The Anchor THE MAGAZINE OF THE INDEPENDENT INSURANCE AGENTS OF RHODE ISLAND
Five Sales Tips to Sell More & Build Better Relationships
Second Quarter 2012
IN THIS ISSUE From the President..................... 5 Convention Overview............... 18 Profile of an IIARI Member....... 24 Agents in Action....................... 35
More. At Smoke Clean of New England, Clean Air of America, and Restorative Drying, we work with insurance companies to minimize costs paid out for water damage claims. We know how important loss ratios are so we work with your adjusters, not against them. Our ﬁrst goal is to restore as much damaged property as possible, not just replace it. To ensure your customers’ water loss experience is handled quickly and cost-effectively, we use “Clean Trust” (IICRC) certiﬁed technicians trained in structural drying methodologies, microbial remediation, carpet cleaning, water damage restoration, and health and safety inspection —allowing us to work faster and restore more property and contents than any other disaster restoration contractor in Rhode Island.
Our family has been serving Rhode Island’s families for more than 40 years.
401-274-4444 • 888-780-7283 • www.smokeclean.com
When it comes to Disaster Restoration,“Trust is Everything”.
The quarterly magazine of the
table of contents
Independent Insurance Agents of Rhode Island
2400 Post Rd., Warwick, RI 02886 401-732-2400, Fax: 401-732-1708 Officers of the IIARI President President Elect Vice President State National Director Immediate Past President
Doug Mayhew, CIC Howard Thorp, AAI, CIC Greg Troy, CIC, CLU, AAI Robert Slocum, CPCU, CIC Michael T. Dacey, CPIA
Board of Directors District Vice Presidents Central East Bay Southern Northern
Andrew Palazzo Richard B. Paquin Tom Regan, AAI David White, AAI
District Vice Presidents, At Large Robert T. Hartnett David Woodmansee, CIC District Representatives Central East Bay Northern Southern
Garry Mansfield, CIC
Edward F. Bishop, CIC Mark Rotondo Colette McKeon, CIC Ken Thompson, Jr. Marc Nadeau, CPIA Denise Smith John Gates, CPIA Stan Tabak
STAFF State Account Manager Marcia L. Berthiaume, AAI, ACSR E&O Administrator & Mbr Coordinator SVP, State Account Executive
Sean R. Donaghey, CPCU
Education & Events Planner
Kathryn E. Griffiths
Executive Vice President AVP, Director of Education
Mark A. Male Jean E. Nagle, ACSR, AAI, AIS
Finance & HR Manager Membership & Administration
Maureen E. Sears Sarah Van Grootheest
Five Sales Tips to Sell More Page 11
Subscription rate for members is $15, which is included in dues. Subscription rates for nonmembers is $75 per year (single copies $10). Reprint requests should be referred to IIARI. Copyright©2012, Independent Insurance Agents of Rhode Island.
36 Clean Care of New England 4 EMC Insurance Companies
Annual Convention Overview Page 18-19
6 Hospitality Mutual
Case Law Note Page 21 Ever Wonder? A Historical Perspective Page 23
features & articles From the President Page 5 Executive Vice President Perspective Page 7 National Director’s Report Page 9 Legal Briefs Page 14 HR Corner Page 20
E&O Corner Page 26
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.
13 2012 Partners Program
2012 Partners Program Page 13
Profile of an IIARI Member Page 24
The Anchor is the magazine of the Independent Insurance Agents of Rhode Island (IIARI).
Marketing Thought Page 30 WC Update Page 32
8 Enviro-Clean, Inc. 22 IIARI Retail Benefits 31 JH Communications 15 Partridge Snow & Hahn, LLP 21 Providence Fire Restoration 29 RLI Personal Umbrella 10 Servpro of Providence 2 Smoke Clean of New England 25 Trusted Choice Campaign 34 Trusted Insurance Alliance
Weâ€™re celebrating our 100th year by planning for our next 100 years. Tanya Wentzel, Des Moines Branch Marketing Manager Troy Boysen, Minneapolis Branch Commercial Underwriter Connie Jarzynka, Omaha Branch Claims Adjuster Emails and teleconferencing may be time-savers, but there is no substitute for the one-to-one relationships with insurance professionals who know you and your community. Early on, EMC Insurance Companies realized the value of being close to agents and policyholders. That value continues to pay off in products and services tailored to individual market needs. Whatever the future holds, insurance will always be a relationship business and EMC will continue to keep those relationships as close to your office as possible.
Providence Branch: 800.556.7010 | Home Office: Des Moines, IA
www.emcins.com ÂŠ Copyright Employers Mutual Casualty Company 2011 All rights reserved
1/5/11 1:35 PM
from the president Winning Together I recently returned from the Big I Legislative Conference in Washington D.C. Special thanks go out to the following members who gave up valuable time in their agencies to attend: Melanie Flamand; Kim Raymond; Brian Hunter; David Bates; Ed Bishop; Bob Padula; Bob Slocum; and Mark Male. This was my first experience at the Legislative Conference and it was quite impressive to see the agents from all 50 states coming together to focus on the most pressing issues that face our industry. After our initial strategy meetings on Wednesday afternoon members from each state made the annual pilgrimage to Capitol Hill to meet with their respective members of the House and Senate to discuss our position on flood insurance reform, licensing reform, health care reform and insurance regulatory reform. Nine of us spent valuable time with our State Representatives and Senators and walked away with the feeling that our position on these issues was understood. In reality, since it is an election year, I’d predict that the NFIP gets extended till year end without any reform, agent licensing reform might finally have a chance now that the NAIC has shown it’s support, there won’t be any action on health care reform until the Supreme Court ruling due later this year, and we will continue to see the threat of federal insurance regulation going forward. If you have any interest in attending next year’s Legislative Conference I would encourage you to let Mark Male know. It is an eye-opening experience and well worth the time out of the of-
fice to attend. Also, while on this topic, please be sure to contribute to InsurPac. This is just another way that we can be sure our voices are heard during the political process. After the day on the Hill, the focus turned back to the Big I Board meeting and specific break out sessions that dealt with ongoing issues. ProjectCAP was the big item on the agenda. There are now over 1,000 agencies signed up for the program in just the first 3 months and admittedly this has caused delays in getting new participants up and running. The process is improving and staffing needs have been addressed so this should run more smoothly going forward. As the rollout to the agent portal starts to take shape it is critical IIARI members reach out to their auto carriers to be sure they are engaged in the program. If you have an insurer that has asked for more information about this please be sure to refer them to Mark for assistance. Mark will be spearheading an effort to reach out to all of our RI auto insurers to gauge their interest in ProjectCAP and to make sure they have the details they need to get involved. If you have not yet signed up or have questions I would encourage you to get involved at the entry level so you will be able to participate in the portal once it becomes available. Additionally we have asked Rhode Island to be on the list of early rollout states of the program so it is important to engage in adopting the program and reaching out to your auto carriers to encourage their participation. Big I made ProjectCAP a top priority and there are a number of very
Doug Mayhew, CIC IIARI President
5 Second Quarter, 2012
smart people involved that understand the urgency of winning back personal lines market share from the direct writers. The power and success of this will be determined based on the excitement and participation we can generate at the grass roots level. If thousands of Trusted Choice agents throughout the country engage in this digital marketing and branding effort it will surely help us turn around the loss of business to the direct writers. We all know that the Independent Agency system is the best for providing insurance solutions to our clients. Unfortunately, we have not done a very good job of working together to market ourselves over the years. On the other hand, the direct writers have done a very good job and have pumped millions of dollars into telling everyone how much they can
save on their insurance. Big I members must work better together. We need to realize that we are not competing against each other. We are competing against very well funded marketing machines that will continue to take our business if we don’t change our approach. Personal lines as well as commercial lines agents (yes, BOP’s can certainly be commoditized like auto insurance by direct writers very easily) need to put aside that individuality that we have come to love as a benefit to being a small business owner and commit to this effort on a national level. In doing so we will level the playing field and guarantee the future of the Independent Agency system for generations to come. Working together = WINNING TOGETHER
d e t n a w
• • • • •
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
or 508-366-1140. Property • General Liability • Liquor Liability • Excess Coverage TOLL FREE
877-366-1140 95A Turnpike Road Westborough, MA 01581
6 The Anchor
www.hmic.com Second Quarter, 2012
