Kentucky IA - Spring 2019

Spring 2019

Path to Perpetuation: Getting to Know Strategies to Reach Nick Rolf: 2018-19 Your End Goal Emerging Leader Chair Page 13

Page 22

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What's

Inside

Page 6

Contents

6 Agents Legislative Day Recap 7 Advocacy in Action

13 Path to Perpetuation: 3 strategies to reach your end goal

Page 22

17 Prepare to be Hacked: How to minimize the damage 22 Getting to know Nick Rolf: 2018-19 Emerging Leader Chair 24 2018-2019 Emerging Leader Committee 27 Five Reality Checks True Leaders Must Give Themselves 38 Sink or Swim: Making Agency Mergers & Acquisitions Work

Page 27 The Kentucky IA is the official magazine of the Independent Insurance Agents of Kentucky, and is published quarterly.

Office Address 13265 O’Bannon Station Way, Louisville, Kentucky 40223.

Telephone:(502) 245-5432 Email: iiak@iiak.org Fax: (502) 245-5750 All advertising and editorial submissions are welcome. Direct any inquiries and submissions should be directed to Nikki Robins, Communications Director at nrobins@iiak.org

In Every Issue 4 From the Chair

32 Education Calendar

5 DOI News

42 Advertiser Index

11 Upcoming Events

42 Classified Ads

19 Industry Partners

42 Social Media Links

Mission Statement The mission of the Independent Insurance Agents of Kentucky is to be the preeminent advocate for Kentucky Independent Agents and support their business and professional development needs.

Kentucky IA - Spring 2019 | 3

Officers Aaron LaRue

Chair, Bardstown 502.348.0050 Ray A. Robertson, CIC

Chair-Elect, Mt. Sterling 859.498.3410 Kevin T. Desmond

Vice Chair, Bellevue 859.491.5100 James D. England, AAI

Treasurer, Pikeville 606.437.7361 Stephen R. Kinkade, CPCU, AAI

National Director, Leitchfield 270.259.5465 Michael G. Johnson, CIC

Immediate Past Chair, Lexington 859.233.1461

Directors Allen J. Crawford, CIC, CSRM Somerset, 606.679.6311 Whitney L. Floyd, CISR Henderson, 270.827.3543 Mark Linkous, CIC Edmonton, 270.432.3491 Barrett H. “Skip” McGaw, II, CIC

Madisonville, 270.821.3122 Carolyn Reynolds

Richmond, 859.623.8485 Nicholas Rolf

Emerging Leader Chair, Ft. Thomas 859.781.0434 Chris J. Wiseman, CIC

Bowling Green, 270.781.2020 Laura Yount, CIC, CISR London, 606.878.0100

Staff Tara T. Purvis

President & CEO Amy Good

Financial Services Director Katie Hines

Membership Services Director Nikki S. Robins

Communications Director

Chair From the

Greetings everyone! Spring has sprung after a miserably rainy winter. With the perpetual cycle of the seasons, we all look forward to the spring renewal of the flowers, trees and our lawns.

Which is a great transition into everyone’s favorite subject and the topic of my article this month – PERPETUATION! Should I sell? Should I buy? Should I merge? What is my best option?

How do I decide? Can somebody PLEASE TELL ME what is my best option? I am certainly no expert (and did not sleep at a Holiday Inn Express last night), but I do know my first stop would be to check out the perpetuation info available from IIAK. But this article is not really about agency perpetuation.

The perpetuation of IIAK, on the other hand, seems like a good topic for the Chairman to have an opinion on, so here we go. First and foremost it starts with our emerging leaders. I can see first-hand the leaps and bounds this group has taken over the last few years. Through social media, programs and events, the level of participation continues to increase. Learning how to operate in the current and future state of our industry is always of utmost importance. If an agency principal is not sending the rising stars in their agency to participate with this group, they’re missing a huge opportunity. Please send your young people to Bowling Green in June for the Leadership Conference! As a former emerging leader committee member & chair, I can’t begin to express the impact this group has had on my professional success.

I also want to work on perpetuating our existing board of directors and IIAK committees.

IIAK has 7 committees that could always use another set of expert eyes and ears like yours.

Government Affairs, Health Benefits, Membership Services, Trusted Choice, Events, Industry Partners and Emerging Leaders. Surely out of those 7, there’s at least one that piques your interest or drives you nuts. Either way, volunteering for one of these is a great way to get involved. And it’s easy, just call a member of the association staff, me or any of the other board members. We don’t know you’re interested unless you tell us! This association is about representing the independent agent. If you don’t feel that you’re being adequately represented, GET INVOLVED! Lastly, the perpetuation of IIAK would not be possible without the generous support of our Industry Partners. Every time you see one of these partners, you should thank them for their investment. Without that investment, we’d be hard-pressed to provide the quality events, programs, products and services available to you, our members. To our industry partners reading this article now, THANK YOU! Our association is in a great place right now and we want to continue that for years to come. With your involvement now and in the future, I know we can make that happen. Opportunities are coming up soon as our regional road shows get started April 18 in Somerset. Be on the lookout for one in your area. If I don’t see you there, I’ll see you in Bowling Green for the Leadership Conference on June 12 & 13.

Thank you,

Kristie Weyer, CISR

Insurance Services Director Cassie Young

Workforce Development Director

4 | Kentucky IA - Spring 2019

Aaron LaRue Chairman, IIAK

Spring into reviewing coverages The month of April is always a good time to review insurance coverage for property damage caused by storms and the accompanying hail, wind and rain. Help your clients prepare for the spring storm season by reviewing insurance policies, ensuring they understand their coverage and determine if there is a gap. After all, it is springtime in Kentucky.

One valuable exercise that agents should recommend to policyholders is to develop a list, or inventory of insured possessions. Inventory lists can help consumers determine the amount of coverage that would be appropriate for their needs. Photographing insured items may save time in the future if you ever need to file a claim. In addition, having these photos electronically available on a mobile device, along with copies of all insurance policies, guarantees that they are readily available.

It is important to remember, too, that a typical homeowners policy does not cover flood damage. As you know, federal regulations may require homeowners to obtain flood insurance if a mortgaged property is in a

high-risk area. It is also recommended that properties in low-lying areas have flood insurance. Insureds can check under the plan exclusions to determine what is covered and what is not.

Flood insurance is available from the National Flood Insurance Program (NFIP). If your community participates in this program, clients can purchase flood insurance regardless of degree of risk. Clients can purchase NFIP insurance from an independent agent or call 888-379-9531 for more information. The average flood insurance policy is affordable, certainly less expensive than a disaster loan. There is a 30-day waiting period before coverage goes into effect.

Encourage policyholders to contact you as soon as possible after a storm to report damage. Remind them that it may take several days for an adjuster to arrive if they have several properties to inspect.

