October 2017

Louisiana Agent October 2017 A publication of the: Independent Insurance Agents & Brokers of Louisiana

Inside this issue: 

New Producer License Renewal Schedule



Power Surge in HO vs.

Commercial Property



InsurTech Threats & Disaster Preparedness



Closing the Talent Gap

Louisiana Agent October 2017

In this issue:

IIABL STAFF Jeff Albright Chief Executive Officer jalbright@iiabl.com

IIABL Starts Automobile Insurance Initiative ................5-7

InsurTech Threats & Disaster Preparedness ........... 5, 8-13

Francine Berendson Director of Communications & Events fberendson@iiabl.com

100 Insurance Maxims ......................................... 14 – 20

Rate & Rule Filings ...................................................... 22

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

Tech Tips ............................................................... 23-24

Power Surge in HO vs. Commercial Property ............ 25-29

Calendar ..................................................................... 30

Fall Ed Conference Recap ............................................. 31

The New Producer License Renewal Schedule .......... 32-24

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

Update Your Website Security ...................................... 36

IIABL Partners ...................................................... 38

Cover photo provided by: #GeauxDowntownBR Follow on Instagram & Facebook

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IIABL Starts Automobile Insurance Initiative In recent months, IIABL has heard from all sectors of the insurance industry that the automobile insurance market is on the verge of crisis as evidenced by significant problems with both affordability and availability. Several insurance companies have stopped writing auto insurance in Louisiana, others have restricted underwriting, and all have increased prices significantly.

Automobile insurance markets have hardened countrywide as both frequency and severity of losses has increased. Cheap gas has resulted in more miles driven, which combined with an epidemic of distracted driving has caused frequency to increase significantly. The explosion of technology in vehicles including cameras and sensors in bumpers and mirrors has driven up the expense of repairing vehicles.

However, Louisiana has a bigger problem than these countrywide challenges in automobile insurContinued page 7

Big I Agents Council on Technology (ACT) InsurTech Threats & Disaster Preparedness InsurTech! The word stimulates a lot of debate among agents about the extent to which this poses a threat and what should be done to address it.

Some dismiss the threat by analyzing flaws in a particular venture or mocking past studies that predict the demise of the independent agent. So, what is this newest evolution in our industry? The broadest definition involves the use of technology innovations designed to create cost savings and efficiency. InsurTech encompasses everything from startups and market “disruptors� like Lemonade to self- driving cars to the technology in a connected home which may, one day, result in premium discounts offered by carriers.

First things first: do we have anything to worry about? Will this be the newest threat du jour to independent agents which never comes to fruition?

Or will we all be out of a job in the next five Continued page 8

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Auto Insurance continued

ance. The Louisiana accident frequency rate is just slightly higher than the national average.

The Louisiana property damage claim rate is in line with the accident frequency rate…slightly higher than the national average. However, the Louisiana bodily injury claim rate is…wait for it… you know what is coming…TWICE THE NATIONAL AVERAGE. This bodily injury claim rate problem is a long-term trend in Louisiana. It is the root cause of our high auto insurance rates and limited market capacity.

From what we are hearing from both agents and insurance companies, IIABL believes that we may be headed for a real automobile insurance market crisis. We think that the auto market may get bad enough to motivate the Louisiana Legislature to make significant changes in the law to address the problems, the way they did when the Workers’ Compensation market collapsed in the 1990s.

The underlying problem driving our high bodily injury claim rate is our tort liability system. The solution is substantial tort reform.

IIABL believes that the 2019 elections provide a unique opportunity for real tort reform in Louisiana. Term limits will create close to 60 open seats in the Louisiana legislature. The business community needs to make a concerted effort to elect legislators who support tort reform. We will also have an opportunity to elect a Governor who is committed to tort reform.

IIABL has started an initiative to work with the insurance industry, business community, and to conduct extensive grassroots efforts with policyholders to drive tort reform in the 2019 election and in the 2020 Regular Session of the Louisiana Legislature.

We have asked insurance companies to work with us to conduct research on claims data to determine the underlying problems our Louisiana tort system and identify specific tort reform solutions which could be proposed to the Louisiana

Legislature.

We have already started conversations with Louisiana business associations to begin building a broad-based coalition to support tort reform solutions in the Louisiana Legislature.

IIABL member agencies, along with other Louisiana insurance agents, can provide powerful grassroots support for tort reform by explaining to policyholders that tort reform is the only way to reduce automobile insurance rates. IIABL plans to provide leadership and educational materials to support a broad-based grassroots effort by Louisiana insurance agents.

We also plan to meet with legislative leaders to develop support and strategy for this tort reform effort.

The IIABL Executive Committee recently met with Insurance Commissioner Donelon to request his help with these efforts to deal with the automobile insurance crisis in Louisiana. Commissioner Donelon agreed to do what he could to help with tort reform efforts and improve the automobile insurance market.

The IIABL Executive Committee also discussed the ability of insurance companies to get adequate rates in this hard market with Commissioner Donelon and his staff. Commissioner Donelon recognizes the need for insurance companies to maintain adequate rates, and assured us that the Department is allowing reasonable rate increases when actuarially justified.