executive vice president perspective The Future is Now Do You Have What it Takes to Embrace it? With four years under my belt at IIARI, I can’t help but reflect on my years as the Pennsylvania executive. There are many differences between then and now and besides age, the most pronounced change is not organizational in nature, but rather operational. If you can believe it, email was a burgeoning new technology when I departed the Pennsylvania Association in 1999. The Internet was beginning to get some legs and the fax machine was the king of all communication. Many industry observers noted that agencies who failed to embrace facsimile machines would contribute to their eventual demise. In terms of how we do business today as compared to just ten years ago, we are light years ahead. Faxes are no longer king of the information highway, and are about to go the way of the written letter. For many of us, this is hard to comprehend, but not so for the younger generation. To them, change is constant and rather than hide from new technology, they tend to embrace it. The fax machine was a great form of communication for many years, but now documents are imaged and e-mailed making the fax machine obsolete. E-mail has replaced faxes in terms of relevance and is still the most widely used form of communication today. E-mail is also the basis for new forms of communication that are still in their infancy – social media and digital marketing. Those who haven’t embraced e-mail at this point may find it difficult to embrace these new technologies and potentially lose the client who is increasingly relying
on this to purchase most of their goods and services, including insurance. I’ve read that some colleges and universities are no longer issuing student email addresses, as they are finding that social media seems to provide a better, more direct and efficient way of delivering information to their students. As an association we work to keep pace and try to stay on the cutting edge of these changes. Probably surprising to some is that IIARI has a Facebook page, a LinkedIn page, and even a Twitter account (ri_agents). Unfortunately the vast majority of those following us are NOT members but are instead other interested parties. We at the association recognize the need to learn how the game will be played in the future so that we can support and, therefore, remain relevant to you, our members. Not too dissimilar to the idea of embracing the fax machine in order to stay relevant in the 1990’s, so too is the idea of embracing digital marketing and social media in order to stay relevant in the future. We live in a changing world and the old ways of doing things are no longer going to work. To the younger generation it is all about the ease of doing business and if it cannot be done electronically, it won’t be done at all. Failure to embrace this philosophy and these new forms of communication will relegate all of us to the status of the written letter – a nice idea, but too cumbersome to accomplish and too time consuming. It is an entrepreneur’s responsibility to read the tea leafs and change accordingly. Failure to embrace
Mark A. Male IIARI Executive Vice President
7 Second Quarter, 2012
social media and digital marketing will enhance our irrelevance. Bob Slocum writes in this issue about Project CAP and digital marketing. It’s a continuation of what Myron Mitchell began writing about during his tenure as our National Director. The progression continues and the constant march of change seems to now carry a sense of urgency relative to the new digital age. The speed of adoption and integration of digital marketing into the agency DNA is critical if we stand a fighting chance of halting the erosion of personal lines market share to alternative distribution methods. I encourage you to read Bob’s column in this issue of The Anchor and be sure to get a grasp of the key concepts and importance of digital marketing to protect and grow your future. Change is constant; that we can be sure of. The transition between the typewriter and the PC, took many
years, giving society time to get acclimated to the new technology before throwing out the old. We will not have the same luxury going forward, however, as things are changing much too quickly and what is popular today will just as quickly be irrelevant tomorrow. Information used to be stationary, meaning that you sat at a desk and answered a phone that was connected to a wire that came out of the floor or responded to an e-mail on a desk top computer. Now, however, with cell phones and tablets, information is mobile. No longer is a desk or office required to conduct business. A potential new client could be at a Starbucks on a Sunday morning and request a homeowner quote and expect an answer just as quickly. The independent agent of tomorrow will have to be able to respond to that request just as quickly and those who cannot will be left behind like the typewriter.
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.
w w w. e n v i r o c l e a n i n c . n e t 8 The Anchor
Second Quarter, 2012
national director’s report It’s Time to Join the Cause! Every year, the large direct writing companies have quietly stolen personal lines market share from the Independent Insurance Agents throughout this country. 1% here 2% there.. just a little at a time… right? NO! Did you know that 1% of the personal Lines Market is over 2 Billion dollars of premium? Me either. But don’t despair because your association is rising to the occasion and taking steps to help you compete! Project CAP’s mission is to regain personal lines market share for the Independent Agency system. CAP is not just a product, its a “cause.” Have you ever wondered how you were going to compete with the large Direct Writers for personal lines business in the future? Did you know that over 75% of insurance consumers are going online to research coverages and rates for their personal insurance needs? Consumers have changed. They want what they want when THEY want it… not when we are available. So it’s time for us to change so we can remain viable in the future and continue to be seen as the agents of choice for personal lines consumers. That’s why IIABA has taken bold steps to help you utilize today’s technology along with the Trusted Choice brand to provide the kind of information and assistance that today’s consumers demand.
In reality, there are two major components to the Project CAP effort. The most talked about is the Consumer Agent Portal that will eventually include the ability for consumers to get rates from several Independent Agency Companies and then find a local agent to write their policy and provide that level of local client service we pride ourselves on. The other major component deals with Digital Marketing to help you establish and maximize the consumer’s ability to find you on the web. These two strategies will work together to help drive new clients to you! If a consumer is searching for insurance information using Google (or a similar search engine), do you know if your name comes up on that first page of results? Try it out and see. Being listed on the first page of search engine results is critical to your long term success with today’s insurance consumer. If you don’t show up on the first page, consumers will probably not see you (because almost none ever go past the first page of search results). But how do you get your agency to show up there? By utilizing something called search engine optimization (SEO). I know it sounds complicated and expensive, and I will admit that there is a lot to learn, but that’s why IIABA teamed up with some of the most dedicated Independent Agency insurance com-
Robert G. Slocum, CPCU, CIC IIARI State National Director
9 Second Quarter, 2012
panies to create project CAP to help! CAP stands for Consumer Agent Portal but in truth it is a comprehensive set of tools and educational materials designed specifically for you to help you establish and enhance your presence on the web and in social media such as Facebook. You MUST be there if you are going to meet the needs of consumers and remain relevant. Over the next few months you will be hearing more about CAP and how
you can take advantage of the opportunity to make your agency “digitally visible” using the various tips, tricks and tools offered by the experts at CAP. I urge you to make the time to listen to the message, take action and join the cause to regain market share in personal lines! To learn more about what’s going on and how you can leverage these powerful tools to help your agency grow in the future go to: https://projectcapmarketing.com/
Whether it’s a drip or a flood
of Providence Fire & Water - Cleanup & Restoration™
SERVICE DOES MATTER
of Weymouth - Hingham, Quincy & Brockton Fire & Water - Cleanup & Restoration™
Fire & Water - Cleanup & Restoration™
of Boston - Downtown, Back Bay &understands South Boston that even minor spring flooding SERVPRO
can have major effects on a homeowner. To minimize the interruption and chaos in their lives, we work quickly to eliminate water. But we don’t stop there. We can reconstruct saturated ceilings, walls, and flooded floors to make it look Like It Never Even Happened.®
• Emergency Water Extraction
• HVAC/Air Duct Cleaning
• Fire & Smoke Damage Cleaning
• Vandalism & Biohazard
• Document Drying
• Mold Mitigation & Remediation
• Drying & Dehumidification
• Deodorization and Odor Removal
• Contents & Structural Cleaning
• Pack Out/Inventory Storage
of Weymouth - Hingham, Quincy & Brockton
Independently owned and operated.
