GREEN MOUNTAIN AGENT VERMONTINSURANCEAGENTSASSOCIATION|September2022 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
CONTENT ________________ September 2022 MichaelPresidentR. Barrett Vice JessicaPresidentFleury, RonaldNationalIanSecretary/TreasurerACSRSutherland,CIC,AAI-MDirectorBixby Green Mountain Agent is a publication of 600 Blair Park Road, Suite 100 Williston, VT 05495 Phone: 802-229-5884 Fax: www.viaa.org802-876-7912 05 Letter from the President AgencyEvolve06202216OntheHill22Management A New Breed of Flexibility: The SkillsBased Organization Employee28Benefits 5 Reasons ESOPs Are an Excellent Option for Succession Planning AgencyCommentaryE&O35Corner3943&Company News VIAA DirectorsOfficers Daniel J. Rodliff, CIC, CPIA, LUTCF Aislyn M. Allen, CISR Laurie Audy Executive Director Mary M. Farley, MBA, AAIM www.viaa.org 3
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Vermont’s Insurance Commissioner Kevin Gaffney will be joining us on Friday as well, followed by the Annual Meeting and installation of officers for 2023.
In addition to the above, we are happy to share that this year we will have all of EVOLVE 2022 events and classes in one dedicated section of the DoubleTree by Hilton in South Burlington! No need to go to different function areas, plus our amazing vendors will be easily accessible just outside of our function rooms!
Then, on Thursday night, The Evolving Leaders (formerly Young Agents Council/YACS) will host a Classic Hollywood Night that will be a crowd pleaser for sure!
On Thursday at Lunch, enjoy a buffet of favorites, plus our Keynote speaker, Jan Reynolds! She is an Olympic Biathlete, photographer, award winning author, and word record climber & skier!
President,MichaelStaymore.well!BarrettVIAAThisyear,on Wednesday afternoon, we will kick off with a Presidents Reception! Many VIAA past Presidents have been invited to join us, as open EVOLVE 2022. Let us help you get some crucial CE credits! Remember, March 2023 is coming fast; work to get your requirements met with two classes this year, Ethics and E&O, with Jill Gidge as our instructor for both! Have you signed up for EVOLVE 2022?!?!?!?! Why wait?!?! Go to VIAA.org and sign up today! Our VIAA Vice President Jessica Fleury has been busy planning EVOLVE 2022, I am quite excited about what she has in store for you, our members!!! Check out a sampling of this year’s offerings below: 2022
Michael R. Barrett VIAA President www.viaa.org 5
LETTER FROM THE PRESIDENT September
Continuing our commitment to making this event accessible for those who may not be able to attend in person, we will offer virtual access! Remember, and I cant’s stress this enough, this event is for you! So join us September 28th through the 30th at the DoubleTree. Shifting gears, have you contributed to InsurPac yet for 2022? While a number of member agents have already donated, we need your help to meet our goal of $6250 for Vermont Agents this year. The goal for our Evolving Agents is $650, so please be sure to go donate! InsurPac a vital piece of Big I, focusing on government affairs and a HUGE voice for our industry in D.C. Finally, I am pleased to announce that VIAA has contributed a $1000 donation to the Youth Safety Council of Vermont. Each year approximately 1,400 soon to be licensed teenagers participate in their Turn-Off-Texting Program. It is an incredible way to keep Vermont’s roads safer, please visit their site at www.yscvt.org to learn
On Friday we are honored to have Robert “Bob” Fee, the Chairman of Big I, moderate a CEO panel with CEO’s from Union Mutual, Vermont Mutual, and Co-operative Insurance Companies.
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VIAA EDUCATION Any time. Any where. Get it done. viaa.org/Education
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THE HILL:
FEMA Requests Information About New Direct to Customer Initiative
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“As FEMA strives to increase climate resilience, ensure equitable access and outcomes for all citizens, and promote and sustain a ready FEMA and nation, it is imperative that FEMA enable the digital sale and servicing of flood insurance to increase the number of people covered. FEMA calls this initiative 'Direct to Customer' or 'D2C,'" FEMA said. FEMA goes on to say that, “while the NFIP is the world's largest single peril insurance company, covering nearly 5 million policyholders with an annual premium of $3.5 billion and $1.3 trillion [of] insurance in force, only 4% of structures in the United States are covered. As climate change continues flood risks are increasing across the country with flooding events occurring in all 50 states and 99% of counties in the United States since . . .Read More www.viaa.org
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FEMA recently released a new, concerning proposal for the National Flood Insurance Program (NFIP)calledDirect to Customer The(D2C).initiative wasunveiled in a request for information (RFI), which was released to a suiteof potentialvendors on a General Services Administration(GSA) schedule. The RFIgivesabriefoverview of the D2C initiative andasks questions about how FEMA shouldapproachdeveloping and delivering theinitiative.
