GREEN MOUNTAIN AGENT VERMONT INSURANCE AGENTS ASSOCIATION | AUGUST 2020
The Lazy Days of Summer..... Vermont Insurance Agents Association is a statewide trade association representing nearly 100 independent insurance agencies in Vermont, with more than 900 employees. VIAA member independent insurance agents represent more than one insurance company, and as a result, can offer clients a wider choice of auto, home, business, life and employee benefits.t
Green Mountain Agent is a publication of
CONTENT ________________ August 2020
04 Letter from the President
600 Blair Park Road, Suite 100 Williston, VT 05495 Phone: 802-229-5884 Fax: 802-876-7912 www.viaa.org
12 Advice for Going Digital Quickly, from Agents Who Already Have 14 On the Hill
VIAA Officers
14 On the Hill
President Alan K. Kinney
22 E&O Corner
Vice President Dan Rodliff
24 Changing of the Guard at VIAA
Secretary/Treasurer Michael Barrett
29 40 Hours and I'm an Insurance Agent
National Director Ron Bixby
33 Governor Phil Scott Announces Strengthened Mask Requirements
Directors
35 Don't use that Language Around Me: Insurance Cuss Words
Chip Ams Erin Odell, CIC Paul Plunkett Jessica Fleury Ex-Officio
39 Commentary
Staff
43 Agency & Company News
Executive Director Mary Eversole mary@viaa.org
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LETTER FROM THE PRESIDENT ______________________________ August 2020
It’s August, those lazy, hazy days of summer when the heat and sunshine just make you want to sip some lemonade under a nice shade tree. For us working folks, it’s not always quite that simple, This is my last President’s message, as my term as President ends this month. It’s been a busy year, full of unique challenges and situations. Through it all, VIAA has continued to serve you and provide you valuable resources to help you through this pandemic. Thank you for your continued support of VIAA. Later this month, I will turn over the gavel to incoming President Dan Rodliff of NFP. I know Dan will do an outstanding job in leading the association in the coming year. You are invited to our annual meeting, which will take place on August 20 at 10:00 a.m. Agency Principals, if you haven’t received your invitation to attend, please let us know. We hope you will carve 30 minutes from your schedule to participate. Our annual fall conference “Evolve” will be held in the fall. Plans are under way to deliver an event that provides you value and keeps you and your staff safe. Stay tuned for more information. Our long-time Executive Director, Mary Eversole, is leaving the association for a new opportunity in her home town of Seattle. Mary leaves VIAA in a very strong position for perpetuation and we sincerely thank her for her contributions and leadership in her time here. Please see our story about Mary and her accomplishments later in this issue. The Board will be working closely with Mary until her departure and will be evaluating long term options for her replacement. I hope that you will have time in the coming weeks to enjoy what remains of the summer. Stay safe and be well!
NEXT MONTH Meet Incoming VIAA President Dan Rodliff from NFP. 4
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Alan Kinney VIAA President
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VERMONT INSURANCE AGENTS ASSOCIATION
JOIN US 2020 ANNUAL MEETING VIRTUAL MEETING
August 20, 2020 10:00 a.m. Installation of 2020 VIAA Officers Installation of 2020-21 President Dan Rodliff, NFP P&C
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ADVICE FOR GOING DIGITAL QUICKLY, FROM AGENTS WHO ALREADY HAVE By Kathy Straub
MARKETING
Digital was once a long-term ambition for many independent agents. But as the pandemic continues to leave us all with more questions than answers, one thing is becoming clearer: Digital will play a large role in how we move forward. Seemingly overnight, digital has moved from a nice-to-have to a must. Our new reality is much more digital. While growth and retaining clients is a top priority, rapid digital transformation will be critical for agents to keep pace with changing customer expectations. It’s best to look for inspiration from the agents who have already tackled transformation. Here’s three pieces of advice on how agents can go digital from three agencies that have embraced the process. 1) Rip the Band-Aid off. “You can’t wait for it to be perfect—it never will be,” says James Castell, owner of Castell Insurance, who believes that today is the best day for independent agents to embrace new tools and technologies. Castell Insurance first embarked on its digital transformation journey just a few short years ago. Building on the agency’s legacy as a small-town, family-owned business, Castell saw an opportunity to reach a new audience of insurance customers that prefer digital. I still believe in the value of in-person relationships, but I felt we were missing out on 12
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“opportunities by making it hard for people to do business with us,” Castell says. Like many agencies that are currently facing the prospect of going digital, Castell first realized how critical digital is during an emergency as a snowstorm shut down the Northwest last year. The traditionally brickand-mortar business was not prepared to keep operations running for the 10 days that the snowstorm required his staff to work from home. Moving to digital quickly became a pet passion: He updated to a Voice over Internet Protocol (VoIP) phone system, integrated texting and e-signature solutions, and started using more video. The experience taught Castell that going digital, like ripping off a Band-Aid, needs to be quick and will likely come with some discomfort.
