Issuu on Google+

The Anchor The Independent Insurance Agents of Rhode Island Magazine

Meet Your President pg. 14 IIARI’s 20132014 Board of Directors pg. 23 IIARI’s 113th Annual Meeting pg. 30 2014 Education Calendar pg. 38

Fourth Quarter 2013


One Call Does it All.

E X P E R T D I S A S T E R C L E A N - U P A N D R E S T O R AT I O N SERVICES FROM ONE SINGLE SOURCE Introducing Single Source Disaster Recovery Specialists — the smart and cost-effective choice for claims adjusters and insurance agents recommending any type of disaster restoration services to their insureds. Under the Single Source name, we’ve brought together the reliable and trusted services of Smoke Clean of New England; Clean Air of America; and Restorative Drying to provide expert disaster restoration services from one, convenient source. Single Source works to minimize costs paid out for property damage claims and helps to avoid the expense, hassle and confusion of using multiple vendors for large scale losses. Our first goal is to quickly restore as much damaged property as possible, not just replace it. To make your claim experience even more singular, we’ve also added full reconstruction to our wide range of Single Source services.

SM

of New England 401-274-4444 • 888-780-7283 • www.smokeclean.com


contents Independent Insurance Agents of Rhode Island

The Anchor

December 2013

7

From the President EVP Perspective

10

E&O Corner

16

HR Corner

18

Young Agents

20

Marketing Thoughts

27

Legal Briefs

29

Case Law Note

37

Legislative Wrap-Up

40

WC Update

42

special

features 14

Meet Your President

23

IIARI’s 2013-2014 Board of Directors

30

IIARI’S 113th Annual Meeting

38

2014 Eduaction Calendar

3 Fourth Quarter, 2013

The Anchor


events

The quarterly magazine of the

2400 Post Road, Warwick, Rhode Island 02886 TEL 401.732.2400 | FAX 401.732.1708

MARK YOUR CALENDARS!

2014 Awards Luncheon 2014 Annual Convention 2014 Education Calendar

OFFICERS President Gregory Troy CIC, CLU, AAI President Elect Robert T. Hartnett Vice President Gary Mansfield, CIC National Director Robert Slocum, CPCU, CIC Immediate Past President Howard Thorp, AAI, CIC

8 8 38

BOARD OF DIRECTORS

advertisers INDEX

2013 Partners Program

Big “I” Flood Clean Care of New England DocuSign EMC Insurance Companies Enviro-Clean, Inc. The IIARI Store Partridge Snow & Hahn, LLP Service Insurance Company ServPro of Providence ServPro of Washington County Smoke Clean of NE/SingleSource SwissRe/Westport Umbrella Coverage SwissRe/Westport E&O Professional Liability Coverage TC Reimbursement Program Trusted Choise - Mobile App UPS Utica E&O Professional Liability Coverage Virtual Risk Consultant Wells Fargo

6 44

back

13 8 28 5 37 26 43 35 2 19 9 22 11 21 17 9 22

Central East Bay Southern Northern

District Vice President Andrew Palazzo Richard B. Paquin Tom Regan, AAI David White, AAI At Large District Vice Presidents John Kaull, AAI Kenneth Thompson Jr. David Woodmansee, CIC District Representatives Central Edward F. Bishop, CIC Maureen Rotondo, CIC East Bay John T. Edge Jr., CIC Northern Marc Nadeau, CPIA Denise Smith Southern Kimberly Raymond, CIC Stan Tabak

STAFF Marcia L. Berthiaume, AAI, ACSR, CPIA State Account Manager Helen Collins E&O Administrator & Member Coordinator Sean R. Donaghey, CPCU Senior Vice President, State Account Executive Mark A. Male Executive Vice President Jean E. Nagle, AAI, ACSR, AIS Assistant Vice President, Director of Education Maureen McNamara Finance & HR Manager Sarah Van Grootheest Membership & Administration Josette Cournoyer Administrative Assistant The Anchor is published by the Independent Insurance Agents of Rhode Island (IIARI). Statement of fact and opinion is made based on the responsibility of the authors alone and does not imply an opinion on the part of IIARI, it’s officers, directors or members. Subscription rate for members is $15, which is included in dues. Subscription rates for non-members is $75 per year (single copies $10). Reprint requests should be referred to IIARI. Copyright©2013, Independent Insurance Agents of Rhode Island.

4 The Anchor Fourth Quarter, 2013


IIARI Store Members Only Open for Business

Polo Shir ts

Window Clings

Business Cards/ Envelopes

Visit the IIARI Store at http://tchoice.bscreative.com

Brushed Alumium Office Signs

Banner Stands

Star ter Kits

Vehicle Wraps

Banners

(3 sizes available)

5 Fourth Quarter, 2013

The Anchor


Thank You Thank You Thank YouThank Thank You 2013 Partners Thank Program Companies You Thank You

Thank You Thank You

Thank You Thank

You You YouThankThank

Thank Thank You Thank You Thank You Thank You Thank YouThank You Thank You ThankThank You Thank You Thank You Thank You Thank You Thank You Thank YouThank You Thank You Thank You Thank You Thank YouThank Thank You Thank You Thank You Thank YouThank You Thank You Thank You Thank You Thank YouThank Thank You Thank You Thank You Thank YouThank You Thank You Thank You Thank You Thank YouThank Thank You Thank YouThank You Diamond Sponsor

Thank You

Gold Sponsors Thank You

Silver Sponsor Thank You

Bronze Sponsors

Thank You

Quincy Mutual Group

American Commerce Insurance Co. EMC Insurance Companies Phenix Mutual Fire Insurance Co. The Andover Companies

The Independent Insurance Agents of Rhode Isalnd proudly introduces the 2013 Partners Program. The 2013 Partners Program is a mechanism to allow companies to demonstrate their support of the American Agency System and IIARI.

Be sure to thank your companies for their unparalleled support of IIARI and all indepdendent insurance agents. Look for all of our sponsors throughout the coming year as we acknowledge their commitment at all IIARI events and functions.

Thank You 6 The Anchor Fourth Quarter, 2013


from the president Tap into Knowledge As your new president I want to acknowledge all the previous leaders who have served the Association since our founding in 1900. I look forward to working with the past presidents, board, committees, young agents, company representatives, Association employees and fellow agents. I want to acknowledge my current partners for making it possible for me to serve as IIARI’s president this year. There are 2 of my brothers, Pete and Andy, who are both great insurance agents but even better people: and Bill Allen who has been around long enough to qualify as a cousin and who is also a great person. A special thanks goes out to Tony Pires who installed me as president at our Annual Meeting and Installation Dinner in October. I worked with Tony for over 35 years and although he retired a few years ago, he was a great partner, mentor and a dear friend. I need to mention someone who is not physically with us but is in spirit – my father Leo Troy. He was IIARI president in 1980 and what son doesn’t want to follow in his father’s footsteps? He gave me and my brothers a great work ethic and a path to success. I am proud to follow him and hope when compared to him I can be half the man he was. Some of you know it has been a rather interesting health year for me and because of that, I especially thank

the Association and board for their confidence in putting me in this position. I am honored to accept. A quick report on the status of the Association. Currently we are in great shape directed by our extremely capable executive Mark Male and lead by the past presidents - particularly the last 2 that I served on the executive board with, Howie Thorp and Doug Mayhew.

“There is far too much knowledge and experience that has passed through this position over the years ... We need to tap into that incredibly rich stream of experience as we move forward.” I come from the school that if it’s not broke, don’t fix it – but you are supposed to change the oil and rotate the tires from time-to-time. Over the next year, we will take some time and energy to look at some Association areas including membership (currently there are 158 member agencies), the board and our four districts. I come from the school that you need to look backward in order to go forward. We must seek and secure more input from our talented pool of past presidents. There is far too

Greg Troy, CIC, CLU, AAI President

CONTINUED ON PAGE 8

7 Fourth Quarter, 2013

The Anchor


From the President Continued from Page 7

much knowledge and experience that has passed through this position over the years and fortunately for us many are still active in the business. We need to tap into that incredibly rich stream of experience as we move forward. By the way, I checked, the bylaws do not preclude past presidents from joining the board again. My special message to young agents

MARK YOUR CALENDARS!

is simple: don’t worry – we will not clog your road forward. Join committees, get noticed – your input is needed. You are our future! I wish everyone has a great new year. Be sure to take advantage of all the Association does and even more importantly, do not hesitate to let us know what we can do for you. Thank you!

