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Louisiana Agent OCTOBER 2018 A publication of the Independent Insurance Agents & Brokers of Louisiana

A publication of the: Independent Insurance Agents & Brokers of Louisiana


IIABL STAFF Jeff Albright Chief Executive Officer jalbright@iiabl.com Francine Berendson Director of Communications & Events fberendson@iiabl.com Mike Edwards, CPCU, AAI Director of Education medwards65@aol.com Karen Kuylen Director of Accounting kkuylen@iiabl.com Ed O’Brien Marketing Representative eobrien@iiabl.com Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com Jamie Newchurch Insurance Services jnewchurch@iiabl.com

In this issue:

2018 ACT Conference Report -------------------------------- 5-12

Your Website Security is Important --------------------------- 12

Ask Mike: Commercial Property: YBPP and the 100-ft Rule ----- 13 – 20

6 Simple Tips to Protect Customers Data -------------------- 20

2018 Future One Agency Universe Study -------------- 22 – 31

Things Everyone Believes About Thanksgiving That Are Not True ----------------------------------------------- 32

Property Damage to Rented Premises ----------------------- 24

Welcome New Members ---------------------------------------- 36

Education & Events Calendar ---------------------------------- 37

IIABL Partners ---------------------------------------------------- 39

2018-2018 IIABL Officers & Board ---------------------------- 40

Lisa Young-Crooks Executive Assistant lyoung@iiabl.com


2018 Agents Council on Technology Conference Report Ross Henry – IIABL Board Member & Technology Liaison It’s that time of year again! No, not Halloween. The IIABA annual Agents Council for Technology (ACT) conference was held October 14-15, 2018 in Nashville, TN. The Agents Council for Technology identifies technology trends (big data, mobile, social media, cyber liability) that will impact the independent agency system. The goal of ACT is to provide strategic guidance, enabling an industry culture of accelerated innovation. The conference this year was co-located with the massive Applied Net conference which had 4000 attendees. This helps IIABA save valuable dollars when selecting and coordinating a venue. Last year the theme was “Insurtech.” Regardless of whether or not you view this evolution as a disruptor, threat or opportunity, Insurtech is clearly here to stay as was evident from the topics of discussion

this year. “Digital transformation has revolutionized the insurance industry, empowering insurance professionals to compete and thrive in the digital age of insurance,” said Reid French, CEO of Applied Systems. The first phase of Insurtech used science and technology to inspire a rethinking of insurance that is making insurance easier and more efficient to buy and sell, and improving customer experiences especially around claims. Insurtech is poised for a dramatic sequel that will build on the theme from the first act that challenges ultimately present opportunities. It’s all a matter of perspective… By now we’ve all heard of Lemonade, the market disruptor which offers Renters insur-

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ance in New York based on a “pledge of honesty” and uses blockchain technology to pay claims within a matter of seconds from the moment they are reported. According to Daniel Schreiber, founder and CEO of Lemonade, The second act, which Schreiber calls “Deep Seeing,” will revolutionize core insurance products and pricing. He said the second act will have a profound impact as it deploys artificial intelligence (AI) and machine learning along with predictive modeling and nontraditional data sets. “The next insurance leaders will use bots, not brokers, and AI, not actuaries.” According to Schreiber, the core product of insurance is essentially an algorithm and thus, unlike most consumer products, is susceptible to being reconfigured by new data practices. “Insurance is about using statistics to price risk, which is why data, properly collected and used, will transform the core of the product,” he said. As IAs we can’t afford to ignore emerging technology but we’ve all heard before that the shiny

new widget will put all of us out of business tomorrow. Interestingly, the Lemonade loss ratios are extraordinarily high. Is it possible that tech does not have ALL the answers for the new economy…? Daniel Glaser, CEO of insurance broker and risk consulting giant Marsh McLennan, also has a view on the next phase of insurtech. But his view includes brokers. He swatted down the Lemonade leader’s notion that bots will replace brokers. “That’s just nonsense,” he declared. “I’m on the other side of that bet.”

Glaser said the industry has been consolidating for a century but there are still plenty of intermediaries because the barriers to entry are low. Glaser agreed that “digitization changes everything” and that the industry will have to embrace AI and machine learning. But he does not

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see these technologies becoming a differentiator in the long run. He predicts companies will at first go about creating proprietary AI and machine learning applications but that those will not be sustainable any more than proprietary customer relations management systems were. Glaser said the industry will likely pivot from emphasizing product and protection to instead emphasizing a better client experience and how insurance enables people and businesses. Who better to capitalize on the nexus of people and product than the vast phalanx of IAs already doing that very thing right now? What if the next phase of our industry only makes us stronger by utilizing technology? Consider Bold Penguin, for example. This started as a lead generation service but has morphed into a platform which IAs can use to allow prospects to quote and bind coverage on the IAs own website. In other words, rather than technology stealing our business it is quite possible that as we leverage tech-

nology we can remove any desire to go elsewhere. I’ve always said that if IAs can offer tech solutions and convenience while maintaining adherence to core values of local presence, professional advice and service that nothing can top that combination. Because relationships still matter and people still want help navigating the complex insurance landscape. In fact, with the pace of life today, people want fewer issues to handle, not more. Customers are more than happy to cede off this headache to a trusted advisor who understands the market and can protect their most valuable assets. We don’t have to stop being who we are in order to evolve. We just need to meet the customer at their point of need. We want to be Uber, not Yellow Cab. Social Media is also a recurring theme at ACT. Here are some highlights from the conference this year: -to get out of a SM rut, get more engagement by

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providing value with your content. Facebook is a storyteller, Twitter is a traffic driver and LinkedIn is a vehicle to showcase individual talents. Know how and when to use each platform.

pages directly correlated to each of the 6 niches in which the agency works.