Passing tort reform and solving the Louisiana automobile insurance crisis will be a long and arduous process. It will take hard work from many people in many different industries and organizations. IIABL will play whatever role we can in this process. At this time, we are trying to focus attention on the automobile insurance crisis and the tort reform needed to improve the Louisiana automobile insurance market.

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Act Continued

years…? I have come to believe that the threat to our industry exists only to the extent that we ignore it. The independent agent when he/she does his/her job well is perfectly situated to be the best solution for the American insurance consumer. Survey after survey for the last quarter century, shows that consumers want: 1) carrier choice and pricing transparency, 2) advocacy, 3) proactive loss control advice, 4) coverage advice and direction even when the consumer doesn’t necessarily understand what that means. Look at the J.D. Power 2017 U.S. Property Claims Satisfaction Study. The industry’s cumulative score was the highest ever. Specifically, surveys have shown that customer satisfaction is highest when agents help insureds file claims. Despite intense pressure from other channels IAs have maintained market share and continue to leverage their unique ability to provide clients with ease, choice, and advice.

We can agree that the sky isn’t falling but that

doesn’t mean we can afford to ignore the new opportunities which technology presents to us.

We will see more change in the insurance industry in the next 5 years than we have seen in the last 25. Our customers and clients will demand ease of managing their accounts online, afterhours access, mobile friendly websites, and mobile apps just to name only a few.

Recently I attended the Big I Agents Council for Technology (ACT) conference in Chicago. The mission of ACT is to bring all independent agent & broker distribution stakeholders together to advance the use of the most effective agency workflow technologies. The goal is to enhance productivity, sales & marketing, service, and security. As an IIABA program, ACT focuses on strategic trends and drives improvements to the customer experience. The conference topics were varied but the central theme is that tremendous change is coming and we must meet it head on.

One of the items discussed

Continued page 11

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Act Continued

which is most pertinent to agents in coastal areas like Louisiana is disaster preparedness. Many resources are available which can help you if you feel overwhelmed getting a disaster plan in place for your agency. See the following: http:// www.independentagent.com/Resources/ AgencyManagement/ACT/Pages/planning/ DisasterPlanning/default.aspx. Some of this content is being updated now but is still very relevant in the interim. Also, see E&O Happens here: http:// rms.iiaba.net/Resources/Pages/Webinars/RiskManagement/Catastrophies/default.aspx. This webinar details how to prepare your agency for a catastrophic event. Experience can be a tough teacher and we have all learned much from the many storms we have endured. When considering Best Practices of documentation remember the Three C’s and the Three W’s. Clear, Concise, Consistent. Who, What, When. Documenting a conversation is good. Documenting and following up with an email or letter is better. Best is to document, follow up and have the client sign off on the details of the conversation. We

discussed a few practical considerations after a catastrophe: After a catastrophe, return calls ASAP. You may not have an answer but anxiety grows when our clients don’t hear from us.

You may have heard the old expression, “bad news is bad, but bad news late is really bad.” Be realistic about timeframes. Our insureds may not want to hear that they will not be contacted for 10 days but they would rather hear that than expect a call from someone immediately, and become more exasperated with each passing day.

Check with your carriers about their specific catastrophe plans and the resources they may make available to you during these tough times.

Finally, check out the VU Point newsletter, The Psychology of Downed Trees by Chris Boggs here: http://www.independentagent.com/Education/VU/ Agency%20Management/Miscellaneous/ BoggsDownedTrees.aspx. It’s helpful to understand what our clients (and often members of our agencies) are experiencing during these stressful times. People will be on an emotional roller coaster, going from the initial relief that they have survived the storm to despair over the magnitude of their loss. The Reality stage quickly turns to anger because of the lack of control felt by the claimant.

The Recovery stage is also tough because it often takes so much longer than initially thought. I recall recently watching people on the news commenting after the Houston floods how happy they were to be alive and that they “just can’t wait to get back to normal.” The Baton Rouge metro area where I live suffered disastrous floods in August 2016, and having experienced that event, my heart really went out to these people in Houston.

They have no idea how long it will really take to get back to anything that approaches normal.

The Big I has many resources to assist your agency with disaster planning and recovery. Please take advantage by visiting our website: www.IIABL.com.

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Closing the Talent Gap

By Sharon Emek, Ph.D. Here’s a sobering thought – by next year, the Bureau of Labor Statistics (BLS) reports there could well upwards of 200,000 positions in the insurance industry that will go unfilled. That’s because 25% of the current insurance workforce is expected to retire in 2018, according to Insurance Business America.

And the problem could snowball over time. The Griffith Insurance Education Foundation says today’s average insurance professional is 45 years old. Over the next 15 years, BLS reports that nearly half of the current insurance industry workforce will retire.

While that may not come as a total surprise given the widely publicized exodus of 70 million Baby Boomers from corporate America, it’s an issue that becomes more critical coupled with the news that millennials just aren’t interested in the insurance industry. According to a study by The Hartford, just 4% of millennials have an insurance career on their wish list.