Advice for Going Digital Quickly, from Agents Who Already Have Continued “There is going to be trial and error, and there may be some casualties along the way, but digital tools will ultimately help your agency grow,” he says. 2) Condition clients. Getting digital tools in place is one thing, but it’s another to start functioning as a digital agency. Erin Nutting is the owner of the digital agency, Integrity Insurance Services. Like Castell, she believes the most important thing agents can do is to just start. “It will take time to unravel what works for your agency in the digital space and what doesn’t work,” she says. “You don’t have to do everything perfectly when you’re making the transition.” Once agents start the transition, it’s critical to stay committed to the process. “You will need to set the expectations and condition your customers to your new ways of doing business,” Nutting says. “I’ve found that customers will do business with you how you ask them to do business if you set the expectation and communicate the change.” 3) Maintain authenticity. Many agents worry about how digital impacts the relationship and connections they have with clients. But adding digital channels doesn’t mean losing the personal touch. In fact, agents should work to infuse their unique personality and values even more than they would in person.
“As long as you’re being authentic, people will connect with that in one way or another,” she adds. “In the coming months and years, agencies are going to operate differently than they have in the past. They’re going to have to be a lot more comfortable with remote workers and digital communications.” These are just three pieces of advice from independent agencies that have already made notable strides in digital transformation. Each agency will have different needs and will be at different stages in their digital journey, so plotting a path forward will look different for everyone. If there is one thing that is certain for all agents, it’s this: We are in a new, Digital, Accelerated reality. How you respond today will define your agency for years to come. What steps are you taking to evolve? Kathy Straub, agency marketing coach, Liberty Mutual and Safeco Insurance This article was published by the Big "I".
Ashley Abrams, marketing director at McClain Insurance Services, has been helping her team embrace video as an avenue to connect with clients. This has become an even greater focus for the firm since agency staff started working from home due to COVID-19. The way Abrams sees it, “people like to do business with people they know, like and trust, and video gives clients a sense of an agent far beyond what they can get from a still photograph or written words.”
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ON THE HILL: Senate Republicans Propose New COVID-19 Relief Package
Senate Republicans released a number of legislative proposals, known as the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act, that they would like to package together in the next COVID19 relief package.
the coronavirus. These protections cover claims arising between December 2019 and October 2024 or the end of the coronavirus emergency declaration, whichever comes later. The Big “I” strongly supports liability protections for businesses and this week joined a number of other business organizations in sending a letter to Congress supporting these liability protections.
In May, House Democrats passed their preferred COVID-19 package, the “Heroes Act,” and discussions between the White House, Congressional Republicans and Congressional Democrats are now taking place with the hope that a deal can be struck in the coming weeks. Currently, the sides remain far apart in negotiations. The HEALS Act includes a number of provisions that are important for Big “I” members and their clients. The legislation includes liability protections for businesses from claims from actual, alleged, feared,or potential exposure to 14
The GOP proposal also provides $190 billion of committed and appropriated funds for the Paycheck Protection Program (PPP) and new “PPP Second Draw Loans.” This allows certain businesses to take a second draw PPP loan at 2.5 times their average monthly payroll with a limit of $2 million. The second draw loan is targeted and aims to assist smaller firms disrupted by the pandemic. To be eligible for the second draw loan,
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Senate Republicans Propose New COVID19 Relief Package continued businesses must have 300 or fewer workers and show that they lost 50% or more in revenue in one of the first two quarters of 2020 compared to 2019. The legislation also attempts to simplify the loan forgiveness application by allowing borrowers with loans under $150,000 to give a good faith attestation that they complied with the rules. Of interest to Big “I” state associations, the legislation would also allow for 501(c)6 organizations with fewer than 300 employees to access PPP loans but with a significant caveat. 501(c)6 organizations are ineligible for the loans if lobbying activities comprise more than 10% of the organization’s overall activities. The Big “I” has consistently pushed Congress to allow 501(c)6 organization’s access to PPP loans. The HEALS Act also allows employers to claim a credit for 65% of employee wages under the employee retention credit, up from 50% in the CARES Act. Under the CARES Act, eligible businesses had to close down under a COVID-19 order or lose at least 50% of their quarterly, year-over-year gross receipts, but this bill reduces the revenue loss threshold to 25%.
The HEALS Act also temporarily increases the business meal deduction from 50% to 100% for expenses for food and beverages provided by a restaurant through Dec. 31. The legislation would also provide a federal payment of $200 per week through Sept. 30 under the federal pandemic unemployment compensation program, which would be on top of state unemployment benefits. In October, claimants would receive a payment that when added to the state unemployment insurance payment replaces 70% of their prior wages with the additional payment limited to no more than $500. Additionally, using the same income thresholds as the CARES Act, the bill also provides another $1,200 rebate for Americans—$2,400 for married couples filing jointly—plus $500 per dependent. Finally, the HEALS Act provides $306 billion in funding for federal agencies. This includes $25 billion for COVID-19 testing and contact tracing. It also includes $105 billion in funding to help schools reopen in the fall. Written by Wyatt Stewart, Big “I” senior director of federal government affairs.