-Seasonal shares are less effective than often thought. When it comes to getting deep traction with your reader you want something that will make them click through to your website.

Cyber threats are always a hot topic at ACT. Though, in some instances these threats can be used as opportunities. Take, for example, “SignOn Once” from industry consortium IDFederation.org. Initially unveiled in May 2014, this new single sign on standard allows agency staff to use one sign-on to securely access systems of multiple carrier business partners. Given the millions of transactions for quoting, submission and account management each year in the U.S. insurance industry, SignOn Once can shave minutes every day off of the administrative and technology time and resources spent managing passwords. The new system uses token technology to authenticate each user’s identity. SignOn Once offers greater security protection than the longstanding

-Follow your carriers on Social. You can leverage those posts for a wider audience. -Have the producers in your agency come up with a blog and maintain a library of info specific to their individual niche. - Since your employees spend lots of time on Social throughout the day (let’s face it. They do.), train them to re-post since they’re already on there. -Clearly identify your purpose and communicate how you add value. For example, one agency owner recounted how he maintains 6 different FB

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process of using a different password for each agency user to enter each carrier system. Imagine coming into the office in the morning, logging into your agency management system with no further need throughout the day to log into a carrier website! All quoting, policy endorsements, etc. can be done right from your agency management system. Multi Factor Authentication (MFA) is now a regulatory requirement in NY and the NAIC Model act will require this also. As more and more states adopt the NAIC model act MFA will require twice the time to log in and who wants to remember even more passwords? Single Sign On will solve this problem and make agency administration easier. Currently, if an agency employee is terminated, management must remember to disable access to numerous carrier and vendor websites. With SignOn Once only one password need be turned off. ACT has a very helpful guide to protect your agency and clients from cyber risks including da-

ta breaches, hacks, ransomware, phishing. A data breach can be expensive and will threaten your business and every client relationship. Cyber Guide 1.0 (https://www.independentagent.com/ ACTCyberGuide) is currently being re-written. 2.0 will be out soon. If you are not familiar with this guide I encourage you to give it a look. At ACT we also take a look ahead at some of the things on the horizon. These emerging areas of risk don’t have a definite endpoint in sight but they warrant observation:

-Autonomous / Crash-Avoidance Vehicles - Autonomous vehicles will significantly impact our personal interactions with vehicles and radically change both private-passenger auto and commercial vehicle insurance. -Telematics - Telematics is the long-distance transmission of computerized information. It is a general term for any device that gathers and

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transmits data in real time. In the insurance industry, telematic devices can be used to assess risk and pricing. - Smart Homes & Buildings - This technology has the potential to significantly impact underwriting, claims, and loss mitigation for property insurance in the near future. - Drones - As the number of UAVs (Unmanned Aerial Vehicle) and their useful applications increase, the exposures and insurance needs of consumers and businesses will increase.

- The Sharing Economy - Insurance carriers are struggling to create best practices and products in a timely manner; agents are unsure of what questions to ask and are opening themselves up to E&O exposures, and consumers are open to risk as they are unaware of exclusions on their policies. - 3D Printing - 3D Printing will become more commonplace as price points reduce for the technology and as other industries embrace its usage. -IoT (The Internet of Things) - The combining of technologies to solve problems which will eventually result in a connected world that few have imagined.

ACT understands the scope, importance and significant effort needed to stay ahead of the accelerating pace of change. Success is dependent on a collective effort by all stakeholders – carriers, associations, user groups, agents/brokers and technology providers. ACT will continue to play an active leadership role in the investigation, review, analytic evaluation, education and communication of hard trends and their impact on our industry. IIABA, through ACT, is committed to driving the dialogue forward.

Steve Anderson

Your Website Security is Important Two recent events prompt this post. First, in the last few weeks, I have come across a significant number of agency websites that have yet to add a security certificate. Website security is especially important if you have any forms that collect personal information — like a “request a quote” form. The second event was an article I read describing how Google will be strengthening Chrome’s security with the next release. I realize that many agencies continue to use Internet Explorer, but the world — by an extensive margin — uses Chrome. The graphic below provides an indication of browser market share globally. Most people coming to your website are using the Google Chrome browser. This next release will also “not trust” older Symantec security certificates (pre-June 2016). Access to the website will not be blocked. However, it will pop up warnings that will be annoying and might discourage your prospects from entering your site. How to Check Your Website Security In previous TechTips, I have gone into detail on the importance of properly securing your website and also how to buy and install a security certificate. It’s easy to tell if your website is secure. Navigate to your website, look in the search bar at the top for “HTTPS.” The S means that the site has a certain purity certificate applied. If you see “HTTP” in your agency website address, your site is vulnerable. This change is not something new. Google has been warning for several years that it is taking steps to provide stronger security in its Chrome browser. For most of you, I suspect this is not an issue because you’ve already taken the steps necessary to secure your website. However, as I indicated above, I am still finding agency websites that are not secure. You must take steps quickly to secure your agency website properly. PS: As I finish writing this, there are news reports that Google has suffered a security breach exposing the personal information of users of its social platform Google+. Google has announced it is completely shutting down the Google+ platform. It shouldn’t be a great loss, as very few people are actively using that platform. Louisiana Agent 12


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:

Commercial Property: YBPP and the 100-ft. Rule

Q. I have been doing some training with our new commercial lines CSR, and would like your thoughts on a

couple of questions that have come up. (1) Under commercial property coverage, are business contents covered only while inside covered buildings? (2) What is the intent of the provision that relates to contents “within 100 feet of the building or structure or within 100 feet of the premises described in the Declarations, whichever distance is greater”? What is meant by “...whichever distance is greater”? Both measurements are 100 feet. When was this added to the commercial property policy? I don’t recall this.

