means that it is IN YOUR SYSTEM WRONG and will affect mail merges, management reports, and information given verbally. While carriers make few mistakes on renewals, they certainly do make them AND items have been known to download incorrectly (e.g. into the wrong client), and downloads often overwrite agency-needed information or bring in carrier codes instead of plain-English field entries. Moreover, automated renewals have caused many agencies to spend more time communicating with clients who don’t pay their bills (via reminders that should not be done!) than with good clients who pay their bills and don’t cause problems. The renewal gives the agency the opportunity, if they don’t find it anywhere else, to stay in touch with the clients. Plus, rounding the account would be a nice thing to do, both from a revenue standpoint and also for E&O protection. Faculty Response Your experience is better than others I’ve heard from. Many moons ago, ISO and its predecessors used to have audit departments that checked insurer policies. That was before the allegedly high level of automation we have today, but I recall the error rate running about 43%. I’ve heard claims that 25%

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or more of NCCI experience mod worksheets have inaccuracies and that’s a highly automated product. I think checking renewal policies is a valuable service for your clients and your E&O exposure. If you do represent carriers who you believe issue highly accurate renewals you might consider this but only if you have an ironclad hold harmless in place. Still, I’d continue checking…I know of agencies that have been dragged through E&O lawsuits for what turned out to be insurer errors.

of your book of business and can be responsible for inaccuracies. While companies (and agents) IIABW, through our subsidiary IPSC, has provided relirarely make mistakes, when able, stable E&O coverage to our members for 30 years they do, they can create through our flagship E & O carrier, Swiss Re/Westport major problems. (formerly Employers Re/GE). Starting in January, our Mistakes aren’t the only carrier will be rolling out some of the biggest, most thing you need to look for. exciting changes in a decade. They include: Often new endorsements are • new, significant premium credits that will added to renewal policies make the policy even more competitive. Even if which restrict or exclude we have quoted your E & O in the past couple coverage. For example, years, give us another chance to help you save some companies writing money and provide you a high quality policy contractors are automatically and service. excluding coverage for work • a bridge application to make it much shorter and done on the insured’s behalf easier to complete. We can continue to give you by subcontractors. This is a rate indication off your present application. a major coverage reduction • a new loss control class that helps agents reduce done by an endorsement you claims and gives an additional 10% credit. Faculty Response didn’t request. What kind of mistakes are In his February 2010 To learn more about these exciting changes, contact you checking for? Some may column in Rough Notes Ashley Kuaea at 425-649-0102, extension 225. not be a mistake, but could magazine, Don Malecki create major E&O problems. discusses and E&O lawsuit Are you talking personal where a roofing contractor’s and/or commercial lines? These are just a few thoughts. Check CGL policy included an endorsement that excluded claims to be sure the insurer has used the same edition of the coverage arising from roofing operations. I’m not making this up. form. If they have not, what were the differences in coverage? You should check to be sure no “strange” endorsements have Faculty Response been added, or requested endorsements omitted, that limits are The bottom line is, yes. However, the items that you need to as requested. For Business Auto, were the requested symbol(s) check might need to be streamlined. You want to make sure used? These are common omissions. that the name and address are correct according to your own records. You will need to check the limits of coverage to see if Faculty Response they have changed. Yes. Always. Also check for wording changes and use of new And, you should look at the premium...if it goes up and forms. It is cheaper than an E&O claim. you do not take notice you could lose policies when the client goes shopping. I know of a case where an agent was sued for Faculty Response providing the same policy at a higher premium in one company Yes, stay vigilant. A very common error is an insurer’s failure of a group when the insured was eligible for the lower cost continue an additional insured endorsement that had been policy. requested mid-term. The courts are full of lawsuits by AIs. One other important item is policy forms. Are there any that have gone missing? Was there a special form on the Faculty Response original policy that does not appear on the renewal? Had you Yes, you should check renewal policies in whatever format you requested additional coverage that somehow disappeared? receive them. A “rare” mistake can be just as costly (in every way, and possibly more so) as one that happens frequently! To read more faculty responses including an article from agency management consultant, Al Diamond., go to the Virtual Faculty Response University’s web site at www.iiaba.net. Yes, I believe you need to check the renewal policies for accuracy. If you are an independent agent, you are the owner 12

