Louisiana Agent
December 2017 A publication of the: Independent Insurance Agents & Brokers of Louisiana
Louisiana Agent
December 2017 In this issue:
IIABL STAFF Jeff Albright Chief Executive Officer jalbright@iiabl.com
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
Big I Agents Council on Technology (ACT) Conference Report ............................................ ... 6 Credit Freezes and the Burn They Have on Hackers ...................................... 8-10 Ask Mike: Can Business Income Coverage Apply for Damages to Uninsured Property? ...................... 11-17
Change in Policy Terms Agency Responsibility ...................................... 18 -20
Commissioner’s Corner: La Citizens Depopulation Update ....................... 21 – 23
Rate Filings ...................................................... . 22
Karen Kuylen Director of Accounting kkuylen@iiabl.com E. Lee Mowe Marketing Representative lmowe@iiabl.com Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com Jamie Newchurch Insurance Services jnewchurch@iiabl.com Lisa Young-Crooks Executive Assistant
The Danger of Being TOO Helpful ...................... 24 – 27
Southern Agents Conference Report .................. 27 – 32
Calendar .......................................................... . 30
Cover photo is the beautiful city of Natchitoches at Christmas time. The city is well know for its elaborate light display.
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Free Member Plus Profiles on TrustedChoice.com Now Available Would you like to have your agency show up higher in the agency listings on TrustedChoice.com? Now you can. IIABL is working in partnership with TrustedChoice.com to get more insurance buyers to the website and connect them with your agencies. The best part is that because of that partnership, our members can receive an improved profile on TrustedChoice.com at no charge. A Member Plus profile will provide your agency with the following benefits: Your agency will show higher to consumers searching on TrustedChoice.com Tell us which lines of business in both personal and commercial you want to write Confirm your contact information to get opportunities to the right producers Select the 2digit NAICS codes that represents your agency’s niche markets The ability to add a custom about us statement Access to your agency Dashboard do see and track the referrals you have received All of these capabilities will enable your agency to start getting only the referrals you want from insurance buyers that you like. It’s Easy! Log in here and click on “Sign in with IIABA” in blue text (under the orange button). Use your Big I username and password on the screen that says Welcome!
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Big I Agents Council on Technology (ACT) Conference Report By Ross Henry, IIABL Board Member Henry Insurance Service, Baton Rouge
Another concept that bears mentioning is Speed to Value. In many cases the Insurtechs and start-ups in our industry cannot offer anything better than we can (quite often not nearly as good as what we can offer) but what they can do is get it in the hands of the consumer much more quickly than we usually do. Earlier I made the statement that tech is only a threat to the extent that we ignore it. Nowhere is this more truth than in the arena of speed to value. From the first moment when a prospect engages with your business, whether that’s via e-mail, phone call, Facebook messenger, etc. how quickly are you delivering value? That could be delivering a quote to them. That could be having a coverage conversation with them. That could be meeting them face to face, getting on the phone. When that customer engages with you, you have to respond. You do not get to dictate the time table in which you deliver value to a prospect who has chosen to engage with your brand. That is a non-negotiable. The days of “We will return your call in 24 hours” are over. The only chance that insurtech startups have to kill the incumbent insurance model is in this moment right here. They have figured out that they can use technology to deliver value to engage prospects faster than the traditional model can today or is willing to. This concept is just as applicable after the sale and certainly critical at claim time. This doesn’t require
crazy technology. This is just: be more responsive. Speed to value is really a cultural aspect of your agency.
Finally, we discussed the challenge of driving younger talent to our industry. Over 400,000 people will soon be retiring from our industry. There are currently 76,000,000 millennials in the workforce today. Guess who will be taking the jobs we have available…? The millennial generation is a very interesting cultural force in the workplace. They are vastly different than Generation X. Millennials care about different things than other generations. A paycheck is important but not allimportant. Millennials want to be part of something bigger. It will be important for them to find a sense of purpose which transcends simply trading
their time for a salary. Gen X was trained to complete a task. Millennials have been trained to solve problems and they are fiercely competitive and hard-working when properly motivated. Millennials have a hierarchy of needs without which they won’t be interested in our agencies nor the industry as a whole. They value: Flexibility Opportunity Giving back
Working in an area of personal interest. They desire collaborative work environments and are seeking newer, updated, vibrant office spaces. These digital natives don’t even have a category for anything other than the latest tech. They have grown up with tech and while you and I may be able to take it or leave it the truth is that tech is the default way in which they interact with much of the world. Check out the following: http:// www.independentagent.com/Resources/ StaffDevelopment/Pages/home.aspx. Specifically take a look at InVEST. InVEST, a school-to-work insurance program, teams with high school and college educators to provide a useful insurance curriculum for students. With the help of InVEST liaisons (insurance professionals), students could have the opportunity for job shadow days, internships or even careers after graduating from InVEST. As the saying goes, “nature hates a vacuum.” If we are not proactive with replacing aging talent in our industry with dynamic young people we are allowing the disruptors another chance to encroach and take our market share. The biggest challenges to the IA channel today are talent and technology. We are eminently qualified to dominate the marketplace. Go out and make it happen!
