The Anchor THE INDEPENDENT INSURANCE AGENTS OF RHODE ISLAND MAGAZINE

2018 RI P&C Financial Results Agencies Arenâ€™t Doing Enough to Attract Millennials

FALL 2019

New Leadership Announced

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CONTENTS

FALL 2019 Independent Insurance Agents of Rhode Island Meet Our New President ............................................ 6 President Perspective ............................................... 9 Executive Vice President Perspective ........................... 11 Human Resources Corner .......................................... 13 The 2018 RI P&C Financial Results ................................ 15 Industry Trends.........................................................

Case Law Notes........................................................

Government Affairs Update .........................................

Workerâ€™s Compensation............................................... 32 Legal Briefs............................................................... 35 Marketing Corner....................................................... 36 Fall Golf Outing.......................................................... 38 Emerging Leaders....................................................... 39

Special Features

7 2018 Market Share Update 3

Fall 2019

226 Agencies arenâ€™t Doing Enough to Attract Millennials

Meet our New IIARI President The Anchor

REGISTRATION NOW OPEN! Discover new customer markets. Attract the next generation of all-stars. Understand demographic buying power. Create an inclusive workplace. Avoid EPLI landmines. And much more...

Join Us. www.independentagent.com/levelup

OFFICERS President

Denise T. Smith, CIC

President Elect

Kenneth Thompson, Jr.

Vice President

Michele Calabrese

State National Director

ADVERTISERS

INDEX

William J. Hunt, CPCU

Immediate Past President

John Kaull, AAI

DIRECTORS Terms Expire 2020

EMC............................................................... 2

Terms Expire 2021 Terms Expire 2022

Thomas. J. DiSanto, JD, LLM, CIC Joseph R. Kosinski, CPIA

Level Up Conference ......................................... 4

Anthony Bucci, Jr., CPCU, AIS Sean P. Daly, CPCU

SERVPRO ..................................................... 12 Woods Appraisers.............................................. 12

Margaret Longolucco, CIC Joseph Paiva

Big I Membership.............................................. 14

STAFF

Risk Management Credits ................................... 28

Marcia L. Berthiaume, AAI, ACSR, AIS, CPIA State Account Manager, Young Agents Liaison

The Institutes ................................................... 30 Hospitality Insurance ........................................ 32

Helen Collins, AAI, AIS, CPIA Director of Professional Liability

JH Communications

Sean R. Donaghey, CPCU Senior Vice President, State Account Executive

........................................ 37

PS&H ............................................................ back

Toni Drowne Communications & Marketing Manager

CORRECTIONS

Jack Hutson, CAE Senior Vice President, Business Development

THE ANCHOR SUMMER 2019

Lori Kaufman Executive Assistant, Membership Services Coordinator Maureen McNamara, AIS, ACSR Director of Finance, Human Resource Manager

CORRECTION In the 2019 Legislative Update (Anchor Summer Edition) on Page 22-23 it was incorrectly reported that legislation which passed this year requiring local businesses to accept cash payments applied to insurance agencies. It was pointed out to us by the Department of Business RegulationInsurance Division, that this requirement does not apply to insurance agencies. This is because the bill that was passed was

Mark A. Male Executive Vice President, Secretary/Treasurer Jean E. Nagle, AAI, ACSR, AIS Assistant Vice President, Director of Education Sarah Ribera Assistant Director of Education & Membership The Anchor is published by the Independent Insurance Agents of Rhode Island (IIARI). Statement of fact and opinion is made based on the responsibility of the authors alone and does not imply an opinion on the part of IIARI, it’s officers, directors or members.

Chapter (6-13.1) of the General Laws pertaining to Deceptive Trade Practices. These Deceptive Trade Practice laws do not apply to the insurance industry because the insurance industry is regulated by the Department of Business Regulation which has it’s own deceptive trade practice laws and regulations. There is no insurance regulation requiring insurance agencies to accept cash payments so therefore insurance agencies do not have to accept cash payments.

Subscription rate for members is $15, which is included in dues. Subscription rates for non-members is $75 per year. (single copies $10). Reprint requests should be referred to IIARI. Copyright © 2019 Independent Insurance Agents of Rhode Island. 5

Fall 2019

The Anchor

MEET OUR NEW PRESIDENT

Denise T. Smith, CIC

I began my insurance career working in the Human Resources (HR) Department of Metropolitan Property and Casualty Insurance Company. When I left Metropolitan I continued my career working HR at Providence Washington Insurance Company. My duties expanded to include interviewing and hiring for Underwriting, Claims, and Accounting positions. I think it was an interesting way to learn how an insurance company operated. A few years after that I switched to the Agency side of the industry as a producer. As a member I have been involved with the Association since I purchased the agency in 2006. After serving on the board for a few years I was encouraged to consider running as an officer which has ultimately led to becoming the President of the IIARI. Next year I will move into the role as President of the corporation which equates to a two year commitment. Outside of my insurance world, I have a wonderful family which includes my husband, three daughters, three sisters, and another large extended family. We spend a lot of time together.

Other than that, you will find me in the garden, practicing yoga, or playing tennis. As President I will be organizing a strategic planning meeting with the board. This was done a few years ago and we feel it is time for another session. The board is looking into IMS (Insurance Market Solutions) – you can read Mark’s column to get some insight on a recent survey we conducted to gauge member interest on investigating this option for RI. IIABA has been meeting with IMS regarding marketing access for Big I members. Promoting comradery among the Agents is important to me. “Emerging Leaders” are an excellent example of how we can socialize, away from the office, and stay enthusiastic about our industry and perpetuation. As President, I feel like Advocacy is a big part of my job. I will follow the lead from the Government Affairs Committee and support ongoing legislative concerns on the state and national level. We must continue to address issues and challenges to our Industry as they occur. And I will be an advocate for the independent agents to use IIARI.

The Anchor

Fall 2019

The Association has so much to offer. Call us when you have a concern; whether it be a Human Resource issue, a need to hire to see if there are any candidates looking for positions, and access to unique markets. If you are an Insurance agency in this State, you need to be part of our Association because there is “Power in Partners” as we stressed at this year’s convention. Together we are stronger.

Above: Denise works closely with her daughter Melanie Smith Lambert, CISR, CPIA. Below: (Left-Right) Elizabeth Lambert, Melanie, Denise and Laura Pires all work together at Smith Insurance Agency. Bottom: The Smith Agency is located in Pawtucket where Denise is the Agency Principal.

Fall 2019

The Anchor

...

2019 Partners

THANK YOU! platinum

Rhode Island

Association of Insurance Agents, Inc diamond

gold

ocal service we provide. We tegically located around of one of the countryâ€™s top ose to home.

on.

silver

bronze Hospitality Insurance Group The Main Street America Group NLC Insurance Companies Quincy Mutual Group

Providence Mutual Swiss Re Utica

PRESIDENT PERSPECTIVE

The Best Girl on Broadway I am the Owner and Agency Principal of the Smith

Insurance Agency in Pawtucket - an accomplishment I am very proud of. I grew up in Pawtucket in an apartment house with my parents and three sisters. I have three daughters, one of whom is in the business with me, and two granddaughters. People would often ask my father “How do you like living with all the girls?” His response was always the same - “What can I tell you, I like girls?” My husband now says the same thing. The love and support from my family has made me who I am today. Growing up, my mother would always tell me “You are going to be the Best Girl on Broadway!” Well when I got older and realized the street we lived off was called Broadway, she wasn’t talking about New York - it always gave me a good laugh! It didn’t matter if it was Pawtucket or New York, I was going to be the best person I could be. After graduating from Katherine Gibbs Business School, I began my insurance career working at a local property and casualty insurance company in the Human Resources department, then moved on to a different insurance company in Human Resources, again, and learned about all the roles in the company, as well as agencies, from my participation in a project involving rewriting the entire company job description manual and it was enlightening. Because of some good advice from a Vice President of the company, I soon began working in a local independent insurance agency before finding my perfect fit at Lefebvre Insurance Agency in 1990. I worked there for 16 years as a producer, knowing it was what I wanted to do. Because of my husband’s complete confidence in me, when the opportunity arose, I was able to follow my dream and become an agency owner.

this year. This results in fewer potential member agencies yet at the same time there hasn’t been a corresponding decrease in headcount. While 12 years ago we had 1,400 people employed by almost 170 agencies, today the number has declined to about 130 agencies, but they still employ about the same number of people. The challenge becomes how we continue to provide services and products to our members when the dues continue to shrink. The board is investigating different innovative approaches to broaden our offerings and position the association for the future. We will be investigating new ways of doing business to position ourselves as a solution provider going forward. We remain committed to evolving the association as we face the challenges of the future. Thanks again to all our members for being a member of our association and let’s make 2020 a great year for all!