Under the CARES Act, the credit applied to up to $10,000 of wages per employee. This bill increases it to $10,000 per quarter, up to $30,000 for the year. The HEALS Act also sets up a payroll tax credit for 50% of expenses employers will have incurred from March 13 until Jan. 1, 2021, on personal protective equipment, cleaning supplies and other items to make the workplace safer. www.viaa.org
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Wags to Wishes Photo Contest
VIAA Young Agents are teaming up with Make-A-Wish Vermont and the Humane Society of Chittenden County to bring you Wags to Wishes—a photo contest that honors the special bond between kids and their pets, sponsored by Trusted Choice. Upload your cutest kid/pet photo today (No fee to enter!). The grand prize winner will receive a professional photo shoot. The top 24 entrants will win a $50 gift certificate to Pet Food Warehouse, AND will be considered for the 2021 Wags to Wishes calendar! Each vote is only $1 and 100% of the proceeds will be used to grant wishes and bring pets and people together. Enter & Vote Today!
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C E O & R O N ER
The Importance of Using Insurance Coverage Checklists By James C. Keidel, Esq. Keidel, Weldon & Cunningham, LLP
One of the best E&O loss control practices for insurance agencies and brokerages to follow is the use of coverage checklists. This simple, but highly effective, E&O loss control practice is one that any size, or type of, agency or brokerage can easily implement and follow. In this issue of The E&O Report, we will discuss how insurance coverage checklists should be used and the many benefits that they provide when they are used on a regular basis. The primary benefit of using insurance coverage checklists is that they help protect an agency or brokerage from E&O claims and lawsuits being made by customers on the basis that various coverages were not offered to them. An insurance coverage checklist can prove to be a valuable piece of documentation if an insurance agency or brokerage is forced to defend itself against a claim made by a customer that it failed to obtain a particular type of insurance coverage to cover a loss. In fact, many professional liability insurers specifically ask on their applications whether the insurance agency or brokerage to be insured under the policy regularly uses insurance coverage checklists. This question is asked because the E&O insurers are aware that coverage checklists can be instrumental in defeating an E&O claim based upon allegations of failure to procure coverage. For this reason alone, every insurance agency or brokerage should implement a procedure pursuant to which insurance coverage checklists are used consistently by all employees when they are reviewing possible coverages with customers and potential customers. Another benefit of using insurance coverage checklists is that they help ensure that 22
consistent information is being provided to customers no matter which employee, or which office location, of the agency or brokerage they are dealing with. When used consistently throughout an agency or brokerage, insurance coverage checklists can help provide better customer service to all customers. An additional benefit of using E&O coverage checklists is that quite often they will have the customer think about coverages or exposures that they had not originally contemplated. When this occurs, customers will often purchase insurance for risks or exposures that they had not planned on insuring, which then helps the agency or brokerage sell more insurance. This factor not only helps protect the customer by providing insurance for something that they did not originally consider insuring, but it also helps increase the sales of the insurance agency or brokerage.
While there are sample checklists available, as each agency or brokerage has its own unique type of business and areas of specialty, there is no one form checklist that fits the needs of every agency or brokerage. An agency or brokerage that seeks to implement the use of insurance coverage checklists should carefully review the various forms that are available and then modify the forms to fit within the parameters of how that particular agency or brokerage operates and the types of customers that it has. One important question that every insurance coverage checklists should have is a catchall question at the end
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The Importance of Using Insurance Coverage Checklists Continued asking the customer whether they have any other insurance or risk that they would like to discuss other than what was reviewed with the agency or brokerage on the checklist above. This question puts the burden on the customer to affirmatively request information concerning anything that was not reviewed with the agency or brokerage. Coverage checklists should be used when discussing insurance coverages with both insureds and potential insureds either on the telephone or in face-to-face meetings. If the coverage checklist is reviewed in person with a customer, a good practice is to have the customer complete and sign the form to acknowledge that the coverages were reviewed. Once the coverage checklist is completed and signed, the agency or brokerage should save the checklist in the customer's file. If a checklist is reviewed instead with a customer over the telephone,
notes of that discussion can either be made on the checklist form or in the agency management system. When insurance coverage checklists are used by an agency or brokerage one of the most important things to require is that they are used consistently by all employees on a regular basis. For all of the reasons discussed above, the prudent insurance agency or brokerage should make certain that all employees consistently use insurance coverage checklists when discussing coverages with customers and potential customers. In our experience, insurance coverage checklists are one of the best E&O loss control practices to follow because they not only provide E&O protection for the agency or brokerage, but they also help a customer identify risks and exposures that they may not have originally contemplated, which in turn will help sell more insurance.
