GMA July 2017 by VIAA

GREEN MOUNTAIN AGENT A PUBLICATION OF VERMONT INSURANCE AGENTS ASSOCIATION

JULY 2017

Green Mountain Agent is a publication of

In This Issue: July 2017 4

600 Blair Park Road Suite 100 Williston, VT 05495 Phone: 802-229-5884 Fax: 802-876-7912 www.viaa.org

Seasons May Change, But Our Commitment to the Independent Agent Channel Remains the Same...

Message from the President

6 On the Hill: Big ‘I’ Urges Protection of Employer-Sponsored Health Care 10 On the Hill: House Committee Considers NFIP Reauthorization Package 12 Newsflash: Independent Contractors Reclassified by Vermont Supreme Court

Features

VIAA Officers President Peter Richards

ermont Mutual is proud to have served Vermont and the New England market through the longstanding partnership with our Independent Agents. It remains our privilege to work with the finest Independent Agencies in the industry … the only place you can buy a Vermont Mutual policy.

Vice President Erin Odell Vermont Mutual is proud to sponsor the Vermont Insurance Agents Association’s new Education Center in Williston, Vermont.

Secretary/Treasurer Paul Plunkett IIABA & PIA State National Director Ron Bixby

Directors Chip Ams Daniel Rodcliff

14 July 1 Changes to Vermont Motor Vehicle Laws 19 Young Agents’ News Brief 22 BreweryPak Unveils Workers Comp for Breweries 28 Sales Success: Run the Day 30 E&O Corner 32 Junior Golfers Hit the Links in Barre 34 Does an Insured Have the Right to Not File a Claim?

Alan Kinney

Staff Executive Director Mary Eversole meversole@viaa.org

GMA Publication Design LONDONmiddlebury londonmiddlebury.com

89 State Street, P.O. Box 188, Montpelier, VT 05601 | 800.451.5000 | VermontMutual.com

Help Wanted 43 The Essex Agency 44 Crowley Insurance Agency 44 The Richards Group

Message from the President see an immediate effect of this law. However, we predict that claims experience and rates will increase dramatically in the next couple of years. New laws also take effect on our roadways this month. There are increased penalties for driving while using a cell phone and moving a vehicle involved in a crash. This is important information to share with our clients. Last but not least I’d like to send congratulations to Aislyn Vaughan, Vice Chair of the Vermont Young Agents. She is an Account Manager with NFP and is featured in IA Magazine this month with other young leaders from across the country. Aislyn shares her insight on how she plans to help perpetuate the insurance industry. Great job Aislyn!

Independence Day Brings New Laws July is the time to celebrate independence. I don’t believe there is a more independent state than Vermont. It’s also the time for new laws to take effect in our state. Speaking of independence, independent contractors will benefit from a recent Vermont Supreme Court Ruling. Our lobbyist has laid out the details for us in this issue. This ruling may resolve the long standing confusion with the Chatham – Woods ruling. You should also be aware that the mental health parity law for workers compensation was signed by the Governor last month. As you recall, VIAA lobbied strenuously against this bill during the legislative session. We also sent a veto request to Administration. Despite those efforts the law went into effect July 1, 2017. We will not

Heads up. Phones Down. Have a safe summer! Pete Richards VIAA President P.S. Registration is open for convention! Register today at viaa.org.

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On the Hill Big ‘I’ Urges Protection of Employer-Sponsored Health Care By Wyatt Stewart

The Big “I” recently joined forces with more than 50 trade associations to send a letter to senators urging them to scrap the Affordable Care Act’s (ACA) “Cadillac” tax on high-end health plans and avoid imposing new taxes on employer-provided plans. The Big “I” also recently met with senior officials in the Trump Administration to express the association’s opposition to new taxes on employer-sponsored plans. 6

When Americans receive their health care coverage through an employer, the cost of that coverage is “excluded” from an employee’s taxable income. However, during the current health reform debate, some lawmakers have proposed taxing employees on the cost of their health benefits if the cost exceeds certain thresholds set by Congress. The Big “I” believes increasing taxes by capping the employee exclusion would not “alleviate the economic burden of the ACA,” as some supporters claim—instead, it would create new ones. The employer-sponsored health care system covers more than 177 million Americans, leading to better health outcomes, lower costs and more satisfied employees. Employers are the foundation of a health care system that provides quality health coverage, and this coverage should be the basis of any health care reform solution. As Congress and the Trump Administration seek to reform the health care marketplace, the Big “I” will continue advocating that they should avoid destabilizing the employer-sponsored system and the 177 million Americans it covers. Wyatt Stewart is Big “I” senior director of federal government affairs.