To learn more about Kentucky Department of Insurance visit http://insurance.ky.gov/home.aspx.

IIAK WELCOMES OUR NEWEST MEMBERS: Agency Member

Associate Member

Budget Guard Services • Union Byers Insurance Group • Bowling Green The Crestwood Agency • Crestwood Consumer Choice Independent Insurance, LLC • Louisville Greg Gibson Insurance & Financial Services • Catlettsburg Real Insurance • Lexington

Country Financial

For information, contact

Katie Hines Membership Services Director 502-245-5432 • khines@iiak.org Kentucky IA - Spring 2019 | 5

February 13, 2019 | Frankfort, KY Thank you to the agents who were able to join us on February 13 for Agents Legislative Day. This session has brought about several bills which will affect our industry on a short and long-term basis. Prentice Harvey and Dustin Miller kicked of the day by giving attendees a briefing regarding the latest on those bills. Members were then able to sit in on a Banking and Insurance Committee Meeting to see the legislative process in action.

These events are so important in ensuring that the voice of the independent agent remains strong in the halls of Frankfort. If you were not able to attend this year, we hope that you will contribute to KAPAC. Visit www.iiak.org/KAPAC to make your donation today!

6 | Kentucky IA - Spring 2019

THE ISSUE/PROBLEM

GRASSROOTS EFFORTS WORK!

WHAT IIAK DID FOR YOU!

Our efforts seemed to be working when a revised proposal came out - only increasing the insurance premium tax on select types of insurance to 10% opposed to the original 15%. This was a better option for the industry... but still not perfect.

Louisville Mayor Greg Fischer recently attempted to triple the insurance premium tax in Louisville Metro and Jefferson County from 5% to 15%. Metro Louisville is facing a $65 million budget shortfall and Fischer was publicizing scare tactics impacting different departments and services with potential budget cuts.

His proposal increased the taxes of Louisville residents on most types of insurance.

Your association sprung into action and developed a position on the topic. The board of director’s wrote a letter to Mayor Fischer and copied all of the Metro Council Members. John DeWeese (fellow agent) and IIAK President & CEO, Tara Purvis spoke on behalf of the Independent Agents in Louisville at a televised budget committee meeting. Purvis provided a document to each council member for reference on the amount of money being collected versus the amount of money needed to reconcile their shortfall, the absence of a sunset clause and the raid on the responsible.

Ordinance impacting Insurance Premium Tax www.iiak.org

Overview

The Louisville Metro Insurance Premium Tax is intended to increase funds sought for the express purpose of addressing Metro’s pension obligations, health insurance costs or unforeseen emergencies.

DON’T RAID THE RESPONSIBLE!

Who/What will be impacted?

• Homeowners • Business Owners • Businesses • Residents • Economic development • Expansion of small businesses

THE ULTIMATE RESULT

The vote occurred at the council meeting on March 21 and failed with a vote of 15-11 against the proposed tax. We then made a call-to-action for all agents to say, “thank you” to their council members for voting NO!

WHAT’S NEXT?

Although the deadline to submit local government premium tax changes has passed, we anticipate other taxing districts across Kentucky to experience proposals similar to this next year as local governments face budget problems. If this happens in your area and you need the help of the Big “I”, please don’t hesitate to reach out and we would be happy to set up a grassroots plan for you. Disclaimer: We may not be able to hit all 382 taxing districts, but we CAN supply you the information to be successful.

At the proposed rate increase, you will collect $339.3 million $173.8 million OVER the pension obligation.

Consequences

• The tax is incredibly difficult for insurers to administer.

• A number of cities and counties will be raising their premium taxes as a result of this vote.

• The municipal premium tax makes Kentucky a less attractive place to do business.

• Consumers could make a decision to not purchase insurance or buy lower limits due to the cost.

• Consumers may not be able to distinguish the tax from the premium increase.

• The agents will be the messenger and could be perceived in a negative way in their effort to collect.

• Businesses will be forced to pass on costs to their customers.

We challenged Jefferson County agencies to reach out to their council members and ask them to vote NO on the proposed insurance tax. Thank you to all who reached out and forwarded your responses!

Solutions

• Add a sunset clause when funds are reached • Let the voters decide • Raise only the amount needed through other sources • Lower the tax increase • City/County employees should share health insurance costs • Better budget management to fund unforeseen emergencies

For further questions, please contact:

Tara Purvis, President & CEO Independent Insurance Agents of Kentucky 13265 O’Bannon Station Way Louisville, Kentucky 40223 502-245-5432 • tpurvis@iiak.org

The Independent Insurance Agents of Kentucky (IIAK) is the largest insurance trade association in the state, with more than 300 insurance agencies, employing more than 3,000 people as its members. Independent agents offer customers a choice of policies from a variety of insurance companies. This diversity enables flexibility, customization, competitive pricing and advocacy for the end consumer. These agents offer all lines of personal and business insurance including – property, casualty, life and health, as well as employee benefit plans and retirement products. IIAK members are Trusted Choice® agents committed to providing a high level of responsive, ethical, courteous and personalized customer service. The organization was founded in 1896.

For more information, visit www.iiak.org. Trusted Choice® agents can be found at www.TrustedChoice.com.

Kentucky IA - Spring 2019 | 7

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9 - 11 am A Whole New World: Insuring Recreational & Medical Cannabis with Rick Pitts (2 hrs CE)

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11 am - 12 pm Legislative Update, Part 1 (1 hr CE)** 12 - 12:30 pm Lunch 1 - 2 pm Legislative Update, Part 2 (1 hr CE)** 2 - 4 pm Ripped from the Headlines - Real KY E&O Claims (2 hr CE) **Must attend both parts of the Legislative Update to receive CE. It is a 2 Hr class split in half, not two separate 1 Hr classes.**

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Kentucky IA - Spring 2019 | 9

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10 | Kentucky IA - Spring 2019

Road Shows April & May Somerset - Lexington - Owensboro - KDV - NKY - Louisville

Leadership Conference June 12 & 13 Holiday Inn University Plaza - Bowling Green

Emerging Leader Clay Shoot August 8 Blue Grass Sportsmen’s Club -

Keeneland Tailgate October 11 Lexington

123rd Annual Convention & Trade Show November 20-22 Omni Hotel - Louisville

Kentucky IA - Spring 2019 | 11

12 | Kentucky IA - Spring 2019

3 Strategies to reach your end goal

By: Sarah Lucas One of the great things about having your own business is the legacy you create having built it from the ground up. When you’re ready to step back from the helm, you can then either sell it, or pass it down to your chosen candidates to run. In particular, when it comes to perpetuation, our research shows that the insurance industry is lagging behind.

So what can you do to help ensure that you have as many options as possible when it comes time to let go of the reigns? We believe the key lies in positioning – you need a plan, before it becomes too late to create one. Then you’ll need to stick to it.

