GREEN MOUNTAIN AGENT A PUBLICATION OF VERMONT INSURANCE AGENTS ASSOCIATION
MAY 2017
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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.
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In This Issue: May 2017 4 Message from the President 7 On the Hill
600 Blair Park Road Suite 100 Williston, VT 05495 Phone: 802-229-5884 Fax: 802-876-7912 www.viaa.org VIAA Officers President Peter Richards Vice President Erin Odell Secretary/Treasurer Paul Plunkett IIABA & PIA State National Director Ron Bixby
Directors
9 Under the Dome
Features 13 How to Effectively Onboard New Producers 17 Young Agents Corner 20 Consumer Reports and Auto Insurance 24 Is 2017 the Dawn of a ‘New World’ for Flood Insurance 28 Sales Success: Swing the Bat 32 E&O Corner
News 37 Acuity Insurance 37 Concord Group Insurance
Chip Ams
Help Wanted
Daniel Rodcliff Alan Kinney
Staff Executive Director Mary Eversole meversole@viaa.org
GMA Publication Design LONDONmiddlebury londonmiddlebury.com
40 NFP 42 Crowley Insurance Agency 42 American Church Group
In Memoriam 44 Dayle “Annie” Smedy
Message from the President Political Spring
usual with our clients until this issue is resolved. We will be back at it next year. The House did approve the expansion of Mental Health Workers’ Compensation Benefits. We do agree that addressing mental health issues in the work place is important. However, this bill, as written, is too broad and will create significant impacts to rates and markets. It is now in the Senate and we continue to advocate for significant changes. We applaud our members and the Young Agents Committee for responding to our action alerts on these important issues. While the committee votes may not have gone our way, we were heard and our concerns were discussed by decision makers.
Pete Richards, VIAA President
When the ice is out of the lake it’s a sure sign of spring in Vermont. Another sign of spring is the activity at the legislature as the session comes to an end. VIAA has been very active in Montpelier clarifying the definition of Independent Contractors and advocating against a change in the workers’ compensation law allowing presumption of compensability for post-traumatic stress disorder. Unfortunately, the Independent Contractor issue did not make it out of Committee this year. The House Commerce and Economic Development Committee determined that there was not consensus on bill language with stakeholders. It will be business as 4
VIAA will be sending a group to the Big “I” Legislative Conference this month including many Young Agents. They will be meeting with our congressional delegation and advocating for federal legislation, such as flood and crop insurance, that directly affects the livelihood of Vermont’s Independent Agents. Tax reform and other issues will be discussed. It’s a good time to remind our members to donate to InsurPac. What is InsurPac? InsurPac raises money to contribute to candidates running for federal office, increases agent visibility on Capitol Hill and empowering members to participate in the political process. It protects our commissions and our livelihoods. The VIAA Board of Directors has set a stretch goal of $8800 for InsurPac this year. We hope that you will help us meet that goal. There is more information in this issue about what InsurPac does for Vermont’s Independent Agents. A reasonable investment today in InsurPac helps protect your bottom line tomorrow.
5
On the Hill
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property & casualty (P&C), retirement, and This week, the Big “I” recommended changes individual insurance and wealth management solutions is currently seeking an fiduciary experienced to the Department of Labor’s (DOL) Lines Producer advanceconflict his or rule—aPersonal federal regulation that to tightens her rules careerunder as a Commercial Lines Producer of interest the Employee Retirement its SouthAct Burlington This position IncomeinSecurity (ERISA)office. and requires insuris responsible for generating new sales for ance agents and brokers who give guidance about Commercial Lines policies and requires certain all retirement investments, including selling the ability to work closely with clients, certain annuities, to adhere to a fiduciary standard customer service representatives, producers, of care. management, and insurance carriers. The The rule wasenvironment originally scheduled to start work is professional andtaking very supportive. ideal candidate should have effect on April 10. The However, earlier this month, excellent interpersonal skills, {2+} years of the DOL formally delayed the first applicability experience, and ability to adapt to emerging date until June 9. The delay was a response to a technology. They will be supported with memorandum President Trump issued requestlines training andthe mentoring ing thatcommercial the DOL further analyze potentialfor sales calls, proposals and impactsprospect/planning, of the rule to “determine whether it may education. A property and casualty license is adversely affect the ability of Americans to gain required. NFP offers a highly competitive access to retirement information and financial compensation and benefits package.
advice.”
In response to a request for comment on the rule, the Big “I” submitted a comment letter asking the DOL to further delay the rule. The letter also suggests that the DOL update the economic impact analysis on the rule to take into account the value of personalized retirement advice, and recommendssend necessary changes Please your resume to: to the rule such as broader education, Dan Rodliff referral and marketing exemptions. Vice NFP P&C It isPresident, unclear whether the DOL will further delay
PO 2243 theBox June 9 applicability date, or when the agency South Burlington, VT 05407 will finish reviewing the rule. However, the DOL
has indicated it should complete its review before Or the end of the year. Following the review, should Email: dan.rodliff @nfp.com
the DOL determine that the rule will adversely impact retirement savers, it must publish a notice to rescind or amend the rule as necessary. Of course, the DOL may also decide that the rule is sufficient as is and not amend the rule at all. In the meantime, Big “I” members should check with any financial institutions they work with regarding what approach that firm will take to complying with the rule. Jennifer Webb is Big “I” federal government affairs counsel.