I am proud to represent the Independent Insurance Agents of Rhode Island this year and will continue with our Convention theme of “Power in Partners”. Our partners are each other, our carriers, our vendors, and most importantly our clients. We need each other to succeed. We are all in business to help others. We need to maintain our personal relationships with each other to gain strength overall. This past year the association faced many challenges and opportunities. We successfully moved a bill through the general assembly that achieved change in the private passenger auto threshold from $1,500 to $3,000. Equally important, with member support, we were able to secure the Governor’s veto on a bill that would have complicated the claims and processing on auto total losses. It would have permitted suits against insurance companies when insureds felt their vehicle should be repaired versus totaled. This bill could have had a dramatic impact on both rates and accessibility in Rhode Island. Working in concert with the insurance carriers, we successfully urged the governor to veto that bill. One of the biggest challenges we face as an agent association is the ongoing merger and acquisition activity. Reviewing our numbers over the years, the number of agencies has shrunk and the pace is escalating

Denise Smith, CIC IIARI President

EXECUTIVE VICE PRESIDENT PERSPECTIVE

Survey Data Last issue I spoke about M&A activity

as it impacts the organization and the intrinsic challenges that accompany that dynamic. As an Association we need to face the reality unique to our distribution and strategize how to take a firm hold of a mindset that requires our innovation. Principals were recently solicited to participate in a two-minute survey investigating the expansion of Association activity in market access. Over a third of the agency principals took the time to complete the 5 question survey. The results were neither earth shattering nor eye opening but confirmed some assumptions. The survey was slightly heavier on larger agency responses (34.9%) and the overall response rate was almost 33%.

Do you have a full complement of markets that meet your clientâ€™s needs?

34% NO

66% YES

I like to share this data with you and your agency members to allow for your own interpretation. As the Board plans with next steps for the coming years I am sure they would welcome your input and comments. Remember to frame your thoughts with this important piece of information:

Over 70% of the members are agencies with

under $5 million in premium volume

while the largest agencies represent just less than 30% of the total.

85% 15%

57% 43%

Agencies with > $5M in premiums Agencies with < $5M in premiums Robert J. Pettinicchi, Mark Chief Male Lending officer, Executive Vice President The Anchor Insurbanc

Fall 2019

Over time, would additional programs offered through the Association have potential value?

25% 75%

38% NOT SURE

62% YES

78% 22%

0% NO

Do you consider the Association as a trusted market access point?

75% 25%

8% NO NO

92% YES YES

100% 0%

Is new market access an area we should investigate, for example, standard & non-standard lines including auto, homeowners, commercial, etc.?

46% 54%

20% NO NO

80% YES YES

Fall 2019

93% 7%

Mark Male Executive Vice President The Anchor

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655 MAIN STREET EAST GREENWICH, RI 02818 PHONE (401) 884-6050 • FAX (401) 884-0665 www.johnawoodsappraisers.com

HR CORNER

Be prepared... New Overtime Rule January 1, 2020 This is a continuing article in the series of human resource articles for the “Independent Agent”. My goal is to bring value to your organization in the accomplishment of the Essentials of Human Resources.

•

Suggestion is to bring your employee handbook forward to a current date upon the completion of your review with any changes you have made.

On September 24, 2019 the United States Department of Labor has approved an increase in the salary level threshold for white-collar exemptions to $35,568 annualized ($684 per week) from $23,660 annualized ($455 per week).

•

Execute a communications plan for each of your affected employees. Suggestion is to sit with each one individually to insure there is understanding.

•

Make appropriate adjustments to your budget planning for 2020.

We went through this in 2016 where the proposed threshold under a prior administration was $47,476 annualized for white collar exemptions and was upheld in Federal Court. This proposal, as you can see, is a compromise. I would like to review the key points that came out of this DECISION: •

For salaried exemptions, the salary threshold has increased from $455 per week ($23,660 annualized) to $684 per week ($35,568 annualized).

•

The new overtime rule will result in the re-classification by employers of more than a million currently exempt workers as nonexempt and an increase in pay for others above the new threshold.

•

The proposal does not call for automatic adjustments to the salary threshold, does not create different salary levels based on the region of the country.

•

Nothing else has changed…duties tests for all exemptions remain the same.

•

Meeting the salary threshold doesn’t automatically make an employee exempt from overtime pay, the employee’s job duties also must primarily involve executive, administrative or professional duties as defined by the regulations.

•

Review all job descriptions that are presently salaried exempt, follow the duties test for the category they are in, and update the job descriptions to a current date with any changes that you have made.

•

Review your employee handbook to insure your employee classifications are properly defined; in addition, these classifications may have an effect on each of the benefits that you provide your employees which you need to review and adjust accordingly.

Dave Nichols is the principal of a human resource management business, Quality Transitions, Inc. located in Charlestown RI. He has 25 years of experience in the field and also retired from the U.S. Army as a Lieutenant Colonel. If you are interested in learning more, please visit his website at www.qualitytransitions.net. 13

Fall 2019

These are suggestions in your preparation for the upcoming change. Being prepared and compliant is the only way to go. Department of Labor Wage and Hour Division will be auditing employers regarding this change. If you have a question, please contact someone that can provide the necessary assistance to you. See you next quarter.

Dave Nichols Quality Transitions, Inc. The Anchor

Are you taking advantage of your membership? Big “I” Professional Liability

www.independentagent.com/EO As a member of your state association, you have access to the Big “I” Professional Liability program, the most respected and comprehensive program in the business, offering a variety of insurance agent’s E&O products that are hand-selected for their superior reputation and exceptional performance. With comprehensive rates and a long-term market, the Big “I” Professional Liability program is properly positioned to meet your professional needs, protecting the future of your agency.

Big “I” Markets

www.bigimarkets.com Exclusively available to Big “I” members, IIABA’s online market access program features specialty/niche coverages, program business and hard-to-ﬁnd markets. Unlike similar programs, there are no registration fees, no minimums, and you own your expirations. In many states, additional markets are available through Big “I” Eagle Agency.

Big “I” Flood

www.independentagent.com/Flood Big “I” endorsed Selective Insurance has been a Write Your Own carrier (WYO) for the National Flood Insurance Program (NFIP) since 1984 and is one of the top 10 writers of NFIP policies. Selective makes writing flood insurance easy through quality customer service and superior technology. Together, Big “I” Flood and Selective’s relationship helps deliver members an unparalleled flood program by offering state-of-the-art processing, dedicated underwriters (not a TPA call center) and localized flood Territory Managers providing you with the knowledge and expertise needed to effectively speak flood.

Big “I” Retirement

www.independentagent.com/Retirement Big “I” Retirement Services, LLC has partnered with national firms to provide a unique member-only plan that simplifies the plan sponsor’s administrative responsibilities while limiting your fiduciary exposure. The Big “I” MEP 401(k) Plan is sponsored by Big “I” Retirement Services, LLC. It is a multiple employer plan also known as the MEP, which is a great way to lower your overall retirement plan costs while receiving consulting, helpful educational tools and low cost investment options. By partnering with Mesirow Financial, a 3(38) fiduciary and MVP Plan Administrators, a customer service oriented record-keeper, the Big “I” MEP 401(k) Plan is designed to maximize cost savings and our unique association design.

Big “I” Employee Beneﬁts

www.independentagent.com/EmployeeBenefits The Big “I” Employee Benefits program provides full service group benefits for our member agents. Our program is underwritten by The Guardian Life Insurance Company of America, a multi-line insurance group with many years of experience in the business and administered by a dedicated service team just for Big “I” Members. Offering Group Life, Group Short- and Long-Term Disability, Group Dental and Group Vision, the program offers varying lines of coverage options to meet the diverse needs of our members and also provides guaranteed issue with certain requirements being met. Whether you are a new member or an existing one, we quote and add coverage on a continuous basis.