For the agency or brokerage looking to hire, that creates a significant gap in the talent pool. If attracting millennials isn’t

working and locating talent is becoming increasingly difficult, the industry must innovate in how they hire and employ, and how they perceive the way we do business.

The “New” Talent That includes rethinking who your next worker will be. There’s a wealth of talent and skill with proven expertise that could be employed today – retiring workers. At WAHVE we interact with many retiring or retired workers (“pretirees”) who are wanting to continue working, but not necessarily in the traditional sense. Some veteran insurance pros are looking to downsize their careers, either to gain more work-life balance or to change direction and focus in new areas.

Plus, economic pressures compel some insurance veterans to continue working. Some are looking to supplement retirement income, while others are looking to recoup losses sustained during the recession. These are engaged, interested, and skilled workers eager to bring their knowledge back into the market in a support role. And they want to

Continued page 13 Louisiana Agent 12

work from home.

The New Office It’s a business model that’s increasing in popularity and use. According to Gallup’s State of the American Workplace report, 43% of today’s workforce performs all or part of their work from home. And there are distinct advantages to hiring with remote workers: Low or no overhead. Adding to your employee pool usually comes with additional expenses – benefits, dedicated office space, training and the like. Remote workers remove nearly all of those costs, and require minimal training, usually just a few days to a week learning your management systems, if they don’t already know it.

Improved communication. Our clients report that they communicate more frequently with their wahve workers than if that worker were sitting in the office.

That’s because wahves are connected through messaging and video chat technology whenever they’re working for a client.

Affordable consultancy. If you’ve hired a truly ex-

perienced remote worker, you have at your disposal a consultant who has worked in the industry and can advise on complex issues.

Access to a large talent pool. A remote worker removes geographical boundaries. Your next underwriting specialist, claims adjuster, or policy rater needn’t be next door.

As the talent shortage heats up and agencies struggle to fill positions, a pretiring insurance professional can offer more than just a helping hand. No matter the need, agencies can get talent, knowledge, and rightsized skills all at an affordable price. That kind of remote, dedicated worker can help agencies grow and profit in a shifting employment market.

About the author Sharon Emek, Ph.D., CIC, is president & CEO of Work At Home Vintage Experts, an innovative contract staffing talent solution. WAHVE matches retiring insurance professionals leaving the regular workforce to insurance firms to meet their full- or part-time staffing needs.

You can reach Emek at sharon.emek@wahve.com or 646.807.4372, ext. 3754.

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100 Insurance Maxims Bill Wilson, CPCU, ARM

This is my 100th blog post since I officially launched this year. So, to commemorate this pontification landmark, I decided to post 100 insurance do’s, don’ts, myths, caveats, warnings, suggestions, etc., etc., etc. Hope you find a nugget or two.

1. There is no such thing as “full coverage.”

2. If you let someone drive your car and they injure someone or damage their property, your insurance almost always pays first.

3. The rental car loss damage waiver covers things not covered by most PAPs and vice versa.

4. The loss damage waiver on a rental car is not a “rip-off.” Buy it as if it’s any other necessary cost of your trip.

5. Don’t listen when “Flo” says, “You get the SAME COVERAGE, often for less”…insurance policies are different.

6. Insure all resident family members on one auto policy if at all possible…if not, make sure coverages and limits are as identical as possible.

7. Everyone today needs auto insurance, even if it’s a named nonowner policy.

8. Never use coverage suspension endorsements on personal autos.

9. Compared to many auto policies in the marketplace today, the ISO PAP is the “Cadillac” of PAPs…ask the carrier if their form is as good or better than the ISO PAP. Continued page 15

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10.If a family has a student in college without an auto, make sure they do not have regular access to someone else’s vehicle.

11.It is often a mistake to drop physical damage coverage on an auto, regardless of its age or value.

12.Some policies cover things like pizza delivery, but others don’t…make sure you know which is which and ask your customers about this type of exposure.

13.Some policies cover street racing and some don’t…do you know the differences between the policies you sell for exposures like this or other exposures?

14.A policy with a “stated amount” limit on an auto (usually an antique or specialty vehicle) is often a reduction in coverage, not “agreed value” coverage.

15.Anyone with access to a company car should have extended nonowned coverage on their PAP. 16.Most auto policies do not require that “auto equipment” be attached to the vehicle at the time of loss in order to have PAP coverage.

17.Far too many non-ISO auto policies are crap. Don’t sell them.

18.The balance on your mortgage has nothing to do with how much Coverage A you need and lenders who insist on this are violating the law in many states.

19.An HO-5 is often only 10-15% more costly than an HO-3…sell it.

20.Always offer personal injury coverage if not included in the HO policy.

21.Renters need high liability coverage and often have a greater need for an umbrella policy than home owners.

24.Far too few HO policies include optional coverage endorsements other than scheduled property floaters…use an exposure checklist and offer them.

25.HO policies usually extend liability coverage to vacant land, but the majority of such land is likely not vacant.

26.The ISO HO-3 and HO-5 do not exclude leaking roofs…there is no requirement that the building be damaged by windstorm before interior building damage is covered.