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Credit Freezes and the Burn They Have on Hackers More than 143 million Americans’ personal information was exposed when Equifax announced earlier this year it was the victim of a data breach. Hackers accessed names, Social Security numbers, birth dates, addresses and, in some instances driver’s license numbers. Guarding against identity theft is important because bankers and insurers reward good credit. Bankers and insurers use your credit i9nformaiton when granting loans and pricing and underwriting insurance products. A favorable credit-score often results in lower interest and insurance rates. If you have a credit report, chances are you were impacted by the Equifax breach. Equifax took immediate steps to help affected consumers, including freezing customers’ credit. Before you take this step, the National Association of Insurance Commissioners has these tips for your considerate. What happens when you freeze your credit? A credit freeze or security alert, restricts access to your credit report, thwarting would-be hackers from gaining access to your personal information. Without a credit report, most creditors won’t approve or open a new account. A credit freeze does not: Impact your credit score. Prevent you from getting a free annual credit report, stop you from opening a new account, applying for a job, renting an apartment or buying insurance. Note: you can temporarily lift the credit freeze for a specified time to conduct this business. You may have to pay for the temporary left, so check with one of the credit reporting agencies. There is no charge for consumers impacted by the Equifax data breach in 2017. A hacker cannot lift your credit freeze and open a new line of credit. A personal identification number (PIN) is required to lift it. Some states allow insurers to access your credit information to underwrite or rate. In these cases, a
policyholder may want to consider temporarily lifting a credit freeze. If a freeze renders a consumer’s credit report inaccessible, the insurer may rate the consumer as if they have neutral credit information or exclude the use of credit information as a factor. This means that a consumer who is up for renewal and has excellent credit may experience an increase in their rate. If you receive an adverse action notice based on the freeze, you should contact your agent or insurer. Credit freeze versus fraud alert – According to the Federal Trade Commission, a credit freeze locks down your credit. A fraud alert allows creditors to obtain a copy of your report, as long as they take steps to verify your identity. Fraud alerts can stop someone from opening a new account in your name, but may not prevent them from misusing existing accounts
There are three types of alerts: Initial Fraud Alert – protects your identity for 90 days from unverified access. Extended Fraud Alert – protects your credit identity for seven years, if you are a victim of identity theft. Active Duty Military Alert – protects deployed military for one year.
How to know if your information has been breached. You should check your credit report and look for any errors, new and unauthorized open accounts or any unauthorized charges on your credit cards. For the Equifax data breach, the company set up equifaxsecurity2017.com to help consumers find out if their information was compromised. You should check your credit report on an annual basis, but if you think your identity has been compromised, do so immediately. Louisiana Agent 8
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What to do if your information is breached?
1. Contact one of the three reporting credit agencies – Equifax, TransUnion and Experian can investigate fraudulent activity on your credit report and remove it. 2. Notify your lenders, banks, and insurance companies – Alert them of the situation. Close your accounts and change passwords and PINs associated with these accounts. 3. File a police report – Notify authorities of a potential identity theft. It provides documented proof that a crime occurred.
Law. The model law has been a focus of considerable Big I advocacy, education and grassroots attention. The approved version is considerably more reasonable and less onerous for independent agents—the requirement that the agency purchase identity theft protection for all of its customers in the event of a data breach was removed, as well as financial burdens on small agencies which could not comply with these requirements. It will up be up to each state’s legislature to determine if the law will be enacted. IIABL will continue to monitor this issue if it is introduced in the Louisiana legislature for consideration.
NAIC Passes Data Security Model Law After over two years of extensive debate, the National Association of Insurance Commissioners (NAIC) has formally adopted its Insurance Data Security Model
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IIABL Director of Education, Mike Edwards, CPCU, AAI is your source for technical questions. Contact Mike at medwards65@aol.com or 770.402.1011
Subject: Can Business Income Coverage Apply for Damage to Uninsured Property?
Q.
I received a phone call from my brother-in-law over the weekend, about an insurance claim at his country club in Florida. A severe thunderstorm blew down numerous large oak and pine trees across the club’s private road leading from the highway to the clubhouse, as well as onto parts of the golf course itself. Due to the extent of damage in the general area, it was 9 days before crews with heavy equipment could clear their road and the course. In the interim, business at the club was at a virtual standstill. The initial indication from the insurance adjuster is that the business income claim will be declined, since windstorm damage to trees is not covered. Do you agree?
A.
Yes and no. I agree that “windstorm damage to trees is not covered” under the Building and
Personal Property Coverage Form (ISO CP 00 10). But this is irrelevant to a business income claim, which is governed by the Business Income Coverage Form (ISO CP 00 30). The CP 00 10 applies for direct loss (loss to tangible property) to the types of property described in the coverage form (buildings and business personal property). The CP 00 30 applies for indirect (consequential) loss that results from direct damage (business income, extra expense). Both the CP 00 10 and the CP 00 30 rely on a description of what perils apply, such as the ISO Causes of Loss – Special Form (CP 10 30). So a direct loss claim will require an analysis of the CP 00 10 and the CP 10 30. Nothing in the CP 00 30 is relevant. And an
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indirect loss will involve the CP 00 30 and the CP 10 30, and nothing in the CP 00 10 has a bearing on the coverage. Since we don’t know the actual coverage form the country club has, my comments are based on commercial property forms from ISO (Insurance Services Office). Proprietary forms may be different. Here is the pertinent excerpt from the ISO business income form. [Emphasis added.]
