IIAW August 2017

wisconsin

INDEPENDENT AGENT AUGUST 2017

DRIVING CONSUMERS TO TRUSTEDCHOICE.COM

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wisconsin

INDEPENDENT AGENT AUGUST 2017

Open Door Policy Flexing our Political Muscle: Reforming Certificates of Insurance Statutes. . . . . . . 5 Government Affairs State Work’s Compensation Rates to Drop Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Technology What’s Your Game Plan for InsurTech?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Industry Business The Rise of a New Era of Commercial and Specialty Insurance. . . . . . . . . . . . . . . . . 13 Virtual University New ISO Professional Liability Form Filing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Errors & Omissions When Good Things Happen to Hood Agents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Sales What Price are You Placing on Yourself? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Agency Management How to Build a Positive Conveyancing Business Culture . . . . . . . . . . . . . . . . . . . . . . 23 2018 Leadership Conference Another Successful Year in the Dells. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

On The Cover…

Thanks to a grant from Trusted Choice and IIABA, the IIAW will, for the fourth year in a row, be tapping the power of the Green Bay Packers to drive consumers to your agency and TrustedChoice.com with advertising.

Partnering with a winning team makes good business sense. The NFL ranks the Packers as the #1 market for local broadcast listeners and the Packers radio network reaches 2.1 million listeners per week, statewide, who are 18 years old and older- prime insurance customers. For more about our advertising and TrustedChoice.com contact Matt at Matt@IIAW.com.

Members in the News. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Independent Insurance Agents of Wisconsin 725 John Nolen Drive, Madison, Wisconsin 53713 Phone: (608) 256-4429 or (800) 362-7441 ■ Fax: (608) 256-0170 ■ Web: www.iiaw.com Executive Vice President - Matt Banaszynski 2016-2017 Executive Committee President....................................................... Matt Weimer Diversified Insurance Solutions - 100 North Corporate Dr., #100, Brookfield, WI 53045 President-Elect................................. Lise Meyer Kobussen Meyer Insurance - P.O. Box 633, Sauk City, WI 53583 Secretary-Treasurer............................................ Jason Bott Robertson-Ryan & Associates - 330 East Kilbourn Ave., Milwaukee, WI 53202 Chairman of the Board.................................. Steve Leitch Leitch Insurance - P.O. Box 85, River Falls, WI 54022 State National Director ................................Linda Steiner 2016-2017 Board of Directors Mike Ansay, Ansay & Associates 101 East Grand Ave. #11, Port Washington, WI 53704 Cindy Burns, Burns Insurance 500 South Central Ave., Marshfield, WI 54449 Gerald Couri, Couri Insurance 379 West Main Street, Waukesha, WI 53186 Jack Demski, Ansay & Associates 101 East Grand Ave. #11, Port Washington, WI 53074 Ryan McClone, McClone Agency 150 Main St. Suite 102, Menasha, WI 54952 Marc Petersen, American Advantage-Petersen Group 15171 W. National Ave., New Berlin, WI 53151 Jack Riesch, R&R Insurance Services P.O. Box 1610, Waukesha, WI 53187-1610 Pam Utpadel, Universal Insurance Advisors 100 West Lawrence St. Suite 313, Appleton, WI 54911 Darrel Zaleski, Spectrum Insurance Group 4233 Southtowne Drive, Eau Claire, WI 54701 WISCONSIN INDEPENDENT AGENT

2016-2017 Committee Chairs

> A DVERTISERS & INFORMATION AAA Wisconsin................................................. 30

Agency Services ............................................Kim Dandrea M3 Insurance - N19 W24200 Riverwood Dr., Waukesha, WI 53188

Acuity Insurance.............................................. 31

Automation/Technology ...............Cathleen Christensen Hierl Insurance - P.O. Box 949, Fond du Lac, WI 549360949

Badger Mutual................................................. 25

Emerging Leaders ...........................................Jack Demski Ansay & Associates - 101 East Grand Ave. #11, Port Washington, WI 53074 Employee Benefits.......................................... Mike Farrell David Insurance - 1300 South Green Bay Rd., Racine, WI 53406

AMTrust North America..................................... 8 Berkshire Hathaway/Guard.............................. 14 Burns & Wilcox.................................................. 4 ePayPolicy ...................................................... 15 EMC Insurance.................................................. 12 IIAW Prelicensing Classes.................................18

Government Affairs .......................................Skip Hansen Diversified Insurance Solutions - 100 North Corporate Drive #100 Brookfield, WI 53045

IIAW Online CE................................................. 22

Carrier Relations ......................................... Kevin Murray Johnson Insurance Services - 525 Junction Road, Madison, WI 53717

Pekin Insurance............................................... 25

Marketing & Membership Development .......... Jeff Thiel R&R Insurance Services - P.O. Box 1610, Waukesha, WI 53187-1610 Technical...............................................Timothy Kakuska Robertson-Ryan & Associates - P.O. Box 547, La Crosse, WI 54602-0547

ProtectYourAgency.com.....................Back Cover Robertson Ryan & Associates............................11 The IMT Group.................................................. 21 West Bend......................................................... 2 Western National............................................... 6 Wilson Mutual/Motorists Insurance Group......... 9 AUGUST 2017 | 3

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OPEN DOOR POLICY

FLEXING OUR POLITICAL MUSCLE: REFORMING CERTIFICATES OF INSURANCE STATUTES For years—recently with increasing frequency—agents have been asked by third parties to issue certificates of insurance that include information beyond (and potentially inconsistent with) the terms of the policy of insurance represented by the certificate. These requests present a myriad of potential E&O problems for agents.

Traditionally, these requests typically have come from governmental entities, contractors, financial institutions and others who are additional insureds, certificate holders, or are otherwise interested in the coverage being provided under the relevant policy. Although certificates of insurance are not forms requiring OCI approval, the IIAW and others have consistently advised against modifying certificate forms, e.g., ACORD or ISO forms, as well as attempting to summarize complex cancellation provisions, exclusions or other terms within the confines of certificates of insurance.

In 2008, with the IIAW’s support, the Wisconsin Commissioner of Insurance issued a bulletin to all property and casualty insurers and agents regarding the use of certificates of insurance. At that time, the IIAW and OCI were confident that the bulletin would be helpful in stemming inappropriate requests to agents related to certificates of insurance, and that it would also protect agents by both educating them and deterring misconduct.

In 2011, the IIAW, again, engaged OCI on this issue out of concerns the bulletin was ineffective. As a result, language was added to statute that “no intermediary may provide a misleading certificate of insurance”. This modification allowed OCI to pursue sanctions or remedies for violating this section of the statute. IIAW Legal Counsel Josh Johanningmeier said in a 2011 memo, “The amendment to Section 628.34 is essentially a codification of the OCI’s 2008 bulletin, but serves as a stern reminder to agents that acceding to third party requests for certificates of insurance that deviate from industry standard forms or go beyond an accurate

summary of the policy may have dire consequences”.

At that time, the IIAW and OCI were again confident that the bulletin, combined with the small statutory change, would be helpful in stemming inappropriate requests to agents related to certificates of insurance, and that it would also protect agents by both educating them and deterring misconduct. Despite the OCI’s clear direction regarding certificates of insurance, inappropriate requests continue to mount.

As a result, the IIAW will pursue legislative action similar to what has been enacted in states such as Delaware, Indiana, Massachusetts, New Jersey, Ohio and Rhode Island. This legislative effort lead by the IIAW will seek to avoid opposition from financial institutions and contractors while working with the Professional Insurance Agents, National Association of Insurance and Financial Advisers and the Wisconsin Insurance Alliance.

Essentially, the legislation will prohibit a person from the following: (1) Prepare, issue, or request or require the issuance of a certificate of insurance that contains any false or misleading information concerning the policy of insurance referenced in the certificate of insurance.

(2) Prepare, issue, or request or require the issuance of a certificate of insurance that purports to affirmatively or negatively alter, amend, or extend the coverage provided by the policy of insurance referenced in the certificate of insurance.

(3) Alter or modify a certificate of insurance after issuance.

In addition, the commissioner of insurance will have the power to enforce the statute by a variety of mechanisms/actions available under Wisconsin law.

When similar legislation has passed in other states, the IIA state associations developed template letters that agents could use when they received a request for an improper certificate. The notice informs the requester that there is a state law that prohibits the issuance of a certificate of insurance that does not reflect the underlying policy, and it points out that anyone requesting such a certificate is also breaking the law and may result in a forfeiture.

We’ve found that the combination of a certificate statute and the use of such a template letter eliminates many of these requests and ends the back-and-forth between agents and third > Matt Banaszynski is parties that previously occurred. If our legislative the Executive Vice President of the efforts in Wisconsin prevail, the IIAW will draft a Independent Insurance similar document for our members to use.

