January 2017

IIABL STAFF

IIABL January Board Meeting

4–8

Jeff Albright Chief Executive Officer jalbright@iiabl.com

The Marketing War

10 – 17

Small Commercial Offerings

19

National Tornado Summit

27

Cyber & Gaps in Homeowner’s Coverage

31-33

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

Ask Mike

20-24

E. Lee Mowe Marketing Representative lmowe@iiabl.com

Commissioner’s Corner

24-30

Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com Jamie Newchurch Insurance Services jnewchurch@iiabl.com Lisa Young-Crooks Executive Assistant lyoung@iiabl.com

IIABL Calendar

26

Rate & Rule Filings

27

Tech Tips

28

IIABL Partners

36 Louisiana Agent 3

INDEPENDENT INSURANCE AGENTS & BROKERS OF LOUISIANA BOARD OF DIRECTORS MEETING JANUARY 20, 2017—NEW ORLEANS The following items were discussed at the board meeting:

2017-2020 Strategic Plan IIABL lobbyists and strategic planning consultants, David Tatman and Kathleen O’Regan, with the Tatman Group, led the IIABL Board through the final review of the 2017-20120 IIABL Strategic Plan. First they reviewed the planning process, then reviewed and revised the mission statement, then reviewed the ongoing perennial goals.

Finally, Tatman and O’Regan reviewed and discussed the 2017-2020 Strategic Goals, which include: 1. Engaging IIABL members in association activities and recruiting new members.

will provide significant benefits to member agencies and contribute revenue to fund association activities.

3. Improve and expand communications so that member agencies can find the resources they need when they are needed.

4. Workforce development – help member agencies find talented new employees and provide training and education resources to make employees productive.

On a motion by David Perry with a second by David Dethloff, the adoption of the 2017-2020 IIABL Strategic Plan was approved by the Board without objection.

2. Developing new products and services which Continued page 5

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2017 IIABL Legislative Agenda The IIABL Board discussed LDI Directive 209 which prohibits agency fees on individual health insurance. The dramatically reduced commissions on individual health insurance make it essential that agencies be able to collect agency fees. IIABL plans to work with LDI and other agent associations to introduce legislation to permit agency fees on individual health insurance.

On a motion by Joey O’Connor with a second by Robert Riviere, the plan for IIABL to work together with LDI and other agent associations to introduce legislation to allow agency fees on individual health insurance policies was approved by the Board without objection.

The IIABL Board discussed legislation in 2016 that limited LA Citizens to resident agents in response to a similar statute in Mississippi that prohibits Louisiana agents from writing business in the Mississippi Wind Pool. Unfortunately, the law has unintended consequences. First, the

Texas Wind Pool allows Louisiana agents to write business, but the new law now prohibits Texas agents from writing in Louisiana Citizens. Texas agents are understandably upset and plan to pass retaliatory statutes or regulations. We could end up with a multistate border war. Instead, IIABL plans to work with LDI and other agent associations to make the statute reciprocal so that LA Citizens will treat nonresident agents the same way their state treats Louisiana agents doing business in their state.

On a motion by Joey O’Connor with a second by Robert Riviere, the plan to work with LDI and other agents’ associations to introduce legislation to make LA Citizens reciprocal with other state residual property markets and permit out of state insurance agencies with Louisiana locations and Louisiana resident insurance producers to write business in LA Citizens was approved by the Board without objection.

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24/7 Agency Solutions IIABL CEO, Jeff Albright, presented a proposal to participate with the Big I of North Carolina to offer IIABL members 24 / 7 Agency Solutions, which offers expert independent agency website design, agency mobile apps, and a 24/7 agency backup answering service with licensed and trained insurance professionals.

On a motion by Joey O’Connor with a second by David Perry, the plan to partner with IIAB of North Carolina as outlined in the Letter of Agreement reviewed by the Board to provide for 27 / 7 Agency Solutions was approved by the Board without objection.

Proposal for Industry Education Foundation As part of our efforts to help recruit and train qualified people to work in IIABL member agencies, the board discussed the possibility of establishing a Louisiana insurance industry education foundation to fund qualified insurance training programs.

On a motion by Brenda Case with a second by Morris Funderburg, the plan to work with the Professional Insurance Agents and the Louisiana Surplus Lines Association to create a private nonprofit insurance industry education foundation was approved by the Board without objection.

Louisiana State Licensing Board for Contractors Service Problems Paul Owen described a variety of problems agents have had with the Licensing Board for Contractors with regard to certificates of insurance. The Board agreed that IIABL should work with the Licensing Board for Contractors to resolve these problems for the benefit of IIABL member agencies. Paul Owen, David Perry, Jeff Mohr and Jeff Albright volunteered to meet with the Licensing Board of Contractors to resolve these problems.

President’s Report IIABL President, Richard Jenkins, reviewed some of the activities and accomplishments of IIABL in recent months, announced that the next IIABL Continued page 7

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Board meeting will be March 9-10, 2017 in Baton Rouge, and plans are underway for an outstanding IIABL Convention June 18-21, 2017.

www.TrustedChoice.com, and with Big I member agencies receiving over 100,000 referrals.

IASC President’s Report Secretary Treasurer’s Report IIABL Secretary Treasurer, Johnny Beckmann, reviewed the November, 2017 IIABL Financial Statement with the board. Merrill Lynch advisor, David Ellis, reviewed the investments of IIABL member funds with the board and discussed the outlook for markets in 2017.

IASC President, Jeff Mohr, reported that Independent Market Solutions continues to search for ways to bring markets to small agencies that cannot access markets on their own.

