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

Inside this issue: 

NFIP Extension

DOL Overtime Rule

Big I Best Practices Study

Millennials-Amplify Their Assets

Louisiana Agent August 2017 IIABL STAFF Jeff Albright Chief Executive Officer Francine Berendson Director of Communications & Events

In this issue:

Disaster Assistance/NFIP Extension ..............5-6 ACT ‘Agency Cyber Guide 1.0’..................5-13 HO “Matching” Problems—Pairs or Sets .. 14-17 DOL Overtime Rule ......................................... 17

Mike Edwards, CPCU, AAI Director of Education

Ask Mike-Garagekeepers vs. PAP ........... 18-20 Rate & Rule Filings .......................................... 22

Kim Jackson Education & Membership Karen Kuylen Director of Accounting E. Lee Mowe Marketing Representative

Tech Tips—Domain Name Scam................... 23

Big I Best Practices Study ............................... 25 IIABA/J.D. Power Survey ................................ 26 Could Your Next Great Hire be 2,000 Miles Away? .................................... 28 Millennials—Amplify Their Assets ............. 31-36 IIABL Partners .................................................. 38

Rhonda Martinez, CIC Director of Insurance Jamie Newchurch Insurance Services Lisa Young-Crooks Executive Assistant Louisiana Agent 4

President Approves Disaster Assistance and NFIP Extension Last week, Congress passed and President Trump signed into law a $15 billion disaster relief package related to Hurricane Harvey and in anticipation of Hurricane Irma. The legislation also included a short-term extension of the NFIP through Dec. 8. The package contains $7.4 billion in direct assistance for Hurricane Harvey victims, $450 million for Small Business Administration (SBA) loans and an additional $7.4 billion in community development block grants for all disasters in 2017. Those impacted by the recent storms may be eligible for federal funds to cover uninsured or underinsured disaster expenses or serious needs. In general, two types of assistance are available from the federal government for disaster victims: grant assistance from FEMA, and SBA loans. Applicants can receive either a FEMA grant or SBA loan, a combination of both, or neither. Individual assistance grants from FEMA are currently Continued page 7

ACT 'Agency Cyber Guide 1.0' Giving agents & brokers ONE comprehensive resource for all Cyber Security Regulations Tools for Compliance and Protections in today’s world of Cybercrime.

Independent insurance agents & brokers deal with sensitive client information every day. For many insurance transactions, consumers must disclose confidential personal information that they would not normally or willingly disclose even to close personal friends. This puts the burden on agents and brokers to properly collect and protect this information which means complying with state and federal regulations as well as adhering to customer service best practice standards. Admittedly, technology significantly contributes to the ease of data collection and reduces the time required to write and service policies. But if not addressed properly, these improvements also create risks and exposures that could mean potential catastrophe for agents. Federal and state acts such as Gramm-Leach-Bliley Act ("GLBA"), the New York Department of Financial Services, and Continued page 8

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NFIP continued

capped at $33,300 and cover such expenses as temporary housing costs, home repair and replacement costs, and health care costs, such as the replacement of medication or medical equipment, among other disaster-related costs. FEMA’s grants do not cover food losses, insurance deductibles and secondary homes. Assistance for any single household is capped at $33,300, but that cap includes the following maximum reimbursements:

Up to $6,000 to repair or replace vehicle damaged by the disaster Up to $3,600 for child care expenses for children ages 13 and under, or ages 14-18 with a disability

Homeowners can apply for loans up to $200,000 to repair or replace disaster-damaged property. Homeowners and renters are eligible for up to $40,000 to repair or replace disaster-damaged personal property, such as furniture, clothing and vehicles. Businesses and private nonprofit organizations may borrow up to $2 million to repair or replace property, machinery and equipment, inventory, and other business assets. Small businesses can apply for an economic injury disaster loan for up to $2 million regardless of whether they suffered any physical property damage. However, if a business already applied for a physical damage loan, the cap for both loans is still $2 million.

Up to $7,000 for funeral expenses SBA offers loans to both businesses and homeowners. Applicants who register for a FEMA grant are often referred to the SBA, which sets loan amounts and terms based on each applicant’s financial circumstances:

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other emerging regulatory requirements or recommendations to protect consumer information but that are also in the agents’ best interest. These acts and regulations can be tedious and onerous to address given the multifaceted responsibilities agents encounter daily. But agents need to make compliance a priority. The Agents Council for Technology (ACT) in cooperation with independent agent distribution entities has created this Agency Cyber Guide for Big "I" independent agents and brokers. The tool includes a list of the major Federal and State regulations with clear descriptions and resources to address each one. Some of these resources are free through ACT and other entities while some are at cost to the agency. ACT envisions this tool is to be a point-in-time "best practices" resource. Given the swift nature of change in technology and the increasing sophistication of cybercrime, this tool will be updated on a periodic basis. Here is a high-level overview of the GLBA security measure regulations: 1.Access controls on customer information systems, including controls to authenticate and permit access only to authorized individuals and systems to prevent employees from providing customer information to unauthorized indi-

viduals who seek it through fraudulent means; 2. Access restrictions at physical locations containing customer information; 3. Encryption of electronic customer information, including when in transit or in storage on systems where unauthorized individuals may have access; 4. Procedures to ensure that customer information system modifications are consistent with an organization’s information security program; 5. Dual control procedures, segregation of duties and employee background checks for employees with access to customer information; 6. Monitoring of systems and procedures to detect actual and attempted attacks on or intrusion into customer information systems; 7. Response programs for when an organization suspects or detects that unauthorized individuals have gained access to customer information systems; 8. Measures to protect customer information from destruction, loss or damage by environmental hazards or technological failure; 9. Training for staff to implement the security program; and 10. Regular testing of the key controls, systems and procedures of the security

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lack of action can cost businesses dearly.

program. Data breaches of large commerce businesses are in the news every day. In reality, small- to medium-sized agencies are not immune. Data breaches are occurring just as often in small businesses, and the results can be disastrous! Having to communicate to your entire client base that your system—which contains their sensitive personal data—trusted personal data - has been lost to hackers or cybercrime, can cripple a small business.