10 The Anchor
of Boston - Downtown, Back Bay & South Boston
Second Quarter, 2012
special article Five Sales Tips to Sell More and Build Better Relationships Through Better Body Language While much has been written and said about how much you can read a person based upon body language, the reality is: body language does not typically say much about a person unless it is extreme. Someone with crossed arms is not necessarily closed off to your communication, they may be cold, or that may be their “standard stance”, this is typically the case with electricians, plumbers, contractors and similar professions. That being said, the average person has heard the basics on body language and as a result, they will read what they can into your body language. Because of this, you want to make sure your body language is as agreeable as possible. Here are some ideas on how to do that. Five Body Language Keys 1. Don’t cross your arms. Okay, you saw that one coming right? The one tip about body language that almost everyone is aware of, states that a person with crossed arms is closed off to communication. As a result, keep your arms down by your side or otherwise uncrossed. The most agreeable position for the arms is open with the palms of the hands facing up or toward the other person. Note: When shaking hands, establish a 45 degree angle with your palm
facing upwards. A hand-on-top handshake is a show of dominance while a hand-on-bottom handshake is read as much more accommodating and agreeable. 2. Keep your chin down and your eyes up. If you do the opposite of this, namely: chin up, eyes down, the other person may get the feeling that you are “looking down your nose at them”, not good. In addition to chin down and eyes up, it is a good idea to tilt your head slightly as this has been shown to be the most friendly and accommodating position
John Chapin Complete Selling, Inc.
3. Never go toe-to-toe with the prospect or customer. When you picture two people getting ready for a confrontation, what do you see? They are usually standing toe-totoe, chest-to-chest, directly facing one another. Directly facing someone headon can be subconsciously perceived as confrontational, even if you are several feet from them. As a result, it is best to stand at a slight angle to the person you are talking to. 4. Smile. Smiling is the one piece of body language that does have meaning all by itself. A smile says many positive things and sends a message of: warmth,
John Chapin will be presenting a Sales Seminar at the 112th Annual Convention! 11 Second Quarter, 2012
genuineness, self-confidence, and professionalism. A smile can do more to build rapport and bring down the defensive walls than almost anything else. In addition, if you are having a bad day, by smiling you send positive messages to the brain and you will actually feel better. 5. The eyes have it. Through Better Eye Contact, if you really want to know where you stand with someone, or how they feel, focus on the eyes. The eyes are mirrors of what’s going on internally. They will let you know if someone is interested or disinterested, if they truly care or couldn’t care less, and whether they’re paying attention or off in another world. Here are some things to look for: • Is the person looking around? • Are his eyes glazed over? • Is he fighting to stay awake? • Does he have a look of confusion? • Is he looking right through you? • Is he looking at his watch or otherwise looking away from you? • Does he have an intense look? • Is he focused on and absorbed with what you’re presenting?
Likewise, your eyes tell others a lot about you. Make sure your eyes say you are alert, interested, and focused. Also, make sure you are making as much eye contact as possible. In conclusion, when body language is an issue, it’s easy to notice. If your prospect is completely reclined and relaxed when she should be on the edge of her chair, you have a problem. If she is leaning back with her arms folded, and she really looks as though she couldn’t care less—once again, you have a problem. These are extreme examples and thus good signs as to how someone feels, at the same time, subtleties in body language are very rarely indicators of exactly how someone feels. Body language needs to be coupled with other items, such as what the eyes are telling you, before it has any real significance. That being said, you still want to ensure your body language sends all the right messages because over 90% of the people you run into on the street believe that body language is a big factor and they will make judgments about you based upon yours. John Chapin is an award winning sales speaker, trainer, coach, and co-author of the gold-medal winning “Sales Encyclopedia” a comprehensive how-to guide on selling. “Sales Encyclopedia” is written for sales professionals in all industries at any level of experience. Utilizing more than 21 years of sales experience and as a number one salesperson in three industries, John co-founded Complete Selling Incorporated, a company helping salespeople and sales teams significantly increase sales and find their motivation.
The Anchor 12
Second Quarter, 2012
Quincy Mutual Group BRONZE SPONSORS American Commerce Insurance Co. The Andover Companies EMC Insurance Companies Peerless Insurance Phenix Mutual Fire Insurance Co. The Independent Insurance Agents of Rhode Island proudly introduces the 2012 Partners Program. The 2012 Partners Program is a mechanism to allow companies to demonstrate their support of the American Agency System and IIARI. We thank all of our 2012 Partners Program sponsors. Diamond sponsor The Beacon Mutual Insurance Company, Gold sponsors Progressive, and UPC Insurance Company, Silver sponsor Quincy Mutual Group, and Bronze sponsors American Commerce Insurance Co., The Andover Companies, EMC Insurance Companies, Peerless Insurance, and Phenix Mutual Fire Insurance Co. Be sure to thank your companies for their unparalleled support of IIARI and all independent insurance agents. Look for all of our sponsors throughout the coming year as we acknowledge their commitment at all IIARI events and functions.