27.Increasingly, homeowners policies do not cover the use of drones and personal injury coverage usually does not cover drone invasion of privacy claims.

28.Most homes are undervalued for Coverage A. 29.Many, if not most, insureds have business property on their premises today…inquire and offer additional coverage beyond this and other policy sublimits.

30.Always offer open perils and replacement cost coverage on personal property.

31.Unlike many HO policies in the marketplace, the ISO HO-3 and HO-5 do not exclude repeated seepage or leakage of water over time if damage is promptly reported…this can be a very valuable coverage.

32.Possibly the majority of homeowners now have an “in-home business” exposure, either from their own business or while working from home part-time or as a telecommuter.

22.Always ask customers if the named insured(s) reside in the home and expect to continue to do so.

33.HO policies often provide little, if any, coverage for the use of riding mowers and other service vehicles off the residence premises…talk to your underwriters about options.

23.Water backup coverage endorsements usually exclude backup caused by flooding.

34.Encourage condo owners and HOA residents to buy maximum limits of loss assessment coverage.

Continued page 16 Louisiana Agent 15

35.Many homeowners have uninsured off -premises Coverage B exposures (e.g., boat docks) that should be revealed using exposure checklists.

36.Renters insurance offered through apartment management companies is often pure overpriced crap…sell quality HO-4s and umbrellas to renters whenever possible.

37.If a home is owned by a trust, be very careful how it is insured…talk to the underwriter and document the conversation.

38.Determine in advance which of your carriers cover, exclude or limit “matching losses” for roofs, siding, etc. and give this strong consideration when placing customers with these exposures.

39.Everybody is in a “flood zone.”

40.Never recommend someone not buy a particular insurance coverage.

41.If you buy a home in flood zone X and

the lender is not requiring flood insurance, there is no 30-day wait if you buy the policy the day the loan closes.

42.Never base a coverage decision on “I’ve always heard that….” Or “We’ve always….”

43.Always offer optional utility service coverage on both a direct damage and time element basis…failure to do so is one of the top E&O claims following natural disasters.

44.Strongly encourage customers to reduce the 72-hour business income waiting period to 24 or zero hours.

45.Always offer building ordinance or law coverage.

46.Always offer additional limits of debris removal coverage on commercial buildings.

47.Business income coverage for dependent properties is far too often overlooked.

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48.The most overlooked advantageous business income endorsement is possibly the CP 15 20.

49.Always offer coverage for catastrophic exposures like flood and earthquake… consider a DIC policy if there is a landslide exposure.

50.Be wary of margin clauses, either those provided by endorsement (like the CP 12 32) or those buried in non-ISO policy forms.

51.Always attempt to have protective safeguards endorsements (like the CP 04 11 and CP 12 11) removed.

sentative of policy terms.

61.Avoid endorsements that tie coverage to classification codes or types of operations.

62.If you want an E&O claim, allow the CG 21 49, CG 21 55, or CG 21 65 endorsements to be attached to a policy.

63.Make sure additional insured endorsements do not limit coverage to vicarious liability only or apply on an excess basis.

52.If there is any doubt if property is part of the building vs. contents, declare it as building property using the CP 14 15.

64.Do everything you can to avoid the attachment of CG 21 39, CG 24 26, and CG 22 94 (or CG 22 95) endorsements.

53.A commercial property policy (e.g., CP 00 10) should include a description of any building that houses contents, even if no coverage is desired on the building.

65.If there is any doubt about whether an event is coverage as host liquor liability, recommend liquor liability coverage be purchased.

54.“Fire damage legal liability” coverage is not enough if you lease premises…read the lease and you’ll find out why.

66.Most EIFS exclusion are onerous… avoid them if at all possible.

55.Avoid “Special Condition,” “Contractor Warranty,” or similar onerous policy forms.

56.There is no such thing as a “comprehensive general liability” policy… it’s been called “commercial general liability” for over 30 years.

57.Policy forms do not always do what you think they do…two good examples are the CG 22 93 and CG 22 64.

58.Always quote higher liability and medical payment limits on liability policies.

59.Fight to remove endorsements that limit coverage to designated premises or operations, such as the CG 21 44, CG 21 54, and CG 21 34.

60.Never add any unnecessary comments on a certificate of insurance that are broad, vague or could be interpreted as misrepre-

67.Ask the underwriter if a policy package includes a cross liability exclusion…if so, have it removed.

68.The ISO CGL says it covers “BYOB” liquor establishments, but that might not be true.

69.Almost every defunct business needs discontinued operations coverage.

70.Every business needs hired and nonowned liability coverage using Symbols 8 and 9.

71.BOP hired and nonowned auto coverage is usually not as broad or flexible as BAP Symbols 8 and 9 coverage.

72.There is no coverage under most business auto policies for temporary substitute vehicles unless you have Symbol 8 physical damage coverage.

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73.ISO has no business auto additional insured endorsement.

74.Be wary of driver exclusion endorsement, especially those that apply to coverage for ANY insured if the claim involves an excluded driver.

75.Every business auto policy should include the CA 99 33 and CA 20 54 endorsements.