Here are the primary regulations along with resources

for agencies to use to comply. ACT recognizes that this is a point-in-time snapshot, so we have developed a process to update this document as individual regulations—as well as federal and state laws—change.

In the section immediately below, we are providing you with details on each of 12 Cybersecurity Regulations, as well as resources to address those. The regulations detailed are: 1.Risk Assessment 2. Written Security Policy Statistics show that 50% of small and medium-sized busi3. Incident Response Plan 4. Staff Training and Monitoring 5. Penetration Testing/Vulnerability Assessment ness have suffered a cyberattack in the last 12 months (through YE 2016)—this number will increase. The U.S. 6. Access control Protocol National Cyber Security Alliance found that 60 percent of 7. Written Security Policy for 3rd-Party Service small companies are unable to sustain their businesses six Providers months after a cyberattack. According to the Ponemon 8. Encryption on Non-Public Information Institute, the average price for small businesses to recover 9. Designation of CIO after their businesses have 10. Audit Trail been hacked stands at 11. Implementing Multi-Factor $690,000. And for Authentication middle market comHandling sensitive 12. Procedure for Disposal of panies, it’s over $1 Non-Public Information information is now one million. It is critical that agents and brokers: 1. understand these requirements 2. begin to comply and protect 3. follow the road map to fully address all areas that apply to them

of the most critical

But the costs are not Note that all regulations listed responsibilities faced by just relegated to lost are critical to comply with GLBA, the modern insurance business. Nonwhich also covers other emergcompliance with ing regulation such as NY DFS. any of these regulaThese are considered "best practices" tions may come with a for agency security. substantial penalty. Penalties can vary by state, as do the data breach communication requirements. Penalties Agencies doing business in the state of New York can be assessed as: Civil penalties per resident affected and/or per breach, Additional penalties for actual economic damages, Noncompliance also punishable by other state-specific deceptive trade practices laws, or as prescribed by a state attorney general. It is important to note that the law that applies is not the state where the breach occurred, nor the state where the agent/broker is located, but the jurisdiction of the person whose data was breached. There are also required timelines for responses. These may carry penalties for each day of failure to provide notice of security breach. Bottom line: Non-compliance and

may apply for an exemption under the NY DFS 23 CRR 500 Act for some of the regulations. However, GLBA still applies. Details on NY DFS exemption eligibility and application are in the ‘Appendix’ section at the end of this document .

A risk assessment is the identification of hazards that could negatively impact an organization’s ability to conduct business. These assessments help identify inherent business risks and provide measures, processes and controls to reduce the impact of these risks to business operations. The assessment should include a risk mitigation checklist.

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Resources: ACT/CIS ‘Cyber Hygiene Toolkits’ For hardware & software, the ability to Count, Configure, Control, Patch: Click here to access

A security policy is a document that states in writing how a company plans to protect the company’s physical and information technology (IT) assets. It can also be referred to as a ‘written information security policy" or "WISP". The document must detail your agency’s operations for security, governance, inventories, controls, continuity and disaster planning and systems monitoring. This includes internal and external mitigation policies. Primary Resource ACT Cybersecurity Policy Template Resources Information Shield FCC- Cyber Security Planning Guide NetGen Data Security

An incident response is an organized approach to addressing and managing the aftermath of a security

breach or attack (also known as an incident). The goal is to handle the situation in a way that limits damage and reduces recovery time and costs while complying with federal and state regulations. This includes communication/notices to state superintendent upon detection of a cybersecurity event and communication to customers, insurers, and third-party service providers. This is part of an overall written security plan (see item #2 above). Resources Mintz-Levin 2017Apr Data Breach Guidelines by State NCSL Security Breach Notification Laws by State Guidance for Incident Response Plans NetGen Data Security

This is a critical regulation. Even if all other areas are in compliance, one misstep by agency personnel can expose data due to malware, phishing and other incursions. ACT strongly recommends that all businesses— regardless of size—comply with this regulation. Resources – Phishing simulator for agency training KnowBe4 – Staff security awareness training Cybersecurity employee training guidelines from Travelers Continued page 12

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NetGen Data Security

Penetration testing (also called pen testing) is the annual practice of testing a computer system, network or Web application to find vulnerabilities that an attacker could exploit. This should be done internally and externally. Vulnerability Assessment is a biannual process that defines, identifies, and classifies the security holes (vulnerabilities) in a computer, network or communications infrastructure. Resources Tutorials: Differences/Details between Penetration Testing and Vulnerability Assessments Veracode - Vulnerability Assessment and Penetration Testing Illumant Security Assessment Services - Vulnerability and Penetration testing

This responds to regulations requiring restricted access to non-public Information, including PII, PHI, PCI. Resources

FTC.Gov How to Comply with the ‘Privacy of Consumer Financial Information Rule’ of the Gramm-Leach-Bliley Act

These are written policies and procedures designed to ensure the security of information systems and nonpublic information that are accessible to, or held by, thirdparty service providers. Note: The NAIC refers to this an "information security program." Resources NetGen Data Security This is an evolving issue, with regulatory guidance to come. Note: These elements for the NY DFS regulations do not take effect until Mar 1, 2019. We expect for guidance on this soon and will update this resource.