The 2014 Awards Luncheon will be held on Thursday, April 3, 2014 at the Providence Marriott The 2014 Annual Convention will be held from Wednesday, May 28 to Thursday, May 29, 2014 at the Hyatt Regency Newport Cross-Sell Strategy

#21

EPLI COVERAGE

“ Addressing the growing concerns of clients can grow your business.” Paula Hutchinson, Kansas City Branch Senior Marketing Representative

Employee lawsuits are more likely to occur than a fire. Include EMC’s Employment Practices Liability coverage to make certain your clients are protected from all the risks they may face. It’s just one of the many reasons policyholders Count on EMC®.

Providence Branch: 800.556.7010

|

Home Office: Des Moines, IA

www.emcins.com © Copyright Employers Mutual Casualty Company 2013. All rights reserved.


Virtual Risk Consultant

The Big I Advantage® Virtual Risk Consultant powered by Rough Notes (“VRC”)

The VRC is a web-based sales and service resource exclusively available to Big “I” members that will improve the knowledge and professionalism of agency staff by providing tools that will allow them to better understand the coverage needs of clients, assist them meeting those needs, while offering valuable file documentation should an E&O claim arise. Explore how the VRC can transform the way your agency does business.

Swiss Re Corporate Solutions: A Trusted Partner For 25 years, the Big “I” Professional Liability Program underwritten by Westport Insurance Corporation, a member of the Swiss Re Corporate Solutions Group (rated A Excellent by A.M. Best), has been the premiere choice of IIABA member agents for insurance agents and brokers E&O insurance. The Big “I” Professional Liability Program offers not just a policy, but a comprehensive program for insurance agents. Over the past two decades the Big “I” Professional Liability Program, underwritten by Westport Insurance Corporation, a member of the Swiss Re Corporate Solutions Group, has grown into the largest and most stable insurance agents E&O program in the nation. Our member agents and brokers nationwide look to the program for stable rates and a long-term market that they can rely on to protect their greatest assets—their businesses. Visit www.IIARI.com today to learn more. 9 Fourth Quarter, 2013

The Anchor


executive vice president perspective Continuous Progress In the last issue of The Anchor, I posed the question about minimum automobile limits and questioned the adequacy of state mandated limits. Much to my surprise a couple of readers responded to the article and asked additional questions. Here’s a look at one of those questions. How do we compare to other states? Having researched limit profiles on a state-by-state basis, some interesting results were found. Of no particular surprise, the median limits for all 50 states and the District of Columbia is 25/50/10 (Rhode Island is 25/50/25). We are one of 27 states that have a $25k bodily injury (BI) limit with only five other states with higher BI limits than us. On the BI per occurrence front we are one of 26 states with limits of $50k per occurrence with again only five states with higher limits. Finally for property damage (PD) I found that we are one of ten states with $25k PD limits and only Texas with a higher limit at $30k. So where are we now? There appears to be no outpouring of consumer or industry interest in modifying the current state minimum automobile limits. In fact, without a broad based consumer initiative I would say it’s probably unlikely we will see amendments offered to raise minimum limits even though it is in the public’s best interest to do so. Commoditization of auto insurance will continue and be driven at least partially by consumers opting for what are clearly inadequate limits. Make sure your policyholders carry adequate UIM coverage to combat a sea of underinsured motorists that roam the streets and highways! Mark A. Male Executive Vice President

As we wrap up 2014, here’s a quick overview of the past year. IIABA View As an organization, Rhode Island maintains a viable presence at the national association, IIABA, as our national director, Bob Slocum, heads Project INvest, a critically important committee as the Association countrywide looks to bring more young people into the business. With an aging population of agency principals, the importance of INvest continues to increase and Bob has been asked to take the lead in this area. Bob and I also serve on working groups of the IIABA Planning Committee. There are three working groups and Rhode Island is represented on two of three! I continue as a member on the formal IIABA Planning Committee and also serve as chair of the Co-Branded Website Task Force. In all, 36 states participate in a shared web platform that minimizes our expense in maintaining a web presence which includes the ability to handle online purchases. CONTINUED ON PAGE 12

The Anchor 10 Fourth Quarter, 2013


Trusted Choice® Consumer Mobile App: Get the Download. Independent insurance agents are now in the mobile marketplace. Trusted Choice® has launched a consumer mobile application for iPhone and Android users that boasts home inventory and accident reporting tools, a news feed and a find an agent feature. We’ll keep it fresh, you look savvy—share it with your clients today.

Upload and Make it Your Own. The new Trused Choice® mobile app also allows you to upload your logo and color preferences to complement your agency brand. Learn about this and other marketing packages at www.ProjectCap.info.

Get the download in your app store or visit www.TrustedChoice.com for details.


Executive Vice President Perspective Continued from Page 10

State Executives I had the privilege of serving my peers this past year as president of the Independent Agent Association Executives (IAAE). This group is comprised exclusively of the state association executives from each state association as well as the provincial association executives from Canada. My term as IAAE president wrapped up in July after the annual conference in Newport. Organizing the meeting is placed on the sitting president so with the help of Jean Nagle and Sarah Van Grootheest from IIARI we were able to run a fist class event that showcased Rhode Island. Metrics • You may be surprised to learn that IIARI does between $80,000 to $90,000 in online transactions each year! • Additionally over 2,018 individuals participated in classes/programs/ seminars/self-study programs sponsored by IIARI last year. • Trusted Choice® Branding delivered over 15,616,379 in ad impressions last year through television and radio advertising (total invested since 2008 exceeds $1.5 million). • Between the Board, Executive Committee and Committees, over 35 meetings took place and involved over 288 people. In summary, IIARI has had another positive year on a number of different levels. With stable finances and membership, we are poised to continue the work established in 1900. It is my privilege to serve all of you. We are proud to be part of an organization dedicated and focused on increasing member relevance and lifting the image of independent agents throughout Rhode Island. I hope you had a good 2013 and that 2014 is even better to you, your business and your families.

◊ 11

◊ 3th 14 0 2 , Ann 9 ual C ay 2 onvention ◊ May 28 to M ◊ Hyat t Regency Newport ◊

12 The Anchor Fourth Quarter 2013


meet your president Greg Troy was installed as the 65th IIARI President on October 17 at the Crowne Plaza in Warwick and is the fourth president who’s followed their father as president. In addition to Robert Spenser Preston/William G. Preston, Fred C. Clarke/Matthew F. Clarke, and Robert B. Loiselle/Melanie Loiselle-Mongeon, Greg’s father, Leo J. Troy, served IIARI as President from 1980 to 1981. Greg started in the business in 1977 after graduating from the University of Rhode Island with a degree in insurance and finance. His one year college football career ended when a knee injury sidelined him. While Greg did not necessarily have his sights set for working in an independent insurance agency he found himself gravitating toward the profession due in a large part to his father. He is currently a partner at Troy, Pires & Allen, LLP with his two brothers and Bill Allen.

special feature

Greg has been active in the Association for over 10 years having served in numerous capacities. He has served on committees including the property committee, finance committee, and executive committee. Prior to moving through the chairs Greg served the Association as a District Representative from the East Bay District prior to moving into the District Vice President role for the East Bay District as well. His voluntarism extends beyond

14 The Anchor Fourth Quarter 2013


IIARI as he is a Board Member (and past chair) of the Boys and Girls Club of East Providence; serves on the Board of Trustees of the Providence Performing Arts Center; and, serves on the Board of Clinical Services of RI. Being one of ten siblings Greg is well prepared and equipped to deal with challenges as President. No surprise he enjoys contact with other people and helping them navigate the insurance process. Looking forward, Greg wants to focus on improving member benefits and involving all members. One of his initial directives to the IIARI Board was to begin to reach out to members in their respective districts to build a stronger bond between association and member. “I think as it is our Association, we should be able to get something from being a member and that is one of my priorities,� he said recently. As the Association continues to evolve Greg believes IIARI must continue to be a member asset and working to keep our form of distribution alive and well especially in the highly competitive marketplace in which we exist. He also believes that technology will play a key role in our future. The ability to link seamlessly between company and agency website will be imperative for the future of all independent insurance agents.