Big “I” Personal Umbrella

www.independentagent.com/RLI RLI’s PUP stands atop the existing homeowner and auto insurance to provide an extra layer of personal liability protection for the insured and their family. With RLI’s PUP program, the insured can maintain their auto or home coverage with any company they choose, provided they agree to maintain the mandatory minimum underlying coverage limits. Limits up to $5 million ($1M in NM) and UM/UIM coverage available.

Big “I” Home Business

www.independentagent.com/HomeBusiness RLI’s Home Business Policy provides affordable coverage for those people who operate small home-based businesses. Insureds often believe their existing homeowners or apartment-dwellers policy will cover any loss or damage to their business equipment, furniture and supplies in the event of ﬁre, theft or other catastrophe, when in fact, those policies usually explicitly exclude coverage for any business exposures on their premises. Partner with us to offer this important coverage to your clients.

Big “I” Business Resources

www.independentagent.com/Advantage Enjoy member discounts for a variety of services to assist in managing your agency. Caliper (personality testing and human resource consulting); DocuSign (eSignature); UPS (express delivery); Mines Press (printing); Virtual Risk Consultant (agency checklists and marketing tools); Hertz (rental car service); Big “I” Career Center (insurance jobs board) and more. Members are also encouraged to connect with Insurbanc, the FDIC insured bank founded by agents for agents. Visit www.insurbanc.com.

SPECIAL REPORT

2018 RHODE ISLAND MARKET SHARE ANALYSIS by Roger L. Messier, CPCU

2018 turned out to be a good year overall for the insurance companies. The total written premiums for all Group 1 Lines increased $87,350,000 to $2,355,562 billion. The Loss Ratios for all lines are as follows: 2018 Paid to Earned 56.0 Incurred to Earned 60.9

2017 53.1 52.3

The Private Passenger Liability Loss Ratio was as follows: 2018 Paid to Earned 63.9 Incurred to Earned 64.1

2017 66.8 69.9

A nice reduction for the 3rd consecutive year. The Homeowners Written Premium increased $20,551,000, and we increased our Market Share 2.1 – a huge increase. The bad news, however, is that the Incurred to Earned Loss Ratio increased from 40% to 55.3% not a good sign. A couple of years ago, a start-up company was formed in New York and allegedly had all the answers to how business should be done. In Rhode Island, that particular company only wrote a whopping $108,000 in premium...so maybe they haven’t found the answer. State Farm incorporated a new company in Rhode Island called HiRoad. This is another disruptor and a direct writer experimenting with alternative distribution but this could pose a future problem as they wrote $11,941,000 in one year. This is an exceptionally large number for a company that doesn’t do traditional advertising and trying something different. The direct writer market share of Auto Insurance dropped 1% to 59.5%. This is the 4th year in a row that their market share has decreased. 15

Fall 2019

The Anchor

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS

RHODE ISLAND 2018 RESULTS by Line

2018

2017

2016

Private Pass. Auto Liability

638,045,000

612,871,000

573,362,000

Private Pass. Phys. Damage

327,612,000

309,114,000

294,195,000

Homeowners

419,521,000

398,970,000

382,840,000

W.C.

219,800,000

220,355,000

226,916,000

11,311,000

11,687,000

10,869,000

Comm’l Multi-Peril (Non-Liab.)

101,503,000

94,935,000

94,045,000

Comm’l Multi-Peril (Liability)

65,844,000

60,255,000

59,744,000

Other Liability

133,815,000

146,366,000

140,509,000

Comm’l Auto Liability

93,215,000

92,227,000

82,106,000

Comm’l Auto Phys. Damage

25,943,000

24,628,000

21,529,000

Inland Marine

87,277,000

82,911,000

76,343,000

Medical Malpractice - Other Than MMJUA

26,136,000

26,603,000

27,277,000

Fire

40,717,000

42,672,000

43,659,000

Allied Lines

44,483,000

28,664,000

39,612,000

Products Liability

The Anchor

Fall 2019

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT RANK

20192018

RHODE ISLAND 2018 RESULTS TOP 20 WRITERS ALL GROUP 1 LINES

COMPANY NAME

2018 MARKET SHARE

2017 MARKET SHARE

2016 MARKET SHARE

WRITTEN PREMIUMS

P/E

I/E

Progressive

9.7

9.2

8.6

228,659,000

57.6

60.1

Amica

7.9

7.8

7.4

186,907,000

60.3

57.9

Allstate

7.0

7.4

7.7

165,780,000

51.5

48.2

Liberty Mutual

6.4

6.5

7.0

151,751,000

55.8

63.3

Berkshire Hathaway

6.2

5.7

5.3

146,283,000

60.7

66.7

Beacon Mutual

5.2

5.5

6.2

122,777,000

54.2

66.4

Nationwide

4.6

5.1

5.4

109,303,000

73.4

69.7

USAA

4.2

4.1

3.7

99,045,000

62.4

65.2

Travelers

3.7

3.8

86,656,000

37.6

34.9

Metlife

3.0

3.6

70,331,000

59.9

53.4

Chubb

2.9

2.8

69,332,000

29.3

43.4

MSA Group

2.5

1.9

1.6

59,802,000

55.1

68.2

MAPFE

2.5

2.6

2.5

59,745,000

59.8

68.0

Selective

2.0

2.1

48,078,000

53.9

59.9

American Intâ€™l Group

1.9

1.6

2.0

44,135,000

61.9

68.3

Hartford

1.9

1.8

43,653,000

41.5

55.5

Zurich

1.6

2.2

1.2

36,628,000

114.5

127.8

United Ins. Group

1.5

1.3

34,444,000

65.9

54.9

Andover

1.3

31,077,000

88.8

63.4

Tokio Marine

1.2

29,432,000

53,3

81.6

2018

2017

2016

2,355,562,000

2,268,211,000

2,177,113,000

PAID TO EARNED LOSS RATIO:

56.0

53.1

56.3

INCURRED TO EARNED LOSS RATIO:

60.9

52.3

56.2

TOTAL WRITTEN PREMIUM

MARKET SHARES

Fall 2019

National Agency

13.5

State & Regional

30.6

Direct Writes

55.2

The Anchor

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT RANK

RHODE ISLAND 2018 RESULTS PRIVATE PASSENGER AUTO LIABILITY

COMPANY NAME

2018 MARKET SHARE

2017 MARKET SHARE

2016 MARKET SHARE

WRITTEN PREMIUMS

P/E

I/E

C Progressive

24.5

23.6

22.5

156,166,000

55.6

57.7

GEICO

12.0

11.6

11.0

76,377,000

67.8

72.4

n Amica

11.0

10.5

10.6

69,899,000

62.2

57.3

C Allstate

10.8

11.9

12.3

68,668,000

56.8

51.4

C Liberty Mutual

6.4

6.7

7.2

41,001,000

68.3

72.0

n USAA

6.4

5.6

40,788,000

67.4

68.5

C MetLife Auto

5.2

5.8

6.4

33,369,000

67.8

54.5

C Nationwide

5.2

5.9

6.5

33,002,000

71.7

64.6

Mapfre

4.5

4.6

4.4

28,740,000

65.8

79.0

MSA Group

2.7

2.2

1.6

17,357,000

72.3

93.2

Travelers

2.2

2.6

14,094,000

61.7

57.2

1.8

11,272,000

56.1

81.7

n State Farm

Selective

1.5

9,255,000

84.1

88.8

Providence Mutual

1.3

1.2

1.3

8,597,000

66.1

82.8

Ohio Mutual

1.0

1.1

1.4

6,342,000

81.4

64.3

Hartford

5,113,000

77.9

81.6

National General

4,018,000

75.2

63.0

Quincy Mutual

3,851,000

82.6

70.2

Horace Mann

1,784,000

107.3

NLC

1,546,000

76.3

86.8

2018

2017

2016

638,045,000

612,871,000

573,362,000

PAID TO EARNED LOSS RATIO:

63.9

66.8

67.4

INCURRED TO EARNED LOSS RATIO:

64.1

69.9

74.5

National Agency Co.