A. The new language you refer to was included in the 2012 ISO Commercial Property filing.

Two of the changes this filing made to the prior 2007 edition address the issues you raised. Not all insurers adopt ISO filings, and those that do are free to implement the new forms and endorsements anytime they so choose. So it could be that none of your markets use the 2012 ISO commercial property forms.

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Here is the pertinent excerpt from the provision related to business personal property (“Your Business Personal Property” – YBPP), with the 2012 changes underlined. Excerpts and comments are based on coverage forms from ISO (Insurance Services Office). Proprietary forms may be different. Assume that Smithco, Inc. is the Named Insured. ISSUE #1: Business Personal Property on Premises

CP 00 10 10 12 Building and Personal Property Coverage Form A. Coverage 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 a. Buildings, meaning the building or structure de-

scribed in the Declarations

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.

or on”) a building which was at the premises.

However, prior to the 2012 edition, the coverage language did not specifically include property that was in or on something which was not technically a “building.” Where an important term is not defined in the insurance policy (“building” is not defined in the CP 00 10 10 12), courts look to standard dictionary definitions, as well as applicable jurisprudence. Black’s Law Dictionary [9th ed.] defines “Building” as “A structure with walls and a roof, esp. a permanent structure.” (2) In the past, there have been coverage disputes where commercial insureds had business personal property in or on an open-sided structure that did not have “walls and a roof.” The 2012 revision to the CP 00 10 10 12 specifically added the words “or structure” to clarify that the intent was to provide coverage for property in such non-building structures. [See underlining in A.1.b.] In the ISO filing, the addition of “or structure” was classified as “No change in coverage,” meaning it was never the intent to exclude business personal property in or on

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Overview

Comments: (1) Coverage for business personal property is restricted to “the premises described in the Declarations.” [See bold in “A. Coverage” above.] (2) This contrasts with the ISO Homeowners coverage for personal property, which is worldwide. The ISO Dwelling coverage for personal property is restricted to the Described Location. (3) In the CP 00 10 10 12, coverage for business personal property applies to such property while it is in or on a described building or structure, or not in or on a described building or structure. [A.1.b.] Described Building or Structure

Comments: (1) It seems obvious that coverage for business personal property would be covered while it is inside (“in Louisiana Agent 14


a non-building structure on premises, as long as the structure was described in the Declarations. (3) One important word that did not change in the 2012 filing, and is often overlooked, is the word “described,” which is a critical qualifier, since coverage applies only for property that is “located in or on the described building or structure.” [See A.1.b.] (4) Assume our insured Smithco, Inc. has 3 buildings at the premises. Building #1 is the main building, Building #2 houses mechanical equipment, and Building #3 is an older metal building which is used to store miscellaneous equipment and supplies, archived files and records, and unneeded office furniture. On the Declarations page, only Building #1 and Building #2 are listed. Bob Smith, the owner of Smithco, did not see the need to insure Building #3. (5) Since Building #3 is not listed on the Declarations page, there is no coverage for any of the business personal property located inside. (6) In addition, there is no coverage for Building #3 itself, should it be damaged by a covered

cause of loss. For a building or structure to be considered Covered Property, it must be “described in the Declarations.” [See A.1.a. above.] Within 100 Feet

Comments: (1) To address business personal property that is not in or on a described building or structure, ISO considers such property to still be covered while it is in the open, or in a vehicle, but on the premises, or within 100 feet of the premises. [A.1.b.] (2) The new language in the 2012 edition of the CP 00 10 relating to the 100 foot provision created quite a kerfuffle, so you aren’t the only one who was baffled trying to understand it. The prior 2007 edition provided coverage for business personal property while it was “in the open (or in a vehicle) within 100 feet of the described premises.” The problem with that provision was that it created unintended limitations on coverage for commercial tenants in a multiple-occupancy building. For ex-

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ample, in situations where business personal property was in a vehicle in the parking lot or parking garage, the distance from the vehicle to the tenant’s specific “premises” could easily be over 100 feet. (3) A 2003 court case from Texas is often cited in the insurance literature as illustrating the problem. A tanning salon was located in a large mall, and the Declarations page listed the Description of Premises as the salon’s specific leased space, which was also its mailing address (e.g.,123 Main Street, Suite A). Some tanning bed equipment valued at $45,483 was stolen from a truck owned by the salon, while the truck was in the mall parking lot. The insurer denied the claim, noting that the distance from the truck to Suite A was 280 feet, while the coverage for property in a vehicle was covered only up to 100 feet from the “described premises” (123 Main Street, Suite A). The obvious crux of the case was whether “premises” referred to Suite A, or to the parking lot. The salon’s lease granted certain legal rights to common areas of the mall, which included the parking lot. However, the insurer pointed out that

the lease also provided that common areas including the parking lot were under the “sole management and control” of the landlord. The district court ruled in favor of the tanning salon, finding that since the term “premises” was not defined in the policy, the term was ambiguous. The Texas Court of Appeals disagreed, observing that the policy clearly listed the “Description of Premises” to include both the street address, and suite. [Evergreen National Indemnity Co. v Tan It All, Inc., 111 S.W.3.d 669.]