Start by thinking in the long-term. The future of your business is more than just next year’s sales figures.

It also includes investments that make the changes now that will show dividends later in the two most

critical factors of your business: your staff, and your technology. Regardless of whether or not you choose to perpetuate or sell externally, by ensuring that you invest well here, you’ll help give yourself the best possible options and outcomes.

In our experience, by running your firm at optimal efficiency now, you’ll reduce the challenges and increase your firm’s value when it comes time to sell.

Step 1: Reinvesting in Staff

Investing in your staff starts with hiring the right people, for the right roles. Since producers are at the heart of your business, this is an area that requires some sound decision making, financial investment and patience. So why do it? You may have 3, 10, or 50 producers working for you, and maybe you think that’s enough. They all do their work well, and Kentucky IA - Spring 2019 | 13

things seem okay. That’s great, and things probably are okay, but is there anyone that stands out as a potential candidate for perpetuation? This is why we believe that investing in your staff is critical. If you eventually want to sell your firm internally, the first thing you’ll need is a buyer, and it’s never too early to start preparing your staff so that a good one is already lined up when you’re ready to sell.

Your producers can be your pool of candidates when you’re looking to perpetuate, so you’ll want to invest significantly in hiring the right people. I’m sure at this point, your main question is, “Who are the right people?” To answer that, start by looking at your current roster. What percentage of your producers are over 50? If you want to create candidates to buy your business that will be ready when you need them to be, you’ll need to invest in hiring younger individuals.

Often, producers under 50 will be in a better position to take on the debt that comes with buying stock in your firm because they’re likely more able to take risks. To make those risks look more attractive, you’ll need to introduce the best candidates to the idea of purchasing stock earlier on in their careers. The more comfortable they are with their options, the more likely they will be the ones to help you ensure your option to perpetuate.

Step 2: Reinvesting in Technology

Take a look at the technology your firm is using.

Making use of current software that handles the automation of your business, and leveraging laptops and tablets to create mobility, can help you attract younger producers looking for modern, digital workplaces. If your website hasn’t been updated in a few years, then refreshing the layout and overall site design should be a priority. Younger producers – and most of your customers – will start learning about your business by looking at your website. A professional, well organized site will make a much better first impression.

Organizational structure can also go a long way toward helping you find, train and keep the most promising talent. We are seeing that more successful firms are moving away from the traditional producercontrolled workflow toward a more team-based, 14 | Kentucky IA - Spring 2019

specialized system. This could mean hiring additional staff, or reassigning and readjusting workflows, to create teams that interact with clients, rather than concentrating the bulk of the customer relationship in the producers’ hands.

Specialization means that you can have a ladder system whereby your service staff supports your producers by interfacing with clients and handling service requests and other more administrative work while your producers concentrate on bringing in new business. Consider implementing intermediary roles like account executives. They can interact with clients on a day-to-day basis, leaving producers free to focus on bringing in new business.

This model takes the pressure off producers and allows you to have dedicated staff that can give clients the personalized service they need. This makes workflows more efficient, as customers have a variety of ways to get information, access and update their data and file claims. With account technicians/processors to work on any additional administrative work, your customer service representatives (CSRs), as well as your producers can focus on providing the customer service that can help grow your business.

Step 3: Follow Your Plan and Track KPIs

Now that you have a plan, you’ll need to track it to ensure that you’re reaching your long and shortterm goals. Here are five key performance indicators (KPIs) that will give you a good idea of where you are: 1. New Business Production 2. Organic Growth Rate 3. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) 4. Total Commission and Fees per Employee 5. Weighted Average Owner Age These KPIs are some of the essential methods of determining the overall health of your business and will likely be important for helping you quickly spot issues in your plan such as hiring or staff problems, untapped growth potential, or compensation discrepancies that might otherwise hinder your efforts. If you review each factor periodically, you should be able to make any necessary changes well

in advance and increase your eventual valuation as profitable systems will already be in place within your business. You can extract this data directly from your management system where some of the figures will have been pre-calculated for you. You can then use the rest in the form of financial statements or production reports to create a dashboard of vital statistics that you and your stakeholders can review regularly. Doing this will help enable you to make and meet short-term goals that feed into your overall plan.

You don’t have to view perpetuation as the only option for the future of your business. You may not have come to a decision yet as to what your firm’s future will be, but we believe that ensuring that you have the option to perpetuate is critical. Many leaders find themselves forced to sell externally because the chance to perpetuate internally is gone.

In our experience, reinvesting in your business and ensuring that your firm is running at optimal efficiency will not only keep both choices open to you, but will also be good for business, increasing your profits, productivity, and overall value within the industry.

Sarah Lucas, senior vice president of MarshBerry, is a key contributor to the merger & acquisition and consulting practices of MarshBerry. Her primary responsibilities include merger and acquisition valuation and analysis, due diligence, document review, deal negotiation, integration planning and intangible asset valuation. From the consulting side, Sarah performs valuations, consulting projects such as business planning, perpetuation planning and operational reviews, and other financial management consulting.

Securities offered though MarshBerry Capital, Inc., Member FINRA and SIPC, and an affiliate of Marsh, Berry & Co., Inc. 28601 Chagrin Blvd., Suite 400, Woodmere, Ohio 44122, 440354-3230. The information contained herein is for informational purposes only. It is not intended as, and does not constitute, an offer or solicitation for the purchase or sale of any financial instrument. Except where otherwise indicated, the information provided is based on matters as they exist as of the date of preparation, and may not be updated or otherwise revised to reflect information that subsequently becomes available, or changes occurring after the date hereof. Past performance is not necessarily indicative of future results and individual results may vary.

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Kentucky IA - Spring 2019 | 15

16 | Kentucky IA - Spring 2019

By: Jason Gobbel Hacking is big business. It’s been estimated that cybercrime will cost the global economy $600 billion this year. While some attacks will happen behind the scenes, 93% of them will happen right before your very eyes in the form of phishing attempts.

Phishing is the attempt to obtain sensitive information, such as a password or account number, by impersonating a trustworthy source.

These often arrive as emails requesting that you sign in to cloud storage services (OneDrive, Dropbox) to view an important invoice or past due bill. Moreover, they often appear to come from a trusted sender or even a coworker. In the past six months, phishing attempts have increased by more than 60 %, and 22% of employees have clicked at least one phishing link this year.

If you do the math, it’s very clear that the odds are not in your favor. While threat prevention and Security Awareness Training are crucial pieces of your cybersecurity strategy, I’d like to give you one more piece of advice: Expect to be hacked.

It’s no longer enough to try to keep the bad guys out. We need to shift our focus to understanding what they can access when they do get in, and how we can limit their reach. To do that, we need to understand three key things: What data are we keeping, where are we keeping it, and who has access?