CP 00 30 10 12 Business Income (and Extra Expense) Coverage Form A. Coverage 1. Business Income We will pay for the actual loss of Business Income you sustain due to the necessary "suspension" of your "operations" during the "period of restoration". The "suspension" must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which a Business Income Limit Of Insurance is shown in the Declarations. The
loss or damage must be caused by or result from a Covered Cause of Loss. With respect to loss of or damage to personal property in the open or personal property in a vehicle, the described premises include the area within 100 feet of such premises. Comments: (1) The business income (BI) coverage trigger applies to a loss of business income from a necessary suspension of operations due to: (a) direct physical damage to property;
(b) at the described premises; (c) caused by a covered cause of loss. (2) Note that the property which is damaged does not have to be covered property for a business income claim. But for a property claim for damage to the trees themselves, the CP 00 10 provides coverage only for the perils of fire, lightning, explosion, riot or civil commotion, or aircraft.
Continued page 13 Louisiana Agent 12
(3) Article: “Business Income Coverage for Weather Damage to Golf Courses and Trees” Other examples of business income loss due to “damage to property.” Example #1: Vehicles. (1) Vehicle owned by the insured. Vehicles can be the primary source of income for certain insureds, including those who rely on specialty vehicles such as food trucks, mobile medical services, cement trucks, well drillers, etc. For such specialty vehicles, a replacement vehicle can rarely be acquired quickly following serious damage or destruction. The highest exposure would probably when the business is closed, and the specialty vehicles are at the company’s premises. Potentially, all of the vehicles could be destroyed by fire, windstorm, vandalism, etc. While vehicles licensed for road use are not “covered property” in the CP 00 10, they are still “property” on the described location and damaged by a covered cause of loss, thus the BI loss is covered. However, if the vehicles are away from the
described premises at the time of damage, the CP 00 30 will not provide business income coverage. In recent years, ISO and other industry sources have developed policies that provide BI coverage for specialty vehicles. (2) Vehicle not owned by the insured. Assume the insured uses chemicals in the course of its operations. A vendor’s chemical delivery truck is in the insured’s parking lot and somehow overturns, spilling a potentially hazardous chemical that saturates the parking lot asphalt and surrounding soil. The cleanup, including the replacement of the affected area of the parking lot, takes a week, during which time the business is shut down. Ignoring any eventual recovery from the vendor’s auto insurance, our insured’s business income coverage will apply. The “damage to property” requirement in the CP 00 30 coverage trigger does not distinguish between damage to owned vs. non-owned property, as long as the damage occurs on the described premises, and is caused by a covered cause of loss which suspends operations.
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By the way, the pollution exclusion in our insured’s CP 10 30 will not apply. Excerpt:
CP 10 30 10 12 Causes of Loss – Special Form Exclusions B.2.l. Discharge, dispersal, seepage, migration, release or escape of "pollutants" unless the discharge, dispersal, seepage, migration, release or escape is itself caused by any of the "specified causes of loss". But if the discharge, dispersal, seepage, migration, release or escape of "pollutants" results in a "specified cause of loss", we will pay for the loss or damage caused by that "specified cause of loss". G. Definitions 2. "Specified causes of loss" means the following: fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fireextinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage. (3) Articles: “Business Income from Specialty Vehicles” “Business Income for Auto Damage” “New in 2014: Business Income for Autos and Mobile Equipment” Example #2: Uninsured buildings. (1) Building(s) owned but not listed on declarations page. Assume the insured operates a food processing facility. The company has one location, with two buildings. The main building contains all the processing equipment, while a small adjacent building houses the high-speed water pump and multi-stage water filtration system. The insured elected not to insure the small building, since it merely houses the water systems. The declarations page therefore lists only “Location 1, Building 1.” If a covered cause of loss damages the small water-services building and/or the equipment, the business will have to suspend operations until the building and/or equipment is repaired or replaced. The ensuing loss of business income would be covered, since there was covered damage to prop-
erty at the described premises (Location 1). However, if a claim was made for direct damage to the building and/or the equipment, the CP 00 10 would not cover the loss, since the definition of “building” means “the building or structure described
in the Declarations, including permanently installed machinery and equipment.” Interestingly, the Busi-
nessowners Policy (BOP) applies for direct damage to “the building and structure at the premises described
in the Declarations, including permanently installed machinery and equipment.” For additional information, see these articles:
“Business Income and Undeclared Buildings” “Described Premises Under Commercial Property Forms” “Does the BOP Cover Undescribed Structures?”
(2) Building(s) at a non-owned location. Assume the
food processing company obtains most of its raw ingredients from one wholesale supplier. In addition, it has a contract with a large specialty food store that buys most of their products. Clearly, major damage to either the wholesaler or the specialty food store would severely impact the food processing operations. However, since neither facility is located at the described premises of the food processing company, its business income coverage would not apply if either facility was damaged. This exposure is often referred to as “contingent business income,” and could be described to the food processor insured as providing coverage for a loss to a supplier or customer that reaches the level of, “If they down, you go down.” Those of us in the business prior to the 1986 ISO Simplification Program in commercial lines remember that the three components of the contingent business income exposure were “contributing property,” “recipient property,” and “leader property.” One other blast from the past is that in 1986, the term “business income coverage” replaced the term “business interruption coverage.” Today, contingent business income coverage is called “dependent properties coverage.” In the ISO Commercial Property Manual, Rule 51 effectively defines the four exposures. Louisiana Agent 14
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Rule 51. Business Income Coverage Options
B. Business Income From Dependent Properties 2. Definition a. Dependent Property is property that the insured depends on to: (1) Deliver materials or services to the insured or others for the insured's account (Contributing Locations). With respect to Contributing Locations, services does not mean water, communication or power supply services; (2) Accept the insured's products or services that the insured ships (Recipient Locations);
(3) Manufacture products for delivery to the insured's customers under contract of sale (Manufacturing Locations); or (4) Attract customers to the insured's business (Leader Locations). The Dependent Property must not be owned, operated or controlled by the insured.