Agents of Wisconsin.

Perhaps a third time’s a charm and we will for Contact him at matt@ iiaw.com. once and for all put this issue behind us!

WISCONSIN INDEPENDENT AGENT

AUGUST 2017 | 5

GOVERNMENT AFFAIRS

STATE WORKER’S COMPENSATION RATES TO DROP AGAIN The Wisconsin Office of the Commissioner of Insurance (OCI) announced last month approval of an overall 8.46% rate decrease for employer worker’s compensation premiums effective October 1, 2017 on all new and renewal policies. The news comes on the heels of a 3.19% overall drop in rates from the previous year and follows a national trend of decreasing rates in worker’s compensation.

Rate Level Change By Industry Group

Rate Level Change

Manufacturing

-9.28%

Contracting

-8.28%

Office & Clerical

-8.64%

Goods & Services

-8.83%

Miscellaneous

-6.45%

Overall

-8.46%

Over 70% of Wisconsin employers will see a rate decrease, according to the state Department of Workforce Development (DWD). Some industries like manufacturing, goods and services, office and clerical will see larger decreases, while others will see less.

The Wisconsin Compensation Rating Bureau (WCRB) is responsible for calculating worker’s compensation rates for the state of Wisconsin.

Their work is regulated by the Office of the Commissioner of Insurance. For those unfamiliar with the WCRB, it is a non-profit, non-governmental agency, established by statute in 1917 as a licensed rate service organization.

Each year, worker’s compensation insurance carriers participate in a WCRB financial data call. The loss and expense information received, combined with prior years financial results allows the WCRB and its independent actuaries to calculate a rate that will be adequate to cover existing and estimated future claims and expenses.

The WCRB consists of the Bureau itself and several functional committees. One of the committees is the Actuarial Subcommittee that presently consists of four stock and four non-stock insurer representatives. The subcommittee ensures that the selected ratemaking methodology, trends and expense provisions result in rate accuracy and integrity.

An actuary and one or more representatives of the OCI is also present at all actuarial subcommittee meetings to ensure the efficiency of communication between the WCRB and WISCONSIN INDEPENDENT AGENT

OCI as regulator.

Once a rate change is agreed upon, the new rate is referred to the WCRB’s Rating Committee for review. If the Rating Committee approves the rate filing, it is sent to the WCRB’s Governing Board (comprised of an equal number of stock and mutual insurer representatives, as well as two public members appointed by the Governor) for the final vote to approve or disapprove. If approved, the rate filing is sent to OCI for review and a final decision.

Despite rapidly rising medical costs in Worker’s Compensation, premium rates in Wisconsin over the last decade have remained stable with a 10-year average annual net premium change of minus .37 percent, according to the Department of Workforce Development (DWD). Interestingly enough, while medical costs have quickly risen, indemnity payments to injured workers has declined. A second consecutive rate decrease illustrates how out of line Wisconsin health care costs and payments for certain medical procedures are in the Worker’s Compensation system. An in-depth analysis conducted by the WCRB and presented to the Worker’s Compensation Advisory Council (WCAC) highlights this observation. The analysis was done through development of a database that captured prices paid under worker’s compensation from 2012 to 2015 for various medical services to injured workers. Some medical services such as knee surgery or carpal tunnel surgery were 600% or more of the Medicare rate. All the more reason to advance a fee-schedule proposal for medical

payments, but hard to convince policymakers to enact such reforms when overall rates are declining.

Unlike some other states, Wisconsin has a long history and reputation for a strong and vibrant Worker’s Compensation system.

Employers, working in partnership with the insurance industry, strive to ensure a safe work environment and favorable return-to-work program for their workforce. The result is a healthy, stable, predictable system that directly benefits employers, employees and insurers.

Wisconsin was the first state in the nation to have a constitutional Worker’s Compensation law starting in 1911. Under that law, employees receive no fault workplace injury coverage while employers receive workplace injury tort protection. Insurance costs are calculated by assigning employers into classification codes according to the level of risk associated with the work they perform. If an industry has lower accident costs overall, this is reflected in lower classification rates. Most employers in Wisconsin are required by law to have worker’s compensation insurance.

For more specific information on rate levels by business type and classification codes, go to www. wcrb.org.

> Misha Lee is Owner/ Founder of Lee Government Relations, LLC and lobbyist for the IIAW. Follow Lee Government Relations on Twitter@mishavlee.

AUGUST 2017 | 7

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TECHNOLOGY

WHAT’S YOUR GAME PLAN FOR INSURTECH? Over a year ago, Stephen O’Hearn, global insurance leader at PwC, predicted, “Insurtech will be a game changer for those who choose to embrace it.” Since then, the insurtech playing field has matured. Many insurers that have operated in the “good enough” zone are finding that it is no longer, well, good enough. The game has changed.

Whether you’re in underwriting, claims or exposure management or are a CIO, insurtech will have an impact on you. There’s no option to stay on the bench.

So, what’s your game plan?

Partnership is the way forward Right now, collaboration should be a part of everyone’s game plan — not just insurers, but everyone from commercial tech providers to managing agents and brokers. Insurance is a team sport and has been since its inception.

Insurtech will not change that; it will only amplify the need to partner — quickly. Who insurers pick as their partners to accelerate transformation matters, and the technology they employ to transform matters.

In the last year, talk of “disruption” has turned to talk of “collaboration” as the insurance community is realizing the fastest way forward is through partnerships. A more mature conversation is happening. Insurers are realizing the benefit — and speed — of leveraging what insurtechs have to offer.

Once labeled “disrupters,” insurtechs are now “enablers.” Fact is, the vast majority of insurtechs aren’t looking to oust incumbents.

They’re looking to find a niche where they can succeed and leverage the sheer scale

10 | AUGUST 2017

of their more established partners. As a recent InsurTech Bytes podcast observed, “Partnership is the way forward. Enablers are leading disruptors across the insurance sector, presenting an exciting opportunity for insurers to drive forward their digital transformation.

Insurtech has developed (largely) with a view toward partnership rather than disruption.”

New digital opportunities are opening up more choice for consumers and businesses alike — think Internet of Things (IOT), vehicle telematics and, especially, advanced data and analytics. As customer expectations grow, an insurer’s data and analytics will need to keep pace in an effort to drive competitive differentiation. This includes the ability to hasten and streamline the quote process, more accurately price risk and mitigate and respond to claims. Insurers recognize data and analytics as a leading insurtech priority and, like other digital transformation priorities, are looking to either VC opportunities or partner integrations to accomplish this. In fact, in a KPMG survey of insurance executives, 25% of respondents said they already had a VC unit set up to make investments in technology companies. And 37% said a VC unit was in the works. Likewise, these same insurers are looking for partnerships to help accelerate transformation; three-quarters of respondents

said they “will partner to gain access to new technology infrastructure.”

Still, while some insurers are clearly making plays toward making insurtech investments a priority, others are still on the bench. Only 39% of insurers believe they are harnessing digital technologies successfully. And one in five property and casualty (P&C) insurers do not apply advanced analytics for any function.

This last statistic is mind-blowing when you consider how intrinsic data and analytics is to insurance. So, what is holding a large percentage of insurers back from embracing digital transformation?

The gap between knowing and doing In a recent column, Denise Garth talks about the gap between “knowing and doing.” She writes, “Even though most companies know they should respond to key internal and external challenges to create promising growth opportunities — and more importantly to ensure survival — many are still only thinking about doing something, at best. Why is there a gap between knowing and doing?”

The gap exists because the list of challenges is long: legacy systems and processes, lack of budget and downright risk aversion.

Understanding where to start with digital transformation, and how, is critical for WISCONSIN INDEPENDENT AGENT

TECHNOLOGY First, “see over the horizon”

insurers that recognize the need to digitally transform. But the goal shouldn’t just be transformation. It should be to succeed — to lead and compete in ways that produce profitability, efficiency and innovation.

However you measure success, integrating insurtech — whether IOT, blockchain or advanced data and analytics — should achieve those goals.

But where to start?

Without doubt, insurtech is an epic climb. It’s not a bump in the road, it’s a mountain that will shape the future of the industry. If we’re to succeed, we must start climbing — only by doing can we compete and start shaping what’s next. However, you first must climb to the top and, as Jon Bidwell, former Chubb chief innovation officer and now SVP and underwriting transformation leader at QBE North America, put it, “see over the horizon.”

SpatialKey is insurtech, and even we’re not immune from the need to digitally evolve.

We’ve been providing geospatial insurance analytics since 2011, and we’re constantly evolving our own platform and product offerings to include the latest technology. Our role as an insight hub is to help shorten and

accelerate the transformation that’s necessary for insurers to remain competitive. But, at the same time, our insurance clients are recognizing that not all digital transformation has to be hard. Technology integrations can be swift and painless with the right partner.

