GMA July 2015 by VIAA

GREEN MOUNTAIN AGENT A PUBLICATION OF VERMONT INSURANCE AGENTS ASSOCIATION

July 2015

Green Mountain Agent is a publication of

In This Issue: July 2015

P.O. Box 1387, Montpelier, VT 05601 Phone: 802-229-5884 Fax: 802-223-0868 www.viaa.org VIAA Officers

President Michael T. Walsh, CPCU Vice President Daniel Lussier Secretary/Treasurer Peter Richards IIABA & PIA State National Director Ron Bixby Immediate Past President Jon Jamieson, CIC

Directors Chip Ams

4 Message from the President 6 VIAA Jr Golf Tournament Wrap Up 7 An update from the Vermont Department of Financial Regulation, Insurance Division

Features 16 Marketing: The one marketing campaign you cannot afford to miss 18 Sales Success: You Didn’t Lose your Largest Account Because of Price

E&O Corner 24 Duties and Obligations of Insureds Required By Professional Liability Policies

News

Erin Odell Paul Plunkett

Staff Executive Director Mary Eversole meversole@viaa.org

GMA Publication Design Thorin Markison thorinmarkison.com

28 Vermont Mutual

Are you trying to reach Vermont’s Independent agent’s? Do you have a great ad that represents your company and have nowhere to place it? Are you looking to hire? Place your ad in VIAA’s monthly publication and have the opportunity to advertise and market to Vermont’s Independent Agents.

Questions on how to place an ad? Contact Mary Eversole at meversole@viaa.org for placement options and advertising rates.

Vermont Insurance Agents Association ATTN: Advertising/ PO Box 1387/ Montpelier, VT 05601

Message from the President Paradigm Shift Change has been a major theme in my life over the last few months. The same is true for VIAA. The board of directors has instituted a number of changes at the association and they are working well. But we are not done. At our last board meeting we tackled the issue of staying nimble in a highly active merger and acquisition marketplace. After consulting with attorneys, accountants, and other associations, we made the decision to dissolve Vermont Insurance Agents Services, our for-profit subsidiary. Starting in 2016 VIAA will operate solely as a non-profit. This will be an invisible change for members. It simply streamlines operations further and provides cost savings for the association. We are in the process of revising the by-laws to reflect these latest changes and will ask our principal members to approve them at the Annual Meeting on September 10 in Montpelier. Thank you for your loyal membership and on-going support of VIAA.

Michael T. Walsh, VIAA President

Leasing: A Seamless Customer Experience

But don’t take it from us. Listen to your peers. Agents Express Leasing is an effective solution to manage your clients needs with today’s best equipment technology. Jay Byrnes of Byrnes Agency experienced how easy our leasing solution is for his agency: “As a longtime member of the “Big I”, I always knew of InsurBanc and their commitment to the independent insurance agent. Recently we wanted to update the agency with a new computer network and desktops, so I turned to InsurBanc for leasing options. From start to finish I experienced firsthand how seamless it was to conduct business with them. We have a 35 person agency so to update everyone’s computers was a decent size upgrade. InsurBanc made the process very easy and offered attractive terms and competitive rates which helped to manage the agency’s cash flow”. – Jay Byrnes ~ Byrnes Agency How it works: • Lease terms are 24, 36, 48 or 60 months with a minimum transaction of $5,000 • You are looking for 100% equipment financing, including certain soft costs such as software, shipping, installation and maintenance* • No down payments or advance payments are required • Monthly payments can be customized to meet your special business needs • You are looking for potential tax benefits associated with equipment financing**

We invite you to see for yourself. Contact us today for help preserving your cash flow with an equipment lease solution. These materials are for informational purposes only. The availability of any financing described herein is subject to approval of applicant’s credit, the equipment supplier and the equipment. *Soft costs are limited to 20% of the total amount financed. **Nothing herein constitutes tax advice and customers are advised to consult with their own tax advisors prior to electing specific rates or options. Agents’ Express leasing is a program of De Lage Landen Financial Services, Inc., a third party not affiliated with InsurBanc, a Division of Connecticut Community Bank, N.A.

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Nelson, Richards and Goulet Head to Prairie Dunes for Trusted Choice Big “I” National Championship Three Vermont junior golfers earned their way to the 2015 Trusted Choice Big I National Championship on June 20. The Vermont qualifier tournament, presented by the Vermont Insurance Agents Association and its sponsors, was held at the Country Club of Barre. Special recognition is noted for Union Mutual, Vermont Mutual and NFP for their contributions and support. For the boys, Jared Nelson of Rutland fired an even par round of 71 to claim medalist honors, Bryson Richards of Plainfield was runner-up with a round of 73. On the girl’s side, Katie Goulet from Derby Line will be making her first trip to the national tournament as the Vermont qualifier. 17 junior players competed for the right to move on to the national tournament which will be held at Prairie Dunes, Hutchinson, KS in August. The national tournament is the third oldest junior golf event in the U.S. Many PGA Tour and LPGA players competed in the event which has a rich history and dates back to 1968. The tournament venue moves around the country as state associations host and assist in the production of this most prestigious tourney. The Trusted Choice Big I Junior Tournament is viewed as one of the ‘majors’ for junior players. Past winners of the national tournament include – Boys: Tiger Woods, Justin Leonard, Bobby Clampett, and Billy Andrade; Girls: Cristie Kerr, Kellee Booth, Grace Park and Cheyenne Woods. Doug Hawley, VIAA Jr. Golf Qualifier Tournament Chair