In the example of our food processing insured, they have exposures B.2.a.(1)(2). Coverage can be written for any or all the 4 exposures listed in B.2.a. with endorsement CP 15 08 Business Income From Dependent Properties – Broad Form, or CP 15 09 Business Income From Dependent Properties – Limited Form. The fundamental difference between the two endorsements deals with how the limits of insurance are applied. In the CP 15 08, the limit of insurance for business income of our food processor is the same amount at any declared dependent location, although applied separately to each dependent location. The CP 15 09 allows for different limits of insurance to apply to one or more dependent locations, which could also differ from those of the food processor. Additional articles on business income. These articles are posted on the IIABA’s Virtual University. “Selling Business Income Insurance” “Business Income Coverage...What Does
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‘Necessary’ Mean?”
“Net Income vs Continuing Expenses” “Business Income Basics...Coinsurance Alternatives” “Understanding the Business Income Monthly Limit of Option” “Business Income Without Extra Expense” “Extended Business Income”
“Business Income Loss Due to Mall Shooting”
“Business Income vs Manufacturer’s Selling Price” 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.
"Business Income Coverage for Non-Profit Organizations” “Business Income from Unprofitable Business”
“Business Income and Civil Authority Curfews” “Hurricanes and Business Income” “Hurricanes and Commercial Insurance Q&A” “Business Income for Mandatory Hurricane Evacuation” “Business Income and Ordinance or Law” “Business Income and Cancellation of Contracts”
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Change in Policy Terms – Agency Responsibility
By David Thompson, CPCU “One of my insurance companies just issued a bulletin letting the agency know that as of a certain date they will be removing, reducing or altering a coverage on renewal policies. The bulletin stated that the insurer would be providing notice to the customer; are we, as agents, obligated to also advise the customer?” This question is asked of me in nearly every errors and omissions (E&O) class I teach. I also receive many emails on this specific topic. My answer to whether the agent is “obligation to notify the customer” falls back on statute. Each state promulgates its own regulations regarding policy changes; in Florida, 627.43141 - Notice of change in policy terms states who is responsible to do what. (Remember, this a Floridaspecific statute; each state has its own rules. Click here to link to a spreadsheet listing each state’s notification statute.)
627.43141 Notice of change in policy terms.— (1) As used in this section, the term: (a) “Change in policy terms” means the modification, addition, or deletion of any term, coverage, duty, or condition from the previous policy. The correction of typographical or scrivener’s errors or the application of mandated legislative changes is not a change in policy terms. (b) “Optional coverage” means the addition of new insurance coverage that has not previously been requested or approved by the policyholder but that does not include any change to the base policy or a deductible or an insurance limit. (2) A renewal policy may contain a change in policy terms. If such change occurs, the insurer shall give the named insured advance written notice of the change, which may be enclosed along with the written notice of renewal premium required under ss. 627.4133 and 627.728 or sent separately within the timeframe required under
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the Florida Insurance Code for the provision of a notice of nonrenewal to the named insured for that line of insurance. The insurer must also provide a sample copy of the notice to the named insured’s insurance agent before or at the same time that notice is provided to the named insured. Such notice shall be entitled “Notice of Change in Policy Terms.” In Florida, there is no statutory requirement that the agency also notify the policyholder if the insurer does, assuming that the insurer has properly notified the policyholder as noted in the statute above. That is the easy part of the answer. Let’s look next at what an agency, perhaps, “should” do. Granted, some of what follows may seem to come from the “Ivory Tower,” and some may sound like it’s coming from the “eternal optimist!” Put yourself in the shoes of the customer and ask yourself this, “Does my customer expect me
to contact them and let them know that they are losing coverage, and I may have the option for better coverage elsewhere?” I think that most agents, if they were “gut honest,” would say that the customer does expect the agency to notify them that valuable coverage was lost. After all, most customers if asked the name of their insurance company name the agency rather than the company. Losing coverage is not a pleasant situation or feeling for the customer. Questions such as, “Why did they take this away” are sure to be asked. Rather than focusing on a loss of coverage, turn the conversation toward the opportunity to sell the coverage, perhaps with another insurer? Yes, that creates extra work (many times a lot of work) but this loss of coverage can be transformed into an opportunity to actually sell coverage. This contact with the customer creates the opportunity to review all of their coverages and make sure the policies they have are adequate. Think, too, about the fact that most independent
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agents are “Trusted Choice” agents. The name alone says a lot (to me anyway) about what an agency should do in situations like this. In addition, I have seen scores of agency websites and marketing pamphlets that significantly “raise the bar” in similar situations. Examples include wording such as, “We will contact you multiple times per year to discuss your insurance coverages,” and “Our service is second to none; we work hard to make certain you have the proper coverage.” I consulted with three E&O defense attorneys with whom I routinely work and presented this situation to them for comment. Each responded almost exactly the same: “The agency may have no legal responsibility to contact the customer, but I can promise you that after a claim denial and an E&O claim is filed against the agency I won’t be able to get it easily dismissed. It will be hard to defend the situation, especially if it can be shown that coverage could have been obtained elsewhere.” One industry veteran, with over three decades in the insurance industry, who often serves as an ex-