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Under the Dome:
Skirmishes, but not Warfare, as Adjournment Nears Legislative Update By John Hollar VIAA Lobbyist Downs Rachlin Martin, Director, Government & Public Affairs Team
The final weeks of the session are always filled with minor drama and conflicts that are both large and small. But even with adjournment likely on May 6, the level of discord inside the Statehouse has been relatively mild. That’s particularly surprising given the heavily Democratic makeup of the legislature and a Republican serving on the fifth floor. The big issues that have dominated the adjournment process in recent years have been set aside. The Democratic legislature has endorsed, albeit reluctantly, the governor’s call for modest spending growth and no new taxes. Instead, lawmakers are positioning themselves on a handful of other issues, most of which are either certain to pass or certain to die. The administration’s proposal for a new $35 million housing bond falls in the “certain to pass” category. But the plan relies on an appropriation of $1 million, and lawmakers early on rejected Scott’s plan to raise the money. Given the budget squeeze, Democrats have been loathe to cut other programs to pay for it while also giving the Scott Administration a major victory. In a positive turnabout from recent weeks, the administration and legislative leaders have been negotiating to end the impasse. An administration plan to close a state prison was a nonstarter for legislators, and another proposal floated recently – to cut $1 million from the state’s energy efficiency programs – is also likely to be
dismissed. Housing, however, is widely recognized as a major statewide problem, and Democrats almost certainly won’t turn their backs on the housing advocates who make up some of their strongest supporters. One issue that continues to divide legislators is how (or whether) to clarify the definition of “independent contractor” under Vermont’s workers’ compensation laws. The House Commerce Committee spent weeks working on the issue – as it has for each of the last four legislative sessions – to no avail. Committee Chair Bill Botzow, D-Pownal, recently signaled his intent to abandon further work on the issue, but a handful of committee members continue to push for a vote on a proposal that has the support of organized labor, but not agents or the business community. A bill that has does have widespread and bipartisan support is H.197, House-passed legislation that would expand workers’ compensation benefits for emergency responders. The bill creates a presumption that PTSD claims by emergency responders are work related. The bill also makes it easier for all employees to file mental health claims of any kind. Workers’ Compensation Division Director Steve Monahan testified before a Senate Committee last week, saying that “if the bill is not limited to first responders I’m not sure we can support it.” That was not quite a veto threat, and it was almost certainly not sufficient to convince a majority of senators not to support the bill. VIAA has strongly opposed H.197, but insurance organizations have been unable to estimate the impact of the bill on workers’ compensation premiums. That is the likely reason that business groups have not made opposition of the bill a priority. 9
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How to Effectively Onboard New Producers New producers face a dualchallenge when onboarding to their employer – absorbing the massive range of information about their new employer and gaining a clear understanding and appreciation for their new working environment. The solution is a comprehensive and disciplined onboarding experience. According to a Brandon Hall Group 2015 report, organizations with a strong onboarding process improve new hire retention by 82% and productivity by over 70%.
• Identify all critical knowledge elements the producer must acquire. • Register all operational elements they must understand and execute. • Document all critical background and historical contexts they need for efficient and effective performance. At VIAA we offer on-demand, interactive, online training for new hires you can build into your onboarding plan. From Personal and Commercial Lines Basics, important business skills like perfecting an elevator pitch to proper email communication, and more. Check out our online portal for a full list of course offerings. We even have courses for the manager, including information on where to find post jobs, how to effectively screen candidates in today’s talent pool, and coaching tips.
Acquiring a full orientation to the agency is essential for the new employee to be fully assimilated to the company, and ultimately to their success as a representative of the firm. Most new hire orientations are limited to the agency’s history, organizational chart and management team, brief descriptions of the key staff, the agency’s business units and an introduction to their department. Follow these tips to effectively onboard your new employees: Develop a Formal Plan Build a comprehensive, organized onboarding plan and timeline for the new hire. The onboarding plan should:
View the entire onboarding article in IA Magazine Here: http://www.iamagazine. com/magazine/read/2017/04/03/ how-to-match-a-new-hire’s-skillswith-your-agency’s-priorities 13
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What: Quarterly Meeting When: May 25, 2017 Where: VIAA, 600 Blair Park Road, #100, Williston, VT Time: Noon – 2:30 pm Check your in-box for a meeting invite! Questions? Brady Hecht brady.hecht@fmins.com
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Consumer Reports and Auto Insurance By Bill Wilson
Not long ago, Tim Wahl, a Missouri agent sent me a copy of a recent Consumer Reports article on how to save money on car insurance. Oh joy, yet another article on how to save money on car insurance by someone who knows pretty much nothing about insurance. During my 17+ years with the Big “I,” I did a lot of media interviews. I would always cringe when our communications department would ask me to talk to a writer doing an article about how to save money on car insurance. As if we need another article to join the 15,200,000+ articles that already exist. And they all provide the same advice.
