August issue of the Wisconsin Independent Agent Magazine by Independent Insurance Agents of Wisconsin

wisconsin

INDEPENDENT AGENT AUGUST 2018

Don’t choose countless providers.

C hoose the one you can count on.

In an industry where an empty promise can be commonplace, EMC has been a reliable and trusted partner to our agents for more than 100 years. As true professionals, we treat all our agents with respect while reacting to their needs and giving them superior service and products that set them up for long-term success.

It’s a relationship you can always count on.

wisconsin

INDEPENDENT AGENT AUGUST 2018

Open Door Policy Association Health Insurance Plans – The Future of Health Insurance? . . . . . . . . . . 6 Sales 5 Steps for Effective Client Retention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Government Affairs State Panel Submits Final Report on Autonomous Vehicles . . . . . . . . . . . . . . . . . . . 13 Agency Operations Memorandum Regarding Texting with Clients and Sample Text Messaging Opt-In Form and Terms & Conditions. . . . . . . . . . . . . . 14 Technology Four Carriers Outline Strategic Tech Roadmaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Errors & Omissions The Value of Consistency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 From the Email Bag: Elderly Policyholders: What Do You Do When They Call You 20 Times a Year Asking For a Copy of Their Policy?. . . . . . . . . . . . . 19 Emerging Leaders Spotlight Ryan Leitch, Leitch Insurance Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Virtual University DOPE Excludes Stupidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Ask An Expert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Risky Business The Great Talent Search. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Employee Benefits Trump Administration Cuts Navigator Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Members in the News. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Food for Thought. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 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 2017-2018 Executive Committee President............................................................ Lise Meyer Meyer Insurance - P.O. Box 633, Sauk City, WI 53583 President-Elect.................................................... Jason Bott Robertson-Ryan & Associates - 330 East Kilbourn Ave., Milwaukee, WI 53202 Secretary-Treasurer......................................Chris Costakis Avid Risk Solutions- 2501 Parmenter Street, Ste 200A Middleton, WI 53562 Chairman of the Board................................. Matt Weimer Diversified Insurance Solutions - 100 North Corporate Dr., #100, Brookfield, WI 53045 State National Director ................................Steve Leitch Leitch Insurance - P.O. Box 85, River Falls, WI 54022 2017-2018 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 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 Chad Tisonik, HNI 16805 W Cleveland Ave, New Berlin, WI 53151 Pam Utpadel, Universal Insurance Advisors 100 West Lawrence St. Suite 313, Appleton, WI 54911 Ryan Waite, Neckerman Insurance Services 6200 Mineral Point Road Madison, Wisconsin 53705 Darrel Zaleski, Spectrum Insurance Group 4233 Southtowne Drive, Eau Claire, WI 54701

WISCONSIN INDEPENDENT AGENT

On The Cover… The Trump administration has expanded access to association health care plans, a move that’s meant to decrease health insurance costs. What the new rule does is broaden who can join these plans, and exempts a larger number of them from meeting requirements established by the Affordable Care Act for comprehensive insurance. The IIAW is currently exploring the option of offering an Association Health Insurance Plan to its members and their employees to be available starting November 1, 2018. The Open Door Policy column this month seeks to provide additional information and insight into Association Health Insurance Plans.

> A DVERTISERS & INFORMATION

2017-2018 Committee Chairs

AAA Wisconsin................................................. 30

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

AM Trust........................................................... 12 Badger Mutual.................................................. 21

Automation/Technology ...............Cathleen Christensen Hierl Insurance - P.O. Box 949, Fond du Lac, WI 54936

Berkshire Hathaway/Guard............................. 23

Emerging Leaders ..........................................Ryan Waite Neckerman Insurance Services - 6200 Mineral Point Road Madison, WI 53705

EMC................................................................... 2

Employee Benefits.......................................... Mike Farrell David Insurance - 1300 South Green Bay Rd Racine, WI 53406

IIAW Pre-licensing Classes............................... 17

IIAW CE . ........................................................... 8 Keystone Insurers Group................................. 20

Government Affairs .......................................Jeff Thiel R&R Insurance Services - P.O. Box 161 Waukesha, WI 53187

Partners Mutual............................................... 21

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

Risk Placement Services................................... 5

Marketing/Membership Development....Jamie Durocher Arlington Roe- 2 Carlson Parkway N., Suite 175 Plymouth, MN 55447 Technical...............................................Timothy Kakuska Robertson-Ryan & Associates - P.O. Box 547 La Crosse, WI 54602

ProtectYourAgency.com ................................. 25 Robertson Ryan & Associates.......................... 27 Society Insurance ............................................ 9 The IMT Group................................................. 22 West Bend........................................................ 31 Western National............................................... 4 Trusted Choice................................... back cover AUGUST 2018 | 3

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ASSOCIATION HEALTH INSURANCE PLANSTHE FUTURE OF HEALTH INSURANCE? Secretary of Labor Alexander Acosta proclaimed, “President Trump is expanding affordable health coverage options for America’s small businesses and their employees. Many of our laws make healthcare coverage more expensive for small businesses than large companies. Association Health Plans are about more choice, more access, and more coverage.”

On June 19, 2018, the U.S. Department of Labor expanded access to affordable health coverage options for America’s small businesses and their employees through Association Health Plans. Association Health Plans work by allowing small businesses, including self-employed workers, to band together by geography or industry to obtain healthcare coverage as if they were a single large employer. Association Health Plans will also be able to strengthen negotiating power with providers from larger risk pools and greater economies of scale. The Department of Labor expanded access to Association Health Plans as a result of President Donald J. Trump’s Executive Order “Promoting Healthcare Choice and Competition Across the United States.” The following was published by Morgan Tilleman and Jay Mark Waxman of Foley and Lardner titled Association Health Plans- The Final Rule is Issued. The authors do a fantastic job discussing

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the opportunity, the pivotal role state insurance commissioners will play and a synopsis of what the future might hold. As I looked to write my own article on it, I found this section of their article to be the best.