An update from the Vermont Department of Financial Regulation, Insurance Division By Kaj Samsom Deputy Commissioner of the Insurance Division Over the past few months, the Department of Financial Regulation’s Insurance Division has seen several changes in personnel, some interesting legislation and a number of thought-provoking initiatives. Now that the Kaj Sampson, Deputy Legislature has adjourned and the fiscal year is ending, Commisioner I thought it would be a good time to update you – our industry associates – on what we’ve been doing and what we will be working on in the next few months. Staffing changes: In May, Tom Van Cooper, director of Insurance Regulation, retired after almost 30 years with the Phil Keller Department. During his tenure Tom served the Department in various capacities and his regulatory and industry knowledge will be missed. As one of four directors in the Insurance Division, Tom’s retirement gave me the opportunity to rethink how the Division is organized Kevin Gaffney and to offer some new opportunities to current staff members. The resulting structure has Phil Keller, formerly director of Rates and Forms, stepping into Tom’s vacant position. Phil will be working closely with me and Commissioner Susan Donegan in leading several projects aimed at updating Title 8 and associated regulations,

internal policies and procedures. Phil will also be my right-hand man in dealing with emerging regulatory issues such as “price optimization” and the “sharing economy.” Kevin Gaffney, who has been the Division’s assistant director of Rates and Forms, has been promoted to director. In this role he will also supervise the Producer Licensing section. And finally, Consumer Services is now under the supervision of Christina Rouleau, director of the Market Conduct section. I am grateful to have highly-trained and dedicated staff members who can assume new positions with ease and confidence thereby making these transitions seamless. Although I know most of you have some experience with Kevin and Phil, here are their bios to reintroduce them to you! • Phil Keller is a graduate of Bennington College and Hastings College of the Law in San Francisco. Before coming to the Department of Financial Regulation, he worked for eight years as a deputy state’s attorney in the Washington County State’s Attorney’s Office. Phil has held a variety of positions with the Department, including Insurance Division enforcement attorney, deputy commissioner of the Securities Division, acting deputy commissioner of Insurance and director of Rates and Forms. His combination of legal and regulatory experience will be a great asset in his new role as director of Insurance Regulation. • Kevin Gaffney has served in various Rates and Forms analysis positions within DFR the past eight years, most recently heading up the Property and Casualty analysis team as the assistant director of Rates and Forms. Kevin came to the department with more than 22 years of industry experience in property and casualty operations including product management, product 7

development, pricing, compliance and underwriting functions. His extensive industry and regulatory experience will provide effective and practical regulatory leadership in his new role at DFR. DFR Legislation: Here is a brief rundown of some important changes in legislation that DFR advanced this session. Holding Company Law: The National Association of Insurance Commissioners (NAIC) model law was updated to clarify authority for the Commissioner to act as a group-wide supervisor for internationally active insurance groups. DFR introduced the changes in this legislation to add new language. The authority in the changes were arguably already present, but these changes remove any doubt and also display to the international community that states do have the necessary authority to work alongside foreign jurisdictions to regulate international groups. We expect these changes will have no impact on domestic insurers, except for the broad benefit of strengthening state-based regulation and Vermont’s reputation for being prompt and up to date on law and accreditation standards. Establishment of Domestic Insurers: Vermont’s three-step process to create a new Vermont-domiciled company was tweaked this year. The three steps are: 1. Petition the Commissioner for a Certificate of General Good (CGG). A proposed insurer may not incorporate with the Secretary of State without first obtaining this certificate. This process involves a public hearing and emphasis is on displaying that the proposed insurer will provide a general good for the state of Vermont; 2. Incorporate with the Secretary of State. And finally; 3. Apply for approval to write business – Insurance License/ Certificate of Authority (COA). 8

Prior to this year’s change, this process was somewhat limiting to both the Department and applicants, in that the criteria to get a COA (Step 3) was very minimal, and all the effective criteria was contained in the CGG stage (Step 1). It forced the Department to make demands of an applicant in the Step 1 review before the company is even incorporated. The changes passed this year strengthen the authority of the Commissioner in awarding the domestic COA (Step 3) so that the Department doesn’t have to front load the review process and make unreasonable demands on an applicant prior to the company’s incorporation. Corporate Governance Annual Disclosure (CGAD): This law and forthcoming regulation are new NAIC models coming out of an NAIC committee chaired by Commissioner Donegan. The effort was driven largely by the need for the 50 state system to show equivalence in the international community as it relates to formal oversight of corporate governance practices. The model law was the result of an open and collaborative effort between regulators and industry representatives that addressed redundancy and confidentiality concerns and gave regulators what is needed to monitor solvency and protect consumers. DFR recently issued Bulletin number 185, which clarifies that the first CGAD filing will be due June 1, 2016. Principles Based Reserving (PBR): Vermont joins approximately 30 other states that have passed revisions to the Standard Valuation Law, which represents a shift to principles-based reserving for life insurers. The new life insurance reserving approach only becomes effective if and when 42 states and jurisdictions with 75 percent of national premium pass the law. Healthcare S.139: As a result of health care reform over the past few years, DFR has much less involvement in health care policy-related responsibilities, formerly the duties of the Health Care Association (part of BISHCA). These functions have largely