Encryption is the process of encoding a message so that it can be read only by the sender and the intended recipient. Non-Public Information refers to all electronic information that is not publicly-available information and for insurance purposes refers to PII (personally identifiable information), PHI (protected health information), and PCI (payment card industry data security standards). This regulation describes the need to encrypt and protect this data when in storage and when transferred between the insurance agency and its policyholders (email) What is Data Encryption, How to Get Started Comparison of the Best Data Encryption Software - 2017 ACT – TLS email encryption FAQs ACT - Protect Your Clients with Secure Email Using TLS ACT – IA Carriers with TLS Secure Email Enabled Note: There is an exemption to this requirement, however it requires a waiver request to be submitted annually.

This is the title required by NY DFS for some agencies doing business in New York.; nationally this role can be viewed as ‘Data Security Coordinator’. Resources

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An audit trail (also called audit log) is an electronic trail that gives a step-by-step documented history of a transaction. It enables an examiner to trace the financial data from general ledger to the source document (invoice, receipt, voucher, etc.). The presence of a reliable and easy to follow audit trail is an indicator of good internal controls instituted by a firm, and forms the basis of objectivity. For agencies, using your agency management system (with all other interfacing systems) provides a solid foundation for an audit trail. Resources National Institute of Standards & Technology (NIST) on Audit Trails

Multifactor authentication (MFA) is a security system that requires more than one method of authentication from different categories of credentials to verify the user’s identity for a login or other transaction. One example is a policyholder logging into an agency

website and being requested to enter an additional onetime password (OTP) that the website’s authentication server sends to the policyholder’s phone or email address. Resources Protect Your Small Business with Two-Factor Authentication Making Multi-Factor Authentication Easy to Use

As with encryption, this regulation refers to all electronic information that is not publicly available, including PII, PHI and PCI. Improper document destruction is often a downfall of small business security. Regulations on this vary by state. Agents doing business in multiple states should adhere to the highest level of requirements. Keep in mind, there is a difference between complete disposal of information, and simply deletion. Resources National Conference of State Legislatures (NCSL) - Data Disposal Laws by State

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HO “Matching” Problems and the Pairs or Sets Clause Bill Wilson, CPCU, ARM I subscribe to a blog from a plaintiff’s attorney. I don’t always agree with the posts, but I find them to be interesting and generally fair. An exception was a blog post (and a response) made this weekend about a Missouri insurance department bulletin that was published then later withdrawn. I’ll give you a minute to read the blog entry…. The claim scenario deals with property like vinyl siding or asphalt roof shingles which is damaged by a covered peril such as hail. Only individual shingles or one side of a home actually has physical damage but, of course, the insured wants the entire roof or all siding on the house replaced because the result of just replacing the damaged property results in a downgrading of the cosmetic appearance of the

home. The apparent conclusion of the author and at least one responder was effectively that a bulletin mandating coverage for the entire loss, including the cosmetics, was later withdrawn because the insurance department is in the pocket of the insurance industry. So this was my response (at the time of this writing, my post on the other blog was awaiting approval and I’ve slightly edited my original response below): Chip, what you and Shirley are saying is largely biased presumption and I say that with all due respect. My career in the P&C insurance industry spans 6 decades. Bulletins like the one described carry no force of law, though insurers often abide by them. I have no idea why the bulletin was withdrawn and I checked with someone who worked at the MO DOI at the time and he did not know. It is not a fact-based conclusion that somebody is in the pocket of the insurance industry and that explains why it was pulled. More likely, someone pointed out that most of the policies in the marContinued page 15

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HO “Matching continued

ketplace simply do not cover this type of “matching” loss. Here is an article about this (no password needed…I got so many questions about this issue that I made the article public last year): “Direct vs. Consequential Damage in the Homeowners Policy” As the article points out, some states have statutory or case law that governs such consequential or indirect claims. The ISO homeowners forms (as do most non-ISO forms) clearly state that they only cover DIRECT damage. If I own a suit and the coat is physically damaged, but not the pants, I don’t get a complete new suit even under replacement cost coverage because only the coat suffered DIRECT damage. That may not sound “right,” but that’s precisely what the insurance contract says and means. HOWEVER, this is why the ISO homeowners policies have a “Pair or Set” clause that pays the difference between the value (on an ACV basis) before and after the loss, such that you get more than just the value of the pants. I’ve personally and successfully used this clause when settling a tornado claim that damaged or destroyed 6

of 18 shutters on my home a few years ago. I invoked the Pair or Set clause (something my adjuster said no one had ever done for real property, though the clause does not say it’s limited to personal property). And the really good news? The insurer used the 1991 ISO HO-3 policy but had a broadening endorsement that provided replacement cost, not just ACV, recovery in the Pair or Set clause. Long story short, because the shutters were almost 30 years old, they couldn’t be matched, so I got 18 brand new shutters. What is covered is/should be governed by what the insurance contract says. My experience over 47+ years is that claim denials are not most often based on the insurer trying to screw its customers. Most often denials are based on the FACT that the policy doesn’t cover the claim. That being said, it is sometimes, perhaps even often, the case that the language is subject to more than one reasonable interpretation. If so, the insured usually wins. I’ve spent the past 28 years assisting independent insurance agents who are advocating FOR coverage for their customers in such cases. There are other reasons for claim denials we could talk about (including the sad state of mandatory inContinued page 16