The following IIABL Board Members were in attendance: Johnny Beckmann

J Everett Eaves

New Orleans

National Director’s Report

Byram Carpenter

Moreman, Moore

Shreveport

IIABL National Director, Lee Schilling, provided a federal government affairs update. The good news is that the Republicans are in charge and there is reason to believe that there will be a substantial reduction in regulations. The bad news is that the Republicans are in charge and they want to privatize flood insurance, which will mean that the September, 2017 reauthorization of the NFIP Flood Program will be very difficult. Schilling also reported on 2016 results from www.TrustedChoice.com, which exceed their goals with over 4 million people visiting

Brenda Case

Lowry-Dunham, Case Slidell

Joseph Cunningham Cunningham Agency

Natchitoches

David Dethloff

Dethloff Agency

Shreveport

Donna DiCarlo

Riverlands Agency

La Place

Morris Funderburg Reeves, Coon & Funderburg

Monroe

Ross Henry

Henry Insurance

Baton Rouge

Bret Hughes

Hughes Insurance

Gonzales

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Richard Jenkins

Moore & Jenkins

Franklinton

Harry Kelleher

Harry Kelleher & Co

Harahan

Philip “Phe” McMahon Paul’s Agency

Morgan City

Joe Montgomery

Monroe

Thomas & Farr

Joey O’Connor

O’Connor Insurance

Metairie

Paul Owen

John Hendry Insurance Zachary

Teeny Perret

Quality Plus Insurance

Lafayette

David Perry

Arthur J. Gallagher

Baton Rouge

Neil Record

Record Ins Agency

Clinton

Robert Riviere

Riviere Ins Agency

Thibodaux

Lee Schilling

Schilling & Reid Ins

Amite

Armond Schwing

Schwing Ins Agency

New Iberia

Mike Scriber

Scriber Ins Services

Ruston

Don Stiel

Stiel Insurance Agencies

Others Attending: Derek Canchola IIABL Young Agents Chairman Jeff Mohr, President Independent Agents Service Corp.

David Tatman & Kathleen O’Regan Tatman Group, IIABL Lobbyists & Strategic Planning Consultants Jeff Albright IIABL CEO

Franklin

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Why Independent Agents Are Losing The Marketing War

by Marty Agather

In an earlier article we focused on a couple of the poor marketing habits that many insurance organizations rely on time and again:

 Low price is the only measure of value,  Most of the industry has no ethics and is out to screw the public but XYZ Insurance is one of the few that does the right thing.

This post will identify what the directs and captive carriers are doing right, why they are winning today, and what we can change so that the independent channel can begin to compete effectively.

Before we get there however, we’re going to dive deep into the new shopping behavior.

The Evolving Buyers Journey Insurance is a fairly opaque topic for most consumers. We have our own language, which ranges from confusing (underwriting, all risk) to downright incomprehensible (co-insurance, aleatory contracts).

In that mythical time known as ‘the good-old days,’ insurance buyers were on the wrong end of the information asymmetry problem. They had less information, and insurance professionals had more. The only way for an insurance buyer to become educated was to interact with an insurance professional.

Because of that information asymmetry, carriers and agencies had the upper hand.

Consumers didn’t know what the pricing models were. They didn’t understand much about insurance; they certainly didn’t have resources like pissedconsumer.com.

Not that the issue was confined to insurance, we just deal in an arcane subject. This situation existed in all types of industries, both B2C and B2B. For example, car manufacturers used to control all of the information about their model line-up. An enthusiast’s magazine might have some performance information. Ads on TV might lead you to

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believe how much better your life would be if you drive the 2017 Gizmodo SuperSport.

But if you really wanted to know about option packages, colors, and how it felt to sit in one, you still went to the dealer.

Now all you need to do to get information on which model of the SuperSport has collision avoidance, you just fire up your browser and search.

Want to see what the interior looks like? Use the panoramic camera option to take a look.

Same thing if you want to know what a comprehensive deductible is. The internet has become the source for almost all information. And according to SiriusDecisions, 70 percent of the new buyer journey is completed prior to the buyer contacting the seller. Say it again: 70% of the buyer’s journey is complete BEFORE the buyer reaches out to you.

The new buyers journey consists of 5 stages:

 Awareness – The process of realizing you need to purchase a product or service, and doing the research and investigation.

 Consideration – Evaluation and inclusion or

exclusion of various sources and providers.  Decision – Selecting the provider who will win the business.  Experience – Using the product and/or service and determining it’s relative value  Advocate – Encouraging (or discouraging) others to use the product.

In this article, we’ll be focusing on the first three steps of the journey, which culminate with purchase.

Journey In Detail The average consumer goes through their busy life focused on the last social update, today’s EHollywoodTonight or sports scandal, or getting the kids to their next event. That is, until a trigger event takes place that refocuses their mind.

A trigger event is something that changes the status quo. They aren’t thinking about buying a new car until they are waiting for a tow truck on the side of the interstate. Or the last thing on their mind is their lack of a renters policy until an uninsured friend has a loss.

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A trigger event creates awareness of a need.

When a consumer enters the awareness stage, their equilibrium has been disturbed. The trigger event has prompted them to reassess their situation and start researching.

In the Awareness stage, buyers are trying to understand and talk about their problem. But they may not even be able to clearly state what their needs are, nor identify what the root issue is. As they do their research, their understanding of the problem grows, and they are more able to articulate the issue.

As the buyer becomes more knowledgeable about their needs, they enter the consideration phase.

During the Consideration phase, the buyer begins to look for a solution to their problem. They have a much better understanding of their problem, their needs and potential solutions. They can now clearly articulate and define their problem and their search for information becomes much more targeted.

In the consideration phase the buyer starts ‘trying your product on,’ seeing how your solution addresses their needs. In this stage, potential solutions and providers are starting to be either eliminated or added to the short list.

If the need to solve the problem continues to have urgency, the buyer will now enter the Decision phase of the journey. At this point, the buyer’s questions are less about whether or not your solution fits their needs and more about how you will deliver the product or service.