76.Do not use suspension or lay-up endorsements for commercial autos or mobile equipment.

77.Over 35% of all NFIP policies are at maximum limits…always quote excess flood insurance if available.

78.There is no such thing as a “following form” umbrella or excess policy.

79.Tenant “build-outs” are not the same as tenant improvements and betterments.

80.Coverage for damage to rented premises should always be provided by a first-

party direct damage CP form (not CGL FDLL or the CP 00 40).

81.Not every account can or should be written on a BOP. 82.Always make sure you know who owns what property being insured, especially autos.

83.Personally-owned autos usually should be insured on a PAP and business-owned autos on a BAP…it is almost always a mistake to insure a personally-owned auto on a BAP.

84.Education is an investment, not an expense…if you think the cost of quality education is expensive, try the cost of ignorance.

85.Do not bid on accounts beyond your expertise.

86.Almost 40% of NFIP policies have building coverage only, no contents coverage… always quote and encourage contents coverage.

Continued page 19

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87.Always compare what coverage a customer needs to what was bound and/ or ordered from the carrier to what the carrier actually provided…pay particular attention to exclusionary endorsements the carrier added.

88.Address coverage questions to a carrier’s claims department, not underwriting.

89.Most attorneys, CPAs, financial planners, roofers, plumbers, and others know nothing about insurance…make sure your customers understand this when they get insurance advice from them.

90.Most policies do not have “flood” exclusions…they’re “water” exclusions.

91.Damage from toilet overflows is usually coverage by homeowners policies but not by commercial property or BOP policies.

92.Establish “minimum limits” and

“minimum coverage” standards for your agency…e.g., never sell minimum limits auto coverage nor UM/ UIM limits less than liability limits.

93.Be very, very wary about providing noninsurance advice…your E&O policy may not cover a resulting claim or lawsuit.

94.Use self-documenting means of communication (e.g., email) when discussing coverage with customers, underwriters, and adjusters.

95.Do not communicate with your customers only at renewal.

96.Be very careful about modifying an insurance program during or following a divorce, especially when there are requests to remove or reduce coverage.

97.Physically inspect every property you insure.

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98.Never accept an oral declination of a claim by an adjuster…always require it in writing and demand that policy language be cited for the basis of the denial.

99.Do not take over an account via AOR before doing due diligence and never renew “as is.”

100.Always practice the “RTFP!” Doctrine.

Do you have questions about any of the above? Do you have any insurance maxims of your own you’d like to share? If so, feel free to post your questions or suggestions below in the Comments section.

P.S. I will be speaking next week in Oklahoma City on “The Reports of My Death Have Been Greatly Exaggerated: Commoditization, Disruption, and the Imminent Death of the Insurance Agent” and also doing a webinar on the NEW (finally) ISO Personal Auto Policy that will be effec-

tive next year. As a result, there’s a good chance I won’t be blogging next week.

In fact, my blogging might be a little spotty for the next month. If you are in North Carolina, I will be doing CE seminars in Raleigh, Greensboro, and Asheville November 14-16.

The morning session is “Finding and Fixing Personal Lines Coverage Gaps” and the afternoon session is “Finding and Fixing Commercial Lines Coverage Gaps.” You can get more information and register here.

I hope you’ll consider attending and, if so, please introduce yourself as one of my blog subscribers.

1.If you are a CPCU, I will be doing a free webinar for the CPCU Society called “Raiders of the Lost Coverage: Insurance Jones and the Temple of Exclusions.” Visit the CPCU web site for more details and to register. Or email me and I’ll send you a copy of the course outline.

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Company

Coverage Type

Overall % Impact:

Overall $ Impact:

Number of Policyholders:

Changes

Shelter Mutual Ins Co

4 – Homeowners Mobile Homeowners

+13.9%

$109,090

1,188

New: 10/30/2017 Renewal: 10/30/2017

Shelter Mutual Ins Co

4-Homeowners Revised Rate Homeowners Platinum Shield 4-Homeowners Revised Rate HO-3,HO-4, H0-6

+2.9%

$237,891

4,087

New: 10/30/2017 Renewal: 10/30/2017

+6.9%

$1,489,846

18,353

New: 10/30/2017 Renewal: 10/30/2017

LAMMICO

11-Medical Malpractice

+1.4%

$633,056

6,638

New: 1/1/2018 Renewal: 1/1/2018

American Home Assurance Co Commerce & Industry Ins Co Nat’l Union Fire Ins Co of Pittsburgh New Hampshire Ins Co AIG Property Casualty Co

19 – Commercial Auto

+19.700 %

$2,083,860

421

Shelter General Ins Co

19 – Commercial Auto

Revised Rate +20.400 %

$517,303

1,150

New: 3/6/2018 Renewal: 3/6/2018

Southern Fidelity Ins Co

4 – Homeowners

-.07%

-$127,951

686

New: 1/1/2018 Renewal: 1/1/2018

Shelter Mutual Ins Co

New: 12/11/2017 Renewal: 12/11/2017

IIABL Technical Advisories have been published and are archived on the IIABL Website since 1995.

This is an excellent member benefit— but you must login in to the IIABL website as this is member only content.