Interpreting insurance contracts

Comments: (1) In the 2012 commercial property filing that introduced the revised language regarding what ISO refers to as the “100 foot coverage radius,” the change is described as a “broadening of coverage.” While the change certainly benefits commercial tenants in multiple-occupancy buildings, the readability doesn’t

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benefit the insurance practitioner or policyholder, in the opinion of many coverage experts. (2) A few days before I received your question, a colleague of mine in Tennessee had a similar question from an agency. Bill Wilson, CPCU, ARM is one of the best insurance coverage experts in the country. He recently wrote an outstanding book on understanding and interpreting insurance contracts, titled When Words Collide – Resolving Insurance Coverage and Claims Disputes. The email discussion eventually involved four of us insurance nerds who communicate on a daily basis about coverage issues. Bill’s summary of the new ISO language is spot-on:

ISO probably should reword this policy language and use a “tabulated” format I discuss on pp. 79, 121, and 125-126 of my “When Words Collide” book to make it clearer to read. For example: b. Your Business Personal Property consists of the following property located: (1) in or on the building or structure described in the Declarations; or (2) in the open (or in a vehicle) within 100 feet of the building, structure, or premises, whichever distance is greater. (And I’m not even sure the “whichever distance is greater” phrase is needed.) (3) Bill frequently writes technical articles, so you might visit his website occasionally for articles that would be useful in staff training. ISSUE #2: Business Personal Property Off Premises

CP 00 10 10 12

Building and Personal Property Coverage Form A. Coverage 5. Coverage Extensions d. Property Off-premises (1) You may extend the insurance provided by this Coverage Form to apply to your Covered Property while it is away from the described premises, if it is: (a) Temporarily at a location you do not own, lease or operate;

(b) In storage at a location you lease, provided the lease was executed after the beginning of the current policy term; or (c) At any fair, trade show or exhibition. (2) This Extension does not apply to property: (a) In or on a vehicle; or (b) In the care, custody or control of your salespersons, unless the property is in such care, custody or control at a fair, trade show or exhibition. (3)The most we will pay for loss or damage under this Extension is $10,000. Comments: (1) Coverage Extension 5 provides coverage for incidental exposures for personal business property while it is away from the described premises. [A.5.d.(1)] (2) Note that it does not apply to property in or on a vehicle, so this coverage would not have been available for the tanning salon loss. [A.5.d. (2)(a)] (3) Maximum available is $10,000. . [A.5.d.(3)]

ISSUE #3: Business Personal Property in Transit

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.

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(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.

business personal property that will be away from the premises, and/or in transit. If so, Inland Marine coverage should be recommended. ISSUE #4: Commercial Property Form vs Businessowners (BOP)

BP 00 03 07 13

c. The most we will pay for loss or damage under this Extension is $5,000.

Businessowners Coverage Form

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

A. Coverage

Comments: (1) The Causes of Loss – Special Form (CP 10 30 10 12) provides a limited amount of coverage for property in transit. Note that theft from a vehicle is covered only under very specific conditions, so the tanning salon’s theft loss could possibly have been covered. [F.1.b.(3).] (2) The limit of coverage is $5,000. [F.1.c.] (3) Bottom line is that every commercial insured should be asked about any known exposures for

SECTION I - PROPERTY 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. b. Business Personal Property located in or on the buildings or structures at the described premises or in the open (or in a vehicle) within 100 feet of the buildings or structures or within 100 feet of the premises described in the Declarations, whichever distance is greater. Comments: (1) The ISO Businessowners Policy (BP 00 03 07

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13) takes a different approach than the Building & Personal Property Coverage Form, regarding coverage for business personal property on premises. The difference is subtle, but significant. Compare the pertinent language in the two coverage forms. [My emphasis added.] (2) CP 00 10 10 11: “Your Business Personal

Property located in or on the building or structure described in the Declarations.” Business personal property is covered only if it is in or on a described building or structure. That is, the building or structure must be listed (“described”) on the Declarations page in order for the business personal property inside to be covered. (3) BP 00 03 07 13: “Business Personal

Property located in or on the buildings or structures at the described premises.” In the

BOP, business personal property is covered while in or on any building or structure that is located on described premises. Note, however, there is no coverage for the building or structure itself, unless it is listed on the Declarations page. But the business

contents in or on any building or structure on premises is covered. (4) Referring to the example of our insured Smithco, Inc. in the “Described Building or Structure” section above, see “Comment (4).” Bob Smith, owner of Smithco, Inc., elected not to insure Building #3. Thus in the CP 00 10 10 12, neither Building #3, nor its contents, are covered, since Building #3 is not “described in the Declaration.” (5) Under the BP 00 03 07 13, the business personal property in Building #3 would be covered, since Building #3 is “at the described premises.” But Building #3 itself would not be covered, unless it was actually listed on the Declarations page. (6) The Smithco example does not mean to imply that the BOP is always superior to the Building and Personal Property Coverage Form (CP 00 10). In my experience, many practitioners mistakenly believe that both treat business personal property the same when on premises. Additional information – Coverage: “Described Premises Under Commercial Property Forms”

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“The Indescribable Coverage Gap” “Should Property Addresses Include Suite Numbers?” “The Adventures of Semi-Colon Man” “Is It ISO or Is It Memorex Insurance Company?” Additional information – Training: “IIABL Agency Resource Guide – 2018 Edition” Comments: The Agency Resource Guide contains extensive information on recruiting and training new employees, resources for technical training and professional designation programs, important information on miscellaneous topics such as frequently requested Louisiana insurance statutes, coverage checklists, as well as legal and technology information. 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.