15 Fourth Quarter, 2013

The Anchor


e&o corner A Review of Recent Changes to the ACORD 25 Certificate of Insurance Form As we approach a new year, we suggest that all insurance agents take the time to become familiar with the ACORD forms that are such an important part of your business. In the past several years, ACORD has issued numerous amended and updated versions of its forms. These include the ACORD 24 certificate of property insurance, ACORD 80 homeowner application, ACORD 83 personal umbrella application, ACORD 88 personal insurance application, ACORD 89 “...we urge every residential section, ACORD 125 commercial insurance agency or brokerage to application, ACORD 126 commercial general liability section, and ACORD 131 umbrella/excess section —all take the time to of which have been revised in recent years. ensure that certificates of In particular, the ACORD 25 certificate of liability insurance are being insurance form is of crucial importance to agents and brokers, since this form is often at the heart of an E&O issued correctly.” claim or lawsuit. The ACORD 25 form is one of the ACORD forms that have been revised most recently. In fact, a new version of the ACORD 25 form has just been released, effective January of 2014. This new 2014/01 ACORD 25 form is nearly identical to the 2010/05 ACORD 25 form that—hopefully—agents and brokers are using currently. We believe this presents an opportunity to review the larger- scale revisions that led to both the 2014/01 and 2010/05 ACORD 25 forms, and that are quite relevant to your business today. One of the most important recent changes to the ACORD 25 form was the elimination of the second page, which contained important language concerning additional insureds and waiver of subrogation, as well as an additional disclaimer stating that the certificate does not constitute a contract between the insurer(s), authorized representative or producer, and the certificate holder. Now, James C. Keidel, Esq. Christopher B. Weldon, Esq. Partner Partner the form is just one page, with the additional insured and Keidel, Weldon Keidel, Weldon subrogation language included prominently on the front of & Cunningham, LLP & Cunningham, LLP the form. The revised language, set forth in bold print at the top of the new form, reads as follows: THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. CONTINUED ON PAGE 34 16 The Anchor Fourth Quarter, 2013


stronger

from

customer satisfaction

stronger

the people

coverage

stronger

loss control

stronger defense

rhode island association of insurance agents 2400 Post Road Warwick, RI 02886 Phone: 401-732-2400 Contact: Helen Collins Fourth Quarter 2013

who

know. Continuous E&O protection since 1966.

17

The Anchor


hr corner Critical Human Resource Laws You Should Know!!!!

Dave Nichols Quality Transitions, Inc.

This is a continuing article in the series of human resource articles for the “Independent Agent.” My goal is to bring value to your organization in accomplishment of the Essentials of Human Resources. In past articles, we dealt with a variety of topics from hiring to termination. Hopefully, your organization has the appropriate systems in place for your workforce that in the event you have to exercise a personnel action that you are in good shape. For this article, we want to discuss or review the importance of four (4) critical Human Resource Laws you should know in protecting your organization. Number One…Fire the Legal Way (learn the precautions you should take to avoid lawsuits and unrest when terminating employees.) Insure you have policies in place, adhere to your policies and be consistent in your exercising of your policies. In addition, make sure you have a documentation trail with the employee you are counseling or coaching. Number Two…Do not violate Overtime Rules (Understand when you can keep an employee longer, and when you may be in violation of the

law). Make sure you have current job descriptions in place that determine whether an employee is eligible for overtime or not. Become familiar with overtime rules under the Fair Labor Standards Act. Number Three…Tying into Number Two, correctly classify your employees. Again become familiar with the Fair Labor Standards Act regarding correctly classifying employees exempt or non-exempt from Overtime. Number Four…Protect yourself with an Employee Handbook. An Employee Handbook can help shield you from liability for a variety of claims. Also, faithfully update your handbook to insure current compliance to regulations as well as your company policies. Handbooks should be updated at least every two years. In having a good handle with these four areas will drastically reduce your exposure and minimize your liability as an employer.

“My goal is to bring value to your organization in accomplishment of the Essentials of Human Resources.”

Dave Nichols is the principal of a human resource management business, Quality Transitions, Inc. located in Charlestown, Rhode Island. He has 25 years of experience in the field and also retired from the US Army as a Lieutenant Colonel. If you are interested in learning more, please visit his website at www.qualitytransitions.net.

The Anchor Fourth Quarter, 2013 18


Wondering where your clients went?

Increase client retention now.

Cross sell with Big “I” Personal Umbrella. Everyone in the insurance industry knows that the more lines of business a client has with you, the less likely they are to leave you for a competitor. Is your agency taking the extra step to secure an additional line of business with your auto and home sales? As a Big “I” member, you have access to two stand alone personal umbrella markets which enables you to write most any risk you will run across. Whether the risk qualifies for the Preferred Market with RLI Personal Umbrella or the Alternative Market for more difficult to place risks via Anderson & Murison, you can support your state Big “I” association by placing your stand alone umbrella business with the Big I Advantage® Umbrella Program.

Preferred Market - RLI Personal Umbrella          

Limits up to $5 million available Excess UM/UIM available in all states You can keep your current homeowner/auto insurer New drivers accepted - no age limit on drivers Up to one DWI/DUI per household allowed Auto limits as low as 100/300/50 in certain cases Competitive, low premiums for increased limits of liability Simple, self-underwriting application that lets you know immediately if the insured is accepted E-signature and credit card payment options Immediate coverage available in all 50 states plus D.C.

Alternative Market - Anderson & Murison

Limits up to $10 million available Ideal for risks that have drivers with multiple violations/accidents Will consider high profile personalities such as elected officials, athletes, media personalities & entertainers Will consider risks with prior liability losses exceeding $25,000 Drivers over age 75 acceptable with two violations Drivers under age 22 can have minor violations Driver exclusion endorsement available for drivers with unacceptable driving records Written on A rated Scottsdale paper

To access log onto www.bigimarkets.com or visit www.iiaba.net/Umbrella.


young agents What A Difference A Year Makes

Kelly Townsend Young Agents Chair

This time last year we were in the middle without power, how best to manage our of one of the most significant weather events time in assisting with claims, and have had to directly affect our area in a very long time. scores of real life coverage scenarios to learn For many of us this was a defining time in from. The way we approach our clients and our insurance careers that we are sure to look prospects today is different than even 3 or 4 back on and reference for years to come. years ago. With an increase in work load that was the The same can be said of the Rhode result of many things including the Super Island Young Agents. If you haven’t taken Storm Sandy fallout, I was once asked why I a look at us recently or attended an event, I would choose to take on the Young Agents at invite you to do so. We’ve approached the that time. The answer was easy. Simply put, revitalization of the Young Agents with new there will always be another fire to put out set of eyes. The committee that we put in or crisis on the horizon. We are busy, and place just last year is full of dynamic ideas while it’s sometimes hard to see the other and motivated young agents. Each of them end of things, we’ve got to remember that deserves special recognition for what they in business, being busy is a good thing! So, bring to the table and the time and energy knowing that taking this on would mean that they have spent over this last year to additional work and less time at night with bring the Young Agents and their offerings my family, and no immediate pay off, I back. Marcia Berthiaume is our state liason decided to go for it. After all, the world is from IIARI. We have a three part team from not going to stop being busy next year. the Troy, Pires & Allen group of Tim Rhode Island has Mailloux, Vrania seen a lot these last few Coelho and William “We’ve approached the years, market stress (Bill) Hunt Jr. We revitalization of the Young especially in coastal have Melanie Smith Agents with new set of areas, rising premiums from Smith Insurance, eyes. The committee that consumers were not Chris Slocum from we put in place just last prepared for, and punch Slocum Insurance year is full of and dynamic after punch with storms Ken Thompson ideas and motivated after years of relative of Lezaola Thompson quiet. With flooding of Insurance. Next time young agents.” March 2010, Hurricane you see one of these Irene in 2011, Super Young Agents let them Storm Sandy in 2012 and the Blizzard know how great they are doing. Nemo in 2013 younger agents who have With that said our team is not about been in the business just a few short years any one individual, but what we can do have been made almost instant veterans of collectively. The more Young Agents and the industry. We’ve learned how to manage Charter Members that become involved, the CONTINUED ON PAGE 26