9.9

10.2

10.3

State and Regional

27.9

29.3

28.0

Direct Writers

59.5

60.5

61.7

TOTAL WRITTEN PREMIUM

MARKET SHARES

The Anchor

Fall 2019

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT RANK

RHODE ISLAND 2018 RESULTS PRIVATE PASSENGER AUTO PHYSICAL DAMAGE

COMPANY NAME

20192018

2018 MARKET SHARE

2017 MARKET SHARE

2016 MARKET SHARE

WRITTEN PREMIUMS

P/E

I/E

Progressive

17.2

15.8

15.3

56,375,000

66.4

66.2

GEICO

13.1

12.5

11.7

42,835,000

67.1

67.7

Amica

12.5

13.3

12.6

41,072,000

68.0

683

Allstate

10.8

11.2

12.1

35,222,000

53.5

54.3

USAA

8.0

7.9

7.2

26,230,000

67.8

67.1

5 6

Liberty Mutual

7.4

7.7

8.6

24,237,000

50.9

MetLife Auto

5.4

6.2

7.4

17,696,000

50.0

49.6

Nationwide

5.0

5.5

5.7

16,487,000

56.3

55.9

Mapfre

4.8

4.7

4.4

15,656,000

59.8

63.9

MSA Group

2.9

2.5

1.6

9,560,000

64.0

64.8

Travelers

2.6

2.8

8,392,000

56.4

57.5

Selective

1.9

2.1

2.0

6,097,000

57.9

59.1

State Farm

1.6

5,347,000

81.6

95.9

Prov. Mutual

1.4

1.3

1.4

4,520,000

77.1

78.1

Ohio Mutual

1.3

1.5

3,787,000

62.4

63.9

Hartford

1,829,000

50.0

48.8

National General

1,587,000

59.6

59.0

State Farm

1,581,000

62.2

60.3

Quincy Mutual

1,308,000

57.1

56.0

NLC

1,211,000

72.9

74.2

2018

2017

2016

127,612,000

309,114,000

294,195,000

PAID TO EARNED LOSS RATIO:

61.8

61.4

63.5

INCURRED TO EARNED LOSS RATIO:

62.4

61.8

63.9

TOTAL WRITTEN PREMIUM

Fall 2019

The Anchor

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT RANK

RHODE ISLAND 2018 RESULTS HOMEOWNERS

COMPANY NAME

2018 MARKET SHARE

2016 MARKET SHARE

2015 MARKET SHARE

WRITTEN PREMIUMS

P/E

I/E

Amica

16.3

15.8

14.9

68,392,000

58.0

55.3

Allstate

12.4

12.8

13.3

51,896,000

43.8

42.4

Liberty Mutual

8.4

8.6

35,202,000

48.8

44.8

United Ins. Group

7.3

7.4

6.7

30,490,000

66.3

65.7

USAA

6.3

6.1

6.0

26,598,000

50.9

56.6

Nationwide

6.1

6.4

6.7

25,712,000

87.7

87.1

Andover

4.7

19,780,000

83.5

71.9

Heritage

4.4

4.3

18,295,000

49.6

53.6

MetLife Auto

4.3

4.5

4.9

17,988,000

58.6

58.3

MSA Group

4.2

2.0

1.8

17,462,000

49.6

59.8

Chubb

3.8

3.9

4.0

16,058,000

32.3

49.1

Mapfre

3.4

3.8

3.7

14,220,000

46.8

48.0

American Intâ€™l Group

2.4

9,874,000

35.9

15.9

Prov. Mutual

2.3

2.6

8,678,000

53.5

46.1

PURE Group

1.8

1.6

1.4

7,373,000

63.2

62.7

NLC

1.7

1.8

1.9

7,012,000

70.7

60.0

Selective

1.5

1.6

6,342,000

68.8

65.7

Travelers

1.4

1.5

1.6

5,764,000

23.2

24.0

Union Mutual of VT

1.1

1.2

1.3

4,557,000

74.7

71.1

Vermont Mutual

1.0

1.8

4,284,000

63.5

67.4

2018

2017

2016

419,521,000

398,970,000

382,840,000

PAID TO EARNED LOSS RATIO:

55.8

39.3

47.0

INCURRED TO EARNED LOSS RATIO:

55.3

40.0

45.5

National Agency Co.

13.5

14.5

14.6

State and Regional

30.6

27.5

27.0

Direct Writers

55.9

58.0

58.4

TOTAL WRITTEN PREMIUM

MARKET SHARES

The Anchor

Fall 2019

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT

20192018

RHODE ISLAND 2018 RESULTS WORKERS COMPENSATION

RANK

COMPANY NAME

Beacon

55.9

56.1

59.5

122,777,000

54.2

66.4

Hartford

8.2

7.9

6.9

18,045,000

31.5

37.6

Travelers

5.3

5.7

5.1

11,684,000

54.3

14.9

Berkshire Hathaway

3.2

3.3

2.8

7,062,000

35.3

47.4

Chubb

3.1

3.4

2.7

6,727,000

35.0

44.5

Zurich

3.0

3.6

4.2

6,571,000

49.5

88.2

Liberty Mutual

2.7

1.7

2.3

5,851,000

76.2

33.3

MEMIC

2.0

1.7

1.3

4,466,000

41.0

58.0

AmTrust Group

1.8

2.1

1.8

3,980,000

62.4

134.7

American Intâ€™l Group

1.5

1.2

2.3

3,384,000

32.0

58.1

Tokio Marine

1.4

2,993,000

41.7

Hanover

1.0

2,246,000

39.4

78.4

Fairfax

2,067,000

32.6

22.9

W. R. Berkley

1.1

2,031,000

51.8

82.7

Markel Corp.

1,714,000

63.7

33.7

CNA

1,558,000

82.9

60.5

Arch Ins.

1,501,000

32.9

60.9

Everest RE US Group

1,268,000

35.7

84.0

QBE

1,253,000

29.0

31.9

Great American

1,194,000

36.1

45.5

2018

2017

2016

219,800,000

250,355,000

226,916,000

PAID TO EARNED LOSS RATIO:

50.2

50.5

66.2

INCURRED TO EARNED LOSS RATIO:

58.3

52.2

51.8

2018 MARKET SHARE

TOTAL WRITTEN PREMIUM

Fall 2019

2017 MARKET SHARE

2016 MARKET SHARE

WRITTEN PREMIUMS

P/E

The Anchor

I/E

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT

RANK

RHODE ISLAND 2018 RESULTS COMMERICAL AUTO LIABILITY COMPANY NAME

2018 MARKET SHARE

Progressive

2017 MARKET SHARE

2016 MARKET SHARE

WRITTEN PREMIUMS

P/E

I/E

12.3

11.3

10.6

11,405,000

45.9

72.8

Travelers

9.1

11.0

10.4

8,503,000

22.3

43.4

EMC

6.1

5.5

5.9

5,694,000

68.0

42.5

Liberty Mutual

5.3

6.0

7.1

4,984,000

60.4

69.3

Nationwide

5.1

5.8

7.0

4,754,000

48.3

34.0

Selective

4.9

4.8

5.6

4,541,000

42.1

67.3

MSA Group

4.7

4.2

4.0

4,416,000

34.0

75.7

Tokio Marine

4.0

3.4

3.2

3,701,000

29.1

40.6

Berkshire Hathaway

3.3

2.4

1.8

3,112,000

30.8

59.9

Ohio Mutual

3.3

3.7

3,071,000

44.9

50.2

Arbella

3.1

2.6

4.8

2,854,000

65.6

87.9

Zurich

2.9

6.3

3.7

2,744,000

38.9

49.1

National General

2.9

2.8

2.9

2,685,000

54.0

39.3

Motorists

2.2

2.0

1.6

2,058,000

52.8

67.7

Hanover

2.1

2.0

1.8

1,946,000

71.1

57.7

Hartford

2.1

2.0

2.2

1,923,000

52.4

29.8

W.R. Berkley

2.0

1.3

1.8

1,836,000

41.4

125.6

Chubb

1.9

1.6

1,766,000

30.8

59.9

Great American

1.8

1,717,000

26.8

33.1

American Natâ€™l P&C

1.6

1.5

1,527,000

35.4

92.3

2018

2017

2016

93,215,000

82,106,000

PAID TO EARNED LOSS RATIO:

43.8

55.0

52.1

INCURRED TO EARNED LOSS RATIO:

54.6

57.9

TOTAL WRITTEN PREMIUM

The Anchor

Fall 2019

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS

20192018

C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT

RANK

RHODE ISLAND 2018 RESULTS COMMERICAL AUTO PHYSICAL DAMAGE COMPANY NAME

2017 MARKET SHARE

2016 MARKET SHARE

2015 MARKET SHARE

WRITTEN PREMIUMS

P/E

I/E

Progressive

9.2

8.6

8.3

2,374,000

35.6

33.8

Travelers

8.3

7.8

7.2

2,153,000

61.2

72.2

Selective

7.2

6.8

7.3

1,869,000

64.8

64.5

EMC

6.4

5.8

1,669,000

72.6

Liberty Mutual

6.4

6.8

7.5

1,654,000

58.1

68.3

Nationwide

5.7

6.1

7.1

1,485,000

70.1

68.7

MSA Group

5.4

4.9

4.6

1,402,000

60.0

60.1

Ohio Mutual

3.7

4.1

951,000

44.0

43.4

Berkshire Hathaway

3.4

2.4

2.2

892,000

68.7

75.4

Zurich

3.2

5.3

3.7

821,000

20.6

12.8

Tokio Marine

3.2

3.0

2.7

820,000

62.9

72.1

Arbella

3.1

2.8

3.5

792,000

65.6

61.2

National General

3.0

3.1

3.3

780,000

45.3

44.2

Hanover

2.5

2.6

2.3

661,000

58.9

61.9

American Natâ€™l P &C

2.4

2.2

634,000

77.3

76.7

Hartford

2.1

2.0

2.2

556,000

62.0

61.8

Motorists

2.0

1.6

1.5

520,000

76.6

74.6

Chubb

2.0

1.8

508,000

23.1

23.9

W.R. Berkley

1.7

435,000

32.0

42.1

Great American

1.6

412,000

81.6

85.0

2018

2017

2016

25,943,000

24,628,000

21,529,000

PAID TO EARNED LOSS RATIO:

57.1

56.0

57.9

INCURRED TO EARNED LOSS RATIO:

58.8

55.4

59.6

TOTAL WRITTEN PREMIUM

Fall 2019

The Anchor

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT

RHODE ISLAND 2018 RESULTS COMMERCIAL MULTI-PERIL (LIABILITY)

RANK

COMPANY NAME

MSA Group

9.3

9.5

9.2

6,119,000

29.4

39.2

Nationwide

8.8

11.6

12.6

5,817,000

45.6

36.8

Travelers

8.8

8.6

7.9

5,778,000

12.9

37.3

Liberty Mutual

8.7

8.8

8.2

5,746,000

47.5

94.4

Tokio Marine

8.2

7.4

7.0

5,374,000

23.4

110.4

Hartford

4.6

4.2

3,057,000

33.5

49.1

Hanover

4.1

4.5

4.0

2,674,000

6.5

21.2

Arbella

3.7

2,448,000

37.7

57.5

Ohio Mutual

3.7

4.2

2,409,000

73.6

65.5

Chubb

3.3

2.8

3.8

2,190,000

119.4

13.5

Vermont Mutual

2.5

2.2

1,635,000

4.4

15.9

EMC

2.5

2.7

1,625,000

25.6

82.2

CNA

2.5

1.7

1,614,000

65.6

24.2

American Intâ€™l Group

2.4

1,579,000

42.0

52.1

Quincy Mutual

1.6

2.0

2.4

1,066,000

32.2

30.8

Allstate

1.5

1.8

1,018,000

20.4

41.9

Selective

1.5

1.8

1.7

1,009,000

95.0

100.5

Providence Mutual

1.5

1.3

1.4

1,000,000

2.0

28.5

Andover

1.2

806,000

41.2

42.3

Zurich

1.2

805,000

15.6

92.7

3 4

2018 MARKET SHARE

2017 MARKET SHARE

2016 MARKET SHARE

WRITTEN PREMIUMS

P/E

2018

2017

2016

65,844,000

60,255,000

59,744,000

PAID TO EARNED LOSS RATIO:

39.5

42.6

44.0

INCURRED TO EARNED LOSS RATIO:

50.3

51.6

54.6

TOTAL WRITTEN PREMIUM

The Anchor

I/E

Fall 2019

SPECIAL REPORT

RHODE ISLAND MARKET SHARE ANALYSIS

20192018

C MULTIPLE DISTRIBUTION n CAPTIVE/DIRECT

RHODE ISLAND 2018 RESULTS COMMERCIAL MULTI-PERIL (NON- LIABILITY)

RANK

COMPANY NAME

2017 MARKET SHARE

2016 MARKET SHARE

Travelers

9.1

8.8

8.7

9,191,000

23.2

17.6

Nationwide

8.6

10.1

10.4

8,762,000

126.8

140.7

Chubb

8.2

8.0

8.1

8,321,000

55.1

101.5

Hartford

6.2

5.6

5.4

6,312,000

50.7

48.8

Liberty Mutual

6.0

6.6

6,048,000

28.8

Tokio Marine

4.9

5.1

4,947,000

92.6

Allstate

4.3

4.8

5.0

4,379,000

53.6

Arbella

3.6

3,698,000

33.8

22.3

Hanover

3.4

3.5

3.4

3,460,000

32.9

36.9

Vermont Mutual

3.2

2.8

3,227,000

37.1

25.4

Greater NY

2.5

2.0

1.6

2,552,000

27.0

29.2

Zurich

2.5

1.9

2,532,000

453.7

437.4

Motorists

2.2

2.3

1.9

2,225,000

46.2

44.6

MSA Group

2.2

2.1

2,208,000

54.9

62.2

Great American

2.2

2.4

2.2

2,184,000

33.4

25.1

CNA

2.0

2.4

2.8

2,018,000

38.3

32.9

Quincy Mutual

1.9

2.1

2.5

1,967,000

74.8

24.0

Ohio Mutual

1.9

2.1

2.2

1,950,000

43.7

50.3

Providence Mutual

1.9

1.8

2.0

1,915,000

36.9

16.0

American Intâ€™l Group

1.9

1.1

1,890,000

40.7

48.2

6 7

WRITTEN PREMIUMS

P/E

2018

2017

2016

25,996,000

94,045,000

PAID TO EARNED LOSS RATIO:

64.1

55.7

INCURRED TO EARNED LOSS RATIO:

74.5

46.5

TOTAL WRITTEN PREMIUM

2015 MARKET SHARE

Fall 2019

The Anchor

I/E

58.3 126.2 48.4

INDUSTRY TRENDS

Agencies aren’t doing enough to attract Millennials In Robert Pettinicchi’s interview for Insurance Business of America, he discusses the lack of millennials in the insurance industry, the benefits that a career in insurance has and the need for the industry to promote just how good a field it is. For young people with an entrepreneurial drive, working at an agency can open doors for business ownership later on. Work-life balance, opportunities for advancement, and a stable career path – who wouldn’t want to land a job with these qualities? And yet, millennials are still not entering the insurance industry in the numbers needed to replace a retiring workforce. “It’s a great field, but I really don’t believe that the industry does enough to promote just how good a field it is,” said Robert Pettinicchi (pictured), executive vice president and chief lending officer at InsurBanc, which specializes in insurance agency perpetuation, acquisition and debt consolidation transactions. Agencies especially aren’t grabbing the attention of students graduating from risk

Millennials already are the largest segment in the workplace. Within the next two years, 50 percent of the U.S. workforce is expected to be made up of Millennials. It will be 75 percent by 2030, according to the U.S. Bureau of Labor Statistics. management programs who often end up being quickly picked off by carriers. It’s a lost opportunity, says Pettinicchi, because a young agent knows their demographic well. “What the young agent can bring to an agency is how to market to a young person or to younger people,” he told Insurance Business, adding that stats show the world of agencies is populated by employees from older generations. “There’s a tremendous opportunity if the right talent is brought in to step into those roles.” Getting exposure to the work done at an agency is key in the development of a young person’s sales skills, which are crucial to succeed as an agent. Though insurance is something that everybody needs, it does involve a sales process, says the executive VP. It takes people who can present well, work collaboratively, and, when all is said and done, make the sale. As new entrants to the industry, millennials need a hand in cultivating those skills. “They’re good with problem-solving, collaborating, working in groups, and working in teams, but when it comes to that one-on-one sales process, that’s where they’ll need the development and there’s no greater place than an insurance agency to do that and learn that,” said Pettinicchi. For young people with an entrepreneurial drive, working at an agency can open doors for business ownership later on. Many probably don’t set out with a clear goal of starting their own insurance agency, even though this doesn’t necessarily require a high capital cost of business, but that first job could be the start of a long and rewarding career that eventually leads to owning an agency. Nonetheless, that journey can’t start if young agents aren’t walking in the door to begin with. “You’ve got to get your feet wet and see how it’s done, and be in a position where you could model some behaviors from people who are real top performers,” said Pettinicchi.