Keidel, Weldon & Cunningham, LLP concentrates its practice in the defense of insurance agents and broker's errors and omissions claims and litigation, errors and omissions loss control counsel and education, insurance coverage analysis and litigation and insurance regulatory matters. Please direct any comments or questions to James C. Keidel, Esq. by mail to the main office of Keidel, Weldon & Cunningham, LLP, at 925 Westchester Avenue, Suite 400, White Plains, NY 10604, telephone at (914) 948-7000 or e-mail at jkeidel@kwcllp.com. The law firm also maintains offices in Syracuse, New York; New York City, New York; Wilton, Connecticut; Fair Lawn, New Jersey; Warwick, Rhode Island, Philadelphia, Pennsylvania, Williston, Vermont and Naples, Florida.
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40 Hours and I'm an Insurance Agent
AGENCY MANAGEMENT
By Bill Wilson
TI read an article in the Toronto Star that struck home. It was called, “$80 and I'm a Security Guard.” The author tells the story of how he dropped by the Ministry of Community Safety and Correctional Services with a passport photo, completed a security guard application, and gave the clerk $80. The clerk asked him if he’d also like a private investigator’s license. What did that take? Another $80. Two weeks later, his security guard and private investigator’s license materialized in his mailbox. As he put it, “I'm now fully licensed for two jobs I have no idea how to perform.” Sound familiar? When I conducted agent licensing schools, I used to show completers at the end of their 3-day classroom training a photo of a manicurist with the caption, “What do you have in common with this woman?” The answer was, “Nothing...this woman has 15 TIMES as much education in her field than you do in yours.” In our state, a manicurist had to complete 600 hours of classroom and supervised work experience prior to being licensed (a beautician required 1,500 www.viaa.org
hours). An insurance agent? Put in 40 hours — 24 in the classroom and 16 selfstudy — and you could be licensed to bid on General Motors’ account in the morning and Microsoft’s in the afternoon. Insurance policies are contracts. While attorneys focusing on contract law typically spend at least 7 years preparing for their careers, insurance agents often spend...a week. Attorneys take a rigorous bar exam. Many of them don't pass it the first time. Some of them never pass it. Insurance agents who were working at a convenience store last week take exams that sometimes have passing rates in excess of 90%. Attorney CE may be governed by the state Supreme Court which restricts who can deliver CE and what must qualify. The educational comprehension level of agent training and testing material is often at a fifth and sixth grade level. In contrast, insurance agent CE all too often consists of a self-study provider with a 12-hour course called “Insurance Terms A-L” or 3 hours at an auto glass company 29
40 Hours and I'm an Insurance Agent continued rubber chicken luncheon learning how to steer customers to their business. For online education, most insurance departments grant credit hours based on a word count. As a result, some providers pad courses with verbiage from marketing brochures just to elevate the word count. Continuing education as an industry has become an end in and of itself, rather than a means to an end. But that's a rant for another day. Insurance policies are complex contracts. With state insurance departments requiring minimum Flesch test scores, policies must be “easy to read” but are often not easy to understand. In a Flesch test, the higher the score, the easier the material is to read. In one insurance department study, the Bible scored a Flesch rating of 66.97, while Einstein’s Theory of Special Relativity scored only 17.72. Sadly, a personal automobile policy scored just 10.31. Many insurance practitioners lack the requisite skills and knowledge to fully understand (much less explain) the products they’re selling. Too often, underwriters and adjusters don’t either. Here is a deposition excerpt where an agency owner was asked to explain coinsurance:
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“I could give you the wrong thing, and I can stand to be corrected. But on coinsurance if you’ve got, like, a million dollars worth of coverage and if a person has an 80 percent coinsurance factor, all right, that means that it’s going to have to be sure that it is insured up to 80 percent of the value. That comes into play when it’s a partial claim is one thing that it will come into play. If a person is only insured up to 50 percent of the value instead of 80 percent, then it would be stated on the policy. Then there would be probably a 30 percent depreciation taken off the policy. So, the 80 percent is really better than a 90 percent coinsured or the coinsurance being 100 percent. And so that’s on that particular incident now.” www.viaa.org
Consultant James R. Mahurin has performed expert witness and litigation support since 1993 and has been involved in litigation arising out of Hurricane Katrina for almost five years. He has observed that agents with academic credentials in the form of substantive designations, especially CPCU, are (a) rarely the subject of lawsuits, and (b) far more successful in defending themselves. He believes there is a strong correlation between the quality and extent of educational background and work quality and in deposition performance. According to Mahurin, “A substantial number of insurance agents hold CPCU designations. A smaller number hold CPA certificates, MBA and law degrees. These men and women are involved in many of the most complex insurance programs in the United States and internationally. This group of agents is much less frequently subject to agent litigation. Their performance in deposition and trial testimony is far, far superior to the average agent.” Education and articulation are key elements in successfully defending an E&O lawsuit. Mahurin cites a national conference he attended where an attorney from a prominent plaintiff’s law firm said (paraphrased), “If insurance industry personnel were required to take basic college level courses about the business of insurance, our law firm would have to find something else to do. We are successful as a law firm because the insurance industry doesn’t train their people.”