Big Changes in the E & O Program

IIABW Receives

Education Award Susan Scott, IIABW’s Senior V.P. of Education, accepted our association’s IIABA’s 2013 Excellence in Insurance Education Gold Award at the national education conference in San Antonio in September. It was the third year in a row that IIABW won this prestigious award which is given to state Big I associations to recognize their dedication towards the progression of the independent agency system through education.

Agency

Trends

ince 2010, the percentage of agencies with a specialty or niche has increased significantly across all revenue categories, according to the 2013 Best Practices Study. This annual study of annual benchmarks is conducted by the Big “I” and Reagan Consulting and examines the activities of top agencies across the country. This year Davidson & Associates Insurance, Parker Smith & Feek and The Unity Group (Hub International) were Best Practices agencies from Washington State. The increase in specialization is not surprising given the potential efficiencies and growth advantages of the practice. Developing an expertise or proficiency in a certain industry or product facilitates targeted leads and referrals, improves retention and provides a competitive edge for an agency. Specialization has increased across agencies of all sizes:

Revenues

(in millions)

2010 2013

<$1.25 $1.25-2.5 25.0% 39.4%

44.2% 55.9%

$2.5-5

$5-10

$10-25

51.4% 55.6% 64.1% 64.4% 72.1% 72.7%

Another interesting result from the study is the ranking of technology investments planned for the coming year. The top investment choice for agencies with revenue under $5 million will be in internet marketing and social media, while agencies with revenue over $5 million ranked investments in agency management systems as the No. 1 choice. Internet marketing and social media investments ranked fourth for the larger agencies, perhaps because many of these firms have already ventured into these fields. Across all revenue groups, the average number of agency staff members that devote time to social media activities is 1.3 employees, who spend about 10% of their time on these activities. This year’s study also takes a new approach to measuring service staff productivity. Rather than identifying the average book of business serviced per account executive (AE) and customer service representative (CSR), the study combines all service positions—AE, CSR, processor, marketer/placer and claims—by line of business, and does not include administrative staff members like accountant or receptionist. This change gives readers access to the total number of people the typical Best Practices agency utilizes to service the revenue in its commercial, bonds, personal, group life-health and individual life-health books of business. The study also provides a salary range for each of the four service staff positions. 14

As expected, organic growth has continued to improve dramatically since last year’s study. The average growth rate in total commission and fee revenue was 9.4% (up from 2.1%) for agencies with net revenue under $5 million, and 9.8% (up from 4.5%) for agencies with net revenue over $5 million. Although a significant portion of the growth can be attributed to increasing premium rates and an improving economy, that’s not the whole story. Between 2007 and 2010, when the soft market and an extremely weak economy made positive growth nearly impossible, Best Practices agencies continued to invest in growth strategies that would allow them to achieve organic growth and obtain a competitive edge as conditions improved. The results of those strategies—which include hiring new producers and equipping them with new tools and resources, enforcing more producer accountability, focusing on specialty/niche areas and expanding marketing/advertising activities—has paid >$25 off. Strong revenue growth improved profitability as 68.4% well. Although last year’s study results identified that 80.0% growth was stronger than it had been in years, profit margins remained stubbornly flat thanks to waning contingent income growth. That trend has now reversed. This year’s results show that contingent income has grown an average of 21.8% for agencies with revenue under $5 million, and an average of 10.7% for those with revenue over $5 million. At the same time, agencies did a much better job of controlling expenses so that operating profits grew faster than contingent income. The result? Smaller to mid-sized firms enjoyed an average ProForma EBITDA margin of 29.3%, while the larger firms averaged 22.7%. Finally, last year proved to be a solid year of value creation. The Rule of 20 scores, a simple growth and profitability balancing equation that provides a quick way to determine whether or not agency is creating value for its shareholders, were the highest they’ve been in several years. Small to mid-sized agencies earned an average score of 24.1, while agencies over $5 million earned 20.8. Generally speaking, an outcome of 20 or higher— regardless of growth and profitability—indicates that the agency’s shareholders can expect to earn 15-17% per year through stock price appreciation and/or shareholder distributions. For more information about Best Practices resources and to obtain your copy of the full report, go to www.iiaba.net and look under the Resources tab for Best Practices.