Robert J. Pettinicchi is chief lending officer of InsurBanc, a division of Connecticut Community Bank, N.A., a community focused commercial bank with a specialty in providing banking products and services to independent insurance agencies. He can be reached at rpettinicchi@insurbanc.com

Robert J. Pettinicchi, Chief Lending officer, The Anchor Insurbanc

Fall 2019

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visit iiari.com/pacs

Risk Management Premium Credit

PROFESSIONAL L I A B I L I T Y.

Effective 1/1/2020, new risk management (formerly loss control) ͳͲΨƬ credit compliance and credit options will be available to Westport ͵ clients. ȋ͵ͲǦ ȀȌǤ Changes include: Ǥ 1. The credit will remain on your account for 2 years instead of 3. Ǥ

2. Credit will no longer be lost because of claim activity. ϐǡǣ 3. E&O seminar attendance requirements will be 3 hours instead of 6. October 2019 E&O seminars will qualify for both the three-year and two-year credits.

Agency StaȘ Size

Total Required Attendees

4. Required number of staff reduced for the base 10% credit per list below:* 1 – 4 1 • 1-4 5 –staff 11= 1 attendee 3 • 5-11 staff = 3 attendees 12+ 25% of staȘ • 12+ staff = 25% of staff with a maximum of 15 attendees (Max of 15 attendees) *One active agency principal, owner, partner or officer is required for all three levels.

The following additional credits are available, up to

5. If you qualify for the 10% risk management credit, you can also earn up a to maximum risk with management credit of 20 an additionaltotal 10% credit the options below:

percent:

If you have any questions or want any further information, please contact: Helen Collins, CPIA, AAI, AIS Director of Professional Liability Program Phone: 401-732-2400 Fax: 401-732-1708 helen.collins@iiari.com

50% or more of staff attendance at an E&O seminar or webinar = 5% credit. X have an orodd more ofofstaȘ attendance = 5% creditnumIf you50% number employees, round up for the proper available ber of attendees.

Agency use of a coverage checklist = 5% credit. X Agency use of a coverage checklist = 5% credit Checklist must be submitted for underwriter review and approval prior to theavailable renewal for credit to apply.

Voluntary website review = 5% credit. X Voluntary website review with șndings Website review must be done by a Westport approved auditor, and findimplemented = 5% credit available ings must be implemented before credit will apply.

ʹͶȀ͹ ƬǤǣ www.iiaba.net/EOHappens The Anchor

Fall 2019

Risk Management Premium Credit

Frequently Asked Questions Who is included in the staff count? Only “active” agency principals, owners, partners and officers are included in the staff count. Staff includes all employees of the agency, including full-time, part-time, licensed or non-licensed, as well as exclusive independent contractors. Nonexclusive independent contractors are not included. Part-time individuals now count as one employee (i.e., two part-time employees count as two staff members).

If 25% of our staff count does not result in a whole number, how many attendees are required? Always round to the next highest whole number. For example, if you have 13 staff, 25% would be 3.25, so you would need to send four staff members to receive the credit. How long will the coverage checklist credit apply? This credit will apply for two years, and can then be requalified.

How long will the website review credit apply? If the website review is done on its own, the credit will apply for four years, as long the agency continues to qualify for the 10% risk management credit. Agency audits (see below) include this review and the additional 5% credit will apply for the five years that the agency audit credit applies. All audit recommendations must be responded to and approved by the underwriter prior to the renewal date for credit to apply. A website review or agency audit must be done by a Westport approved auditor. Contact MAIA’s insurance department for this information. If I do an agency audit, can I earn more than the 20% risk management credits? Yes, you can receive an additional 10% credit by having a Westport approved auditor conduct an agency audit and implementing their recommendations. This credit will apply for five years. Contact MAIA’s insurance department for approved auditors or for more details. Do I have to pay for a website review or agency audit? Yes. Westport has a list of approved auditors you may use. Each auditor has their own pricing schedule.

If my renewal date is prior to 1/1/20, and the required number of staff attended loss control seminars this year, will anything change for me until the three-year credit has expired and I need to requalify? Generally, no. Any agency on the current three-year loss control credit will retain that credit until the credit period ends, staff members change and attendance must be requalified, or you have a claim that removes the credit. At that point, the new requirements will apply. If my renewal date is 1/1/20 or after, and I am in the middle of a three-year loss control credit, will anything change for me until the three-year credit has expired and I need to requalify? Generally, no. Any agency on the current three-year loss control credit will retain that credit until the credit period ends, staff members change and attendance must be requalified, or you have a claim that removes the credit. At that point, the new requirements will apply. *Pending Rhode Island Rate Rate Filing Approval .

Fall 2019

The Anchor

Th a pe

A Better Bottom Line Starts With Better Training The Institutes’ Agent and Broker Training Programs New-Hire Courses

Early to Mid-Career Courses

Quickly position your employees for success with these courses designed by industry experts:

Retain valuable employees with solutions that foster increased recognition and responsibilities:

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Professional Risk Consultant (PRC™) designation

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GOVERNMENT AFFAIRS CORNER

Out of State Violations Become a Major Issue Out of state driving violations have become a

share this information electronically. The Globe article reported that the American Association of Motor Vehicle Administrators does have a database that allows states to share information electronically however it appears that most states don’t subscribe to this service or their systems aren’t compatible with the AAMVA database.

Legislation Threatens Personal Auto Market Stability major issue ever since the June crash in New Hampshire that killed seven motorcyclists caused by a driver who should not have had a valid Massachusetts driver’s license. Recently an agency customer of mine who is a RI resident was surcharged on their RI auto policy for a speeding ticket that occurred in Massachusetts. Violations from Massachusetts have never shown up on Rhode Island motor vehicle reports in the past. An inquiry to the RI Division of Motor Vehicles has indicated that recently Massachusetts began notifying RI about violations in Massachusetts for RI licensed drivers. The Anchor has not been able to find out exactly which other states report violations to the RI DMV, but we did find out the RI DMV has been “receiving violations and suspensions from a number of jurisdictions over the years”. Reporting violations to the licensing state of the driver is a decision made by the state where the violation occurred. The Boston Globe reported in an October 4th article that the RI DMV was sending the Massachusetts Registry of Motor Vehicles 22,500 notices of violations for Massachusetts licensed drivers. These notices are paper notices which have to be processed manually by the sending state and the receiving state. The Globe also reported that New Hampshire recently sent 8,000 notices to the Massachusetts RMV regarding Massachusetts drivers who had violations in New Hampshire. The Registrar of the Massachusetts RMV lost his job this summer after an audit showed the Massachusetts RMV had not processed tens of thousands of notifications from other states about Massachusetts licensed drivers, including the driver that killed the seven people. That driver’s record included violations so severe it should have prevented him from having a license in Massachusetts. Since that time over 6,000 Massachusetts drivers have had their license suspended as the RMV processed the backlog of notifications of serious violations and suspensions from other states.

The result of this sporadic cross border data sharing will be that more drivers will be seeing some large surcharges on their auto policies because of out of state violations that are now going to be on record. The good news is that drivers with truly clean driving records will still maintain the best rates available.