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dustry education today), but I truly and honestly believe that deliberately refusing to pay a known covered claim is a rare reason and more often due to either the FACT that the policy doesn’t cover the loss or that there is some measure of incompetence or misjudgment involved rather than malice. Check out this excellent white paper on this subject: “Matching” in Replacement Cost Homeowners Insurance Policies* This report was prepared for United Policyholders by Jay Feinman, Distinguished Professor of Law at Rutgers Law School and Co-Director of the Rutgers Center for Risk and Responsibility; Nancy Talley, Librarian at Rutgers Law School; and Evan Kerstetter, Rutgers Law School—J.D. expected 2018. Contact Jay Feinman at This report is for informational purposes only and is not a substitute for legal advice. Blog subscriber question: Interesting note on the “Pair or Set” clause. Curious if you have ever heard of any cases in Nebraska where this may have been invoked. Also, I didn’t see a mention of it, but the Pair or Set clause states “In case of loss to a pair or set we MAY elect to:…”. As you have stated before, words do matter. When I interpret that language, it leaves the appli-

cation of the Pair or Set clause completely at the will of the carrier. How could you legally challenge whether or not the clause applies to roofs and shingles when the clause can only be invoked at the carrier’s discretion? Bill Wilson response: I have no seen the Pair or Set clause adjudicated for real property other than my own claim. It’s quite possible it has been, but I’ve not looked for it. As for the use of “may” in the Pair or Set clause, ISO uses the word “may” 27 times in their current HO-3 form. If it was interpreted as “may or may not” in each instance then that would strip a lot of the coverage out of the form. “May” may (no pun intended) mean different things, depending on the context of its use. This is what the clause says: Loss To A Pair Or Set In case of loss to a pair or set we may elect to: 1. Repair or replace any part to restore the pair or set to its value before the loss; or 2. Pay the difference between actual cash value of the property before and after the loss. As used here, “may” refers to either/or in that the insurer may either pay repair or replacement or the difference in ACV before and after loss.

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Here is some Q&A from today that illustrates that this issue is not limited to homeowners insurance: Q: “One front tire was damaged in a covered collision loss on an all wheel drive vehicle. The carrier is offering to pay for two tires with an allowance for betterment. The manufacturer and tire retailers say all four tires should be replaced at the same time on all wheel drive models. The insured believes the logic followed that allows the carrier to pay for two tires must be extended to all four tires on this vehicle. I agree with the insured. Is there a developed industry standard that supports replacing more than the damaged tire on all wheel drive vehicles?” A: There is no “industry standard” that governs whether something is covered or not. The insurance contract rules. The carrier’s first mistake was probably agreeing to replace both tires rather than just the one damaged. Now they may have established a precedent that could extend to all four tires, depending on their rationale for replacing the second undamaged tire. What does the POLICY say? The ISO PAP says it covers “DIRECT” damage, not consequential damage in the form of replacing property not physically injured. A literal reading of the ISO PAP would lead most people to the conclusion that only the damaged tire is covered. There is no obligation in any auto policy I’ve seen to pay for claims involving compliance with manufacturer recommendations.

Bill Wilson, CPCU, ARM, AIM, AAM Founder & CEO, or

Com•men•tar•y … an expression of opinions or offering of explanations

William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of 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.

In a striking legal victory for independent insurance agencies and the Big “I”, a federal judge in Texas issued a ruling to overturn the DOL overtime rule. The decision applies on a nationwide basis. The overtime rule was finalized during the Obama Administration, and requires that many employees who were not previously legally entitled to overtime be paid overtime. The ruling is the result of lawsuits filed by the Big “I”, other business groups, and 21 state governments. The Big “I” is the only insurance trade association to join the lawsuits.

What are the immediate implications of the court’s ruling? Pending a possible appeal by the Trump Administration, the overtime rule will not go into effect. Agencies are still legally required to comply with current state and federal labor laws, but they will not be liable for complying with the 2016 federal overtime rule. While agencies do not need to implement changes to comply with the 2016 federal overtime rule update at this time, changes to current law could be made in the future.

What’s next?

The court’s decision is welcome news for agencies who have been struggling with the impacts of the rule, and means that the 2016 overtime rule is unlikely to ultimately take effect. However, while unlikely it is still possible the decision is appealed by the Trump Administration. The DOL could also make amendments to the current regulations. In July 2017, the DOL issued a request for information with the intent of potentially issuing their own version of an overtime rule. In order for any rule to be finalized by the DOL, the administration must follow the Administrative Procedure Act, which is generally a multi-year process. Nonetheless, changes to current regulation can be anticipated at some point in the future. However, the expectation is any potential changes by this Administration will result in a more workable rule for both agencies and their employees. If your agency has already implemented changes in anticipation of complying with the rule, it is at the agency’s discretion whether or not to leave those changes in place. All agencies are encouraged to ensure that they are in compliance with existing federal and state employment laws. More information on the 2016 overtime rule, the court case and current laws can be found at: Issues/overtime.aspx

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IIABL Director of Education, Mike Edwards, CPCU, AAI is your source for technical questions. Contact Mike at or 770.402.1011

Subject: Garagekeepers vs PAP for Classic 1970 Chevy Chevelle SS


Over the weekend, a neighbor asked me an interesting insurance question. Her son lives in Florida. He recently bought his “dream car” – a 1970 Chevy Chevelle SS 454, and told her he paid “about $40,000” for the car. Two days before the hurricane, he took the car to a classic car shop to have new tires and rims (chrome wheels) put on. He’s sure the area around the tire shop has flooded, but doesn’t know the extent of damage to his car. He has not been able to reach anyone at the shop, and is trying to find out if the tire store’s insurance is going to pay for damage to his car. I work primarily in commercial construction accounts at the agency, so I don’t really know anything about garage insurance. But I seem to remember that the Stated Amount endorsement should be used for insuring classic cars on a PAP. Can you give me a few pointers to pass along to my neighbor?