the Nationwide policy provide superior coverage and/or claims service? I don’t know, but I do know that, unless you consider such differences, you can’t say that the alleged $1,900 savings is worth it. It might be for some people but not for others. And this recommendation doesn’t take into account that there could be other insurers with far better coverage in the same price range. As I began to write this article, I got an email from Tim Dodge at IIABNY. A member agent’s insured borrowed a dealer’s car while her car was being repaired. She had an accident damaging the auto. ISO’s PAP Part D insuring agreement says: “We will pay for direct and accidental loss to ‘your covered auto’ or any ‘non-owned auto’, including their equipment, minus any applicable deductible shown in the Declarations.”
And they all (pretty much) say NOTHING about the differences in coverage between policies or the claims practices of the carriers. So, why is this? My guess is that stating the truth, that buying insurance is not simply a matter of few tips or tricks, lessens the value of their articles. The reality is that articles of this type are dangerous and a disservice to consumers. This ignorant, simple-minded approach jeopardizes the financial solvency of American families. For example, the article cited above says: “Shopping around pays, too. In California, a driver combining homeowners and auto policies could save about $1,900, on average, by signing up with Geico vs. Nationwide.” Is the coverage in both policies identical or does 20
While ISO’s own policy has an excess Other Insurance clause that may be problematic (see this blog post), her policy was not an ISO form. Her policy says:
“We will pay for direct and accidental loss to your covered auto, including its equipment, minus any applicable deductible shown in the Declarations. Your covered auto does not include any vehicle while used as a temporary substitute for a vehicle you own which is out of normal use because of its breakdown, repair, servicing, loss or destruction.”
price. So, they focus their entire attention, and that of their readers, on how to reduce that price, regardless of whether the coverage itself might also be impaired. You will find the same kind of irresponsible journalism in many otherwise reputable publications.
Notice the policy language differences? Aside from not covering auto equipment (e.g., those $800 snow tires now in your garage), there is only physical damage coverage for declared autos, similar to some motorcycle and boat policies. Not providing coverage for nonowned autos is a HUGE coverage gap. This is something these types of articles never mention because the authors don’t understand it and view auto insurance as a commodity where the only difference is
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.
Are you trying to reach Vermont’s Independent agents? 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/ 600 Blair Park Road/Suite 100/Williston, VT 05495
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Are you taking advantage of your membership? Big “I” Professional Liability
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Big “I” Markets
www.bigimarkets.com 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.independentagent.com/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” Retirement
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Big “I” Employee Benefits
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Is 2017 the Dawn of a ‘New World’ for Flood Insurance By Jacquelyn Connelly
Although flood insurance is in for a blissfully quiet April with few major NFIP changes, the program is set to expire in just six months. What’s next for flood insurance beyond the short-term reauthorization timeframe? As massive debt continues to loom heavy over the NFIP, a swell of private markets is targeting flood business—and sophisticated mapping technology continues to make it easier for the entire insurance industry to get its arms around flood risk.
“For the first time, I can really say the industry has a lot of innovation that’s going on,” says Keith Brown, chairman of Aon National Flood Services. “The tools out there to evaluate risk, private products, the NFIFP itself—we’re looking at an exciting time for flood insurance.” Private Plays In 2016, five flood-related events exceeded $1 billion in losses each, according to CoreLogic’s Natural Hazard Risk Summary and Analysis—and despite another relatively light year for large catastrophes, last year’s flood losses totaled $17 billion, which is six times greater than overall flood damage in 2015. “Given the increase in the flood losses we’re seeing, the NFIP is not sustainable in its current state,” says Howard Botts, chief scientist at CoreLogic. “We’re seeing a tremendous push in every discussion we’ve had to try to push more and more of the flood risk back into the private insurance market.” Brown adds that flood insurance has only 4-6% penetration among homes that purchase homeowners coverage, when “really it should probably be more like 15-20%,” he says. “It’s a big growth market all the way across the board, and private insurers are starting to really look at this as a greenfield space where they haven’t looked at in that way before.” 24
As the NFIP has been forced to raise premiums and tack on fees, “it makes the price point so high that private options out there are in many cases better and cheaper, and easier too because they don’t have as many hoops to go through,” Brown explains. “There are more and more private product offerings out there, and it’s only going to get more and more diverse in the coming years.” But what happens to the NFIP if policyholders begin to swarm the private marketplace? “There are those who are concerned that a strong private market cannibalizes the NFIP,” Brown says. “The NFIP itself helps fund the mapping program, helps fund some of the operations aspects of the program and some of the grants,” agrees Bruce Bender, specialist in outreach and risk communication services and a national consultant for FEMA’s Risk MAP effort and recent FloodSmart marketing campaign. “The private market right now uses FEMA maps and NFIP rates. If you take that away, if the NFIP shrinks, you’re making a direct impact on all of that.” Bender says some organizations, such as the Association of State Floodplain Managers, are trying to figure out whether it’s possible to assess a fee on a private policy “to help continue to fund all of those things.” But the elephant in the room is whether the private market will cherry pick lower-risk properties, leaving the “worst of the worst” to the NFIP. Bender raises the question: “Does Congress want the NFIP to become a market of last choice? If so, you’re going to have really high rates in the NFIP.” But with a “flurry” of private product releases in just the past two years—most of which provide discounted NFIP rates and do not
include any extra policy fees beyond those for excess & surplus lines—comes a number of private insurers who are going after higher-risk zones or even negatively rated buildings, Bender says: “So the worry was that the private market would target the low fruit, but now we’re seeing otherwise.”