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On the Hill House Committee Considers NFIP Reauthorization Package By Jen McPhillips & Jennifer Webb At press time, the U.S. House of Representatives Financial Services Committee is conducting a markup on a package of seven bills to reform and reauthorize the NFIP. The markup and committee votes on the bills are not expected to conclude today, and additional changes to the bills are anticipated. However, the bills are currently expected to pass the committee. The legislation would reauthorize the NFIP for five years and addresses a variety of issues, including providing greater private market access, enhancing mitigation efforts, updating the flood mapping process, addressing consumer costs and affordability, and reforming the NFIP claims process. A short summary of provisions in the legislation is available on the Big “I” website. Most important for independent insurance agents and brokers, one of the bills, H.R. 2874, the “21st Century Flood Reform Act” by Subcommittee Chairman Rep. Sean Duffy (R-Wisconsin), addresses WYO compensation. As originally introduced, H.R. 2874 would have capped all payments insurance companies receive for participating in the WYO program at 25% of policyholder premiums before various federal fees and surcharges. Currently, WYO companies receive 30.9% to administer the NFIP and can receive additional compensation for claims handling. WYOs pay insurance agents, vendors and state premium taxes, among other costs, from that allowance. 10

During the markup, Rep. Duffy offered an amendment that minimizes WYO program cuts. The amendment, which is expected to be approved, says that WYO companies cannot receive more than 27.9% to administer the program. However, WYO companies would still receive additional compensation above that cap for claims handling-related costs, or if the NFIP Administrator deemed additional payments necessary. Finally, the 3% reduction would be phased in over three years, and the NFIP would have to reduce administrative costs and burdens on the WYO program by at least 1.5% over the same time period. Should this language become law, the program cuts and the impact on agent compensation are expected to be limited compared to the original proposal. Due to the WYO cuts, among other issues, the Big “I” has officially adopted a neutral position on the legislative package the committee is considering today. But the three property-casualty carrier trade associations, which together represent the majority of the WYO companies, have endorsed the legislation. Working closely with these trades, the Big “I” was the only agent and broker group involved in the congressional discussions, which led to the new amendment minimizing the WYO program cuts. Ahead of the markup, the Big “I” used a multipronged approach, launching a targeted grassroots campaign and scheduling numerous meetings with members of Congress and staff to address the issue of WYO compensation. As H.R. 2874 moves through the legislative process in the House, the Big “I” will continue defending WYO and agent compensation and advocating on other issues important to independent agents who sell and service flood insurance. House floor action on NFIP reauthorization and reform could occur as soon as late June.

earlier this week by Sens. Bob Menendez (D-New Jersey), John Kennedy (R-Louisiana), Chris Van Hollen (D-Maryland), Marco Rubio (R-Florida), Elizabeth Warren (D-Massachusetts) and Thad Cochran (R-Mississippi), Cory Booker (D-New Jersey) and Bill Nelson (R-Florida). The legislation would reauthorize the NFIP and make a number of reforms to the program, including capping WYO compensation at 22.46%, increasing agent training requirements

and creating an agent advisory council to the NFIP. Senate Banking Committee leadership is expected to introduce additional legislation before the Senate takes up NFIP reform.

Jen McPhillips is Big “I” vice president of federal government affairs. Jennifer Webb is Big “I” federal government affairs counsel.

Meanwhile, in the U.S. Senate, another bill to reauthorize and reform the NFIP was introduced 11

Newsflash Independent Contractors Reclassified by Vermont Supreme Court The following is a brief summary of the recent Vermont Supreme Court decision In re Bourbeau Custom Homes as it relates to the singlemember LLC’s and employment under the unemployment compensation system: •

The Bourbeau case involved a challenge to the state’s classification under the unemployment compensation system of a group of carpenters who worked for a home construction company. One of the carpenters, John Parah Construction, LLC, was a single-member LLC. Parah argued that he should not be considered to be an employee of Bourbeau Homes, as determined by the Employment Security Board, and he appealed to the Vermont Supreme Court.

• The Court held that a single-member LLC is not an “employee” for purposes of unemployment compensation. • The Court specifically limited the scope of its decision to unemployment compensation, saying “We need not decide whether any of these individuals are employees of Bourbeau for other purposes, such as tort law or tax law.” Nonetheless, many of the arguments

used by the Court in support of its holding would appear to be relevant to the workers’ compensation program. • The Court applied the following reasoning in concluding that a single-member LLC is not an employee under the unemployment compensation statute: • The statute refers to “services performed by an individual.” Id. at 6, quoting 21 V.S.A. §1301(6) (B) (emphasis original). • Throughout the Unemployment Compensation Act, the legislature distinguishes an individual from a business entity. • The unemployment compensation statute uses the word “individual” to mean a human being. • The legislature has distinguished the term “individual” from “person” (which includes business entities) in other statutes, “showing a consistent intent to exclude business entities from the definition of ‘individual.’” Id. at 8. • The Court has previously determined that a corporation is not an individual. The Court found this reasoning relevant as to the relationship between singlemember LLC’s and individuals. • Courts in other jurisdictions have held that a business entity is not an individual. • The legislature has repeatedly expressed its intent in the LLC statute that an LLC is a distinct business entity.