pert witness in E&O claims says, “When I am asked what an agency should do in a situation like this, I ask how many zeroes can be on the E&O claim.” By that, he means how much could a claim cost an agency? If it’s a minor issue, such as perhaps an insurer reduces coverage for theft of jewelry from $1,500 to $1,000 the potential financial impact on an agency is minor. Consider, however, the loss of coverage for a pool screen enclosure (generally a Florida-specific issue). At a minimum cost of $10,000 per enclosure multiplied by the number of claims that could come from all policyholders with that insurer, the potential for “a lot of zeroes” on E&O claims is significant. What an agency does or does not do relating to contacting customers when coverage is removed or reduced will likely vary based on what is being lost. Certainly that creates issues with “invariable practice.” If a customer had been notified about the loss of $10,000 is screen enclosure coverage but was not notified about a loss of $500 on theft of jewelry, that could come back to haunt the agency. As is often the case, there is no “perfect
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solution” to a customer losing coverage. I’d close with this situation: My name is Fred Jones; I own a lawn care business, am married, and have two teenage kids. My insurance is with XYZ Insurance Agency, I found them on the Trusted Choice website. Their web page references quality customer service, trained staff and the ability to look at various insurance companies in order to get me the best coverage. I have almost all of my insurance with the agency, including a CGL and BAP for my business, a homeowners’ policy, a personal auto policy, a flood policy, and a jewelry floater. My annual premiums are a lot, (to me anyway) well over $5,000 a year. I know the agent is paid in part by commission and she makes several hundreds of dollars per year from my policies. I don’t understand insurance and read almost nothing that the insurance companies send me; I count on my agent to make sure I have the best coverage. My homeowners’ insurance company took away coverage for my $12,000 pool screen enclosure. I suppose they sent me some notice about it, but like I said, I don’t read anything they send me. My neighbor has the same insurance company and he lost the same coverage. He told me about it last week while we were cooking burgers. He said his agent sent him a personal letter several months back telling him about the loss of coverage and was able to get the screen enclosure covered for a little more money with another company. I told him that XYZ Insurance Agency never contacted me about this; to which my neighbor responded, “If your agent isn’t going to tell you when you lose coverage, why do you need them? Why not just buy from the Internet?” I didn’t have an answer for his question, because what he said makes sense. I think maybe I need a new agent. Copyright FAIA, 10/2017 Link here to each state’s conditional renewal statutes. See also, “Understanding the Statutory Requirements of Conditional Renewals.” Thanks to David Thompson with FAIA and IIABA Virtual University for sharing this valuable information.
Commissioner’s Corner
Updates on Louisiana Citizens Property Insurance Corporation: Depopulation, Rebates and Rate Changes As it does every fall, Louisiana Citizens Property Insurance Corporation (Citizens) opened its book of business to the private market for the statutorily required annual depopulation program that moves policies from the insurer of last resort to private companies. This is the eleventh round of depopulation and when it is complete, Citizens’ personal lines policy count is expected to be about 39,000 residential policies. Including commercial policies, Citizens’ total policy count will be about 40,800. According to Citizens, the five companies participating this year have requested 10,072 policies through depopulation. That is predicted to drop Citizens homeowners’ market share to an estimated 0.5 percent of the total market, down from 0.8 percent at year-end 2016. Citizens’ market share peaked at 9.8 percent in 2008 when it was the third largest insurer in the state. Over all of the rounds of depopulation, Citizens has reduced its overall policy count by nearly 77 percent from the all-time high in 2008 of 174,000 policies. This year saw familiar companies participating in depopulation. All five participated in last year’s program. A total of 37,099 distinct policies were requested this year and 10,072 policies were authorized for removal to private companies. Of the companies that participated in depopulation in 2017, policies were requested and authorized as follows: Access Home Insurance Company requested 5,274 policies and 881 policies were authorized; Maison Insurance Company requested 21,990 policies and 4,123 policies were authorized; Ocean Harbor Insurance Company requested 858 policies and 52 policies were authorized; Spinnaker Insurance Company requested 19,651 policies and 3,693 policies were authorized; Safepoint Insurance Louisiana Agent 21
Company
Coverage Type
Allstate P&C Insurance Co.
19 – Private Passenger Auto Motorcycle/Off-Road Vehicle Program
Number of Policyholders:
Overall % Impact:
Overall $ Impact:
+4.0%
+$176,651
13,360
New: 3/14/2018 Renewal: 3/14/2018
Changes
Continental Casualty Co
17 – Other Liability Prof E&O Liability Lawyers Prof Liability
+1.9%
+$361,088
3,861
New: 10/1/2017 Renewal: 10/01/2017
Maison Insurance Co.
4 – Homeowners
+1.18%
+$322,075
12,833
New: 11/01/2017 Renewal: 11/01/2017
Allstate P&C Ins Co.