The Anchor Fourth Quarter, 2013 20


IIABA Members Save up to 34% With UPS® The Independent Insurance Agents and Brokers of America is proud to bring its members valuable discounts on the products and services you need. Make the most out of your membership and take advantage of some of the most competitive rates available on shipping services. Whether you need your documents or packages to arrive the next day or are looking for the most affordable shipping option, UPS understands the importance of reliability, speed and cost.

UPS Service

UPS Member Discount

UPS Next Day Air®

Up to 34%

UPS Next Day Air Saver®

Up to 34%

UPS 2nd Day Air A.M.®

Up to 30%

UPS Ground

Up to 16%

UPS Worldwide Express®

Up to 33%

To save on your UPS shipments, simply: Call:

1-800-MEMBERS (636-2377) M-F 8am-6pm EST

Visit:

savewithups.com/iiaba

Fax:

1-888-461-4664 (Complete form below)

Contact____________________________________________________________________________________________________________________________ Address___________________________________________________________________________________________________________________________ City________________________________________________________________________________State___________________Zip___________________ Phone______________________________________________________Association_________________________________________________________ Email______________________________________________________________________________________________________________________________


Trusted Choice® Expands 2013 Reimbursement Program Program reimburses members up to $500 for expenses for co-branding.

Trusted Choice® released revised guidelines for the Marketing Reimbursement Program (MRP) that has been extended for 2013. The program reimburses expenses incurred in 2013 by Trusted Choice agencies for co-branding materials such as business cards, letterhead, envelopes and marketing or advertising materials. It also provides reimbursement for creating or updating a digital presence to include the Trusted Choice logo, link to trustedchoice.com and the Pledge of Performance. In order to qualify for a reimbursement, the activity must Include the Trusted Choice logo in external messaging with Consumer impact, documentation that an expense was incurred and paid and that the nature of the expense is correlated to the external messaging and consumer impact. In addition to covering advertising, the 2013 guidelines remove a lifetime cap on MRP benefits that was implemented in 2012, so agencies that previously reached the maximum reimbursement will be eligible for funds again in 2013. Program guidelines & application available at trustedchoice.com/mrp.

We Are The Calm Before The Storm

One Size Definitely Does Not Fit All Every one of your customers with a home or business needs flood protection, no matter where they are. Even those who think they are covered may find out they are drastically underinsured. Big “I” Flood Program and Wells Fargo Special Risks now offer Excess over Primary flood as well as flood in Non-participating Communities and Coastal Barrier Resources Act designated properties. Submit your quote request on Big “I” Markets at www.bigimarkets.com. Linda Mackey, Program Manager n 800.221.7917, ext. 5380

Wells Fargo Special Risks The Anchor Fourth Quarter, 2013 22


Independent Insurance Agents of Rhode Island

2013-2014

executive committee

State National Director Robert G. Slocum, CPCU, CIC The Slocum Agency, Inc. 1229 Greenwich Avenue, Wawrick

Immediate Past President Howard Thorp, AAI, CIC Thorp & Trainer, Inc. PO Box 1248, Westerly

Board Representative Richard B. Paquin, CRIS Paquin Insurance Agency, Inc. PO Box 10, Tiverton

President Gregory Troy, CIC, CLU, AAI Troy, Pires & Allen, LLC 376 Newport Avenue, East Providence

President Elect Robert T. Hartnett Interstate Insurance & Finance Co. 80 Main Street, Tiverton

32

special feature

The Anchor

Vice President Garry Mansfield, CIC Mansfield Insurance Agency 115 High Street, Westerly

Third Quarter, 2013


Independent Insurance

board 2013-2014 District Vice Presidents Andrew Palazzo, Central Atwood & Palazzo Insurance Agency 565 Broadway, Providence Richard B. Paquin, CRIS, East Bay Paquin Insurance Agency, Inc. PO Box 10, Tiverton Thomas J. Regan, AAI, Southern Christopher & Regan Insurance, Inc. 1130 Ten Rod Road, N. Kingston

special feature

David White, AAI, Northern Butler & Messier, Inc. 1401 Newport Avenue, Pawtucket John Kaull, AAI, At Large OceanPoint Insurance 73 Valley Road, Middletown Kenneth Thompson, Jr, At Large Lezaola Thompson Insurance, Inc. 896 Broadway, E. Providence David Woodmansee, CIC, At Large Woodmansee Insurance PO Box 246, Wyoming

32 The Third Quarter, 2013 TheAnchor Anchor Fourth 24


Agents of Rhode Island

of directors District Representatives Edward F. Bishop, CIC, Central E. F. Bishop Agency, Inc. 94 Waterman Street, Providence Maureen Rotondo, CIC, Central Johnston Insurance Agency, Inc. PO Box 19719, Johnston John T. Edge, Jr., CIC, East Bay A.N. Nunes Agency, Inc. PO Box 627, Bristol Marc Naduea, CPIA, Northern Blais Insurance PO Box 158, Lincoln Denise Smith, Northern Smith Insurance Group, Inc. 664 Armistice Boulevard, Pawtucket Kimberly Raymond, CIC, Southern Raymond Insurance Agency 920 Main Street, Coventry Stan Tabak, Southern John J. Clarke Insurance 1226 Main Street, West Warwick

32 The Anchor Fourth Quarter 2013 25

Third Quarter, 2013 The Anchor


Young Agents Continued from Page 20

more we can accomplish. This month we welcome a new committee member to the Young Agents, Doug Guilbert from Ocean Point Insurance. We’ve also taken steps to appoint champions with in the committee who will focus on specific projects with in the group. These Champions will focus on Networking Opportunities for Young Agents, Charitable Actions and Social Media. If you are or know of a Young Agent would like to get involved but does not have the time to dedicate to being a full fledged committee member and they may be interested in serving on a sub committee. Please have them contact us. We recognize that success can be measured in many ways, and while we can’t spout lots of big numbers for our membership and participation we know that in time, that will come. Our big goals are long term, most likely fulfilled long after my time is up in Young Agents, but the wheels

are in motion. We have succeeded is in re-forming the group, offering you a different level of education, and a Young Agents Group with a renewed focus. We’ve offered opportunities for networking with other Young Agents, Agency Principals, Company representatives, and IIARI staff and board members. We’ve held an association night to allow you to learn more about IIARI and all of its Key committees and how to get involved. We’ve set a standard for frequent communication and offered Agent round tables to provide a place for coverage or industry discussions. We value and request your input. We want to offer you more, to be where you are and be what you need. And with the proper mindset in place, the steps that we have already taken, and the plans that are in the works I see only good things ahead. Now is the time to support and get involved with the Rhode Island Young Agents. We really are more than Just the next generation.