You can review the IIABL Technical Advisory Index (a comprehensive directory by Major Topics (Alphabetical) and in chronological order).

Many of your questions can be answered in this valuable member resource.

IIABL Technical Advisory Index

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How to Use the New LinkedIn Post Options LinkedIn continues to work on improving the user experience when using the platform.

They have recently made improvements and added some new features, including Multi-photo posts, Native Video, Loggedout Views of all posts, Share a Draft, and Disable Comments.

Here are all the details:

— Upload multiple photos in a single post You now have the ability to select multiple photos in a single post. You can share more of your experiences at a conference or upload more of the slides you presented. Currently available for upload on iOS (Android and desktop coming soon).

— Post native video directly to LinkedIn

I previously wrote about this update but include it here as a reminder. You’ll soon be able to record and post videos directly from the LinkedIn app, giving you another way to share your professional insights and perspectives. As I said previously, this has started rolling out to a small group of members, but you can expect to have access soon.

— Get more distribution! Share your content off of LinkedIn Guests and logged out users of LinkedIn can now see your posts, videos, and articles on LinkedIn. Just grab the post’s URL via the control menu and share it with your friends on Facebook, Twitter, and around the web!

— Share a draft of your article before you publish Want to get feedback on an article you are about to release before you publish it? You can now share your draft articles. Click on “Share Draft” in the article edit menu to get the link. Your drafts are only available to people who have these direct links that you choose to create. This allows you to get input from others easily. 

Take control over your comments

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As part of LinkedIn’s ongoing efforts t provide a professional environment that encourages sharing of perspectives and thoughts on professional issues, they have rolled out the ability to manage the comments on your posts and articles directly. This added feature gives you the option to enable or disable comments. Remember, responding to comments left on a post or article is a great way to increase engagement.

LinkedIn continues to improve the user experience and is an important platform that will contribute to improving your Internet Presence.

Are you using any of these improved features? What has worked well for you?

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: Power Surge in Homeowners vs Commercial Property

Q.

I am giving a presentation to a local business group in a couple of weeks. They asked me to address some of the important but often overlooked coverages in personal and business insurance. One of my topics will be power surge. I have done some reading in IRMI and FC&S Bulletins, and I think I have a fairly good grasp of the technical coverage issues. What I’m looking for are suggestions on organization, and maybe some examples, for my presentation that would make it more understandable and relevant to non-insurance people.

A.

I think you’ve chosen a good topic, considering all the electronic devices that are such an integral part of modern life. Here are my thoughts. All coverage excerpts and comments below are based on ISO (Insurance Services Office) forms and endorsements. One important reminder to your audience is that not all coverage forms are identical, and that there are many proprietary (and specialty) forms in the marketplace.

the ubiquitous property exclusion usually referred to as the “flood exclusion.” This tends to mischaracterize the true scope of what types of losses are within the exclusion. In actual fact, the Water exclusion lists numerous types of water events that are intended to be excluded, such as flood,

surface water, storm surge, backup of sewers or drains, subsurface water, waterborne material, etc.

The same is true for the term “power surge.”

That suggests some Hollywood special-effects event, with sparks flying and light bulbs popping.

For example, lightning is a natural form of a power surge. Especially in the commercial segment, there any many forms of electrical events, often subtle and undetectable without special equipment, which can cause damage.

Homeowners Insurance

HO 00 03 05 11 Overview The term “power surge” is generally described as “too much electrical power” that damages or destroys electronic devices or other property. The other side of that coin is “power failure,” or “the absence of electrical power” which causes damage.

While general descriptions are usually helpful in any form of communication, on occasion, they do not paint a true picture of the entire issue. In insurance, this is particularly true. A prime example is

Homeowners 3 – Special Form Section I – Perils Insured Against A. Coverage A – Dwelling and Coverage B – Other Structures 1. We insure against direct physical loss to property described in Coverages A and B. 2. We do not insure, however, for loss: [Note: No exclusion for power surge.]

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B. Coverage C – Personal Property

equipment.

We insure for direct physical loss to the property described in Coverage C caused by any of the following perils unless the loss is excluded in Section I – Exclusions.

(3) There are a number of endorsements available in the ISO Homeowners Program that provide coverage to property damaged by artificially generated electrical current:

1. Fire Or Lightning 15. Sudden And Accidental Damage From Artificially Generated Electrical Current This peril does not include loss to tubes, transistors, electronic components or circuitry that is a part of appliances, fixtures, computers, home entertainment units or other types of electronic apparatus.

Special Computer Coverage (HO 04 14) Scheduled Personal Property Endorsement (HO 04 60 and HO 04 61) Mechanical Breakdown Coverage (HO 06 33) (covers electrical failure and electrical arcing)

Comments:

(4) The Homeowners 5 – Comprehensive Form (HO 00 05) provides special form (“all-risk”) coverage for Coverages A, B, and C, with no power surge exclusion.

(1) Any property subject to Coverages A&B in the HO 00 03 is covered for a loss by power surge, by virtue of the fact that a special form or “all-risk” policy covers any damage not excluded.