19 – Private Passenger Auto Motorcycle/Off-road Vehicle Program
+4.0%
+$176,651
130360
New: 3/14/2018 Renewal: 3/14/2018
IIABL WELCOMES NEW MEMBERS Thao Huynh
Michael Rabalais
Insurance Center of New Orleans
Rabalais Insurance Group LLC
2245 Manhattan Blvd., Suite 102
321 N. Florida St., Suite 109
Harvey, LA 70058
Covington, LA 70433
thao@theinscenter.com
rabalaism@yahoo.com
504-367-8555
(504) 909-7308
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Company requested 29,909 policies and 1,162 policies were authorized. . For the first time, commercial lines policies were also requested in depopulation. Safepoint Insurance Company requested 1,145 commercial policies and 161 policies were authorized. Policyholders have until February 28, 2018 to opt out of moving to a private company. Forms and FAQs for agents are available on the Citizens website. Dedicated agents across the state assist policyholders with questions and concerns throughout the depopulation effort to help them make the best decisions for their budgets and coverage needs. This year independent agents authorized 33 percent of their requested policies. Farm Bureau agents authorized 30 percent of their requested policies. Allstate agents authorized 22 percent of their requested policies. State Farm agents authorized 20 percent of their requested policies.
Changes to staff at Citizens, including the retirement of two longtime employees Chief Operating Officer Vijay Ramachandran and Chief Financial Officer Steve Cottrell, has led to a change in management structure at the insurer. Additionally, Governor Jon Bel Edwards has appointed Denise Gardner, who recently retired from the LDI, to the Board. I’m confident that the new executive team, along with CEO Richard Newberry who is approaching 18 months at the helm, will guide this important component of our Louisiana marketplace through to success in the new year.
While you are working with your policyholders, it’s a great time to remind them that the opportunity to file for the partially refundable 2013 Citizens assessment will expire on December 31, 2017. The Citizens Assessment is to pay off the bonds issued by Citizens to cover the costs of damages caused by Hurricane Katrina to its policyholders. More than $36 million, or 53 percent, of the partially refundable assessments available for 2013 remains unclaimed. Policyholders can currently claim rebates for assessments charged in years 2013 through 2017. Following the passage of Act 125 of the 2015 Legislative Session, 72 percent of the assessments for 2013 through 2015 are refundable. Act 9 of the 2016 Second Extraordinary Legislative Session further reduced the refundable amount to 25 percent of the assessments paid for 2016 and 2017. The dollar amount of the assessment can be found on the declaration page. Policyholders that have paid the assessment can file for a rebate online, on paper or on their annual tax returns. Residential and commercial forms and additional information are available on the Louisiana Department of Insurance website at www.ldi.la.gov/citizensrebate. In closing, I want to thank the leadership of Citizens for their work that’s contributed to the continued success of the depopulation program. Louisiana Agent 23
“The Danger of Being TOO Helpful” Bill Wilson, CPCU, ARM What two things do the following situations have in
common?
• •
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An insured comes into the agency to get her CSR to review the rental agreement on a cabin she is thinking about renting for a week. She doesn’t have a question about insurance…she just wants her CSR to review the contract since she’s so smart and helpful. A condo unit owner hired a general contractor (GC) to remodel a unit he bought. A leaky pipe was discovered and the GC hired a plumber to repair it. The plumber sent an invoice to the condo association and they paid it. Then the GC sent an invoice to the association for “supervising” the plumber. The association then asked their insurance agent if they should pay this. The agent now is asking what advice they should provide the association. An agent is trying to figure out how to answer a question from a customer as to whether they
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can legally drive their golf cart on public roads and, if so, is a license required? A homeowners association has asked their agent if the community swimming pool must comply with the Americans with Disabilities Act. A personal umbrella prospect wants to know if he was sued, could the plaintiff get his IRA and cash value from his life insurance policy. A business prospect is buying a building and wants the agent to tell him if fire codes require him to sprinkler it. An insured wants to drop her personal umbrella after someone told her that her wages could not be garnished if she was sued. Is this correct? An insured personally owns a car and wants to lease it to his business and add it to the business auto policy. Do you have a sample lease we can provide to the customer? The agent for a general contractor is looking
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for a sample hold harmless agreement the insured can use with his subcontractors. A condo association insured needs to tear out dry wall in a unit to repair a deteriorating pipe, and they’re asking the agent who has to pay for it, the association or the unit owner. There is no insurance claim. An insured’s son is 19 years old and lives at home. Dad wants to transfer the title to the kid and write a low-limit auto policy. Can he be sued if the kid injures someone? A prospect is starting a business with a friend and wants to know if they should operate as a partnership, LLC, or corporation.
