April 2016

I was astounded by the positive dialogue that we were able to have with our congressmen on bills that hit home for us, like flood insurance and regulatory reform.

As a lone citizen, it is easy to feel insignificant or overlooked in our political system, but there is strength in numbers.

After meeting with our local congressman and senators, it was easy to see that our presence and voice does make a difference .

IIABL STAFF

Important Agent Bills

4-7

Jeff Albright Chief Executive Officer jalbright@iiabl.com

Trusted Choice 8,000 Leads per Month

7-9

March IIABL Board Meeting Notes IIABL Goes to Washington

9-11 17-25

Francine Berendson Director of Communications & Events fberendson@iiabl.com Mike Edwards, CPCU, AAI Director of Education medwards65@aol.com

Kim Jackson Education & Membership kjackson@iiabl.com Karen Kuylen Director of Accounting kkuylen@iiabl.com

Commissioner’s Corner

13—17

Ask Mike

28—32

E. Lee Mowe Marketing Representative lmowe@iiabl.com

Rate & Rule Filings

29

Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com

IIABL Calendar

27

Jamie Newchurch Insurance Services jnewchurch@iiabl.com

IIABL Partners

34

IIABL Officers & Board

35

Lisa Young-Crooks Executive Assistant lyoung@iiabl.com

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Important Agent Bills Moving Through Legislature A number of bills adverse to the interests of independent agents and their customers have been killed in the insurance committees. We will not bore you here with a recitation of bills that died, but playing defense in the legislature is always the most important job!

Following are the remaining insurance bills of primary interest to IIABL members.

IIABL will continue to send weekly updates on the progress of these bills throughout the legislative session.

HB 280

Broadwater, Chris(R)

Provides with respect to group self-insurance funds for workers' compensation.

HB 280 would provide for greater financial regulatory oversight by the Louisiana Department of Insurance over workers’ compensation group selfinsurance funds. HB 280 is supported by the group self-insurance fund industry. The bill would assist independent agents and policyholders by improving the financial stability of WC-GSIFs. IIABL strongly supports HB 280.

HB 352

Huval, Mike(R)

Provides for the retention of certain insurance records by producers and adjusters.

HB 352 is an LDI bill which would require insurance agents to retain a long list of specific records for five years after policy expiration. The details of this bill are unworkable for agents. IIABL strongly opposes HB 352.

Continued page 6

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HB 476

Huval, Mike(R)

Specifies that insurance producers may not be required to provide certain information regarding insurance coverage.

HB 476 is an important bill to simplify the number and type of certificate of insurance forms that agents must complete, and eliminate the requirement of agents to provide interpretations of coverage on certificates of insurance. IIABL strongly supports HB 476.

HB 596

Huval, Mike(R)

Provides for notification and effectiveness of a material change in a contract between a health insurance issuer and a producer.

HB 596 would require health insurance companies to provide agents with a 90day advance written notice of changes in the terms of their agency agreement.

IIABL supports HB 596.

HB 663

Thibaut, Major(D)

Requires notice to a non-captive insurance producer prior to an insurance company terminating the producer's appointment.

HB 663 was introduced at the request of IIABL and would require insurance companies to provide independent agents with 180-day advance written notice before terminating the agency contract. There are exceptions for cause. This bill would give independent agents valuable time to find replacement markets and make arrangements to replace business after an agency termination. IIABL strongly supports HB 663.

HB 746

Thibaut, Major(D)

Provides for licensing and regulation of insurance consultants by the commissioner of insurance.

HB 746 was introduced at the request of IIABL and would license and regulate insurance consultants. This bill would eliminate many of the conflicts between insurance agents and insurance consultants. IIABL strongly supports HB 746.

Continued page 7

Louisiana Agent 6

HB 915

HB 932

HB 935

Huval, Mike(R)

Davis, Paula(R)

Hollis, Paul(R)

Provides relative to the sale of policies issued by the Louisiana Citizens Property Insurance Corporation.

HB 915 would limit the ability to write policies with LA Citizens to Louisiana resident agents, and would eliminate the ability of nonresident agents to write policies with LA Citizens. Louisiana agents are not permitted to write policies in neighboring state residual markets, and HB 915 would reciprocate. IIABL strongly supports HB 915.

Provides relative to certain exemptions from the continuing education requirements for producers.

HB 932 would reinstate the “grandfather exemption” to continuing education requirements for insurance producers, so that experienced agents over the age of 65 would no longer need continuing education. IIABL strongly supports HB 932.

Big I Agents Get 8,000 Referrals Per Month from TrustedChoice.com Louisiana Leads Increasing with Local SEO Program You NEED an online strategy for your agency.