6 Simple Tips to Protect Your Customers Data As cyber-attacks continue to make headlines, hackers are exposing or selling customer data files in record numbers. But just like with any threat, there are actions you can take to minimize risk and ensure your business retains a positive reputation among customers. Stop using the same password on repeat. Set a mandate for all staff that passwords must be unique for each user and for your workplace. That means it can’t be remotely like the one on their home PC, tablet or online banking. Passwords are hacked more than ever, so when you’re prompted for a password change, dig deep and really think about what goes into a hacker-proof password. If remembering them is a problem, consider one of the latest password management tools like Lastpass. Go on a shredding spree. How much sensitive data is being dumped into the recycling bin? Valuable customer data is often taken from the bins of small businesses and quickly sold or published. It’s not just good practice to shred sensitive documents, it’s the law. Take 5 seconds to run documents through the shredder or book in the ser-

vices of a secure shredding company. Ditch the accounting spreadsheets. Still using an Excel doc for all your number-crunching? Besides making your accountant’s job harder (and more expensive), you’re opening your business to a massive range of vulnerabilities. Even with password-protection, spreadsheets aren’t designed to safeguard your financials or those of your clients. Upgrade to a proper accounting solution with built-in customer data protections and security guarantees. Train staff explicitly. You can’t rely on common sense because what you think is a given might be news to someone else. It can be extremely beneficial to hold special data-safety training sessions once or twice a year as a reminder, as well as take the time to induct new staff into the way things are done. Limit access to data. Just like the bank manager who guards the keys to the vault, you can limit who accesses your data. Revoke employee access as soon as they leave your business for good, and set rules around who can access what – and when. Do they need access to sensitive information while working from home? Should they be able to change the files, or only view them? Keep your software updated. Possibly the most preventable hack, having outdated software can be an open invitation for cyber-criminals. They look for known weaknesses in business software and waltz right in. While the nagging pop-ups and reminders to update can feel like a selling ploy, they’re actually helping your business to stay in the safe zone. Updated software gives you protection against new viruses and hacking techniques, plus closes off those nasty weaknesses. Source: Little Dog Tech

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2018 Future One Agency Universe Study The Agency Universe Study (‘AUS’) is a product of Future One, a cooperative effort of the Independent Insurance Agents & Brokers of America (IIABA) and independent agency companies. The AUS started in 1983 and was fielded every 4-5 years until 2002, when it went to biennially to stay abreast of the fast- paced changes in the industry. For those who do not purchase the full AUS report, ACT is providing this overview of the technology – focused results of this 2018 survey. Far more detail, comparison charts, and insight are available in the Management Summary and Full Report, both of which can be ordered on the IIABA AUS webpage.

High-Level Observations For 2018, the total number of independent agencies in the United States decreased from 38,000 in 2016 to 26,500. Since 2004, the estimate had not fluctuated greatly, running between 37,500 and 39,000.

The survey had 1,629 respondents, using their 2017 experiences as a lens to provide insights. From 2016-2018, the number of Small agencies (<$150k revenue) increased from 21% to 35%. The number of agencies in small towns/rural areas stayed steady at 19%. Note: This may be partly due to

changes in the methods areas are classified by the federal government. Jumbo agencies (>$10m revenue) increased from 1.6% to 2%.

Business conditions for agencies continue to be favorable; three in four agencies (76%) saw revenue gains from 2016 to 2017 (similar to 2014-2015, in which 74% saw gains). The average size of revenue gains is similar to 2014, at +25% among those reporting an increase. The 11% of agencies that saw decreases in revenues report similar percentage losses to 2014 (average decrease of -14%, compared to -15% in 2014). Personal lines revenue has grown more in 2018 than 2016, with 74% of agencies reporting an increase (versus 70% in 2014). As shown in past studies, larger agencies are more likely to focus on commercial lines, whereas smaller agencies are personal lines dominant.

Technology Section; High-Level Findings Marketing Budget - % of Agencies who include each technology activity as part of Marketing Program

Creating/Maintaining Website Social Media SEO Creating/maintaining portal technology E-marketing activities Social Media Print Advertising

2016

2018

61% 49% 31% 25% 14% 48% 19%

58% 48$ 31% 29% 20% 49% 15%

Chang -3% -1% —+4% +6% +1% -4%

Nearly all (93%) engage in at least one marketing activity.

Large and Jumbo agencies tend to place more importance on agency-sponsored events and client industry associations, and, to a lesser extent, development of digital content and e-marketing. Small agencies tend to place higher importance on direct mail and print advertising. Medium Large agencies are highly focused on social media marketing; newer agencies focus more on social media and events than older agencies do. Louisiana Agent 26


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Overall Agency Technology Challenges: More than half of agencies see dealing with multiple carrier interfaces as a top technological challenge. Marketing the agency effectively on the Internet, overall cost of technology, and keeping pace with technology advances are also key challenges.

Responses indicate that Small agencies feel particularly challenged to market their agency on the internet; Larger, especially Jumbo agencies are most likely to be challenged in staff adoption of new workflows & technologies. Some changes from 2016, below are those ranked 1, 2, or 3 as a top challenge:

Marketing agency effectively on the internet Dealing with multiple carrier interfaces Keeping pace with technology changes Overall cost of technology Ensuring data transmission confidentiality

2016 57% 44% 36% 32% 24%

2018 Change 55% -2% 49% +5% 32% -4% 35% +3% 26% -2%

Note: that Managing IDs & passwords as a challenge was relatively unchanged from 2016, at 22% (+1%). This low number comes as something of a surprise, though the ID Federation initiative is working to address this.