40 Hours and I'm an Insurance Agent continued One area where this is evident is certificate of insurance processing. This function over the years has been pushed down to lesser skilled and trained staff in agencies. Demands being made on agents today for more detailed certificates, compliance checklists, and “agent affidavits” may require the review of lengthy and complex construction contracts, with document completion by staff members with little or no formal training in the subject matter. As a result, one of the largest agents’ E&O insurers in the country has seen a dramatic escalation in E&O claims involving certificates and additional insured requests. However, more important than processing issues as they relate to education level is the fact that the vast majority of E&O claims arise from a lack of coverage. We all make mistakes, but it is the combination of education and experience that teaches us what we don’t know. The industry’s emphasis on process and procedures as a means of reducing litigation is only minimally effective when the practitioners do not understand what they don’t know. And the E&O implications are only one side of the education coin. Proper training and education can dramatically impact the bottom line from the standpoint of improved effectiveness and greater production and account retention. Unfortunately, during hard times, training and education are usually the first budget items to be cut in a hard market, despite the evidence that a knowledgeable staff is a more efficient and productive staff. One insurer's study showed a close correlation between levels of professional education and production success, determining that production increased by up to 54% while taking LUTCF classes and up to 80% following completion of the designation. Insurance agencies typically spend from www.viaa.org
0.4% to 1.1% of revenue on employee education. The U.S. Department of Labor suggests that 5-12 times as much should be invested in training and education. Licensed agents spend 12-20 hours per year, when 100 is recommended. A housekeeper at a Ritz-Carlton hotel receives a minimum of 120 hours of customer service training before interacting with guests. How many of your agency CSRs have 3 weeks of customer service training in their entire careers? Did you know that if you invested only 15 minutes per workday studying policy forms or reading coverage reference manuals, you’d amass over 60 hours of learning each year? In the 1970s, a new company underwriter or adjuster typically spent up to a year in formal training followed by a year of supervised work experience before he or she was unleashed on an unassuming public. Several insurer training schools rivaled college graduate schools in the comprehensiveness and difficulty of the subject matter. Agents often came from these ranks. The CPCU designation was actively promoted and supported by both companies and agencies. More than one carrier insisted that rising stars in the organization with management destinations actively pursue the CPCU designation. The time has come for each of us to step up and speak out about the relevance and importance of CPCU and other Institute programs. So what are we, insurance professionals or security guards?
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NEWSFLASH
GOVERNOR PHIL SCOTT ANNOUNCES STRENGTHENED MASK REQUIREMENTS As the state continues its sustained efforts to encourage mask use as a tool to limit the spread of COVID-19 and protect the most vulnerable, Governor Phil Scott today announced strengthened mask requirements in public places and congregate settings. “Based on national and regional data on how the virus is spreading – and rather than waiting like other states have – I feel we need to act now to protect our gains, which have allowed us to reopen much of our economy,” said Governor Scott. “That’s why today I signed an Order, which will strengthen our current mask mandates, so that we do not take steps backwards and we can stay open into the fall as people move more of their interactions indoors,” Governor Scott added.
“Unfortunately, this issue has become polarized and, I’m still worried that a mandate will create unnecessary conflict and resistance,” Governor Scott said. “Attacking, shaming, and judging isn’t going to help; but understanding, educating, leading by example, meeting people where they are, and maybe a little kindness and understanding will,” Governor Scott encouraged. Developed in consultation with the Vermont Department of Health (VDH), this amendment is critical to the state’s strategy to limit the spread of COVID-19 in anticipation of K-12 and college students returning to school, as well as the fall and winter recreation seasons.
Effective Friday, August 1, 2020, the amendment requires all Vermonters to wear masks or cloth facial coverings any time it is not possible to maintain a physical distance of at least six feet with others from outside their household. Those who are not required to use masks include those exercising outdoors, those under the age of 2, those with a medical or developmental condition that is complicated by a facial covering and those with difficulty breathing. Businesses and other entities may require customers to wear masks, including signage explaining mask requirements and denial of entry or service to those who decline to wear masks.