What is yours?

TrustedChoice.com has grown to the point where over 300,000 consumers visit the site every month, and Big I members receive almost 8,000 qualified referrals each month.

Are you getting your share?

Building TrustedChoice.com has been a long slow process. We have made mistakes along the way. But we have learned a lot, and are finally “moving the needle” to provide Big I members with a meaningful online presence.

Most consumers prefer to buy their insurance from an agent. But most consumers shop their insurance, or look for an agent ONLINE.

Continued page 8

Provides relative to notice to policyholders of policy changes at renewal.

HB 935 would require insurance companies to provide policyholders with a written notice of material reductions of coverage on renewal policies. This bill would properly inform policyholders and provide agents with valuable protection from potential E&O claims by providing an appropriate notice of reductions of coverage. IIABL strongly supports HB 935.

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The problem for most Big I members is that they do not understand how or cannot afford to develop their own online presence so that consumers can find them online.

That is how TrustedChoice.com can help YOUR agency. By networking all Big I member agencies in one agency locator, and conducting extensive Search Engine Optimization (SEO), TrustedChoice.com can put Big I members on first page insurance searches.

When consumers search for insurance or insurance agents, TrustedChoice.com appears high on the list of search results. Then consumers can search for a Big I member in their area. 70%-80% of consumers who find Big I member agencies at TrustedChoice.com end up calling the agency for an insurance quote.

Other consumers end up on the agency website. And some complete the TrustedChoice.com consumer profile which is sent directly to the Big I member agency of their choice.

Over 300,000 consumers visit TrustedChoice.com every month, which results in almost 8,000 referrals to Big I member agencies every month.

IIABL is helping Louisiana Big I members get their fair share of TrustedChoice.com leads by funding Louisiana specific Search Engine Optimization (SEO). Here is how it works. IIABL provided funding so that TrustedChoice.com staff can write approximately 150 different web pages, each with a specific insurance search topic in cities throughout Louisiana, such as ‘Best Car Insurance Baton Rouge’, or ‘New Orleans Business Insurance ‘. When a consumer types that phrase into their search engine, that specific page will show up in the search results.

Over time, these Louisiana specific insurance search web pages will move up to page one of web searches. This will result in insurance buyers clicking the link, to learn the value of using an independent agent, and searching for Big I members in their area.

In the two months that Louisiana has been in the local SEO program, 325 Louisiana specific insurance search terms (also known as Keywords) have moved up to page one.

Another 200 Louisiana insurance search terms appear on page two and 250 on page Continued page 9

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three. As additional pages are created and the SEO program continues, more Louisiana specific insurance searches will appear on page one, resulting in more referrals to IIABL member agencies.

The IIABL / TrustedChoice.com Louisiana insurance Search Engine Optimization program has already providing increased visibility, visits and referrals to our IIABL member agencies.

To maximize the visibility of your agency on TrustedChoice.com, you need an Advantage Subscription, which will move your agency to the top of the agency search list and provide you with an expanded Agency Profile. If you haven’t signed up for your Advantage Subscription to TrustedChoice.com, you can sign up at www.agents.trustedchoice.com.

March IIABL Board Meeting Notes The IIABL Board of Directors met on March 11, 2016. Following are notes from the board meeting.

The first item of business was the review, discussion and approval of the July 1, 2016 – June 30, 2017 IIABL Financial Budget. IIABL Secretary-Treasurer, Neil Record (Record Agency - Clinton, LA), presented the budget, which is essentially the same as the current year with minor adjustments to a few budget items. The board asked a number of questions and discussed various items in the budget.

On a motion by Brenda Case (Lowery, Dunham, Case & Vivien – Slidell, LA) with a second by Joey O’Connor (O’Connor Agency – Metairie, LA), the 2016-2017 IIABL budget was approved by the Board without objection.

Louisiana Agent 9

IIABL CEO, Jeff Albright, and IIABL Lobbyist, David Tatman, gave the board a summary of the 2016 First Special Legislative Session, and a review of HB 86 which resulted in a 5% reduction of the insurance company premium tax credit for the next two years.

IIABL Legislative Chairman, Brenda Case (Lowery, Dunham, Case & Vivien – Slidell, LA) gave the board an overview of the IIABL Legislative Agenda for the 2016 Regular Session.

At the request of IIABL, Rep Major Thibaut has introduced HB 663 – 180-day Notice of Agency Termination. HB 663 would require insurance companies to provide independent agents with 180-day advance written notice before terminating the agency contract. There are exceptions for cause. This bill would give independent agents valuable time to find replacement markets and make arrangements to replace business after an agency termination. Board members reviewed the bill, asked questions and discussed the bill at length.