What is hard about insurtech is making the right choices, making the right investments, prioritizing the right transformation initiatives, > Bret Stone is president collaborating with at Spatialkey. He’s the right partners. It’s passionate about solving insurers’ all a risk — but not analytic challenges and as big a risk as doing driving innovation nothing. There is no to market through well-designed analytics, option to stay on the workflow and expert bench. No one knows content. Before joining what’s over the next SpatialKey in 2012, he held analytic and horizon, but we all product management have an opportunity to roles at RMS, Willis Re shape it. and Allstate.

SNAP SHOT into a Top 100 Agency How we grew from 28 Producers to 95 Producers.

Q: What markets do you have?

Q: How does carrier contingency work?

A. As the largest independent agency in Wisconsin, RRA has strong carrier relationships. We offer over 45 CL, 20 PL and 45 EB carrier partners.

A. Producers can share in all contingencies. Because of our size, our contingent return is more predictable and stable to our Producers.

Q: Will I make more money?

Q: Do you have a solid perpetuation plan?

A. Yes, we offer one of the strongest returns to Producers. We pay all office costs including staff salaries.

A. Scaling back hours, retiring or planning for the unexpected should be a priority. We help connect Producers with similar interests and backgrounds to develop a buy/sell plan where they are comfortable.

Q: How can I maximize my time?

Q: What technology resources do you offer?

A. We handle staff management, HR, accounting, IT, rating, office management and other administrative details. This allows Producers to spend more time with their families or growing their book on their terms.

A. A dedicated IT department ensures technology resources are performing and the latest tools are being reviewed. We operate on Applied Epic and offer Zywave, AccuComp and HR Workplace Services.

Learn More: Gary Burton I gburton@robertsonryan.com I 800.258.0277 I RobertsonRyan.com WISCONSIN INDEPENDENT AGENT

AUGUST 2017 | 11

Your customers like working with a local agent to handle their insurance. We think you deserve the same kind of attention. That’s why EMC has a fully staffed branch office in your area — to respond quicker and with a greater understanding of your area’s needs. It’s just one of the many reasons you and your policyholders Count on EMC ®.

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www.emcins.com ©Copyright Employers Mutual Casualty Company 2017. All rights reserved.

INDUSTRY BUSINESS

THE RISE OF A NEW ERA OF

COMMERCIAL AND SPECIALTY INSURANCE When people hear about property and casualty (P&C) insurance, they often think of the highly-marketed personal lines brands like State Farm, Geico, Allstate, Progressive and others that dominate. The reality is that commercial lines have the edge in P&C dominance.

Market, 2015 P&C commercial lines direct written premium (DWP) was $295B, representing 50.6% of the total P&C market.

The Insurance Information Institute expects overall personal and commercial exposures to increase in the 4.0% to 4.5% range in 2017, but cautioned that continued soft rates in commercial lines could cause overall P&C premium growth to lag behind economic growth. These numbers reflect to a great extent the range of “traditional” P&C products that have been in the market for years or decades.

But disruption and change is reshaping industries and the businesses within them that use “traditional” P&C products. It is creating both challenges and opportunities. As a challenge, just consider insurers with personal and commercial auto. Pundits are predicting a rapid decline in personal auto premiums and questioning the viability of both personal and commercial auto due to the emergence and adoption of autonomous technologies and driverless vehicles, as well as the increasing use of alternative options (ride-sharing, public transportation, etc.).

Finding alternative growth strategies is “top of mind” for CEOs. Opportunities for alternative growth strategies can be captured from the disruption and change within commercial and specialty insurance. New risks, new markets, new customers, and the demand for new products and services may fill the gaps for those who are prepared.

Our new research, A New Age of Insurance: Growth Opportunities for Commercial and Specialty Insurance at a Time of Market Disruption, highlights how changing trends in demographics, customer behaviors, technology, data and market boundaries are creating a dramatic shift from traditional commercial and specialty products to the new, post-digital age products redefining the market of the future.

Growth Opportunities New technologies, demographics, behaviors, and more, will fuel the growth of new businesses and industries over the next 10 years. Many of these businesses will grow within completely new industry types, setting the stage for new insurance market expansion.

Commercial and specialty insurance provides a critical role to these businesses and the economy — protecting them from failure by assuming the risks inherent in the production and delivery of goods and services.

Industry statistics for the “traditional” commercial marketplace don’t yet reflect the potential growth from these new markets that may still need tra¬ditional insurance, but also may need new types of insurance. It is a diverse group that embraces new technologies, social shifts, demo¬graphic shifts, new economies, and more, focused on narrow segments that will increasingly demand niche, personalized products and services. Many do not fit neatly within pre-defined categories of risk and

products for insur¬ance, creating opportunities for new commercial insurance products and services.

Small and medium businesses are uniquely at the forefront of this change and at the center of new business creation, business transformation and growth in the economy. > By 2020, more than 60% of small businesses in the US will be owned by Millennials and Gen Xers — two groups that prefer to do as much as possible digitally. Furthermore, their views, behaviors and expectations are different than those of previous generations, and will be influenced by their own personal digital experiences. > The sharing/gig/on-demand economy is an example of the significant digitally-enabled changes in people’s behaviors and expectations that are redefining the nature of work, business models and risk profiles. > The rapid emergence of new technologies and the explosion of data are combining to create a magnified impact. Technology and data are making it easier and more profitable to reach, underwrite and service commercial and specialty market segments. In particular, insurers can > Denise Garth, SVP narrow and specialize - Strategic Marketing, various segments into Industry Relations and CONTINUED ON PAGE 29

WISCONSIN INDEPENDENT AGENT

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AUGUST 2017 | 13

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Austin-based company takes hassle out of payment collection The insurance industry is fast becoming an epicenter for technology change. From underwriting software to management systems, insurtech is transforming the way we do business.

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NEW ISO PROFESSIONAL LIABILITY FORM FILING Effective June 1, 2017, Insurance Services Office (ISO) introduced the new Miscellaneous Professional Liability Policy (MI 00 01) along with a multitude of endorsements. This is the first in a series of insurance programs designed to address the professional liability needs of various risk types.

These new forms are housed in Division Sixteen – Professional Liability – Other Than Medical of the ISO Commercial Lines Manual.

This first Miscellaneous Professional Liability filing was developed to provide professional liability coverage for various types of operations including: a Advertising Services a Answering Services/Call Center a Appraisal Services (Non-real Estate) a Career Counseling a Concierge Services a Corporate Trainer a Court Reporting a Document Preparation Services a Event Planners a Interior Designers (Non-structural) a Life Coaching Services a Notary Services a Paging Services a Photography Services a Printing Services a Private Investigator/Investigative Services a Process Servers a Resume Services/Consulting a Salon Services a Seminar Conductors a Staffing Agency a Tax Preparers a Tour Operators a Translating/Interpreting Services (Non-medical) a Translating/Interpreting Services (Medical) a Travel Agents a Tutoring Services a Not Otherwise Classified (NOC) When Not Otherwise Classified (NOC) is used, the MI 10 01 and the MI 10 03 endorsements allow the insured to specifically list one or more professional services intended to be covered. Services eligible for under NOC seem to be quite broad with a few specifically listed ineligible operations which include: Accountants, Agricultural professions, Architects, engineers or surveyors, Contractors, Insurance agents or brokers, Investment advisors, Lawyers, Medical professionals, and Real estate agents or brokers.

Some carriers may have their own lists of ineligible operations in addition to these business classes.

The Base Coverage Form Coverage is provided on a claims-made and reported basis, meaning that the claim must be made against the insured and reported to the insurer during the policy period or extended reporting period. The base policy is divided into 11 sections.

Section I extends coverage on a “pay on behalf” basis, in excess of any retention, when the insured is charged with a “wrongful act”

16 | AUGUST 2017

occurring after the retroactive date. A “wrongful act” is defined to mean any actual or alleged act, error, misstatement, misleading statement, omission, neglect, breach of duty committed, attempted, or allegedly committed or attempted solely in the performance of or the failure to perform “professional services.” The professional service covered by the policy is the service included in the policy’s declarations.

Section II addresses the Limit of Liability limiting the total amount of coverage for the policy period to the aggregate limit listed in the declarations. Individual claims are subject to the Each Claim Limit, also listed in the declarations. In the unendorsed form defense cost is within the coverage limits. Two defense limits endorsements are also available: Limit of Liability Amended – Additional Defense Costs Limits (MI 03 03): Allows for a specified amount of additional defense cost coverage if the aggregate limit has been exhausted. Until the aggregate is exhausted, defense is still within the limits; or Limit of Liability Amended – Defense Costs Outside Limit of Liability (MI 03 04): As the name suggests, defense costs do not reduce the available limit when this endorsement is attached.