It has long been a practice of agencies to keep an indefinite record of every business communication. As these records become digital, hackers gain access to years or even decades of non-public information, often long after these records serve a business purpose. As a result, The National Association of Insurance Commissioners is proposing that all Agencies adopt a strategy for reviewing and purging non-public information that is no longer needed. I would encourage you to make a list of the type of data you’re collecting, determine how long it’s needed (by regulation, or business process), and make a plan for eliminating as much as possible to reduce your exposure.

Kentucky IA - Spring 2019 | 17

I tend to find at least three treasure troves of client data in every Agency I meet: The Agency Management System, Email, and a shared location such as SharePoint, OneDrive, or a network share. Often, the data stored in email or the shared location is redundant and only stored there for convenience. Even more alarming, this non-public information is often uploaded to a personal email or cloud account. In fact, 87% of Senior Managers have uploaded business files to personal accounts.

Remember: What’s convenient for you is also convenient for the hacker. It’s important to keep non-public information in a few places as possible so that monitoring and protection can be as focused and effective as possible. And it should never be permissible to store client data on personal accounts.

It’s also important to limit access to non-public information so that a single breach will expose as little data as possible. Do all employees need access to client payment records? Do commercial lines employees need access to personal policies? There are numerous ways to limit access, and there’s certainly one that will work in your Agency. I encourage you to make a list of the roles and responsibilities of your employees. You can use that list to begin building a plan to limit the amount of nonpublic information that can be accessed and compromised by their accounts.

By expecting a security breach, turning our focus inward, and understanding how nonpublic information is stored and accessed, we can reduce the amount of data that a single breach can expose. Smaller breaches mean less data to sell to the next bad guy, and this hits the hacker where it hurts the most: The wallet.

Jason Gobbel is the chief technology officer of Kite Technology Group. Blending a unique background of insurance and technology, he consults with independent agencies across the country on topics of cloud adoption, security posture, and strategic planning. Contact him at jason@kitetechgroup.com

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18 | Kentucky IA - Spring 2019

Thank You

2019 Industry Partners

GOLD

PLATINUM

DIAMOND

(as of 04/01/19)

BRONZE

SILVER

AFCO Keystone Insurers Group State Auto Insurance Company

Amerisafe, Inc. Anthem Blue Cross & Blue Shield Auto-Owners Insurance Company BITCO Insurance Companies ClearPath Mutual EMC Insurance Company FFVA Mutual Insurance Co

Frankenmuth Mutual Insurance Imperial PFS J.M. Wilson Kentucky Retail Federation SIF Market Finders Insurance MetLife Midwestern Insurance Alliance

Prime Insurance Companies RT Specialty Group, LLC Selective Insurance Summit The Hartford United Home Insurance Company Westfield Insurance

Kentucky IA - Spring 2019 | 19

Introducing

IIAK’s NEWEST member benefit

Getting to know

2018-19 Emerging Leader Chair THE BASICS

Name: Nicholas Rolf Age: 28 Title: Personal and Commercial Lines Agent Agency: Gross Insurance Agency Location: Fort Thomas, KY Education: Bachelor of Science in Business Marketing from the University of Louisville What does your position entail?

Sales, service, marketing and social media along with miscellaneous IT and accounting duties.

Why insurance?

Doesn’t everyone grow up wanting to be an insurance agent?! But in all seriousness, I joined the agency to carry on the business and reputation that my grandpa worked so hard to build.

What do you enjoy most about your job/industry?

I enjoy working with people to compile an insurance portfolio to help protect what they have worked so hard to acquire.

What are your goals for your year as chair?

Grow the committee to create more opportunity for participation and engagement, increase attendance at events and create Leadership Program for Emerging Leaders through the University of Kentucky to become available in 2020.

22 | Kentucky IA - Spring 2019

GETTING PERSONAL

Tell me about your family I have been happily married to my wife Jessica since 2013 and welcomed our son Charles in October of 2018. We also have a “fur child” - our Yorkie, Sophie.

Biggest influence/role model My Grandpa, Frank Gross What accomplishment are you most proud of?

Becoming a father You’re a true millennial. Do you think that helps or hurts you in this industry?

Both - sometimes it is harder to establish credibility, but I feel that we are more adaptable and efficient through the use of technology.

Advice for fellow emerging leaders Henry Ford said, “Whether you think you can or think you can’t, you’re right.” We are the future of this industry, so we have to rise to the challenge.

Thoughts on the next Generation Z - (those born between mid-1990s and mid 2000s) Wow, this makes me feel old! As long as people skills aren’t lost with the evolution of technology, I think they have a lot of potential!

FUN FACTS

What’s something unique about yourself?

I was allergic to peanut butter until college but somehow I outgrew it.

Bad habit Not flossing (don’t tell my brother, he’s my dentist!)

Pet Peeve Incorrect Grammar Farthest place you’ve traveled Honeymoon in Jamaica Favorite movie/TV show My all-time favorite TV show is 24, but current is probably This Is Us Favorite music/band Rock/The Cars iPhone or Android? iPhone What’s playing in your earbuds right now?

Good To Be Alive (Hallelujah) -Andy Grammer Favorite restaurant in your hometown Midway Cafe Something others don’t know or would be surprised to know about you I lost my wedding ring in the bottom of the ocean while Flyboarding…my replacement one fits much better!

First job Building Maintenance with my Dad What’s something that you’re really bad at that you would love to be great at?

Playing the drums Uber or Lyft?

Whichever is cheaper ;) Guilty pleasure?

Bourbon

Kentucky IA - Spring 2019 | 23

CHAIR NICHOLAS ROLF

Gross Insurance Agency, LLC Ft. Thomas Email: nicholas.rolf@gross-ins.com

COMMITTEE MEMBER Logan Edelen

Roeding Insurance Lexington Email: ledelen@roeding.com

COMMITTEE MEMBER Nathan Shanks

Logan Lavelle Hunt Insurance Louisville Email: nathanshanks@llhins.com

24 | Kentucky IA - Spring 2019

CHAIR-ELECT ADAM SHERIDAN, CLCS

Reed Brothers Insurance Services Somerset Email: asheridan@mikrotec.com

COMMITTEE MEMBER Danny Greene, CIC

Fifth Third Bank Covington Email: daniel.greene@53.com

COMMITTEE MEMBER Chip Wilkins

Lawton Insurance Bowling Green Email: cwilkins@lawtoninsurance.com

VICE CHAIR DANNY YACKEY

Insuramax Louisville Email: dannyy@insuramax.com

COMMITTEE MEMBER Stephen Hill

McKinney & Blair, Inc. Jamestown Email: stephen@mckinney-blair.com

BOARD LIAISON Kevin Desmond

Desmond Brothers, Inc. Fort Thomas Email: kevin.desmond@desmondinsurance.com

IMMEDIATE PAST CHAIR DANNY NEELY

Neely & Wade Insurance Agency, LLC Winchester Email: danny@neelyandwade.com

COMMITTEE MEMBER Camille Knight

Arlington/Roe Louisville Email: cknight@arlingtonroe.com

STAFF LIAISON Katie Hines

Independent Insurance Agents of Kentucky Louisville Email: khines@iiak.org

COMMITTEE MEMBER Nathan Arant

Peel & Holland, Inc. Benton Email: narant@peelholland.com

COMMITTEE MEMBER Dustin Million

Fritts-Million Insurance Mt. Sterling Email: dustin@frittsmillion.com

COMMITTEE MEMBER Robbie Blain

Al Torstrick Insurance Agency, Inc. Lexington Email: rblain@altorstrick.com

COMMITTEE MEMBER Diana Norwood, CIC, CSRM, CPIW, DAE Liberty Mutual Insurance Lexington Email: Diana.Norwood@libertymutual.com