The Opportunity If the Final Rule survives legal challenge, there are a myriad of opportunities (and risks) for entities previously not able to obtain insurance as a part of a larger group under the existing rules may be able to participate in an AHP. Three examples may illustrate the scope of possibility. First, virtually any type of existing trade association should be able to meet the necessary associational and control requirements. Such an association would then be able to make a health plan product available to its members as a potentially profit making offering that may also help bind the members more tightly to the association. Second, hospitals and hospital based systems should be able to create an AHP

to offer health benefits to their aligned medical staffs. There certainly could be the necessary commonality of interest, and the captive insurers of such systems may be able to play a significant role in facilitating the necessary insurance relationships, as well as desirable stop loss coverage. And, properly structured, the reach of the fraud and abuse laws should be capable of being avoided. Third, a franchisor should be able to offer an AHP to its franchisees to enable those franchisees to offer health benefits to their employees. Such an arrangement could provide substantial benefits to franchisees, and make the offering franchisor a more attractive business proposition in the competitive franchise business marketplace.

The Role of the States Remains Pivotal Notwithstanding the desire of the administration to create a more flexible environment to allow small employers to take advantage of the new definitions to negotiate lower premium insurance, the WISCONSIN INDEPENDENT AGENT

OPEN DOOR POLICY

role of the States remains pivotal. As the DOL notes, the ERISA preemption rules are not changing. This means that there remains the potential for broad State insurance regulation, either through the health insurance issuers through which coverage is purchased, or directly in the case of self-insured AHPs. Thus: 1. A self-funded AHP is subject to state regulation, just like non-fully insured MEWAs are. Some states regulate them as insurance companies; other states take a somewhat less intrusive regulatory role; 2. The group itself may be unacceptable under State law; and 3. The type(s) of insurance that can be sold to the AHP can, and will, be regulated by the States. What this means is that, to a great extent, while the DOL has sanctioned a very broad expansion under ERISA, it will, in the main, look to the States for effective oversight. For example, the AHP’s ability to discriminate based on non-health factors is specifically called out as being subject to State regulation. Similarly, the States will be able to exercise authority to impose additional rating rules on fullyinsured AHPs. WISCONSIN INDEPENDENT AGENT

The Effective Dates The applicability date for fully-insured AHPs is set for September 1, 2018. For any employee benefit welfare plan that is not insured, the applicability date is January 1, 2019.

The Future How the AHP “alternative criteria” effort will unfold is an open question. In March, as the Proposed Rule was being considered, the Attorneys General of 17 States submitted a strong comment letter opposing key elements of the proposal. Shortly after the Final Rule was adopted, two of the signatories to that letter, New York and Massachusetts, immediately indicated their intent to file litigation to enjoin the Final Rule as inconsistent with the applicable statutory basis. Whether the other States who signed on to the joint comment letter will join, remains to be seen. Even if that lawsuit fails, state insurance regulators in many states will likely take actions to limit the scope of AHPs on the same or similar bases as those regulators have historically regulated or prohibited MEWAs. Finally, and perhaps most importantly, while cheaper coverage is clearly a

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THE IIAW IS CURRENTLY EXPLORING PUTTING TOGETHER AN ASSOCIATION HEALTH INSURANCE PLAN FOR ITS MEMBERS.

desirable goal, the ultimate impact on the insurance markets and the quality of insurance being offered remain open questions. For example, because AHPs will not be subject to the essential health benefits requirements, there may be an adverse selection impact across insurance markets that will create material problems for higher risk populations. This could leave small groups as a whole with reduced access to affordable health insurance. (END FOLEY & LARDNER ARTICLE) The IIAW is currently exploring putting together an Association Health Insurance Plan for its members. We are currently gathering information from our members in order to gauge interest and engage health insurance carriers in order to discuss the formation of a competitive association health insurance plan. If you or a member of your staff may be interested in this health insurance option or to learn more about Association Health Insurance Plans, please don’t hesitate to contact me for more information.

> Matt Banaszynski is the CEO of the Independent Insurance Agents of Wisconsin. Contact him at matt@iiaw.com.

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CONTINUING EDUCATION AUGUST ONLINE AND LOCATION CE CLASSES IIAW Webinar: Protecting Your Most Valuable Asset 3 CE Credits Approved Date: August 6, 2018 Location: IIAW Webinar - iiaw.com/events Time: 12:00 pm - 3:00 pm IIAW Webinar: Lying, Stealing, New Types of Fraud: The Importance of Crime Insurance 3 CE Credits Approved Date: August 7, 2018 Location: IIAW Webinar - iiaw.com/events Time: 12:00 pm - 3:00 pm IIAW Webinar: Insuring Technology Exposures Products, Property & Professional Liability 3 CE Credits Approved Date: August 7, 2018 Location: IIAW Webinar - iiaw.com/events Time: 8:00 am - 11:00 am IIAW Webinar: The Dirty Dozen 3 CE Credits Approved Date: August 8, 2018 Location: IIAW Webinar - iiaw.com/events Time: 8:00 am - 11:00 am IIAW Webinar: E&O: Roadmap to Policy Analysis - Part One 3 CE Credits Approved Date: August 9, 2018 Location: IIAW Webinar - iiaw.com/events Time: 8:00 am - 11:00 am

IIAW Webinar: Personal Auto Hot Topics... What You Need To Know 3 CE Credits Approved Date: August 14, 2018 Location: IIAW Webinar - iiaw.com/events Time: 12:00 pm - 3:00 pm IIAW Webinar: Cyber Liability Date: August 16, 2018 Location: IIAW Webinar - iiaw.com/events Time: 12:00 pm - 3:00 pm IIAW Webinar: Ethics - Walking a Straight Line 3 CE Credits Approved Date: August 20, 2018 Location: IIAW Webinar - iiaw.com/events Time: 12:00 pm - 3:00 pm IIAW Webinar: Commercial General Liability Coverages 3 CE Credits Approved Date: August 21, 2018 Location: IIAW Webinar - iiaw.com/events Time: 8:00 am - 11:00 am IIAW Webinar: Insuring Trusts - Protecting Your Client’s Wishes 3 CE Credits Approved Date: August 27, 2018 Location: IIAW Webinar - iiaw.com/events Time: 12:00 pm - 3:00 pm

IIAW Webinar: E&O: Roadmap to Policy Analysis - Part Two 3 CE Credits Approved Date: August 9, 2018 Location: IIAW Webinar - iiaw.com/events Time: 12:00 pm - 3:00 pm

E&O Risk Management: How To Manage Changing Risks and Opportunities 6 CE Credits Approved Date: August 28, 2018 Location: Brookfield, WI Time: 9:00 am - 4:00 pm

IIAW Webinar: Dispelling the Myths of Workers’ Compensation 3 CE Credits Approved Date: August 13, 2018 Location: IIAW Webinar - iiaw.com/events Time: 12:00 pm - 3:00 pm