Inthe RFI,FEMA notesthat, “other lines of insurancehavemadethe leap into the digital realm, includingWYO companies for their otherlines of insurance.Flood Insurance remainsbehind thetimes, leading to potential customerfrustrationand the inability to protect one'shomeor business."
solving the talent gap might require another kind of flexibility, one that the organization itself must take on. Enter the “skills-based “Toorganization.”enableagility and maintain competitiveness, organizations must shift from understanding the unit of work in terms of fixed, static jobs to reimaging it in terms of a dynamic landscape of skills that can be agilely deployed to work as it continuously evolves,” writes Deloitte’s Michael Griffiths. And as Korn Ferry’s “Future of Work Trends 2022” report puts it: “Successful organizations are shifting their thinking towards the capabilities needed to win in their marketplace. Through strategic modeling of BySharonEmek,Ph.D.,CIC 22 www.viaa.org
However, according to recent reports by the likes of Deloitte and Korn Ferry, the key to
managementagency
A NEW BREED OF FLEXIBILITY: THE ORGANIZATIONSKILLS-BASED
By this point, you’ve probably been inundated with news stories and fact-filled reports about the talent shortage sweeping the nation. It’s become increasingly difficult to attract and keep the best and brightest employees, with July 2021 seeing the highest-ever number of U.S. employers with unfilled positions. Needless to say, organizations are feeling the pinch. Many are responding with promises of higher salaries, nurturing cultures, and, of course, flexible work environments—which existing employees and job seekers alike have claimed as a top priority for them.
Indeed, companies will need to be flexible in how they think about their internal roles and responsibilities if they want to attract and retain great people. What does that look like? Well, it starts at the beginning, with your hiring practices. No longer should you be looking at a job description and trying to match bullet points on a candidate’s resume to it. According to Korn Ferry’s “Future of Work Trends 2022” report, 69% of the world’s most admired companies value learning agility and curiosity over career history and experience when it comes to hiring. You need to reimagine “jobs” as broader “goals to achieve” and consider the skills that are necessary for achieving those goals.
At WAHVE, for example, we blind-screen candidates based on skills and organizational fit, ensuring that those who are hired have both the right skillsets and mindsets to thrive in their new environments. Next, take a look at your existing workforce. In the broader context of your strategic goals, how do your people help take you there? Keep in mind that skills are transferrable. Siloes are your enemy: Consider mixing and matching individuals from different teams to create a “dream team” for a particular project.
As Korn Ferry puts it: “Expect more projectbased working, where teams assemble to achieve specific goals before dispersing back out into the organization.”
Further, offering employees the opportunity to work on projects based on their interest and skillsets is another way to motivate and keep them: Professional development and learning opportunities are consistently listed as top benefits that employees seek from their organizations. We at WAHVE have always believed that individuals’ skills and professional goals are what drive their ability to succeed in any environment. Our very business model is based on it. And we feel that the rise of the skills-based organization is proof that this concept is the way of the “Whatfuture.was a slowly growing sentiment has been accelerated exponentially. The need for organizational agility and resilience spotlighted by the pandemic, digital transformation’s disruption of jobs and tasks, and the need to access and retain skills amid the ‘Great Resignation’ has put skills front and center,” Griffiths writes for Deloitte. I invite you to join us in embracing this exciting future of work—and to get ready to boost your company’s talent, goals, and growth into the stratosphere.
future workforce options, they clarify the future roles, skills, and mindsets to deliver their strategy. They then focus on sourcing and developing these through reskilling, upskilling, recruitment or drawing on the wider ‘gig economy’ of flexible workers.”
A New Breed of Flexibility: The Skills-Based Organization Continued www.viaa.org 23
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An(ESOP).ESOP is an employee benefit plan in which the owners sell some or all their shares to a trust at fair market value. The owner receives cash for their shares, and each employee receives a financial interest in the stock held and owned by the trust.
Step forward: an employee stock ownership plan
Be aware that ESOPs are not for agency principals looking for a quick exit or to extract the last dime. They're for well-run firms with ESOPS ARE AN EXCELLENT OPTION FOR SUCCESSION PLANNING
5 REASONS
2) Friendly perpetuation. ESOPs are a structured, tax-favored way to sell a portion or ByRobertPettinicchi www.viaa.org
BenefitsEmployee
Independent agency principals have a lot on their plates. Besides navigating uncertain times, the need to grow, recruit and retain talent and plan an exit strategy are constants. Therefore, agency owners should consider a vehicle to meet these challenges.
at least 20 employees and a principal who understands the unique benefit of the ESOP.