• The statute creating the LLC form does not distinguish between single- and multi-member LLCs.

The Vermont Supreme Court. Pool file photo by April McCullum/ Burlington Free Press

• The fact that the single-member LLC in this case paid taxes as a sole proprietorship is not relevant in determining whether the LLC is considered to be an individual. • Many of the arguments used by the Court would appear to apply equally to the question of whether single-member LLC’s should be considered as employees under the workers’ compensation system. • We do not yet know how the Department will interpret this decision as it relates to the workers’ compensation program.

Feature Article July 1 Changes to Vermont Motor Vehicle Laws

“

There is a lot of money from private equity and public brokers buying agencies of all sizes. Why can’t I do the same?” You have built significant value in your agency through

Removal of Stopped Vehicles

years of hard work. InsurBanc can help you to unlock

Any enforcement officer is authorized to:

the value to grow your agency to the next level,

Direct the operator of a vehicle involved in a crash, at the crash scene, to move and stop the vehicle at the nearest location where the vehicle will not impede traffic or jeopardize the safety of a person.

acquisitions, perpetuations and producer development.

independently. InsurBanc can provide funding for

This does not apply to crashes

There were a number of changes made to Vermont’s motor vehicle laws this past legislative session that agents should be aware of. These changes are contained in Act 71.

Protect your own legacy.

Hand-held Cell Phone Use Ban New Penalties for Violations

Driver’s ticketed for talking on their cell phone while driving will now be penalized: • 2 points (from 0 points) for use of portable electronic device outside work or school zone. • 4 points (from 3 points) for use of portable electronic device in a work or school zone—first offense •

The fine for these violations remains $162.

where there is a death or apparent injury to any person; the vehicle to be moved was transporting hazardous material; the vehicle cannot be operated under its own power without further damage to the vehicle or highway; the movement cannot be made without endangering other highway users.

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InsurPac

PROTECT YOUR COMMISSIONS & YOUR AGENCY The U.S. Congress regularly considers legislation that directly affects the livelihood of Vermont’s Independent Agents.

InsurPac raises money to contribute to candidates running for federal office, increasing agent visibility on Capitol Hill and empowering members to participate in the political process. Elected officials who receive InsurPac support might not always vote with agents, but it does enable the Big “I” to constantly remind officials about where agents stand on important issues.

GIVE TO InsurPac TODAY – InsurPac WORKS FOR YOU! What does InsurPac Do for Vermont’s Independent Agents? Vermonters need flood insurance. They cannot buy a home without it in many cases.

NFIP is set to expire in September 2017. Agent Compensation is on the chopping block. Your donation to InsurPac will help the Big “I” Government Affairs team beat back and minimize damage to the Write Your Own Program. Most importantly they are working to protect your commissions!

The Federal Crop Insurance Program protects $32 million of liability on growing crops in Vermont. It insures 77,125 acres of farm land that produces dairy products, maple syrup, apples and more. Agriculture is an important part of Vermont’s economy and agent livelihood. The Federal Crop Insurance Program (FCIP) continues to be the bullseye for budget cuts. In 2015 the Big “I” led the charge in opposing cuts to the crop program and protecting agent commissions. They continue that work today advocating for a strong FCIP with agents as the sole sales force of the program. Contributing to InsurPac allows them to do that for you. Tax Reform is heating up in Congress. The majority of VIAA member businesses file at individual tax rates since they are organized as S-Corps, Partnerships, or Sole-Proprietorships. The Big “I’ is urging Congress to address individual tax rates for small businesses like yours along with corporate tax rates. The Big “I” believes that any tax code overhaul should provide simplification and certainty for individuals and small businesses like your C-Corporation counterparts. Otherwise this creates an unequal playing field. Level the playing field by donating to InsurPac.

GIVE TO InsurPac TODAY – InsurPac WORKS FOR YOU! The VIAA Board of Directors has set a stretch-goal for InsurPac this year. Our goal is $8800. Please help us meet that goal today. A reasonable investment today helps protect your bottom line tomorrow.