COMMITTEE MEMBER

COMMITTEE MEMBER

Josh Dahl

Maddie Dobson

Risk Placement Services, Inc Lexington Email: Maddie_Dobson@rpsins.com

Secura Insurance Richmond Email: josh_dahl@secura.net

COMMITTEE MEMBER Chandler Purdom

COMMITTEE MEMBER

The Murray Insurance Agency Murray Email: chandler@themurrayinsuranceagency.com

Jared Pursley, AAI

Pedigo-Lessenberry Insurance Agency Glasgow Email: jpursley@plinsurance.com

Are you the Boss of the toss?

Grab a partner and prove it!

Pitchin’ for PAC Corn Hole Tournament • June 12 (during Leadership Conference) • Sponsored by the Emerging Leaders Committee • All proceeds go to benefit our PACs. Visit www.iiak.org/cornhole for details.

Kentucky IA - Spring 2019 | 25

Become an Emerging Leader The future of the industry

How we can help: • Expand your professional network to include not only other agents, but also carrier representatives and other industry professionals • Strengthen industry connections and make new ones • Get more involved in your community • Develop leadership skills • Learn how to get more involved in the political process and advocate for important agent issues

26 | Kentucky IA - Spring 2019

Upcoming Events Leadership Conference

June 12 & 13 • Bowling Green

Clay Shoot

August 8 • Wilmore

Keeneland Tailgate

Ocotbeer 11 • Lexington

Intrigued? Contact Katie!

Katie Hines, Membership Services Director 502-245-5432 • khines@iiak.org

Five Reality Checks True Leaders Must Give Themselves By: Marcel Schwantes

Everyone is capable of building the character necessary to inspire their team on an emotional level and win their trust. Here, leadership coach Marcel Schwantes provides five reality checks to help leaders and aspiring leaders gauge their leadership aptitude and assess what changes need to be made.

Kentucky IA - Spring 2019 | 27

Leadership is not for the faint of heart. It never has been. The essence of leadership lies within who you are and how you behave. It is character-driven.

In fact, leadership and character are one and the same.

Becoming a leader means embarking on a courageous journey of strength and integrity. Not everyone is qualified, but everyone is capable if given the tools.

Every leader must reach a point where they look in the mirror and have a gut-check, asking themselves some honest questions. But before we get to the hard realities that every leader or aspiring leader must face to understand what it truly takes to successfully lead others, a caution: There are prerequisites. You don’t just arrive at great and sustainable leadership with a rub of the genie’s bottle.

You need strong foundational work and pillars that may take months if not years to develop.

You need to create a compelling vision that inspires the people “in your bus” to help you achieve it. And that vision has to be stacked on top of a solid framework of personal and organizational values that are practiced in hallways and conference rooms, not just displayed as words on a wall.

Finally, you need good bus-driving skills. If your geeked-up project team along for the ride doesn’t know what direction they’re headed or why they’re being steered in that direction, then you need to stop, put that bus in reverse, park, get everyone off and start over.

In all my years of coaching leaders to lead better, or being an unfortunate member of unhealthy and disengaged executive teams at former companies, I have seen firsthand some disastrous outcomes from leaders who fail to create an environment that allows people to thrive—where they are encouraged to work collaboratively, utilizing their unique talents, creativity, personality strengths, and skills to achieve common goals.

The best leaders never stop learning and growing. They are introspective, look for opportunities to develop themselves, and will continually hone and fine-tune their leadership skills in order to serve others better. On top of hard managerial, left-brain skills that drive bottom-line results, they have uncanny intuition and perception to understand the emotional realities of the circumstances and people around them. They will then operate on those realities, often in 28 | Kentucky IA - Spring 2019

support of elevating their own and other people’s behaviors and actions.

Here are five reality checks that will help you gauge your leadership aptitude and assess whether changes need to be made going forward.

Reality Check #1:

Leaders Can’t Motivate People, They Can Only Inspire Them to Motivate Themselves

Readers of Daniel Goleman’s “Emotional Intelligence” will recall that the intrinsic self-motivation Goleman talks about in the “Self-Management” quadrant of emotional intelligence can only come from deep within a person. You can try to pound into a person’s noggin all the motivationalguru psychobabble a book or seminar has to offer, but none of it will stick if the person you’re trying to motivate doesn’t buy into your vision. It takes inspiration.

Inspiration in its most authentic form appeals on an emotional level to win hearts as well as minds. To truly engage your employees with an inspired approach, you need to capture their attention and hit the core of what motivates them. This takes the artful skill of communicating with influence.

When you shift your leadership perspective—moving from a power structure of tasks being handed down from Mt. Sinai to a worker bee culture to a structure that communicates a compelling vision, encourages shared decision-making and empowers its tribe—you inspire team members to succeed on an emotional level.

This is when your employees will spring out of bed in the morning because they cannot wait to get to work and contribute. They are motivated.

Reality Check #2:

Leaders Need to Know the Core Elements Necessary to Attract and Keep the Most Talented Employees You inspired your employees. They feel empowered. They are ready to be rock stars. Now what?

One way to find out what they need to keep going is to get schooled on the best talent management practices out there and then align them to suit your performance management plan. You can start with The Gallup organization. They’ve interviewed literally millions of employees across the globe

and have a plethora of well-researched resources to maximize the workplace.

One such study, the “Gallup Q12 Employee Engagement Survey,” interviewed over 80,000 managers across a broad range of companies, industries, and countries to find the core of a great workplace. Thanks to Gallup, leaders can measure the core elements needed to attract, focus and keep their most talented employees by asking simple questions like: 1. Do my employees know what is expected of them?

2. Do my employees have the materials and equipment they need to do their work right?

3. Do my employees have the opportunity to do what they do best every day?

4. In the last seven days, have my top performers received recognition or praise for doing good work?

5. Do immediate managers/supervisors seem to care about them as people?

6. Is there someone at work who encourages their development?

Reality Check #3:

Trust is certainly a reciprocal concept—it needs to be shared, extended and be mutually beneficial for it to work.