with more appetite for taking on the risk, understanding the risk and managing that risk.”
Why? How? “The way the available capital is in the space right now, private markets are willing to get into some of the higher-risk areas,” Brown explains.
Although mapping technology has already become increasingly sophisticated, incorporating laser-based LiDAR and mountains of granular data on elevation, rainfall, real-time stream gauging and more, most flood maps are currently based on historic data. And as weather patterns continue to change drastically year to year, that’s a problem for flood map accuracy.
And that means opportunity will be abundant if agents decide to start offering private market options to flood insurance prospects and clients. “We’ll have to stay tuned to see
“The existing flood mapping program uses engineering-based studies that do a very, very detailed analysis of historic streamflow data,” Botts says. Although he believes the maps “do
what the September reauthorization’s going to look like,” Botts says. “But I think there will be more and more opportunities for independent agents to write it in the future as we move into a new world of flood insurance.”
a good job in what they were intended to do,” those intentions are nearly half a century old.
Mapping Technology As private markets increase their presence in the flood insurance space, “they also get more and more interested in quantifying the risk they’re taking on, and therefore investing in the both predictive models and historical models,” Brown says. “Those models are going to get better as we go forward
“When the original NFIP was written, the goal was to define properties that are at risk, and to try to mitigate that risk through floodplain management, zoning and a variety of other things,” Botts explains. “But people have figured out how to work around those rules, or in some cases real-estate interests have won out over planning activities. Whatever the reasons, the number of people at risk has actually become greater rather than less.” 25
Now, more than half of Americans live in a coastal county, Botts says—“which means we’ve actually increased the level of risk,” he explains. “As we pave over more surfaces, that certainly that adds to the risk.” Plus, approximately 50% of all flood damage currently results from very intense rainfall events or flash flooding, “which we really didn’t contemplate in the old days when we were primarily looking at river flooding,” Botts points out. Moving forward, Bender says FEMA is considering implementing something called Rating 2.0, which would provide more representative insurance rates from one side of a high-risk flood zone to the other. Consider a house located in a riverine Zone A that stretches out a mile from the center of the river before becoming Zone X. “That house right next to that Zone A/Zone X line is getting the same rate as the house right next to the river,” Bender points out. “If you cross over that line, the house next door in Zone X gets a Preferred Risk Policy for $400, and just across the line in Zone A is a house that has to pay $1,400, which is what the house by the river’s paying too. But the risk did not change that significantly.”
CoreLogic, for example, assesses an individual structure’s footprint based on property location, elevation and risk of flood, flash flood, riverine, storm surge and more. Then, it calculates a risk score on a 0-100 scale, where anything above 60 constitutes a high-risk property. The technology can also complete a full probabilistic analysis that generates average annual loss for that property—and flows directly into an insurance rating engine. “These are the kinds of tools the industry is starting to deploy more and more, so that individual agents can be more educated as to what individual property risks are,” Botts explains. “If a house is one foot outside a flood zone, they could steer an individual by saying, ‘Hey, you’re not free of flood risk, but you get a significantly reduced NFIP policy because you’re not in the 100-year flood zone.’” Having that conversation “really drives the value of going to an independent agent as opposed to online rating,” Botts says. “As we expect agents to be more and more informative, I’m hoping people start to better understand their true risk profile.”
And FEMA isn’t the only entity working on improving flood mapping technology. “You’ve got several companies that have modeling out there,” Bender says. “Eventually, you could see companies breaking away from the FEMA maps and coming up with their own rating.” “We’re starting to put more tools into the hands of individual agents or companies, where they can really look at risk and price that risk in a way that really reflects what the true cost is,” Botts agrees. “A lot of companies we work with are going to start making those available to their agents.” 26
Jacquelyn Connelly is IA senior editor.