First, each of these is an actual scenario/question received by the national Big “I” Virtual University or by the Florida Association of Insurance Agents (thanks, David Thompson, CPCU). Second, each of these is an example of a customer inquiry that has little or nothing to do with insurance and is probably not the type of question most agents are qualified to answer. The issue here is the agency’s E&O policy. Most E&O policies cover something like “professional services” which are defined to mean “activities as an insurance agent or insurance broker” or something to that effect. Also often covered are losses arising from “insurance consultant” activities. Note the word “insurance.” In the scenarios above, the advice provided by agency staff does not involve “insurance” per se, so a claim or suit about bad advice quite likely would not be covered by the agency’s E&O policy. One thing that makes customer service staff so good at their jobs is the desire to be helpful to customers and prospect. But, just keep in mind that it’s possible to be TOO helpful. Bill Wilson, CPCU, ARM, AIM, AAM Founder & CEO, InsuranceCommentary.com Bill@InsuranceCommentary.com or InsuranceCommentary@outlook.com
Com•men•tar•y … an expression of opinions or offering of explanations
William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of InsuranceCommentary.com. He retired from the Independent Insurance Agents & Brokers of America in December 2016 where he served as Assoc. VP of Education and Research and was the founder and director of the Big “I” Virtual University for over 17 years. He is the former Director of Education & Technical Affairs for the Insurors of Tennessee and, prior to that time, he was employed by Insurance
Southern Agents Conference Report Several members of the IIABL Board of Directors recently attend the Southern Agents Conference (SAC) in Atlanta. This meeting brings together 14 Big I state associations from the southeastern United States to share ideas on how the Big I can help independent agents succeed. Following are reports from the Southern Agents Conference: SAC Technology Meeting (Ross Henry) There is an overwhelming variety of technological devices, platforms and software applications which can be beneficial to Independent Agents. We discussed many of these at the SAC tech meeting. The first topic was: How do we maximize the use of our agency management systems? Specifically, how do we rate the effectiveness of different vendors. The takeaway here was that there are many more options available than in the past. There are some big players in this space to be sure (Applied, Vertafore/AMS). However, there are others as well; for instance, Tech Canary and NexSure. Next, we discussed how technology can make life simpler for agents. How can we leverage technology? ex: Magic Cam (Clients Inventory), Go To meeting (set up video conferences), Screen Cast-o -matic was an interesting one with many applications from proposal delivery to the creation of training videos in your office. With this app producers create videos explaining a proposal to a prospect by using screen captures and recording his voice detailing the specifics of the proposal. This can be a huge time saver because it eliminates travel time to the client who is comfortable with this type of interaction. Rocket Referral- is a great app for increasing favorable online reviews which helps with SEO. If an unfavorable review comes in you are immediately notified and you have a chance to correct it with the client before it is posted. DocuSign seems to be the one everyone agrees is a no-brainer. Easy for staff and clients love it. The client can sign apps, etc. on their phone from any Louisiana Agent 26
location. We also discussed the use of drones. Some carriers are using drones to determine roof damage for claims and for underwriting agricultural business to quantify forested areas for crop insurance, etc. TeleVoips allowed one agency to drastically reduce monthly phone expenses while also allowing the remote employees to take calls from anywhere and have calls transferred to a cell phone. This provides helpful efficiencies daily but the impact can be huge in case of a disaster when all your staff may have to locate elsewhere temporarily. It runs on Fiber optic service so is less likely to be damaged by falling trees, etc. Acuity is scheduling software which sends an email to clients offering to meet for an appointment based on your current calendar openings. The system can be further narrowed to only offer certain calendar openings when you want the meetings to occur. ePayPolicy is a software application which allows your agency to take ACH and credit card payments. The client pays the fees. Your agency receives the full amount billed. You can even add an icon to your homepage that allows clients to pay directly from your website. The page will have your logo but it does not
require anything from you to maintain it. They do everything behind the scenes. They are working with some of the major agency management systems to seamlessly interact with the accounting functions of these platforms. Wisp and other services like it provide cyber vulnerability assessment to pinpoint where hacking attempts may be successful against your organization. Last Pass is password storage software. Each employee has only one password to remember and the system interfaces directly with the carriers. No more writing down passwords right next to the computer you are trying to secure. A similar option is RoboForm. Symphony is a system developed by Tom Baker which sets Key Performance Indicators for your employees (they recommend 7 KPIs). How many times have we made decisions about salary increases based on intuition or the last month’s performance when in fact the review period should be the last 1218 months. Symphony gives regular feedback to the employee on the KPIs and how well they are doing. In addition, it will report to the principal so he/she will have actionable feedback with which to make
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informed decisions about performance salary increases. CoverPulse reads your policy forms as a .pdf, and identifies coverage gaps. No one seemed to know what algorithm was used to accomplish this but if it works this could be a huge benefit. We have all seen webchat boxes pop up when we visit a website. Now there are sites which are using chatbots equipped with Artificial Intelligence to answer real time questions posed from visitors to the site. This could free up lots of time if deployed properly. See ProNavigator from Canada for an example. WAHVE - refers to Work At Home Vintage Employees. These partially retired folks have lots of experience and can work part time for your agency if needed. Marble Box- Similar to WAHVE. This is an organization in India which does admin service work for agencies (though no customer contact). Both options can be beneficial to agencies which may not need a full-time employee. In addition, there is no need to pay benefits, retirement, etc. Mobile apps for agencies was also on the agenda. Insurance Agent Mobile Apps and Redhead were the 2 ven-
dors discussed. The main question raised was how often will our clients really use an app? The other question raised was how do we most effectively market the app? Secure email was the next item for discussion. There are many software options including Rpost, Virtu, Neocertified. Keep in mind that MS Office 365 can be used to send secure email at a fraction of the cost of using a third-party vendor. This is a system that many agents are already using. Electronic delivery of policies - either by email or some sort of client portal. Make sure to check your state laws for the definition of “delivery.� Physical mailing may be required, but if you have affirmative reason to believe that e-delivery is acceptable to a client, electronic delivery may be acceptable. Marty Agather from TrustedChoice.com was on hand. Marty reminded us that Trusted Choice (which is more than just TC.com) will do a website analysis for free for members (a $1500 value). TC.com traffic and referral volume continues to increase. 45% of referrals on TC.com are now commercial lines referrals. However,
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TC.com is trying to figure out how to be more effective in generating referrals in rural areas. We briefly discussed social media. One agent recounted how he uses Facebook for relationship management but stops short of actual marketing on this platform. Each time a prospect or client reads a post from his agency it is a “touch.” This helps when the agent is approaching the prospect. What may have been a cold lead is now a warm lead because the prospect is more familiar with the agency. Facebook ads are remarkably inexpensive and can be laser focused on a certain demographic, zip code, etc. In fact, you can develop a FB campaign targeting your own clients for cross-sell, new products, etc. When a user creates a FB account their email address or cell number is used. You have this info in your management system and can merge it with your ad campaign. By doing so, FB can reach only your current clients. Check out Nibby Priest and Jason Cass. These guys do a great job of using social media platforms to drive business growth and retention.