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Successful Joint Conference IIABW and PIA held our third successful joint conference in Seattle last month which was attended by over 470 insurance professionals. The sold out Trade Show provided attendees over 85 booths to network with in one place as well as excellent educational opportunities.

d IIABW installed our new officers: • President Pat Otter is the owner of Otter Insurance in Lynnwood and has worked in the insurance industry over 18 years. • President Elect Mike Button is a commercial lines producer for PayneWest in the Tri Cities. • Secretary Kim Krogh is an account manager for Fidelity Insurance in Spokane. • Treasurer Lori Reed is Secretary of Mitchell, Reed, Schmitten in Wenatchee.

IIABW Awards (photos of winners at right)

•

IIABW’s top honor, the Don C. Burnam Lifetime Achievement Award, was presented to Don McQuary of Stonebraker McQuary for contributions he has made to his community and the insurance industry. He is a past president of the IIABW, of his city’s chamber, and of his county’s economic development association. He is currently the President of his county hospital and has run the local school levies for the past 30 years. Claudia McClain of McClain Insurance Services was presented the Agent of the Year Award for her leadership on the Govt. Affairs committee and advocacy before the legislature

•

Carrie Cheshire was given the Industry Person of the Year Award for her support of independent agents and the Big I throughout her career at Traveler’s, Payne Financial Group and Aetna Life & Casualty.

•

Glen Williams was presented the Max Walton Insurance Education Award for his outstanding contributions to the field of insurance education in Washington throughout his career.

•

Ryan Porter of Porter Whidbey was presented the Young Agents of the Year Award for his leadership on the IIABW Young Agent Committee.

Don McQuary Lifetime Achievement

Claudia McClain Agent of the Year

Glen Williams Educator of the Year

Ryan Porter Young Agent of the Year

Carrie Cheshire Industry Person of the Year

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A Consumer Connection You Won’t Want to Miss

n amazing opportunity is upon us as independent agents. We have the chance to put everything we have to offer in front of the biggest audience we’ve ever encountered. What am I talking about? What is this opportunity? It’s encountering the consumer where they are today, on the internet. Today, consumers look for answers to their questions by conducting searches on the internet. We all do it - when we’re shopping for a home fixture; when we’re dreaming about a new car; or even if we’re helping our 8th grader find that answer to a homework assignment. The internet has changed us all. And our insurance prospect is there too. We need to connect with them if we want to serve them, and now is the time to do just that.

Some years ago, independent agents decided that we needed a new brand. We collectively decided that Trusted Choice© captured who we are, what we have to offer, and what we’re committed to. We branded ourselves as the solution to what consumers were looking for. And you know, we were right. The challenge in the meantime has been communicating that message to them. Now is the time to do precisely that. Independent agents across America are joining the effort to get their message of choice, customization, and advocacy out to consumers through their presence at TrustedChoice.com. Agencies are making themselves visible by creating their agency profile on the site, promoting their value, and inviting contact by consumers interested in local service, professionalism, and options. If you haven’t joined this effort to reach consumers with this unique message, you can begin today. To make your Trusted Choice© agency part of the online effort to connect with consumers, just go to projectcapmarketing.com and login using your IIABA credentials. There you can create your agency profile that shows consumers who you are, where you are, and what you’re about. If you have questions, simply reach out to the professionals at Project CAP who can walk you through the process. Project CAP is an initiative of the Independent Insurance Agents of America and its company partners.