legal briefs It’s Hurricane Season Again; Help Your Customers Ready Themselves
Jennifer R. Cervenka, Esq. Partner Partridge Snow & Hahn, LLP
Melissa E. Darigan, Esq. Partner Partridge Snow & Hahn, LLP
Hurricane deductibles continue to confound and alarm residential consumers. Being on the front-line of the insurance distribution system, agents bear the brunt of questions, concerns and even anger from insureds who do not understand their coverages and how deductibles are applied. As we have discussed in prior Anchor articles, an independent agent simultaneously owes legal duties to both the insured and the insurer. The Rhode Island Supreme Court has held that an agent is the agent of the insured, not the insurer, in the procurement of the policy. Thus, the agent represents the insured’s interests exclusively in: 1. Identifying insured risks 2. Determining appropriate types of coverage 3. Determining appropriate amounts of coverage 4. Soliciting quotes In carrying out these responsibilities, the agent must exercise reasonable care, diligence and judgment. Among other things, this means that the agent must assess the nature of the risks to be insured and identify coverage types and amounts appropriate to insure against those risks. As a result, educating insureds about hurricane deductibles is not simply a good business practice or customer service – it is an important part of the agent’s legal duties owed to the insured. Additionally, when faced with devastating property damage and loss, insureds rely heavily upon their agents to help
them with claims, provide relevant information and make recommendations. To ready themselves for their customers’ inquiries and requests for assistance, agents should be familiar with R.I. General Laws § 27-5-3.7 (Hurricane Deductibles, Triggers and Policyholder Notice) and the Department of Business Regulation’s Insurance Regulation 110 (Residential Property Insurance – Hurricanes), which implements that statute. Section § 27-5-3.7 requires that insurance companies electing to include any deductible and/or mitigation measure related to such deductible for any type of personal lines residential property insurance on dwelling houses provide prominent and clear notice to insureds in the policy issuance or renewal package. Such notice must fully disclose all details of the applicable deductible and/or mitigation measure. The statute caps the deductible at 5% of the property’s insured value and limits the application of the deductible to a declared “hurricane.” Insurance Regulation 110 expounds on the requirements of the statute and specifies that insurers that include a deductible for weather-related events: 1. May not include a windstorm deductible 2. May only offer a deductible of 5% of the insured value of the building 3. May not offer optional hurricane deductibles in excess of 5% 4. May offer a flat dollar hurricane deductible in place of or in addition to a percentage deductible but the total
The Anchor 14
Second Quarter, 2012
deductible may not exceed 5% of the insured value of the property The most critical time to educate insureds about hurricane deductibles is at policy inception or renewal – it is at that point that the insured is making an informed decision, with the agent’s assistance, about the coverage, exclusions and deductibles in the policy. The disclosure requirements in Insurance Regulation 110 assist in this effort, by requiring insurers to fully and completely disclose all details pertaining to hurricane deductibles and include two practical examples of how hurricane deductibles work in all policy issuance or renewal packages. The DBR also explains that a hurricane deductible may be applied only to losses occurring during the period commencing with the issuance of a hurricane warning by the National Weather Service and ending 24 hours after the last National Weather Service hurricane warning. Agents should note that Block Island risks are treated differently from
the rest of the state. A hurricane deductible is triggered in Block Island only when hurricane force sustained winds are reported in Block Island by the National Weather Service. In the same vein, hurricane force winds reported in Block Island do not trigger hurricane deductibles in the remainder of the State, unless the National Weather Service reports this condition as being present in other parts of the State. Section 27-5-3.7 provides relief to insureds who undertake certain mitigation measures to protect against loss. Under the statute, hurricane deductibles shall not be applied to any insured that has installed approved mitigation measures to protect against windstorm damage and the insurer has either inspected the property or the insured has submitted satisfactory proof of installation of the approved mitigation measures. Insurance Regulation 110 specifies which mitigation measures are approved by the DBR, which include plywood shutters over all window and door open-
• Regulatory compliance and licensing
LEGAL EXPERTISE F R O M A F I R M T H AT K N O W S
• Enforcement • Corporate governance • Acquisitions, sales and mergers • Policy interpretation • Loss coverage • Litigation/dispute resolution
I NSURANCE PRACTICE G ROUP M EMBERS Jennifer R. Cervenka, Chair Christopher C. Cassara • Melissa E. Darigan Paul M. Kessimian • Howard Merten John J. Partridge • Steven E. Snow
www.psh.com | 401-861-8200 The Rhode Island Supreme Court licenses all lawyers in the general practice of law. The court does not license or certify any lawyer as an expert or specialist in any field of practice.
Closer to the issues
15 Second Quarter, 2012
ings, roof tie-downs and permanent storm shutters or hurricane glass. In some areas of the State, insurers may not require an insured to employ any mitigation measures, while in others they may. In those instances, Insurance Regulation 110 requires that the insurer provide written notice to the insured explaining the mitigation measure that is required, describing the credit to be applied to the premium upon installation, stating the length of time the credit for the mitigation measure will apply and that the insurer will not non-renew as a result of a risk of catastrophic loss. Section 27-5-3.7 and Insurance Regulation 110 are too new to have yet developed reported cases in Rhode Island. However, litigation on policy interpretations, exclusions and deductibles related to hurricanes and other extreme weather events can be expected. The last reported case dealing with windstorm deductibles was Bliss Mine Road Condominium Association v. Nationwide Property and Casualty Insurance Company; Rhode Island Supreme Court, 2010 LEXIS 105 (November 1, 2010). This case concerned a 2005 loss and was decided under law pre-dating the implementation of § 27-5-3.7 and Regulation 110. There, the plaintiff condominium association made a claim on a policy after a storm with high winds, sleet, rain and snow and was awarded $26,977.77 after an appraisal process was completed. The defendant insurer refused to pay the award based upon a “windstorm” deductible contained in the policy. Plaintiff disputed the applicability of the deductible and eventually filed a breach of contract suit in Rhode Island Superior Court which found that the insurer had breached the insurance contract by applying the windstorm deductible. On appeal, the insurer argued that the term
“windstorm” was unambiguous and that it should be afforded its ordinary meaning, which it described as a storm with high levels of wind, irrespective of precipitation. The plaintiff argued that the term was ambiguous in that it was not defined by the policy and could be construed to mean a storm marked by high winds but with little to no precipitation, a common dictionary definition. Applying established rules of insurance policy construction, the Supreme Court agreed with the plaintiff that the policy was ambiguous in that the term was reasonably susceptible to more than one meaning. The Court further held that the ambiguity was to be construed strictly in favor of the plaintiff as the insured. Thus, the Court found that the term meant what the plaintiff argued it meant. Because the storm at issue was characterized by expert testimony at the trial as having a “considerable” amount of precipitation, the storm was not a windstorm within the meaning of the policy and, thus, the deductible did not apply. Hurricanes also can create flood conditions as a result of storm surges and torrential rains and many insureds do not understand that flooding is not covered in the standard homeowners or business insurance policies. Agents have a duty to seek forms and limits of coverage pursuant to an express request by the insured for specific coverage; however, Rhode Island law does not impose a general duty on agents to inform an insured as to every form or limit of coverage available. Thus, there is no legal duty to inform insureds about flood insurance. It is a best practice however to address flood insurance issues with customers at policy inception or renewal. Agents seeking to implement best practices, provide superior customer
The Anchor 16
Second Quarter, 2012
service and limit their exposure to claims relating to extreme weather events should consider the following three easy-to implement steps: 1. Communicate with the insured to ensure informed decision making. When meeting with insureds to prepare an application for coverage (or for renewal coverage), specifically discuss hurricane deductibles and the availability of flood insurance. Do this with every insured every time, no matter how sophisticated the insured is in relation to insurance matters or how long you have acted as the insuredâ€™s agent. 2. Document communications relating to hurricane damage coverage and deductibles and flood coverage. Make sure your file contains written documentation that you discussed hurricane deductibles and mitigation measures, reviewed hurricane deductible examples and relevant flood maps, advised as to the scope of flood coverage and informed the insured about NFIP plans. Having the insured sign a declination form for flood is powerful evidence that the insured made an informed decision about the availability of coverage. Consider writing to the insured to confirm your discussions and the decisions made by the insured about coverage. At the very least, document the discussion and the decisions made by the insured in an internal memorandum to be maintained in your file. Prepare this letter or memorandum reasonably contemporaneously in time to the meeting. 3. Preserve your documentation. Keep these records documenting your communications on hurricane and flood issues in your files. Insurance Regulation 67 requires agents to maintain a policy record file for
each policy, including hard copy and electronic work papers and written communications for the current policy year plus four years. In an earlier Anchor article, we suggested that this minimum regulatory retention requirement may not be sufficient to allow agents to effectively defend claims because many claims to which an agent may be subject have statutory limitation periods of up to 10 years. Agents should also be mindful of any contractual obligations imposed by their E&O carriers for retaining documents. Failure to maintain or preserve records in accordance with regulatory authority or pursuant to contract may relieve the E&O carrier from the duty to defend third party claims. These practices and policies should be established and communicated to all agency employees and enforced by management. What is covered is one of the biggest sources of anxiety for an insured during an extreme weather event. Agents should reach out to their customers to fully explain the coverages and exclusions and assist them in selecting the best product for their unique circumstances. Melissa E. Darigan (firstname.lastname@example.org) and Jennifer R. Cervenka (email@example.com) are attorneys with Partridge Snow & Hahn LLP, a Providence based business law firm. Ms. Darigan is a partner with the firm and Chair of its Litigation group. Ms. Cervenka is a partner with the firm and Chair of its Insurance group.