GIVE TO InsurPac TODAY – InsurPac WORKS FOR YOU! Questions? Please contact: Paul Kendall, Vermont InsurPac Chair, Lawrence & Wheeler, 802.885.2178 Mary Eversole, Executive Director, VIAA, 802.229.5884 Nathan Riedel, InsurPac, Big “I”, 202.863.7000

All forms of payment must be by personal check, credit card or non-incorporated LLC or Partnership check. Contributions or gifts to InsurPac are not deductible as charitable contributions for purposes of federal income tax. Federal law requires us to use our best efforts to collect and report the name, mailing address, occupation and employer for each individual whose contributions aggregate in excess of $200 in a calendar year. Your contribution should be considered strictly voluntary.

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

YACs Give Back Vermont Young Agents met in late May to discuss upcoming events, earn CE credits and network. They also took time to support Red Nose Day to help end child poverty!

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Save the Date

Coming soon in August! Free to YACs, their families, and friends. More details coming soon!

What: Young Agents Quarterly Meeting When: Thursday, August 10, 2017 Where: The Richards Group, 48 Harris Place, Brattleboro Time: 11:30am - 1:30pm Questions: Email Brady Check your inbox for registration information coming soon!

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CONSIDER THIS: Existing homeowners and auto insurance may not be enough to cover a lawsuit or judgment. A personal umbrella policy will substantially increase your customer’s overall liability coverage beyond the basic coverage provided under homeowners and auto insurance policies. A SMART WAY TO PROTECT YOU AND YOUR FAMILY. You’ll find an RLI personal umbrella policy is a good idea. • $1 million in additional insurance • Backed by a financially secure, A+ rated company • Customers keep their current homeowner/auto insurer • Excess UM/UIM available • New drivers accepted — no age limit on drivers • Up to one DWI/DUI per household allowed • Auto limits as low as 100/300/50 in certain cases

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CISR Elite status now offers an even higher distinction for those eager to gain greater skills and knowledge of insurance service and sales.

The CIC Program is for agency and company personnel -- owners, producers, agents, account managers, brokers, underwriters, and marketing or claims personnel. Participants should be licensed agents, brokers, adjusters, or solicitors; or have at least two years of full-time experience in the insurance industry or as a risk management professional; or have served for at least two years as a full-time insurance faculty member at an accredited college or university. CIC COURSES MAY BE TAKEN FOR CE CREDITS FOR THOSE NOT SEEKING THE DESIGNATION. ATTENDANCE REQUIRED FOR ALL DAYS TO RECEIVE CREDIT FOR INDIVIDUAL CLASSES.

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Feature Article BreweryPak Unveils Workers Comp for Breweries By Ronimarie Acord The craft brewing movement in the U.S. is growing by leaps and bounds. More than 4,000 small and independent microbreweries, brewpubs and regional craft breweries now represent 12% of the overall beer industry.

manager, BreweryPak. “As the brewing industry has grown, we have perceived a greater need for workers compensation coverage.” BreweryPak now applies its significant experience insuring breweries to workers comp insurance, focusing on reducing injuries and ensuring workers receive timely, affordable care after sustaining an injury. BreweryPak’s professional safety consultants are also available to help breweries by designing, recommending and coordinating loss prevention strategies. Other loss control services include educational programs on distracted driving,

of workers comp coverage each year. Coverage includes specialty claims handling services, including specialized resources for catastrophic claims, non-traditional return-to-work programs, a customizable medical provider network, an internal special investigation unit and an advanced prescription cost containment program.

events, bonds, beer storage, retail sales, beverage shops, catering and lodging.

The company also provides customized coverages exclusively for breweries, including coverage for buildings; beer stock; beer contamination; leakage of beer; tanks and barrels; production equipment; specialized beer loss valuation; stock in transit; equipment breakdown; product withdrawal expense; general liability; liquor liability; cyber risk; commercial auto; and excess liability.

COMPANY: BreweryPak, underwritten by Great American Insurance Group

BreweryPak requires three years of workers comp loss history prior to considering writing an account. The company will not consider writing a workers comp policy on a monoline basis.

COVERAGE TERRITORY: All U.S. states except ND, OH, WA, WY and WV. PRODUCT: Workers compensation for breweries

BEST RATING: A+ (Superior), size XIV AVAILABILITY: Coverage is available through independent agents and brokers. CONTACT: Paul Martinez, program manager; Brewery Pak, 3 Wing Drive, Cedar Knolls, NJ 07927; 888-386-5701.

MINIMUM PREMIUM: None. TARGET: Brewery operations of all sizes, including beer production facilities, tasting rooms, restaurants, special

In response to this steady growth, BreweryPak now offers workers compensation coverage for breweries.

active shooter incidents and OSHA topics; safety program reviews; accident analysis; and an online streaming video library.