>>>>> Q & A With the Healthplanfinder

The following are answer from the Healthplanfinder, our state’s health care exchange, to IIABW’s questions. What are the largest challenges the Healthplanfinder (exchange) is dealing with so far? The largest challenge for Washington Healthplanfinder is getting the word out to the 1 million uninsured individuals about the new coverage opportunities that are before them. While we are pleased with the 55,000 enrollments we’ve seen to-date, we know that many still have questions about where they should go and what types of options are available. They may also be confused about the chatter they are hearing about the national site, Healthcare.gov. Here in Washington we’ve taken the steps to create our own online marketplace that was designed specifically for residents here in our State. We have experienced some technical bumps in the road, which is to be expected with a new IT system of this complexity. Overall we are doing well, but our IT team is working hard to fine-tune our system to better meet the needs of our customers. How does an agent get a broker of record executed? There is more than one way for an agent or broker to partner with a customer in Washington Healthplanfinder. In order for an agent or broker to receive compensation for the business they write for a customer, the agent or broker must be registered with the Exchange by taking a required training course and appointed with the carrier directly. The Exchange is responsible for forwarding broker-of-record information to carriers, but in order to receive compensation, brokers must work directly with each carrier to obtain an appointment. When an agent’s customer signs up for the exchange directly and forgets to choose his/her broker, how does the broker keep the relationship by adding his/her name after the fact? As long as the agent or broker has their customer’s full name, social security number and date of birth, the agent or broker can go into Washington Healthplanfinder after the fact, locate the customer in the system and establish a partnership with that customer. When will an agency get their own unique link to the exchange so we get credit for a customer’s written policy? A direct link from an agent or broker’s website to Washington Healthplanfinder is one of the many enhancements that we are 22

planning to make in the near future. At this time, we cannot provide an exact date when this link will be available since it is one of many desired system enhancements that need to be prioritized and scheduled. Do you have data on the number of agents and navigators writing business so far? Approximately 1,200 agents and brokers are registered to sell business through Healthplanfinder to date; however, the actual volume of applications submitted by agents and brokers is unknown at this time. We are hoping to release this data soon. What does a navigator do if a customer asks which policy is best for him/her? How will their compensation be impacted by a referral to an agent? Navigators may not make any plan recommendations to a customer -- only a licensed broker or agent has the authority to make a plan recommendation. If a customer is seeking a plan recommendation, the navigator should refer him/her to a licensed agent/broker. Navigators are not individually compensated for their activities, including referrals. The Exchange has contracted with 10 lead organizations across the state who are responsible for establishing broader networks in their communities. Half of their grant award is provided for startup activities such as training and administration, while the other half is based on specific enrollment targets. Most of these organizations specialize in reaching vulnerable and low-income populations. Do you have an idea of when the SHOP will be in place in Washington State? Washington Healthplanfinder Business is currently available in Clark and Cowlitz counties through Kaiser for coverage starting in January 2014. We expect to operate a small business Exchange statewide for enrollment effective January 2015, assuming that receive sufficient insurance carrier participation. We should know more about the extent of the carrier participation by late first quarter, 2014.

In Person Assister (Navigator) Lead Organizations Agents are encouraged to partner with In Person Assisters to access new customers and better serve your present ones. Contact your county’s lead organization for a list of In Person Assisters.

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Benton Franklin Comm. Action Connections, Pasco, wluckey@bfcac.org: Benton, Franklin, and Walla Walla counties

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CHOICE Regional Health Network, Olympia, weisdeppl@crhn.org : Clallam, Grays Harbor, Jefferson, Lewis, Mason, Pacific, and Thurston counties

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Clark Co. Public Health, Vancouver, Janis.koch@ clark.wa.gov :Clark, Klickitat and Skamania Counties

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Cowlitz Family Health Center, Longview, pspears@ cfamhc.org : Cowlitz and Wahkiakum Counties

