GREEN MOUNTAIN AGENT VERMONT INSURANCE AGENTS ASSOCIATION | JANUARY 2020
In this edition Legislative Preview 2020
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 ________________ January 2020
04 Letter from the President
600 Blair Park Road, Suite 100 Williston, VT 05495 Phone: 802-229-5884 Fax: 802-876-7912
05 American Cancer Society Daffodil Days 2020
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07 Legislative Preview 2020
VIAA Officers President Alan K. Kinney
10 Westport Changes to the Loss Control Credit Program
Vice President Dan Rodliff
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Feature: Knowledge
Secretary/Treasurer Michael Barrett
14 Young Agents Spotlight
National Director Ron Bixby
17 On the Hill
Directors
19 NewsFlash
Chip Ams Erin Odell, CIC Paul Plunkett Jessica Fleury Ex-Officio
25 E&O Corner
Staff
31 Feature: Sales & Marketing
Executive Director Mary Eversole mary@viaa.org
35 Insurance Commentary
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LETTER FROM THE PRESIDENT ______________________________ January 2020
Many of you may be thinking why are their daffodils on the front cover of the magazine in the dead of winter. It’s a symbol of hope in support of the American Cancer Society Vermont Daffodil Days Campaign. See the next page for information on the 2020 Campaign. I hope that you and your families had a great holiday season and that you looking forward to the year to come, full of hope and inspiration and new beginnings. It's a great time to challenge your staff to begin their education paths, now available for CSRs and Producers. We have a great line up of programs that will meet their specific training needs and improve your agency operations. Here at VIAA, we are not going to make New Year's resolutions, we are going to make New Year promises, to you, our members: We promise to always look out for your best interests We promise to listen to your needs and help you find solutions We promise to help you and your staff grow in your insurance knowledge so you can rise above your competitors We promise to help you grow and sustain your agency I wish you a very happy New Year!
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Alan Kinney VIAA President
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LEGISLATIVE PREVIEW 2020
Legislative Leaders, Governor in Uneasy Pre-Session Truce Gov. Phil Scott and legislative leaders ended the 2018 session locked in battle over state spending. The 2019 session ended with Democratic leaders warring among themselves over minimum wage and paid family leave. As lawmakers enter the second year of the biennial session, leaders in both parties and both branches are showing more interest in compromise and less desire for conflict than at any time since Gov. Scott’s election in 2016. One sign of truce is the quiet that has pervaded Montpelier since June. There have been virtually no press conferences or political jousting between or among the parties. House Speaker Mitzi Johnson and Sen. President Tim Ashe appear to have buried the hatchet; at a recent joint press conference they made clear they had patched up their very public disagreement from last spring. Surprisingly, they took no shots at Gov. Scott as they matter-of-factly described several bills that he is certain to veto.
John Hollar, Director, DRM Governmental Affairs Group & VIAA Lobbyist
margin, but it failed to receive the necessary 2/3 votes in the Senate to overturn the governor’s veto. Advocates on both sides of the issue have ramped up their pre-session lobbying efforts. The outcome will likely turn on the votes of one or two senators. VIAA members are encouraged to contact their lawmakers and let them know their concerns about the bill’s likely impact on insurance costs.
Similarly, Scott has generally avoided calling out his many disagreements with the Democratic legislature in his periodic press conferences. Everyone seems willing to resolve their disputes relatively amicably and move on.
Lawmakers may also return to a bill that would restrict the ability of employers to enter into non-compete agreements with employees. The bill was proposed by two members of the House Commerce Committee, Rep. Charlie Kimbell, DWoodstock, and Rep. Emilie Kornheiser, DBrattleboro. VIAA worked closely last session with the two sponsors to carve out an exception that would allow agencies to limit the ability of departing employees to solicit business from agency customers.
One of the first disagreements to resurface will be S.37, a bill Scott vetoed last spring that would create a new cause of action for individuals who have been exposed to toxic chemicals and claim they may suffer future harm. Environmental and business groups have fought bitterly over the proposal for the past two years. VIAA has been active in educating lawmakers on the potential impacts of the bill on insurance markets. The bill passed the House by a wide www.viaa.org
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Legislative Preview 2020 continued
Other major issues include:
Housing. Perhaps no issue in Vermont has greater consensus than the need for more housing. Senate Democrats want to use more state bonding to fund housing development, but fellow Democrat Beth Pearce remains their biggest obstacle.