marketing thoughts Repetition is Reputation

Consistent Advertising is the Key to Gaining Market Share According to a recent research report from analysts at Nomura Equity, GEICO spent $1.1 billion on advertising in 2012, compared to $526 million by Progressive. We saw more than double the number of ads featuring the British lizard and comical camel than Progressive’s quirky Flo. Through advertising, GEICO has been able to achieve the second greatest market share (9.9 percent) and is followed by Allstate (9.7 percent) and Progressive (8.2 percent). State Farm is still the leader with an 18 percent market share. A billion dollars per year has made an advertising icon out of a lizard and created a household name for the auto insurance carrier. None of us have the seemingly limitless budget of GEICO’s owner Warren Buffet, and we can’t advertise like GEICO, Coca-Cola, McDonalds or Nike. But, we can take a page out of their playbook and follow Coca-Cola’s other proven formula: Repetition Will Build Your Reputation. Repeating your ad as much as possible is paramount in advertising. It is better to have a good ad with a clear message that runs one hundred more times than that “ad that really wows me” but only runs a few times because you blew your budget on the creative. Simply stated, a greater priority should be placed in running the ad than in creating it. This in no way means that you should develop a sub-par ad, but just don’t get hung up in trying to win creative awards; this game is about increasing market share. I know that the money spent in airing the ad is going to do more for an advertiser than the money and time spent creating it. The other trap that many local advertisers fall into is the perceived need for change. Just because you’re tired of the same ad doesn’t mean your potential customers are. Sure, you were there from the beginning when the first script was approved, when the camera was rolling, and when your first customers said they saw you on TV. You may think it’s old, but it’s new to everyone else. You need to stay with the same consistent message and keep airing it over and over until it sinks into the minds of consumers. With consumers bombarded daily with advertising

John Houle JH Communications

CONTINUED ON PAGE 28

Fourth Quarter 2013 27

The Anchor


Expect the unexpected. When your customer needs help in a hurry, it’s your time to shine. Make the right call and look like a hero. Make problems disappear for your customers. And for you.

FIRE • WATER • WIND • MOLD • BIOHAZARDS

Who’s on your speed dial? Toll-free

Quick Response. Quality Results.

(888) 231-3130

w w w. e n v i r o c l e a n i n c . n e t Marketing Thoughts Continued from Page 27

messages everywhere they turn, the best ads to break through are clear, concise and repeated over and over. Building a brand takes time, commitment, and consistency. Consumers want to get to know a brand and expect to continuously receive a good experience. The reputation of a brand is built through regular repetition. With over $1.5 million spent branding Trusted Choice in Rhode Island over the last six years, the brand is making traction in our state. It will take more time and hundreds of thousands in additional marketing, but we are starting to see the needle move. Our winning message of out localing the national direct writers is resonating with our neighbors and friends. Remember that the biggest brand in insurance is Trusted Choice, with $195 billion in premiums and over 45,000 agents. We just need to continue to tell everyone. John Houle is the president of JH Communications and provides consulting services to IIARI for the Trusted Choice Branding campaign. He can be reached at 401.831.6123 or at john@jhcom.net. 28 The Anchor Fourth Quarter 2013


legal briefs Federal Reform to Flood Insurance Impacting the Ocean State Flood insurance premiums have spiked since implementation this year of a new law affecting the Federal Emergency Management Agency’s (FEMA’s) National Flood Insurance Program (NFIP). Starting in 1968, the NFIP has provided federally backed flood insurance to participating communities, including those in Rhode Island, subsidizing premiums and enabling artificially low insurance rates for properties not covered by private insurance. These subsidies have been used to insure high hazard properties that have not necessarily met current standards for flood zone construction and elevation. According to the Rhode Island Department of Business Regulation, there are currently 6,757 flood insurance policies in Rhode Island that are subsidized by the NFIP. In some communities such as Bristol, Kent, and Newport counties, the number of subsidized policies is roughly one half of all policies issued and almost double the national subsidy rate of 20%. The chief objective of the new law – known as the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012 -- is to eliminate the flood insurance subsidies, and grandfathered rates, over time. As a result of massive property damage claims following Hurricanes Katrina and Sandy and other mega storm activity, the NFIP is now burdened with a $25 billion deficit. Recognizing that the current program is not financially sustainable, the new law moves the NFIP towards actuarially sound rates for insured properties. Not all insured properties are being immediately impacted. The ones that have been targeted for reform this year are:

☑ Non-primary/ secondary homes in a “Special Flood Hazard Area” and that were built prior to the first Flood Insurance Rate Map and have not been substantially damaged or improved.

☑ Properties with sustained severe or repeated flooding

Jennifer R. Cervenka, Esq. Partner Partridge Snow & Hahn, LLP

where cumulative amount of NFIP claims payments have exceeded the properties’ fair market value

☑ Businesses in a “Special Flood Hazard Area” ☑ Properties insured by the Preferred Risk Policy Eligibility Extension,

which had allowed structures mapped into Special Flood Hazard Areas after October, 2008 to remain insured at lower rates The elimination of subsidies for affected properties will occur incrementally up until 2017. For example, flood insurance policies for the first three above- listed categories of properties will see a 25% increase in premiums annually at renewal until the rates reflect the true flood risk. According to FEMA, this will result in CONTINUED ON PAGE 36 29 Fourth Quarter, 2013

The Anchor


special feature

g h t n 3 i 1 t 1 e S e ’ I M R Annual IIA

t Presiden d e t c le e oy was Greg Tr

ARI Many II e cam

n stallatio in e h t ended e als att ratulat princip te and cong bra to cele

of IIARI

Marcia Ber thiuame & Jean Nagle welcome attendees to the 113th Annual Meeting!


I. Fisher Award David Bates (center) receives the Carleton ers. surrounded by previous winn

Bill Allen exchan ges a laugh wit h Bill Hunt & David Bates


E&O Corner

Continued from Page 16

IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). While Rhode Island’s federal district court has cited this language in the dismissal of an action against an insurance agent, insurance agents and brokers must take caution when issuing certificates of insurance. See ZVI Construction Co. v. H. Carr & Sons, Inc., et al., No. 09-547-ML, 2011 WL 2923876 (D.R.I. July 18, 2011). Rhode Island trial courts will continue to entertain claims against insurance agents and brokers when this form is completed incorrectly. Rhode Island courts, perhaps moreso than those of many other states, are reluctant to dismiss cases where they feel a plaintiff may have been misinformed or misled, regardless of any boilerplate disclaimer or warning language that may have been used. Accordingly, we urge every agency or brokerage to take the time to ensure that certificates of insurance are being issued correctly. Another important feature of the ACORD 25 form is the new language contained in the “CANCELLATION” section. Once, this section included a blank space, where the agent or broker could write in the number of days that the policy required for providing notice of cancellation. The revised language is as follows:

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.

This section was changed because a number of state insurance departments stated that including this language on the certificate might constitute an amendment or modification of the policy, and thereby violate state law. As you may be aware, while insurers are bound by certain provisions of state law in setting the cancellation provisions in their policies, in Rhode Island there are many cases where a certificate holder, or even an additional insured, is not entitled to receive a notice of cancellation per the terms of the policy. Under the terms of most policies, only the first named insured is provided with notice of cancellation. This led to changes to avoid any implication that any certificate holder was entitled to be provided with notice of cancellation. And, in fact, before the changes to the ACORD 25 form, our firm handled a number of E &O claims and lawsuits that involved issues of agents and brokers entering a time period in the form’s notice of cancellation section, as well as making other deletions and changes to that section. The new language is good news for agents and brokers—it helps protect an agent or broker from being accused of providing incorrect or misleading information. Another change to the ACORD 25 form is the expansion of the columns for both additional insureds and waivers of subrogation in the “Coverages” section. The column that was labeled “ADD’L INSRD” was moved directly to the right of the column for “TYPE OF INSURANCE,” and was re-labeled “ADDL INSR.” Further, due to the frequency of requests for waiver of subrogation, a new column was added with the title “SUBR WVD” so that you may note a waiver of subrogation where appropriate. However, take caution: before you place a check mark in this column, you must confirm that the insured’s carrier is willing to waive subrogation. This should not be done simply based on a request from the insured. A further change is a revision of what was previously called the “SPECIAL PROVISIONS” section. Prior to the 2014/01 and 2010/05 ACORD 25 forms, this section was titled as follows:

DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES / EXCLUSIONS ADDED BY ENDORSEMENT / SPECIAL PROVISIONS

34 The Anchor Fourth Quarter, 2013


E&O Corner

Continued from Page 34

The new form has modified the language in this section so that it now reads as follows: DECRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required)

It appears that ACORD made these changes because it was concerned that as originally written, it allowed agents and brokers to use this section for purposes such as noting a waiver of rights, providing information for the owner or lender of a leased vehicle, quoting language directly from a contract, attaching a policy endorsement, or quoting language which changed or amended the policy—and thus open themselves up to liability. The removal of the words “EXCLUSIONS ADDED BY ENDORSEMENT / SPECIAL PROVISIONS” from this section of the form was due to litigation against insurance agents and brokers where it was claimed that the agent or broker acted negligently or otherwise improperly in issuing the certificate without listing exclusions and/or special provisions contained in a liability insurance policy. We believe that the deletion of these words from this section will continue to help insulate insurance agents and brokers from claims that they should have made specific reference to exclusions and other provisions of the policies of insurance referred to on the certificate. While this article has covered some of the most significant recent changes to the ACORD 25 form, there have also been other changes that ACORD has made to this form. As such, we recommend that every insurance agency or brokerage who issues certificates of insurance review carefully the recent forms and ensure that all employees who work with this form are familiar with all of the current language and requirements. The best way for the prudent insurance agent and broker to provide good service to customers while at the same time avoiding exposure to potential E & O claims and lawsuits is to stay knowledgeable concerning the best practices to follow when issuing certificates of insurance and also to be familiar with and use the most current ACORD forms. The law firm of Keidel, Weldon & Cunningham, LLP concentrates its practice in handling errors and omissions claims, litigation and loss control for insurance agents and brokers. Please direct any comments or questions to either James C. Keidel or Christopher B. Weldon either by mail at the firm’s Rhode Island office located at 303 Jefferson Boulevard, Warwick, RI 02888, or by email at jkeidel@kwcllp.com or cweldon@kwcllp.com or by telephone at 401-773-7730. The firm also maintains offices in White Plains, NY; Syracuse, NY; New York, NY; Wilton, CT; Philadelphia, PA and Bayonne, NJ. Copyright 2013, Keidel, Weldon & Cunningham, LLP. All rights reserved

FIRE & WATER DAMAGE Commercial and Residential Trained, Uniformed Professionals Complete Move-Outs Restoration Vendor for Insurance Companies Nationwide

24 Hour Emergency Service

SERVPRO® of Washington County Independently Owned and Operated

401-315-2337

Like it never even happened.®


Legal Briefs

Continued from Page 29

different outcomes for different policyholders. Some may actually see their policies go down or stay the same while others may see large increases. Further, some policyholders will reach their properties’ true risk rate earlier, while others will continue beyond 2017, dictated by rate tables provided by FEMA. Flood policies for primary residences will maintain their subsidies for now but will eventually shift to a risk based rating system. Subsidies will end and new, full-risk rates will be charged upon the occurrence of any of the following:

☑ The property is sold ☑ The policy lapses ☑ A new policy is purchased by July 6, 2012 For other properties not listed above, the new law calls for the phasing out of grandfathered rates when a community adopts a new Flood Insurance Rate Map (FIRM). In fact, FEMA is in the process of coastal re-mapping for the 21 coastal communities in Rhode Island. As a result, some properties may find themselves for the first time in high risk flood zones and thus, subject, to significantly higher premiums. Agents should be careful to advise their customers of the existence of the new law and, if they are impacted, what actions they can take to minimize its financial impact. Customers may be able to better control their rates and premium increases by doing any or all of the following:

☑ obtaining an “elevation certificate” to determine a property’s correct rate ☑ increasing their deductible ☑ using flood mitigation techniques in remodeling or rebuilding According to producer Marti Longolucco of Mansfield Insurance Agency, Inc., a Westerly based company that writes flood insurance in Rhode Island and Connecticut, her agency’s customers are very concerned about the new flood insurance rules. Some worry that they will be forced out of their homes when their insurance subsidies are eventually eliminated. Others are concerned that their properties may fall into re-drawn flood zones under the new FIRM and that they will have to start paying flood insurance. Finally, Longolucco is hearing from potential buyers that the cost of flood insurance is the single deciding factor in whether they will go forward with a sale. Indeed, Longolucco confirms that the premium increases in the first year of the law’s phased implementation are already significant, ranging from several hundred to several thousand additional dollars. While changes to flood insurance are being made uniformly across the country, the impact of the Biggert-Waters reforms is particularly acute in a coastal state like Rhode Island. It is no surprise then that Rhode Island Representative James R. Langevin is the co-sponsor of new federal legislation -- the Homeowners Flood Insurance Affordability Act – which would freeze rate changes for two years while the government undertakes an affordability study. Longolucco cautions her customers not to count on the proposed bill to reverse the changes begun by the Biggert-Waters law. She’s right. While the Langevin affordability bill does offer some near term relief, its goal is no different than the Biggert-Waters law – reformation of the NFIP. That means that, long term, major change to the way flood insurance is written is inevitable. Jennifer R. Cervenka (jrc@psh.com) is a partner at Partridge Snow & Hahn LLP, a Providence based business law firm. Ms. Cervenka chairs the firm’s Insurance Group.

36 The Anchor Fourth Quarter, 2013


CASE LAW NOTE

RI Supreme Court Establishes When Causes of Action Accrue under UM/UIM Policies

American States Insurance Company v. LaFlam, Rhode The Supreme Court reviewed the legislative landscape Island Supreme Court, 69 A.3d 831 (2013). and public policy underpinnings of UM/UIM coverage in Rhode Island and concluded that the limitations Summary: In a matter of first impression, the Rhode period on a UM/UIM claim begins to run when the insurer Island Supreme Court recently held that the contractual breaches its insurance contract - not the date of the limitations period begins to run on a claim against an accident. The Court explained that while UM/UIM uninsured/underinsured insurer on the date of the breach claims are incidental to personal injuries, they arise of the contract by the insurer rather than the date of the not from the injury but from the insurer’s breach of its accident. This case began in the United States District contractual promise to indemnify against the injury by Court for the District of Rhode Island as a coverage dispute. denying a claim, refusing payment or rejecting a demand The insurance carrier filed suit seeking a declaration that a for arbitration. Indeed, the Court emphasized that an UM/UIM claim submitted more than three years after the insured may not even know s/he has a UM/UIM claim for accident was barred because a provision of the insurance a number of years after the accident. In light of this, the contract expressly required any legal action against the Court found that the insured is not” injured” by the UM/ insurer to be brought within three years of the date of the UIM insurer at the time of the accident and has no right to accident. The District Court agreed with the insurer that seek judicial relief against the insurer unless and until the the three year contract limitations period was enforce- insurer breaches the insurance contract. able and barred the claim. The insured appealed to the Although the Supreme Court firmly held that a UM/ First Circuit Court of Appeals. On appeal, the First Cir- UIM cause of action accrues on the date the insurer denies cuit found that there was no controlling law on when a the claim or rejects a demand payment or arbitration under UM/UIM cause of action accrues under Rhode Island law, the policy, it was careful to clearly note that this decision is and asked the Rhode Island Supreme Court for a ruling on not meant to express an opinion on whether an insurance whether an insurance policy may properly require that an policy may properly shorten the time period within which insured’s UM/UIM claim begins to run on the date of the a UM/UIM claim may be brought after the cause of action accident. accrues. This feature of The Anchor reviews recent case law involving the insurance industry. Please contact the author for more information: Melissa E. Darigan, Esq., Partridge Snow & Hahn LLP, 401-861-8200, www.psh.com.