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Better Health Together, Spokane, curt@betterhealthtogether.org : Adams, Asotin, Chelan, Columbia, Douglas, Ferry, Garfield, Grant, Lincoln, Okanogan, Pend Oreille, Spokane, Stevens, and Whitman counties

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Kitsap Public Health District, Bremerton, Kerry. dobbelaere@kitsappublichealth.org : Kitsap County

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Public Health, Seattle-King Co., Daphne.pie@ kingcounty.gov : King county

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Tacoma-Pierce Co. Health Dept., Tacoma, kscrivner@tpchd.org : Pierce County

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Whatcom Alliance for Health Advancement, Bellingham, dabradshaw@hinet.org : Island, San Juan, Skagit, Snohomish, and Whatcom counties

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Yakima Neighborhood Health Services, Yakima, Rhonda.hauff@ynhs.org: Yakima and Kittitas Counties

Walk Trusted Choice©, our consumer marketing brand, was one of the top sponsors for our state’s Make A Wish Walkathon in Redmond and Spokane in October. IIABW organized an industry-wide effort which resulted in over 50 insurance professionals participating in multiple industry walking teams, including Conover, Pacific Coast

E & S, Pacific International Underwriters, North Town Insurance, IIAB of Spokane and IIABW. Over $10,000 was raised by IIABW and the insurance industry for the worthy cause of granting wishes to life-threatening health conditions. Thank you to the Young Agents Committee who did a great job organizing the industry-wide effort.

teamwork Imperial PFS, the leader in premium financing, continues to focus on the success of our agency partners. The relationships we have developed with our agency partners are a critical element in the way we do business. These relationships have enabled Imperial PFS to continually develop and improve programs and services. Customer focus is why we operate a nationwide network of local offices, each shaped by the region it serves. We look forward to your continued partnership with Imperial PFS and providing you the most comprehensive benefits in the industry.

ipfs.com marketing@ipfs.com Bothell: 800.888.2750 Spokane: 800.234.7373 11716 WA IIABA ad.pdf

12/18/12

3:55 PM

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GUARDING

for Carrier Claims Against Agents

By Karen Thurlow

here is an old saying that tells us to love our neighbors and also to love our enemies—probably because they are generally the same people. This is good advice in all areas of life, especially in business relationships. Historically, carriers and agents had close and longstanding relationships. Carriers were loyal to their agents and were reluctant to pursue them in situations where the carrier paid a claim even if there was a question about whether coverage was owed. In fact, carriers could typically be counted on to side with an agent in the face of a claim dispute and would pay questionable claims, especially to valuable producers. This was due to the fact that higher investment income allowed carriers to better withstand underwriting losses, as well as the fact that insurance was more relationship- driven than it is today. While accommodations still happen, they are becoming more and more rare. Today, the trend seems to be toward carriers taking harder line coverage positions. Carriers are now more regularly pursuing the agents in situations where the carrier was found to owe coverage that it did not believe it owed. As carriers keep a close eye on profitability, they have taken the approach that pursuing agents is another avenue to recover losses. This results in carriers denying coverage and holding the agent responsible for actions like misrepresentations, exceeding authority or paying the underlying claim and then pursuing the agent for reimbursement. Some carriers have even designated a dedicated professional liability subrogation specialist whose job is to review paid claims and determine whether to pursue claims against the agent. These aren’t just large claims either; they are typically lower-value claims that may fall within the agency’s deductible on its E&O policy. It’s a headache nonetheless and frequency could become more of an issue. Here are a few examples of real E&O claims scenarios: Case study #1. An agent requested a carrier add a new project to an existing open builders risk policy. A request was made for a higher limit than contained in the master policy and for expanded (flood) coverage for this project. The carrier added the project with the higher limits only. A flood loss occurred and the carrier took the position that there was no flood coverage. The documentation was not clear on either side. Ultimately, the carrier paid the claim in the amount of $4 million and then pursued the agent. Interestingly, the carrier structured the underlying claims settlement with the policyholder as plaintiff 26