You might want to take some of those bullets above for a spin. Create a quick questionnaire and toss it around for feedback to see where you and your team stand with trusted behaviors. It might surprise you.

What questions might such a questionnaire include?

Consider the bullet point “showing loyalty,” for example.

You might ask yourself and your employees, “Do I give credit freely?”

Other examples: • Listening first: Do I show real interest in what others say?

• Practicing accountability: Do I blame others when things go wrong? Do I take responsibility for results?

• Deliver results: Do I overpromise and underdeliver? Do I make excuses for a lack of results?

Reality Check #4:

Leaders Need to Know and Understand Themselves and Others to Achieve Greatness

Leaders Need to Look in the Mirror and Ask, “Does My Behavior Increase Trust?”

Leaders Need to Know and Understand Themselves and Others to Achieve Greatness

Trust is the pillar your leadership should stand on. While trust is somewhat of a subjective concept, leadership behaviors that promote trust can be defined, measured and improved upon.

Self-awareness, another component of emotional intelligence, is one of the most important capabilities for leaders to develop. Remember, these are learned traits.

So, let me suggest that the first “to do” on your path to leadership greatness is to know your true, authentic self.

What does that look like in real life, you ask?

Leaders Need to Look in the Mirror and Ask, “Does My Behavior Increase Trust?”

In “The Speed of Trust,” Stephen M.R. Covey highlights behaviors that are culturally ingrained in the leadership structures of some great companies known for high employee engagement. These are just a few trusted behaviors that drive performance and define how leadership teams and employees interact day-to-day.

Among those trusted behaviors are: • Creating transparency • Showing loyalty • Delivering results • Confronting reality • Clarifying expectations • Practicing accountability • Listening first • Keeping commitments • Extending trust

A self-aware person will naturally exhibit traits of humble self-confidence because that’s what it will take to change something that no longer works.

A self-aware leader also shows resilience. A leader with a resilient mindset rewards himself or herself for corrective behavior, such as deciding to try it again a different way.

Instead of self-defeated victim behaviors—e.g., asking “Why me?”—self-aware leaders probe and ask themselves questions like: • Why do the same issues keep coming up over and over in my business unit, marriage, life?

• Why do I respond to situations with anger, fear, optimism or withdrawal?

• What makes me think, act and feel the way I do? What makes me tick? What pushes my buttons?

Kentucky IA - Spring 2019 | 29

Having a complete self-understanding gives you an edge.

You can manage yourself and your emotions, identify opportunities for development and make the most of your strengths.

Marcel Schwantes is Managing Principal and Co-Founder of Leadership from the Core – a servant leadership development company in the business of creating better bosses and healthier organizations. Visit www.leadershipfromthecore to sign up for free teleseminars.

Reality Check #5:

Leaders Have to Be Willing to Listen to Constructive Feedback—Especially the Kind They Don’t Want to Hear Leaders Have to Be Willing to Listen to Constructive Feedback—Especially the Kind They Don’t Want to Hear Many leaders don’t want to listen to the ideas, opinions and constructive feedback of others. It’s hard to acknowledge something that may be true because truth sometimes hurts. We might fear the loss of respect from our peers or subordinates.

So, while such leaders may appear strong on the outside, in reality, their fears and insecurities send a loud message that they don’t want anyone to disagree with their views. Unfortunately, if you’ve ever worked with this type of leader, it can be exhausting.

Leaders who listen well do so with active listening.

This helps to filter any criticism, strain out emotion and find the facts. They can respond appropriately, cutting out the drama.

If you’re still filtering through your emotions and can’t shake off the urge to react, it may be helpful to probe and ask questions—and keep asking them until you get clarification and understand what the speaker is trying to tell you. This means you should listen to understand and always focus on the future.

As I mentioned earlier, if you are in the infancy stages of your development as a leader, or even if you’re facing some hard truths about your leadership style from those around you, start by looking within and building up good self-awareness to define your present reality and then figure out what authentic leadership behaviors need to be learned and practiced day-to-day. This change process will take courage, but it comes with the territory of being a strong and effective leader.

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30 | Kentucky IA - Spring 2019

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Underwriters who know and understand what coverages are necessary to protect the business.

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As an Official Supplier of the Silver LiningÂŽ, you and West Bend will find the right insurance plan for your valued customers.

To find out more, talk to your West Bend underwriter.

Celebrating 125 years of valued relationships with our agent partners.

DATE/TIME

SEMINAR NAME

May 27 @ 1 pm June 24 @ 1 pm

Agency Management Based E&O and Ethics

3

May 2 @ 3 pm June 6 @ 3 pm

Annuity Basics and Where They Fit

1

May 15 @ 11 am June 19 @ 11 am

Business Auto Claims That Cause Problems

2

May 9 @ 11 am June 13 @ 11 am

Business Fraud Protection

1

May 16 @ 11 am June 21 @ 11 am

Certificates of Insurance – Emerging Issues and Other Stuff that May Scare You!

3

May 10 @ 10 am June 25 @ 2 pm

Commercial Lines Claims That Cause Problems

2

May 14 @ 10 am June 11 @ 2 pm

Commercial Property Endorsements That Can Make You Money!

2

May 11 @ 1 pm June 6 @ 1 pm

COPE – Property Underwriting and Effective Loss Control

2

May 1 @ 2 pm June 7 @ 2 pm

Data Privacy Insurance

2

May 1 @ 10 am June 5 @ 10 am

Directors and Officers Liability Insurance

2

May 13 @ 1 pm June 10 @ 1 pm

Double Trouble - Certificates of Insurance and Business Auto Endorsements

2

May 7 @ 9 am June 4 @ 9 am

E&O Risk Management – Meeting the Challenge of Change (6 hour course)

6

May 22 @ 10 am June 25 @ 10 am

E&O Risk Management – Meeting the Challenge of Change (Part 1)

3

May 28 @ 2 pm June 25 @ 2 pm

E&O Risk Management – Meeting the Challenge of Change (Part 2)

3

May 9 @ 3 pm June 13 @ 3 pm

Estate Planning Basics

2

May 1 @ 11 am June 5 @ 11 am

Ethics and Business

3

May 14 @ 11 am June 13 @ 2 pm

Home Based Business Exposures

2

May 2 @ 11 am June 6 @ 11 am

Hot Topics in Personal Lines

2

May 10 @ 2 pm June 13 @ 11 am

Liability Issues to Worry About – Indemnity Agreements and Additional Insureds

2

May 6 @ 10 am June 3 @ 10 am

Long Term Care Insurance

2

32 | Kentucky IA - Winter 2019

CE CREDITS

DATE/TIME

SEMINAR NAME

CE CREDITS

May 16 @ 11 am June 20 @ 11 am

National Flood Insurance Program Basic Course - 2016

3

May 17 @ 2 pm June 21 @ 2 pm

Personal Fraud Protection

1

May 8 @ 11 am June 12 @ 11 am

Personal Lines Claims That Cause Problems

2

May 24 @ 11 am June 28 @ 11 am

Professional Ethics in the Insurance Industry

3

May 2 @ 2 pm June 6 @ 2 pm

Property & Liability Concepts - Comp. Cov. Series

2

May 21 @ 9 am June 18 @ 9 am

Rental Cars: More Than Meets the Eye

2

May 17 @ 10 am June 10 @ 10 am

Shake, Rattle, and Roll with it- Earthquake Basics

1

May 27 @ 11 am June 24 @ 11 am

Those Kids and Their Cars!