(5) Alternatively, there are some standalone specialty policies in the marketplace that include coverage to electronic personal property from power surge and similar electronic disruption.

(2) Coverage C is provided on a named perils basis. Natural power surges from lightning are covered under Peril #1. Peril #15 addresses damage from manmade (“artificially generated”) electricity. However, under Peril #15, there is no coverage for damage caused by manmade power surge to certain types of electronic

(6) Lastly, most any electronic device purchased today makes available an extended warranty plan, or separate breakage/damage protection.

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Commercial Property

CP 10 30 10 12

But if loss or damage by fire results, we

Causes of Loss – Special Form

will pay for that resulting loss or damage.

B. Exclusions 2. We will not pay for loss or damage caused by or resulting from any of the following: a. Artificially generated electrical, magnetic or electromagnetic energy that damages, disturbs, disrupts or otherwise interferes with any: (1) Electrical or electronic wire, device, appliance, system or network; or (2) Device, appliance, system or network utilizing cellular or satellite technology.

For the purpose of this exclusion, electrical, magnetic or electromagnetic energy includes but is not limited to: (a) Electrical current, including arcing; (b) Electrical charge produced or conducted by a magnetic or electromagnetic field; (c) Pulse of electromagnetic energy; or (d) Electromagnetic waves or microwaves.

But if fire results, we will pay for the loss or damage caused by that fire.

Comments: (1) It would be a rare commercial enterprise that did not have any exposure for damage to property – building or business personal property – from some sort of electrical event. For many businesses, such exposures are significant, maybe paramount.

(2) The length and detail of the exclusion for artificially generated electrical power conveys the complex and varied nature of what is casually referred to as “power surge.”

Compare the same exclusion from the 1985 edition of the CP 10 30, when the ISO Simplification program was introduced:

by

2. We will not pay for loss or damage caused or resulting from any of the following: a. Artificially generated electric current, including electric arcing, that disturbs electrical devices, appliances or wires.

(3) The sophisticated electronic machinery and equipment in use today is more vulnerable to myriad disruptions and fluctuations of electrical current than was present back in 1985. Information found in electrical power industry literature analyzes potential damage from various electrical “transients” such as “sag, surge, swell, electrical noise,” and so forth. Damage can occur from a single event, or, over time, from a series of imperceptible transients and other electrical disturbances.

(4) The remarkable advances in machinery and equipment demand that insurance producers pay close attention to potential gaps arising from not only electrical damage exclusion, but also from the mechanical breakdown exclusion, and boiler & machinery exclusion.

These three exposures are best handle with specialty coverages, such as Equipment Breakdown, Electronic Data Processing, and similar policies.

(5) Lastly, given the integral nature of technologydependent machinery and equipment to commercial operations, the potential exposures for business income and extra expense (BI/EE) losses need careful review by the insurance producer.

Risk Management (1) I would also suggest that speaking to a public group about insurance issues is an ideal opportunity to include some discussion of risk management awareness, including some practical measures that both home owners and business owners can relate to, in conjunction with their insurance program. I think broadening the public’s understanding of ways to uncover and manage risk is a win-win for the public and the independent agent. Who knows…they might realize that price isn’t the only factor after all – despite the deluge of TV ads, and 3-minute online quotes from the insurance “disruptors” so prevalent on the internet. As my colleague John Eubank, CPCU, ARM often said, “The bitterness of no coverage is

remembered long after the sweetness of low price has been forgotten.”

(2) Among the most common and readily available devices that can prevent or minimize damage from certain types of electrical disturbances are surge protectors and uninterruptible power supply (UPS) devices. In addition, on-site and off-site data backups, as well as sound cyber-security protocols, are easily achievable for most insureds.

(3) For businesses heavily dependent on high-tech machinery and equipment, viable risk management solutions to electrical failure and mechanical breakdown can

fill gaps in insurance coverage. For example, here is a brief excerpt from a power industry article on how one company’s power problems were solved.

A production and processing facility of a manufacturer faced a power disturbance that plagued the company for many years. The plant, which manufactures automobile rear disk rotors, experienced numerous explained and unexplained power problems that caused an average of 4 to 12 hours of downtime a month, and required the services of three electricians per incident to fix the problem.

new CNC [Computer Numerical Control] equipment and other critical plant electronic components.

As is pretty evident, power problems lead to serious problems in a production facility.

Additional Information The following articles are posted on the Virtual University (VU), a free member service of the Independent Insurance Agents and Brokers of America (IIABA).

“Power Failure and Power Surge”

Although plant management tried numerous solutions and a variety of products, they couldn't pin down the problem. The division called in local manufacturer of power quality equipment and found among other things a lack of regulated voltage.

“The HO Policy and Power Surges” “Squirrely Building Damage Claim” “Mechanical Breakdown Exclusion” “Mechanical Breakdown Exclusion - Revisited” “Is Insurance a Commodity?”

After installing a system that included both surge suppression and line voltage regulation, the electrical problems ceased. Plant management estimated that the company saved $750,000 over a threeyear period after the system was installed. Because of its success, these systems were installed on all

“Price Check” 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.