Insurance law is: more about creating versus resolving. A good insurance lawyer knows how to resolve disputes and protect your interests. A great one also sees the law as an opportunity to create value and build your business. With Jenn Cervenka’s knowledge and skills on your side, you’ll be free to focus on the future — confident that you’re moving forward within the boundaries of the law.

Jennifer Cervenka Insurance, Chair

CLOSER TO THE ISSUES www.psh.com • 401-861-8200


2014Education Catalog l ep Schoo r P r e c u d P&C Pro

This four day program provides key information in Personal and Commercial vLines plus State Laws and Regulations that prepares attendees for the RI Producer exam.

February 10 - 13

September 8 - 11

May 12 - 15

December 1 - 4

r Custome d e it d e r c Ac ative epresent R e ic v r e S (ACSR)

Attending this intermediate level program will provide students with the skills necessary to succeed in today’s competitive agency environment.

Personal Lines Modules (Topics include Dwelling, Personal Umbrella, Personal Inland Marine, Watercraft, Beachfront and FAIR Plan)

special feature

Commercial Lines Modules (Topics include Crime, Commercial Inland Marine, Commercial Package, Business Owners and Workers Compensation)

Upon successful completion of all three module exams plus the two core modules, you will earn the Personal Lines ACSR designation.

February 5 ACSR 1 - Homeowner Coverage March 5 ACSR 2 - Personal Auto Coverages April 8 ACSR 3 - Personal Lines Related Coverages Upon successful completion of all four module exams plus the two core modules, you will earn the Commercial Lines ACSR designation.

July 9 ACSR 6 - Comercial Property August 13 ACSR 7 - Commercial Liability September 3 ACSR 8 - Commercial Auto & Garage October 15 ACSR 9 - Commercial Lines Related Coverages

Core Modules

These are the required modules for all ACSR designations.

May 8 ACSR 4 - E&O Loss Control June 11 ACSR 5 - Professional Development November 6 ACSR 4 - E&O Loss Control December 10 ACSR 5 - Professional Development

38 The Anchor Fourth Quarter, 2013


er ed Advis it d e r c c A nce in Insura (AAI)

This advanced level program will improve the student’s insurance knowledge, increase commissions, and help avoid E&O claims.

February 27 AAI 81 A - Foundations of Insurance Production March 19 AAI 81 B - Multiple-Lines Insurance Production April 24 AAI 81 C - Commercial Property May 22 AAI 82 A - Commercial Liability June 17 AAI 82 B - Other Commercial Insurance September 25 AAI 82 C - Specialized Insurance & Bonds October 23 AAI 83 A - Principals of Agency Management November 20 AAI 83 B - The Insurance Production Environment December 16 AAI 83 C - Agency Management Tools & Processes

in Associate ices e Ser v Insuranc (AIS) September 17

tion Risk Construc ialist nce Spec a r u s In & (CRIS)

By completing the AIS program, you’ll gain a basic understanding of continuous improvement principles that will help you attract new clients while retaining current customers. Attendees who currently hold the AAI designation, can obtain the AIS designation by passing the exam administered at the end of the program.

September 24

October 1

This course provides an introduction to important risk management techniques and concepts for design-build construction project participants.

April 16 - Design - Build Risks & Insurance

al

n Professio Cer tified n e Age t Insuranc (CPIA)

This full day seminar combines two distinct topics to enhance professionalism and sales excellence for producers and customer service personnel.

February 19 - Advanced Commercial Lines Risk Analysis for E&O Loss Prevention October 21 - Advanced Personal Lines Risk Analysis for E&O Loss Prevention 39 Fourth Quarter, 2013

The Anchor


legislative wrap-up Regulation 110 Revised New Consumer Protections Added for Residential Property Insurance As of October 3rd 2013 Rhode Island insurance Regulation 110 - Property Insurance and Weather Related Claims has been revised. It includes several new rules for pricing and underwriting residential property insurance. Most of the new provisions were the result of legislation, that was submitted at the request of the Division of Insurance, which passed during the 2012 session of the General Assembly. These new rules include provisions for residential property insurance which will:

Ernest Shaghalian, Jr., CPCU, AAI Government Affairs Committee Chairman

PREVENT NON-RENEWAL & CANCELLATION FOR: a. claims with payouts less than $500 unless there has been more than one such claim in a three year period b. loss resulting from a catastrophic event c. prior claims experience of the property by a former owner unless the risk from which the claim originated has not been mitigated. PREVENT PREMIUM INCREASE OR SURCHARGE FOR: a. a claim with a payout of less than $500 unless there has been more than one noncatastrophic claim in a three year period b. a loss sustained as a result of a catastrophe c. prior claims experience of a former property owner unless the risk from which the claim originated has not been mitigated. EMERGENCY MEASURES: Upon declaration of a catastrophe the

Insurance Division can require insurers to: a. allow grace periods of insurance premiums up to 90 days b. suspend normal duties of insureds under a policy for those who have been displaced c. suspend cancellations and non-renewal of policies but not for cancellations that were sent out prior to the hurricane. CESSATION OF NEW BUSINESS: If an insurer plans to cease writing new residential property insurance policies a notice must be filed with the Division 90 days in advance which describes the date, applicability and categories of new business the insurer will continue to write. MULTIPLE HURRICANE LOSSES IN A CALENDAR YEAR: If a homeowner suffers more than one hurricane loss in a single calendar year only one hurricane deductible may be applied. MEDIATION PROGRAM: Following a hurricane the Division may institute a non-binding mediation process for open and unresolved residential claims that have not been settled in a time frame which would be expected under the circumstances. The regulation includes a detailed mediation process that operates like arbitration. The exact language of Regulation 110 as well as all the other insurance regulations can be viewed at www.drb. state.ri.us/divisions/insurance. Click on legal information and all our insurance regulations will be available. Regulations 10, 16, 25, 38, 73, 97 and 110 are Regulations that a property and casualty agent should have some familiarity with. During the last eight years since the big

40 The Anchor Fourth Quarter, 2013


hurricanes down south property insurance has become volatile across the country and we have not been immune. Sharp price increases,insurers withdrawing/ shutting down territories and stricter underwriting criteria has caused residential property insurance to become a big concern for consumers as well as insurers. There appears to be no end in sight to this cycle which scientists attribute to global warming. Hurricane/Tropical Storm Sandy was a weak storm by the time it hit Cranston and the north half of the state. But it still produced claim payments in Rhode Island of over $63,000,000 according to figures released by the Division of Insurance. Residential property claims accounted for almost $27,000,000 of that amount and commercial property accounted for $12,000,000. Only $18,000,000 was for flood losses. After Irene in 2011, which was a bigger event than Sandy, about one half of Rhode Islanders were without electricity causing thousands of small losses for food spoilage. The following year many consumers were upset with the large premium increases on their home insurance. Many homeowners no longer qualified for loss free credits and coupled with across the board rate increases, many consumers got sticker shock.