Climate Change. The Global Warming Solutions Act (H.462) would convert Vermont’s greenhouse gas reduction goals into requirements and require the Agency of Natural Resources to adopt rules to achieve those reduction requirements. The bill also creates a private right of action against ANR if it fails to adopt and enforce rules to implement the mandatory greenhouse gas reductions. Opponents will argue that the bill is a carbon tax in disguise.
Economic Development. Legislative and administration leaders have worked cooperatively over the past month on a variety of measures to promote economic development. The pre-session sense of calm and cooperation will no doubt change as new issues and priorities arise, but the level of acrimony is unlikely to match that of recent years.
Paid Family Leave; Minimum Wage. House and Senate leaders have reached agreement on these two highly contested issues, but a gubernatorial veto has been promised and overrides are unlikely.
This article was written by John Hollar, Director, DRM Governmental Affairs Group & VIAA Lobbyist.
Budget. The state’s three major funds – the general fund, transportation fund and education fund – are all on track to meet projections. There will still be significant pressures for new spending, but no areas of major disagreement have yet surfaced. Act 250 Reform. This issue been a thorny source of conflict between the business community and environmentalists for years. But administration staff members are optimistic that they may reach an agreement on reforms that have eluded the legislature for decades. Gun Violence Prevention. Ashe and Johnson said that they hope to find areas of agreement with the governor. Marijuana. Johnson and Scott are already in general agreement on this issue, so it seems unlikely to become a partisan debate. 8
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SNOW SQUALLS What you should know
KNOWLEDGE
Information provided by the National Weather Service | National Oceanic and Atmospheric Administration Snow squalls, often associated with strong cold fronts, are a key wintertime weather hazard. They move in and out quickly, and typically last less than an hour. The sudden white-out conditions combined with falling temperatures produce icy roads in just a few minutes. Squalls can occur where there is no large-scale winter storm in progress and might only produce minor accumulations. Snow squalls can cause localized extreme impacts to the traveling public and to commerce for brief periods of time. Unfortunately, there is a long history of deadly traffic accidents associated with snow squalls. Although snow accumulations are typically an inch or less, the added combination of gusty winds, falling temperatures and quick reductions in visibility can cause extremely dangerous conditions for motorists. The difference between a snow squall and a snowstorm is the duration of the event. Snow squalls are usually very short-lived (on the order of 30-60 minutes) and extremely intense. A snow storm could last for several hours or even days. Snow squall warnings are short-fused and focused on distinct areas (like tornado and severe thunderstorm warnings). These warnings provide critical, highly localized life-saving information. If a snow squall warning is issued for your area, avoid or delay motor travel until the squall passes through your location. If a snow squall warning is issued for your area, avoid or delay motor travel until the squall passes through your location. There 12
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truly is no safe place on the highway during a snow squall. However if you are already in transit and cannot exit the road in time, reduce your speed, turn on your headlights and hazard lights and allow plenty of distance between you and the car in front of you. It’s also best not to slam on your brakes. With slick/icy roads, this could contribute to the loss of vehicle control and also increase the risk of a chain reaction crash. Follow weather.gov to get the latest forecasts and warnings before you start your car to travel. For tips on how to stay safe before, during and after a winter weather, bookmark our Winter Weather Safety page. Prior to traveling, take steps to prepare your vehicle and have an emergency kit for your car. Bottom line, follow weather.gov to get the latest warnings before you travel this winter.
YAC SPOTLIGHT: Jessica Saladino Kinney Pike Insurance Jessica Saladino was born and raised in Bradford, VT. She attended school and has never found a reason to leave her hometown.
involved in the Insurance Industry and be a team player in all that she commits too.
She was working in the banking industry when she was given an opportunity to interview with a large insurance agency here in Vermont thanks to a friend she met in the bank, Brittani Villandry. In 2012 she took that opportunity and interviewed with Kinney Pike Insurance, in the White River Junction Branch to become a Commercial Lines Customer Service Agent. Some may say she is quiet, but she sees it as she likes to stay busy as it makes the days go by fast. She is always looking to learn and be more
She recently joined the Young Agents Committee and had the opportunity to attend the Youth Leadership Conference in Savannah, GA where they were awarded the Outstanding Breakthrough YAC Award. While attending the conference she was able to work with other Young Agents from other States and gather thoughts and ideas to bring back to Vermont. You can find Jessica in her hometown of Bradford, VT cozied up with a book, dog and 2 cats. She has goals of traveling more with her Husband and in time raise a family and continue her career in the Insurance Industry.