HB 746 was also introduced by Rep Major Thibaut at the request of IIABL and would license and regulate insurance consultants.

This bill would eliminate many of the conflicts between insurance agents and insurance consultants. The IIABL Board reviewed and discussed HB 746.

Next, Jeff Albright & David Tatman reviewed the long list of IIABL tracked prefiled insurance bills that were pending for the regular session. The board asked questions, discussed various bills, and provided guidance as to the position IIABL should take on the pre-filed insurance bills.

IIABL President, David Dethloff (Dethloff & Associates – Shreveport, LA), reported that IIABL has been working with the Louisiana Surplus Lines Association (LSLA) to address problems with surplus lines cancellations and non-renewals. The two associations are working well together to resolve the issue.

Louisiana Agent 10

IIABL Secretary-Treasurer, Neil Record, (Record Agency – Clinton, LA) reviewed the January 2016 IIABL Financial Statement with the board.

IIABL National Director, Lee Schilling (Schilling & Reid – Amite, LA), reported on the TrustedChoice.com localized Louisiana Search Engine Optimization (SEO) project. (See separate article) Schilling also reported that the federal government affairs staff in Washington, DC is working to pass the Flood Modernization Act, which will be the most important issues at the IIABA National Legislative Conference in April.

Finally, IIABL Young Agents Chairman, Lydia McMorris (Regions Insurance – Baton Rouge, LA), reported on various Young Agent Committee activities including their Career Day at SELU, InsurPac fundraiser, YAC crawfish boil on March 18th, and the YAC Conference which will be held August 4-7 in New Orleans.

Jeff Albright reported to the board on the University of Louisiana Monroe (ULM) Risk & Insurance Talent Search, where IIABL recruited bright young students in the ULM Risk & Insurance Program to work in IIABL member agencies.

Louisiana Agent 11

Commissioner’s Corner

Distracted Driving and Its Impact on the Auto Insurance Market

Every day commuters in Louisiana are facing a danger that is entirely self-inflicted. Driving while distracted and the accidents that result from it are taking lives and contributing to increasing insurance premiums all over the country. April is National Distracted Driving month and many federal and state agencies are sounding the alarm. The National Highway Traffic Safety Administration reports that ten percent of all teenage drivers involved in fatal crashes were distracted at the time of the accident. The National Safety Council has released data that points to distracted driving as a major factor in the estimated eight percent rise in traffic deaths from 2014 to 2015.

The Council also found that one in four fatalities on the road is caused by distracted driving.

When most people hear the phrase distracted driving they often think of texting and using a cell phone while at the wheel. While this is a big part of the phenomenon of increased traffic accidents and fatalities, it isn’t the only way we are distracted while driving. Interacting with passengers, eating and using technology such as a GPS unit can lead to the same inattention. A study by the AAA Foundation for Traffic Safety found that drivers spend more than half of their time behind the wheel focused on something other than driving. Following a decades-long downturn in the number of car crash fatalities, generally attributed to increased seat belt use and automobile improvements like stability-control systems and air bags, the number of fatalities has increased dramatically in recent months.

Cell phones aren’t the Continued page 14

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only culprits however. Newer model automobiles include the latest in Wi-Fi connectivity and infotainment systems that include hundreds of radio options, the ability to play movies for passengers in the back seat and texting and traffic updates right in the dashboard. Studies show that even when these features are voice activated, they distract the brain from the primary job of focusing on the road ahead and the surrounding traffic. Other factors contributing to higher fatalities are more people driving more miles. As gas prices have fallen more people drive rather than taking other modes of transportation, whether the destination is around the block or across the state. More people at the wheel, increasingly not paying attention to the road in front of them, is a recipe for more accidents.

There are penalties in current law that prohibit using a cell phone to text message or post to a social networking site while operating a vehicle on any public road or highway.

The fine is $175 for the first offense and $500 for each subsequent offense. Using a headset while driving is also prohibited and carries a penalty of $25 plus court costs per offense. Operating a mobile device or cell phone in any manner is prohibited while driving through a school zone during the posted hours, with only very few emergency situations exempted. The fine for a first offense is $175 and any second or subsequent offenses carries a fine of up to $500.