Section III applies to Defense and Settlement. The policy states that the insurer has the right and duty to defend and as part of this right and duty can select defense counsel. However, the carrier’s right to select defense counsel can be altered by endorsement MI 04 01. This endorsement allows the insured to approve or disapprove the choice of counsel. When the MI 04 01 is attached, the MI 07 05 endorsement is attached placing specific conditions on the insured’s choice of counsel.

The insurance carrier’s duty to defend ends when the limit of insurance has been exhausted.

The Settlement provision gives the insurance carrier the right to negotiate and settle a claim, but only with the consent of the insured.

The Consent to Settle provision (often called the “hammer clause) states that if the insured does not settle, they become a 50 percent “coinsurer” on all amounts above the agreed to settlement amount and defense costs incurred after the date the settlement was agreed to by the injured party.

Essentially, if the insured refuses to settle, 50 percent of any damages awarded in addition to the agreed to settlement amount are the responsibility of the insured. Further, the insured must pay 50 percent of the defense costs incurred after the proposed settlement date.

Consider the following chart: Amount on Date Settlement Accepted

Amount Ultimately Paid

Insured’s Responsibility (Out of Pocket Cost) – 50%

Damages: $100,000

$180,000

$40,000

Defense: $60,000

$120,000

$60,000

The Consent to Settle “coinsurance” percentage can be altered (increased) by endorsement (MI 04 02). In the above example, if the coinsurance percentage is increased to 70 percent, the insured’s out-ofpocket costs drop to $42,000 from the $100,000 at 50 percent coinsurance.

Section IV details the retention, stating that only amounts in excess of the retention are paid by the carrier. Retention amounts are basically the first “layer” of protection and are borne solely by the insured.

WISCONSIN INDEPENDENT AGENT

VIRTUAL UNIVERSITY

Defense costs are subject to the retention only when defense is within the limits (as it is in the unendorsed form). If the MI 03 04 is attached, defense costs are not subject to the retention. The basic retention is $2,500, but can be lowered to $250 or increased to $1 million.

Section V, entitled “Related Claims,” states that all claims arising out of the same wrongful act or combination of interrelated wrongful acts are considered one claim and are thus subject to one retention (the good part) and one claim limit (the restrictive part). An interrelated wrongful act is defined to mean “all causally connected ‘wrongful acts’ arising out of the same or substantially the same facts, circumstances or allegations which are the subject of or the basis for any ‘claim.’”

Section VI details Coverage Enhancements. This provision includes: 1) Separate limits for the defense of Disciplinary and Licensing Proceedings and Subpoena Assistance; and 2) Up to $500 per day for loss of earnings for each insured person with an aggregate limit of $10,000. These payments do not reduce the Aggregate Limit of Liability and are not subject to a retention.

Section VII, entitled Coverage Extension, can be seen as a vicarious Who Is An Insured section. The form states, “Coverage shall be extended to ‘claims’ for ‘wrongful acts’ of an ‘insured person’ made against: a. The lawful spouse or domestic partner of such “insured person” solely by reason of such spouse or domestic partner’s status as a spouse or domestic partner, or such spouse or domestic partner’s ownership interest in property which the claimant seeks as recovery for an actual or alleged “wrongful act” of such “insured person” > Christopher J. Boggs, b. The estate, heirs, legal representatives or CPCU, ARM, ALCM, assigns of such “insured person” if they are LPCS, AAI, APA, CWCA, deceased, or the legal representatives or CRIS, AINS, joined the insurance industry assigns of such “insured person” if they are in 1990. He is the legally incompetent, insolvent or bankrupt; or Executive Director of the c. A trust of such “insured person” and any Independent Insurance legally approved trustees of such trust.”

Agents and Brokers of America (Big “I”) But note, coverage is not extended for those Virtual University. His listed individual acts, only for their vicarious current duties involve liability for the actions of the insured. researching, writing,

To complete the policy picture, Section and teaching property and casualty insurance VIII lists the 22 policy’s exclusions; the policy’s coverages and concepts Conditions are found in Section IX; and to Big “I” members and Extended Reporting Periods and the Run-Off others in the insurance industry.

Coverage Period are in Section X. The policy’s

final section, Section XI, defines specific terms.

A unique provision is the Run-Off Coverage Period in Section X. The insured has the option to purchase up to six years of “run-off” coverage in the event of a merger, consolidation or acquisition of the named insured or cessation of a subsidiary.

Loss Costs, Revenue Bands and Forms Loss costs are based on per $1,000 of revenue and drops as revenues increase. The revenue bands are: • $0 - $250,000 • $250,001 - $500,000 • $500,001 - $1,000,000 • $1,000,001 - $3,000,000 • $3,000,001 - $5,000,000 • $5,000,001 - $10,000,000 • $10,000,001- $15,000,000 • $15,000,001 - $25,000,000 • $25,000,001 - $50,000,000 • $50,000,001 - $100,000,000 • >$100,000,000 Premiums are developed by charging the rate of each band until the ultimate premium is reached. As an example, consider the method for developing the premium for an operation with $6,500,000 in revenues.

For this assumption, loss costs are fabricated and Risk Hazard Groups are ignored (there are five risk hazard groups ranging from “Very Low Risk” to “Very High Risk”): Revenue Band

Loss Cost (Rate) Example

Example Premium

$0 - $250,000

$5.00

$1,250

$250,001 - $500,000

$4.00

$1,000

$500,001 - $1,000,000

$3.00

$1,500

$1,000,001 - $3,000,000

$2.00

$4,000

$3,000,001 - $5,000,000

$1.00

$2,000

$5,000,001 - $6,500,000

$0.50

$750

Total Premium

$10,500

Remember, these numbers are completed made up solely for the example; also, other key rating factors are not considered (such as hazard group, increased limits, deductibles, etc.).

In total, ISO introduced 82 policy forms and endorsements as part of this new filing.

The Virtual University is a Big “I” members-only resource. Many articles are based on real-life questions received by the Ask an Expert service. This service ensures that the information is current and topical. Go to www.independentagent.com/ Education/VU/. You will need to login with your IIABA username and password before using the VU. The IIAW and IIABA do not assume and have no responsibility for liability or damage which may result from the use of any of this information.

WISCONSIN INDEPENDENT AGENT

AUGUST 2017 | 17

2017 PRELICENSING CLASS SCHEDULE

Conducted at State Association Headquarters, IIAW prelicensing classes fulfill the study requirements for life, health, property and casualty. Full course materials — not just an outline — are included with registration. The classes are:

REGISTER AT IIAW.COM 2017 CLASS DATES L IFE & A CCIDENT /H EALTH

P ROPERTY & C ASUALTY

July 10-13

July 24-27

August 7-10

August 21-24

Sept. 11-14

Sept. 25-28

October 9-12

October 23-26

Nov. 6-9

Nov. 13-16

December 4-7

December 11-14

To register, click the Education tab on IIAW.com. For Wisconsin exam info, visit prometric.com.

CLASS SITE/DIRECTIONS

The IIAW is located at 725 John Nolen Dr. in Madison, WI. When traveling south on John Nolen, it’s the last driveway before Highway 12/18 (Beltline). Located near the Alliant Energy Center and Sheraton Hotel.

INCLEMENT WEATHER

If weather conditions are questionable, use your own judgment regarding your personal safety. If Madison public schools are closed, the IIAW is closed and prelicensing is canceled for the day. Canceled classes are made up on Friday.

HOTEL INFORMATION

Students requiring lodging will receive a special rate at the Clarion Suites, 2110 Rimrock Rd. in Madison. Please call the hotel directly at 608.284.1234, and ask for the independent insurance agent’s discount.

!Designed to help you pass your state licensing examination. !The quickest way to meet the Wisconsin education hours requirement. !Taught by experienced insurance professionals who know the business. !Conducted in a comfortable classroom with free parking. !Approved by the Office of the Commissioner of Insurance.

IIAW MEMBER PRICING: $340 - Pricing given for full class registrations.

NON-MEMBER PRICING: $355

You may also take individual classes.