wonder if you’re doing enough I suggest you focus on one area first. Do your due diligence and then implement one item at a time. Then monitor to see if it actually provides the efficiency or cost savings you had hoped for. As an aside, I would like to remind all members to familiarize themselves with the many significant benefits Big I membership affords you. For instance, did you know that IIABA has reviewed every agency contract you are likely to sign and can provide input to you.
SAC Commercial Lines Meeting (Johnny Beckmann)
One word of caution. Rome wasn’t built in a day. If you read all this and begin to feel overwhelmed and/or
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Webcasts E&O Risk Management December 5, December 21
Ethics December 6
Available on Demand
Flood December 27
Available on Demand
Available on Demand
Commercial & Personal Lines Courses Click above title for courses & dates for 2017 Available on Demand
Seminars E&O Risk Management 5/8/18—Monroe 5/9/2018—Lafayette 5/10/2018—BR 5/11/2018—NOLA
E&O Risk Management 10/16/2018 –Shreveport 10/17/2018—Lafayette 10/18/2018—Kenner 10/29/2018—Covington
Events IIABR Installation Luncheon January 11, 2018
IIAGNO Installation January 19, 2018 Metairie Country Club
On-Demand Webcasts Masters Series: The Master Series are unique agency management courses from industry experts. in the Masters Series.
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.
Cyber Risk Manager (cyRM) Completion of the Cyber Exposures & Insurance – Train- ing 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 Louisiana Agent 30
The Big I advocates for a
Education Committee Meeting (Joey O’Connor) The Institutes have developed more agent specific training programs. They have developed a New Pro-
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ducer and New CSR successful start programs. Students can choose between two different course tracks, either personal lines focused or commercial lines focus.
good resource for new employee development. (IIABL offers both of these program on our website: www.IIABL.com
The Institutes also created a brand new intermediate level course for producers, referred to as PRC (Professional Risk Consultant). The program takes 6 to 9 months to complete. There are also new products for risk management and insurance (geared for producer after they do introductory course) which has a sales training component (Polestar). The National Alliance is in the middle of revamping their website. The CISR Program is now available to complete entirely online. The Agents & Brokers Education Network (ABEN) has become a significant source for online education in many states, and New Level Partners is a
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GOLD LEVEL
SILVER LEVEL
BRONZE LEVEL
BANKERS INSURANCE
CNA INSURANCE
FCCI GROUP
FOREST INSURANCE
GULFSTREAM P&C
HOMEBUILDERS SIF
IROQUOIS SOUTH, INC.
LANE & ASSOCIATES
LUBA WORKERS’ COMP
MAISON INSURANCE
MARKEL FIRST COMP
RPS COVINGTON
SUMMIT CONSULTING
AMERISAFE
EMC INSURANCE
AMERICAS INSURANCE
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IIABL 2017—2018 BOARD OF DIRECTORS & OFFICERS Neil Record President Record Agency, Inc.—Clinton John L. Beckmann, III President Elect J. Everett Eaves—New Orleans
Joseph A. O’Connor, III Secretary/Treasurer The O’Connor Insurance Group—Metairie H. Lee Schilling, Jr. National Director Schilling & Reid Insurance—Amite Richard Jenkins Past President Moore & Jenkins Insurance—Franklinton
Stuart Harris McClure, Bomar & Harris—Shreveport Ross Henry Henry Insurance Service—Baton Rouge Bret Hughes Hughes Insurance Services—Gonzales Harry B. Kelleher, III Harry Kelleher & Company—Harahan Philip McMahon Paul’s Agency—Morgan City Joe King Montgomery Thomas & Farr Agency—Monroe
Paul Owen John Hendry Insurance Agency-Zachary
Donnie Stiel Young Agent Representative Stiel Insurance of Acadiana, Inc.
Martin Perret Quality Plus—Lafayette
Byram H. Carpenter, III Moreman, Moore & Co—Shreveport
David T. Perry Arthur J. Gallagher RMS—Baton Rouge
Brenda Case Lowry-Dunham, Case & Vivien—Slidell
Robert Riviere Riviere Insurance Agency—Thibodaux
Joseph Cunningham, Jr. Cunningham Agency—Natchitoches
Armond Schwing Schwing Insurance Agency—New Iberia
Donna DiCarlo Riverlands Insurance Services—LaPlace
Michael D. Scriber Scriber Insurance Services—Ruston
Morris Funderburg Reeves, Coon & Funderburg—Monroe
Donelson P. Stiel David H. Stiel, Jr. Agency—Franklin Louisiana Agent 38