“On-the-job injuries are a persistent problem in breweries,” says Paul Martinez, program

UNDERWRITING: The program is backed by Great American Insurance Group, which writes about $1.2 billion

Ronimarie Acord is an IA contributor.

We Want You!

Everything you insure is on your shoulders

South Burlington, VT NFP, a leading insurance broker and consultant that provides employee benefits, property & casualty (P&C), retirement, and individual insurance and wealth management solutions is currently seeking an experienced Personal Lines Producer to advance his or her career as a Commercial Lines Producer in its South Burlington office. This position is responsible for generating new sales for all Commercial Lines policies and requires the ability to work closely with clients, customer service representatives, producers, management, and insurance carriers. The work environment is professional and very supportive. The ideal candidate should have excellent interpersonal skills, {2+} years of experience, and ability to adapt to emerging technology. They will be supported with commercial lines training and mentoring for prospect/planning, sales calls, proposals and education. A property and casualty license is required. NFP offers a highly competitive compensation and benefits package.

Please send your resume to: Dan Rodliff Vice President, NFP P&C PO Box 2243 South Burlington, VT 05407 Or Email: dan.rodliff @nfp.com

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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

THE MEETING SPACE YOU’VE BEEN LOOKING FOR

Are you ta king a d va nta g e of your m em b ership ? Big “ I” Professiona l Lia b ility

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

Big “ I” Ma rkets

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

Big “ I” Flood

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

Big “ I” Retirem ent

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

Big “ I” Em p loyee Beneﬁts

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

Big “ I” Persona l Um b rella

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

Big “ I” Hom e Business

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

Big “ I” Business Resourc es

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

Sales Success: Run the Day By Phil Schuman

Each morning when we wake up we have an important choice to make. Either we just react to the day’s events as they unfold, or we plan ahead and take charge of our day. Reacting to circumstances as they unfold, although seemingly the easier choice, leads to a life of mediocrity. But planning ahead with an agenda, goals and clear expectations is the path to controlling the day that leads to success. As author and speaker Bob Proctor says: “Life happens by design or default – the choice is ours.” For a salesperson this choice is a critical one. Study the lives of the most successful people, in sales and life in general, and you’ll find they all this in common: they plan the day’s agenda the night before. This can be as simple as writing down a prioritized list of what needs to get done or updating a visual daily goal at your desk. “What gets measured gets done.” By the same token that which does not get measured has a far greater chance of not getting done! We all have great intentions, but if the intentions aren’t measured, they quickly get kicked ahead to the next day with all too little getting achieved – and procrastination wins! Winging the day as it goes along is a critical mistake that all too many salespeople make. Simply planning ahead each day and holding yourself accountable to those plans can make a dramatic difference in your sales results. Take control of the sales day by adopting a simple way of keeping track of all the calls, appointments and follow-ups for the days, weeks and months ahead. A wide variety of CRM (Customer Relationship Management) software systems make it very easy to keep track of every prospect in your 28

sales funnel. CRMs do all the tracking work for you – you have a virtual assistant at all times! The salespeople who rely on jotting down notes on random pieces of paper that get buried and lost and keeping excel spreadsheets to remember who they’ve called and when they need to call back are far more likely to lose track of prospects in their pipeline. Following up is one of the most overlooked areas in an unsuccessful salesperson’s mind, and is an easy and highly effective way to make an immediate and significant difference in sales results. So too is “knowing your numbers” – understanding and getting comfortable with the ratio of how many calls you need to make to secure how many appointments to close how much new business. So if you’re not already planning the night before for the day ahead, try writing tomorrow’s sales “to do” list tonight and notice the immediate difference it makes. Make sure you’re using an effective CRM to track your calls and follow-ups. And be ever conscious of your sales numbers and ratios. This will all help in taking charge of the day so that you can better dictate how each day ends. As author and motivational speaker Jim Rohn puts it: “Either you run the day, or the day runs you.” Make a decision to run the sales day proactively, and great results will quickly follow! Happy Selling! The Schuman Group empowers and inspires sales teams with proven strategies and real world tools through sales training, coaching and consulting services. www.schuman-group.com

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Planning “Plans are nothing. Planning is everything.”

-Dwight Eisenhower; President, General of the Army By Richard F. Lund, J.D., Vice President, Senior Underwriter, Swiss Re Corporate Solutions* I recently attended my daughter’s graduation from St. Louis University (Go Billikens!) and the commencement speaker was the United States Ambassador to Ireland, Kevin O’Malley. A double SLU graduate (Business, Law), he began his comments with a simple statement from former President Dwight D. Eisenhower: “Plans are nothing. Planning is everything.” The President’s statement referred to the United States’ battle plans during World War II. They were continually being revised to address changing circumstances. The Ambassador’s message to the graduates was while you may think you have a plan for your life, that plan will change as your circumstances change.