This is typically when the buyer reaches out to the seller. They already know that the product or service meets their needs, they just want to get the details.

If your solution hasn’t been part of the Consideration phase, you are fighting an uphill battle to get the prospect to add it in the Decision phase.

The Elephant in the Room Unfortunately, the direct writers and captive agency companies have a distinct advantage in this

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new buyers journey. Their massive advertising budgets have allowed them to guide the conversation for decades.

They have done a wonderful job of defining what the trigger event is for the insured. And what is it?

When they get their bill. How insidious is that? Every time the policy comes up for renewal (or is billed, if the insured is on a payment plan) they wonder whether they are paying too much.

The directs and captive companies have also built out wide and deep resources on their websites that allow buyers to do their initial research, narrow their choices, and if they so choose, make a decision.

Compare and contrast that with the way we in the independent channel do our marketing.

In the old insurance buyers journey, insurance purchases were hyper-local. The buyer visited a neighborhood agent to have their questions answered and if they were comfortable, they purchased a policy.

The information asymmetry meant that the agency had the answers and there was no other way for a consumer to purchase.

It made sense for insurance companies to focus their marketing dollars locally at point of purchase.

The agency was the voice to the insurance buyer and the exclusive source of information.

Unfortunately, that model doesn’t work with the new buyer journey. There are few consumer awareness marketing campaigns (aka top of funnel) being run

by IA channel carriers. And of those, only a fraction actually co-brand to a local agency.

Today, the hard truth is that when a buyer gets to an independent agent, the agent has to sell an unvetted option. Unvetted, because in the eyes of the buyer that carrier was not part of their research on potential options, and thus wasn’t on the short list.

The marketplace has changed, and our marketing tactics haven’t kept pace.

That’s why we’re losing.

Long Story Short The internet has leveled the scales for information.

Any number of comparison sites will quickly provide quotes. Many sites, including TrustedChoice.com offer information about insurance products and services.

Directs and captives also provide this information in great volume with high quality. But here is the difference. They spend billions of dollars creating awareness.

The independent channel doesn’t.

In the live debate between the author of the McKinsey Report “Agents of the Future” that predicted “The End of An Era for the Local Insurance Agent” and Bob Rusbuldt, the CEO of the Independent Insurance Agents and Brokers of America, interesting data was presented.

The McKinsey consultant didn’t just parrot the report, he provided details on the research that supported his conclusions. He presented one slide that showed the relative positions of marketing spend in insurance. He pointed out a couple of interesting data points for insurance marketing spending.



In order to create unaided brand recall, a company needed to spend $ 800 Million per year.  To even create aided awareness of a brand, a company needs to spend $ 425 Million per year  The entire IA channel combined only spends about $425 Million.

This last point is the crux of the matter. Insurance company A spends some marketing money telling consumers why the ‘Solid Foundation” insurance is the one you can trust. Insurance company B markets the cuddly stuffed bovine. Daybreak Agency promotes itself as the ‘Hometown Value’, while the Twilight Agency claims to be the ‘Last Choice’.

Individualized, mixed, competing marketing often ends up diluting the message of the IA Channel that consumers also need to hear.

The Solution As self-serving as it is to say, Trusted Choice ® is the only brand that the independent channel has that comes close to a being national in scope, consisting of: Louisiana Agent 15

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 21,000 Trusted Choice agencies in 27,000 loca-

tions.  60+ Trusted Choice Partner insurance companies.

This year's revised MRP follows a two-tier structure: 

Tier 1: Receive up to $750 for using the Trusted Choice logo on any consumer-focused items, including but not limited to Freedom Campaign ad materials, promotional items, original advertising (non-Freedom Campaign ads), or collateral items like business cards or stationery. Available for new and first-time MRP users only.



Tier 2: Receive up to $500 for a digital upgrade using a web developer or vendor, including updates to an agency website, social media or mobile app. The digital upgrade must include the Trusted Choice logo, Pledge of Performance and a link to the Trusted Choice website. This onetime reimbursement is available for all agency locations that have not been reimbursed for a digital upgrade in 2016.

It is time for us to work together to change the dynamic.

If you are a member of the Independent Insurance Agents and Brokers of America, encourage your nonTrusted Choice Partner carriers to participate. Direct more of your production to Trusted Choice partner companies as a thank you for their support.

If your insurance agency isn’t a member of the IIABA, this is the time to join us.

If you are an insurance company that isn’t a Trusted Choice Partner, it is time to join the battle for the new insurance buyer.

If you are already a Trusted Choice carrier partner, it is time to stop spending your marketing dollars at the bottom of the funnel where they are less than effective.

Carriers must start or continue efforts to create awareness at the top of the funnel for the IA channel brand via cobranded marketing with Trusted Choice.

That’s how we begin to compete effectively again.

Good Selling, Marty Agather

Trusted Choice® Opens 2017 Marketing Reimbursement Program

Encourage your members to fill out the MRP application and submit completed materials via email to Jo Buckley, Trusted Choice member advocate, or via mail to:

Demarcus Johnson

Trusted Choice®, Inc.

y

Attention: MRP Spread the word: Applications for the 2017 Marketing Reimbursement Program (MRP) are now available.

With this program, Trusted Choice® continues to ease the financial burden for independent agencies by providing marketing tools and offsetting the costs.

127 South Peyton Street Alexandria, VA 22314 Explore the MRP toolkit for details, insights and more, or contact Jo Buckley for more information.

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Surprise! Expanded Small Commercial Offerings Broader options put choice and quality at members' fingertips.

We get calls all the time asking if we can cover this commercial risk or another. Now when we tell members about the recently expanded small commercial market, we often get a pleasantly surprised response of, "Oh, really?"