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Comparative Raters: Highest utilization in Personal Lines: •

EZLynx: 21% (-1% change from 2016)

PL Rating: 13% (up 2%)

SEMCAT (now Applied Rater): 4% (2%) Note there may be some confusion

with the naming change, as the AUS study tried to clarify

FSC Rater: 2% (+3%)

ITC TurboRater, AccuAuto, and EZ Rater: each 2%

All others combined account for 10% (-2% from 2016) – This includes rater from AMs (e.g., TransactNOW and Transformation Station)

43% report they are not using a comp rater (unchanged from 2016).

Management Systems: Highest utilization:

11%

AMS360 (-2%) TAM (+1%) EZLynx (+1%), and QQ Catalyst (+5%) EPIC (+3%) HawkSoft (-1%) DORIS, Eclipse Agency Software, Partner XE, Xanatek Other Do not use (+2%)

Use of QQCatalyst has increased since 2016. Almost all Medium, Large, and Jumbo agencies use an AMS. They are more likely to use EPIC (especially Jumbo agencies) and Vertafore’s Sagitta (used almost exclusively by Jumbo agencies).

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Agent Satisfaction Survey through J.D. Power Important Survey Released This Week!

Make Sure Your Voice is Heard and Earn $50 Amazon Gift Card J.D. Power and the Independent Insurance Agents and Brokers of America (the Big “I”) are excited to announce this week’s release of the second annual Independent Agent Satisfaction Survey.

Click here to login and take the survey To be sure you’re able to participate, or to ask any questions, please contact Tom Super from J.D. Power at Thomas.Super@jdpa.com. Madelyn Flannagan, VP Agent Development, Research and Education

The study has emerged as the go-to source for top carriers seeking to improve their performance with you, the Agent. The results are shared with top executives across the industry, and if last year’s reception is any indication, your feedback will help influence the agenda of many leading carriers and can be a driving force for change in the industry. The main objective of the survey is to capture your experiences, satisfaction level and potential areas for improvement across your carrier relationship. The study will address numerous facets of the insurance process – from the quota/underwriting process and claims processes to policy servicing and insurer risk appetite, as well as commission management, product/service offerings, and communication.

Insurance Products for your Customers Why is membership in IIABL important?

Only IIABL members have access to the following programs:

The results will address the following areas: •

• •

How does each service event you have with an insurer impact the overall perception of that insurer? Which critical service standards are most likely to drive high satisfaction? What should insurance carriers do to better meet your needs – and, in turn, the needs of your customers?

We aim to have truly robust results. Simply put, the more responses we receive, the stronger and more encompassing the information will be. Thus, better decision-making will be possible. What’s more, participants will receive a complimentary summary report of the study results and a $50 Amazon gift code for taking the time to complete. Any licensed agent who works with insurance carriers in any member agency are eligible to participate!

Personal Umbrella Insurance In Home Business Insurance Flood Insurance

Premium Finance Program Big I Markets Program

Health Insurance Brokerage

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Management System Functions (PL and CL): Compared to 2014, fewer agencies seem to find Payments to be a valuable PL management system function. Overall, Similar results between PL & CL, although PL slightly higher. Surveyed value of functions through management system.

Note: green font indicates increase from 2016, red font indicates decrease, black font is ‘no change’ or new to survey:

Function

Customer view/search Inquiries on claims, billing, etc. Endorsements Real Time Auto Quotes Real Time Home Quotes Rate Quote Requests Policy Issue Alerts/Activity Notifications Bridging quotes from mgmt. system Payments Claims Reporting Carrier Loss Runs

PL

CL

63% 69% 61% 61% 52% 41%

56% 62% 72% 50% *New to 2018 AUS 62% 57% 54% (Note: important to 74% of Jumbo agencies)

79% 65% 67% 69% 68%

77% 68% 67%

both –3%

Overall processing technologies used: Seven in ten agencies use personal lines and 50% use commercial lines download tools. 2016 2018 Personal Lines Commercial Lines Download Carrier ePolicy Delivery to agency Direct Bill Commissions Download Paperless office (Commercial Lines) Agency ePolicy delivery to clients Secure email

68% 56% 51% 49% 38% 39% 29%

69% 56% 55% 53% 46% 46% 34% Increased for 2016-2018 after a drop 2014-2016

Note: E-policy delivery is more common than e-billing.

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Electronic Communications Used: •

Texting with clients, and use of electronic signature tools for the agency and carrier have increased since 2016.

Use of technology varies with agency size. For example, Jumbo agencies are particularly likely to use tablets/smartphones (63%), an intranet (49%) and an agency self-service portal (37%).

One in five Small agencies say they use none of these technologies compared to 2-3% of Jumbo, Large and Medium-Large agencies.

Note: green font indicates increase from 2016, red font indicates decrease, black font is ‘no change’ or new to survey: Activity Notifications from carrier Texting with clients Tablets/smartphones Agency eSignature solutions Carrier eSignature solutions Instant Messaging within the agency Intranet for internal communications Mobile apps from the carrier Mobile apps for clients

2016 44% 43% 34% 33% 29% 16% 13% 13% 12%

2018 46% 50% 34% 42% 39% 19% 12% 17% 15%

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Attitudes Towards Technology: Cyber concerns continue at the top of everyone’s list. •

Jumbo agencies are almost three times as likely as small agencies to see the need for their own cyber liability policy (91% vs. 34%).

Jumbo agencies are also more likely than smaller agencies to offer cyber liability policies to customers (82%) and to have implemented a written security policy and monitor compliance (77%).