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Don’t Use That Kind of Language Around Me: Insurance Cuss Words
AGENY MANAGEMENT
By Chris Boggs Growing up, you knew which words you could say and not say; and if you didn't, that slap in the back of your head from your mom and/or dad made it clear a recentlyuttered word was inappropriate. As we got older (mid-to-late teens), we got bolder and would test our parents to get their reaction when we used those "four-letter" words. Sometimes you got away with it, sometimes it was like being 12 again. As we morphed into adulthood, our mom wasn't there to give us that unapproving look (or head slap), so some of us developed a bad language habit. I did – until I heard someone else using the same language. I thought to myself: "If I sound like that much of an idiot, I have to stop using that language." Recently I've noticed insurance practitioners doing a LOT of cussing. No, I don't mean using the traditional words that got us in trouble as kids, I am referring to insurance cussing. Yes, there are certain words and phrases used by many insurance practitioners that should not be used in polite company, mainly because they are just plain inappropriate and DIRTY. Allow me to present the three most common examples of insurance cussing: Blanket Additional Insured: In the ISO world, there is no such thing as a blanket additional insured endorsement. Yes, there are "Automatic" additional insured endorsements; but no "blanket" endorsement. The difference is connotation. "Blanket" conveys the idea that everyone is covered as an additional insured; the reality of "automatic" is that www.viaa.org
additional insured status is granted when specific conditions are met. While this appears semantic, in the ears of a client or certificate holder, there is a big difference. All Risk: Hopefully this property term long ago disappeared from your lexicon; but if it didn't, promise me the phrase "all risk" will never again cross your lips. As you know, Judge Wapner, Judge Judy or whichever judge you follow has a very hard time when someone is told their property policy is written on an "all risk" basis. To the court, this means everything that happens is covered; which we all know is a lie. Over the years, the industry has tried to tone down this term, preferring euphemisms such as, "open cause of loss," "open peril" or even "risk of direct physical loss." While these were less offensive, non-insurance professionals (like lawyers and judges) gave these terms broader meaning than the industry intended. Now we refer to this breadth of coverage as "causes of loss - special form." But even this non-descriptive term can be misunderstood – depending on the form. 35
Don’t Use That Kind of Language Around Me: Insurance Cuss Words continued
Full Coverage: I don't know where to begin explaining the impropriety of this phrase. Although we think we know what is meant by this phrase, what is actually understood when the phrase "full coverage" is spoken? Insurance practitioners understand "full coverage" to mean an auto is covered for liability, medical payments and physical damage (collision and other-than-collision) and maybe even uninsured and/or uninsured/underinsured coverage. But how full is full? Analyzing "how full is full," does "full coverage" mean that you will be paid replacement cost if something happens to your car – with no deductible? It must, because depreciated value wouldn't qualify as "full coverage."
have meaning. When you use bad language like detailed here, your clients, or some other party, may think they are getting something they are not. Disappointment is a function of expectation; when others think they are getting protection they aren't, a court date may be in your future. Never use these phrases in professions conversations or writings – unless you are making a point. When you hear anyone use these terms, punch them in the mouth and correct them. OK, I'm just kidding, no punching; but do correct their phraseology and provide them with the appropriate terminology.
Do you get my drift? Insureds don't actually have full coverage, even if they have liability, medical payments, uninsured AND underinsured motorist, physical damage coverage and any other optional coverage. The coverage they have is something less than "full." So, if I can't call it "full coverage," what do I call it? That's a reasonable question. I'm not sure you will think my answer is reasonable – you don't group the coverages into one term because you can't. You layout each coverage for the insured, explaining what limits, limitations and deductibles apply. Because there are limits, deductibles, exclusions and conditions, the insured will never have "full coverage." Breaking Bad Habits Why do I make such a big deal about cleaning up our language; because words 36
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The 180-Day ACV VS. RC Notice Myth
William C. Wilson, Jr. CPCU, ARM, AIM, AMM is the founder of InsuranceCommentary.com. He retired from the Independent Insurance Agents & Brokers of America in December 2016 where he served as Assoc. VP of Education and Research and was the founder and Director of the Big "I" Virtual University for over 17 years. www.viaa.org
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This issue came up twice in the past week and has come up many times over the years. Many property policies written on a replacement cost (RC) basis give the insured the option of prompt claim payment on an actual cash value (ACV) basis with any balance due on a RC basis available at a later date. Using ISO forms as model language, the following are the applicable parts of these provisions in their Homeowners and Commercial Property programs. ISO HO 00 03 05 11 “You may disregard the replacement cost loss settlement provisions and make claim under this policy for loss to buildings on an actual cash value basis. You may then make claim for any additional liability according to the provisions of this Condition D. Loss Settlement, provided you notify us, within 180 days after the date of loss, of your intent to repair or replace the damaged building.” ISO CP 00 10 10 12 “You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim for the additional coverage this Optional Coverage provides if you notify us of your intent to do so within 180 days after the loss or damage.” I have seen this issue arise most often following claims for hail damage. In many cases, the insured does not know there has been hail damage for many months when a leak finally manifests itself. Most recently this was the subject of a National Underwriter FC&S Q&A involving a North Carolina proprietary homeowners form which has language almost identical to the ISO form above: 40
HE 00 07 07 13 “You may disregard the replacement cost loss settlement provisions and make claim under this policy for loss to buildings on an actual cash value basis. You may then make claim for any additional liability in accordance with D.2.a. above if you notify us, within 180 days after the date of loss, of your intent to repair or replace the damaged building.” In this claim, the policyholder was not aware of the hail damage to a wood shake roof on a twostory house for many months. When the adjuster did weather research, the conclusion was that the hail storm occurred more than 180 days before the claim was made and cited this policy language as the basis for limiting coverage to ACV rather than RC. The FC&S answer did not address the insurance contract language and based its opinion for RC coverage on the manifestation theory of occurrences. While I agree with their conclusion that RC coverage is appropriate, I base that on the actual contract language and not the occurrence theory. More on the policy language in a minute, but first a brief side step on occurrence theories. If you are not aware of these loss occurrence theories, you might take a few minutes to peruse these two articles: “Trigger Theories in Homeowners Insurance” “No Manifestation Destiny: The Seventh Circuit Declines to Set a Standard Trigger Rule for FirstParty Property Policies”
If you read these articles, you can see how even the courts disagree on which theory, if any, is applicable to first-party property damage claims. But I believe there is an easier way of determining whether RC or ACV is owed to the insured. At about the same time the FC&S article was published, I www.viaa.org
The 180-Day ACV VS. RC Notice Myth continued received an email from an insurance company’s home office claims manager about a hail claim under the CP 00 10 12. The claim was filed on June 21, 2020 when the roof damage was discovered but the carrier’s investigation has led them to believe the loss actually occurred in 2017. The policy was in force throughout this time period. The claim manager believes RC is owed but the carrier’s legal counsel believes recovery is limited to ACV because the insured failed to report the claim within 180 days of the date of loss or damage.