Sales Success: Less is More By Phil Schuman
“Say more with less.” This great advice that I was given many years ago has helped in all areas of the sales process. From elevator pitches, value propositions, leaving voicemails, sending emails and giving presentations, we think the more we say the greater the potential of winning the prospect over with a wealth of information. But in reality all we’re doing is greatly increasing the chance of the prospect tuning out and ultimately losing the sale. When we are nervous or trying to impress the natural instinct is to talk too much and fill any silences with words. But listen to any great speaker and you’ll hear a very measured tone where each word counts, where pauses play as important a role as the words themselves and the presentation ends with the audience wanting more. As a result of this controlled yet natural tone, the presenter comes across as confident, knowledgeable and persuasive – all necessary attributes for a successful salesperson to possess. This principle is true in all aspects of the salesperson’s life. Emails should be kept short. 65% of emails are opened on a smartphone and if it’s too long the chances are it will never be read. People are busy and we need the best shot at capturing their attention. Prospects receive an average of 88 business related emails per day. An average 28
person’s attention span lasts for 8.25 seconds with emails and 43% of people delete or stop reading within 30 seconds of opening them. So where possible keep your emails to three short paragraphs with a succinct ask or call to action at the end. Add as few attachments or links as possible. And most importantly, before you hit send go back over the email and take out any words or sentences that aren’t necessary. It’s amazing how much filler you’ll find and how much more the email packs a punch once it’s condensed, with added meaning and impact. Become a champion of condensation! Similarly voicemails should be kept as short as possible – 20 seconds maximum. Be concise, compelling and clear. A great question to ask yourself is: “Would I return that voicemail?” Every interaction with your prospects and customers should be measured and thought through before they occur, pre-planning for any conceivable direction that a conversation might take. Remember never to use company jargon and acronyms that are so familiar to you but could leave the prospect baffled! It’s amazing how all too often this happens. Apply the “less is more” rule anytime you’re in front of potential customers. Too frequently when salespeople are on the phone scheduling appointments they’ll be so excited to have the prospect on the phone they’ll launch into the
sales presentation itself. Remember your task on the phone is not to close the sale but simply to sell the appointment. And once you’ve made your presentation at the meeting and won the business, the “less is more” principle still holds true. When the agreement is signed the best thing you can do is say thank you, agree on follow up or next steps, and then leave. All you can do by staying and talking further is compromise the sale. Perhaps Leonardo Da Vinci says it best: “Simplicity is the ultimate sophistication.” Your words when selling are Da Vinci’s paintbrushes! I will now go back over this article and take out any redundant words or phrases, keeping the message concise. To quote Sir Winston
Churchill when giving advice on public speaking: ”Stand up, speak up, and then shut up!”
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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www.iiaba.net/eohappens
VIAS is a subsidiary of Vermont Insurance Agents Association viaa.org
Read the Policy You’re Selling By Tim Dodge, IIABNY “Insurance professionals should seek continually to maintain and improve their professional knowledge, skills, and competence.” (The Canons, Rules, and Guidelines of the CPCU Code of Professional Conduct, Canon 2) “Insurance professionals should be diligent in the performance of their occupational duties and should continually strive to improve the functioning of the insurance mechanism.” (Canon 4) “Last Sunday morning there was a 24-inch water main break on the road where my insured is located. The water main was only 20 yards from the insured. We have them written under a Businessowners policy that has the broadest coverages available. Yesterday, the adjuster indicated, ‘the claim might be not covered because of surface water.’ However, when we Google what is surface water, it‘s quite vague. Therefore, it has been difficult to explain to our client that the water main damage most likely will not be covered by the comprehensive policy we tailored for them. I hope you might have other similar claims that you recall, or perhaps there is some case law(s) or bulletins which you might be able to research.” (Email, sent with no citations or attachments of policy forms, from the president of an agency outside New York in the eastern U.S.) “I write a property policy using ISO form CP 00 10 06 07. The building definition includes buildings under construction for materials, equipment, supplies, etc. The policy also has the special causes of loss form CP 10 30 06 07. Question: If there is a loss to building materials due to theft, would there or would there not be coverage?” (Email from another anonymous producer in a Midwestern state) 32
“Is the trigger for property damage in a Commercial General Liability policy the date the product was manufactured or the date the product was put to use? What is the interpretation of ‘occurrence’?” (Email from a CPCU in another Midwestern state) What do these three questions have in common? The producers could have found the answers quite easily by reading the contracts that they were selling. In the first question, the agency president claimed that the insured had “the broadest coverages available,” yet the news about a surface water exclusion apparently came as a surprise. The water damage exclusion in property insurance policies dates back decades. The individual did not know the product the agency had sold. The second questioner knew what the coverage forms were. However, rather than reading the forms to determine whether coverage would apply to a theft of building materials, the questioner asked someone else (not me) to do it. The third questioner, who is actually bound by the ethics canons cited above, and who has taken the intensive CPCU courses and passed the exams, apparently did not review the CGL policy, did not know that coverage under that form has always been triggered on the date the injury or damage occurs, and in fact did not check the form’s definition of the word “occurrence.” All of these individuals hold licenses issued by their respective state insurance regulators. They have been granted legal authority to give other people advice about insurance decisions. They are permitted to accept commission payments for the sale of contracts potentially involving tens or hundreds of thousands or even millions of dollars. No doubt some of them prominently use the Trusted
Choice® logo in their advertising. And yet, they do not know what is in the contracts they are selling. Worse, they don’t display any inclination to find out on their own. I wish I could tell you that these questions are unique, but they are not. It is very common for producers to ask me or my peers around the country, “Does a [fill in the blank] policy cover [a particular loss]?” That question immediately implies that all policies of that type are the same, that there’s no difference between ISO, GEICO, Progressive or Travelers auto policies. That a Chubb umbrella is the same as one issued by The Hartford. That a GL policy issued by Scottsdale says the same thing that one issued by CNA says. That is demonstrably incorrect. As evidence, I will cite my own previous blog posts: • An ISO homeowners policy covers
dwellings that house up to four families. At least one insurer’s policy does not cover three- and four-family dwellings. • A theft claim was not covered because two words, found in ISO homeowners policies, were not in the one a Texas man bought. • The afore-mentioned ISO Causes of Loss – Special Form contains a five-word phrase that would make the difference between coverage and no coverage for the owner of heavy equipment if the floor collapses. His policy will not provide the coverage. • A commercial auto insurer’s policy actually makes the application part of the legal agreement between it and the insured. In one part of that application, the insured acknowledges a duty to notify the insurer of new drivers. What happens if the person who normally handles that is on vacation or out sick when a new driver gets hired?