This legislative session Senate Bill 91, which proposes increasing these penalties, is before the Committee on Transportation, Highways and Public Works. Harsher penalties may indeed cause drivers to think twice before using their mobile phones while driving. The problem with this strategy is that many people see distracted driving as a largely victimless crime—which it clearly is not. The victims of this crime are our neighbors who suffer injury and possibly death in accidents Continued page 16

Louisiana Agent 14

caused by distracted driving. The victims are all of us who are burdened by higher insurance premiums and higher taxes to pay for the emergency services and police presence needed to clear the aftermath of these accidents.

However, state laws prohibiting such behavior don’t seem to be making a dent in the amount of drivers who use cell phones while driving. Higher premiums and other financial repercussions may help drive home the seriousness of the matter. No less a public figure than Warren Buffet took on the hot button topic of distracted driving in his spring newsletter to Berkshire Hathaway investors, advising them that higher costs related to auto accidents caused by distracted driving caused significant losses for some of the largest insurance companies in the country.

Allstate Insurance Corp recently attributed distracted driving to a rise in premiums, citing mobile phones and drivers surfing the internet while driving as the main offenders.

comfortable with purchasing new cars and trucks as the economy improves. With more technology including back-up cameras and park assist, new automobiles are more expensive to repair and replace in the event of an accident as well.

I think the best answer to the question, “What can we do about distracted driving” is to raise awareness of the choices drivers are making. Because make no mistake—it is a choice. Every time we text to let a friend know we are running behind in stop-and-go traffic on the interstate or check directions while driving down a residential street, we are making the choice to risk injury to ourselves and others. Speak out when you see friends at the wheel using their cell phones.

Refuse to text back when you know people are driving. Even one death from a preventable cause is too many.

Premiums are also affected by the higher cost of vehicles as Americans grow more

Continued page 17 Louisiana Agent 16

Sources: Louisiana Highway Safety Commission Traffic Safety Laws http:// www.lahighwaysafety.org/laws.html Act 62 of the 2013 Regular Legislative Session – Prohibits posting to social media while driving Distracted driving pledge: http:// www.distraction.gov/take-action/take-thepledge.html National Highway Traffic Safety Administration http://www.distraction.gov/stats-research-laws/ facts-and-statistics.html National Safety Council stats: http:// www.nsc.org/learn/NSC-Initiatives/Pages/ distracted-driving-awareness-month.aspx Warren Buffet: http://www.usatoday.com/story/ money/business/2016/02/29/warren-buffettberkshire-hathaway-cnbc-auto-insuranceeconomy/81100540/ ; http://www.wsj.com/articles/car-crashes-are-onthe-rise-and-warren-buffett-blames-texting1441800119

IIABL Goes to Washington Every year, over 1,000 Big I members from all 50 states converge on Washington to let our voices be heard on Capitol Hill about insurance issues during the IIABA National Legislative Conference.

The Big I is widely recognized throughout the insurance industry as the “400 pound gorilla” of federal insurance politics in Washington because of our extensive grassroots network in all 50 states and our outstanding Big I staff lobbyists who represent us every day.

It is truly thrilling to see Big I agents literally swarming all over congressional offices visiting senators and representatives. For some first-hand accounts, please see the accompanying comments from several first

Louisiana Agent 17

time attendees from Louisiana.

Louisiana is blessed to have a congressional delegation that is “business minded” and understand the importance of our issues.

IIABL members met with every single senator and congressman from Louisiana to discuss the issues outlined below. With only a few minor exceptions, our entire congressional delegation is supportive of our positions on these issues.

Flood Insurance The Big “I” strongly supports a reformed and modernized National Flood Insurance Program (NFIP) and calls upon Congress to extend the NFIP prior to its September 30, 2017 expiration. The Big “I” recommends consideration of risk-based rates, where appropriate; modernized mapping; increased use of private reinsurance; and additional mitigation. The Big “I” also supports allowing the private market, where practical, to offer flood insurance as a complement to the

NFIP. Therefore, the Big “I” has endorsed S. 1679 and H.R. 2901, the “Flood Insurance Market Parity and Modernization Act,”

by Sens. Dean Heller (R-NV) and Jon Tester (D-MT) and Reps. Dennis Ross (R-FL) and Patrick Murphy (D-FL). The legislation clarifies that a private insurance policy can satisfy the NFIP mandatory purchase requirement, and grants state regulators the ability to determine what is “acceptable” private flood insurance. Most importantly to Big “I” members, it would benefit consumers by ensuring they can move smoothly between the private market and the NFIP without penalty.