Second Quarter, 2012 17
MARK YOUR CALENDARS! Monday The
conve CE and ntion begins a t the Ne an oppo wp rt An Exh ibit Hal unity to both n ort Marriott w etwork lC followe and rela ith d by IIA ontinental Bre x! a R k who wi ll prese I member favo fast starts the d nt Stree credits) t Level rite, Chris Am ay . After E r h t lunch C hics (su ein sion on hris bmi M for 3 cr arketing to the will continue w tted for 3 edits). New Ge i neration th a ses(submit ted
b in try Clu olf outn u o C f& ’s g my Gol on of this year land’s o n o t e i e Is Wanum n is the locat of Rhod 18-hole, e d w i s o t t e s l n a Midd n the e my is a o o n d o e t t e a done in c m ing. Lo ett Bay, Wanu e par 70 layout ns qu Narraga g and pictures n i g challen nks style. c li i s a clas
Opening Night Reception
The Op en the uniq ing Night Rece ption te ue Inte rn nt tions, h ors d’oe ational Tenni atively will be s Hall o held in uvres, m who att f Fame usic, ra end. Th . f fle and Libae evenin House m g concl with a c udes at ore await all asino, i the Can nternati field onal co ffees an d desert s.
MARK YOUR CALENDARS! Tuesday
After br ea tend a s kfast and annu ession t al meet i o learn speaker more ab ng, donâ€™t miss , author the chan o ut s , tra to focus ce to at on sales iner, and coach ales with the a w agencie become â€“ a r J d o w h i n n s - this s n C i p hapin. ng aramou ses tools to succeed sion will help a nt for ALL ind As the need e ! rm you with so pendent me add itional
n o o n r e t f do esday A Raimon
Gina easurer wing lunch, r T l a r e Gen ear ollo e Island n Luncheon. F hode Island. H d o h R R ted is tio We invi for the Installa on the State of g pension cris e n i e s t su to join u ondo will upda ckled the loom vercome an is o ta oo int im Ms. Ra urer Raimondo Rhode Island t sent the State s f ty to n a o or eve portuni d p how Tre ned the State e o l p n p a i r h wit itio ed, c s. and pos paralyz onclude es, and vendor c e l v l a i h w d n v o ul that wo y. The afterno ny representati a c t p p s, com bankru ith peer w k r o netw
The Toll Is On Us! We Hope You Can Join Us
hr corner Do You Have a Current 2012 Compliant Policy Handbook?
Dave Nichols Quality Transitions, Inc.
This is a continuation in the series of human resource articles for “The Anchor.” My goal is to bring value to your organization in accomplishment of the Essentials of Human Resources. This article will deal with 2012 compliance. Did you know that a seemingly innocent policy statement can cost you $1,000,000—or more? Or if you don’t have any written policies, you could be in double jeopardy? Sound unbelievable? Listen to this: •
A pharmaceutical firm felt safe when it fired a senior employee for subpar performance. But the employee used the company’s routine discipline policies to accuse it of unfair treatment. Cost: $8.4 million. A West Coast manufacturer fired two employees for dating. Problem: It didn’t have a no-dating policy. Cost: $6.3 million.
In today’s legal combat zone, costly disasters like these can be prevented. Example: An East Coast transportation organization had such a strong and well-publicized policy against sexual harassment (as the Supreme Court has “recommended”), that it was judged not liable despite a manager’s clearly illegal harassment of a subordinate. Now, take a major step in policy protection and lawsuit prevention.
• • • •
ANSWER THESE QUESTIONS Do I currently have a policy handbook? Has it been over a year since I reviewed it? With regulatory changes in 2011-2012, am I currently compliant? Have I used a third party (lawyer or Human Resource Professional) in rendering a compliant opinion?
This is the time of the year that you want to make sure you are 2012 compliant in taking a closer look at your Human Resource responsibilities. These questions are just the tip of the iceberg in validating how you are doing. Prevention is a lot better than running into a very expensive labor issue. If this is a concern contact someone in the Human Resource field that can help you. Thanks for your time. See you next quarter. Dave Nichols is the principal of a human resource management business, Quality Transitions, Inc., located in Charlestown, RI. He has 25 years of experience in the field and is 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 20
Second Quarter, 2012
CASE LAW NOTE
A Review of Case Law of Interest to IIARI Members This feature of The Anchor reviews recent case law involving the insurance industry. Please contact the authors for more information: Jennifer R. Cervenka, Esq. ( firstname.lastname@example.org or 401-861-8228) and Melissa E. Darigan, Esq. (email@example.com or 401-861-8250), Partridge Snow & Hahn LLP. Excess automobile liability insurer entitled to reimbursement of defense costs: Empire Fire and Marine Insurance Companies v. Citizens Insurance Company of America/Hanover Insurance, Rhode Island Supreme Court, 2012 WL 1592963 (R.I. 2012) (Suttell, J.) (May 7, 2012).
The limits of both policies were tendered in an eventual settlement of the pedestrian lawsuit. In defending the lawsuit, Empire had paid $98,955.92 in legal expenses, only $23,060.62 of which was reimbursed by Citizens. Relying on the “other insurance” provision of its policy, Citizens refused to reimburse Empire for the remaining defense costs. Empire Summary: This case arose out of a 2003 accident in which a filed a declaratory judgment suit seeking a determination that pedestrian was struck and seriously injured by a driver operat- Citizens was liable for reimbursement of the full amount of deing a BMW automobile while under the influence of alcohol. fense costs Empire had paid in the underlying action. Citizens At the time of the accident, the BMW was owed by BMW filed a counterclaim against Empire seeking reimbursement of Financial Services, NA, LLC (BMW Financial) and leased by the $23,060.62 it had paid Empire, asserting that Empire was Inskip Autocenter (Inskip) to MCB Productions LTD (MCB). singularly responsible for BMW Financial’s defense costs. The lawsuit triggered coverage under multiple policies. Cross-motions for summary judgment were filed, with each One of those policies was issued by Citizens Insurance insurer arguing that the other was the primary insurer who had Company of America/Hanover Insurance (Citizens) to MCB, the primary duty to defend and the sole responsibility for paythe lessee of the BMW. The Citizens policy named Marilyn ment of defense cots. The Superior Court granted summary Brownell, the owner and agent of MCB, and her husband as judgment in favor of Empire and against Citizens, holding insureds and, by endorsement, named BMW Financial as an that the Empire policy provided excess coverage to Citizens’ additional insured lessor and loss payee. The Citizens policy primary insurance coverage and, therefore, Empire was due expressly provided that any liability afforded by the policy for $75,895.30 from Citizens. the leased auto would also apply to the lessor named in the On appeal, the Rhode Island Supreme Court affirmed the endorsement. The policy also included a provision entitled Superior Court’s decision in favor of Empire. The Supreme “OTHER INSURANCE”, indicating that in the event of other Court refused to read the “other insurance” provision of the applicable insurance, Citizens would only pay its proportionate Citizens policy in isolation, as had been urged by Citizens, share of the loss and that any insurance provided by Citizens and, instead, held that the policy would be interpreted as a for a vehicle not owned by the insured would be excess over whole consistent with established principals of contract interany other collectible insurance. pretation. To determine coverage by reading the “other insurA separate business automobile insurance policy was issued ance” provision only, held the Court, would render coverage as by Empire Fire and Marine Insurance Companies (Empire) to BMW Financial “illusory” and the additional insured lessor to BMW Financial. The Empire policy provided contingent, endorsement meaningless. Indeed that endorsement, stated the excess, and interim liability coverage to BMW Financial for Court, would lead an ordinary reader and purchaser of the Citivehicles that BMW Financial had leased to others, including zens policy to believe that the Citizens policy provided BMW the vehicle at issue. The policy also had an “other insurance Financial with primary, not excess, coverage for the underlyprovision”, which stated that coverage under the Empire policy ing action. Accordingly, Citizens was under a primary duty was excess to any other collectible insurance unless such to defend the action and was responsible for all the defense insurance was specifically written to apply in excess of the costs expended by Empire in defending BMW Financial in the Empire policy. underlying suit on Citizens’ behalf.