Here are the facts:
• Insurance policy forms and endorsements for the same line of coverage but issued by different insurers have significant differences. • Insurance producers offer these different policy forms and endorsements for sale to their clients.
• Leaving aside what the courts say about a producer’s legal duty to insurance buyers, those buyers rely on producers to know what those forms and endorsements say. • Producers who do not know what the forms and endorsements say cannot give sound advice to their clients.
When people receive bad advice, they are more likely to make bad decisions. They may make bad decisions even with good advice; bad advice just makes a bad outcome more likely. When they make bad decisions and eventually suffer uninsured losses, people suffer. Not just the insured – innocent third-party claimants. In one case involving a New York State agency, the insured had a special events policy covering a rodeo. Actually, the insured received a certificate of coverage, not a complete policy. After the event ended, some bulls got loose. An average professional bull riders bull weighs between 1,600 and 1,700 pounds. It’s not hard to imagine that a bull after a rodeo is at best anxious and at worst frightened. These bulls injured several people before they were subdued. People who came out for an evening’s entertainment ended the night in hospitals. When they sued, the insured looked to his special events policy for coverage. This policy was obtained from an employee of a managing general agency, brokered to an employee of the retail agency, which was managed by a veteran agency principal. And before the loss occurred, none of them noticed that the policy excluded coverage for bodily injury or property damage caused by animals. A special events policy covering a rodeo did not cover injuries caused by animals, and nobody noticed. Please ponder that for a moment. Animals are kind of the stars of the show at rodeos. So, no coverage under the events policy, so the insured sues the agency. Trial
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court dismisses the lawsuit, insured appeals, and this time he wins. The agency couldn’t even cite the insured’s duty to read the policy as a defense, as there was no policy for the insured to read. He had only a certificate. The appellate court has sent the case back to the lower courts for a trial. I doubt the agency’s E&O carrier will let things get that far. The agency in question has not been an IIABNY member for well over a decade, so I don’t know who that carrier is. Did I mention that the injuries occurred in the summer of 2012, and the appellate court’s decision just came down four months ago? In the meantime, have the people injured by the bulls received anything? Only if the insured emptied his pockets. The guy is a logger by trade and puts on rodeos as a sideline. Something tells me he’s not independently wealthy. People enjoying a night out, injured by agitated animals who weigh almost as much as a car, and they probably have received no compensation for their injuries four years after the fact because three insurance professionals didn’t know what they were selling. I believe that product knowledge is an ethical issue. The stakes are too high, the consequences too severe, the potential financial loss is too great for we as insurance professionals to shrug, say the policies are all the same, and focus on whether we can get the premium down fifty bucks. Ignorantly selling someone the wrong product can and does harm people. It is one thing if a client ignores your suggestion and buys lower limits or skips the coverage altogether. People can’t be forced to buy high uninsured motorists limits or flood coverage. It’s another thing altogether when the clients are never given the chance to make that decision because they’ve been told that they have “the comprehensive policy we tailored for them,” to quote the email above about the water main break. 34
We are insurance professionals. We do what we do to make a living, yes, but we also do it to give people peace of mind so they can go on about their lives and businesses. We can’t do that unless we know what we are talking about. That means keeping copies of the insurance policy forms and reading them. Sometimes the words are indeed vague and subject to interpretation (personally, I find interpreting policy language to be the fun part – here’s a good example about some kayaks.) That’s when the conversation should start about what it all means. However, the starting point has to be opening a paper or electronic copy of a policy form, finding the relevant provision, and reading what it says. No one can commit all these forms to memory, but the key is to know where they are and where to look for the answers when questions come up. Sure, I can do that for you, Bill Wilson can do it, Chris Boggs can do it, and so can a lot of other people around this country who are smarter than I am. But I’m not the one who has to face the client, or answer a summons, or suffer a damaged reputation. I’m a guy blogging at a desk in Syracuse, and no one faces bankruptcy if I never get around to reading today’s email from Insurance Journal. But someone could face bankruptcy if an insurance producer sitting at a desk in Syracuse or San Francisco or San Antonio sells a policy to someone without knowing if it’s the right policy for that client. We are insurance professionals. We are Trusted Choice®, for crying out loud. Maybe we’re not all CPCU’s, but that doesn’t mean we shouldn’t meet the requirements of the CPCU canons at the beginning of this article. We have ethical obligations to the people we serve. We owe it to them. We owe it to our peers in this industry that has treated us so well. We owe it to ourselves. Read the policy. Tim Dodge, the Assistant Vice President of Research, at IIABNY. Tim is a self-proclaimed “Insurance Geek.”