shifted to the Green Mountain Care Board and Vermont Health Connect. S.139 continues to reassign ownership of responsibilities related to health care quality and policy however, the DFR Insurance Division will maintain its traditional solvency-based regulation over domestic health insurers as well as its involvement in resolving consumer complaints. Emerging Issues and Special Projects: Here are some of the items that the Insurance Division and DFR will be working on this summer:

• 2015 is our once every five year onsite NAIC accreditation review. Chief Examiner Karen Murphy will be busy preparing for that review, which will take place in September; • Lead a broad-based study of the multiple impacts of the rapid emergence of the sharing economy (AirBnB/Uber etc.); • Review Chapter 103 (life insurance) and consider the relevance or utility of certain provisions such as “employee pay all” prohibitions;

• Continue to track several other national • Price Optimization: expect a Bulletin shortly issues and understand the impact on on this actively debated pricing practice; the Vermont insurance market and potential need for DFR response/input. • Workers compensation: misclassification issues/large deductible policies/ PEO and more. Also, we are currently in the Thanks for taking the time to read bidding and selection process for servicing this Insurance Division update and let carriers for the assigned risk plan; me know if you have any questions or • Review litigation funding arrangements and make recommendations for legislative action as necessary;

other topics you’d like to hear from the Division about. Have a great summer!

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Swimming Safety Tips Everything you need to know to keep your kids safe when swimming.

Whether it’s a trip to the beach or a dip in the community or backyard pool, you can ensure that swimming is as safe as it is fun by following a few basic safety tips.

There Is No Substitute for Active Supervision • Actively supervise children in and around open bodies of water, giving them your undivided attention. • Whenever infants or toddlers are in or around water, an adult should be within arm’s reach to provide active supervision. We know it’s hard to get everything done without a little multitasking, but this is the time to avoid distractions of any kind. If children are near water, then they should be the only thing on your mind. Small children can drown in as little as one inch of water. • When there are several adults present and children are swimming, use the Water Watcher card strategy, which designates an adult as the Water Watcher for a certain amount of time (such as 15-minute periods) to prevent lapses in supervision. Download a Water Watcher card here.

Start Slow With Babies • You can start introducing your babies to water when they are about 6 months old. Remember to always use waterproof diapers and change them frequently.

For more information visit safekids.org.

Educate Your Kids About Swimming Safely • Every child is different, so enroll children in swimming lessons when you feel they are ready. Teach children how to tread water, float and stay by the shore. • Make sure kids swim only in areas designated for swimming. Teach children that swimming in open water is not the same as swimming in a pool. They need to be aware of uneven surfaces, river currents, ocean undertow and changing weather. • Whether you’re swimming in a backyard pool or in a lake, teach children to swim with a partner, every time. From the start, teach children to never go near or in water without an adult present.

Drowning is the leading cause of injury-related death among children ages 1-4.

Don’t Rely on Swimming Aids • Remember that swimming aids such as water wings or noodles are fun toys for kids, but they should never be used in place of a U.S. Coast Guard-approved personal flotation device (PFD).

Take the Time to Learn CPR • We know you have a million things to do, but learning CPR should be on the top of the list. It will give you tremendous peace of mind – and the more peace of mind you have as a parent, the better. • Local hospitals, fire departments and recreation departments offer CPR training. • Have your children learn CPR. It’s a skill that will serve them for a lifetime.

Take Extra Steps Around Pools • A swimming pool is a ton of fun for you and your kids. Make sure backyard pools have four-sided fencing that’s at least 4 feet high and a selfclosing, self-latching gate to prevent a child from wandering into the pool area unsupervised.

Check the Drains in Your Pool and Spa • Educate your children about the dangers of drain entanglement and entrapment and teach them to never play or swim near drains or suction outlets. • Pools that pose the greatest risk of entrapment are children’s public wading pools, in-ground hot tubs, or any other pools that have flat drain grates or a single main drain system. • For new pools or hot tubs, install multiple drains in all pools, spas, whirlpools and hot tubs. This minimizes the suction of any one drain, reducing risk of death or injury. If you do have drains, protective measures include anti-entrapment drain covers and a safety vacuum release system to automatically release suction and shut down the pump should entrapment occur. • Regularly check to make sure drain covers are secure and have no cracks, and replace flat drain covers with dome-shaped ones. If a pool or hot tub has a broken, loose or missing drain cover, don’t use it. • If you do have drains, protective measures include anti-entrapment drain covers and a safety vacuum release system to automatically release suction and shut down the pump should entrapment occur. Go to www.PoolSafety.gov for a list of manufacturers of certified covers. • Check to make sure your pool or hot tub’s drains are compliant with the Pool and Spa Safety Act.