These responses are ranked as ‘6’ or ‘7’ on a 7-point scale. Agency sees need for an agency cyber liability policy Achieved improvements through use o new technologies Agency offers a cyber policy to customers Agency believes digital marketing is a core discipline Agency has implemented written security policy Agency has written disaster recovery plan/trains employees Agency has a focused mobile strategy for customers Agency has a focused mobile strategy for employees

56% 47% 44% (down only 1% from 2016) 45% 35% 25% 16% 17%


Perceptions on Electronic/Digital Resources: The level of insureds’ receptivity to e-documents and agencies that have realized cost savings by using paperless communications both increased since 2016.

Insureds are just as likely to accepts e-documents as paper Agency has seen significate cost savings by offering paperless options offered by carriers Agency has seen significant cost savings by offering customers paperless communications options Agency measures ROI in use of traditional marketing Agency measures ROI in use of digital/social media marketing

Company American Security Ins Co

SAFECO Insurance Co

Allstate Insurance Co.

Progressive Security Ins Co

GEICO Marine Ins Co

Coverage Type 1—Property Revised Rate Only Commercial Property 19—Private Passenger Auto 19- Private Passenger Auto Revised Rate Only LA Trailer Prog. 19- Private Passenger Auto Revised Rate & Rule

2016 2018 35% 44% 29%

38%

29% 22% 18%

34% 22% 19%

Number of Policyholders:

Overall % Impact:

Overall $ Impact:

10%

+$2,306,576

13,603

New: 2/2/2019 Renewal: 2/1/2019

16.9%

+$19,807,205

34,236

New: 10/28/2018 Renewal: 12/9/2018

30.0%

+$697,301

5,080

New: 10/22/2018 Renewal: 10/22/2018

-1.3%

-$5,752,951

171,068

New: 10/26/2019 Renewal: 10/26/2019

10.3%

+$322,322

6,038

15.7%

+$1,961,145

898

6.7%

+$99,586

1,753

9—Inland Marine Revised Rate & Rule Personal Inland Marine Boatowners/Personal Watercraft

United Fire & Casualty Co United Fire & Indemnity Co

19—Commercial Auto

RLI Insurance Co

17-Other Liability Revised Rate & Rule Personal Umbrella & Excess

Changes

New: 1/1/2019 Renewal: 1/1/2019

New: 4/1/2019 Renewal: 6/1/2019

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Things Everyone Believes About Thanksgiving That Are Absolutely Untrue Myth: At the 1st Thanksgiving they were called Pilgrims. Fact: They didn’t even refer to themselves as Pilgrims – they called themselves “Saints.” Early Americans applied the term “pilgrim” to all of the early colonists: it wasn’t until the 20th century that it was used exclusively to describe the folks who landed on Plymouth Rock. Myth: It was a solemn, religious occasion. Fact: Hardly. It was a three-day harvest festival that included drinking, gambling, athletic games, and even target shooting with English muskets (which, by the way, was intended as a friendly warning to the Indians that the Pilgrims were prepared to defend themselves). Myth: It took place in November. Fact: It was sometime between late September and the middle of October – after the harvest had been brought in. By November, says historian, Richard Ehrlich, “the villagers were working to prepare for winter, salting and drying meat and making their houses as wind resistant as possible.” Myth: Pilgrims wore large hats with buckles on them. Fact: None of the participants were dressed anything like the way they’ve been portrayed in art. The Pilgrims didn’t dress in black, didn’t were buckles on their hats or shoes, and didn’t wear tall hats. The 19th century artists who painted them that way did so because they associated black clothing and buckles with being old fashioned. Myth: They ate turkey. Fact: The Pilgrims ate deer, not turkey. As Pilgrim Edward Winslow later wrote, “For three

days we entertained and feasted, and (the Indians) went out and killed five deer, which they brought to the plantation.” Winslow does mention that four Pilgrims went “fowling” or bird hunting, but neither he nor anyone else recorded which kinds of birds they actually hunted – so even if they did eat turkey, it was just a side dish. “The flashy part of the meal for the colonist was venison, because it was new to them,” says Carolyn Travers, director of research at Plymouth Planation, a Pilgrim museum in Massachusetts. “Back in England, deer were on estates and people would be arrested for poaching if they killed these deer. The colonist mentioned venison over and over again in their letters back home. “Other foods that may have been on the menu: cod, bass, claims, oysters, Indian corn, native berries and plums, all washed down with water, beer made from corn and another drink the Pilgrims affectionately called “strong water.”

SOURCE: Reader’s Digest


Are you taking ADVANTAGE of your IIABA membership? DocuSign Big “I” members may now receive exclusive discounted pricing from the industry’s #1 esignature solution, Docusign. DocuSign is used to accelerate transaction times to increase speed to results, reduce costs, improve customer service and reduce E&O exposure. Learn more at www.docusign.com/iiaba.

InsurBanc

InsurBanc is an independent community bank that was founded by agents exclusively for agents. Organized in 2001 by the Big “I” specifically to serve independent insurance agents, InsurBanc specializes in agency financing including acquisition and perpetuation and custom cash management services. InsurBanc also offers consumer banking products such as home mortgages, certificates of deposit, free checking available to you and your employees.

Virtual Risk Consultant

Virtual Risk Consultant

The Big I Advantage® Virtual Risk Consultant powered by Rough Notes (”VRC”) is an online sales and service resource designed to help your agency be b e t t er serve your customers. Using this tool will lead to increased sales by improving your staff’s knowledge of a prospect’s operation enabling them to better identify and cover customer exposures. Learn more at www.iiaba.net/VRC.

Caliper

Big “I” Members receive exclusive discount pricing on the premier personality testing product in the industry. Let Caliper tell you what you need to know before you hire. A test and comprehensive consultant is just $245.