I believe this reading is in keeping with the insured’s reasonable expectations for the coverage their premium paid for, is the proper interpretation as a matter of equity, and is the clear and unambiguous meaning of this language. The RTFP Doctrine prevails. P.S. Another myth is that the insured must actually replace the property within 180 days of loss in order to recover on a RC basis. That’s not what the policy language above says. The insured only has to provide notice within 180 days that the insured intends to recover on a RC basis.
I believe the answer lies in the contract language itself [emphasis added]: “You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim for the additional coverage this Optional Coverage provides if you notify us of your intent to do so within 180 days after the loss or damage.” This provision starts out by saying “You may make a claim for loss or damage covered by this insurance on an actual cash value basis….” The reality is that the insured is NOT making a claim for ACV. The insured paid for and expects RC coverage and is making the claim for RC coverage. The second part of the provision goes on to say that “In the event you elect to have loss or damage settled on an actual cash value basis….” Again, the insured never elected an ACV recovery. Therefore, the “In the event you elect….” language required to trigger the 180day provision is inapplicable. The only time the 180-day limitation is triggered is IF the insured actually requests an initial ACV recovery and that is not the case for these types of claims. www.viaa.org
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Hickok & Boardman Insurance Group Opens New Office in Plattsburgh, New York Expanding Outside Vermont Hickok & Boardman Insurance Group is pleased to announce the opening of a new office in Plattsburgh, New York. The office, located at 14 Durkee Street, Suite 430 in The Gateway Building overlooking Broad Street and the Saranac River is scheduled to open in July and will be Hickok & Boardman’s first physical location outside of the state of Vermont. Ryan Lee, long-term resident of Plattsburgh joined Hickok & Boardman, Inc in early 2018. Ryan will be located in The Gateway Building office with responsibility for business development in the commercial insurance area.
Tracy Orkins Joins The Richards Group in Keene, NH The Richards Group is pleased to announce the addition of Tracy Orkins to the firm’s Commercial Insurance and Risk Management team. Tracy will be an Account Manager based in The Richards Group’s Keene, NH office. Prior to joining The Richards Group, Tracy worked for over 25 years in the insurance industry, including time with Masiello Insurance and The Insurance Source. Tracy holds the Accredited Advisor in Insurance (AAI) designation and has extensive experience in both commercial and personal insurance. She has been active in the Keene community, as a member of the BNI Chapter in Keene, as well as at the Keene Chamber of Commerce. In addition, Tracy has volunteered to support local nonprofit organizations including Linda’s Closet and the Hundred Nights Shelter. Tracy can be reached at (603) 357 – 4553 or torkins@therichardsgrp.com.
The Richards Group named Best Employee Benefits Firm The 2019 Best of Business Award winners have been announced by Vermont Business Magazine and The Richards Group has won as Best Employee Benefits Firm. This awards program celebrates the best Vermont companies in business-to-business categories. The Richards Group’s Employee Benefits and Human Resources practice employs a ‘360 Degree’ strategy that focuses on employee benefits in the broadest sense of the phrase. We provide unique attention designed to meet each individual client’s needs and understand the challenges that HR leaders balance between maintaining a healthy workforce and fiscal responsibility. To that end, we provide clients with plan design and budgeting strategies, wellness expertise, leadership and training, robust technologies and compliance insights. We take a holistic approach to ensuring you have a healthy, engaged and dynamic workforce. 44
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Co-operative Insurance Companies announces new President and CEO The Board of Directors of Co-operative Insurance Companies is pleased to announce the election of Lee Dowgiewicz as President & CEO, effective July 1, 2020. Mr. Dowgiewicz joined Co-op in September 2019, and replaces retiring CEO Marie Jewett. He is a 29-year veteran of the insurance business, starting with ITT Hartford in 1991 as a commercial lines underwriter. He became an Account Executive with Goodwin Loomis & Britton in Hartford, CT, before moving to Litchfield Mutual Fire Insurance Company in 1995 as Marketing Director. Upon Litchfield’s affiliation with Patrons Mutual Group in 2000, Mr. Dowgiewicz assumed the title of Vice President of Insurance Operations. Prior to Joining Co-op, he was Senior Vice President at reinsurance broker Guy Carpenter & Company for 15 years.