If this sounds like you, here are five reasons an ESOP is advantageous for independent agency principals:
1) Retain control. As principals sell stock to the ESOP, employees gain a sense of ownership. But simultaneously, principals can retain control of their firms because they're not required to sell all of their stock, all at once. This provides flexibility to decide whether and how they want to stage this process. They can even use the ESOP as a vehicle to acquire another agency.
4) Staged perpetuation. ESOPs aren't for principals in a hurry. Rather, they're a terrific vehicle to create and manage a staged exit strategy. Agency principals can relinquish ownership over the course of some years, allowing time for rising stars to flourish in their new or expanded roles. At the same time, they are handed the opportunity to increase the agency's value.
5) Preserve a legacy. Agency principals often express “seller's remorse" after they've sold to an external buyer. Sure, they may have been paid well, but now they're removed from a business they've built up over decades.
all of the agency to a “friendly buyer"—the ESOP trust. In fact, the tax code encourages ESOPs with a generous tax break. Studies show that employee-owned firms enjoy productivity gains, success and employee retention. That's important, especially these days when private equity buyers are seeking to hire an agency's best talent but don't offer 3)ownership.Taxtreatment.
Agency owners can elect to defer the gain on their stock sale to the ESOP if certain rules are met. This allows them to maximize their post-sale, after-tax proceeds. On an after-tax basis, selling to an ESOP can approach the prices paid by the big ESOPsacquirers.usually borrow money to purchase shares. The agency repays the loan by contributions to the plan with funds that are not taxed.
Excellent Option for Succession Planning Continued www.viaa.org 29
5 Reasons ESOPs Are
Robert Pettinicchi is executive vice president and chief lending officer for InsurBanc, a division of Connecticut Community Bank, N.A. He developed InsurBanc's loan products for independent agents. An expert on agency mergers and acquisitions, agency perpetuation and financing, he has presented at numerous venues nationally. Reprinted with permission from IA Magazine. an
Ultimately, ESOPs make sense for independent agency principals who remember how they gained ownership and want to reward family members and employees who subsequently helped them build their business. While not always a panacea, ESOPs are an attractive option that should be strongly considered to boost productivity and employee retention while meeting an agency's perpetuation needs.
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ByJamesC.Keidel,Esq.
Over the years we have seen insurance agencies and brokerages react to these types of storms and change certain aspects of how they conduct their business in order to help protect their customers and also help prevent a potential E&O claim or lawsuit. In this issue of The E&O Corner, we will discuss a few things that every insurance agency or brokerage should be doing in preparation for another potential catastrophic event. No matter whether your agency or brokerage is located on the coast or inland, it is important that you think about the issues discussed below.
Already this year, in May, hurricane Ana developed in the Atlantic and, thankfully, headed out to sea without making landfall.
Another thing that many insurance agencies and brokerages learned from these various storms, is only as a result of the storm did some customers discover that they had insufficient coverage, inadequate limits of coverage, or they did not fully understand how their coverages or deductibles applied. Many insurance agencies and brokerages now use these types of storms as learning tools for their customers to think about the coverages
If we did not have enough to worry about already, with the coronavirus pandemic still upon us, June 1st is the start of the Atlantic hurricane season. For the past seven years, there have been named hurricanes that have developed prior to the official June 1st start of hurricane season. Although 2020 was a record-breaking year for hurricanes, many of the weather and hurricane experts are predicting that this year’s Atlantic hurricane season may once again be a very active one.
E&O CORNER
It has been estimated that less than a quarter of the properties that were damaged several years ago in Texas and Florida from flooding as a result of hurricanes Harvey and Irma were covered by flood insurance. After Irene and Sandy many of the storm related E&O claims and lawsuits that we saw were been brought by customers who had suffered a flood loss but did not have flood insurance in effect at the time of the storm. Although Vermont is not on, or even near the sea coast, it suffered severe flooding as a result of Hurricane Irene after the storm headed inland. Some Vermont towns
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WatchOut-HereComestheHurricaneSeason
An added benefit of using the ACORD 60 Flood form is that it specifically states that once it is signed it will apply to all future policy renewals. By adopting an agency-wide practice where the option of purchasing flood coverage is offered to each customer, and the ACORD 60 is then completed by every customer, insurance agencies and brokerages will help protect themselves from potential E&O claims or lawsuits if a customer sustains a loss due to an uncovered flood claim.