IIAW Webinar: When The Child Becomes The Parent - Aging Parents and Insurance Decisions 3 CE Credits Approved Date: August 28, 2018 Location: IIAW Webinar - iiaw.com/events Time: 8:00 am - 11:00 am

FOR MORE CLASSES AND TO REGISTER PLEASE GO TO IIAW.COM

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5 STEPS FOR EFFECTIVE CLIENT RETENTION “Your Best Clients are your Competitions Best Prospects”

It’s easy to take for granted the things we value the most. This is especially true with relationships, including the relationships we have with our best insurance clients. In 1988, the long-haired, shrill sounding rock band, Cinderella, released the song, “Don’t know what you got until it’s gone.” If you are a fan of metal ballads from the 80’s this one will bring back memories. Although this song was about losing a lover, the message holds true for insurance agencies losing their top clients as well. Have you ever had a “lifetime” client that you assumed would

clients you want to keep. Is maintaining 100% of your top clients possible? Well, if you are like most agencies, the answer is no. However, if you are committed to providing a continuation process with exit barriers based on relationship management and risk advice, the answer is yes.

never leave, and then unexpectedly moved their business away from your agency? As an agency coach, I see this happen too often and I have also learned this the hard way from my own personal experience. Midway through my insurance production career, I wrote a $15,000 revenue account for several years. We had a good relationship (or at least I thought) and after a few renewal dates, I simply figured they would be a client for life. Then, one cold wintry day, I got back to my desk at the office to find a signed agent of record letter on my desk. My heart stopped, my face wrinkled, then I immediately got angry. “How could THEY do this to ME!” I exclaimed. After a week of pouting, the stark reality hit me upside the face. I didn’t earn their business. In fact, I took it for granted. I deserved to lose it. As insurance professionals, there are two things that should be your focus every single day; Relationships and Risk Advice. How are you developing and improving the relationships with your clients, especially your top clients, and what are you doing to help them control their true cost of risk? The top reason that insurance clients move their account to another agency is indifference. Not an egregious mistake or a premium increase, but most often, it’s simply indifference. At the Sitkins Network, we believe that the goal of every agency should be to achieve 100% effective retention on their best clients. Outside of businesses closing or merging, death, or any other factor outside of your control, your agency should maintain 100% of the

and less time stressing over renewal dates and pricing?

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Stop renewing accounts and start continuing relationships Most agencies focus on how they will renew accounts. What if your agency spent more time on building value-based relationships

5 Ways to Make the Renewal a Non-Event and Achieve 100% Effective Retention When we work directly with agencies, our goal is to make the renewal a non-event. The renewal is simply part of the continuation process, not a hair-raising event. So how can you achieve 100% effective retention and make the renewal a non-event? Here are 5 ways

Full Time Clients Only One of biggest mistakes we see agencies make is that they do not round-out their best accounts. Do you write all lines of your client’s business (personal lines, commercial lines, life, and benefits)? Why not? Even if the other lines of coverage are handled by a different department, your agency should still be the point of contact for all of their insurance needs. Every additional line of coverage you write for your clients multiplies the likelihood of retaining that account for multiple years. In fact, studies show that the average agency increases their five-year retention by 65% (from 27% to 92%) when they go from single line policies to four or more lines of insurance.

Proactive Client Touch Points The sad truth is that many agents do very little in terms of proactively contacting their clients. Every touch point is either an emotional withdrawal or a deposit with your clients. If your client’s WISCONSIN INDEPENDENT AGENT

SALES

only interaction with your agency is regarding billing, claims, or the upcoming renewal, you are sucking the life out of your most important relationships. I was recently speaking with an agency leader who said one of the most powerful and effective things he has ever done is to put a list of his top 20 clients in his desk drawer and make regular calls simply to check in to see how he can help and add value. Remember, if you aren’t making regular contact with your best clients, someone else is. Schedule and execute on specific proactive client touch points. This can be anything from a thank you, a friendly check in, a birthday, or holiday. There is no bad reason to touch base with your client if it is providing an emotional deposit.

Defined Continuation Process Could you imagine playing a game where the rules are made up as you go along? That’s what many agencies do with their clients. There is no defined outcome, schedule, or expectations. Therefore, at renewal time, instead of feeling confident that you have performed as expected to continue the relationship, you simply hope that the score will turn out in your favor. When I ask most agencies about their continuation (renewal) process, they start about 120 or 90 days from the renewal date. An effective continuation (renewal) process starts by understanding the client’s expectations up front. What are the rules we will play by? What do they expect from the agency? This needs to be defined up front. Does your agency have a defined service calendar for your client? Do you provide an annual stewardship report? Do you conduct annual risk reviews? Do you have a defined plan of how their account will be marketed in the future? These are just a few of the items that need to be discussed up front in your continuation process. Having no plan is a bad plan.

Member of Trusted Advisor Team Your best clients likely work closely with their attorneys, CPA, WISCONSIN INDEPENDENT AGENT

wealth manager, and banker. They are their trusted advisors. A vendor makes changes after the client has already made a financial decision, but a trusted advisor is contacted for advice before making a financial decision. As an insurance professional, you provide knowledge, insight, and advice that your clients can’t get anywhere else. That’s what makes you a professional. You need to position yourself as a member of your client’s financial team.

Becoming an Indispensable Resource The law of compensation states that your ability to get paid (and paid well) depends on three factors: 1) The need for your products/ services in the marketplace; 2) Your ability to deliver those products/services; and 3) the difficulty there is in replacing you. How difficult are you to replace? What do you offer or what can you offer to your top clients that no one else can provide? What makes you indispensable? This could come in the form of your risk analysis for a specific industry, your network of resources, your consistent communication, your community involvement, or your ongoing educational services. Only you can determine how to become indispensable, but when you find it, you clients could not imagine doing business with anyone else.

The Bottom Line 100% effective retention is possible. Yes, it may be more work up front, but when you implement these five strategies with your best clients, your relationships will be stronger, your referrals will increase, and your stress level will decrease. The goal is to have clients for life. We don’t want to churn clients. We want clients that are with us forever. Even a 1% to 2% increase in your retention can improve your agency’s overall profitability by 5% or 6%. Remember, your best clients are your competition’s best prospect. Handle with care. > Brent Kelly is an executive coach and speaker with the Sitkins Group. He helps agencies define a clear path to sell more, retain more, and earn more through the “ProFit Experience.” Contact Brent at brent@ sitkins.com or learn more about the programs Sitkins Group offers at www.sitkins.com.