• When using inflatable or portable pools, remember to empty them immediately after use. Store them upside down and out of children’s reach. • Install a door alarm, a window alarm or both to alert you if a child wanders into the pool area unsupervised.

For more information visit safekids.org.

Vermont Insurance Agents Association

Annual Business Meeting Luncheon & Installation of Officers

SEPTEMBER 10, 2015 Featured Guests Capitol Plaza Hotel Montpelier, VT Ethan Allen Room 11:30 am – 1:30 pm

Randy Lanoix

Susan Donegan

Chairman Elect Big “I”

Commissioner VT Department of Financial Regulation

In Every Community Maximize your Investment In the 2015 Trusted Choice Campaign Increase your ad dollars by 150% No other advertising campaign delivers more value

2015 TRUSTED CHOICE TOTAL STATEWIDE CAMPAIGN TV Placement

TV AD DESIGN l l

Your own Trusted Choice high definition TV commercial. Gold sponsors receive customized footage, including an on-camera appearance and agency customers featured - all taped on location. Silver sponsors receive an on-camera appearance taped at VIAA at NO COST. (Customized footage taped on location is available at $350 per agent) Production begins in late Spring.

Total spots: 421

Total spots: 2,875 Total TV Placements: 3,296

$ TARGETED 2015 PLACEMENTS AND BUDGET SPEND Your ads will run between June and November on WCAX during local news, national morning shows, and weekend news and during the Red Sox and other top cable programming. GOLD SPONSOR: $5,000

SILVER SPONSOR: $2,500

Targeted Cable TV Ads: 230

Targeted Cable TV Ads: 115

Ads on WCAX: 35

Ads on WCAX: 16

Total Value: $15,000

Total Value: $6,500

. OVER 1.5 MILLION TOTAL OVERALL CAMPAIGN IMPRESSIONS The number of ad placements may vary depending on total agent participation. Ad placement was based on company contributions plus 7 agents participating at the Gold $5,000 level and 11 agents participating at the Silver $2,500 level. For more information contact Mary Eversole at 802.229.5884 or meversole@viaa.org.

Sponsored By

CONVENTION REGISTRATION Join us September 24 & 25, 2015 at the Hilton Burlington Hotel in Burlington, Vermont for the 109th Annual Convention. VIAA’s largest and most anticipated event of the year is our Annual Convention. Approximately 400 member agents, Young Agents and company representatives join together to network and acquire new knowledge about the industry. We’ve changed the format this year to include more time for networking and socializing. Local and national exhibitors will be in attendance to provide updates on their latest products and educate attendees. The Young Agents are taking over the entertainment and will host Young Agents Casino Night. The Annual Convention this year includes informative CE sessions presented by David Walker, Chair of the Big “I” and a golf tournament at Kwiniaska Golf Club in Shelburne on Friday. This year’s event will be better than ever so mark your calendar, reserve your rooms, register online and get ready to have fun! Remember CSRs attend for free! For questions call (802) 865-5202 or email info@delaneymeetingevent.com.

Visit www.viaa.org for program updates and to register online

SCHEDULE AT-A-GLANCE Thursday, September 24 8:30 AM

Registration

9:00 AM - 4:00 PM

Continuing Education Classes

4:00 PM - 7:00 PM

Trade Show

5:00 PM - 7:00 PM

President’s Opening Reception

7:00 PM - 10:00 PM

Vermont Young Agents Casino Night

Friday, September 25 8:00 AM - 9:00 AM

Friday Breakfast

10:00 AM - 3:00 PM

Annual Golf Tournament at Kwiniaska Golf Club

LOCATION & LODGING Overnight accommodations are available at the Hilton Burlington Hotel to conference participants at a discounted rate of $199/night for September 23, 2015 through September 26, 2015. The special room rate will be available until August 24th or until the group block is sold-out, whichever comes first. Visit http://bit.ly/1e2QqYO to make your reservation online. Hilton Burlington 60 Battery Street Burlington, VT 05401 (802) 658-6500 www.hiltonburlington.com

CONVENTION HIGHLIGHTS CONTINUING EDUCATION E&O AND ETHICS WITH DAVID WALKER, CHAIR, BIG “I”

NEW THIS YEAR! YOUNG AGENTS CASINO NIGHT After the President’s Reception on Thursday evening, the first annual Vermont Young Agents Casino Night will take place from 7:00 PM – 10:00 Take advantage of a rare opportunity to learn from

PM. Each attendee will receive $500 in poker chips

the “Top Dog” of the independent agents, David

to play Texas Hold ’em, Roulette, Craps, 5-Card Stud

Walker, Chair of the Big “I”. Start the morning with

and more! There will also be prize drawings every

an eye-opening E&O course and after lunch learn

15 minutes, cash cube, photo booth as well as food

how ethics and leadership go hand in hand.

and drink. Grand prizes will be awarded at 9:30 PM.