Yes, really! With CNA and RLI/CBIC's Mainstreet mono-line general liability as available carriers we can cover more commercial risks than ever.

On top of that we've added excess and surplus lines through Gridiron.

Here is a summary of the new product line-up: Small Commercial Standard Markets CNA Small Business CNA Small Business currently offers a market for a broad variety of businesses, representing Healthcare, Financial Institutions, Professional Services, Business Services, Technology, Retail, Real Estate, Wholesalers and Manufacturing. BOP, Workers Compensation, Commercial Automobile, and Umbrella and Miscellaneous Professional Liability products are available. CNA is available in all states except AK & HI.

RLI/CBIC's Mainstreet Mono-Line General Liability available in all states. $5,000 minimum premium for packages and $500 for BOP. ACORD Applications and 3 year loss runs will be required.

Small Commercial Excess and Surplus Lines Gridiron offers over 350 eligible package classifications designed for small business. Package select business for coastal and non-coastal risks. Gridiron

available in AL, CA, CT, FL, GA, LA, MD, MA, MS, NJ, NY, NC, OR, PA, SC, TX, VA, & WA. To learn more or submit a risk for Gridiron, select Small Commercial Excess and Surplus Lines from the product menu. ACORD Applications and 3 year loss runs required.

You will be able to submit one ACORD application and select from available standard carriers online, with separate applications required for the Excess & Surplus lines product and Small Contractor Product.

The new markets are live! If you have any questions, please contact Big "I" Markets Commercial Underwriter Tom Spires at tom.spires@iiaba.net.

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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: Coverage form excludes the loss, but it might be covered elsewhere in the form.

Q. I need your advice on a claim that just happened. So far, we only have a “probable” denial by phone, and are awaiting written response from adjuster.

Our insured is an arborist. Late last week, he dispatched two of his crews to a local golf course, following a severe storm. Before they left the company’s parking lot, the supervisor called them to come into the office for something. They left their trucks running, and went inside.

When they came back out, one of the trucks had been driven away. The police found the truck a few hours later, hidden in some woods on an old logging road nearby.

However, all their expensive power equipment had been stolen.

The adjuster’s basis for his denial is going to be that theft under the Property in Transit coverage requires that the vehicle be locked, and that there are visible signs for forced entry, which was not the case here.

A. It is so frustrating to see a small businesses become the victim of these types of crimes of opportunity. In addition to the loss of valuable equipment, they will probably lose some business in the next few days, given the availability of work following the storm. This is when insurance moves from the theoretical to the real world, where a good insurance program, and an independent agent, can make all the difference. As first responders often say, “This is what we train for.”

The denial is technically correct, as far as it goes. Based just on the limited provision cited from the coverage form, the requirements for theft coverage are accurate. However, one important guideline to remember in analyzing any insurance coverage form is to understand context. Here is the entire provision for Property in Transit. Coverage form excerpts and comments are based on Insurance Services Office (ISO) forms. Proprietary forms may be different.

Commercial Property CP 10 30 10 12 Causes of Loss – Special Form F. Additional Coverage Extensions 1. Property In Transit This Extension applies only to your personal property to which this form applies. a. You may extend the insurance provided by this

Coverage Part to apply to your personal property (other than property in the care, custody or control of your salespersons) in transit more than 100 feet from the described premises. Property must be in or on a motor vehicle you own, lease or operate while between points in the coverage territory. b. Loss or damage must be caused by or result from one of the following causes of loss.

(1) Fire, lightning, explosion, windstorm or hail, riot or civil commotion, or vandalism.

(2) Vehicle collision, upset or overturn. Collision means accidental contact of your vehicle with another vehicle or object. It does not mean your vehicle's contact with the roadbed.

(3) Theft of an entire bale, case or package by forced entry into a securely locked body or compartment of the vehicle. There must be visible marks of the forced entry. c. The most we will pay for loss or damage under this Extension is $5,000.

This Coverage Extension is additional insurance. The Additional Condition, Coinsurance, does not apply to this Extension.

Comments: (1) Theft coverage is described in [F.1.b.(3)], and clearly requires the vehicle being locked, with visible signs of forcible entry.

(2) However, [F.1.a.] states that the Property in Transit Additional Coverage Extension only

(3) applies for property in transit more than 100 feet from the described premises. Therefore, there would be no theft coverage at all if the vehicle was less than 100 feet from the described premises, even if the vehicle was locked.

(3) Here is where context comes in. Keeping in mind that the CP 10 30 describes the covered causes of loss, it must be attached to the CP 00 10, which describes the types of property being insured.

Form

Commercial Property CP 00 10 10 12 Building and Personal Property Coverage A. Coverage

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We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.

1. Covered Property Covered Property, as used in this Coverage Part, means the type of property described in this section, A.1., and limited in A.2. Property Not Covered, if a Limit Of Insurance is shown in the Declarations for that type of property. b. Your Business Personal Property consists of the following property located in or on the building or structure described in the Declarations or in the open (or in a vehicle) within 100 feet of the building or structure or within 100 feet of the premises described in the Declarations, whichever distance is greater: (1) Furniture and fixtures; (2) Machinery and equipment; (3) "Stock" (4) All other personal property owned by you and used in your business; Comments: (1) Under [A.1.b.], Your Business Personal Property is covered while inside a covered building or structure, as well as in the open (including in a vehicle), within 100 feet of the described premises.

(2) So the actual claim is theft of covered property from the premises. That is why the Property in Transit Additional Coverage Extension does not apply.

(3) That takes us back to the CP 10 30, to see if theft from the premises is a covered cause of loss. There is no exclusion for theft of property from the premises, except for “Dishonest or criminal act (including theft) by

you, any of your partners, members, officers, managers, employees,” and “Voluntary parting.”