AUGUST 2018 | 11

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GOVERNMENT AFFAIRS

STATE PANEL SUBMITS FINAL REPORT ON AUTONOMOUS VEHICLES Governor Scott Walker’s Steering Committee on Autonomous and Connected Vehicle Testing and Deployment submitted its final report on June 29, 2018. Over the last 9 months, the steering committee has been meeting regularly at the State Capitol to hear from industry experts and stakeholders about the impacts of the emergence of connected and autonomous vehicles (CAVs) in Wisconsin. The Governor created this special committee to recommend a coordinated effort on how Wisconsin can best advance testing and operation of autonomous and connected vehicles here. The committee was chaired by state Department of Transportation (WisDOT) Secretary Dave Ross and included Insurance Commissioner Ted Nickel, members from the legislature, public agencies, law enforcement, auto manufacturers, trucking, motorcycles and other sectors. The report to the Governor was the final action of the committee as required by the Governor’s Executive Order #245 issued in 2017. In summary, the report provides recommendations to meet the requirements of the executive order. One of the main recommendations is to remove and/ or amend state statutes and regulations that create obstacles to safe testing and distribution of CAVs in the state. Specifically, the report identifies current statutes that are potential barriers for CAV deployment. In addition, the report recommends that the legislature work towards authorizing a CAV testing framework and certain requirements to enable manufacturers to test on public roadways. Another recommendation is to create a more permanent working group to keep policymakers up-to-date on the WISCONSIN INDEPENDENT AGENT

latest CAV testing and deployment activity. The committee report provides details on CAV technology and highlights the rapid pace at which it continues to evolve. The expectation is that the working group will ensure a timely response to important CAV issues that arise and that the group can serve in an advisory capacity to both the Walker administration and Legislature. The report includes a list of short and long-term issues for the working group to consider.

The remaining three recommendations include a recognition of various reports from the U.S. Department of Transportation and American Association of Motor Vehicle Administrators regarding regulatory roles and CAV equipment standards; the promotion of Wisconsin as “Open for CAV Deployment”; and the engagement of strategic partnerships through the established working group.

The process to deploy CAVs in Wisconsin Another notable recommendation from and how this new technology is rapidly the steering committee identifies the evolving and changing our state’s Department of Transportation (WisDOT) transportation landscape will continue as the lead state agency for all CAV related to be a closely watched issue by the issues. The report identifies multiple Administration and Legislature for many future functions for WisDOT, including years to come. the development of a permit process for manufacturers to test and deploy CAVs Read the committee’s final report at: on public roadways. Also, the agency https://wisconsindot.gov/Documents/aboutcould consider additional licensing and wisdot/who-we-are/comm-couns/av-finaltraining for the operation of CAVs, modify report-062918.pdf vehicle registration requirements, manage infrastructure priorities, and manage the role See the committee member roster here: of the State Patrol. The report provides some https://wisconsindot.gov/Documents/ details on the role that other state agencies about-wisdot/who-we-are/comm-couns/avcould play in CAV deployment, including committee-roster.pdf the Office of the Commissioner of Insurance (OCI), Department of Administration (DOA), and Wisconsin Economic Development > Misha Lee, IIAW Lobbyist Corporation (WEDC).

AUGUST 2018 | 13

AGENCY OPERATIONS

MEMORANDUM REGARDING TEXTING WITH CLIENTS AND SAMPLE TEXT MESSAGING OPT-IN FORM AND TERMS & CONDITIONS In recent years, text messaging has moved quickly into the professional setting, providing independent agents with a quick and simple way to communicate with clients. The expansion of text messages to and from independent agents brings challenges along with the opportunities. The challenges include developing proper workflows and policies for text messaging, properly preserving text messages in the agency’s management system, potential E&O exposures related to text messaging, and meeting the legal requirements for text messaging. This memorandum focuses on just one of these challenges – i.e., how to meet the legal requirements for text messaging.

Why Does An Agency Need Clients to Opt In to Text Messaging and Need to Provide Text Messaging Terms and Conditions? An agency may ask why it needs clients to opt in to text messaging and needs text messaging terms and conditions, particularly if the agency communicates via text only with existing or prospective clients or only when initiated by the client or prospective client. The short answer is that the Federal Communications Commission (“FCC”) has broadly interpreted the Telephone Consumer Protection Act (“TCPA”) to regulate nearly all commercial text messaging (aka, short message service or SMS), including texts on any device that qualifies as an “automatic telephone dialing system” (ATDS) or autodialer. The FCC’s interpretation of the TCPA could potentially cover all commercial text messages sent on equipment that has the “potential ability” to dial numbers “without human intervention.” Because of such an expansive definition, using a platform that is merely capable of bulk messaging, such as an agent’s personal iPhone, might trigger the

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TCPA’s regulations even if the bulk messaging function is not used and messages are sent to one rather than multiple recipients. The D.C. Circuit recently questioned the FCC’s approach, expressing concern that the TCPA could “be read to render every smartphone an ATDS subject to the Act’s restrictions.” Although the D.C. Circuit struck down the FCC’s most recent guidance on the definition from 2015, the landscape remains murky. Additionally, unlike the rules for some other commercial communications, the FCC has ordered that an existing business relationship does not provide an exemption to the TCPA requirements of obtaining prior express written consent before sending commercial text messages. Moreover, the D.C. Circuit recently upheld the FCC’s determination that a consumer may revoke consent using “any reasonable manner that clearly expresses his or her desire not to receive further calls.” Therefore, even if an agency does not have any current plans to text with a particular client, it is strongly recommended that an agency require its clients to sign or decline an opt-in form at the beginning of the relationship, and ideally, each year thereafter. The need for opt-in renewals is discussed below.