2

May 16 @ 2 pm June 26 @ 2 pm

Top 5 Life Insurance Uses

2

May 8 @ 3 pm June 12 @ 3 pm

What you Need to Know about Employment Law & Coverage

2

May 1 @ 1 pm June 6 @ 1 pm

Workers Compensation Beyond the Basics

3

VISIT IIAK.ABEN.TV FOR: • • • • •

Class descriptions Faculty Group discounts Bundle discounts Professional development courses

Kentucky IA - Winter 2019 | 33

Be an Agent of the Future Wednesday - June 12, 2019 8:30 am 10 am 10:15 – 11:45 am 12 - 1 pm 1 - 2:30 pm 2:45 – 4 pm 5:30 – 6:30 pm 6:30 – 8:30 pm

Registration Welcome Leveraging Technology to Enhance the Customer Experience presented by Seth Zaremba, ZINC Lunch Dominate the State: How to Generate 3,000 Referrals in 2020 presented by Matt Naimoli & Zack Gould, G&N Insurance Social Selling for the Insurance Professional presented by Brett Allen, The Hartford Opening Reception/Dinner Pitchin’ for PAC Corn Hole Tournament to benefit KAPAC/InsurPAC

Thursday - June 13, 2019 8 am 8:30 – 9:30 am 9:30 – 11 am 12 – 5 pm 5 - 6 pm

Registration Breakfast - Commissioner Atkins Tech Panel: The Future is Now Golf Scramble at Crosswinds Golf Course Golf Reception

Bowling Green June 12-13

Coun t on us to be there, there ...

A strength that sets EMC apart from other insurance companies is the local service we provide.

We cover policyholders in more than 40 states and we have 20 offices strategically located around the country. So when you partner with us, you not only get the stability of one of the country’s top insurance organizations, but you also get a familiar face close to home.

We look forward to seeing you soon.

www.emcins.com ŠCopyright Employers Mutual Casualty Company 2019. All rights reserved.

Kentucky IA - Spring 2019 | 35

ACT CATALOG/CHECKLIST From our national association, the Agents Council for Technology (ACT) is committed to providing agents and the industry with practical information and tools to help them use technology more effectively and to become more productive. Lately we’ve been sharing

a lot of their materials on cybersecurity, but ACT also offers resources on productivity, sales and marketing, agency management systems and disaster planning.

View a catalog of items below, and find all materials on their website, independentagent.com/act.

RESOURCE GUIDES  Agency Data Security Summary Guide A step-by-step guide to best protect your agency’s data from cyber threats by mitigating risks, creating policies and understanding regulations. Also in a printable, easy-to-share pocket guide version.

 Agency Website Privacy Policy Template Did you know that GLBA and NAIC regulations require that you have a Privacy Policy posted on your agency website? ACT has a free template to download for your agency’s use.

 Agency CyberGuide 2.0 Handling sensitive information is one of the most critical responsibilities faced by the modern insurance agency.

This updated in-depth guide will help you better understand threats and create policies and procedures to protect your agency from cyber threats, set recovery procedures when a threat occurs as well as ensure your agency complies with all applicable cyber regulations.

 Sample Social Media Policies Part of the Social Media Policy Guide, view sample policies developed by TrustedChoice.com as well as existing policies in place at independent agencies and prominent companies.

 CX Customer Experience Resource Site Use the six steps of the customer experience lifecycle to tap into technology and motivate your team to provide the service today’s insurance consumers want.  eSignatures Benefits Guide Spells out the benefits for both agents and customers in using eSignature products as part of the agency workflow.  eSignatures Training & Troubleshooting Guide Aids agencies in choosing, implementing and developing its eSignature workflow. Includes workflow insights and background resources.  Social Media Policy Guide Created to assist agencies in developing the social web policy for employees’ permissable use of social media for business purposes in order to protect your agency and maintain the productivity of your employees.

Includes a checklist of key steps to take in developing and implementing your policy, samples of policies in use by prominent companies, examples of provisions to consider and suggestions for a social web code of conduct for employees.

TEMPLATES & SAMPLE POLICIES

 Agency-Customer eDelivery Agreement Template Agencies should have an agreement with their customers on sharing electronic documents, as well as access to agency customer portals. ACT consulted the Big “I” National General Counsel to create an Electronic Delivery Consent Form template for agency use.  Agency Cybersecurity Policy Template Sample policy created by the ACT Security Issues Workgroup to help agencies easily comply with requirements to have a cybersecurity policy for employees. If the agency uses independent contractors the agency will need to broaden the policy to cover this group as well.

 Sample Agency Website Disclaimers Protect your agency from E&O exposure by including customized versions of disclaimers in the appropriate spots on your agency websites and social media sites.

Agents should consult with their local counsel to ensure compliance with all applicable federal and state laws and regulations. These disclaimers are in addition to the Privacy Statement that the agency should include at the bottom of its website spelling out its privacy policies.  Texting With Clients Sample Opt-In Form With Terms & Conditions FCC regulations say that an established prior business relationship does not exempt you from needing prior express written consent before sending commercial text messages. Meet the legal requirements of obtaining client/prospect express written consent for text messaging with an opt-in form referring to and containing terms and conditions to sign and return to the agency if they want to communicate via text messaging.

BEST PRACTICES  Best Practices Recommendations for Delivery of Insurance Policies to Agents and to Insureds  eSignatures Best Practices & Industry Recommendations  Remote Work Best Practices  Small Commercial Rating Carrier Best Practice Recommendations

ON-DEMAND WEBINARS  Customer Experience Journey  Cybersecurity Made Simple  Is Your Agency Mobile Friendly?  Small Commercial Rating Needs  Using Video to Drive Growth and Retention

CHANGING NATURE OF RISK SERIES This series discusses hard trends of the industry with short call-to-action summaries that define each trend, list implications and offer recommended actions. It offers an ideal but brief overview of a variety of technology topics you may be hearing about elsewhere as they apply to the insurance industry.