The same is true for you as an insurance professional. While you may have a business plan in place, change in circumstances may cause you to modify your plans. As you plan for your agency’s future, your staff’s future, your own future, circumstances, mostly in the form of market forces, cause you to change your business plan to adapt to those forces.

And the same is true about agency risk management. Over the last 25 years, think about some of the things that have changed the way you do business and helped you to change your risk management. One of the first 30

was the change from agency billed policies to direct bill policies. Until the late 1980’s to early 1990’s, virtually all insurance agencies sold the carriers’ policies and also collected the premiums. Then, carriers began the process of “direct bill”, especially for renewals. From a risk management standpoint, this was one of the best improvements as it did two things: 1) took the agencies out of the money handling business, which was a significant cause of E&O loss due to discrepancies regarding payment of premiums, and 2) it removed the agency from the process of notifying the customer when the premium was due and cancellation of the policy for failure to pay, one of the largest areas of E&O loss at the time.

Unfortunately, we still see some claims involving the notification of insureds when their premium is due, even though the agent has no such duty to do so, but they’re due to the agencies not adapting to changes in the market which have removed them from this part of the transaction and continuing to insert themselves when they have no such duty. Numerous articles are available on the IIABA Virtual University and E&O Happens if you want more information about how to avoid this exposure.

Another significant area that has just recently been on the rise is that insurance carriers are no longer requiring agents to submit signed applications for insurance policies they write for their customers. In fact, many carriers’ online systems may not even allow agents to submit applications or the applications they submit do not match the criteria used to underwrite or price the risk. While the carriers may believe this streamlines the process, it eliminates the ability to defend an E&O claim when a dispute arises as to the risk that was being insured. However, we have seen many agencies that have adapted and are planning their own internal

systems to create appropriate documentation even when the carriers have not done so.

Yet another area that is causing E&O exposures is that of technology in general. Agency websites, Facebook, smart phones, tablets and many other forms of technology were unheard of as little as 15 years ago. Now, they are everywhere and makes planning for these technologies crucial to conducting business. You should especially take into account how your agency can protect its information and itself from E&O claims arising from new technology.

As General Eisenhower said, “Plans are nothing. Planning is everything.” Protect your agency from potential E&O claims by planning continually to adapt as circumstances change in your business.

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. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders.

*Richard F. Lund, JD, is a Vice President and Senior Underwriter of Swiss Re Corporate Solutions, underwriting insurance agents errors and omissions coverage. He has also been an insurance agents E&O claims counsel and has written and presented numerous E&O risk management/ loss control seminars, mock trials and articles nationwide since 1992.

Junior Golfers Hit the Links in Barre

Winners Lauryn Goulet of Derby (R ) and Bryson Richards of Plainfield

VIAA sponsored the Trusted Choice® Big “I” VIAA Tournament at the Country Club of Vermont on Sunday, June 11. Lauryn Goulet of Derby and Bryson Richards of Plainfield qualified for the Trusted Choice® Big I National Championship and will travel to Annandale Golf Club in Madison, Mississippi in August to compete against champions from 31 states. A special thank you to Ron Bixby, Ludlow Insurance, VIAA National Director and Dave Pfannenstein, Vermont Golf Association for running another successful tournament for VIAA!

111th Annual Convention & Golf Tournament September 21 & 22, 2017 Hilton Burlington

Corralling Cyber Space SADDLE UP COWBOYS AND COWGIRLS! Join us for a rootin’ tootin’ good time. Round up your boots, wranglers, western shirts, and cowboy hats to wear and mosey on over to the Burlington Hilton. Come in your best western wear and win a prize! Approximately 300+ member agents, Young Agents, and company representatives join together to network and learn. This event is an invaluable opportunity for insurance professionals of all ages, titles, and experience levels and is a must-attend for all independent agents. See y’all real soon!

Feature Article Does an Insured Have the Right to Not File a Claim?

information...” related to a potential claim can lead directly to an errors & omissions lawsuit.

By Big “I” Virtual University Faculty

Response 5: Yes, but that would be ignorant and foolish since it would mean violating the policy conditions. If the third party sues, the insured should not expect to receive any defense or indemnification.