Crop Insurance

The Federal Crop Insurance Program (FCIP) is the cornerstone of the farm safety net and is crucial to the economic security of rural America. Despite the success of this public-private partnership, the program continues to be in the bullseye for budget cuts, which the Big “I” opposes. The association opposes S. 2244 and H.R. 3973, the “Affirm Act,” by Sens. Jeff Flake (R-AZ) and

Louisiana Agent 18

Jeanne Shaheen (D-NH) and Reps. Jim Sensenbrenner (R-WI) and Ron Kind (D-WI).

The bills would result in cuts to private sector delivery of crop insurance and would discourage farmers from purchasing adequate coverage for their farmland.

Health Care

The “Cadillac tax” assesses a damaging 40% tax on health plans that exceed a fixed annual cost. At the end of 2015, with Big “I” support, a two-year delay of the “Cadillac tax” was enacted to move the effective date of the tax from 2018 to 2020. While not perfect, a delay is a good first step toward full repeal.

Numerous pieces of bipartisan legislation have been introduced to repeal this onerous tax and the Big “I” continues to push for a full repeal. In addition to repealing the “Cadillac tax”, the Big “I” also supports excluding agent compensation from the Medical Loss Ratio (MLR) formula in the Affordable Care Act. As such, the association supports H.R. 815, the “Access to Professional Health Insurance Advisors Act of 2015,’’ by Reps. Billy Long (R-MO) and Kurt Schrader (D-OR) and

its Senate companion, S. 1661, the “Access to Independent Health Insurance Advisors Act,” by Sens. Johnny Isakson (R -GA) and Chris Coons (D-DE).

Insurance Regulatory Reform

The Big “I” strongly supports state regulation of insurance and is concerned with federal encroachment into insurance regulation. As a result, the Big “I” supports H.R. 2141, the “International Insurance Standards Transparency and Policyholder Protection Act,” by Rep. Sean Duffy (R-WI) and S. 1086, the “International Insurance Capital Standards Accountability Act,” by Sens. Dean Heller (R-NV) and Jon Tester (D-MT). These bills would create procedural “checks” for federal officials in international insurance negotiations to ensure that our state-based system of regulation remains strong. The Big “I” also strongly supports creation of the National Association of Registered Agents and Brokers. We thank Congress for their support of the NARAB II legislation and continued involvement in the implementation process.

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Risk Retention Act Expansion The Big “I” strongly opposes H.R. 3794, the “Nonprofit Property Protection Act,”

by Reps. Dennis Ross (R-FL) and Ed Perlmutter (D-CO) that would allow many Risk Retention Groups to expand their insurance offerings to include all lines of commercial coverage, while retaining a weaker and preferential system of regulatory oversight. This will distort the competitive balance within the insurance market and place consumers at increased risk.

Department of Labor (DOL) Regulations The Big “I” supports numerous legislative measures that seek to remedy concerns regarding DOL efforts to expand the application of the ERISA “fiduciary” standard from just investment advisors to include brokerdealers, who are currently subject to a “suitability” standard. The Big “I” is concerned that this will harm investors and limit consumer access to professional advice. The Big “I” is also concerned with new DOL overtime requirements for “white collar” workers under the Fair Labor Standards Act that will be overly burdensome for small businesses.

Continued page 22

IIABL National Legislative Conference Attendees. IIABL President-Elect Richard Jenkins, Moore & Jenkins, Franklinton; Brittni LaGarde, Hub International Baton Rouge; IIABL Secretary-Treasurer Neil Record, Record Insurance, Clinton; IIABL Young Agent Chair Lydia McMorris, Regions Insurance, Baton Rouge; Brittany Mohr, Lewis Mohr Real Estate & Insurance, Baton Rouge and IIABL Young Agent Vice-Chair Derek Canchola, Blumberg & Associates, Baton Rouge.

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IIABL National Legislative Conference Attendees. IIABL Board Member Johnny Beckmann, J. Everett Eaves, New Orleans; IIABL Young Agent Vice-Chair Derek Canchola, Blumberg & Associates, Baton Rouge; IIABL Past-President David Daniel, Daniel & Eustis, Baton Rouge; IIABL Secretary-Treasurer Neil Record, Record Insurance, Clinton; IIABL CEO Jeff Albright, IIABL Young Agent Chair Lydia McMorris, Regions Insurance, Congressman Garrett Graves, Brittany Mohr, Lewis Mohr Real Estate & Insurance, Baton Rouge; Brittni LaGarde, Hub International Baton Rouge; Christen Losey, Losey Insurance, Baton Rouge and IIABL Lobbyist, David Tatman with Tatman & Associates.