Drivers who hold a Commercial Drivers License (CDL) are part of a national data base that tracks their driving records. For regular drivers the states generally do not have computer systems that are compatible which would enable them to

Ernest Shaghalian, Jr., CPCU, AAI Government Affairs Committee Chairman 31

Fall 2019

The Anchor

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WORKERS COMPENSATION CORNER

Rhode Island Workers Compensation Changes Please recall from my last column

• • • •

that I summarized recent changes to the workers’ compensation laws of our state by the General Assembly. One other significant administrative change was recently made at the Department of Labor and Training (DLT) affecting workers’ compensation. For the first time in many years, the independent contractor form that is filed by independent contractors with the (DLT) was changed. The following summarizes the issue and the change.

Do you have employees? Do you have workers’ compensation insurance? Do you have General Liability Insurance? Do you have Subcontractors?

This new form is the only form presently available at the DLT website. Also, the old form will no longer be accepted for filing by the DLT after December 1, 2019. The intent behind the additional questions is to limit its use to true independent contractors. The questions are relevant in defining the relationship. Both hiring entities and persons signing the forms will have to think twice when completing and submitting the forms.

You would agree that changes over the years involving independent contractors and how they fit into the worker’s compensation system have caused some consternation among the agent and employer community, particularly at the time of a claim or an audit. Recall that in documented circumstances, an employer does not have to include an independent contractor in its workers’ compensation insurance program.

When issues arise concerning a person’s status in regards to either premium or coverage, the important thing for an agent to obtain is documentation. If the issue has to do with an independent contractor, the prudent agent will make sure the employers using independent contractors has them documented by a DWC-11-IC form. Of course, just having the form will not always lead to independent contractor designation either by the Court or the carrier. But especially with the new questions, it will go a long way towards delineating the relationship.

In 2000 the General Assembly, for the first time, defined “independent contractor”. The law provides that an individual shall not be considered an independent contractor unless he or she filed a “Notice of Designation as Independent Contractor” form (DWC-11-IC) with the DLT. While the Workers’ Compensation Court retained the power to find that a worker is an independent contractor as opposed to an employee, or vice versa, the filing of the form with the DLT created a presumption of independent contractor status. Likewise, insurers, such as Beacon, retained this right as well. None of this has changed. What has changed is the form.

In conclusion, the General Assembly made the original changes regarding independent contractors to close out any loopholes arising from the adoption of the “universal coverage” law. These more recent changes were made to clarify the relationship and reduce fraud. Agents should inform their clients that they can expect the DLT, the Workers’ Compensation Court and insurance carriers to strictly construe these laws to eliminate abuse to the detriment of employees and law-abiding employers.

More specifically, the same form was used by the DLT for many years. At the suggestion of the DLT’s Misclassification Task Force and the Workers’ Compensation Court, the form was amended to include the following questions for purported independent contractors:

Mike Lynch has more than 30 years of experience in workers’ compensation law. Prior to Beacon, Mike was a partner at Higgins, Cavanagh & Cooney where he practiced primarily in the area of workers’ compensation defense. 33

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Michael Lynch, Vice-President, Legal, Beacon Mutual The Anchor

FALL 2019

CASE LAW NOTES R.I. Supreme Court Holds No Duty to Defend Additional Insured Outside Policy Coverage The Rhode Island Supreme Court this summer ruled in Bacon Construction Co., Inc. v. Arbella Protection Ins. Co., 2017-350 (R.I. June 4, 2019) that a trial court did not err in finding that a subcontractor’s liability insurer was not obliged to provide coverage to the general contractor for personal injuries suffered by a worker at a construction project, when there was no claim that the subcontractor itself was negligent. Appellant Bacon Construction, Inc. (“Bacon”) had been hired as the general contractor for a construction project at the University of Rhode Island. Bacon, in turn, subcontracted certain work to U.S. Drywall. Pursuant to their contract, U.S. Drywall was required to obtain an insurance policy listing Bacon as an additional insured. U.S. Drywall did so, obtaining a policy from Arbella Protection Insurance Company (“Arbella”), and naming Bacon as an additional insured under that policy. During site work, a U.S. Drywall employee was severely injured. The employee brought suit against Bacon, alleging that Bacon’s negligence was the proximate cause of his injuries. Bacon initially filed a third-party complaint against U.S. Drywall, claiming that their contract required U.S. Drywall to defend and indemnify them. However, Bacon subsequently dismissed its suit with prejudice, and sought instead to recover indemnification through its “additional insured” status on the Arbella policy. It did so by filing a declaratory judgment action, seeking a Superior Court ruling that Arbella was contractually obligated to defend and indemnity Bacon, due to Bacon’s additional insured status. Arbella argued, conversely, that it had no such duty, because the allegations in the underlying injury suit fell outside the scope of the policy’s coverage – which was limited to negligence in U.S. Drywall’s acts or omissions. There were no allegations in the underlying injury suit that U.S. Drywall had been negligent in any way. At the Superior Court, Arbella

prevailed, prompting an appeal to the Rhode Island Supreme Court. The Rhode Island Supreme Court held that the additional insured endorsement to the policy limited coverage to those situations where liability was attributable, at least in part, to the negligence of the named insured, whereas the allegations in the underlying complaint did not suggest that these injuries were due to any negligence on the part of U.S. Drywall. In so holding, the Court rejected Bacon’s argument that the endorsement language that Bacon “is an additional insured only with respect to liability for … injury caused in whole or in part by (1) Your acts or omissions; or (2) the acts or omission of those acting on your behalf” (emphasis in original) applies to claims arising from Bacon’s own alleged negligence. “You” and “Your” in the policy, the Court found, referred to the named insured, U.S. Drywall, only. The endorsement, then, is more accurately read as Bacon “is an additional insured only with respect to liability for … injury caused in whole or in part by (1) [U.S. Drywall’s] acts or omissions; or (2) the acts or omission of those acting on [U.S. Drywall’s] behalf”. In the Court’s view, the mere fact that the employee was injured while working for the named insured did not meet the causation requirement of the additional insured endorsement, and the plain language of the endorsement acted as a limitation on the policy’s scope. The Court also found that Bacon’s dismissal of the action against U.S. Drywall was “fatal because these actions extinguished any vicarious-liability claims that Bacon could have raised.” The lesson: pay close attention to the specific language regarding the scope of coverage before relying on the coverage. The courts certainly will.

This feature of The Anchor reviews recent case law involving the insurance industry. Please contact the author for more information: Travis J. McDermott Partner., Partridge Snow & Hahn LLP, (401) 861-8200, tmcdermott@psh.com

LEGAL BRIEFS

Cybersecurity Legislation Cybersecurity Legislation Expressly Applicable to the Insurance Industry is Coming Sooner or Later, Rhode Island. Are you Ready?

least 43 states and Puerto Rico considered a combined 300 bills relating to cybersecurity, a significant number of them based on the Model Law.

Hackers are not going away. Media reports of massive data breaches at banks, retailers, credit card companies, credit bureaus, and others have become a near-daily occurrence. And insurance companies collect large amounts of sensitive, non-public information, including personallyidentifying information. There is little doubt that insurers are ripe targets for cyberattacks.

Legislation to adopt the Model Law was introduced in 2018 in the Rhode Island legislature but did not emerge from committee. In 2019, a similar Senate bill failed again. That said, there is significant wind at the sails of the legislation nationwide, and it is expected that through the remainder of 2019 and into 2020, a number of additional states will adopt some version of the Model Law. If South Carolina and the other earlyadopter states are any indication, as more states implement similar statutory regimes, licensees may have as short as twelve (12) months from the date of enactment to implement compliant information security programs. Given the amount of work that developing such a program entails, licensees may find themselves scrambling to comply despite the warning signs that stricter legislation was coming.