FREE TURN OFF TEXTING DEMONSTRATIONS The Youth Safety Council of Vermont is now scheduling free Turn Off Texting demonstrations at Vermont high schools for the spring! Please feel welcome to reserve a date at http://www.yscvt.dreamhosters.com/request-a-tot-demo/ or, if you’re already familiar with the program, email Jim Lockridge at info@yscvt.org. The Youth Safety Council of Vermont’s Turn Off Texting demonstration raises awareness about the dangers of distracted driving by putting Vermont students behind the wheel of a golf cart to navigate a course ofcones while texting. The demonstration comes to your school free of charge thanks to a grant from the Governor’s Highway Safety Program and the support of our program sponsors.
For more about the program including photos and a video, visit YSCVT.org.
Helen Collins hcollins@viaa.org
Company News Acuity INSURANCE Wins “Workplaces That Care” Video Award
Auto-Insurance and Concord General Mutual Insurance Affiliation Approved
For the fourth year in a row, Acuity Insurance is the winner of the national video competition from Great Place to Work®. Previously called the “We Love Our Workplace” contest, the 2017 competition was titled “Workplaces that Care.” As the 2017 winner, Acuity earned $1,000 for the Conquer Cancer Foundation.
LANSING, MI / CONCORD, NH – Auto-Owners Insurance and Concord General Mutual Insurance announce that their affiliation has been approved effective April 1, 2017, by policyholders and all regulatory bodies.
In the 2017 contest, companies from across the country submitted a one-minute video demonstrating they truly care for their employees and go above and beyond to transform company into family. The winner was chosen based on the results of online voting. To view this video, along with all of Acuity’s other award-winning videos, visit www.acuity.com/acuityhasheart. Acuity, headquartered in Sheboygan, Wisconsin, is a property and casualty insurer that operates in 25 states, generates over $1.3 billion in revenue through 1,000 independent agencies, and manages $4 billion in assets. Named one of the top 10 large companies to work for in America, Acuity employs over 1,200 people. For more information, contact: Paul Miller, Manager - Communications Acuity Insurance Phone: 800.242.7666 Ext. 1143 Fax: 920.458.1618 paul.miller@acuity.com www.acuity.com
Auto-Owners is an A.M. Best A++ (Superior) rated multi-line property and casualty insurer, operating solely through independent agencies in 26 states. Auto-Owners also owns a life company and an excess & surplus lines company. Concord General Mutual Insurance is a leading property and casualty insurance provider through independent agencies in Vermont, Maine, New Hampshire and Massachusetts. “The combining of capabilities will allow us to expand our product and premium base and help support the Concord name in the (New England) region,” said Linda Day, Concord’s president and CEO. Jeff Harrold, Auto-Owners Insurance chairman and CEO, stated, “We are excited about combining the efforts of these two groups of companies to expand our geographic reach into New England with additional products and services. Adding Concord and its affiliates to the Auto-Owners family of companies will present tremendous synergies and opportunities for growth on a superior financial platform, providing increased value to agents, their customers and our companies.” 37
Calendar: viaa.org/Education/Pages Webinars: iiavt.aben.tv/
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HELP WANTED
PERSONAL LINES SERVICE Customer Service is the top priority of this position. Efficient servicing will be required in this position in order to maintain excellent customer relations. This position will coordinate the processing of personal lines new and renewal business.
• Maintain control on renewal expirations and binders.
Essential Duties & Responsibilities:
• Manage adding coverages to existing accounts.
• Manage & prepare quotations. • Complete and upload new business applications. • Manage new accounts in Agency Automation System • Respond to company memos or e-mail in timely manner. • Maintain positive relationships and keep direct communication with company underwriters and staff. • Keep informed and up to date on industry and company issues. • Improve/refine sales techniques through continuing education. • Maintain account files in accordance with established procedures. • Complete performance objectives as directed by the Manager. • Perform other specific duties as requested by the Manager. • Some processing on assigned accounts, including: daily mail, ordering of renewal or new coverage’s, invoicing, binders, company and/or client correspondence, suspense and follow-up, computer information input and client and/or policy information update.