What Must An Agency Do to Obtain and Renew the Client’s Prior Express Written Consent? An agent must obtain and renew the client’s prior express written consent before sending commercial text messages. The agency may obtain the client’s prior express written

WISCONSIN INDEPENDENT AGENT

AGENCY OPERATIONS

consent by providing the client with an opt-in form to sign and return to the agency if the client wants to communicate with the agency via text message. The opt-in form should refer to and include a copy of the terms and conditions applicable to the agency’s text messaging. Following the agency’s receipt of the signed opt-in form, the agency should send a text message asking the client to confirm or deny the client’s consent with a yes or no response. The agency should retain either a paper or electronic copy of all signed opt-in forms and a list of mobile numbers for clients that have opted in. Various products and vendors are available to streamline the optin process and to manage mass marketing via text message. Agents should also train their employees and independent producers not to text with any client or prospect, particularly mass marketing texts, until that individual has opted in. Although the TCPA does not expressly require agencies to renew the client’s prior express written consent, it is strongly recommended that agents renew consent by obtaining a new optin form annually – perhaps when the agency meets with the client to review coverages prior to renewal. This renewal of consent is strongly recommended because the TCPA may impose substantial fines on businesses that send commercial text messages without the consent of the individual using the mobile phone number. Sometimes mobile phone numbers are disconnected and reissued to a new consumer. The prior user’s consent is inapplicable when a mobile phone number is transferred to a new user. The TCPA provides a limited safe harbor of one text message after a transfer, even if the sender was unaware of the change in users. The FCC generally did not require a new user notify the sender before filing a complaint and seeking damages. The D.C. Circuit recently found that penalizing a caller “regardless of whether the caller has any awareness of the reassignment” was arbitrary and capricious. Since this ruling, the FCC has proposed creating one or more reassigned numbers databases for companies to use. Nevertheless, it would be prudent for companies to employ a robust opt-in process as part of their efforts to avoid contacting reassigned numbers given the uncertain regulatory environment.

Practical Considerations Many agents may ask whether the opt-in process and terms and conditions discussed in this Memorandum are necessary for text messaging directly related to a client’s account, especially when the client initiates the texting or has provided consent orally. Two comments for agents who might not consider compliance with the TCPA a high priority. First, the risk associated with mass marketing via text messaging can be substantial. An agency is wise to have a comprehensive opt-in process and terms and conditions WISCONSIN INDEPENDENT AGENT

if it engages in mass marketing via text messaging. Second, although TCPA compliance may be daunting at the outset, the agency may find it much easier if it is introduced as part of the agency’s intake and renewal processes. Agents are also encouraged to provide information about text messaging, including the agency’s opt-in form and the agency’s text messaging terms and conditions, in a prominent place on their website and in the “contact us” section of their website and social media pages.

Resources Made Available to Big “I” Members The Big “I” Office of General Counsel and the Agents Council for Technology are pleased to make available to members a sample opt-in formand sample terms and conditions for text messaging. The sample opt-in form is a one-page document that can be tailored to collect client consent to text messaging on a regular basis. The sample terms and conditions are longer and intended to be communicated to clients less regularly as they are geared more generally toward meeting the requirements of the federal Telephone Consumer Protection Act. Additionally, the sample terms and conditions contain other terms and conditions that may reduce the agent’s liability in the event of a claim relating to text messaging. It is our hope that agencies will find this memorandum and the sample opt-in form and terms and conditions to be useful tools when developing policies and procedures for text messaging or reviewing existing policies and procedures. However, two important points are in order. First, the sample terms and conditions concentrate on federal compliance issues relating to the TCPA and, of course, will not necessarily ensure compliance with all applicable laws and regulations, particularly on the state level. Therefore, agencies should review other applicable state laws and regulations – and consult with an attorney as needed – to ensure compliance. Second, agencies should review their own policies and practices to ensure consistency with the terms and conditions. In some cases, this review may show the need for changes to meet legal requirements; in other cases, the agency will have the discretion to decide whether to change its policies or practices, or whether to change the terms and conditions. At any rate, agencies must operate in conformity with the statements in the terms and conditions. The > A ny questions regarding this memorandum or the sample terms and conditions should be directed to Scott Kneeland or Ron Berg. absence of such This article/memorandum is not intended to provide specific advice about individual legal, business, or other questions. It conformity could was prepared solely as a guide and is not a recommendation lead to unwanted that a particular course of action be followed. If specific legal or other expert advice is required or desired, the services of an litigation or appropriate, competent professional, such as an attorney, should be sought xecutive coach and speaker with the Sitkins Group, enforcement activity Inc. At The Sitkins Network, we deliver proven agency results….. by state and federal simplified. This includes hands-on training and coaching with exclusive agencies in the areas of leadership, sales, service, and regulators. finance/administration.

AUGUST 2018 | 15

TECHNOLOGY

FOUR CARRIERS OUTLINE STRATEGIC TECH ROADMAPS The March ACT meeting featured a panel of carrier technology executives who addressed the difficult but necessary work in managing the customer experience – for agents and policyholders. The group included Greg Tacchetti, Chief Information and Strategy Officer with State Auto; Dan Goodwin, Business Architect, Nationwide; Miguel Edwards, VP of Strategy & Operations, Allstate Independent Agents; and Chris Ross, VP of Personal Insurance, Travelers. Here are selected comments:

Allstate Independent Agents

Greg Tacchetti, Chief Information and Strategy Officer for State Auto

“We serve the consumer in three channels. We spend a ton of time on customer experience. The challenge is when we need to develop technology on our own and expose that to our agents, but we are just one carrier out of maybe 20 in your office. Let’s think about how we can build industrywide solutions together that go beyond commission or claims download.”

“We’re transitioning to a more customerfacing strategy. We have a more mobile strategy; email is disappearing as a communications mode. We are racing to get ahead of that trend. We’ve done a lot to get our customer data cleaned up and straightened out so that they have one view to offer.”

“We’re investigating (the process of) sharing individual customer touchpoints; imagine when a policyholder calls our service center, you get a notification that your customer called us. But we need the help of service providers – the agency management systems – to seamlessly make that happen.”

“The work we’ve been doing in last few years has been around improving the sales process – whether you come to us via a comparative rater, management system or another way – we have it down to five minutes. We firmly believe in the choice model. We are going to be adding white-labeling capabilities, so if the client comes to you at your agency’s URL the client can pick whether to just get a quote or go through the product line.”

“We are providing digital tools so that customers can get things of value. The claims process, for example, is not where an agent can add as much value in the data collection. But it’s on the back end that the agent can add value by making sure people are taken care of. People can take photos of their car damage and send it in via an app. The value in the data collection can be invisible to the consumer.”

“Cyber is an area that keeps me up at night. You have to be really, really, really good – and you still might not be good enough. This is not being done by kids on a computer; this is organized crime by state actors. It’s the one thing that is major – a data reputation and risk issue.”