A. My old college roommate has a 1961 Corvette,

so I understand the affection people have for their classic cars. Since we don’t have the actual coverage forms to review, here is a broad-brush picture of Garagekeepers and Personal Auto, based on coverage forms from ISO (Insurance Services Office). Proprietary forms may be different. Assume the tire shop is Classic Car Specialty Shop (CCSS), and your neighbor’s son is Bill. Issue #1: Garagekeepers Garagekeepers coverage is specifically designed to cover damage to customers’ autos while in the care of a business for servicing. The term is thought to trace its roots to the royal “gamekeepers” of England. Merriam-Webster Unabridged cites the first known usage of the term in 1645. Today, the National Gamekeepers’ Organisation of England and Wales reports that there are approximately 3,000 full time gamekeepers in the UK. Businesses that service, repair, or store myriad vehicles for customers should obtain specialty coverage. Continued page 19

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Ask Mike continued

That is because personal property in the care, custody, or control of the insured is generally excluded under liability insurance, without endorsement. One additional niche filled by garagekeepers is for valet parking, such as at restaurants. The CGL (Commercial General Liability) policy excludes autos “owned or operated by or rented or loaned to any insured.” However, there is an exception for “parking an auto on, or on the ways next to, premises you own or rent.” At the same time, the CGL also excludes “personal property in the care, custody or control of the insured.” The net effect of these two provisions is that parking customers’ autos is covered for bodily injury or property damage, but damage to a customer’s car is excluded. Attachment of the Garagekeepers Coverage solves the problem. In addition to Garagekeepers for auto service work, the equivalent in aviation insurance is Hangarkeepers, and Marina Operators Legal Liability for boats. Garagekeepers is a legal liability coverage, and is often abbreviated in insurance texts and literature as “GKLL,” although the actual name of the form is “Garagekeepers Coverage.” Below are pertinent excerpts from the ISO Garagekeepers Coverage form, followed by comments about the coverage it would provide for damage to Bill’s Chevelle.

(3) Mischief or vandalism. c. Collision Coverage Caused by: (1) The "customer's auto's" collision with another object; or (2) The "customer's auto's" overturn. Direct Coverage Options Indicate below with an "X" which, if any, Direct Coverage Option is selected. Excess Insurance If this box is checked, Garagekeepers Coverage remains applicable on a legal liability basis. However, coverage also applies without regard to your or any other "insured's" legal liability for "loss" to a "customer's auto" on an excess basis over any other collectible insurance regardless of whether the other insurance covers your or any other "insured's" interest or the interest of the "customer's auto's" owner.

Garagekeepers Coverage

Primary Insurance

CA 99 37 10 13

If this box is checked, Garagekeepers Coverage is changed to apply without regard to your or any other "insured's" legal liability for "loss" to a "customer's auto" and is primary insurance.

A. This endorsement provides only those coverages: 1. Where a Limit Of Insurance and a premium are shown for that coverage in the Schedule; and 2. For the location shown in the Schedule. B. Coverage 1. We will pay all sums the "insured" legally must pay as damages for "loss" to a "customer's auto" or "customer's auto" equipment left in the "insured's" care while the "insured" is attending, servicing, repairing, parking or storing it in your "garage operations" under: a. Comprehensive Coverage From any cause except: (1) The "customer's auto's" collision with another object; or (2) The "customer's auto's" overturn. b. Specified Causes Of Loss Coverage Caused by: (1) Fire, lightning or explosion; (2) Theft; or

Comments: (1) The GKLL is based on the legal liability that Classic Car Specialty Shop (CCSS) owes for damage to Bill’s Chevelle. See B.1. above: “We will pay all sums

the insured legally must pay as damages for loss to a customer's auto."

(2) The damage must arise from a category of covered losses selected by CCSS: a. Comprehensive Coverage; b. Specified Causes of Loss Coverage; or c. Collision Coverage. Note that Specified Causes of Loss Coverage only provides for 3 categories of damage, while Comprehensive Coverage is much broader, and covers “any cause except collision or overturn.” Therefore, Specified Causes of Loss Coverage and Comprehensive Coverage are never written on the same policy. Collision Coverage can be written in conjunction with either. (3) If Bill’s Chevelle is damaged by fire due to the negligence of CCSS, coverage is found under either Comprehensive, or Specified Causes of Loss. However, if the fire started at an adjacent business, CCSS would not ordinarily be legally liable for damage to the Chevelle. Continued page 20 Louisiana Agent 19

(4) Since Bill’s car is probably damaged by one or more causes related to the hurricane (windstorm, hail, flood), it is highly unlikely that CCSS would be held legally liable for such damage, even though Comprehensive Coverage applies for “any cause except collision or overturn.” (5) If an employee of CCSS accidentally hits Bill’s Chevelle with another customer’s car, or the Chevelle somehow falls off the hoist, legal liability would clearly be applicable under Collision Coverage. But if another customer accidentally rammed the Chevelle, CCSS is not likely to be held legally liable. (6) Therefore, it’s safe to say that GKLL written on a solely legal liability basis is not going to be good for customer relations. However, the Garagekeepers form offers CCSS two options: Direct Excess, and Direct Primary. (See excerpts above.) (7) Direct Excess remains on a legal liability basis for covered causes of loss. But in a situation where CCSS is not legally liable, such as flood damage, and Bill carries Other Than Collision (“Comprehensive”) on his PAP, GKLL Direct Excess becomes excess over amounts collectible under Bill’s PAP (such as deductible), and pays this amount on a direct (vs legal liability) basis. (8) Direct Primary pays without regard to legal liability by CCSS, and pays on a primary basis, if the cause of loss is covered by the GKLL. While this option costs more, it could make the difference between keeping or losing customers. (9) One last issue – and Bill’s first issue – is: how much is the check? Automobile physical damage losses are generally settled on the basis or ACV (Actual Cash Value). However, the GKLL says “We will pay all sums the insured legally

must pay as damages for loss to a customer's auto."