DAILY SCHEDULE

Life & Accident/Health

Day 1 (Monday) 8:30 a.m. - 4:00 p.m. ($85) SECTION A: Principles of Insurance & General WI Ins. Law Ethics Day 2 (Tuesday) 8:30 a.m. - 4:00 p.m. ($90) SECTION B: Life Policies, Terms & Concepts Day 3 (Wednesday a.m.) 8:30 - 11:30 a.m. ($45) SECTION B: Life Policies, cont. & WI Life Insurance Law Day 3 (Wednesday p.m.) Noon - 4:00 p.m. ($45) SECTION B: Accident & Health Policies, Terms & Concepts Day 4 (Thursday) 8:30 a.m. - 4:00 p.m. ($90) SECTION B: Accident & Health, cont. & WI Health Insurance Law

Property & Casualty

Day 1 (Monday) 8:30 a.m. - 4:00 p.m. ($85) SECTION A: Principles of Insurance & General WI Ins. Law Ethics Day 2 (Tuesday) 8:30 a.m. - 4:00 p.m. ($90) SECTION B: Property Policies, Terms & Concepts Day 3 (Wednesday a.m.) 8:30 - 11:30 a.m. ($45) SECTION B: Property Policies, cont. & WI Property Insurance Law Day 3 (Wednesday p.m.) Noon - 4:00 p.m. ($45) SECTION B: Casualty Policies, Terms & Concepts Day 4 (Thursday) 8:30 a.m. - 4:00 p.m. ($90) SECTION B: Casualty Policies, cont. & WI Casualty Insurance Law ! Please contact Katie@IIAW.com for information about multiple registration discounts.

The course fee includes all class materials. Materials are distributed on the first day of class. You receive: • The Life & Accident/Health or Prop. & Casualty Insurance Study Manual.

• The Intermediary’s Guide to Wisconsin Insurance Law. • The State of Wisconsin Ins. Licensing Candidate Handbook.

This provides all the necessary information to obtain a license.

ERRORS & OMISSIONS

WHEN GOOD THINGS HAPPEN TO GOOD AGENTS

Let me tell you a little story. Its Monday, December 21, and an agency owner, let’s call him Bob, is trying to get things wrapped up before the holidays so he can be ready for a nice vacation and he’ll be back after the first of the year.

At about 3:00 pm his administrative assistant tells them he has a call from someone named Frank. He asks who Frank is and she says she doesn’t know. Thinking it might be one of his old college buddies, he takes the call. Frank says hi, he’s an attorney and he wants to talk to Bob about Kenny, a former insurance customer of Bob’s. Frank tells him that they have a trial starting on December 28 and he wants to discuss Kenny with him.

Immediately, Bob’s heart sinks and things start to race through his mind: Will his vacation be ruined? But one thing pops into his mind that he remembers from a Swiss Re loss control seminar he went to a few months earlier. The instructor said “If an attorney calls you and wants to talk, remember, unless he’s YOUR attorney, he’s not your friend. And you DON’T have to talk to him. Instead, ask him what he wants to talk about and don’t volunteer any information. Instead, politely tell him you

can’t talk to him and IMMEDIATELY call the claims department at Swiss Re or your E&O carrier.” Bob knows that Kenny has always been a problem customer (late premium payments, unreasonable requests, failing to report changes, etc.). What does this lawyer want? Why is he calling ME????

So Bob told Frank the lawyer, “I’m sorry, but I can’t talk to you about Kenny” and hangs up. He immediately calls his state E&O administrator who gives him the number for the Swiss Re claims department. Bob calls and speaks with one of Swiss Re’s professional claims staff, Jim, who goes over everything with Bob, and Jim tells him that if anyone calls him or if he receives any letters or documents, including a subpoena, to immediately call him. Sure enough, the next morning the attorney delivers a subpoena for him to testify at his deposition on Thursday, December 24. Merry Christmas!!!

Bob immediately calls Jim the claims handler who tells him to fax the subpoena to him right then, which Bob does. Suffice it to say, in the next two days, an attorney has been retained to represent Bob, the attorney contacts the attorney who issued the subpoena, they talk, the subpoena is withdrawn and Bob’s vacation is saved!

The key to this is not that Bob’s vacation was saved, (although that’s nice too,) but more importantly he remembered what he’d been taught at a Swiss Re/IIABA endorsed loss control seminar: that any time he is contacted by an anyone who wants to talk to him about one of his customers, unless it is his customer, he should assume that they are not wanting to help him and he should contact his E&O claims department. But be careful, if there has been a problem with your customer’s policy or a claim, and you receive a call from your customer, a representative from the insurance company or even someone from your state department of insurance, then you may want to call your E&O carrier’s claims staff to get some advice as well.

Here’s a few other examples of what happens when agents do the right thing: Agent receives a subpoena for his customer’s records.

He contacts his E&O claims department who contacts the attorney who issued the subpoena, asks what is they wanted, and determines they only want a copy of the customer’s policy. The claims handler obtains that from the agent and forwards it to the attorney.

CONTINUED ON PAGE 21

> Richard F. Lund, JD, is a VP and Sr Underwriter of Swiss Re/Westport, underwriting insurance agents errors and omissions coverage.

He has also been an insurance agents E&O claims counsel and has written and presented numerous E&O risk management/ loss control seminars, mock trials and articles nationwide since 1992.

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders. Copyright 2010 Swiss Re America Holding Corporation WISCONSIN INDEPENDENT AGENT

AUGUST 2017 | 19

SALES

WHAT PRICE ARE YOU PLACING ON YOURSELF? One of the most common frustrations I heard from insurance clients in my 15 years of insurance production was that the premium is too high.

If you are an insurance producer, you probably hear things like………

• “Can we get a better price?”

• “Can you do any better?”

or a lower price?

My guess is probably not.

Because most insurance producers don’t believe in the “real value” they are providing.

They don’t believe in their product or service, company, or the value enough to have the customer fully buy in.

Why don’t you ask them?

Most importantly, many insurance producers don’t put a high enough value on themselves.

Talk to them in person, on the phone, via email, hold a luncheon, or use social media.

Don’t send out some survey no one will complete. Just ask.

Starting today, make it a point to ask your customers what they value. Stop assuming what they want.

• “Why is it so expensive?”

• “Why did the price go up.”

• “That’s way too much.”

I have previously discussed why all salespeople need to focus on selling “real value” and quit playing the price game.

Let’s be real though. Our society loves to price shop. They want to feel like they are getting the “best deal.”

Here’s the good news. They also like to buy things.

There is nothing sexy or exciting about insurance, but that’s not why people want (or need) to buy insurance.

In a nutshell, people buy insurance because they don’t want to lose money they have earned……. period. They want to feel safe, secure, and confident you will be there at their time of need.

They don’t want to lose their property, their investments, their jewelry, their income, their business, or their livelihood.

If you sell your products or services like everyone else, you probably don’t have much value to offer anyway. That’s why you default back to price.

• Ask how you can best help them Insurance products can protect clients for thousands or even MILLIONS of dollars. Yet, it is often sold much like a basic item on a shelf (Thanks Flo.) If you are just getting a quote for someone, as in you are just collecting numbers and spitting them back out, you are no different from the other 15 agents in town. You are a commodity.

You have no differential value. If you are really lucky, you may write the business………until they find someone cheaper.

So How Can Insurance Agents Provide Value?

Value is an over used term and often is sold in terms of the seller and not the buyer.

So what kind of things should you offer?

Maybe that’s not exciting, but it sure seems important to me. Surely, buying insurance can’t just be about price? Of course not.

Before you start coming up with hundreds of items you think may be valuable to your customer, why don’t you take a step back for a minute and analyze the situation.

So why are insurance salespeople so quick to drop their proverbial pants to find a better deal

What do your customers really want?

Do you know?

20 | AUGUST 2017

Find out what they really want!

• Listen intently • Respond accordingly • Solve their problems.

Yes, there will be people who will say they just want a lower price, but you may be surprised at other (non-price) issues.

You have an opportunity to rise above the murky waters of the price game. You just need to ask, listen, respond, and then start working your tail off.

If you are looking to build stronger relationships with your prospects and clients, you need to stop convincing and start connecting.

Question: What value are you bringing to your clients?

> Brent Kelly is the co-founder and CEO of BizzGrizz Marketing.

Brent is a featured speaker at the 2016 IIAW Annual Convention.

WISCONSIN INDEPENDENT AGENT

ERRORS & OMISSIONS

WHEN GOOD THINGS HAPPEN TO GOOD AGENTS CONTINUED FROM PAGE 19

Agent receives a call from the carrier for a policy of a former customer of the agent and they want to see his file. Agent asks why and they tell him there is a question about the information that was contained in the application. They tell the agent they just want to help him. The agent hangs up and immediately contacts his E&O claims department and the claims handler calls the carrier and asks specifically what information they want. They say they don’t know of anything in particular, they just want to see the agent’s file to see if they find anything in his notes. The claims handler tells them that if they can tell her anything specifically, they’ll see what they locate, but unless they have a specific request, they can’t provide anything.

They never hear back from the carrier.

Agent receives a call from an upset former customer who has a claim that was denied by the carrier because the policy expired due to

non-payment of the premium. The customer tells the agent their going to sue them and hangs up. The agent immediately contacts his E&O claims department, they discuss what happened and the claims handler asks if the agent has any documentation about the cancellation. The agent says yes, he has a copy of the letter from the carrier notifying the customer of the cancellation. The claims handler helps the agent draft a letter to the customer and provides a copy of the cancellation notice. The agent sends the letter and the notice to the customer and the agent never hears from the customer again.