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Webcasts E&O Risk Management November 7, November 16, November 17, December 5, December 21

Ethics November 3, November 16, November 21, December 6

Available on Demand

Available on Demand

Flood November 7 December 27

Available on Demand

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

Seminars

Events IIABR November Luncheon 11/9/2017

IIAGNO Company Past President’s Luncheon 12/14/2017

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.

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

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

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

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IIABL FALL EDUCATION CONFERENCE

Dave Tralka, CEO of InsurBanc presented information to the attendees on Agency Perpetuation & Valuation.

Marty Agather with TrustedChoice.com’s presentation on Digital Marketing was enhanced by IIABL Member, Glenda Dean with Glenn Dean Insurance in Deridder who shared with the attendees her success in utilizing Facebook.

Thank you to our company exhibitors for your support of the IIABL Fall Education Conference in Shreveport!

Burns & Wilcox, Ltd. Compass Premium Finance Gulfstream P&C IIABL Imperial PFS Iroquois South, Inc. LA Restaurant Assoc. SIF RISCOM Selective Flood

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Commissioner’s Corner

Understanding the New Producer License Renewal Schedule and Other Legislative Changes At the start of the new year, some significant changes are coming to the timeframes for license and appointment renewals as well as requirements for contact information reported to our agency.

In this month’s column, I’ll touch on those changes which take effect in just a few months.

As of January 1, 2018, producer license renewals will no longer be renewed on a schedule that is set by the producer’s line of business. In 2018 and beyond, the renewal year will be based on the individual’s license number. Licenses that end in an even number will renew in even-numbered years. Licenses that end in an odd number will renew in odd-numbered years. If you have an even-numbered license and you last renewed in 2017, you will have to renew again in 2018 but you will not

have to earn additional continuing education (CE) credits.

As an example, say you just renewed your license number 2468 for property and casualty when it expired on October 31, 2017. Your new renewal date will be October 31, 2018 (since your license ends in an even number). You will pay your renewal fee in October 2018 but will not have to complete CE credits again until you renew in 2020. To view more examples, please visit the producer renewal webpage www.ldi.la.gov/renewals.

Notices will be sent to licensees approximately 90 days prior to scheduled renewal. The National Insurance Producer Registry, or NIPR, recommended this revision to the renewal schedule as is being promoted nationally.

Renewing at the appropriate time will renew all eligible lines. Any lines of business not eligible to renew or that you choose not to renew will be cancelled from the license. You can reinstate a cancelled line by filing an initial application. As in current law, if you file an application to become relicensed for a cancelled line within two years of the cancellation, you will be exempt from the exam and pre-license education. If more than two years have passed since the cancellation of the line, you

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will need to complete pre-license education and retest to add the line back on the application. As always, not completing your continuing education requirement will render a line ineligible for renewal.

As part of the recent changes, producer license application fees will no longer be based on lines of authority. All application fees will be $75 with the exception of Surplus Lines ($250) and Portable Electronics ($200). Adding a line to an active license will be $50.

Application fees for claims adjusters remain unchanged.

cess Portal on our website. Mid-year changes can be made through the Industry Access Portal or by filling out the Uniform Certificate of Authority Corporate Amendment Form 14 which is available from the NAIC. The paper form is also available via a link on the LDI website.

The cost to renew a producer license is also changing.

It will cost $50 to renew one line and $55 to renew two or more lines. Surplus lines authority will remain the same at $350 and the adjuster renewal fee remains unchanged at $50. All of these changes are revenue neutral to the Louisiana Department of Insurance (LDI).

Additional legislative changes in the 2017 session include the requirement that all non-captive producers and any producer who sells products financed in whole or in part by a premium finance company are now required to maintain professional liability coverage or Errors and Omissions coverage if they are actively writing in Louisiana. That mandate was not part of the LDI legislative package. That law provides that failure to maintain coverage constitutes an unfair trade practice and that producers who are licensed for bail bonds are excluded from the requirement.

Also new in 2018 is the requirement for risk-bearing entities to file contact information annually with the LDI. If that information should change during the year, the contact information must be updated within 30 days. The annual update will be set up as part of the Licensee Contacts module within the Industry Ac-

It is the hope of the LDI that the licensing changes we proposed will help streamline and simplify filings for agents and companies. We will do all we can to make the changes seamless. If you have questions or concerns about the new licensing requirements, please contact our Licensing Division staff who will be glad to assist you.

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Update Your Website Security or Risk Becoming Invisible on the Web Providing proper security on your website is always an important factor for insurance agencies. It is now more important than ever.

Google has announced significant changes in how the security of an individual website will affect search engine results and the visibility of a particular website on a Google search results page. Beginning in January, Google will start marking websites and individual web pages that don’t have adequate security as “non-secure.”

You can tell the security level of the Internet site by its URL (the site’s online address). Traditionally, the website address begins with “http:” which indicates an unsecured connection. A secure website adds an “s” to the address (https:) indicating information sent between your computer and the web host is secured.

In the Chrome Browser you will see the word Secure in green.

In Foxfire you will see a green lock.

In Internet Explorer you will also see a lock.

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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