(4) But your insured was lucky in a way, since the theft occurred on premises. Since his equipment is usually at job sites, I would recommend that he consider covering it under an inland marine form of some sort, such as a tool & equipment floater.

(5) Lastly, there would be no coverage in their Business Auto Policy (BAP) for the stolen power tools and equipment. Section III – Physical Damage coverage only applies to “loss to a covered auto or its equipment.” However, if the thieves stole some of the truck’s equipment, such as certain permanently installed electronics, that loss is covered under either Comprehensive or Specified Causes of Loss.

Other examples.

There are numerous other situations where an accurate coverage analysis requires reading forms and endorsement for context, as well as reviewing possible applicable provisions that are located in various places in the coverage form or endorsement.

Example #1: The loss is not specifically excluded, but it still is not covered.

Situation: Seepage losses in Commercial Property and Homeowners.

Rain enters the building or dwelling, with no visible damage to the roof or walls. This is not uncommon in heavy thunderstorms, where the condition is sometimes referred to as the “carwash effect.”

Coverage analysis – Commercial Property.

(1) There is no Exclusion in the CP 10 30 Causes of Loss – Special Form which excludes damage from rain that enters without visible damage to the roof or walls.

The Exclusions are found on pages 1-4, Special Exclusions on page 5, and Additional Exclusions page 6.

(2) However, in the Limitations section, further down page 6, the following provision is found:

C. Limitations The following limitations apply to all policy forms and endorsements, unless otherwise stated: 1. We will not pay for loss of or damage to property, as described and limited in this section. In addition, we will not pay for any loss that is a consequence of loss or damage as described and limited in this section. c. The interior of any building or structure, or to personal property in the building or structure, caused by or resulting from rain, snow, sleet, ice, sand or dust, whether driven by wind or not, unless: (1) The building or structure first sustains damage by a Covered Cause of Loss to its roof or walls Louisiana Agent 22

through which the rain, snow, sleet, ice, sand or dust enters; or (2) The loss or damage is caused by or results from thawing of snow, sleet or ice on the building or structure.

Comments: (1) Damage due to rain, etc., to the interior of a building, or the personal property inside, is not covered unless a Covered Cause of Loss damages the roof or walls, which allows the rain inside. [C.1.c.(1)] (2) Since this form provides special form (“all-risk”) coverage, there must be a non-excluded event which damages the roof or walls sufficiently for rain to enter. The rain damage is considered a consequential loss due to a covered (non-excluded) cause. Therefore, rain that enters due (2) to no sign of apparent damage to the roof or walls is not covered.

(3) While the provision is found in the Limitations section, it has the same effect as an exclusion. However, insurance texts note that the intent is to more specifically limit certain coverages (rain, in this case), to specific types of property (interior items), so it is assumed that the forms drafters felt the Limitations section was a more appropriate place for this provision than the Exclusions section.

(4) For named perils forms (CP 10 10 Causes of Loss – Basic Form, and CP 10 20 Causes of Loss – Broad

Form), damage by rain to the interior of a building, or the property inside, is covered only if a Covered Cause of Loss damages the roof or walls, allowing the rain in.

This is specifically stated in the Windstorm cause of loss:

Form Form

Commercial Property CP 10 10 10 12 Causes of Loss – Basic

CP 10 20 10 12 Causes of Loss – Broad

A. Covered Causes Of Loss 4. Windstorm or Hail, but not including: a. Frost or cold weather; b. Ice (other than hail), snow or sleet, whether driven by wind or not; c. Loss or damage to the interior of any building or structure, or the property inside the building or structure, caused by rain, snow, sand or dust, whether driven by wind or not, unless the building or structure first sustains wind or hail damage to its roof or walls through which the rain, snow, sand or dust enters; or d. Loss or damage by hail to lawns, trees, shrubs or plants which are part of a vegetated roof.

Comments: (1) Since the “carwash effect” is obviously caused by windstorm, the coverage for rain damage to the inside of a building, or the property inside, requires that windstorm caused damage to the roof or walls that Continued page 24

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allowed the rain inside. [A.4.c.]

(2) For the other named perils in the Causes of Loss – Basic Form and Causes of Loss – Broad Form, there is no reference to rain as appears in the Windstorm cause of loss. However, if any covered peril in either of these two causes of loss forms damages the roof or walls to the extent that rain enters, the rain damage is considered to be covered by proximate cause from that peril.

Coverage analysis – Homeowners.

(1) Coverage for rain damage to property subject to named perils (HO 00 02 Coverages A, B & C, and HO 00 03 Coverage C, for example), essentially tracks the provisions discussed above for Commercial Property Causes of Loss Basic Form and Broad Form.

(2) For property subject to special form (“all risk”) coverage (HO 00 03 Coverage A & B, and HO 00 05 Coverages A, B & C), there is no exclusion for damage by rain which enters the dwelling without there being visible signs of damage to the roof or walls.

For example, the “carwash effect” can force water under doors, through partially open windows, etc.

This is often referred to as “seepage,” which is covered for Coverages A and B in HO 00 03, and Coverages A,B & C in HO 00 05.

Coverage analysis – Flood.

(1) For the entirety of the above discussion of Commercial Property and Homeowners coverages appli-

cable to rain entering a building or dwelling, it is important to note that any loss involving water (rain or otherwise), must reviewed under the Water Exclusion in each applicable coverage form.

(2) When rain hits the ground, it becomes “surface water,” which is excluded.

(3) Likewise, the Water Exclusion applies to damage from “Water that backs up or overflows… from a sewer, drain, …”, and “Water under the ground surface pressing on, or

flowing or seeping through… Foundations, walls, floors…

Basements… Doors, windows or other openings ,…” etc.

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.