Continued page 23

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IIABL National Legislative Conference Attendees. IIABL CEO Jeff Albright; Brittany Mohr, Lewis Mohr Real Estate & Insurance, Baton Rouge; Brittni LaGarde, Hub International Baton Rouge; IIABL Board Member Brenda Case, Lowry-Dunham, Case & Vivien, Slidell; IIABL Secretary-Treasurer Neil Record, Record Insurance, Clinton; Congressman Steve Scalise; IIABL Lobbyist, David Tatman with Tatman & Associates; IIABL Board Member Donelson Stiel, David H. Stiel, Jr. Agency, Franklin and IIABL Board Member Johnny Beckmann, J. Everett Eaves, New Orleans.

Continued page 24

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IIABL National Legislative Conference Attendees. IIABL President, David Dethloff, Dethloff & Associates, Shreveport; IIABL State National Director & IIABA Government Affairs Chair, Lee Schilling, Schilling & Reid Insurance, Amite; Congressman Charles Boustany; Donelson Stiel, David H. Stiel Jr. Agency, Franklinton; David Tatman, Tatman & Associates, IIABL Board Member Brenda Case, Lowry-Dunham, Case & Vivien, Slidell and IIABL Board Member Johnny Beckmann, J.

IIABL Testimonials for the National Legislative Conference Two IIABL Young Agent Committee members were awarded scholarships to attend the IIABA National Legislative Conference: Brittni LaGarde with Hub International in Baton Rouge and Brittany Mohr with Lewis Mohr Real Estate & Insurance in Baton Rouge. They were both kind enough to share their thoughts on the conference as follows: I can honestly say I benefited from every portion of the trip’s agenda. From general meetings with the Big I, to witnessing the lobbying process, and to dinners with fellow Louisiana Agents – I found value in every experience. Most importantly, this trip afforded me an opportunity to experience an

integral part of the legislative process first hand. It was truly enriching to meet with members of Congress and discuss issues that we, their constituents back home, feel are important.

As a lone citizen, it is easy to feel insignificant or overlooked in our political system, but there is strength in numbers. When an organization like the ‘Big I’ unites Independent Agents across the county, it shows that not only do we have a voice, but that voice can be heard and yield real results. It was empowering and refreshing to feel that I played a role (however small) in the democratic process.

Brittany Mohr, ARM Lewis Mohr Real Estate & Insurance Agency, LLC Louisiana Agent 24

This trip exceeded my expectations! I feel privileged to have been able sit down with our Senators and Representatives to discuss the upcoming bills that affect the Independent Agents in Louisiana, and across the country. After discussing each topic, face to face, I was shocked to see how much we can influence our congressmen.

In each meeting we were reminded that while we are focused on the few bills that affect our industry, each congressman has many more coming across their desk each day so they actually need meetings like these to keep them informed of the facts.

I was astounded by the positive dialogue that we were able to have with our congressmen on bills that hit home for us, like flood insurance and regulatory reform.

My eyes are now opened to the fact that we can make a difference in our political system.

Brittni Lagarde, CPIA Marketing Representative HUB International Gulf South Limited

IIABL Secretary-Treasurer Neil Record expressed his thoughts on the conference below:

I was proud to be a part of a small contingent of IIABL members agents to attend the recent annual IIABA Legislative Conference in Washington, DC. Our group along with Jeff Albright was able to meet face to face with each Senator and Congressman from Louisiana where we were graciously welcomed. In these meetings we were able to present and discuss several important insurance issues affecting each of us.

It was quite an honor to see Louisiana's own Randy Lanoix of Donaldsonville as the current chairman of IIABA and Lee Schilling of Amite as the chairman of the Governmental Affairs committee of IIABA. Suffice it to say Louisiana is well respected & represented on a national level.

IIABL Young Agent Vice-Chair Derek Canchola shared the following: Since this was my first trip to Washington DC and Capital Hill, I wasn’t sure what to expect. But I can now say that it was a valuable experience.

After meeting with our local congressman and senators, it was easy to see that our presence and voice does make a difference.

Besides our time on Capital Hill, the meetings with our agents from across the country and our Louisiana agents, truly made this an unforgettable experience. I greatly appreciate the opportunity and look forward to going again.

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Webcasts E&O Risk Management May 3, 10, 13 & 19 June 7, 14,16 & 23

Ethics May 3, 17 & 23 June 7, 9 & 16

Flood April 28 May 12 & June 29

E&O Risk Management October 11th—14th

Free Flood Seminars November 8—10, 2016

Big I Louisiana/Mississippi Young Agents Conference August 4-7, 2016 Ritz Carlton New Orleans

North Louisiana Education Conference—Shreveport 3 Hours Ethics 3 Hours Flood October 20th

CSR Training: The Customer Service Representative is key employee in every agency and is a difficult commodity to find.