An insured has coverage for third-party property damage, but insists they are not responsible for a claimant’s allegations. Q: Can the insured refuse to submit the claim to their carrier and advise the claimant to file with their own carrier or pursue legal action? Do they have the right to not file a claim? Response 1: Yes, they have the right to deny reporting, but they forfeit coverage if a claim follows. The policy has a condition requiring “prompt notification of a claim” and “cooperation” with the insurer. Response 2: There are actually two situations here: 1. If the insured has a claim and doesn’t report it, that’s their choice, but they have to deal with the consequences— including potential denial of coverage. 2. If the insured tells the agent, the agent has a duty to report it to the carrier. Response 3: Is the insured willing to be responsible for any third-party damages when the carrier denies a subsequent claim for “failure to report” under the terms of the policy? As an agent for the company, you have separate duties to inform the carrier regarding any information you possess related the risk. Failure to report known “...facts, circumstances or 34

Response 4: A better question might be, does an agent have the right to withhold this information from the carrier? I think not.

In addition, as a licensed insurance agency, you might be obligated under your state’s insurance code, your agency contract or both to report all claims to the carrier. If you don’t, be prepared for an E&O claim. Response 7: You have to read the policy conditions. I assume they read similarly to most policies, which state: General Conditions 2. Duties in the Event of Occurrence, Offense, Claim or Suit a. You must see to it that we are notified as soon as practicable of an occurrence or offense which may result in a claim. That means the insured must report all matters which may result in a claim. If they fail to do so, they’re in violation of the policy conditions, and the carrier could deny the claim should it turn into a mess in the future. Carriers don’t just hand over money to claimants. If the insured isn’t legally obligated to pay for the property damage, the insurance carrier isn’t going to pay the claim. The insured needs to report this to the carrier.

Response 8: Yes, the insured has the right to not turn in a claim. Of course, they’d be in violation of the policy conditions and therefore forfeit coverage or defense in the event of a claim or suit against them. Remember, the insured does not determine liability. The carrier or court does. And if you are aware of a liability situation, you are obligated as a representative of the carrier to report it. Response 9: Of course that’s their right. But if they violate the loss reporting provisions of the policy, the insurer may use that as grounds for refusal of coverage if the matter goes south later. Response 10: Nobody can force an insured to tell their insurance company about a thirdparty claim, but if they don’t, they may find themselves funding their own defense and settlement. Of course, they are free to tell their insurer their thoughts regarding the

claim and provide any support for their view that it’s fraudulent. So while they’re free to do or not do whatever they want, in my view, it would be very foolish not to involve their insurance coverage in this a situation. Response 11: This isn’t your decision, nor is it the insured’s. By taking this matter into your own hands, you don’t allow the carrier to determine or offer a defense for the allegations. Submit the claim and allow the carrier to investigate. Remember: Time constraints apply to reporting of a claim. Response 12: Almost all policies require the insured to “promptly report all losses.” That does not mean “losses they want to report.” Also, if the agency is aware of a loss like this, the contract they signed with the carrier probably requires the agency to report the loss. 35

Helen Collins hcollins@viaa.org

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Feature Article Claims Happen Check and Then Double Check The Real World: Martha is a CSR with a rather large agency that writes business in four states. She’d been in the insurance business for about five years and was starting to think of herself as a more seasoned professional. Martha worked closely with Dan who was one of the agency’s top producers. Dan often went to Martha for help on accounts when he was swamped with submissions and preparing proposals. The accounts Martha worked on varied in size and type.

One day Martha received a phone call from one of the agency’s customers, a local accounting firm. They were inquiring why their renewal premium had nearly doubled from the previous year. Martha had just delivered their renewal and told them she would check with Dan as to the reason for the premium increase. Dan felt renewing carrier was no longer competitive for this class of business, and asked her to get a quote from another company. To everyone’s 40

surprise, and the customer’s delight, she was able to get a quote with another carrier for about the same as they had paid the prior year. When she sent the quote to the customer, Martha’s letter indicated that “the coverage was nearly identical” to the expiring policy and that there were only one or two differences. She did not indicate what they were. Since she was changing carriers, she also sent out applications to the customer to have them complete and update them, based on the agency’s files. The new policy was received and was mailed to the customer. The cover letter indicated that Martha would be servicing their account and that she was “very familiar with their account”.

When the customer called to inquire about their renewal premium, which was much higher than the previous year, Martha was correct in seeking the producer’s input. This is a perfect example how errors can occur when remarketing coverage. Although she was able to get a quote at a lower price from another carrier, she did not spend the necessary time comparing the coverage provided by each company and sharing the specifics in writing with the insured.

Did they live happily ever after?

Live and Learn

The underlying injury to the pedestrian, luckily, was not as serious as it could have been. The injured person did, however, require plastic surgery and ongoing physical therapy. The account firm was facing a $1,000,000 lawsuit, without benefit of insurance coverage. They sued the agency for their loss. The agency’s E&O carrier paid $950,000 on behalf of the agency. The agency was responsible to pay its $50,000 deductible to the agency firm. The accounting firm did remain a customer of the agency.