Commissioner’s Corner Louisiana Citizens Depopulation Efforts in 2016 Louisiana Citizens Property Insurance Corporation (Citizens) is set to complete its tenth round of depopulation and for the first time in its history is looking at how much further it can go in divesting itself of policies. This fall, Citizens opened its book of business to the private market in the annual depopulation program that moves policies from the insurer of last resort to private companies. After this latest round of depopulation is complete, Citizens’ personal lines policy count will be about 52,500 residential policies. Including commercial policies, Citizens’ total policy count will be about 54,500.

According to Citizens, the eight companies participating this year will receive 10,304 policies through depopulation. That is predicted to drop Citizens homeowners’ market share to an estimated 0.8 percent of the total market, down from 1.3 percent at year-end 2015. 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 70 percent from the all-time high in 2008 of 174,000 policies.

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While the reduction in policies is a positive move for both Citizens and the private insurance market in Louisiana, there is a baseline of policies needed to sustain Citizens. Every year we hold our breath and wonder if this will be the hurricane season that sees the return of a destructive storm to the Louisiana coastline. Just as we all prepare our homes for hurricane season and hope that our preparations aren’t actually put to use, Citizens must do the same. There is a level at which the company must retain enough policies to fund its operations so that the company is able to adequately respond and pay out claims after the next big storm. Under the guidance of the new Chief Executive Officer Richard Newberry, Citizens will attempt to define this threshold in 2017 to ensure the companies’ continued health.

Also vital to Citizens’ continued success are the agents that sell policies and assist policyholders with questions, claims and concerns. In this year’s legislative session, we sponsored legislation that limits sales of policies issued by the Louisiana Citizens Property Insurance Corporation to resident agents licensed in Louisiana. Act 367 of the 2016 Regular Session became effective on June 5, 2016 and mirrors similar residency requirements in Mis-

sissippi and Texas.

Also notable in this latest round of depopulation is the participation of two companies new to the program - Spinnaker Insurance Company and Excalibur National Insurance Company which is also new to Louisiana. They are joined by six companies that previously participated in depopulation: Access Home Insurance Company, Capitol Preferred Insurance Company, Maison Insurance Company, Ocean Harbor Insurance Company, Safepoint Insurance Company and Southern Fidelity Insurance Company.

A total of 51,985 distinct policies were requested this year and 10,304 policies were authorized for removal to private companies. Of the companies that participated in depopulation in 2016, policies were requested and authorized as follows: Access Home Insurance Company requested 13,933 policies and 1,175 policies were authorized. Capitol Preferred Insurance Company requested 25,000 policies and 681 policies were authorized; Excalibur Insurance Company requested 10,176 policies and 966 policies were authorized; Ocean Harbor Insurance Company requested 9,230 policies and 915 policies were authorized; Safepoint Insurance Company requested 45,913 policies and 2,605 pol

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Webcasts E&O Risk Management February 7, February 16, February 21

Ethics March 16 & March 21

Flood February 15

Commercial & Personal Lines Courses Click above title for courses & dates for 2017

2017 E&O Classes 3/28—Monroe 3/29—Lafayette 3/30—Baton Rouge 3/31—Metairie

2017 Flood Classes 5/9—Bossier City 5/9—Monroe 5/10—Lafayette 5/11—Kenner 5/11– Covington

IIABL Fall Education Conference October 19 Shreveport Convention Center

Trusted Choice Make A Wish Bowling Fundraiser April 20th—New Orleans April 28th—Shreveport, Monroe, Lafayette, Baton Rouge

IIAGNO Installation Banquet February 3, 2017 Arnaud’s Restaurant

2017 Alvin Shepherd Big “I” Charity Golf Classics March 10, 2107 Audubon Park

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 – Training for Agents & Brokers course qualifies you to register for the cyRM certification for FREE.

Seminars IIABL Spring Education Conference March 9, 2017 Crowne Plaza Baton Rouge Flood & Ethics CE

Events IIABR Luncheon February 9, 2017 Juban’s Restaurant

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

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

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Company

Coverage Type

Overall % Impact:

Overall $ Impact:

Number of Policyholders:

Changes

Property Ins Assoc of LA

Businessowners

-7.5%

-$1,427,138

11,318

New:7/1/2071 Renewal: 7/1/2017

United Fire & Indemnity Co

19 – Commercial Automobile

+2.8%

$233,204

670

New: 3/1/2017 Renewal: 3/1/2017

Maison Insurance Co

LA Takeout Dwelling Fire Program

-2.0%

-$249,417

8,088

Federated Mutual Ins Co. Federated Service Ins Co.

19 – Commercial Automobile

+8.154%

$409,510

340

New: 4/15/2017 Renewal: 4/15/2017

American Fire & Casualty Ohio Casualty Insurance Ohio Security Insurance West American Insurance

Commercial Protector Business Program

+6.1%

$336,489

1,606

New: 9/1/2017 Renewal: 9/1/2017

NATIONAL TORNADO SUMMIT FEBRUARY 14—15,2017 OLKAHOMA CITY, OK What is the National Tornado Summit?

An annual conference aimed at saving lives and helping communities quickly recover from tornadoes.

Who Should Attend?

Anyone who prepared for and responds to tornadoes. Many NTS attendees work in the fields of insurance, emergency management and meteorology.

Management, Producers, Special Interest, and National Severe Weather Workshop.

Louisiana licensed agents and adjusters can earn 10 yours of continuing education credit.

Click here for additional information on the conference.

During the National Tornado Summit, attendees will have the opportunity to attend five general sessions and seven breakout sessions in five different tracks: Adjusters, Emergency

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By: Steve Anderson

How Mobile Friendly is Your Agency Website?

Use this Test to Find Out.

You will be penalized in a Google search if your agency website is not mobile responsive.