Environmental Strategists (eS) Becoming a certified environmental Strategist™ (eS) will equip you with the knowledge to identify, manage and transfer environmental exposures impacting everyday business.

Commercial & Personal Lines Courses Click above title for courses & dates for 2016

Seminars August 2,3 & 4 John Eubank Topic: TBD

Events IIABL Annual Convention June 19-22, 2016 Sandestin Beach Hilton Destin, Florida THE BIG I AWAKENS!

On-Demand Webcasts Masters Series: The Master Series are unique agency management courses from industry experts. in the Masters Series.

Cyber Risk Manager (cyRM) Completion of the Cyber Exposures & Insurance – Training for Agents & Brokers course qualifies you to register for the cyRM certification for FREE.

Pre-Licensing Online prelicensing 3 optional study packages available Click here for additional information

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IIABL Director of Education, Mike Edwards is your source for technical questions. Contact Mike at medwards65@aol.com or 678.513.4390 Subject: “Temporary Substitute” Auto – PAP/BAP Q. I was doing some in-house training in our agency yesterday, and got a question that stumped me. Would appreciate your thoughts.

The specific issue is coverage for “temporary substitutes” in the Personal Auto Policy (PAP).

One of the attendees inquired about a personal situation, where his fiancé’s car has been at the dealer for well over a month, waiting on replacement parts. Some vandal tossed a chunk of concrete off an Interstate overpass, and she was unable to avoid driving over it.

There was a lot of damage to the undercarriage, and her insurer is providing a rental car.

So the question is, how long is “temporary”?

Also, the PAP excludes an auto which is “furnished or available for your regular use,” so that provision might also come into play in the event she has an accident with the rental car.

Lastly, can you also comment on how the Business Auto Policy (BAP) applies to temporary substitute autos? Thanks.

A. Undefined words such as “temporary,” “regular,” and a host of others, could all be placed on a list titled, “You Won’t Know What These Words Mean Until After the Trial.”

Here are my thoughts on this issue. Excerpts and commentary below are based on ISO coverage forms. Proprietary forms may be different.

Continued page 30

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Company

Coverage Type

Overall % Impact:

Overall $ Impact:

+19.50%

$185.040

Number of Policyholders:

Changes

Progressive Security Ins Co

17-Other Liability Personal Umbrella & Excess; Personal Umbrella Program

State Farm Fire & Casualty Co

9-Inland Marine Revised Rate & Rule Personal Inland Marine

N/A

N/A

-2.6%

$-231,600

37361

Employers Ins of Wausau Wausau Underwriters Liberty Mutual & Liberty Mutual Fire, 1st Liberty, Liberty Insurance Continental Casualty Co

19 – Commercial Automobile

8.200%

$1,184,199

316

New: 9/1/16 Renewal 9/1/16 Approved

17 – Other Liability

+14.0%

$2,584,209

3825

New: 5/1/16 Renewal: 5/1/16 Approved

Imperial Fire & Casualty Ins.

19 – Private Passenger Auto

9.300%

$358,554

2199

New: 5/5/2016 Renewal: 6/10/2016

North Pointe Insurance Co.

16 – Workers Comp

7.70%

$374,022

138

New: 5/1/2016 Renewal: 5/1/2016

National Trust Insurance Co.

19 – Commercial Auto

-10.000%

$-174,640

118

New: 8/1/2016 Renewal 8/1/2016

1829

Approved

Approved-Amended Rate Amended from -2.6% or $-231,600 to -6.6% or $587,900

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First, here is where the term “temporary substitute” is found in the PAP. Excerpt: Personal Auto Policy PP 00 01 01 05 Definitions J. "Your covered auto" means: 1. Any vehicle shown in the Declarations.

2. A "newly acquired auto".

3. Any "trailer" you own.

4. Any auto or "trailer" you do not own while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its:

a. Breakdown; b. Repair; c. Servicing; d. Loss; or e. Destruction.

This Provision (J.4.) does not apply to Coverage For Damage To Your Auto.

Comments: (1) A “temporary substitute” is one of the four categories of “Your Covered Auto.”

(2) Of course, as with any insurance contract analysis, a definition must be viewed in the context in which it is used.

(3) For the rental car situation above, the liability exclusions are one place in the PAP where the terms “your covered auto” and “temporary substitute” are important.

Excerpt: Personal Auto Policy PP 00 01 01 05 Part A – Liability Exclusions B. We do not provide Liability Coverage for the ownership, maintenance or use of: 2. Any vehicle, other than "your covered auto", which is: a. Owned by you; or b. Furnished or available for your regular use.