Emergency Board Up Services Second Quarter, 2012 21
Today, our Association occupies a very nice building at 2400 Post Road in Warwick. For many years, we occupied small quarters in downtown Providence, which was hard to get to and harder to find a parking place. Over the years, every president and the board of directors spent much of their time discussing buying a building. We went to see many at many locations, but we could never agree on location or if the location was okay, the building was not suitable. On November 16, 1981, the then current President J. William Corr appointed Roger L. Messier, Chairman, William Warburton and Donald Kaul a committee of three to locate land or a building. The committee met and the first thing decided was that the location had to be central and decided that it must be in Warwick, and near 95 and the airport. Once that was agreed to, Bill Warburtonâ€™s real estate division found our present location, which was a piece of land containing 88,000 square feet or just over 2 acres. We negotiated a price of $150,000, which was quickly approved by the board of directors.
The committee then got some rough drawings showing the building pretty much as it looks today. With architectural changes, we then went out to bid. On April 27, 1982, we received 15 bids and finally gave the contract to the F.H. French Company for $182,035 with a side agreement not to exceed $195,000. Groundbreaking took place on May 21, 1982, and we had a big open house celebration on September 30, 1982 when we moved into the completed building. The final cost was $192,888.37, and the furniture cost was $31,500. The building has allowed us to have our own classroom and meeting room and, certainly, has given us outstanding office accommodations.
Roger L. Messier, CPCU
23 Second Quarter, 2012
of an IIARI Member Kraunelis Insurance Agency John Kraunelis 185 Washington Road Barrington, RI 02806
ANCHOR: How long have you been a member of IIARI? Iâ€™ve been a member of IIARI for about 15 years. ANCHOR: What do you like most about your business? I enjoy consulting with my customers and educating them about insurance. I feel when they have a better understanding about insurance, they appreciate it that much more. ANCHOR: What are your greatest challenges?
ANCHOR: What advice would you give to someone interested in becoming an independent agent today? I would tell them to learn as much about the business as possible. Ideally, try to get in with a company first and learn the coverages. I think a good agent is one that knows they are always learning themselves. ANCHOR: What is your biggest struggle? My biggest struggle is direct writers who do no consulting or educating and are just trying to sell price.
The greatest challenges are trying to consult and educate customers who think they know everything there is to know about insurance and the constant changes in underwriting and guidelines with some of the markets. ANCHOR: What are your greatest opportunities? My greatest opportunity is talking to people and getting in front of them. Everyone can be a customer of yours, so the more people you talk to the more opportunities you have.
The Anchor 24
Second Quarter, 2012
2012 RI Trusted Choice Branding Campaign IIARI expresses Special Thanks to the following companies for participating in the 2012 Branding Campaign!
Watch for Trusted Choice Television Ads on Local Broadcast News, Red Sox Games, and Cable Stations. This summer, listen for ads on local radio as well!
2012 PARTICIPATING IIARI MEMBERS A.N. Nunes Agency Apple Valley Insurance Blackman Insurance Agency Bentson-Combies Bessette Insurance Agency Balis Insurance Agency Butler & Messier Capital City Insurance Agency Chatterton Insurance Christopher & Regan Insurance Farmington Insurance Agency Hunter Insurance iConnexion John Andrade Insurance
John J. Clarke Insurance Johnston Insurance Lapointe Insurance Loiselle Insurance Agency Maggiacomo Insurance Agency OceanPoint Insurance Oâ€™Rourke Insurance Agency Paquin Insurance Agency Pearson, Cronin & Jacobsen Soucy Insurance Agency Schonning Insurance Agency The Slocum Agency Thorp & Trainer Woodmansee Insurance
e&o corner Some Social Media Concerns for an Agency or Brokerage to Consider
James C. Keidel, Esq. Partner Keidel, Weldon & Cunningham, LLP
Christopher B. Weldon, Esq. Partner Keidel, Weldon & Cunningham, LLP
Over the past year, Keidel, Weldon & Cunningham, LLP has presented a number of seminars to insurance agents and brokers on the subject of social and digital media and what potential issues arise when agents and brokers venture into this area. This article will focus on several issues agents and brokers should consider in connection with the use of social and digital media. Specifically, we will discuss privacy concerns when using social media, the elements you should consider in any social media disclaimer, what may constitute advertising in social media, and how non-compete agreements are affected by social media. I. Privacy Concerns with Social Media As more and more insurance agencies and brokerages dive into social media, they need to be cognizant of the privacy issues raised by social media and the concerns their customers may have in communicating through social media. While social media is good for group discussion on issues important to the group it should not be used to carryon a conversation with a client who has a particular issue or concern. At the point where a social media communication with a client turns to a personal issue, this must be the time that your agency or brokerages realizes the conversation must be taken out of the social media arena and placed into the agency environment either in person, by telephone or through email. For those agencies and brokerages that utilize an interactive website to
The Anchor 26
Second Quarter, 2012
II. Some Elements to Consider in any Social Media Disclaimer With respect to disclaimers and social media websites, your agency or brokerage should make sure that the following key elements are included in any disclaimer utilized: 1. The social media website is subject to change and/or amendment without notice; 2. The agency or brokerage makes no representation of any kind, express or implied, as to the completeness, accuracy, reliability, suitability or availability of the information provided via the social media website; 3. The agency or brokerage assumes no liability for loss or damage, including without limitation to indirect consequential loss or damage arising from utilizing the information provided on the social media website; 4. The agency or brokerage assumes no liability for loss or damage for temporary or permanent unavailability of the social website; The above is not intended to be an exhaustive list of what should be included in a disclaimer when developing an agency or brokerage’s social media website. Please note that, even with the appropriate disclaimers, there is no guarantee that an agency and/or brokerage can avoid all potential claims when utilizing social media as a means of communication. III. Can a Post on a Social Media Website Constitute an Advertisement, and Other Issues Raised by Such a Post? While agencies and brokerages want to publish their successes on their social media pages to let customers and prospects know what the agency or
brokerage may do for them, it is important to understand that such a post may possibly be considered an advertisement and require the agency or brokerage to comply with all state laws and regulations governing advertising. For example, in a recent insurance agent post, the agency stated the following: “We just saved John Smith $200.00 on his auto insurance policy and we can help you experience a similar savings.” After finding that the post constituted an advertisement, one state regulatory body questioned how the agency saved the insured $200. It was learned during the investigation that the savings arose from John Smith not only procuring an auto policy from the agency but also purchasing his homeowners which provided a package discount. The state investigating this post believed that the post may be considered misleading as it seems to indicate that the insured saved money just by purchasing his auto policy through the agency. The concern here, and with any similar posting, is that it may be considered to be in violation of the state’s unfair trade and/ or unfair competition laws which specifically outline the fact that publishing content that misleads the public will be considered a violation of those laws. Interestingly, there is one state that looked at these types of testimonials on social media posts and found that they are advertisements which must comply with all state advertisement laws and regulations, including the listing of the insurance carrier’s full name and the city and state of its principal office. Thus, if your agency or brokerage decides to use these types of testimonials to describe its successes, the agency or brokerage must ensure that such testimonials comply with state laws and regulations on advertisements in those states where your agency or brokerage is licensed and in each state where the