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• Check policies, endorsements, and other policy documents for accuracy.
• Market, quoting, and placing new and renewal risks. Set up complete policy applications and/or specifications as required for new or renewal business in conjunction with clients’ needs and in conjunction with producer instructions. • Maintain Pipeline weekly with sold business. • Coordinate with accounting department in collecting premiums promptly or taking action in accordance with agency credit program. • Individual will also process any task as needed to relieve the loads of others in the department. Education/Experience/ Licenses/Certifications • High School diploma required; college degree preferred. • Three to five years in company or agency underwriting. • Agency experience preferred • Property/Casualty License required Submit Cover Letter and Resume to: Robin Bilodeau robin.bilodeau@nfp.com
You are Invited to our INSURANCE INDUSTRY MIXER May 25th, 2017 Join Insurance Professionals from across our region for an evening of networking. Thursday, May 25th, 2017 5:30 pm –8 pm The Essex, Vermont’s Culinary Resort & Spa 70 Essex Way, Essex Junction, VT
Door Prizes, Appetizers, Cash Bar, 50-50 Raffle and Hospitality Suite Hosted by:
Please make checks payable to CVAIP.
RSVP by 5/18/2017
$15 in advance, $20 at the door Name
CVAIP or IAIP Member (Y/N)
Business Name Amount Enclosed Please mail check and registration form to: Robin Faraone, c/o Hickok & Boardman Insurance, PO Box 1064 Burlington, VT 05402-1064
HELP WANTED
Personal Lines Insurance Agent Agency seeking Producers: competitve salary, company car, expense account, commission bonus and benefits. Prefer Agent in Boston area or near Vermont/New Hampshire border to specialize in churches and related ministries. Email LKiser@americanchurchgroup.com and include and contact information.
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
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In Memoriam were supportive in so many ways as she valiantly fought breast cancer over the past 10 years. Dayle had worked hard to support women and their families as they face breast cancer. One of the ways was her committee membership of Making Strides of Northern Vermont, which she helped fundraise thousands of dollars, an achievement that she was most proud of. Dayle was also a member of the Green Mountain Community Alliance Church in Duxbury. In her leisure time, she enjoyed following the Red Sox and Patriots as she waited for her true passion, the Boston Bruins. She is lovingly remembered for her love and devotion to her family and the joy she felt spending time with her daughter, Rachel.
BARRE TOWN - Dayle Ann Smedy, 59, known to her family as “Annie,” passed away in the comfort of her home and family, listening to her favorite music from the ‘60s and ‘70s, on Wednesday evening, March 29, 2017. Born in Burlington on March 21, 1958, she was the daughter of the late Wendell T. and Bernice (Robinson) Dolloff. On March 1, 1980, she married Kenneth D. Smedy in Montpelier. Dayle was a 1976 graduate of Harwood Union High School and then went on to have a long and successful career in the insurance business. Beginning her vocation at Denis, Ricker and Brown Inc. in Montpelier and then Hickok and Boardman Insurance Group in Stowe, Dayle has been employed for the past 18 years at Noyle W. Johnson Insurance in Montpelier where she assisted customers needing commercial insurance products. During her tenure there, she taught a variety of insurance classes and was a member of the National Association of Insurance Women. Her relationship with the Noyle Johnson Group extended far beyond employment; Dayle’s peers were like family and 44
Dayle is loved and mourned by her husband of 37 years, Kenneth Smedy, of Barre Town; their daughter, Rachel Manz and her husband, Matthew, of Jericho; her sister, Cheryl Quesnel and her husband, Wayne, of Lakeland, Florida; her brothers, Gary Dolloff and his wife, Janet, of Dade City, Florida, and Charles Dolloff and his companion, Marilyn Vanderhoof, of Port Henry, New York; as well as nieces, nephews, extended family and her beloved dogs, Zoey and Millie. A sister, Rosemary Nicholson, predeceased Dayle. The family would like to extend their sincere appreciation to Dr. David Ospina, Elaine Owen and their staff for the care, compassion and support shown to Dayle. Memorial services were held from the Green Mountain Community Alliance Church, 4987 Vermont Route 100, Duxbury VT 05676 on Monday, April 3, 2017, at 4 p.m. with a reception to follow at the church. Memorial gifts, in lieu of flowers, would be appreciated to the American Cancer Society (memo: 2017 Making Strides of Northern Vermont), 55 Day Lane, Williston, VT 05495 (www.makingstrideswalk.org/ northernvt).
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Mt Mansfield Maple AmTrust North America, Inc. Travelers
Champlain Ethan Allen
Berkshire Hathaway GUARD CNA
Hanover Insurance Group
Meadowbrook TPA Associates
Imperial PFS
New England Excess Exchange, LTD
MAPFRE|USA
Main Street America
MEMIC
Johnson & Johnson
Patriot Insurance Company