were completely washed away and numerous lives were lost as a result of record the flooding. Due to these types of events, many insurance agencies and brokerages have adopted a procedure where they offer every customer the option of purchasing flood insurance regardless of where the Insured’s property is located. Since most customers will usually opt not to purchase flood coverage unless they are located directly on a body of water, it is a good practice for the agency or brokerage to document the customer’s rejection of that coverage. One of the best ways to document the acceptance or, more likely, the rejection of coverage is to use the ACORD 60 Flood Acceptance/Rejection form. The ACORD 60 form should be completed by the customer indicating that the coverage is either accepted or rejected. Then it should also be signed and dated by the customer. The executed form should be retained in the customer file.
Broad Form (CP 15 08 10) Limited Form (CP 15 09 10 12) Limited International Coverage (CP 15 01 10 12) Extra Expense from Dependent Properties—• Limited International Coverage (CP 15 02 10 12) that they may need. For instance, when discussing insurance coverage with a customer, a good practice is to walk the customer through what their insurance coverage, limits of coverage, and what the applicable deductibles would be in the event a catastrophic event occurred. This is a good practice for any agency or brokerage to follow whether it is a hurricane, ice storm, blizzard, fire, or any other type of catastrophic event. Agents and brokers that follow this practice when discussing coverages and potential losses with their customers have told us that it is a good way to help customers identify possible changes in the coverage that may need to be made in order to have the customer adequately Oneinsured.thing that the coronavirus pandemic has shown us during the past year is how very fragile businesses’ supply chains are. Accordingly, businesses that depend on other businesses for supplies, purchases or to attract customers should consider purchasing one of ISO’s Business Income Form Dependent Properties. These endorsements are as follows: The IRMI Commercial Property Insurance manual states that these endorsements insure against income loss or extra expense suffered by the insured as a result of damage to the property of another business on which the insured depends to supply its products (contributing or manufacturing locations), to purchase its product (recipient locations), or to attract customers (leader locations). In order for coverage to apply, the income loss must result from damage the dependent property from a covered cause of loss. Because of this requirement, it would be best to couple these endorsements with flood coverage, so that a storm that flood a supplier would be Additionally,covered.
Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in anyway connected to, reliance on or use of any of the informationcontained 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, norshall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent theviews of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders.
Watch Out -Here Comes the Hurricane Season?
various storms have taught us all over the years that every insurance agency or brokerage, no matter how large or small, should have a disaster
continued plan in effect for their own office that is known and understood by all employees. The first aspectof any disaster plan should be what each employeeshould do if a catastrophic event occurs. A key elementof the plan should be how the agency or brokerage can remotely access its data in the event its officesare not accessible, or they are not fully functioning. When developing such a plan, an agencyor brokerage should make certain that they are complying with any applicable cybersecurityLaws and Regulations that they may be subjectto.The agency or brokerage should also have the ability to forward their phone lines and the email access so that communications with customers can continue.
The prudent insurance agency or brokerage is the one that thinks well in advance of a catastrophic event, and also has its customers do so too, so that both are prepared when a catastrophe occurs. By doing so, the agency or brokerage will not onlyhelp protect itself from a potential E&O claim orlawsuit, but it will also help provide better service to its customers and, in the process, will very often sell more insurance.
1TheAtlantic hurricaneseasonrunsfromJune 1stthrough November 30th each year. Thepeak of theseasonis usually frommid-AugusttolateOctober. However, deadlyhurricanes canoccur anytimeduringhurricane season.
2Irenedumpedas muchasa 11 inches of rainon partsof Vermont and caused$733millionin damages inthe state. 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.
Based upon what has taken place during thepast year with the coronavirus pandemic it appears that most insurance agencies and brokerages now have such a plan in effect and are able to operate remotely. Having this ability enables the agency or brokerage to continue to operate and assist customers in the crucial time immediatelyfollowing a catastrophic event.
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How Much PAP Loss of Use Coverage Do I Need? The Newest Reason to Buy the Rental Car LDW?
WilliamC.Wilson,Jr.CPCU,ARM,AIM,AMMisthefounderofInsuranceCommentary.com.Heretiredfrom theIndependentInsuranceAgents&BrokersofAmericainDecember2016whereheservedasAssoc.VPof EducationandResearchandwasthefounderandDirectoroftheBig"I"VirtualUniversityforover17years.