The consumer protections in this new Regulation 110 are a direct result of the changing landscape in residential (and all property) insurance. With big price increases and strict underwriting comes consumer dissatisfaction. The Division of Insurance has to regulate a line of business which was considered the “gravy” until a few years ago. Now the Division has to walk a fine line between what is fair to consumers while at the same time not making it so tough that insurers don’t want to do business here. After all we are a small coastal state, large national insurance companies don’t need our business. For years state regulations have had detailed rules governing the personal auto surcharging and cancellation provisions. Now in this new era residential property insurance regulations are being increased and the Division is more mindful of announced and unannounced cessations of new business writings. The Rhode Island Division of Insurance is an active participant in the National Association of Insurance Commissioners (NAIC). Through the NAIC insurance regulators from around the nation are able to exchange regulations, exchange information and form CONTINUED ON PAGE 45

41 Fourth Quarter, 2013

The Anchor


wc update Workers’ Compensation

Michael Lynch Vice President, Legal Beacon Mutual

In a number of my past columns, I have written on the foundational elements of our workers’ compensation system, i.e. the statutory requirements, exclusivity provisions and what is a compensable injury. I have also tried to keep you up to date on regulatory, statutory and judicial developments that would better allow you to advise your customers. In this column, I will give an overview of the injured workers’ entitlement to ancillary benefits in addition to workers’ compensation benefits and whether workers’ compensation benefits are assignable. Indemnity benefits are paid to employees who suffer a loss of earning capacity. There are different levels of indemnity benefits under the Rhode Island Workers’ Compensation Act. Broadly, indemnity benefits are categorized by total incapacity or partial incapacity. For our purposes, we will assume there is no difference and the employee is completely out of work. The employee is receiving benefits based upon his “average weekly wage” which are the employee’s earnings for the thirteen (13) weeks prior to the injury. Simply stated, workers’ compensation benefits in Rhode Island are neither assignable nor subject to attachment except as contemplated by statute. More specifically, the issue is contemplated in the Rhode Island Workers’ Compensation Act, as follows:

§ 28-33-27 Immunity of claims from assignment or liability for debt. – (a) No claims or payments due for compensation under [The Workers’ Compensation Act]… shall be assignable, or subject to attachment, or liable in any way for any debts, except as set forth in subsection (b) of this section. (b) A lien in favor of the department of labor and training and/or the executive office of health and human services shall attach by operation of law to any benefits due and payable under [The Workers’ Compensation Act]… to the extent that those payments have been made by the department of labor and training and/or the executive office of health and human services to or on behalf of an injured employee or his or her dependents, but only to the extent that the employee would be entitled to receive benefits under the provision of these chapters. Any such lien is subject to the provisions of § 40-6-10. Under Rhode Island law, if an employee applies for and receives Rhode Island Temporary Disability Benefits (TDI) or monetary welfare benefits for a period of time where he is ultimately determined to be entitled to workers’ compensation benefits, (for example while his claim is being litigated at the Court), the insurer/ self-insured employer must first reimburse TDI or the Department of Human Services to the extent of those payments as they relate to the work related injury. Unemployment compensation must

The Anchor 42

Fourth Quarter, 2013


When winter hits

of Providence Fire & Water - Cleanup & Restoration™

STRIKE BACK

of Weymouth - Hingham, Quincy & Brockton Fire & Water - Cleanup & Restoration™

We’re committed to taking care of your customers! Fire & Water - Cleanup & Restoration™

When it comes to your insured, any disaster to their home or business the Boston biggest event they will face. We are here 24/7 of Boston - Downtown, Back Bay & is South to handle anything, big or small. We will respond immediately, provide a written estimate, project timeline, and most importantly,

peace of mind.

of Providence

401.941.5500 www.servproprovidence.com

• Emergency Water Extraction

• HVAC/Air Duct Cleaning

• Fire & Smoke Damage Cleaning

• Vandalism & Biohazard

• Document Drying

• Mold Mitigation & Remediation

• Drying & Dehumidification

• Board-up/Securement

• Deodorization and Odor Removal

• Reconstruction

• Contents & Structural Cleaning

• Pack Out/Inventory Storage

of Weymouth - Hingham, Quincy & Brockton

Like it never even happened.®

also be reimbursed, although this would be rare as employees are not entitled to both unemployment compensation and workers’ compensation benefits. The employee is not entitled to TDI, unemployment or monetary welfare benefits when he is receiving weekly workers’ compensation benefits. The insurance carrier/self-insured employer is also obligated to honor court orders for the payment of child support. This may be in the form of wage garnishment or outstanding child support liens. Every payer of workers compensation benefits is statutorily mandated to compare each claimants name against a national child support lien network. With a wage garnishment, it must continue to be honored by the carrier. In the event of a workers’ compensation settlement, the aforementioned outstanding liens must be satisfied or meet with the approval of the Family Court. There are no other viable liens in Rhode Island workers’

of Boston - Downtown, Back Bay & South Boston

compensation. Injured workers are, however, entitled to retain certain other benefits. If the worker had a personal disability policy, there is no offset. Likewise, if the employee applies for and is granted Social Security Disability benefits (SSDI), then he is entitled to the difference between his social security entitlement and his workers’ compensation entitlement. The only offset is to the advantage of the Social Security Administration. In summary, the only viable liens on workers’ compensation benefits in Rhode Island are by statute or court order. The employee’s entitlement is not assignable. An injured employee can receive social security disability benefits or personal disability plan benefits but they have no effect on the weekly workers’ compensation payment. As in all past columns, please contact anyone here at Beacon with questions in regards to the above.

Fourth Quarter, 2013 43

The Anchor


www.independentagent.com/Flood

Stand apart from the crowd with Big “I” Flood.

describes your business goals, you need to connect with Big “I” Flood. Big “I” Flood provides: ACCESS - In, Above & Outside of the NFIP! EDUCATION - The latest information on Biggert-Waters 2012 i ADVOCACY Learn more at www.independentagent.com/Flood, or contact Big “I” Flood Program Manager Linda Mackey at linda.mackey@iiaba.net or (800) 221-7917. Let us explain how we operate in, above, and outside the NFIP!


Legislative Wrap-Up Continued from Page 41

sub-committees for the purpose of studying common issues. Often the NAIC will devise model legislation and model regulations which will be adopted in various states. Members of the Rhode Island Division attend multiple NAIC meetings per year and sit on various committees within that organization. This Rhode Island Regulation 110 has elements based on rules and regulations from places like Louisiana (the multiple hurricane in one year rule) and New York (the mediation guidelines). Our Division of Insurance is lead by Joseph Torti III, CPA, Superintendent of Insurance and Banking (he’s the de facto insurance and banking commissioner). Paula Pallozzi is the Chief Property & Casualty Analyst and Elizabeth Kelleher Dwyer is the Legal Council for the Division. All three of these leaders have years of experience at the Division writing our regulations, knowledge of regulations in other states and their in put is relied upon by General Assembly leaders. Often the Division gets dragged into turf wars between groups like body shops and insurers or banks and insurers. Members of the Division are expected to

attend legislative hearings that can last until 9pm at which these turf wars are waged between the groups. The Division is in the midst of a major review and updating of important insurance regulations. Even before Regulation 110 was finalized another major Regulation is now (at the time of the writing of this article) in process of being rewritten and updated. Regulation 73 which is Unfair Property/Casualty Claims Settlement Practices had a public hearing September 17. The division drafts a proposed revised regulation and has a public hearing to get comments from the public and interested parties on the proposed changes. After taking those comments into consideration a final Regulation is a adopted, often with changes made based on the public comments. The new Regulation 73 is required because of recent legislation passed in Rhode Island and because many NAIC approved provisions which will be included in the new version. Any IIARI member with questions about insurance regulations may contact Mark Male our Executive Vice President at IIARI.

d e t n wa

• • • • •

We offer: Package policy General liability insurance Liquor liability insurance Assault & battery coverage Excess coverage

Commercial Package Policies for Hospitality Risks Quote us last for your hospitality package policies and see why we will instantly become your first choice!

And we don’t even want a tip. We just want your business. For more information, visit our Web site at w w w. h m i c . c o m or call toll-free

877-366-1140 or 508-366-1140.

Property • General Liability • Liquor Liability • Excess Coverage TOLL FREE

877-366-1140 95A Turnpike Road Westborough, MA 01581

FAX

508-836-4940

www.hmic.com


The Anchor

PRSRT STD U.S. Postage PAID Providence, R.I. Permit No. 1398

IIARI 2400 Post Road Warwick, RI 02886

Call The Grandmaster of Disaster 24 HR. DISASTER RESPONSE SERVICES 401-941-9111 FIRE * SOOT * WATER * SEWER * WIND * STORM * MOLD

Successfully restoring order from chaos for thousands of satisfied customers. 850 Wellington Ave. Cranston RI 02910 www.cleancare.net


The Anchor December 2013