Comments: (4) Since the rental car has been provided for “well over a month,” it could be argued that this constitutes an auto which is excluded under B.2.b. above.

(5) However, note that exclusion B.2. applies to “other than ‘your covered auto’.”

And since the definition of “your covered auto” includes a “temporary substitute” (J.4.

Louisiana Agent 30

in the Definitions above), the length of time the rental car has been provided is irrelevant.

It remains a covered auto for liability.

(6) However, physical damage for the rental car is handled somewhat differently.

(9) However, the coverage under C.2. is not restricted by the “furnished or available for your regular use” provision. A nonowned auto that is a temporary substitute is covered without a time limit.

Excerpt: Personal Auto Policy

Business Auto Policy (BAP) issues.

PP 00 01 01 05

This being insurance, where uniformity and consistency across various coverage forms is usually more coincidence than intent, the Business Auto Policy (BAP) treats the issue of “temporary substitute” autos differently that does the PAP.

Part D – Coverage For Damage To Your Auto Insuring Agreement A. 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.

C. "Non-owned auto" means: 1. Any private passenger auto, pickup, van or "trailer" not owned by or furnished or available for the regular use of you or any "family member" while in the custody of or being operated by you or any "family member"; or 2. Any auto or "trailer" you do not own while used as a temporary substitute for "your covered auto" which is out of normal use because of its: a. Breakdown; b. Repair; c. Servicing; d. Loss; or e. Destruction.

Comments: (7) Part D provides physical damage to “your covered auto” and “non-owned autos.”

(8) Coverage for “non-owned autos” under C.1. does not apply to those which are “furnished or available for your regular use.”

Since “regular” is not defined, this could be interpreted to apply to a long-term rental.

Some proprietary forms include a specific number of days, but ISO does not.

Excerpt: Business Auto Coverage Form CA 00 01 10 13 Section I – Covered Autos C. Certain Trailers, Mobile Equipment And Temporary Substitute Autos If Covered Autos Liability Coverage is provided by this Coverage Form, the following types of vehicles are also covered "autos" for Covered Autos Liability Coverage: 1. "Trailers" with a load capacity of 2,000 pounds or less designed primarily for travel on public roads.

2. "Mobile equipment" while being carried or towed by a covered "auto".

3. Any "auto" you do not own while used with the permission of its owner as a temporary substitute for a covered "auto" you own that is out of service because of its: a. Breakdown; b. Repair; c. Servicing; d. "Loss" or e. Destruction.

Comments: (1) Liability coverage is provided for temLouisiana Agent 31

porary substitute autos as long as liability coverage is written on the BAP, regardless of the symbol designated for liability coverage. [C.3. above.]

age to apply to a temporary substitute auto.

Note that symbol 8 applies to autos which are leased, hired, rented or borrowed.

Additional resources.

Business Auto Coverage Form

“PAP – Coverage for Non-Owned Autos”

CA 00 01 10 13

“When is an Auto ‘Furnished or Available’?”

Section III – Physical Damage Coverage

“The BAP and Temporary Substitutes”

(No reference to “temporary substitute” autos.)

Comments: (2) The Business Auto Policy does not automatically include Physical Damage Coverage for a temporary substitute auto per se, as the Personal Auto Policy does.

These materials are intended for educational purposes only and should not be relied upon as legal advice. Please consult a qualified attorney for legal advice.

(3) None of the following symbols available for physical damage would apply to a temporary substitute: symbol 2 (owned autos), symbol 3 (owned private passenger autos), symbol 4 (owned autos other than private passenger), or symbol 7 (specifically described autos).

(4) Symbol 8 (hired auto) would have to be included on the BAP for physical dam-

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IIABL 2015—2016 BOARD OF DIRECTORS & OFFICERS David Dethloff President Dethloff & Associates—Shreveport Richard D. Jenkins President Elect Moore & Jenkins Insurance—Franklinton

Neil Record Secretary/Treasurer Record Agency, Inc.—Clinton H. Lee Schilling, Jr. National Director Schilling & Reid Insurance—Amite

Ross Henry Henry Insurance Service—Baton Rouge Bret Hughes Hughes Insurance Services—Gonzales Philip McMahon Paul’s Agency—Morgan City Lydia McMorris Young Agent Representative Regions Insurance—Baton Rouge Joseph A. O’Connor, III The O’Connor Insurance Group—Metairie

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Donelson P. Stiel David H. Stiel, Jr. Agency—Franklin Louisiana Agent 35