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neighbor, he had another car in his household that he was able to use.But that’s not an option for many people. And perhaps this is evenabigger issue when someone has renteda car that is damaged. I’m aware of one $9,000 loss of use charge assessed to a renter becauseof a delay in getting parts from Japan. In the case of a rental car, the renter is at the mercy ofthe rental agency and may be contractually obligated to pay whatevertherental company demands.
While agents may have little control over the availability of increased limits ofloss of use coverage, they can at least warn customers about the increased needto buy the rental car agency’s loss damage waiver.
I recently had a neighbor who couldn’t turn off the radio in his car. When he turned the ignition off, the radio continued to play until it drained the battery. Turns out it was a faulty circuitboardand it took 4 months to get a new one. This past weekend I was reading about how auto repairs involving chips and circuit boards sometimes take up to 8 months because of supply issues. Most auto policies, atbest, include 30 days of coverage for loss of use, usually to rent a vehicle or use a service like Uber or Lyft.ISO’s Personal Auto Program has an option for expanded coverage, but I’m told by many agentsthat carriers are reticent to provide more than 30, maybe60, days coverage (not that consumers would buy it if Fortunatelyavailable).formy
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COMPANY & AGENCY NEWS www.viaa.org 43
Union Mutual Insurance Company recently announced its participation in an innovative, communityowned solar project under development by the Acorn Renewable Energy Co-op of Middlebury, Vermont.
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Union Mutual Invests in Community Solar Project
As the sole Series A Member investor, Union Mutual has provided roughly one-third of the capital to construct the project and will receive federal tax credits in return in addition to keeping investment costs down for Series B member investors.
Each year Co-operative Insurance chooses the agency that outperformed all others inthe areas of growth, profitability and working relationship with the company and its members. The awardwas presented to Hickok & Boardman at their home officelocatedin Burlington VT. Co-operative’s President’s Club outing took place at the Equinox Resort, in Manchester VT, in mid-June.
Hickok & Boardman Insurance Group takes top agency honors for
The Company’s Chief Financial Officer, Jennifer Galfetti, cited the project as part of Union Mutual’s ongoing efforts to be a good corporate citizen and environmental steward.
The project involves a 150 kW solar array on the capped former municipal landfill on Beecher Hill Road in Hinesburg, Vermont, which will soon offer shares to Vermont residents with an electric meter in the Vermont Electric Cooperative (VEC) service territory. These investors will receive the project’s net metered credits on their VEC bills, and after six years, are projected to take full ownership of the project when the equity structure is expected to “flip.”
XxxxxCo-operative Insurance Companies of Middlebury, VT is pleased to announce it has awarded the Hickok & Boardman Insurance Group with its 2021 President’s Award of Excellence.
Recognized by Ward Group as a Top 50 Insurer fo the 14th Consecutive Year
Annually, Ward Group identifies the industry’s top insurancecompanies through a comprehensive financial analysis of nearly 3,000 U.S.property and casualty insurers. The “Ward’s50” recognizes insurers for their consistency, safety and superior financial performance.
For the 14th consecutive year, Vermont Mutual InsuranceGroup® has been recognizedasone of the top 50 Property and Casualtyinsurers inthe UnitedStates by Ward Group,anAon Hewitt company, and one of the industry’s most respectedbenchmarking organizations.
Every company recognized by WardGroup has passedall safety and consistency screens and achieved superior performance over a 5year period. As arecipient of the Ward’s 50 designation for 14 years in a row, Vermont Mutual has once againaffirmed its position as a leading provider of homeowner, automobile and businessinsurance in theNortheast.
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Must have a Property & Casualty Insurance Producer License Experience in working with various insurance companies andsystems Ability to perform in depth coverage analysis and policy reviews Must have integrity, a positive attitude, be highly professional, reliable, focused andhave attention to detail Titus Insurance, located in beautiful Shelburne,VTishiring! Are you an experienced insurance professional? If so, come join our Personal Lines Team!We are seeking two, highly motivated individuals who areoutgoing, confident and a team player. The first Position will be instrumental in managing a book of business through expertise in retention, client servicing, technology marketing andsales support. REQUIRED SKILLS & QUALIFICATIONS Our second position available is an Entry Level Personal Lines position with on thejobtraining. Insurance is a challengingfield that requires skills such as attention to detail, confidentiality,the ability to multitask and navigate numerous computerprograms. Understanding thecoverages, insurance carriers and insured’s needs keeps insurancevery interesting. Learn skills on thejobto service client needs for Home, Auto, Farm and Business Insurance. Obtain your VT Producers License and be on your way to a rewarding career intheinsurance industry! Send your resume today to Annette Hannah at annette@titusinsurance.net Job Postings Job VermontPostingsMutual
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