in the lawsuit so it appeared that the policyholder was bringing the claim against the agent. The defense of the case went on for four years before it was settled with a payment of nearly $2 million. Case study #2. A plaintiff wanted auto coverage with no UM/ UIM coverage. The agent did not obtain a UM/UIM waiver. The plaintiff’s wife was then killed in a car accident. The carrier paid the $1 million in UM/UIM benefits and then sued the agent even though the agent was the carrier’s largest producer in the state (writing in excess of $100 million in annual premium). In addition to asserting strong liability and damages defenses, the agent’s defense included attempting to leverage the relationship to reach a favorable resolution. The carrier, however, was unyielding and pursued the claim for 10 years before the case was settled. Case study #3. An agent erred in placing BI coverage for a manufacturing company on a per location basis with a coinsurance provision as opposed to blanket as requested. Following a hurricane loss, the carrier adjusted claim on a blanket basis, contrary to the policy, and paid the claim. Upon discovering its error, the carrier demanded repayment from the plaintiff. Poor claims handling by the carrier created a bad faith exposure for the carrier, but even in the face of a bad faith claim and a strong waiver argument, the carrier refused to recognize its exposure and centered its defense on the agent’s negligence. Case study #4. An agency’s customer signed an application for auto insurance on Dec. 5, but the application was dated Dec. 4. An auto accident occurred on December 5, prior to the client signing the application. The carrier initially denied coverage for the claim. However, since the policy was issued with an effective date of December 4, the carrier paid the claim. The carrier then pursued the agent. The willingness of carriers to pursue claims against agents creates an additional category of E&O claims for agents to consider and guard against. While in the past it was reasonable to assume that carriers wouldn’t come after their own agents, but that isn’t the case today. Karen Thurlow is a vice president of claims and liability with Swiss Re. She handles claims against insurance professionals in the company’s Overland Park, Kan. Office. Reprinted from IIABA’s Independent Insurance Magazine.

2014 Conferences

All Industry Day at the Capitol February 13, 2014 Washington State Capitol, Olympia

Young Agents Conference June 12-13, 2014 Leavenworth

IIABW/PIA Joint Conference October 2-3, 2014 Skamania Lodge in the Columbia River Gorge

Tough, high-hazard property, casualty, transportation and professional and management liability risks require detailed expertise and specific industry experience. At RT Specialty, our brokers draw on the most comprehensive resources worldwide to provide better, faster, smarter insurance solutions. We do whatever it takes to find the solution that meets your clientsâ&#x20AC;&#x2122; complex coverage needs. When it comes to tough risks, experience the difference a tough broker can make. Tough risks demand tough brokers. For more information, contact: Ed Bukovinsky | 206.708.2074 ed.bukovinsky@rtspecialty.com 1200 Fifth Avenue, Suite 1910 | Seattle, WA 98101 www.rtspecialty.com

R-T Specialty, LLC (RT) is a subsidiary of Ryan Specialty Group, LLC, specializing in wholesale brokerage, MGA/MGU underwriting facilities and other services to agents, brokers and carriers. In California: R-T Specialty Insurance Services, LLC License #0G97516 ÂŠ 2013 Ryan Specialty Group, LLC