As a result, in 2014 the National Association of Insurance Commissioners (“NAIC”) adopted a Data Security Model Law (“Model Law”), with the goal of having it adopted in all fifty states. While that has not happened, eight states have adopted a version of the NAIC Model Law, and many others are considering adopting it wholesale or a version of it. The provisions of the Model Law are relatively straightforward: it applies to “licensees” of a given state, and licensees are defined in the Model Law as “any person licensed, authorized to operate, or registered, or required to be licensed, authorized, or registered pursuant to the insurance laws of this State …” This means large carriers, small independent adjusters, and individuals and businesses providing insurance-related services such as agency or brokerage services. Arguably, it could even apply to non-insurers who are “licensed” in the State and offer insurance, such as rental car companies or travel agents! There are some limited carve-outs, such as small employers (less than 10 employees) being exempt from having and maintaining an information security program – but this is not to say that are exempt from the rest of the Model Law’s requirements, such as notification in the event of a data breach. The Model Law requires implementation of an information security program, and contains provisions governing data breach investigations and notifications, as well as authorizing the regulatory agencies with enforcing same. It is important to note that the Model Law aims to protect more than “personal information” – it seeks to protect “nonpublic information” which is inclusive of and broader than “personal information” as typically defined. In practice, “nonpublic information” means information that, in the event of an unauthorized disclosure, would have a materially adverse impact on the licensee’s business, operations, or security. “Nonpublic information” includes certain standard pieces of “personal information” such as social security number, account and credit card numbers, etc., but reaches other nonpublic data as well.

Ideally, both to avoid the horror of a full-scale data breach and to prepare for the inevitable regulatory scheme, impacted entities should consider remaining ahead of the curve by adopting an information security program now.

The Model Law was adopted, in whole or in part, in South Carolina, Ohio, and Michigan in 2018. So far in 2019, Mississippi, Alabama, Delaware, Connecticut, and New Hampshire have adopted versions of it. In 2019, at Travis is a partner at Partridge Snow & Hahn LLP, a business and litigation law firm based in Providence, Rhode Island, with offices in Boston and New Bedford, Massachusetts. 35

Fall 2019

Travis J. McDermott Partner, Partridge Snow & Hahn The Anchor

MARKETING CORNER

Successful Cross-Selling How to Successfully Cross-Sell Your Clients and Reach a New, Informed Audience

BOP-No Commercial Auto; BOP-No Professional Liability.

There has never really been a question that video is a dynamic vehicle to communicate your message. If you’re like many independent insurance agents, one of your greatest resources is right in your own office. Your current database of clients has the immediate opportunity to yield one of your highest returns. This article sets forth a strategy you can implement to successfully cross-sell your current clients by using today’s best inbound marketing strategies.

Identify your campaign audience.

Inbound marketing is about publishing helpful and interesting content your audience wants to consume. Every good marketing campaign starts with the customer in mind; unfortunately, many campaigns focus on pushing features and details consumers really don’t want to hear. It’s not about bragging about what you can do, but more about how helpful you can be to the person on the other end. Show people how you can actually save them money, or detail for them how they will benefit in the long run with better coverage, and they will reward you for your thoughtful advice.

Spend your time upfront mining your database. Before you send out that first cross-sell email or informative E-newsletter, you need to segment your lists. Most management software enables you to export your contacts by type of policy. For a personal lines campaign, you should use the following segmented lists of customers: Auto-No Homeowners Insurance; Homeowners-No Auto; Auto&HomeNo Umbrella; Auto& Home-No Life Insurance. For a commercial lines campaign, you should use the following lists: BOP-No Worker’s Comp;

Who are we talking to? You first want to understand your buyer persona before launching into a campaign, so you can target them correctly. For example, if you want to sell a homeowners policy to your current auto-only clients then you want to focus on what’s most important to them. Most people react first to their own wallets. So, lead with the savings and actual realistic dollar amount that they can save. In terms of number of communications to this targeted list, I suggest engaging with them every month with a communication, varying between a direct sell and a soft sell. I would rotate with an E-newsletter that always includes an article about savings, and an actual client testimonial (even better if it’s a video) that illustrates how a real person benefited.

Create landing pages with offers. For each of the categories I detailed above – “Auto-No Home; BOP-No Liability,” etc. – you want to create individual landing pages off of your website. You should have a clear value proposition and call to action with a form for the user to complete, in addition to a link for an immediate quote. You also want to make sure you optimize your landing pages for Search Engine Optimization (SEO), so they come up high in the search engines. The goal of a landing page is to directly convert a visitor into a buyer, so be clear, concise and to the point. John Houle is the president of JH Communications, a marketing-communications agency in Providence RI specializing in the insurance industry. He can be reached at 401.831.6123 or at john@jhcom.net.

John Houle JH Communications The Anchor

Fall 2019

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Plan + build your automation + nurturing flows.

Share your blog with consumers. Once you’ve written your blog, you need to promote it. First, you will send it your targeted list via email, but you need to also expand your reach and audience. You want to do a post about your blog on Facebook and publish the article directly on LinkedIn.

Planning and building follow-up campaigns to nurture leads into new policyholders is a process. You should always present the option for an agent to call the client on their time frame to explain the benefits one-on-one. If a client does not want immediate contact, I would suggest a follow-up communication with an actual client video testimonial after two to three days. Next, they should receive an E-newsletter with three blog posts from your website, the lead story being about their primary topic of interest. Then they should be entered into your internal marketing campaign, receiving your electronic newsletter each month.

Consider paid search and other channels. Your blog post and social media can be used to drive traffic to the top of your sales funnel. I would recommend setting up a budget for each campaign to boost your blog posts on Facebook and LinkedIn to “lookalike” audiences of your current clients. Just be sure that you are measuring the effectiveness of these channels.

Tracking your results. You set goals at the very beginning so that you can evaluate your success. You want to track the URLs of the visitors coming to your landing pages, and in particular, you want to review where your traffic is coming from and how visitors are finding you. You will be able to analyze where and when your clients are visiting your specific landing pages, and you’ll ultimately be able to track all your new policies you’re writing. This will help you make educated decisions on which marketing activities to continue to invest in and which campaigns work the best.

Write about what you know best. Your insurance knowledge is your greatest advantage especially over direct writers. But you need to tell people about it, and do it often if you want to move the needle. You should write 25-50 articles (150-300 words in length) about how insurance benefits consumers. Many of these articles can be written in advance, not requiring you to write every week. 37

Fall 2019

This will not be a one-and-done campaign. This is a campaign you want to continue to replenish with new leads and contacts. As you attract new customers into your agency, you will need to continue to grow and nurture them into multi-line clients.

The Anchor

RI EMERGING LEADERS

2019 FALL GOLF OUTING

Thanks to all who attended and supported this event!

RHODE ISLAND EMERGING LEADERS

New Leadership I sit here today as the newly appointed Chair of the Emerging Leaders. A big thank you goes out to

An Event Horizon outgoing chair Kelly Townsend for paving the way and to Mark Male and Denise Smith for believing in me as I take the reins for the next year. The truth of the matter is that an effective and productive leader is only as good as those that they surround themselves with and in that regard I am truly blessed. We have a talented group of individuals from all different backgrounds within the industry and they each bring their own blend of talent that has made the Emerging Leaders Executive Committee a force to be reckoned with. Add in staff liaison Marcia Berthiaume and my position as chairman is pretty easy with my hardest challenge keeping the monthly meetings on time and on task. In the past year we re-branded from the ubiquitous and exclusive sounding “Young Agents” to a much more inclusive and forward thinking name of “Emerging Leaders”. I was happy for this transition because as a veteran of 15+ years in the industry I certainly don’t feel young anymore and many of my friends and colleagues would poke fun at me and question how I could still be considered “young”. As Kelly has noted in previous issues we have had a productive year with our events and charitable efforts and we recently just helped run and host the IIARI Fall Golf outing, which as a committee was our first time in this position and was universally looked upon as a rousing success with 90+ golfers and money raised to benefit The Nathans Angels Memorial Foundation. Looking ahead I want to keep this train moving forward and on track. As Bill Belichick once said “ If you sit back and spend too much time feeling good about what you did in the past, you are going to come up short next time”. With that thought in mind looking ahead we have some excellent events planned so I ask everyone to get involved, be involved, and stay involved. If you have any questions or concerns of any kind I ask that you contact your IIARI representative, Marcia or myself, and let us know what we can do to add value for you. Why aren’t you coming to an event? What is holding you back? I also challenge you to recognize if you cannot come up with a reason to go ahead and attend one. Come see what we are all about and help us build a better network of emerging leaders. Lastly, a big thank you to all those who support us from Agency Principals, Carriers, Vendors, the list is endless and we appreciate all the support and guidance. Timothy Mailloux Emerging Leaders Chair 39

Fall 2019

The Anchor

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