Agent receives a notice of complaint from the state department of insurance and contacts the Swiss Re claims department. The claims handler reviews the complaint, discusses it with the agent, contacts the DOI investigator and helps the agent prepare a formal response refuting the allegations in the complaint. In

BE WORRY FREE WITH IMT

some limited instances, an attorney is retained to help the agent respond to the complaint. In most cases, the complaints are resolved in the agent’s favor without further action. But if the complainant pursues it further including filing a lawsuit, the groundwork to defend the agent has already been laid. In each one of these cases, as soon as the agent was aware that there might be a problem that could lead to a claim the agent immediately contacted their E&O claims department. The claims department then gathered information from the agent and took steps to avert a claim. In many instances, by taking immediate action with the claims department before an actual lawsuit arises, the claim can be averted.

So you see, not all E&O claim situations end up bad. Many times, good things happen to good agents.

We understand the importance of partnerships and take great pride in building strong, stable relationships with our agents and policyholders. Through experienced claims expertise and hightouch customer service, we are there when we are needed most.

Learn how you can represent IMT Insurance & Wadena Insurance at imtins.com/contact_us.

imtins.com | west des moines, iowa WISCONSIN INDEPENDENT AGENT

AUGUST 2017 | 21

CONTINUING EDUCATION ABEN ONLINE CE CLASSES

IIAW ONLINE CE CLASSES

Insuring Condominiums 2 CE Credits Approved Date: August 16, 2017 Location: ABEN Online – iiaw.aben.tv Time: 9:00 – 11:00 AM

Income After Retirement: Where Does the Money Come From?

3 CE Credits Approved Date: August 7, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM Workers Compensation 3 CE Credits Approved Date: August 14, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM E&O: Roadmap to Policy Analysis, Part 1 3 CE Credits Approved Date: August 15, 2017 Location: IIAW Webinar – iiaw.com/events Time: 8:00 – 11:00 AM E&O: Roadmap to Policy Analysis, Part 2 3 CE Credits Approved Date: August 15, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM Cyber Liability 3 CE Credits Approved Date: August 17, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM

Data Privacy 2 CE Credits Approved Date: August 18, 2017 Location: ABEN Online – iiaw.aben.tv Time: 10:00 AM – 12:00 PM CDT Long Term Care 2 CE Credits Approved Date: September 21, 2017 Location: ABEN Online – iiaw.aben.tv Time: 8:00 AM – 10:00 PM Commercial Lines Claims that Cause Problems 2 CE Credits Approved Date: September 21, 2017 Location: ABEN Online – iiaw.aben.tv Time: 8:00 AM – 10:00 PM

Reagan Consulting Guides to Training and Perpetuation Series No CE Video on Demand

Commercial Property Coverages 3 CE Credits Approved Date: August 21, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM When The Child Becomes The Parent- Aging Parents and Insurance Decisions 3 CE Credits Approved Date: August 22, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM

FFO OR RM MO OR REE C CLLAASSSSEESS AAN ND D TTO OR REEGGIISSTTEERR P PLLEEAASSEE G GO O TTO O IIAW.C CO OM M

AGENCY MANAGEMENT

HOW TO BUILD A POSITIVE CONVEYANCING BUSINESS CULTURE Over the last decade, the importance of creating a strong culture within your business has become much more prevalent in business practices.

According to Greg Besner (CEO, Culture IQ), there is a direct correlation between a strong, positive culture and employee retention and engagement. But how do get a positive business culture? Is it something that you can work on and can you introduce it to your business?

Besner believes it is a little bit of both. The first step to introducing or creating a positive workplace culture is to understand exactly what culture is. Many people believe that creating culture means spending money on bean bags, work parties or extravagant work trips. These things, of course, are all great things to do and are a great way to attract people to your company, but in the long term they contribute very little to overall job satisfaction and do not create a culture.

Creating a positive business culture means establishing an evolving set of collective beliefs, values and attitudes within a business.

Whilst there is no way to guarantee harmony among people in your organisation, having core values that people are expected to demonstrate in their work and the workplace can help align your employees. The values should be something that are in line with your brand’s image, purpose and aim. Just having WISCONSIN INDEPENDENT AGENT

core values is not enough to create culture, it is important that people practice the core values. Celebrating when people do something that represents the values of your business, is a fantastic way to solidify and encourage people to continue to uphold them.

Similarly having both long term and short term business goals that are communicated to the entire business is another step you can take towards implementing a positive culture. When creating the goals make sure they are both achievable and realistic.

If your people can’t achieve their goals it becomes demoralising and has the opposite effect on culture, as with the sense of failure surrounding them, job satisfaction decreases.

People who are working towards a common goal with similar direction will be more motivated to help and support those around them.

As well as implementing values and goals at a top level it is important to do small things to help create a positive culture. A regular morning tea is a great way of bringing staff together and getting them to engage with one another. It lets people get to know each other in a more relaxed and welcoming environment. Similarly, although it may seem

old fashioned, having an office sports team is another way to improve your culture. Whilst it is important to have barriers between personal life and work life, sports teams provide a space outside of the office where staff can come together and get to know one another. The structure of team sports means that people must learn to work with others, and although the environment is different, the importance of trusting each other and working towards a common goal mirrors the workplace environment.

Whilst the world keeps changing, one thing will always stay the same, if people enjoy what they do and where they do it, they will keep on doing it. Creating a positive workplace culture is something that will take time and needs to be revisited regularly.

If done right, with the goal of increasing employee satisfaction and creating a long-term culture, your people > Harriette Spork, will be able to work Marketing Coordinator and have fun. at Perfect Portal

AUGUST 2017 | 23

2017 LEADERSHIP CONFERENCE: ANOTHER SUCCESSFUL YEAR IN THE DELLS Approximately 85 attendees and guests came to the Great Wolf Lodge in Wisconsin Dells for the 2017 Leadership Conference.

The conference started on Wednesday, July 12 with a session on Loss Control in the 21st Century taught by Rich Durkee and Jonathan Flack of SECURA Insurance. Later that afternoon, all conference attendees enjoyed a reception at one of the Wilderness Resort’s waterpark cabanas.

On Thursday morning, after breakfast, the first session, Agency Principal Roundtable convened.

IIAW CEO Matt Banaszynski moderated a panel discussion with Mike Ansay, Doug Dittmann, and Eric Petersen. Topics that were discussed included technology, agency culture, recruiting talent and much more. Afterward, attendees heard from FBI Special Agent Byron Franz on defeating the cyber threat.

Later in the morning Keynote Speaker, Susan Finerty, adjunct faculty member at UW-Madison’s Center for Professional and Executive Development, talked to the group and explored how to influence without direct authority.

Liberty Mutual sponsored a poolside cabana for attendees and their families to network and enjoy some refreshments.

Thursday ended with a beautiful sunset dinner cruise.

On Friday, July 14, the final day of the conference, Derek Deprey

24 | AUGUST 2017

led his session, SHIFT- Move from Work-Life Balance to Work-Life Fusion. Derek, talked to the group about creating a lasting ID that you admire and respect and how to set the roadmap to greater career fulfillment.

Thank you to all the agency and company members and members of the Emerging Leaders Committee who made the Annual Leadership Conference a resounding success.

The Leadership Conference would not be possible without our great company sponsors: Exclusive Company Sponsors: AAA Wisconsin, ACUITY Insurance, Burns & Wilcox, Integrity Mutual, Liberty Mutual, Progressive Insurance, SECURA Insurance, Sentry Insurance, SFM Insurance, Society Insurance, The Hanover, The IMT Group, Travelers Insurance, West Bend Mutual and Wilson Mutual.

Fusion Small Group Activity

Fusion Back Massages

Partner Level Sponsors: Aflac, Amerisafe, Arlington/Roe & Co., Austin Mutual, Auto-Owners Insurance, CNA Insurance, EMC Insurance, Madison Mutual, Partners Mutual, Philadelphia Insurance, QBE, Wisconsin Mutual, WPS Health Solutions and Zurich Insurance.

Fusion Small Group Photo WISCONSIN INDEPENDENT AGENT

Since 1887, Badger Mutual has been the insurance company independent agents and policyholders can trust. Now, with our new TRUST Auto and Home plans, policyholders are receiving contemporary, broad coverages at our best rates.

Visit our website to quote your customer in the TRUST program today!

Wisconsin STRONG Since 1931 Partners Mutual Insurance Company has built lasting relationships with independent agents across the state. We are committed to the independent agency system as the only means to deliver our products and work hand-in-hand to help our agencies grow profitably.