Mines Press Order your Big “I” and Trusted Choice logo calendars, business cards and stationery from The Mines Press, and you’ll know that your promotion al gifts and correspondence will deliver the message of quality as well as care. www.theminespress.com

UPS IIABA members can now save up to 34% on shipping services with UPS! For more information or to enroll in this program, please go towww.1800members.com/iiaba or call 1-800-MEMBERS (1.800.636.2377, 8 a.m.–6 p.m. EST, M-F).


Property Damage to Rented Premises I recently received the following question: I’m still amazed at how often this comes up where agents don’t understand the very limited coverage provided by the ISO CGL policy for damage to rented premises. The submitter of this question has sold and serBill Wilson, CPCU, viced commercial insurance for over 40 years. I’ve seen ARM, AIM, AAM this type of question from agents with professional designations like CPCU and CIC. Last year, I blogged about this twice: “Is CGL FDLL Coverage Worthless?“ “Coverage for Damage to Leased Premises…CGL FDLL vs. CP 00 40 vs. CP 00 10“

gram, but some non-ISO programs might, as well as some umbrella policies. Bill Wilson, CPCU, ARM, AIM, AAM Founder & CEO, InsuranceCommentary.com Bill@InsuranceCommentary.com or InsuranceCommentary@outlook.com

Com•men•tar•y … an expression of opinions or offering of explanations William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of InsuranceCommentary.com. He retired from the Independent Insurance Agents & Brokers of America in December 2016 where he served as Assoc. VP of Education and Research and was the founder and director of the Big “I” Virtual University for over 17 years. He is the former Director of Education & Technical Affairs for the Insurors of Tennessee and, prior to that time, he was employed by Insurance Services Office, Inc. He is a graduate of the Illinois Institute of Technology with a B.S. degree in Fire Protection & Safety Engineering.

Given that I’ve blogged about this in the past year or so and written and spoken about this for many years, I won’t belabor the point. But, if you haven’t already, please do the following: Read both of the articles above, then Pose the claim scenario presented at the beginning of this article and ask your commercial lines staff: “Does the CGL policy cover this claim? If so, how. If not, why, and if not, how can this be covered? Given the number of times I’ve seen this question, I’m convinced there are many thousands of tenants who are not properly insured. Are you the agent of any of them?

Postscript: There is a similar limitation for coverage for damage to rented premises in ISO homeowners policies, as well as those of most non-ISO insurers. The ISO HO policies limit coverage for damage to rented premises (from apartments and dwellings to hotel rooms and facilities rented for a wedding reception) to only that caused by fire, smoke or explosion. ISO has no way to cover this exposure in their HO proLouisiana Agent 28


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IIABL NEW MEMBERS

Chris Arceri Arceri & Associates Metairie, LA

Gates Skene Ross & Yerger Insurance, Inc. Metairie, LA

Mark Pennebaker Rich & Cartmill, Inc. of Louisiana New Orleans, LA

Andrew Robichaux Handleyâ&#x20AC;&#x201D;Traske Insurance Group Lake Charles, LA Andrew Robichaux Erath Insurance Group Abbeville, LA

For information on membership contact: Jamie Newchurch, jnewchurch@iiabl.com, 225.236.1350

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Webcasts E&O Risk Management Nov 6, 27 Available on Demand

Ethics Nov 7, 14, 13, 27

Available on Demand

Virtual University November Lightning Learning: Trailers, BAP Coverage Symbols & Endorsements

Flood Nov 15

Available on Demand

Commercial & Personal Lines Courses Click above for courses & dates for 2018

November Webinars

December Webinars

6—Excess & Umbrella Fundamentals PLUS

8—Trailers, Trailers Everywhere

15—Additional Insureds: The Quandary

– But Which Policy Provides Coverage

15—Contractors, Contractors, Contractors

19—Secrets Within BAP Cover-

age Symbols 27—Three BAP Endorsements

4—Flood Insurance 5—Home Business Versus Home Insurance 12—Catastrophe: The Coverage Expertise You’ll Need When It Matters Most 18—Tricks to Fix: Closing Coverage Gaps in Home, Work and Auto

Every Agent Should Consider

Seminars 2019 IIABL Spring Education Conference— March22. Baton Rouge Save the Date!

Events IIABR November 8 Luncheon

IIAGNO Past President’s Luncheon—12/13/2018

On-Demand Webcasts

Pre-Licensing

Click here for the course catalog of all of the on-demand webcasts. Reminder– all of the IIABL online courses do not require a test for CE Credit

Online prelicensing 3 optional study packages Click here for additional information

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GOLD LEVEL

SILVER LEVEL

BRONZE LEVEL

ACCIDENT FUND

AMERISAFE

AMERICAS INSURANCE

BANKERS INSURANCE

EMC INSURANCE

EMPLOYERS

FCCI GROUP

FOREST INSURANCE

GULFSTREAM P&C

HOMEBUILDERS SIF

IROQUOIS SOUTH, INC.

LANE & ASSOCIATES

RPS COVINGTON

STONETRUST INSURANCE

LUBA WORKERSâ&#x20AC;&#x2122; COMP

MARKEL FIRST COMP

SUMMIT CONSULTING

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IIABL 2018â&#x20AC;&#x201D;2019 BOARD OF DIRECTORS & OFFICERS

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October 2018 Louisiana Agent  

A digital newsletter publication from the Independent Insurance Agents & Brokers of Louisiana

October 2018 Louisiana Agent  

A digital newsletter publication from the Independent Insurance Agents & Brokers of Louisiana