*Each course is 3 CEUs for the State of Vermont

REGISTRATION OPTIONS Register online at http://www.cvent.com/d/3rqdd7/4W

Thursday, September 24 FULL CONVENTION REGISTRATION Includes: Continuing Education Classes & Lunch, Trade Show, President’s Opening Reception, Young Agents Casino Night and Friday Breakfast

MEMBER

NON-MEMBER

$150

$175

CSRs FULL CONVENTION REGISTRATION

Free

Includes: Continuing Education Classes & Lunch, Trade Show, President’s Opening Reception, Young Agents Casino Night and Friday Breakfast

Continuing Education Classes ONLY Includes: Continuing Education Classes & Lunch

• • •

9:00 AM - Noon E&O (3CEUs) 1:00 PM - 4:00 PM Ethics (3 CEUs) Both E&O and Ethics

OPENING NIGHT ONLY Includes: Trade Show, President’s Opening Reception and Young Agents Casino Night

PRESIDENT’S RECEPTION ONLY Includes: President’s Opening Reception

Friday, September 25 Golf Tournament - Kwiniaska Golf Club, Shelburne, VT

$35 $35 $65

$50 $50 $80

$110

$125

$75

$95

INDIVIDUAL

FOURSOME

$180

$720

CANCELLATION POLICY: Cancellations made by September 18th will be issued a refund of 50% of your total registration fee. No refunds will be given for cancellations received after September 18th. All cancellations or changes must be made in the registration system. “No shows” will not receive a refund.

Marketing Strategies with John Houle The one marketing campaign you cannot afford to miss If I told you about a campaign in which for each dollar you invested, you received more than three additional dollars in value, would you join it? Seems like a no-brainer, right? Where in the advertising universe can you invest $5000 for a return of more than $15,000? (A similar $2500 investment generates a return of $6500.) Where can you have a professionally produced television ad created and then have 265 ads placed on the major broadcast TV station in Vermont and in your local area? Only VIAAâ€™s Trusted Choice campaign offers the visibility and value that every Vermont agent can benefit from now. Many of your fellow agencies already participated in the 2014 campaign, and we are expecting more than a dozen agencies this summer and fall. Here is how the program works. You decide to reallocate your marketing dollars into a campaign with a proven track record, and you ask a company partner to support you. You take advantage of the company support and grant money already available though VIAA, which covers video production costs and also promotes the Trusted Choice message throughout the state. In terms of producing your own ad, we have developed a process that is easy to follow, unobtrusive to your business and effective in its messaging. We work with you to create an ad that reflects the values and history of your agency. Often we ask that you and your fellow agents appear in the ad, providing the narration and delivering lines on camera. If you do not want to be in the ad yourself, though we highly recommend it, you can have your spot professionally narrated. We also feature your customers and the landmarks in your community that reflect what you and your agency truly represent.

Your campaign does not end when the television is off. You can take your video and place it on your website and on social media. Did you realize that you can reach thousands of people in your community on Facebook for as little as $100? But first, you need to take advantage of this exciting campaign right in front of you now. Donâ€™t be stuck in the old advertising rut, in which you continue to do the same thing as you have done in the past just because it is convenient. Todayâ€™s marketing is ever-changing, and this program will put your agency in the position to compete at a higher level.

John Houle is the president of JH Communications and can be reached at 401.831.6123 or at john@jhcom.net.

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Sales Success with John Chapin No, You Didn’t Lose your Largest Account Because of Price This past week an insurance agency called me for help because they just lost their largest account that they’ve had for the past 24 years. When I asked how that happened, the clear, confident response was, “Price!” The only piece of good news I could glean from this initial exchange was that my gag reflex is working perfectly.

you have to show them where the possible holes are and where they might be exposed.

If you think you lost your great, longterm customer based upon price…

Third, you didn’t lose this customer overnight. It’s probably been over a series of years.

First, understand that people don’t change for the sake of changing… …especially if they’ve been with you for a substantial amount of time. The only way a long-term customer will change is if they see significant pain to staying with you coupled with significant benefit to moving. You blew it somewhere. Somewhere you dropped the ball related to the relationship, value, or both.

Note: The above assumes you still have a strong enough relationship and they still like and trust you. If they trust (believe) you, and like you (aren’t changing out of spite), you can raise that shadow of a doubt and that is your objective here.

Solution: You need to make some changes, most likely significant ones, to how you deliver value and build long-term relationships. How to Eliminate your “Price” Problem Step 1: Accept that only about 7% of people buy primarily on price.