 Information Security Concerns in Hotels and Hotspots  It’s Time to Update Your Disaster Plan  Key Questions When Considering an AMS  The Lemonade Taste Test - #InsureTech or #TechInsure?  Managing the System Upgrade Process

 3D Printing

 Mobile Strategies for Independent Agencies and Their Clients

 Artificial/Augmented/Mixed Reality

 Small Town Agency, Big Time Success

 Autonomous Vehicles

 Social Media Time Savers

 Bitcoin, Crypto and Other Virtual Currencies

 Ten Things Agents Should Know About SEO

 Blockchain

 TLS Secure Email Frequently Asked Questions

 Cyberliability

 Using Social Media to Enhance Disaster Communications

 Drones  IOT - Internet of Things  Mass Customization  Machine Learning  Peer to Peer (P2P)  Sharing Economy  Smart Homes/Buildings  Telematics  Voice Computing  Virtualization  Work From Home

OTHER ARTICLES  2018 Key Tech Trends  5 Ways Agency Principals Can Seize the Future  ACT Customer Service Experience Work Group Recommendations  Agency E&O Considerations When Using Social Media  Agency Strategies to Manage Change Successfully  A Balanced Approach to Agency Marketing  Agency Security Education & Training  Anti-Virus and Anti-Malware Software for Agencies  “Bring Your Own Device” Opportunities & Risks  Digital/Paper-Free in 2023?  Don’t Get Caught in the Web! (Agency Website E&O Exposure)

 Using Technology to Drive a Community-Based Marketing Strategy

SUBSCRIBE ACT News is a FREE monthly e-newsletter providing the latest information on technology trends impacting our industry, as well as insights from across our ACT membership. Get the latest editions as they are published and view archives from the ACT website, independentagent.com/ACT.

WHITE PAPERS  Great Agency Websites - v2 Original version discusses the need for effective and dynamic agency online presence with three major components - good design, attracting visitors and encouraging action. The updated version focuses on tactical changes to keep your website up to date and position your agency positively in the minds of customers and prospects.  Privacy & Data Breach Language for Insurance Company Agency Agreements Insurance company agency agreement wording requires compliance with state and federal privacy and data breach response laws. Failure to comply puts your agency at risk for potential breach of contract and liable for all claims incurred by the carrier under the indemnification clause in their agreement. The white paper guides agencies through privacy, security and data breach in view of GLBA, FCRA, FACTA, HIPAA and HITECH.

 Evaluating Application Service Providers: Issues Agents Should Consider  Grow Your Agency & Improve Your Marketing By Tracking Key Metrics  Guidelines for e-Signature & e-Delivery of Documents  Industry Hard Trends

Kentucky IA - Spring 2019 | 37

Sink or Swim Ever hear the adage, “The two happiest days in a person’s life are the day they buy their boat and the day they sell it”?

Boat ownership causes a number of unforeseen headaches for the once enthusiastic captain—and the same is true of the insurance professional who views acquiring another agency through rose-colored glasses.

There’s just one important difference: Both buyer and seller should be wary of the errors & omissions exposures of mergers & acquisitions.

The Seller Side

A boat owner’s liability is typically assessed on an occurrence basis: Any accidents that happened presale are covered by the seller’s expiring boat policy.

Once the sale is signed, sealed and recorded, any future accidents become the problem of the new owner and his carrier.

38 | Kentucky IA - Spring 2019

Not so tidy with claims made E&O coverage. Often, an error that occurred prior to an agency sale is the subject of a claim that comes after. Who is responsible for that claim?

If the selling agency sells only some of its accounts and remains in business, it probably still has an E&O policy in force. Absent an unforeseen issue, that will cover the late-developing claim.

But what if the agency effectively ceases to exist once the sale concludes? If the agency merges into the buying agency with all its assets and liabilities, those claims will be the responsibility of the buying agency and its E&O carrier. Or, the buying agency can simply take over the selling agency’s E&O policy, with the carrier’s prior consent.

Neither of these options is ideal for the selling agency — if the buying agency decides to cancel the policy before the statute of limitations has run, the selling agency will be exposed.

Making Agency Mergers & Acquisitions Work By: Matthew Davis

The third and best option from an E&O standpoint is to purchase an extended reporting period, also known as a “tail,” which can cover acts that occurred prior to the date of the agency acquisition.

The Buyer Side

The extended reporting period is also the best option for the buying agency, because it ensures that any of the selling agency’s mistakes that surface post-sale will be charged to that expiring policy—not the buying agency’s loss history.

Here are five more points that make good E&O sense for the buying agency: 1. Acquire assets only, not liabilities.

2. Have the selling agency purchase an extended reporting period.

3. Promptly notify your E&O carrier regarding the acquisition.

4. If the acquired business must be referenced in the E&O policy, it should only refer to “Buying Agency DBA Selling Agency,” because the selling agency’s name is often used for a time as its business transitions over.

5. Attach a retro date to the acquired business to make it clear that no liabilities have been acquired.

It’s just as important to sell to a good agency as it is to buy from a good agency. Due diligence has its limitations, so to be on the safe side, both parties to a buy/sell agreement should ensure they have proper E&O protection.

Matthew Davis is a vice president and claims manager at Swiss Re Corporate Solutions, working out of the office in Kansas City, Missouri. Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas, a member of Swiss Re. This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders.

Copyright © 2018, Big “I” Advantage, Inc. and Westport Insurance Corporation. All rights reserved.

Kentucky IA - Spring 2019 | 39

40 | Kentucky IA - Spring 2019

Social Media Are we friends?

Follow us on your favorite social media sites.

Classifieds

If you would like to place a classified ad please contact Nikki Robins at nrobins@iiak.org

Acquisitions Established Louisville agency interested in acquiring insurance agencies in Jefferson and surrounding counties. If you are interested in selling, merging, or need assistance with perpetuation, we would like to talk with you in confidence.

Call R. Alex Rankin, CPCU or Philip Anderton, CIC, at Sterling G. Thompson, Co. at 502-585-3277

Looking for Producers

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Independent with top best markets looking to expand presence in Jefferson, Oldham or Shelby counties. Wanting Personal lines, Producer or book of business to move or purchase. All arrangements possible, in strict confidence.

Please send inquiries to Turner Insurance Agency, 2460 Shelbyville Road, Shelbyville, KY 40065 or call Kurt Turner, CPCU at 502-633-6060.

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42 | Kentucky IA - Spring 2019

Acuity Big “I” Hires Bolton & Company ClearPath Mutual EMC Guard J.M. Wilson

IBC 10 OBC IFC 35 15 30

KEMI 41 Prime Insurance 8 RLI Personal Umbrella 18 Secura 12 Summit 16 Big “I” Professional Liability 40 West Bend 31

For classified ads or to advertise in the Kentucky IA, contact: Nikki Robins, Communications Director at nrobins@iiak.org or call 502-245-5432.

Acuity loves you!

We are proud of the relationships we have built with the best independent agents in the world!

www.acuity.com

Kentucky IA - Spring 2019 | 43

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