Therefore, there is no specific valuation basis, such as ACV or replacement cost. The amount CCSS owes Bill is determined by the court. For Bill, with a 47-year-old car worth about 10 times its original MSRP, this will hopefully provide a more equitable settlement. (10) The Virtual University (VU) of the IIABA (Independent Insurance Agents & Brokers of America) has 3 excellent articles on valuation based on a legal liability basis:

Part D – Coverage for Damage To Your Auto Limit of Liability [excerpts] A. Our limit of liability for loss will be the lesser of the: 1. Actual cash value of the stolen or damaged property; or 2. Amount necessary to repair or replace the property with other property of like kind and quality. Comments: (1) Bill’s unendorsed PAP is going to be woefully inadequate for damage to the Chevelle, since covered losses are valued on an ACV basis. (2) The Stated Amount endorsement you mentioned is not recommended for classic cars.

Coverage For Damage To Your Auto PP 03 08 06 94 Limit of Liability [excerpts] A. Our limit of liability for loss will be the lesser of the: 1. Amount shown in the Schedule or in the Declarations. 2. Actual cash value of the stolen or damaged property; or Comments – continued: (3) This endorsement is referred to as the “stated amount endorsement,” although that is not its actual title. Under this endorsement, if the amount scheduled for the Chevelle is $40,000 [A.1. above], the ACV [A.2.] will certainly be far less. The problem with this endorsement is that it pays the lesser of the two amounts. (4) The correct valuation basis for classic and antique autos is “agreed amount” (also called “agreed value”). ISO does not offer such an endorsement, but specialty auto markets for classic cars do. (5) Articles on the Virtual University: “Insuring Autos On A Stated Amount Basis”

“ACV vs RC Recovery in Liability Claims”

“Stated vs Agreed Amount”

“ACV vs RC Recovery in Liability Claims – Revisited”

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.

“The CGL Loss Settlement Clause” Issue #2: Bill’s Personal Auto Policy (PAP)

Personal Auto Policy PP 00 01 01 05 Louisiana Agent 20

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Coverage Type

Overall % Impact:

Overall $ Impact:

Number of Policyholders:


Hartford Casualty Ins Co Sentinel Insurance Co Hartford Accident & Indemnity Hartford Fire Insurance Co

4 – Homeowners




New: 12/16/2017 Renewal: 2/3/2018

United Fire & Casualty Co United Fire & Indemnity Co

17 – Other Liability




New: 12/1/107 Renewal: 12/1/2017

Nationwide Agribusiness Ins

19 – Commercial Ins

+22.300 %


Republic Underwriters Ins Republic Fire & Casualty Ins Southern Underwriters Ins Co Southern Ins Co of Virginia

19 – Commercial Ins




First Liberty Ins Corp

17-Other Liability




New: 8/21/2017 Renewal: 10/12/2017

PURE High Value Homeowners/Condos/Cooperative, Tenants Policy Program

4 – Homeowners




New: 12/2/207 Renewal: 2/2/2018

New: 12/1/2017 Renewal 12/1/2017 New: 1/1/2018 Renewal: 1/1/2018 Digital Marketing o Online consumer-agent portal—“Find an Agent Locator” o Agency website and digital marketing programs

Trusted Choice Consumer Brand o Presence on “Find an Agent” locator and Trusted Choice mobile app o National advertising exposure along with state promotion o Access to professionally produced advertising materials Contact: Lisa Young-Crooks Louisiana Agent 22

Domain Name Scam Over the past few months I have received multiple official-looking letters from “iDNS – Internet Domain Name Services” telling me “When you switch today the Internet domain name services, you can take advantage of our best savings.”

While you do need to make sure to renew your domain name registration, you should not to do it with iDNS.

The problem is that the cost for the iDNS domain name registration is three times more expensive than my current registration fee. You would be surprised how many people fall for the iDNS Domain Name Scam.

Nothing. Throw the letter away. You probably bought your domain name from a company like GoDaddy, SiteGround, or one of the many other domain registrars. When your domain does get close to your expiration date, they will send you an email notifying you of the renewal.

Who are they? The letter comes from a New Jersey address and their official name is Internet Domain Name Services Inc. Their website is listed on the letter as The AE top-level domain is for the United Arab Emirates. Previous letters had a different web address registered in St. Helena, Ascension, and Tristan da Cunha. They could’ve registered that unusual domain to avoid consumer protection laws in the United States. The company uses a Jersey City New Jersey business address. According to Google maps, this address looks like it is a UPS store. The Better Business Bureau online file contains 34 negative reviews and complaints about this company. What do they want? They are trying to trick you into changing your domain registrar to them so they can charge you three times what everyone else charges.

What should I do?