Until you accept this fact, you’ll never be able to overcome the price problem. And no, your Possible solution: You have to get into that account market isn’t different and the people you’re dealing with aren’t different. This is another and do anything to save it. In the process, find excuse I hear weekly and in each and every out why you lost it and start to correct the case I’ve ever encountered, the top performing problem in the accounts you still have left. companies and salespeople are always selling Second, understand that if someone’s price more expensive products to the people who is significantly better than yours, there’s a supposedly buy on price. Think about it. How reason that you’d better make clear to the many things do you buy solely on the fact that customer because they are in danger. they are the lowest price? Do you buy your fiancé the cheapest diamond? Do you send There is simply no way someone can deliver your kids to the cheapest schools? Do you a superior product, superior service, and invest in the cheapest cancer treatment for a much lower price. If someone is 33% your loved one? These are extreme examples cheaper (use this word when referring to the competition) than you, as was the case but they highlight the point that if you’re like most people, the lowest price scares you. with the insurance company, you are selling apples and they are selling oranges. There Dad was right, “you get what you pay for.” are holes in the policy that can hurt them. If you truly believe people buy on price, you Possible solution: You need to get in there and scare the Bejesus out of them. You have to raise doubt that they are getting what they expected. For example, with an insurance policy, 18

don’t have a price problem, you have a mindset and a sales problem. “Price” is simply an easy, throw-away excuse to justify hanging out in your comfort zone and being mediocre while simultaneously avoiding the hard work and

pain necessary for salvation. There’s pain in letting go of an old belief. The amount of work it takes to build sales skills, adjust mindset, and admit you’re wrong, is immense and the reality is: most people won’t do it. They will simply hide behind the price excuse and whine that their situation is different. It isn’t. And the faster you accept that reality, the faster you’ll begin to turn things around. Step 2: Realize that selling on price is the surest way to go out of business. There can only be one low-price provider. If you are it today, you won’t be it tomorrow or when your customer is shopping the next time. There will always be someone willing to sell something cheaper and, in some cases, even give it away. Low price cheapens the marketplace and destroys loyalty, trust, credibility, and relationships. Competing on price will ensure both you and your business live a shorter, more painful life. Solution: Get great at building relationships and value. This is going to take some work, but it will be worth it. Look, is price important? Yes. Is it the most important? In 93% of the cases no. It’s funny that any time the subject of relationships comes up and I ask how important they are in the overall sales and business process, I usually get the answer that they are the most important part. When I later ask the same person why they didn’t get the business, they say “price.” At the end of the day, whatever you believe to be true, will be true. While I can show you over and over again study after study that show that only 7% of people buy primarily on price, you won’t believe what you see, you’ll see what you believe. As we all know, the first sale is to yourself. If you don’t believe in your product and the price you’re asking for it, you either need to find that belief or leave your company and go work for the low-cost provider. Either

way, if you’re going to survive long-term, feel good about yourself, and ultimately thrive in the market place, you have to let go of the price excuse and learn to sell value and relationships. John Chapin is a sales and motivational speaker and trainer. For his free newsletter, or if you would like him to speak at your next event, go to: www.completeselling.com John has over 26 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For permission to reprint, e-mail: johnchapin@completeselling.com

Insurance Agency La Mesa, CA

“

We receive roughly 4-5 leads from TrustedChoice.com on a monthly basis and they are phenomenal! I’ve purchased all kinds of leads throughout the years and nothing is close to this. The quality of the lead and closing percentage are just incredible.

”

Dive in

to ϐlood knowledge.

Stay ahead of the curve with information and updates from Big “I” Flood. Being knowledgeable of NFIP coverages and changes is crucial in communicating the need for �lood insurance to your clients� Fortunately, Selective and Big “I” Flood leverage a variety of channels to keep members up to speed, including:

 Continuing education classes offered by state

associations and taught by Selective Territory Managers or other industry experts

 Regularly issued communications from Selective about NFIP legislative changes and how they impact agents and customers

 Numerous publications providing industry updates:

 Insurance News & Views weekly e-newsletter  Two for Tuesday weekly e-newsletter  Big I Advantage® Newsletter quarterly publication  Independent Agent magazine special features  NFIP reform announced in state association publications

 Free topical webinars hosted by Big “I” Flood,

including a monthly “Oh, By The Way Flood Sale” webinar, as well as access to a virtual university dedicated to �lood insurance�

To learn more about Big “I” Flood visit www.independentagent.com/Flood today.

Vermont Insurance Agents Association Partner Program

Thank you 2015 Annual Partners for Your Continued Support Diamond Partners

Platinum Partners MMG Insurance Co. Progressive

Silver Partners C OURTEOUS

Gold Partners Co-operative Insurance Cos. Hanover Insurance Group Patriot Insurance Company MAPFRE|USA

R ESPONSIVE

Q UICK

C LAIMS C ASH C ARDS 97% S Allstate AmTrust North America, Inc.