Hickok & Boardman Affiliate Companies Announcement of Nine Non-Profits to Receive Charitable Gift The Hickok & Boardman affiliated companies are pleased to announce the nine recipients of 2020’s non-profit organization charitable gifts. In this annual tradition, each firm contributes to a fund, and then Hickok & Boardman employees and associates are given the opportunity to nominate a charity in which they are involved. This year, the companies have selected: Frontline Foods VT, Mercy Connections, Black Lives Matter of Greater Burlington, Fairfax Rescue Squad, Fairfax Community Food Shelf, First Step Recovery House, Lamoille County Home & Health Hospice, Courtney’s Allies, and South Burlington Food Shelf. Nearly 20 years ago, to celebrate the volunteerism and interests of their employees and associates, the Hickok & Boardman Affiliated Companies – Hickok & Boardman Insurance Group, Coldwell Banker Hickok & Boardman, Hickok & Boardman HR Intelligence & Retirement Solutions, Hickok & Boardman Capital Management – formed a Charitable Gifts committee with representatives from each company.
Acuity Ranked Among Top Super Regional Insurers for 14th Consecutive Year Acuity announced that it is named to the 2020 list of Super Regional Property-Casualty (P&C) Insurers, an annual ranking prepared by the Insurance Journal and research firm Demotech, Inc. of the leading multi-state P&C carriers in the nation. Acuity is ranked at number 11. Acuity has been named to the list every year since its inception in 2007 and has always ranked in the top 20. Acuity’s sustained growth has kept it ranked consistently as a Super Regional P&C Insurer. In 2019 alone, Acuity reported $278 million in new business premium, propelling the insurer to an all-time high revenue of $1.658 billion, an increase of 7.5 percent over 2018. For the past 20 years, Acuity has consistently grown faster than the insurance industry.
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Eddie Lewicki promoted to Commercial Risk Management Consultant at The Richards Group The Richards Group is pleased to announce that Eddie Lewicki has been promoted to the Commercial Insurance and Risk Management team. Eddie will be based in The Richards Group’s Bennington and Manchester offices. He started his career with The Richards Group in 2016 as an Account Manager. Eddie is originally from Arlington and attended Burr and Burton Academy. He then moved on to Siena College, where he majored in History and pitched for the baseball team. Eddie resides in Sunderland with his wife. He enjoys coaching the Burr and Burton baseball team, volunteering his time helping youth organizations such as little league and Northshire hockey, and spending time golfing.
Vermont Mutual Named a Top 50 Insurance Company for Eleventh Year in a Row Ward Group, an Aon Hewitt company, has again recognized Vermont Mutual Insurance Group® as one of the top 50 property and casualty insurers in the United States. This is the eleventh consecutive year Ward Group has affirmed Vermont Mutual’s place as a “Ward’s 50®” insurer. Every year, Ward Group conducts a comprehensive financial analysis of approximately 3,000 U.S. property and casualty insurers. The “Ward’s 50” identifies the top 50 P&C carriers in the U.S. for their consistency, safety and superior financial performance. Every company recognized by Ward Group as a Top 50 Insurer has demonstrated superior performance based on a comprehensive examination of the past five years of operation and passed all safety and consistency screens. This is the 29th year Ward Group has conducted the analysis. As a recipient of the Ward’s 50 designation for eleven consecutive years, Vermont Mutual has again affirmed its position as a leading provider of automobile, homeowner and business insurance in the Northeast, and ranks their performance in the top tier of all companies nationwide since 2009.
Acuity Named a Top Performer by Ward Group for 20th Straight Year Acuity has been named to the 2019 Ward’s 50 list of top-performing property-casualty companies, putting the company in the top 2 percent of insurers nationwide. Acuity has earned a spot on the Ward’s 50 every year since 2000, making the company one of only four insurers, and the only regional carrier, to be named to the list for 20 consecutive years. Ward Group is the leading provider of bench marking and best practices studies for insurance companies. Acuity continues to outperform the industry. Over the past 20 years, the insurer’s rate of sales growth has been more than double the industry average, and its surplus growth has been 2.5 times the average. Acuity’s combined ratio, more than 8 points better than the industry average in 2018, has been under 100 for eight consecutive years. 46 www.viaa.org
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