In April 2015, Google announced that they would be expanding their use of mobile friendliness as a “ranking signal” to determine what websites will be displayed on the search engine results page. I talked about this in detail in a TechTip titled Is Your Website Mobile Friendly?

The information in that issue is still valid and may be worth a quick review to understand the importance of your website being mobile friendly.

In addition to mobile friendliness, how fast your site loads on a mobile device or desktop has been an important “ranking signal” for quite a while. Do you know how fast your website loads on a mobile device, laptop or desktop?

Fortunately, Google provides a testing service that will rank your website in three areas: Mobile Friendliness Mobile Loading Speed Desktop Loading Speed Your site is graded on a 0 to 100 scale for each of the above three criteria.

I ran several of my websites through the tool and am a bit embarrassed to show you the results. I could pretend that my site is perfect, but I decided that it actually illustrates the point I am trying to make.

You need to check your website often to make sure it is performing well.

was fast loading also.

According to Google:



People are five times more likely to leave a mobile site that isn’t mobile-friendly.

Nearly half of all visitors will leave a mobile site if the pages don’t load within three seconds.

Fortunately, the test results provides concrete steps you can take to improve your website in each of the three areas tested.

You can choose to have a report emailed to you, or you can view the information on screen once the test is completed.

identified.

While some of the suggestions on what to fix are a bit technical, whoever created or manages and maintains your website should be able to take action to correct any problems

There is no question that many (most?) people begin their search for insurance information online. If your agency is not visible to that online prospect, then you’ve lost the chance to help them and don’t even know it.

I encourage you to test your website today and make sure whoever is responsible for maintaining your site is aware of and will fix any issues that are uncovered.

How often do you review your agency website to make sure it is current and up-to-date? What tools do you use to test your website? Let me know.

Your website is key to maximizing your Internet presence. Too often, we treat our sites as a project and, once completed, don’t think about it again. That is a mistake.

You’ll notice in the screenshot below that my scores were good for mobile friendliness, but were weak on mobile speed and desktop speed. This was an eye-opener as I assumed, because my website is mobile friendly, that it Louisiana Agent 28

Commissioner’s Column continued from page 25

icies were authorized; Spinnaker Insurance Company requested 15,733 policies and 2,293 policies were authorized; Southern Fidelity Insurance Company requested 25,000 policies and 1,038 policies were authorized.

As part of their continuing commitment to the Louisiana insurance market, independent agents authorized 4,885 policies, or 22.6 percent of their requested policies. State Farm agents authorized 1,646 policies or 14.4 percent of their requested policies. Allstate agents authorized 1,824 policies which is 15.9 percent of their requested policies.

Farm Bureau agents authorized 1,949 policies or 26.2 of their requested policies. Depopulation is a large undertaking, involving multiple companies and customers. Without agents to assist policyholders with plan selection and understanding their options, the process would not be nearly as productive as it is today.

of a -5.9 percent rate reduction which will take effect February 1, 2017. Coupled with the overall success of the depopulation program, these rate decreases reflect the resiliency and stability of our homeowners market in Louisiana. Added competition among insurers in the state as well as sound business decisions by Citizens’ leadership have contributed to our success. It is always our hope that fewer of our neighbors will have to purchase policies through Citizens. However, the continued health of our overall homeowners insurance market and the insurance needs of our neighbors that cannot turn to the private market make us reliant on Citizens as an option. I am confident that the continued work of agents, Citizens staff, and the insurance companies participating in depopulation are contributing to the long-term efficacy of this resource for our citizens.

Over the past year, I have granted two rate decreases for Citizens. One statewide personal lines rate cut of -2.4 percent that took effect on June 1 and a commercial rate filing with an overall impact Continued page 30

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Evolving Cyber Concerns Create Gaps in Homeowners’ Coverage

BY MATT CULLINA

Today’s criminals don’t want just your jewelry or car anymore — they want your digital property.

According to the FBI, there were nearly 8 million property crimes in 2015, with victims of these crimes suffering losses of over $14 billion. Property losses were dwarfed, however, by nearly $30 billion in estimated losses that cybercrime inflicted on U.S. consumers in the past year, according to Symantec.

Digital risks are outpacing traditional risks, creating new opportunities for the home insurance marketplace.

The current generation of cyberattacks have begun to target the digital devices and systems that connect us all on a daily basis, exposing novel areas of risk. Online cyber thieves encounter a wealth of avenues to steal components of an individual’s identity, starting with something as simple as a social media account that lists an individual’s birth date, which can be matched with other stolen personal data to hijack an identity. Most people’s mobile devices contain personal data that are a gold mine for hackers, including passwords to banks and healthcare portals and copies of tax statements with social security numbers.

On a daily basis, major retailers, banks and online providers report stolen data, with each hack exposing more consumers. Juniper Research predicts that the rapid digitization of consumers’ lives and enterprise records will increase the cost of data breaches to $2.1 trillion globally by 2019, almost four times the estimated cost of global breaches in 2015. At this point, the digital identities of millions of consumers have already been exposed and offered for sale on the dark side of the Internet.

Today, however, digital risk is much broader than identity theft. A new generation of risks has emerged as people spend more of their lives on online. Fake news, Internet trolls and cyber bullying have notoriously victimized innocent people and businesses online, causing reputational harm that can have devastating consequences. Most victims lack the skills or technology to address reputational harm in the free-for-all of the internet.

Once reserved for business owners and prominent

public figures, ransomware is trickling into the consumer space, and malware has begun to infiltrate any vulnerable system that cannot defend itself.

Criminals can purchase hacking kits online for just a few dollars and they are turning their sights on security gaps in homes as well as businesses.

At the same time, people routinely expose themselves to cybercrime by sharing a wide range of personal details on social networks. Birth dates and locations, addresses, schools, family members’ names and other affiliations can all be used to authenticate an identity, and cybercriminals are all too ready to use these kinds of details to their advantage.