Bronze Partners BankDirect Capital Finance Foremost Insurance Co. Kemper Meadowbrook TPA Associates New England Excess Exchange, LTD NGM Insurance

DID YOU KNOW AGENCY E&O UMBRELLA IS NOW AVAILABLE THROUGH BIG “I” PROFESSIONAL LIABILITY A commercial umbrella underwritten by Swiss Re (rated A+ by A.M. Best) is now available exclusively to Big “I” members. Designed in collaboration with the IIABA to

PROTECT

your business with an E&O umbrella endorsed by IIABA

meet the needs of independent insurance agents Broad coverage over primary casualty lines,

including E&O Limits available up to $10 million over

CONSOLIDATE coverages with one carrier and avoid potential gaps

underlying primary E&O policy Will be available in 50 states and the

District of Columbia May to be written over a variety of E&O

carriers Contact your state association to learn more or to receive a quote today:

www.independentagent.com/EOContact

SECURE your agency’s future with the largest writer of agents professional liability in the country

SUPPORT your state association while protecting your business

Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas. Westport is licensed in all 50 states and the District of Columbia. Insurance products mentioned may not be available in all states. Please contact your state administrator or Westport for availability in your state

Duties and Obligations of Insureds Required By Professional Liability Policies James C. Keidel, Esq. Christopher B. Weldon, Esq. Keidel, Weldon & Cunningham, L LP

Every insurance policy contains a section that sets forth the various duties and obligations of the insured in the event of a claim or potential claim. This is true of the professional liability insurance policies that provide E&O coverage for insurance agents and brokers. Occasionally, we see a situation where an agency or brokerage risks this valuable coverage for a claim or potential claim because they fail to comply with the duties and obligations imposed by their E&O insurance policy. This is a predicament which every insurance agency and brokerage should seek to avoid. In this issue of The E&O Corner, we will briefly review some of the duties and obligations that are typically imposed by professional liability insurance policies covering insurance agents and brokers. We will also discuss some of the problems that could potentially arise if the agencies or brokerages fail to comply with the obligations under their E&O insurance policies. The first obligation of an insured, contained in every insurance policy, is the duty to cooperate with the insurance company. The typical policy provision governing this duty reads as follows: 1. The insured shall cooperate with the insurance company and at its request shall: A.Submit to examination or questioning; B.Attend hearings, depositions and trials; C.Assist in settlement; D.Secure and give evidence; and E.Assist in obtaining the cooperation of witnesses. If an agency or brokerage is faced with a claim, or potential claim, their professional liability policy requires that the agency or brokerage must cooperate with the insurance company and its assigned counsel in connection with the investigation and handling of the claim. If 24

the insured agency or brokerage fails to fully cooperate pursuant to the terms of the E&O policy, the agency or brokerage could risk losing coverage for a claim or potential claim. Another significant obligation of an insured contained within every E&O policy is the duty to provide prompt notice to the insurance company of a claim or potential claim. The typical policy language governing this duty reads as follows: 1. As a condition to our obligations under this policy, in the event of a claim, the insured shall provide written notice of: A. Any claim made against the insured; and B. Any potential claim 2.The insured shall forward every demand, notice, summons or other legal papers an insured receives as soon as reasonably possible. Every insurance agency or brokerage that believes it is facing facts that could potentially give rise to an E&O claim, or if an actual E&O claim exists, should be sure to promptly provide written notice of the claim or potential claim to the insurance company. Failure to comply with this requirement could result in a possible disclaimer by the E&O insurer. Similar to other types of liability insurance policies, E&O policies typically contain requirements that the insured not admit or assume liability in any way, waive any rights they may have, or make a payment in connection with a potential claim or claim. The typical language governing these duties is as follows: The insured shall not: 1.Make a payment; 2.Voluntarily admit or assume liability; 3.Agree to any settlement, judgment or award; 4.Waive any rights; 5.Incur any expense; or

6.Participate in settlement discussions. We understand that many agencies and brokerages feel a sense of loyalty or obligation to their customers and the insurers with whom they deal. However, any agency or brokerage facing a potential claim or claim must never forget that their first loyalty should be to themselves, and they should protect the agency or brokerage from the consequences of a claim or potential E&O claim. An agency or brokerage should never admit liability (either verbally or in writing), make a payment or settlement, or waive any rights they may have in connection with a potential claim or claim. Instead, if the agency or brokerage believes that an error or omission may have occurred it should only discuss the details of the matter with representatives of their E&O insurer or assigned counsel. The agency or brokerage should not discuss the details of the situation with the insured, or anyone claiming to act on behalf of the insured. If they do, the agency or brokerage may

be jeopardizing their E&O insurance coverage for a particular claim or potential claim. The policy provisions discussed above are simply some of the typical duties and obligations contained in professional liability policies covering insurance agencies and brokerages. The prudent insurance agency or brokerage should be certain to make sure that everyone at their company is familiar with these and any other obligations contained in their E & O policy. Further, every agency or brokerage should also make certain that the specific duties and obligations contained within their E&O policies are understood and followed by everyone. By doing so, the agency or brokerage will hopefully avoid jeopardizing insurance coverage for a potential claim or claim that they may face. The law firm of Keidel, Weldon & Cunningham, L LP specializes in the defense of insurance agents and brokers in connection with E&O claims and lawsuits and regulatory matters. You can contact James C. Keidel by telephone at 914-948-700 and by email at jkeidel@kwcllp. com or Christopher B. Weldon by telephone at 203-8692200 and by email at cweldon@kwcllp.com.