Dan Goodwin, Business Architect for Nationwide

Miguel Edwards, Vice President of Strategy and Operations for 16 | AUGUST 2018

“We need to support different people differently. For us the big key is, how do we preserve the three-legged stool [carrier, agent, insured]? H ow do we make independent agents more successful? For example, eDocs; it’s critical that we keep the agent in the loop on any conversation we have with the customer. Our Nationwide app does a great

job but so far, we are terrible at keeping the agent informed. If the customer chooses to come to us via a direct channel or a mobile app, that’s fine, yes – but it’s critical to keep the agent informed, whether it’s email, or messaging.” “We rolled out multi-factor authentication – agents say they don’t like it, but they do expect us to fully secure data. We’re taking a risk in ease-of-doing-business, being one of the first to do this.” “ACT is so important because we can come together and discuss trends and come out with solutions that work for everyone, instead of just for Nationwide.”

Chris Ross, Vice President of Personal Insurance for Travelers “We need to pay attention to external forces that are having an impact on us – like Amazon or Spotify. Consumers are coming into our site via a call center or via an independent agent. A lot of the insuretech deals lately have been around distribution – trying to take out the cost from the system. How do we keep the agent informed that the customer just came in and did something?” Ross shared how Travelers recently completed a five-year customer journey road map. “A 360-view of your customer sounds really simple, but in a big company it’s a challenge internally.” Additional comments were shared on carriers challenging themselves to not only develop an external customer- and agentfacing customer experience strategy, but also extending this internally to make employees’ workflows more streamlined. WISCONSIN INDEPENDENT AGENT

2018 PRE-LICENSING CLASS SCHEDULE REGISTER AT IIAW.COM CLASS SCHEDULE Life and Accident/Health

Property and Casualty

August 6-9

August 20-23

September 10-13

September 24-27

October 8-11

October 22-25

November 5-8

November 12-15

December 3-6

December 10-13

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

IIAW Member Pricing: $340 - Pricing given for full class registrations. Non-Member Pricing: $355 You may also take individual classes.

Conducted at State Association Headquarters, IIAW pre-licensing 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: • 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. 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

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.

Please contact Emma@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.

THE VALUE OF CONSISTENCY Establishing and teaching standard operating procedures Giving your employees clear direction on what actions they should take or not take in certain situations is essential. But establishing standard operating procedures at your agency is not enough— you must also properly train every staff member on them. Consider the following examples of errors & omissions claims that could have been avoided if the agency had established standard operating procedures and properly trained its employees: 1) Relaxing procedures when procuring coverage for a long-time client. A real estate investor who purchases new homes is a long-time client of an agency. He develops a good business relationship with one of the CSRs over many years. The CSR verbally agrees to procure coverage for any new home. After each closing, the client contacts the CSR to advise the agency about the newly acquired property. Because of their longstanding business relationship, the CSR does not require the client to complete or sign any applications regarding coverages.

18 | AUGUST 2018

The CSR abruptly leaves the agency before procuring coverage for three of the client’s newly acquired homes. The homes are damaged by Hurricane Irma, but it is not until afterwards that the client and the agency realize the CSR failed to procure the coverage as requested. As a result of the uninsured losses to his homes, the client files an E&O lawsuit against the agency. 2) Responding to a client’s text inquiry regarding insurance coverage. In the frenzy before Hurricane Irma makes landfall, an agency employee receives a text from a concerned client regarding coverages under their insurance policy. The employee is out of the office, so she does not have the opportunity to review the agency’s documentation and thoroughly investigate the client’s inquiry. In her desire to alleviate the client’s concerns because of the impending storm, the employee incorrectly advises the client that the policy will provide coverage for wind damage to their home. When the client’s claim is later denied, the employee realizes she provided the client with erroneous coverage information.

3) Failing to have a system in place to follow up on requested coverages. Within a few months, one manager unexpectedly leaves an agency and another manager becomes seriously ill. The agency tries to operate as best as it can, but the amount of work is overwhelming. One client had purchased a new vehicle and contacted the agency to add the vehicle to his policy. The agency submitted an auto policy change request, but the carrier required additional information and did not accept it. Because it is so shortstaffed, the agency failed to follow up on its request in a timely manner. When the client’s new vehicle is involved in a loss, the carrier denies coverage, and the client files an E&O claim against the agency. And remember: Every agency should consider modifying its standard operating procedures on an ongoing basis as new situations and new exposures arise.

> Kristina Miller is an assistant vice president and claims specialist with Swiss Re Corporate Solutions and works out of the Chicago office. Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas, a member of Swiss Re. WISCONSIN INDEPENDENT AGENT

ERRORS & OMMISSIONS

FROM THE EMAIL BAG:

ELDERLY POLICYHOLDERS: WHAT DO YOU DO WHEN THEY CALL YOU 20 TIMES A YEAR ASKING FOR A COPY OF THEIR POLICY? Establishing and teaching standard operating procedures

We recently received the following question from a Swiss Re Corporate Solutions insured agent: “We have many customers that are now in their 70s, 80s and 90s and are obviously not cognizant. What are the best procedures for us to follow for E&O” 1. The customer is obviously not cognizant (calls 20 times a day; repeatedly asks for copies of their policies – we have one that has asked maybe 20 times in the last year) and we DO NOT have a POA (Power of Attorney) from someone taking care of their affairs???? 2. We are presented with a POA from someone supposedly representing the customer??? 3. I know their son/daughter/relative, can I contact them and let them know there is a problem? These are interesting questions. With our aging society and more baby boomers living longer, sometimes without retaining all of their mental faculties, this is just one more issue that needs to be considered. Our natural human reaction is that we want to help this person and possibly contact their family or loved ones and let them know that you are concerned about their well-being. The problem is, this is first and foremost a business relationship, and you first need to consider it in those terms.

This may sound harsh, but because it is a business relationship, unless you have a Power of Attorney (POA) from them to discuss their affairs with someone else, you should not be discussing it with anyone other than them. However, this does not mean that you cannot discuss their coverage with someone else without a POA. If your customer has established a course of dealing with you where they have allowed a family member (usually a child, sibling or other close relative) to be part of your conversations with them, AND YOU HAVE DOCUMENTED IT IN WRITING, then you can continue to discuss their insurance with that person. HOWEVER, unless you have a POA giving that person authority to LEGALLY act on their behalf, you should not make any changes to the policy, including but not limited to: changing coverages or beneficiaries, adding or deleting parties, cancellation, or any other material changes. So, what if you are presented with a POA from someone who purports to act on behalf of your customer – should you accept it? Generally, the answer is yes, if the POA is properly authenticated under local state law (in most states, it would be notarized). Once you have verified their authority, document your file accordingly and proceed. Other situations could arise where the customer has been placed under a conservatorship or guardianship by a court,

and as long as you are provided with proper legal documentation from the court, you can act at the direction of the court appointed representative. The next option is that you could decide to no longer represent that customer for their insurance needs. This could be considered a drastic measure, but if you want to protect yourself from an E&O exposure, then that is certainly an option. If you choose this option, you should send written notification to the customer by certified mail with return receipt requested that you are no longer going to represent them for their insurance needs. This will ensure that you have documentation in your file that the letter was received. There is a sample “Disengagement Letter” you can adapt to your own use on the E&O Happens website (https://rms.iiaba.net/Prevention/Pages/ Procedures/Letters/default.aspx). Our aging society is creating new issues that may not have been fully considered in the past. So, when you are presented with this situation, and you follow these simple steps, you will help protect yourself from an E&O exposure and still provide the service your customers have come to expect. > Richard F. Lund, JD, is a Vice President and Senior Underwriter of Swiss Re Corporate Solutions, 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. WISCONSIN INDEPENDENT AGENT