Second Quarter, 2012 27
post may appear on your social media website. IV. What Should be Considered with Non-Compete Agreements and Social Media Social media has raised a unique issue with Non-Compete Agreements. Specifically, producers are creating client lists on their social media pages. For example, Linkedin and Facebook are a connection between a person and all the people that person wants to be connected to on those websites. Normally, when social media websites are used for work, those connections are the person’s client list and are used as a means to advise that client list of changes with the person making the post. Thus, a concern has arisen with employers on the way to fashion noncompete agreements so as to protect the agency/brokerage from an employee using his or her social media client list to take agency or brokerage customers following the termination or separation of employment. The simple fix here is to make sure that your agency and/or brokerage’s non-compete agreement addresses social media concerns. For example, an easy way to obtain protection from an employee soliciting business through their social media outlets is to add language similar to the following: “the employee covenants and agrees that during the employment and for a period of three years after the employment ends, regardless of the reason for separation, the employee will not, directly or indirectly, including but not limited to social media, contact, solicit or attempt to solicit any business of the agency or broker-
age’s customers, prospects or vendors with whom the employee had material contact during the last two years of his employment with the agency or brokerage.” Tying the social media limitation into your non-compete agreement will help protect the agency or brokerage from former employees utilizing social media to solicit clients and prospects once they leave the agency. As you can see from above, social media has raised some new issues and concerns for agencies and brokerages. If social media is utilized correctly it can become an asset to develop and grow your agency or brokerage business. However, if utilized incorrectly and without adequate safeguards, social media can create potential problems for an agency or brokerage. The prudent insurance agency or brokerage should be sure to consider the issues we have raised in this edition of the E&O Corner when venturing into the social media arena. Doing so will help protect the agency or brokerage from a potential claim, lawsuit or regulatory issue. 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 firstname.lastname@example.org or email@example.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.
The Anchor 28
Second Quarter, 2012
Your customers will love our new underwriting box You asked us to find ways to make our standalone, A+ rated personal umbrella policy available to more of your customers. And we listened.
RLI’s Personal Umbrella Policy is now accepting many new exposures for new and renewal business. There’s something for almost everyone in our new underwriting box!
PERSONAL UMBRELLA POLICY
Now eligible for the RLI Personal Umbrella Policy: • Excess UM/UIM available in all states. • Drivers of any age • 20–21 year old drivers can have up to 1 incident • Drivers with an international license • Up to 1 DWI/DUI per household • Up to 6 moving violations and 3 at fault accidents per household • Up to 10 autos (+25 antique autos) per household • Up to 10 properties per household (5 can be rentals) • Up to 5 non-U.S. properties per household
For more information, go to www.rlipersonalumbrella.com
April Shrewsbury AAS, Inc. (IIABA) 127 S. Peyton St. Alexandria, VA 22314 firstname.lastname@example.org P (800) 221-7917 F (703) 995-4406 PUP-MK 509 (05/11)
marketing thought Striking that ‘Responsive Chord’ in your Advertising
John Houle JH Communications
I was watching my favorite TV show on DVR, when I was captivated by a commercial, which struck me even more than the fantastical melodrama about the world of advertising I’m so drawn to. Instead of fast forwarding, I actually kept rewinding the spot. What ad could garner such strong emotions in me, not only preventing me from fast forwarding but actually inspiring me to pen an article? It’s called “My son Steven,” for the Chrysler 300, and these lines brought up emotions of my own father: “…When he started his own firm people thought he took a gamble, but it isn’t that way when you know what you’re doing. I don’t always agree with him. But he’s making the game follow him and that makes him his father’s son.” The ad ends with, “The world will hear the roar of our engines.” And there’s no doubt that Chrysler has roared back. Chrysler brand sales are up 56% and the 300 has had tripledigit year over year sales gains. Not bad for a company that almost was on the trash heap of history. Whether it’s their new innovative models, or their inspiring advertising, the company is doing something right. This same company also has brought us “Halftime in America” with Clint Eastwood giving that gritty “All American” pitch and rapper Eminem’s personal appeal for Detroit’s Renaissance. So, what can we learn from their advertising?
These commercials connect with us. They stir up emotions of pride for our country and remembrance of our fathers. Many of us can relate to having taken a chance in life and not having always agreed with our parents. There’s also nothing more American than: “Dream big, set your own course and shoot for the stars,” as explained in Chrysler’s ad description for “My Son Steven” on YouTube. Evoking an emotional response, striking that “responsive chord” in advertising can make the difference in how successfully you sell your product or service. It’s simply sales, but where the average salesperson can potentially reach hundreds in a day, strong advertising reaches tens of thousands locally and millions nationally. Just as your best salesperson connects with his or her customers, so too should your advertising. Your best salesperson does not ramble off a bunch of features when selling your product, but instead explains why your product makes life better. The Chrysler ads do not tell us that the car has a 3.6 liter V6 engine, gets 28 miles to the gallon, or has Bluetooth connectivity. Instead it tells us that the car is designed for that young man or woman who’s taken a chance in life, that works hard and has achieved, and wants to drive a car that reflects his or her status. It makes us feel good about who we are and that America is back on top again when it comes to manufacturing cars.
The Anchor 30
Second Quarter, 2012
As insurance agents and small businesses, we don’t have the luxury of multi-million dollar creative budgets and advertising buys. So how can you compete, especially against the likes of the direct-writers who have ads that are quirky and make us laugh? How about an ad like this: “I wanted to be a professional ball player, or an actor, but when I graduated from college, I needed a job. I was fortunate that the owner took me under
his wing. I run my own shop now, and raised my family from my hard work. I dream today about how I can make things better, and I know my job helps people. I’m like so many other small business owners working to make a living. That’s why it’s so important to me to help people right here in our community. I’m a Trusted Choice agent, and I’m here to help you with your insurance.”
Second Quarter, 2012 31
wc update Workers’ Compensation - What is Going On?