Perpetuate the Industry? Check.

Donâ€™t wait until the office is empty to find new talent â€“ support InVEST and find new recruits now. InVEST is a free, classroom to career program designed to increase awareness of the insurance industry with high school and college students. And, InVEST has been making huge strides over the last year. With a new student center, career center and more scholarship dollars than ever before, InVEST is touching more and more students daily. InVEST, a 501 (c)(3) non-profit, is supported by financial contributions from insurance companies and individuals, in addition to the active involvement of hundreds of insurance professionals. For volunteer and donor opportunities visit www.investprogram.org. 25

Everything you insure is on your shoulders

Who do you trust to have your back? VIAS offers the most prestigious Errors & Omissions carrier(s) in the country: Westport Insurance Company & Utica National Insurance Group

For a quote or for more information contact Helen Collins at hcollins@viaa.org or 1-844-609-1481

www.iiaba.net/eohappens

VIAS is a subsidiary of Vermont Insurance Agents Association viaa.org

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üThe products you need ü24/7 claims in class quote and ü Best issue platform Interested in becoming a Safeco agent? Reach out to our VT Territory Manager, Deb Bissell, at Deborah.Bissell@Safeco.com for more information.

Agency News Company News Vermont Insurance Agents Association Wishes Bill Catto A Happy Retirement Bill’s distinguished career in the property and casualty business spans more than 40 years. In 1972, after graduating from the University of Vermont where he received a Bachelor of Science degree in accounting, Bill joined Granite Mutual Insurance Company in Barre, Vermont.

He earned his Chartered Property Casualty Underwriting (CPCU) designation from the American Institute for Property and Liability Underwriters in 1985. He assumed increasing responsibility within the Granite Mutual organization and was elected President and Chief Executive Officer in 1986.

In 1995, Granite Mutual became an affiliated member of the Vermont Mutual Insurance Group and Bill joined the Group as Senior Vice President. He was elected Executive Vice President and Chief Operating Officer in 2009. At the annual meeting in April 2012, Bill became President and in 2013, he was elected President and Chief Executive Officer. Under Bill’s leadership, the Vermont Mutual Insurance Group has enjoyed significant growth and profitability. For six consecutive years Vermont Mutual has been recognized by Ward Group as a Top 50 property and casualty company. In 2014, A.M. Best recognized the exemplary financial performance, security and stability of the Vermont Mutual Insurance Group with an upgrade in the Financial Strength Rating from A (Excellent) to A+ (Superior).

Bill is a director of Vermont Mutual Insurance Company, Northern Security Insurance Company, Inc. and Granite Mutual Insurance Company. He has served with many industry organizations, including terms as President of the Vermont Association of Domestic Property and Casualty Insurers and Chairman of the Vermont Property and Casualty Guaranty Fund for more than 20 years. A director of Guaranty Fund Management Services for many years, Bill served two terms as Chairman of that organization. Community service contributions include the Vermont Association of the Blind and Visually Impaired, where Bill has been a director since 1990.

The Catto family includes Bill’s wife Cindy, daughters Katrina and Victoria, son-in-law Luca, and granddaughters Christine and Amelia.

Congratulations to William H. Catto on a Distinguished Insurance Career

Vermont Mutual Completes Leadership Transition with Bridge and McDonnell MONTPELIER, Vermont—With the June 30th retirement of CEO William Catto, President Dan Bridge will take on the Chief Executive role. Current Senior Vice President Mark McDonnell will elevate to the number two position in the organization and partner with Bridge to lead the company. “This completes a well-planned leadership transition that began several years ago”, said Bridge. “Since joining the company in 2014, Mark has made significant contributions to our organization and I look forward to partnering with him as we move the company forward.” Bridge continued “I think I speak for both Mark and myself when I say we are excited about the future of this organization. We are fortunate to work with an exceptional team here at Vermont Mutual, comprised of both our dedicated employees and our agency partners.” “Our goal,” McDonnell added “is to maintain the practices and measures that have produced a sustained period of extraordinary results for our organization and carefully modernize those areas that will benefit our customers, agency partners and staff.”

Bridge and McDonnell each have approximately 30 years of insurance industry experience and have held a variety of leadership positions at national and regional carriers before joining Vermont Mutual. Both are located in the company’s Montpelier, Vermont Home Office. Chartered in 1828, Vermont Mutual Insurance Company is one of the ten oldest mutual property/ casualty insurers in the United States. They have operated continuously since that time in Montpelier, VT. Along with the wholly owned subsidiary, Northern Security Insurance Company, Inc. and the affiliated Granite Mutual Insurance Company, Vermont Mutual Insurance Group provides coverage throughout New England and New York. Through more than 500 independent agencies, the Group insures approximately 285,000 policyholders with a direct written premium of more than $350,000,000. In addition to its upgrade to A+ (Superior) by A. M. Best, Vermont Mutual Insurance Company has been named to Ward’s Top 50 performing property/casualty companies in the United States for the past six consecutive years.