For information about becoming a Partners Mutual Insurance Agent please contact Brian Martin at 262.432.3439; Martin.Brian@PartnersMutual.com; Mike Ottman at 262.432.3418; Ottman.Michael@PartnersMutual.com; or Charles Becker at Becker.Charles@PartnersMutual.com or 262.432.3484.

badgermutual.com 800/837-7833

Sometimes things are just clearly

BEYOND THE EXPECTED PMIC_3-75x4-875_WIA_FINAL.indd 1

®

12/13/2016 12:42:46 PM

.

Just like the way we connect with our insureds.

2505 Court Street Pekin, Illinois 61558 800-322-0160 Extension 2394 AUTO WISCONSIN INDEPENDENT AGENT

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AUGUST 2017 | 25

News Members in the

Steve Jaberg Named to Acuity Board of Directors

Steven J. Jaberg (Steve) is named to Acuity’s Board of Directors. Steve retired as CEO of the Benevolent Corporation Cedar Community after serving in that position for 25 years and working in the organization for 32 years. Cedar Community is a large not-for-profit retirement and healthcare community headquartered in West Bend, Wisconsin.

“It is a great responsibility and true honor to serve on the Acuity Board of Directors. Dedicated to its policyholders, agents, staff, and benefiting the wider community, Acuity has a rich tradition of service and quality. I will be joining a Board of Directors who have shown their intent to support, sustain, and continue to grow Acuity as an industry leader,” Steve said.

Steve is a Wisconsin native, having graduated from Sheboygan North High School. He received his Bachelor of Arts degree from the University of Wisconsin-Eau Claire and his Master of Science in Healthcare Administration from Cardinal Stritch University in Milwaukee.

Having served as Board President of LeadingAge Wisconsin, an association of not-for-profit senior retirement and healthcare headquartered in Madison, Wisconsin, Steve went on to serve two terms on the LeadingAge National Board of Directors in Washington, D.C. Active in local communities, Steve has served as President of the West Bend Rotary Club, on the Lakeland University Board, and on the National Exchange Bank Trust Board. He also received a scholarship, given by the Milwaukee Harvard Club, to study non-profit leadership.

Steve lives in Kohler with his wife, Susan, who is retired after serving for many years as Principal of the Kohler Public Elementary and Middle Schools.

Acuity, headquartered in Sheboygan, Wisconsin, is a property and casualty insurer that operates in 25 states, generates nearly $1.4 billion in revenue through 1,000 independent agencies, and manages over $4 billion in assets. Named one of the top 10 large companies to work for in America, Acuity employs over 1,200 people.

Mike Lappin Joins Valley Insurance Associates, a Vizance Company, as Partner and President Valley Insurance Associates, a Vizance Company, announced today that Mike Lappin is joining the company as Partner and President, effective July 11, 2017.

26 | AUGUST 2017

Since 1999, Lappin has been employed with Motorists Insurance Group, most recently serving as President of Wilson Mutual since 2013. Under Lappin’s direction, Wilson Mutual experienced increased revenue, while also improving a number of internal departments, furthering Wilson’s position as a leader in the insurance industry. At Valley Insurance Associates, Lappin plans to add additional associates to the team, and will also be exploring further opportunities for mergers and acquisitions.

“I am delighted to partner with the team at Valley Insurance Associates and Vizance,” said Lappin. “This is a dynamic organization that has successfully evolved to meet the needs of an ever-changing business environment, and the values and vision of this company are in complete alignment with mine. This role provides the ideal leadership opportunity to merge my passion for insurance with my track record of robust business growth.”

Jeff Cardenas, President of Vizance, echoed Lappin’s thoughts: “We are thrilled to welcome Mike to the team. His outstanding character and values, combined with his proven success in helping Wilson Mutual grow over time, indicate that he will provide the leadership that is needed to sustain our rapid organic growth rate. We will also continue to look at opportunities to acquire agencies that fit with our culture and strengthen our service offerings.”

Valley Insurance Associates offers business insurance, home and auto insurance, employee benefits and individual health insurance, including Medicare. Services such as safety, risk management, compliance services and wellness programs are provided to its business clients and will continue to be enhanced. Valley Insurance Associates has office locations in Appleton, Oshkosh, Green Bay and Kaukauna.

Vizance, founded in 1978 and based in Hartland, Wisconsin, is a privately-held independent agency offering a broad portfolio of insurance, risk management, employee benefits and financial service solutions for businesses and individuals. The agency was recently named as one of the area’s “Fastest Growing Firms” and “Best Places to Work” by the Milwaukee Business Journal. The Metropolitan Milwaukee Association of Commerce appointed Vizance to its “Future 50” list and the Milwaukee Journal Sentinel listed Vizance as a “Top Workplace.” The agency also received the Ethics award, which reflected the associates’ belief that the company operates by strong values and ethics.

Valley Insurance Associates joined Vizance on March 1, 2017. Vizance plans to continue growing through mergers and acquisitions, and is seeking other partner agencies.

Wisconsin’s Church Mutual: Outlook Upgraded; Sensor Technology Recognized Merrill, Wis.-based Church Mutual Insurance Co. and its subsidiaries CM Vantage Specialty Insurance Co. and CM Regent Insurance Co. have earned a “positive” outlook for long-term issuer credit rating by A.M. Best.

A.M. Best upgraded the long-term issuer credit rating to “positive” from “stable,” and has affirmed the Church Mutual family of companies’ financial strength rating of “A” (excellent) and the longterm issuer credit rating of “a.”

WISCONSIN INDEPENDENT AGENT

Church Mutual also announced that the company has been recognized by the National Association of Mutual Insurance Companies, or NAMIC, for its entrepreneurialism and innovation with its Internet of Things (IoT) technology.

The A.M. Best revised credit rating outlook reflects Church Mutual’s strong risk-adjusted capitalization, according to A.M. Best. It further reflects the company’s consistent underwriting and operating results, customer-focused market strategy and well-developed enterprise risk management capabilities.

In announcing the rating upgrade, A.M. Best noted that it anticipates continued favorable operating results from Church Mutual and its subsidiaries based on their diversification and expanded product suite.

The commercial property and liability insurer received the Award in Innovation by the National Association of Mutual Insurance Companies, or NAMIC, for its Sensor Technology Program. This is the second award for innovation that Church Mutual has received this year for the sensor technology. In April, Church Mutual earned the Celent Model Insurer award.

NAMIC’s Award in Innovation was created in 2014 to recognize mutual insurers that exemplify the vision and entrepreneurialism it takes to stay relevant in changing times. Whether the ideas are big or small, each innovation is crucial to keeping the insurance industry strong and stable for the future.

Church Mutual’s Sensor Technology Program offers customers year-round protection using temperature and water sensors setup in vulnerable areas of a building or in areas where priceless and often irreplaceable items are stored. The sensors are monitored remotely 24/7, so no one has to be on the premises. Alerts are sent by text message, email or phone to one or several contacts if a temperature or water sensor relays a low temperature or presence of water reading.

The Sensor Technology Program was launched in late 2016. There are more than 2,500 houses of worship nationwide enrolled in the program.

Riesch family leads R&R Insurance to 42 years of steady growth When Ken Riesch someday closes out his long career as owner and president of Waukesha-based insurance agency R&R Insurance Services Inc., he doesn’t want anyone to notice.

He would rather the business carry on and continue to grow steadily, just as it has for the past four decades.

But when he does, Ken will leave the business in familiar hands— those of his children, Jack Riesch, Bryon Riesch and Stephanie Riesch-Knapp. All have followed in their father’s footsteps as employees of the family business.

“As an owner, my goal from a business standpoint is to, at some point, leave R&R Insurance and have no one really know that I’m not working anymore, which meant that we wanted to have the kids in a position where they really were 100 percent capable of WISCONSIN INDEPENDENT AGENT

managing the company—not only for our customers’ sake, but also for the insurance companies that we do business with,” Ken said.

Ken and Jack Riesch will present at the Family & Closely Held Business Summit, hosted by BizTimes Media on Wednesday, July 12, from 7 a.m. to 11:30 a.m. at Potawatomi Hotel & Casino.

R&R Insurance was founded in December 1975 by a group of five men, who purchased a small agency in North Prairie. Included in that group were Ken Riesch, his brother Dexter Riesch, and their father, Otis Riesch. Within a few years, the other two owners had sold their stock back to the agency for various reasons. R&R, by default, had become a family business.

When Otis Riesch died in 1987, Dexter and Ken became sole owners.

Three years later, Dexter also passed away.

“Those were some tough years from a family standpoint,” Ken reflected. “That left me being the only owner of any stock in R&R Insurance.”

By the time Ken had assumed full ownership, the business had grown substantially. R&R moved three times within North Prairie before moving to Brookfield and eventually landing at 1581 E. Racine Ave., Waukesha, which remains its home office today.