If Martha had taken the time to compare coverage, she likely would have noticed that the new policy did not include non-owned auto coverage—crucial for an accounting firm with employees visiting clients using their own automobiles. The coverage was available from the new carrier, but for an additional premium. Steps should have been taken to offer the coverage to the customer, and if refused, document the customers declination in writing in the file..

The letter from Martha was ultimately used to demonstrate that the customer had been misled about the new quote (“the coverage is nearly identical”) and qualifications (“she is very familiar with your account”). The defense was that the customer should have compared the coverage and discovered the difference—the court did not agree.

Two weeks following the receipt of their new policy, the customer called to advise that one of their employees, using his own vehicle on company business, had struck a pedestrian. The claim was turned in to the insurance company, but was quickly denied due to the fact that non-owned auto coverage was not provided. Sometimes good things turn bad! What are the issues? 41

HELP WANTED

Experienced Commercial Lines Customer Service Representative Manage small, medium, and large commercial insurance accounts in mid-sized independent insurance agency. Position consists of primary day-to-day point of contact with customers and liaison between the client, carrier and sales producer. Brief Job Description: • Professional and prompt customer service including phone, email, and walk-in inquiries on new and existing client accounts. • Coordinate policy changes, receive and process new claims, and assist as needed on existing claims. • Audit review and processing including audit dispute resolutions. • Handling and processing of surety bond requests including bid, payment, and performance bonds. • Keep precise records of customer interactions and transactions, recording details of inquiries, concerns, and comments, as well as actions taken in the agency management system (AMS 360). • Receive direction from carriers and sales producers to assist in project and/or proposal delivery, policy changes, requests for additional information.

Calendar: viaa.org/Education/Pages Webinars: iiavt.aben.tv/

• Market all lines of coverage for new and renewal commercial risks including additional lines of coverage. This includes the creation

of submissions, preparation of proposals, binding of coverage with carriers, billing and review of policies. • Accompany producers to client meetings both in the agency office and at the client’s offsite location. • Perform other duties as needed. Minimum Qualifications: • Highly organized with excellent verbal and written communications skills. • Sharp attention to detail. • Demonstrated flexibility and adaptability to changing priorities, deadlines, and technology. • Thrives in both a team and independent working environment. • Ability to respectfully resolve problems with clients and insurance carriers. • Proven track record of organizing and prioritizing an ever changing work load. • Minimum three years commercial lines property and casualty experience. • Insurance property and casualty license required. • College degree preferred. Please forward resume and cover letter to: David Holton, CIC, The Essex Agency Inc, PO Box 239, Essex Jct VT 05453 davidholton@essexagency.com 43

HELP WANTED

Granite

Personal Lines Insurance Agent The Crowley Agency has been in business since 1947 providing excellent service and products to our many loyal customers. We currently have an open position for a licensed personal lines agent with the opportunity to grow into commercial lines. The ideal candidate would be personable, possess excellent communication skills and really enjoy helping people. This is a full time postion with office hours and basic computer skills are required. We offer competeive salary, commission & benefits based on experience and qualifications. Please send your resume to Gail McKenna at gailm@crowley agency.com For more details regarding our products and the companies that we represent, please visit our website: CrowleyAgency.com

Recognized in 2016 and 2017 as one of the Best Places to Work in Vermont, The Richards Group is an independent, full-service insurance and financial services agency who has been serving the communities of the tri-state region since 1867. We are always looking for highly motivated individuals who have excellent customer service and relationship building skills. The Richards Group offers a competitive salary commensurate with experience as well as a comprehensive benefits package. We are actively recruiting for the following positions: • Accountant, Brattleboro

Maple

• Commercial Lines Department Manager, Brattleboro

AmTrust North America, Inc.

• Commercial Lines Sales Assistant, Brattleboro

Travelers

• Commercial Lines Sales Producer, Rutland

• Commercial Lines Account Manager, Middlebury

Champlain Ethan Allen

Berkshire Hathaway GUARD CNA

• Personal Lines Account Manager, Middlebury

Hanover Insurance Group

Meadowbrook TPA Associates

• Personal Lines Account Manager, Ludlow

Imperial PFS

New England Excess Exchange, LTD

MAPFRE|USA

Main Street America

MEMIC

Johnson & Johnson

• Employee Benefits Account Manager, Rutland For job description and requirement please visit https://therichardsgrp.com/about/careers/ Submit Cover Letter and Resume to jobs@therichardsgrp.com 44

Mt Mansfield

Patriot Insurance Company