Left to Right B. Villandry, J. Salladino, S. Berry
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ON THE HILL: Big ‘I’ Applauds House Action on Agent Priorities
The Big “I” commends the U.S. House of Representatives for passing legislation that would reauthorize the Terrorism Risk Insurance Act (TRIA), extend the National Flood Insurance Program (NFIP) and repeal the Affordable Care Act’s “Cadillac tax,” all as part of government funding legislation.
for seven additional years in this package. The NFIP was scheduled to expire in a matter of days on December 20. This legislation would extend the program through September 30, 2020. Additionally, this package included a repeal of the Affordable Care Act’s “Cadillac tax,” which would have imposed a 40% tax on health benefits that exceed an established annual cost.
This bipartisan agreement between House and Senate leaders would fund the government until September 30, 2020. It would also reauthorize several important programs including TRIA and the NFIP. TRIA was scheduled to expire at the end of 2020 and will be extended
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NEWSFLASH Department of Financial Regulation Reaches $1.9 Million Settlement in Student Health Insurance Matter The Vermont Department of Financial Regulation (DFR) announced a $1.8 million settlement with Companion Life Insurance Company, of South Carolina, for selling unapproved and inadequate student health insurance policies to students at ten Vermont higher education institutions. The penalty component of the settlement is the largest ever ordered by DFR against an insurance company. Companion offered health insurance to over 2,500 Vermont students, but did not file its policies with DFR for approval. Had the policies been filed, DFR would not have approved them as they did not include important coverage mandated under Vermont law and the Affordable Care Act. Missing coverages included certain preventive screenings and counseling (including for sexually transmitted diseases), contraceptive management, mental health and substance abuse treatment, and athletic injuries. As a result, several hundred claims were improperly denied, and 212 students will receive restitution for those claims. “Consumer protection is at the core of our department’s mission so I am pleased every student with an improperly denied claim will receive restitution under this settlement,” said DFR Commissioner Michael Pieciak. “Further, this significant penalty sends a strong and simple message to financial service companies that failure to comply with Vermont’s consumer protection laws will have firm consequences.”
Vermont Governor Phil Scott applauded the work of DFR. “My administration works hard to protect Vermont consumers and ensure their fair treatment. Consumers must have confidence in our marketplaces and businesses must compete on a level playing field. I appreciate the work of our DFR team to secure this settlement, which achieves both these goals,” said Governor Scott. In addition to the claims-payment deficiencies, DFR also found that Companion failed to accurately represent its policies in marketing materials, maintain appropriate records and procedures and supervise its business partners. The $1.8 million from the settlement will be paid out as follows: $950,000 administrative penalty to the State of Vermont $481,243 in restitution to students whose claims were wrongfully denied $225,000 to the Vermont Legal Aid’s Office of the Health Care Advocate $150,000 to the Vermont Financial Services Education and Victim Restitution Fund Under the settlement, Vermont Legal Aid’s Office of the Health Care Advocate will use the $225,000 to develop a targeted education campaign about student health insurance and assist DFR in delivering restitution to the impacted students. www.viaa.org
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NewsFlash continued
“This is an excellent example of DFR protecting Vermonters from illegal insurance company practices. We are eager to launch a special project to provide additional legal supports and education to Vermont’s college students,” said Mike Fisher, the chief health care advocate.
improperly denied claims during academic years 2014/2015 and 2015/2016 not identified during DFR’s investigation. The 212 students already identified should expect to receive contact from the Office of the Health Care Advocates and/or Companion to coordinate restitution payments.
DFR Commissioner Pieciak and Deputy Commissioner Kevin Gaffney commend Karla Nuissl, Chris Rouleau, Phil Keller, Marcia Violette, Izzy Keiser and Chris Antoine for their excellent work in settling this matter.
Students who purchased health insurance through these institutions during the relevant period and believe a medical claim may have been improperly denied should contact: DFR Consumer Services Email: dfr.insuranceinfo@vermont.gov Phone: 802-828-3302 or 800-964-1784
Restitution Information Companion sold student health insurance to students attending Burlington College, Champlain College, College of St. Joseph, Green Mountain College, Landmark College, Middlebury College, New England Culinary Institute, Norwich University, St. Michaels College and Sterling College.