For many victims, the impacts can be life-changing.

Identity theft creates immediate financial hardship for victims, but it can go well beyond, potentially impacting a victim’s employment and housing options, even their educational opportunities. The damage can extend for years as victims’ personal data is bought and sold on illicit websites to any number of criminals. It’s difficult to make someone whole again after such an intrusion, and monetary compensation only addresses a portion of the person’s loss.

For more than 10 years, homeowners’ insurance carriers have offered a variety of coverage options to victims of identity theft, which range from expense reimbursement to expert assistance that helps victims recover their identities, to tools that monitor and detect fraud. Millions of Americans are already covered, or have access to services, for free or at a significant discount, through their insurance company. But current coverage options don’t address the latest cybercrime techniques, leaving consumers on their own without expertise or recourse.

Most policies that cover identity theft are aligned with the Fair Credit Reporting Act (FCRA) regulations, which shield consumers from fraudulent charges when their data is stolen. However, a growing number of cyber exposures don’t fall into this category. Social media credentials stored in a stolen smartphone are not covered by FCRA or similar protections, for instance.

Louisiana Agent 31

Hackers may also attempt to use a pilfered device to execute social engineering scams, which can include posing as a victim to solicit money from relatives or trying to initiate an electronic funds transfer, a transaction that isn’t covered by federal reimbursement laws.

Commercial insurers have already recognized the opportunity to address a business’s full-scale digital risk with fast growing cyber insurance offerings. Now these approaches have been adapted for the home insurance market, enabling carriers to offer family cyber coverage.

Rethinking personal lines policy coverage for the digital age Policies that provide family cyber coverage can help pay for the extortion associated with ransomware and similar attacks.

Coverage to address system compromise is also gaining traction. It helps victims whose technology platforms have been attacked, either by a targeted hack or by malware, and who may need assistance restoring everything to working order. The forensics con-

sulting that identifies the source of these exposures and outlines solutions to close existing leaks may also be included in cyber policies. These coverage options may also provide reimbursement for technical assistance.

With these updates, conventional personal lines coverage can provide adequate protection for valuable digital assets.

Most people don’t know how to respond to cyber bullies, social media hijackers or Internet trolls. Reputational coverage can act like a personal advocate online, clearing away erroneous or negative statements and restoring the victim’s control.

In 2017, the insurance market will see family cyber coverage being introduced for the first time that addresses issues such as cyber bullying and protection against online reputational damage. Carriers will be able to respond to these more complex risks, offering coverage, expert support and tools that make a real impact on victims’ lives.

In the cold world of cybercrime, technical savvy and the human touch are essential

components of the next generation of personal lines coverage for these kinds of digital exposures.

Matt Cullina has 15 years of insurance industry management, claims and product development experience. He is the CEO of Scottsdale, Ariz.based CyberScout (formerly IDT911), a consultative provider of identity and data risk management, resolution and education services. Connect with him via LinkedIn.

Cyber Liability for IIABL Members

Do you have insurance coverage to protect your agency against these cyber risks?

Beazley

Data Breach Information Guide Data Security Risk Management

Chubb

CyberSecurity: Insurance for Data Security Breach & Privacy Losses CyberSecurity: ForeFront Portfolio 3.0

IABL is now offering two new cyber liability programs through Beazley and Chubb. These programs provide IIABL members with coverages designed especially for independent insurance agencies with significant discounted pricing.

As independent insurance agents, we handle a lot of sensitive personal customer information. We upload, download, email an use websites which handle all of the personal information and are potential targets for data breach and cyber liability.

IIABL is pleased to offer through our partner Aben the Cyber Risk Manager designation.

Click here for additional information on how to obtain this designation.

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AMERISAFE

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ASI

BANKERS INSURANCE

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FCCI GROUP

FOREST INSURANCE

GULFSTREAM P&C

HOMEBUILDERS SIF

LANE & ASSOCIATES

LUBA WORKERS’ COMP

MAISON INSURANCE

MARKEL FIRST COMP

RPS COVINGTON

CNA INSURANCE

SUMMIT CONSULTING

Louisiana Agent 35

IIABL 2016—2017 BOARD OF DIRECTORS & OFFICERS Richard D. Jenkins President Moore & Jenkins Insurance—Franklinton Neil Record President Elect Record Agency, Inc.—Clinton

John L. Beckmann, III Secretary/Treasurer J. Everett Eaves—New Orleans H. Lee Schilling, Jr. National Director Schilling & Reid Insurance—Amite David Dethloff Past President Dethloff & Associates—Shreveport Derek Canchola Young Agent Representative Blumberg & Associates—Baton Rouge Byram H. Carpenter, III Moreman, Moore & Co—Shreveport Brenda Case Lowry-Dunham, Case & Vivien—Slidell Joseph Cunningham, Jr. Cunningham Agency—Natchitoches Donna DiCarlo Riverlands Insurance Services—LaPlace Morris Funderburg Reeves, Coon & Funderburg—Monroe

Ross Henry Henry Insurance Service—Baton Rouge Bret Hughes Hughes Insurance Services—Gonzales Philip McMahon Paul’s Agency—Morgan City Joe King Montgomery Thomas & Farr Agency—Monroe Joseph A. O’Connor, III The O’Connor Insurance Group—Metairie Paul Owen John Hendry Insurance Agency-Zachary Martin Perret Quality Plus—Lafayette David T. Perry Arthur J. Gallagher RMS—Baton Rouge Robert Riviere Riviere Insurance Agency—Thibodaux

Armond Schwing Schwing Insurance Agency—New Iberia Michael D. Scriber Scriber Insurance Services—Ruston Donelson P. Stiel David H. Stiel, Jr. Agency—Franklin

Louisiana Agent 35