AUGUST 2018 | 19

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EMERGING LEADER SPOTLIGHT Each month we will be featuring one of the active members of our Emerging Leaders Committee. Our August Emerging Leader is Ryan Leitch, Leitch Insurance Agency in River Falls, WI. Tell us your name and a little more about you: My name is Ryan Leitch and I work for the Leitch Insurance Agency in River Falls, WI. How long have you been on the Emerging Leaders committee? I’ve been active with the Emerging Leaders committee for about 4 years How did you hear about the Emerging Leaders Committee? Growing up in an insurance family, I’ve been aware of the group since I was a kid. I can remember way back when my father, Steve, used to be on the Young Agents Committee and attending events with him. Why did you choose to become active with the Emerging Leaders committee? I wanted to be active with the IIAW, and it seemed like the group within the association that was the best fit for me when I was starting out. I was familiar with some of the events and offerings associated with the Young Agents/Emerging Leaders and knew that I wanted to check them out myself.

(not just InsureTech) and Kathryn talked about emotional intelligence that was really introspective. Event wise, the PriSim event that the Emerging Leaders did just this past October was really fun. Why should a new agent join the EL committee? It’s a great way to get to meet other agents from around the state, and the events put on by the group offer unique opportunities to learn about the insurance industry that you wouldn’t get from attending CE classes or reading magazines. What is your spirit animal? Probably a lion…if nothing else, it rhymes with Ryan. Where is your favorite vacation spot? Maui, Hawaii Do you have any pets? No

What is your favorite EL event or activity that you’ve done with the EL group? Speaker wise, Artell Smith and Kathryn Jeffers from UW-Madison have given some fantastic talks at past Leadership Conferences. Artell gave a very insightful talk about new technology WISCONSIN INDEPENDENT AGENT

What is one professional goal for you in the next 3-5 years? Keep growing my book and continue to learn. Winning a golf tournament wouldn’t be bad, either.

AUGUST 2018 | 21

VIRTUAL UNIVERSITY

DOPE EXCLUDES STUPIDITY Departments of Insurance across the country are bracing for the introduction of new commercial property policy language promised by the newly-formed property insurance bureau the Dominion of Organized Property Exchanges (DOPE). Formed to promulgate rates and forms on behalf of many of the newly founded property insurance exchanges and currently operating group captive insurers, DOPE, like Lemonade, promises to bring new life to a rather boring and staid commercial property insurance industry. DOPE’s strict focus on property insurance allows it to analyze property losses “from every angle,” according to DOPE CEO Kermit DePhrog. DePhrog goes on to say that DOPE’s primary goal in developing its own commercial property policy language, “unlike any that has ever been used,” is to assure that members of exchanges and captives never experience a property loss payment, but rather benefit from both the tax write offs for the expenses associated with policy premiums coupled with the write offs allowed when uninsured losses are paid. A review of DOPE’s new policy language indicates that many traditional property

Please be sure to read this article to its conclusion...

coverages common to other rating organizations such as the Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS) are found in DOPE’s property form. However, there is one new, potentially game-changing exclusion standard in DOPE’s property form not found in any other forms the “Injudicious Act Exclusion.” “Our long research of and into commercial property claims proved what has long been expected within the insurance industry, namely that most commercial property losses are due to, well, human error,” said DOPE chief underwriting officer Waldorf N. Statler. DOPE’s goal, according to Statler, is to remove coverage for such causes. An example of a loss covered under old terminology but excluded under DOPE’s “Injudicious Acts Exclusion” is damage caused by fire resulting from an employee’s poor judgment or lack of experience. Essentially, this exclusion is designed to remove coverage for any action of any insured that fails to meet standards of intelligence. “Basically we want to exclude loss caused by stupidity,” said Statler. Reports are both ISO and AAIS are extremely

interested in this new exclusionary wording. “We want to see how the ‘Injudicious Acts Exclusion’ holds up in court before we begin the long process of filing the endorsement for our member carriers,” said one AAIS executive under condition of anonymity. “Courts may consider property policies with such provisions largely illusory.” ISO and AAIS both state that this so-called “stupidity exclusion” will undoubtedly result in much lower property rates. In fact, ISO calculates that property rates would likely be cut by more than half if injudicious acts could be excluded. “Our calculations are that stupidity doubles insurance rates,” according to the anonymous ISO executive. In case you haven’t guessed by now, this article a total fabrication. There is no such thing as the “Injudicious Acts” exclusion (but it would be fun to consider); and DOPE certainly doesn’t exist (well, not this version of dope). Don’t be upset with me, or even let down. Enjoy the weekend and remember to celebrate our independence and even our ability to do stupid things and still have insurance protection. > C hris Boggs, Virtual University

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 IIABA does not assume and has no responsibility for liability or damage which may result from the use of any of this information.

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ASK AN EXPERT

PAP Claim Denial Due to Wear and Tear I have a client insured under a standard ISO personal automobile policy (PAP). Comp and collision coverage is in place. Last week a heavy rain storm resulted in damage to the inside of the vehicle due to intrusion through the closed sun roof. The technician stated that the water entered the car because the drains around the sun roof were clogged. The insurance carrier denied the claim based on wear, tear and regular maintenance. I disagree with the company.