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HCA Hotline Email: hca@vtlegalaid.org Phone: 800-917-7787.
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C E O & R O N ER
Are Your Clients Carrying Adequate Limits By Curtis M. Pearsall, PCU, AIAF, CPIA President - Pearsall Associates, Inc. and Consultant to the Utnica National E&O Program
There's a good chance that the answer to the question posed above is "maybe, maybe not" or "I'll tell you after a claim whether their limits were adequate." Needless to say, after a claim occurs, it is impossible to do anything abut the limits. When looking at E&O claim statistics, most E&O carriers will report that 6-8% of all E&O claims involve the issue of inadequate limits. For the purpose of this article, the focus is on liability limits, including umbrella coverage for personal and commercial clients. Suppose your agency is faced with an E&O claim. While each situation and fact pattern is likely a little different, the goal is to have a strong defense that protects your agency. There are two E&O claim buckets: one filled with the issues that will be part of the
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agency's defense, and the other filled with the issues that the plaintiff's attorney will be looking to use to find your agency negligent.Make sure that the agency bucket is overflowing with strong defense items. A good starting point when dealing wit liability limits is acknowledging that it is extremely difficult, if not impossible, to predict what the proper limits are. Benchmarking data is available for many commercial industry classifications and, while this has benefit, caution should be exercised. Benchmarking data advises what clients of a certain size (revenue, sales, etc.) are carrying. This data does ot mean that the limits noted are appropriate for your client.
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Are Your Clients Carrying Adequate Limits? continued Following are several suggestions on how to address limits and to include in your "defense bucket" at the time of an E&O Matter. For a new client, don't just duplicate the coverage they currently have. Make a concerted effort to better understand your client and to determine the potential liability issues and ramifications. Every day, we hear stories of events occurring in our country that were probably not considered and, in some cases, redefine the "worst that can happen." Fortunately, this should help agents to navigate the issue of liability limits through discussion of "what's your typical liability claim" as well as "what's the worst that could happen." If the client insists on "just give me the same limits I have now," the suggested approach is to include in the proposal either some additional limit options (such as additional umbrella limits) or a statement like "higher limits are available upon request." The objective is to advise the client of options to consider. If limit options are provided, require the client to sign off on the limit they are choosing and those limits they are rejecting. This is called "customer accountability" and can be a strong element of an agency's defense.
Bottom line, predicting the size of a liability claim is virtually impossible. Following a few best practices could play a key role in your agency's defense should a problem develop.
DO NOT recommend a specific limit! Recommending a limit implies to the client that this limit will be adequate at the time of a claim. Since claim size is impossible to predict, avoid recommending a limit. Once again, it is suggested to provide options for the client to consider.
This information is provided solely as an insurance risk management tool. Utica Mutual Insurance Company and the other member insurance companies of the Utica National Insurance Group ("Utica National) are not providing legal advise, or any other professional services. Utica National shall have no liability to any person or entity with respect to any loss or damages alleged to have been caused, directly or indirectly, by the use of the information provided. You are encourage to consult an attorney or other professional for advice on these issues.
Don't assume the client does not need higher limits or an umbrella. There have been numerous stories involving agency
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staff that did not address the issue of an umbrella because they did not believe the client had the assets worth protecting. A common misconception is "they can't sue you for what you don't have." But they can and will - and this may including garnishing wages for years to come. A recent story involved an agency staff member being asked by a client for their thoughts on securing higher limits. The client had a $1 million umbrella and was interested in securing higher limits. The agency staff member advised them that the $1 million umbrella was more than sufficient. As discussed above, it is impossible to predict the size of a liability claim, so the statement of the staff member is inaccurate and could put the agency in jeopardy in the event a liability claim exceeded the available limits.
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Consider including some language on this topic in the cover letter to the client. Include language such as "Please note that the policy limits are those you have chosen and we cannot guarantee they will be sufficient at the time of a claim." Although it might sound harsh, technically it is true.