Ideas to Get all the Prospects You’ll Ever Need

By John Chapin

hile a lack of sales can be caused by something other than not having enough prospects, generally speaking, most salespeople who miss their numbers do so because they have far too few selling opportunities which is usually caused by having far too few qualified prospects. Following are some ideas to ensure you never have this problem again. 1. Spend at least four hours a day prospecting. Yes, four hours, that’s not a misprint. In order to get a sufficient number of leads, you need to spend a significant amount of time prospecting. For most salespeople spending far too little time prospecting is their primary issue. If you’re wondering where you’ll find four hours in a day, the answer is simple: First, stop wasting time on unqualified prospects you’ll never convert. You know who these people are, you’ve been calling them for months, maybe even years. Either get rid of them immediately, or give them one final call and tell them this is the last time you can contact them, it’s do business now or never. Second, stop over contacting and irritating the qualified leads. As mentioned in a previous article, the reason salespeople tend to keep unqualified prospects in their funnel and harass and over-contact the qualified leads is because they have no one else to call. Spending a lot of time prospecting will give you an abundance of prospects and solve both these issues. Third, cut out all the busy work you do to avoid the hard work of prospecting. Most of us are very creative at coming up with ways to avoid hard work from cleaning up our desks and doing paperwork in the middle of the day, to scheduling doctor appointments and other personal items during prime calling times. Stop it! Finally, schedule your prospecting time and stick to the schedule. For example, block off 8 a.m. to 10 a.m. and 2 p.m. to 4 p.m. for prospecting and don’t allow anything to you’re wondering where you’ll find four hours in a day, the answer is simple: I realize that if you are doing little or no prospecting, four hours is a big jump, so start with an hour or two and build from there. For 95% of you, following this one tip alone will give you all the prospects you’ll ever need. 28

2. Be consistent. A big problem I see with prospecting is a lack of consistency. A salesperson does a ton of prospecting until he or she has enough business or appointments, then they stop prospecting. When business and appointments drop, they go back to doing a ton of prospecting again. In order to be good and stay good at prospecting and have a steady stream of prospects, you have to be consistent. Sure, there may be times when you’re out of balance, but even when you have plenty of business and appointments, block off some time to prospect. 3. Choose active rather than passive prospecting activities. Phone calls, knocking on doors, asking for and calling referrals, and networking are all examples of active prospecting because you control the contact. Mailers, social media, the internet, radio and television ads, and other similar marketing techniques are all passive because you have to rely on someone to contact you. When it comes to prospecting you want to be in control of the numbers and the only way to do that is through active prospecting. While it’s good to have aspects of both active and passive marketing in your prospecting plan, far too many salespeople put most of their effort into passive methods because they are easier and more comfortable. On the flip side, they are also far less effective than active prospecting. 4. Get better at prospecting. Of course you always want to be getting better in each area of the sales process and prospecting is no exception. When you get better at prospecting, you can make fewer calls and work less, while at the same time getting better, more qualified prospects. Read books and articles, listen to and watch programs of prospecting, and perhaps most important, find people who are highly successful at getting lots of good, qualified prospects, find out what they do, and then take the same actions. 5. Do whatever you have to in order to get the prospects you need. You need to be committed to getting the number of prospects you have to get in order to be successful. If it takes six hours of cold calling and making calls on the weekend, that’s what you do. The bottom line is: you must be willing to make tons of

phone calls, knock on tons of doors, and talk to tons of people in order to get the prospects you need.

B C E Consulting, LLC

6. Keep track of numbers and results. If you go to a networking event for four hours and talk to one or two average prospects, that is not a good use of prospecting time. If you get on the phone for four hours and get ten qualified prospects, that is a good use of prospecting time. You have to know where you’re effective and not effective and spend your time on the right activities.

Our mission is to help you grow your business and improve your bottom line.

7. Prospecting is a numbers game. The more people you talk to, the more prospects you will get. If you talk to enough people during the day, you will eventually bump into someone who says, “I need what you have”, or “I know someone who needs what you have.” If you’re going to get an abundance of prospects, you need to talk to an abundance of people. For John Chapin’s free newsletter, or if you would like him to speak at your next event, go to: www.completeselling.com With over 24 years of sales experience, he is a number one sales rep in three industries, and author of the sales book of the year: Sales Encyclopedia.

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: www.bceconsulting.co or contact:

Jeff Bronaugh, CPCU, CLU, ChFC, CIC jeff@bceconsulting.co 404 3rd Ave S, Edmonds, WA 98020 (520) 343-4394

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.

Years

We’ve 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 local expertise. Your success is our success – we are proud to support the Independent Insurance Agents & Brokers of Oregon and Washington.