When it is time to renew your domain, you should expect to pay about $15 per year. If you’re being asked to pay more than this amount, always question the service provider. Another tip: A frequent problem I see when auditing agency websites is that the agency actually does not own the domain name. This likely happened when the site was created by an outside development company. They register the company domain under their name, not the agency’s. This is a mistake that should be corrected. You can download a PDF copy of the notice I received (with sensitive information redacted), so you can educate your staff to always ask questions when someone wants you to move the agency domain name registration. What steps do you take to make sure you protect your agency website address and, thus, your Internet presence?

“You must renew your domain name to retain exclusive rights to it on the web, and now is the time to transfer and renew your name from your current registrar to Internet Domain Name Services. Failure to renew your domain name by the expiration date may result in the loss of your online identity making it difficult for your customers and friends to locate you on the web.”

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Every three years, the Independent Insurance Agents & Brokers of America (National Big I), releases what we call the “Best Practices Study.” This study outlines our findings after researching top performing insurance agencies in six revenue categories, from across the nation, over a three-year period. The agencies are selected based on outstanding management and financial achievement. This study was first initiated by the Big I in 1993 as a way to provide a road map to improve agency performance. The most recent study, the “2016 Best Practices Study,” was released at the end of last year and highlighted four key challenges and areas of opportunity facing the insurance industry: growth, consolidation, an aging workforce, and technology. First, among the 260 agencies studied, the average agency saw steady profitability each year, but found

modest declines in organic growth (non-acquisition growth). Several factors—such as attrition or consolidation—appear to have contributed to this decline. However, the study offered specialization—or expertise in a certain industry—as a way to combat slowed growth. Having an in-depth knowledge of what is unique to a certain niche of businesses and how that affects their insurance coverage sets an agency apart from its competitors. It also enables the agency to be more efficient when marketing as they are already familiar with the best carriers for that type of business and have established relationships with those underwriters. Second, the consolidation of smaller agencies into larger corporations has steadily increased since 2009. This has both positives and negatives. These larger organizations provide resources a smaller firm simply cannot deliver, but they cannot be as flexible or nimble as their smaller competitors. Additionally, it is nice to see a trend of smaller startup agencies. Third, the workforce in the industry is aging. Agencies that recognize this challenge are placing an emphasis on early succession planning for key leadership positions. With a large portion of employees reaching retirement age in the next several years, it is crucial for agencies to be focused on attracting, hiring, and retaining young talent. This includes exploring new ways the younger generations prefer to work, such as working from home, or providing tuition coverage for advanced professional degrees and certifications. Finally, there is the advancement of new technology. Over the past several years we have seen capital being invested in startup companies in the insurance industry, many of which disrupt the traditional broker model (similar to what Airbnb did to the hotel industry and what Uber did to the transportation industry). These startups are betting that consumers prefer to purchase coverage using the internet or an app rather than through an agent. However, so far, this technology seems to target the least complex insurance products where an agent’s expertise in coverage or claims handling may not play as big of a role. In order to understand how this trend may affect an agency, the Best Practices study encourages leaders to take a look at which aspects of their business are most vulnerable (such as small commercial P&C and small group medical). It also provides resources where agencies can monitor the constant evolution of technology in our industry.

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IIABA and J.D. Power Survey The Independent Insurance Agents and Brokers of America, Inc. and J.D. Power are conducting a research study to better understand your experience with the insurers you work with and how satisfied you are with them. As a valued member of the Big “I� you and all licensed agents in your agency who work with companies are invited to provide feedback.

Please be assured that your feedback will only be used for research purposes and no one will try and contact you as a result of completing this survey.

To take the survey you must be logged in the website as a member. >> Click here to take the survey. Forgot your password? >> Click here to recover.

* NO PURCHASE OR SURVEY COMPLETION NECESSARY TO ENTER OR WIN. A PURCHASE OR SURVEY COMPLETION WILL NOT IMPROVE CHANCES OF WINNING. Ends: 12/31/17. The 2018 Independent Agents & Brokers of America Sweepstakes is open to individuals who are legal residents of the 50 United States, including the District of Columbia), who at time of entry are: i) age 18 or older; ii) members of the Independent Insurance Agents & Brokers of America; and iii) possess a current and valid agent license prior to the start of the Sweepstakes. To view the Official Rules, including alternate method of entry, visit InsuranceAgentSweepstakes. Void in where prohibited by law. Sponsor: J.D. Power and Independent Insurance Agents & Brokers of America.

To access the J.D. Power Privacy notice, please visit: To access the Independent Insurance Agents & Brokers of America Privacy notice, please visit: Disclaimers/PrivacyPolicy.aspx

As a token of our appreciation, all study participants will be entered into a sweepstakes* for a chance to win one of the following prizes!* And as an added incentive, all study participants who complete the survey will also receive a complimentary spotlight report of the study results at the time of study publication in January 2018.

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What if an Employer's Next Great Hire is 2000 Miles Away? There are new workforce trends that make remote work an even smarter solution than ever before. A recent report, Dynamism in Retreat by the bipartisan think-tank, the Economic Innovation Group, has identified two economic realities: 1) Business Creation, an integral part of economic health and growth, continues to stagnate, ultimately preventing the economy from being in a "constant state of rebirth, serving to replace dying industries, foster competition with incumbent companies, and produce new, higher wage jobs." 2) There are fewer jobs available, and they're accessible to even fewer people because of geographic concentration. As a result, "the preponderance of business creation is now intensely concentrated in a handful of metropolitan hubs that have managed to maintain resiliency amidst the national slowdown."