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THE TEXT TRAP:
Why 160 Characters is Not Enough
SALES & MARKETING
By Barbara Rocco Approximately 40% of the U.S. population is under the age of 30, which means that a significant part of our workforce is composed of young people who bring new ideas and technology to the workplace. This is as true in insurance agencies as it is in any other business. People are growing up in a world where their primary forms of communication include texting, Snapchat and Instagram. Forget about emailing or calling someone on the phone. Our young employees want immediate responses, which is what they have come to expect from technology. I challenge you to find one person under 30 years old who does not always have a smartphone. Unfortunately, with these forms of communication, agencies open themselves up to significant potential exposures. Take the case of a 21-year-old producer who had just obtained his license and was starting out in the world of insurance. A longtime friend reached out to him to procure coverage for a newly purchased Dodge Charger. The friend had contacted the producer via text as that is how they always communicated. These texts, which were limited to 160 characters, included pertinent information about the car’s make and model, vehicle identification number, coverages and available limits. The producer didn’t think there was anything unusual about getting information in this manner as that was how the pair always shared information.
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Once the producer received the initial quote, the key information was transmitted via text. Within that text, the producer indicated that he would be able to obtain better coverage but never explained what the better coverage included. In another text, the producer advised that there was an option for lesser coverage at a lower premium. Again, coverage differences were never explained to the client. Most significantly, the client rejected uninsured/underinsured coverage via text and never actually signed the mandated rejection form because the producer never sent him an email or met him in person. You won’t be surprised to hear that the client was involved in an accident where the at-fault driver had the state-required minimum liability limits, and the medical bills alone far exceeded those limits. A New York minute later, a lawsuit was filed that named the producer and the agency as defendants.
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The Text Trap continued The plaintiff and former client will be able to submit all the text messages as evidence, which means they become public documents. In addition to the fact that the producer’s method of gathering information was inadequate, much of the language within the texts was very unprofessional, which will undoubtedly cast a poor light on the producer before a jury. As composer Libby Larsen observed, “The great myth of our times is that technology is communication.” That’s particularly true when you allow the means of communication to dictate the content of your message instead of the reverse. An insurance producer must communicate fully with a client to accurately determine the client’s needs and clarify what they are requesting from the agency. Texting does not lend itself to fulfilling the duties of an insurance agent. Moreover, by foregoing in-person, email and telephone communication, an agency opens itself up to errors & omissions claims. Barbara Rocco is an assistant vice president and claims specialist with Swiss Re Corporate Solutions who works out of the Chicago office. Insurance products underwritten by Westport Insurance Corporation, Kansas City, Missouri, a member of Swiss Re Corporate Solutions. This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice.
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What Is a Pedestrian (Revisited)
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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What Is a Pedestrian (Revisited) The ISO Personal Auto Policy extends medical payments to the named insured and resident spouse and family members as pedestrians if struck by a vehicle designed mainly for use on public roads or by a trailer. The term “pedestrian” is not defined in the policy. Similar coverage is provided by most other auto policies I’ve seen and the same is true for some state-specific un(der)insured motorist coverage endorsements. Over the years, I’ve received questions and consulted on claim denials that indicate that there is a wide discrepancy in the interpretation of this term within the same jurisdiction by different insurers. For example, an Ohio agent advised that, “My client was riding his bicycle on a park trail that crosses a public street and was hit by a car. I turned in a medical payment claim for him after the claim manager said he would be considered a pedestrian. The adjuster then declined, saying that they had decided a bike rider is not a pedestrian and not covered.” In another instance, a Nevada agent advised that, “We have an insured who was hit while skate boarding by a UM driver. Her medical expenses to date are $24,000. The insurance company will not pay under UM coverage since she was not on foot.” It makes little sense that these people would be fully covered while walking but not while on a bicycle, skateboard, roller skates, etc. In fact, what would be the logic that someone on foot would be covered but not someone confined to a wheel chair? Does that raise issues of discrimination under any ADA-type laws? Does it conflict with an insurer’s obligation to deal with all insureds in a good faith manner? 36
There appears to be a wide variation in case law and actual claims as to whether “pedestrian” refers only to someone on foot or if it applies to non-motorized vehicles such as bicycles, wheel chairs, scooters, roller skates, etc. if the person using such locomotive devices is struck by a vehicle designed mainly for use on public roads. In fact, this exposure extends to certain types of motorized vehicles that are designed for use off public roads such as motorized wheel chairs and scooters, riding lawn mowers, Segways, etc. In addition, there have been cases involving people on horseback and even sitting in chairs where the term “pedestrian” was considered. My research has found authorities who support the premise that, for example, a bicyclist is a pedestrian and others who insist that “pedestrian” only applies, with apologies to Little Eva, to locomotion by direct foot power.
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