When R&R moved to Waukesha, the business was at about $4.2 million in revenue, or commission income. It’s steadily grown and, today, that number is about $35 million. The business has also expanded geographically, with offices in Menomonee Falls, West Bend, Beaver Dam, Madison and Oconomowoc.

By the end of 2019, R&R has a revenue goal of $42 million. Ken attributes much of the growth to its strategic investment in people.

“We invest a tremendous amount of money back into the agency in resources,” Ken said. “If you think of a manufacturer, a manufacturer is going to invest in tooling, hard equipment and physical assets. Our investment is in people … We have continued to hire the best and brightest people we can find in the insurance business.”

Some of those people have included his children. Jack Riesch is executive vice president of R&R, Bryon Riesch is project manager and Stephanie Riesch-Knapp is senior benefits consultant.

While they all ultimately ended up in the family business, they first worked elsewhere, getting their feet wet in the insurance business— Jack at CNA Financial Corp., Stephanie at West Bend Mutual Insurance Co. and Bryon at Northwestern Mutual Life Insurance Co. “The kids spent at a minimum three, and maybe as much as five years, working outside of the agency,” Ken said. “So when it came time for their next moves, I think they thought their dad was relatively successful and they should try to get involved with this business. And it’s worked. It’s not been easy, but it’s worked.”

Today, Ken owns 100 percent of R&R’s voting stock, while his three children are equal owners of the remaining stock.

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AUGUST 2017 | 27

six months this year, SIAA CEO Jim Masiello has announced.

News Members in the

CONTINUED FROM PREVIOUS PAGE

“Some business owners don’t have kids that want to follow in the footsteps of their mom or dad, so in some respects, I’ve been very fortunate,” Ken said.

Still, it presents a challenging—and looming—question: Who will take over the voting stock? The family is still working through that decision, he said.

“Signing 282 new member agencies in a six-month period is an incredible accomplishment and demonstrates, again, the strength of the SIAA model in all economic and insurance industry climates,” he said.

Among other things, those who join the group gain access to SIAA’s MarketFinder, an online portal where they can search for a “hard-toplace” piece of business. Members are also provided with regular training programs and business development materials.

SIAA is composed of 49 regional Master Agencies that develop the SIAA model within their exclusive territories.

“Since the inception of the business model in New England in 1983 (the founding Master Agency, SAN Group, was established then), SIAA and the Master Agencies have signed over 6,150 local independent agencies and ended 2016 with $6.6 billion in combined premiums,” said Masiello in an interview with MAPFRE published on SIAA’s website.

Startups and existing companies can join with SIAA, maintain full control of their own agency and get access to markets many smaller, local agencies have never had.

“Those are tough issues to have conversations around,” Ken said.

Meanwhile, the family has experienced its share of hardships over the years. In 1998, an accident left Bryon, then a 19-year-old freshman at Marquette University, paralyzed from the chest down.

In 2014, Ken’s son Michael died after a battle with esophageal cancer.

Difficult challenges for any family to weather, these events have also brought a certain resiliency to the family business.

“Every one of those happenings, every one of those tragedies, makes you reflect differently about the business and think differently about the future of the business,” Ken said. “It’s not sad; it isn’t woe-is-me. It’s life. And family businesses go through these trials and tribulations big time. Where we excel is in how to handle them in common sense ways. If you can get through the tragedy, you do have a lot of strength to move forward with. It does bring the family closer together.”

While his children play key roles in the business, he’s quick to acknowledge the important role of bringing in outside perspectives, as well.

“You will never hear me say, ‘The Rieschs run R&R Insurance,’” Ken said. “We always have had a significant management team that helped run and manage R&R Insurance. One of the reasons we’ve been able to grow is we’ve been able to hire people that are probably a lot smarter than we are, the Rieschs, but we’re really willing to invest in those types of people.”

“Our people are our greatest assets,” he added. “Without our people, we wouldn’t be where we are today.”

Insurance alliance adds 282 new independent agents The Strategic Insurance Agency Alliance (SIAA) added 282 new independent insurance agencies to its membership during the first

28 | AUGUST 2017

“The industry is changing rapidly—big is better and size matters,” Masiello previously told Insurance Business. “With the size and relationship we have with these well-branded companies, I don’t see the smaller guy making it on their own, especially with the changing distribution channels we’re looking at right now.”

2017 Ward’s 50 P&C Top Performers Announced Congratulations to all the Independent Agency Channel Companies that received this coveted recognition!

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Assurant, Inc. Auto-Owners Insurance Group Central Insurance Companies Chubb Group Church Mutual Insurance Company Cincinnati Insurance Group Farm Bureau of Michigan Group Insurance Co. Farm Bureau Property & Casualty Federated Mutual Group LTD First Insurance Company of Hawaii, FM Global Frankenmuth Insurance Franklin Mutual Insurance Group GEICO* Goodville Mutual Casualty Company Great American Insurance Group Grinnell Mutual Group HCC Insurance Holdings Group ICW Group Island Insurance Companies Jewelers Mutual Insurance Company Corp.

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INDUSTRY BUSINESS

THE RISE OF A NEW ERA OF

COMMERCIAL AND SPECIALTY INSURANCE CONTINUED FROM PAGE 13

new niches. In addition, the combination of technology and data is disrupting other industries, changing existing business models, and creating new businesses and risks that need new types of insurance. > New products can be deployed on demand, and industry boundaries are blurring.

Traditional insurance or new forms of insurance may be embedded in the purchase of products and services.

InsurTech is re-shaping this new digital world and disrupting the traditional insurance value chain for commercial and specialty insurance — fostering the creation of new products and new channels. They are already helping small business owners to find and purchase unique, specialty protection for a new era of business. Just consider InsurTech Startups like Embroker, Next Insurance, Ask Kodiak, CoverWallet, Splice, and others.

Not being left behind, traditional insurers are creating innovative business models for commercial and specialty insurance like Berkshire Hathaway with biBERK for direct to small business owners; Hiscox, which offers SBI products directly from its website; or American Family, which invested in AssureStart, now part of Homesite, a direct writer of SBI.

The Domino Effect We all likely played with dominoes in our childhood, setting them up in a row and seeing ‘hands on’ how we could orchestrate a chain reaction. Now, as adults, we are seeing and playing with dominoes at a much higher level. The domino effect, or chain reaction between events, is being played out in today’s fast-paced, ever-changing world. Every business has or will likely be impacted by a WISCONSIN INDEPENDENT AGENT

domino effect.

What is different in today’s business era, as opposed to even a decade ago, is that disruption in one industry has a much broader ripple effect that disrupts the risk landscape of multiple other industries and creates additional new risks. We are compelled to watch the chains created from inside and outside of insurance. Recognizing that this domino effect occurs is critical to developing appropriate new product plans that align to these shifts.

Just consider the following disrupted industries and then think about the disrupters and their casualties: Taxis and ridesharing (Lyft, Uber), movie rentals (Blockbuster) and streaming video (NetFlix), traditional retail (Sears and Macys) and online retail, enterprise systems (Siebel, Oracle) and cloud platforms (Salesforce and Workday), and book stores (Borders) and Amazon. And consider the continuing impact of Amazon with their announcement of acquiring Whole Foods last week and the significant drop in stock prices for traditional grocers. Many analysts noted that this is a game changer with massive innovative opportunities.

The transportation industry is at the front end of a massive domino-toppling event.

A report from RethinkX, The Disruption of Transportation and the Collapse of the InternalCombustion Vehicle and Oil Industries, notes that by 2030 (within 10 years of regulatory approval of autonomous vehicles (AVs)), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model called “transport-as-aservice” (TaaS). The TaaS disruption will have enormous implications across the automotive

industry, but also many other industries including public transportation, oil, auto repair shops, gas stations, and many others.

The result is that not just one industry could be disrupted … many could be affected by just one domino … autonomous vehicles. Auto insurance is in this chain of disruption.

And commercial insurance, because it is used by all businesses to provide risk protection, is also in the chain of all those businesses affected – a decline in number of business, decline in risk products needed, and decline in revenue. It will decimate traditional business, product and revenue models, while creating new growth opportunities for those bold enough to begin preparing for it today with different, unique risk products.

Transformation + Creativity = Opportunity Opportunity in insurance starts with transformation. New technologies will be enablers on the path to innovative ideas.

As the new age of insurance unfolds, insurers must recommit to their business transformation journey and avoid falling into an operational trap or resorting to traditional thinking. In this changing insurance market, new competitors don’t play by the traditional rules of the past. Insurers need to be a part of rewriting the rules for the future, because there is less risk when you write the new rules. One of those rules is diversification. Diversification is about building new products, exploring new markets, and taking new risks. The cost of ignoring this can be brutal. Insurers that can see the change and opportunity for commercial and specialty lines will set themselves apart from those that do not.

AUGUST 2017 | 29

FOOD FOR THOUGHT

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