Look at the “wear and tear” exclusion. It should state the exclusion applies only to the wear and tear part of the loss and not to the consequential damage. If the brakes failed from lack of maintenance, the resulting damage when the insured hits the tree would still be covered. -----The things that are excluded are losses resulting from those things. If the seal around the glass wears out and needs to be replaced, the cost of replacement is excluded, but this loss is entirely different--it the result of an unusually heavy rainstorm, and that’s not excluded. This is the kind of stuff that makes us all look bad--the loss is covered and should be paid. If the adjuster can’t see that, escalate it to a supervisor. If that doesn’t work, mention the term “bad faith” in your next conversation. -----This loss is covered. Water damage is a listed comprehensive peril. The water was the cause of the loss, not the failure of the seals. The exclusion for wear, tear and maintenance normally is limited to excluding loss that is both “due” AND “confined to” wear and tear. Even if one could successfully argue the loss was caused by wear and tear, it was not limited to wear and tear. Otherwise the insurer could deny a claim where a poorly maintained bald tire blew and caused an accident totaling the car. A copy of the policy would be helpful as exclusionary language can vary. -----An ISO policy limits the “wear and tear” exclusion to damage “due and confined to” wear and tear. Because the drains were clogged, the water entered the vehicle, the damage is due to the water. It doesn’t sound like there was wear and tear on the drains, it sounds like they needed to be cleaned out. That might be maintenance, but the damage was confined to cleaning the drains. Let’s say the insured found out that the rubber seal around the sun roof was worn out, the policy would not replace the wornout item. However, if water seeped into the vehicle because of the worn-out seals, the damage is not “due and confined to” the worn-out rubber seals. A non-ISO policy might not have the “due and confined to” wording, check the exclusion. -----The company is wrong. See policy, emphasis added: 2. Damage due and confined to: a. Wear and tear; b. Freezing; c. Mechanical or electrical breakdown or failure; or

d. Road damage to tires. This Exclusion (2.) does not apply if the damage results from the total theft of “your covered auto” or any “non-owned auto”. -----I agree with you. Ask for reconsideration. -----Water damage is a covered peril. The loss itself was not due to wear and tear of the item damaged. It was due to water. The claim is not being filed for the item suffering the wear and tear. Pay the claim. -----The ISO form has no “regular maintenance” requirement for coverage. Wear and tear would apply to, for example, a seal that wore out allowing water to enter the vehicle…but, even so, it would apply only to the seal, not the resulting water damage. The water damage itself is the insurable loss and that’s no “wear and tear.” This is the ISO PAP exclusion: 2. Damage due and confined to: a. Wear and tear; b. Freezing; c. Mechanical or electrical breakdown or failure; or d. Road damage to tires. This Exclusion (2.) does not apply if the damage results from the total theft of “your covered auto” or any “non-owned auto”. Notice the “and confined to” language. Any damage that arises from wear and tear is covered…only the wear and tear itself (“confined to”) is excluded. There are several VU articles about this…search the VU for “due and confined to”. -----Excerpt from ISO PAP exclusion: 2. Damage due and confined to: a. Wear and tear; The exclusion only applies to the part that was worn out, not consequential damage (water entering). -----The carrier is misapplying the exclusionary wording. Resulting damage is covered; the only cost possibly excluded is to the weather stripping. Not sure where the idea of regular maintenance came from; but I’m sure from inexperience. -----This is another example of how a carrier doesn’t know how to interpret coverage in their own policy. This is not a wear and tear claim, it is a claim for damage from a leaking seal. Even though water damage may have been contributed by lack of maintenance or wear and tear, the exclusion does not apply to the resulting damage. The insured is not seeking damages for the seal, but the resulting damage. The exclusion is there to assure that the customer pays for their own vehicle maintenance (not the carrier). If an auto accident resulted from the fact that the insured vehicle had faulty brakes, the damage from the accident would still be paid, just not the brakes. In other words, the policy does not pay for a routine brake job or window seal that should be replaced, just the resulting damage.

24 | AUGUST 2018

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AUGUST 2018 | 25

RISKY BUSINESS

THE GREAT TALENT SEARCH

Stop banging your head and start changing how you think Whether or not you have an active job posting or are frustrated with the work ethic of a colleague, you are likely aware of the frustrations that come with finding and keeping talented and passionate employees within your organization. While the IIAW continues to seek out new resources on how to find and hire great talent, I thought I would share some of the helpful tips I have recently come across. 1. Utilize Social Media: It’s no secret that some people are better than others about taking advantage of platforms like LinkedIn and Facebook, but even if you are new to the social media scene, it’s in your best interest to utilize these sites for job postings and recruiting. With a minimal investment on LinkedIn, you can post your job, review applicants and find individuals who have the skills and experience that you’re looking for and proactively reach out to them. Plus, it’s a terrific way to review their experience, look at their endorsements and do additional screening before bringing them in for an interview. That’s time and money well spent! Also, don’t forget to post your job openings on your own LinkedIn and Facebook pages. You never know who is out there looking for a new opportunity. 2. Build Relationships with Colleges and Universities: Not only do these institutions have job boards for you to utilize, you can also try to speak to classrooms and build your brand with professionals who are about to be begin their own job search. Many universities also have student organizations who are always looking for speakers at their meetings or even internship opportunities. The insurance industry is an exciting place to be right now – let’s not keep it a secret! 3. Stay in-house: Don’t forget about the employees who you’ve already worked hard to find and keep. Do you already have the skills internally and can promote a current employee? You should also consider whether your employees know someone who might

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be a good fit for the organization. Before doing this, make sure you have a referral bonus program set up to incentivize employees to help you find the right person for the job. 4. Know Your Ideal Candidate: This might seem obvious, but when the competition for talent is fierce you need to know who you’re looking for. What are your must-have skills and what can you train? How important is organizational fit and their ability to “mesh” with the rest of your team? How much experience do they need to have versus how much you would like them to have? Once you have a clear picture of your needs and wants, you will be able to sort through candidates and conduct focused recruiting efforts. The late Steve Jobs of Apple stated, “Go after the cream of the cream. A small team of A+ players can run circles around a giant team of B and C players.” The data around productivity of high performance is staggering. Build the right team and you will get the results you are looking for. If you fail to focus on the risk of having low-performers in your business, you will see your competition surpass you and any good employees you may have acquired will quickly begin to look for greener pastures. So now that you’ve found the right employees, how do you keep them? Well, that’s another article for another day, but an important topic to discuss. Stay tuned for new resources, training and guidance from your partners at the IIAW and, as always, let us be your first call for all of your agency needs.

> Mallory Cornell is the Director of Risk Management for the Independent Insurance Agents of Wisconsin. WISCONSIN INDEPENDENT AGENT

EMPLOYEE BENEFITS

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