So what's an employer to do if their in-town talent pool is a bit thin? Or what happens when someone loves everything about where they live but the available jobs? They go online. They embrace a remote work solution like WAHVE...and end up discovering how technology can transform everything. If you're ready to hire or ready to be hired, let us help you find your perfect match!

Questions? Contact

Bill Hunt, EVP & CSO 347.292.3757

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Webcasts E&O Risk Management October 3, October 14, October 19 Available on Demand

Ethics October 3, October 19, October 23, October 26

Available on Demand

Flood October 19 November 7

Available on Demand

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

Seminars IIABL Fall Education Conference October 19 Shreveport Convention Center

Events IIABR Fall Social 10/5/2017

IIAGNO Company Appreciation at Rock N Bowl— 10/26/2017

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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Don't Just Manage Millennials, Amplify their Assets If you've spent any time around a golden retriever, you likely found out that they love to play tug of war. Our puppy, Beau, (short for Gumbeaux), is no exception. He's hilarious when he engages someone in a tug-of-war, because he digs his heels in and refuses to give up any ground or give in.

I think a lot of leaders are like this when it comes to the changing workplace. One of the most common complaints I hear from leaders in the Baby Boomer and Gen X generations is that they are baffled and frustrated by the millennial generation in the workplace.

Some of the people that I talk to seem determined to dig their heels in and fight, like they're in some metaphorical tug of war. It's sort of like if you fight hard enough maybe they'll eventually give up and go away. If that's you, all I can say is good luck with all of that!

The fact is that one in three American workers are millennials, and they are the largest group of the American workforce today. So I think it's fair enough to say that the millennials are here to stay. And frankly, I think they have a lot to contribute to our organizations.

So instead of just resigning yourself to the fact that millennials are here to stay - and then barely tolerating them - why not embrace, leverage, and AMPLIFY the assets that these energetic, creative, and innovative young people have to offer to your organization?

I mean think about it. You spend a buh-zillion dollars and as many hours searching for the right employee, with the right skills, education, and experience. Why would you NOT want to make the most of your investment? Sadly, what I see happening all too frequently is the manager hires this superstar and then either leaves him to sink or swim or tries to get him to get into lock step with the rest of the drones. And the result is your superstar will be online looking for Continued page 34

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Best Practices continued

What I hope you take away from this is: take time out of your schedule to look at your company and where you want it to be in the future. I know investing in your agency is always top-of-mind, but putting that thought into action is challenging during the busy day. Be sure to continue to stay knowledgeable, and aware of industry trends to continue to be an asset to your policyholders. And remember, it is no secret that competition is getting fierce and the landscape is changing. However, in today’s world where communication is often done digitally, I can say from experience the personal touch and attention you give your policyholders makes you more valued than ever. You are more than just a quote—you are a trusted advisor. To get a full copy of the Best Practices Survey, visit the IIABA website at: AgencyManagement/BestPractices/Pages/ Products/study.aspx

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Millennials continued

another job before his ID badge is processed.

Nothing will make a young person go from sizzle to fizzle faster than just throwing him out into the workplace and not utilizing his unique skills and talents. As I've researched this topic, I have found lots of broad generalizations and stereotypes about millennials, as well as some downright insulting advice. I heard a so-called "expert" on the subject of millennials in the workplace say that what millennials really want is for us to make a big deal about their birthdays. Huh? Their birthdays? Are you kidding me? Should I make sure to get a princess cake too? That is downright insulting to any self-respecting adult of any age.

Much of this Gen Y-bashing is just a matter of the older generation complaining about the younger generation, and is basically history repeating itself. Since I have young adult children, I can see the situation from both perspectives. I believe that you, as a leader can, not only provide guidance to help them navigate their way through the nuances of the workplace, but also discover ways that you can actually amplify and leverage the assets that they bring to your organization. Here are my top tips.



Let them help drive culture. When my kids were young, we were blessed to have a wonderful public school where the cream-of-the-crop teachers all wanted to teach. When you create a positive, engaging work culture, your customers - and ultimately your bottom line - will benefit. If millennials are the largest population in the workplace, it just makes sense to get their input on what kind of culture will attract them and keep them there.


Engage in reverse mentoring. Your millennial team member may be savvy in areas where you have, well, suckage. Leverage her adeptness in areas such as technology, apps, or trends and ask her for input. By allowing her to mentor you, you'll bolster her selfconfidence and self-worth, while at the same time learning something new and gaining fresh perspective on issues. And incidentally, that fresh perspective can have an impact on your bottom line. Just sayin'.


Leverage their need for speed. Millennials are known for wanting instant gratification, so why not put that need for speed to work? Ask for input on what technology might be available that could help to improve your processes or save time or money. Get their ideas on how Continued page 36 Louisiana Agent 34

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you might achieve results faster.


Maximize their project mindset. Millennials typically like being assigned a project and being given the latitude to get it done - within parameters and deadlines - of course. Emphasize results, outcomes, and standards, rather than a particular structured schedule. To the extent humanly possible, give them the flexibility to work the hours that work best for them. If that means they're burning the midnight oil, or working remotely over the weekend, so be it, as long as they meet your quality standards and deadlines. Will these tips eliminate all of your challenges of working with millennials? Heck no. But if you will stop digging your heels in and resisting the changes that are already happening, you may just find that the millennials in your organization can be your greatest asset. Embrace, leverage, and amplify those assets! YOUR TURN:


How are you amplifying the strengths of your millennial team members?


What are your successes and challenges working with millennials? Pop a comment in my blog and share your experiences with our community. Jennifer Ledet, Ledet Management Consulting Thibodaux, LA

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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

Louisiana Agent Sept 2017  

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