Michael Lynch Vice President, Legal Beacon Mutual
In determining whether an employee is entitled to workers’ compensation benefits, with the exception of unique factual situations, the analysis and answer is not usually that complicated. This article will address a few of those unique factual situations. Unlike with civil liability, in the world of workers’ compensation, the employee’s fault is seldom subject to inquiry. It is a no-fault system. However in some cases, the employee’s actions should be examined. What if your customer’s employee purposely hurts herself at work? What if she was intoxicated at the time of injury? What if she was fooling around in the workplace and injury resulted? All of these scenarios occur every day. The question is, are they compensable claims? The analysis begins with the law: “If an employee … receives a personal injury arising out of and in the course of his or her employment, connected and referable to the employment, he or she shall be paid compensation… by an employer subject to the provisions of chapters 29 – 38 of this title.” R.I.G.L. §28-33-1. On the issue of employee conduct, do the injuries that result from self-infliction, intoxication or horseplay arise out of or occur during the course of employment? Not always. The Rhode Island Workers’ Compensation Act provides further, in pertinent part, as follows: “No compensation shall be allowed for the injury or death of an employee occasioned by his or her willful intention
to bring about the injury or death of himself or herself or another, where it is proved that his or her injury or death was occasioned by that conduct, or that the injury or death resulted from his or her intoxication or unlawful use of controlled substances as defined in chapter 28 of title 21.” R.I.G.L. §28-33-2. The first scenario considered by the statute is “willful intention to bring about the injury or death of himself or herself or another.” While rare, this circumstance does occur. When confronted with this scenario, the importance of a thorough initial investigation cannot be stressed enough. An example of this type of case is Davis v. State of Rhode Island, W.C.C. 86-7932. In Davis, the employee lost his temper at work, hit a wall and broke his hand. After trial and appeal, the Appellate Division of the Court affirmed that such behavior was fairly described as “self-inflicted injury” and deemed noncompensable. Intoxication is the next scenario. While one can argue that intoxication is a form of self-inflicted injury, the facts and a good investigation are again critical as the case law requires evidence that the intoxication caused the injury, not simply that the worker was intoxicated at the time of the injury. A post-accident positive blood test will not suffice as an absolute defense. You need facts to show that the intoxication caused the injury. Here is an example. In the case of Collins v. Cole, 40 RI 66. 99 A. 830 (1917), Collins was in the employ of the respondent as a
32 The Anchor
Second Quarter, 2012
night watchman and deck hand on a dredge which was being operated in the harbor at Block Island. It was a part of his duty to take members of the crew to and from the shore during the evening, and for this purpose a yawl belonging to the dredge was used. During the day of July 7, 1914, the dredge was not at work on account of rough weather outside of the harbor. In the afternoon of that day, Collins, with some of the deck hands, went ashore, where he drank whisky and other liquors to such an extent that when he returned to the dredge at about 5 o’clock he was intoxicated. At 6 o’clock when he went on duty he asked a co-worker to do part of his job as he was “in bad condition.” In the early evening, Collins made two or three trips to and from the shore in the large row boat belonging to the dredge taking ashore and bringing back members of the crew. On one of the return trips Collins was in such condition that, instead of rowing toward the dredge, he rowed out toward the open sea, whereupon one of the men in the boat took the oars and rowed to the dredge. There was also evidence that one of the men in the boat, upon this trip, brought with him a quart bottle of whisky belonging to the cook who had been left on shore and that upon reaching the dredge Collins and some of the deck hands opened this bottle and proceeded to imbibe its contents. Afterwards one of the deck hands heard Collins and the cook, who had then come from the shore, talking about going back again for more whisky. Almost immediately there was a yell, and three co-workers found the cook struggling in the water and Collins standing up in a very small skiff, which did not belong to the dredge. Almost immediately the small boat tipped over and Collins fell into the water. Efforts to rescue Collins and the cook were unavailing. Collins and two
other men were drowned. Mr. Collins’ widow petitioned the Court for workers’ compensation death benefits. The petition was denied at trial. On appeal, the widow Collins argued that the employer must prove that the intoxication was solely and exclusively the cause of the death. The Supreme Court disagreed, finding as follows: “If the petitioner means by that that the respondent must exclude every possibility that death might have resulted otherwise than from intoxication, we cannot agree with her. If Collins was in an intoxicated condition, that is, a condition in which he would be unable to look out for his own safety with that degree of care which a person would otherwise naturally exercise, and that, while so influenced, he did something which a person in a normal condition would not be likely to attempt and which brought about the accident, the trial court would be warranted in finding that the accident resulted from the condition into which he had voluntarily brought himself. We do not think that the statute requires that every possibility should be excluded before the evidence becomes sufficient to support the finding that the result was due to intoxication.” Despite its age, this case is still good law. Any employer who has reason to believe that an injury was caused by intoxication (to include drugs) needs to immediately see that its carrier conducts a complete investigation as was done in the Collins case, and deny the claim. Force the injured worker to pursue the claim at the Workers’ Compensation Court. The final circumstance is horseplay. Simply stated, the perpetrator’s injuries in this scenario are not compensable but the injured innocent bystander may
33 Second Quarter, 2012
very well have a compensable claim. In the case of Carvahlo v. Decorative Fabrics, Inc., 117 R.I. 231(1976), Carvahlo suffered a perforated rectum as a result of co-workers fooling around with an air hose while cleaning work material off of each other. Denied at trial, Carvahlo appealed and the Supreme Court reversed holding that: “Where the use of an air hose to clean off clothes is a daily practice, play with the hose is a risk of the employment and part and parcel of the working environment. Such activity should be regarded as part of the course of employment, particularly where, as in the instant case, the employer places in the hands of the employee the instrumentality which was used in the ‘horseplay’ and caused the injury.”
Accordingly, benefits were awarded. What is the lesson to an employer? Put a stop to horseplay. Your customer will assume the risk of any and all injuries arising from this activity being deemed compensable. In summary, self-inflicted injury, intoxication and horseplay claims are very real possibilities in the workplace every day. To avoid workers’ compensation liability for these claims, every agent should encourage his or her customer to prohibit such behavior and work closely with the carrier in conducting a thorough investigation. Otherwise, it is very possible that the injuries that arise will be deemed work related.
Are you looking to strengthen your agency? The Trusted Insurance Alliance is a group of various size agencies that have a proven track-record of success and performance. Agencies that participate in TIA benefit from: • Aggregation of Premiums and Loss Results • Growth Incentive Opportunities • Partnering with Quality Markets and Agencies Agencies that participate in TIA maintain: • 100% Independent Ownership • Individual Agency Identity • Insurance Company Contracts For a confidential discussion on how your agency would benefit from participating in TIA, call Bob Loiselle at (401) 723-8510 or Brian Hunter at (401) 769-9500.
Strength Through Performance
The Anchor 34
Second Quarter, 2012
Action Agent & Broker Potpourri
Certificate Presented to RIAIA
Matt Clarke, of OceanPoint Insurance, presents the framed original Stock Certificate Number 1 issued on November 12, 1948 by the Rhode Island Association of Insurance Agents, Inc. to Meredith & Clarke, Inc. to Mark Male, executive vice president. Matt sold the agency to OceanPoint Insurance and returned the stock certificate as required by the corporation. Given it was the first certificate issued, the Association will display the framed certificate in the Association offices for posterity sake.
IIARI Calls on Congress
A contingent of nine IIARI representatives visited Washington, D.C., in April to call on Senators Reed and Whitehouse, and Representatives Langevin and Cicilline. Issues raised in those meetings included the reauthorization of the National Flood Insurance Program, NARAB II (a national mechanism to streamline agent licensing in multiple states), the Medical Loss Ratio inclusion of agent commissions and other federal matters of interest to independent insurance agents.
35 Second Quarter, 2012
PRSRT STD U.S. Postage PAID Providence, R.I. Permit No. 1398
IIARI 2400 Post Road Warwick, RI 02886
Disasters Happenâ€Ś. Call the Grandmaster of Disaster! Customer Satisfaction the First Time, Every Time!
Call today for your personal tour of our state of the art facility !
Wellington Avenue Cranston
WIND - FIRE - WATER - SOOT - MOLD DAMAGE