Wisconsin Independent Agent Magazine October Issue by Independent Insurance Agents of Wisconsin

wisconsin

INDEPENDENT AGENT OCTOBER 2018

OUR 2018-19 IIAW EXCLUSIVE COMPANY SPONSORS SEE PAGE 4

We push ourselves for you. Because you push yourself for them. For more about how Integrity can help you help your customers contact: Cathy Colรณn at 920-968-8326 or ccolon@imico.com integrityinsurance.com

wisconsin

INDEPENDENT AGENT OCTOBER 2018

IIAW Exclusive Company Sponsors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Insurance Bartender Insurance Bartender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Government Affairs Call to Action: Remember to Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

INTRODUCING On The Cover… OUR Privacy Compliance and Sample Website Privacy Notice. . . . . . . . . . . . . . . . . . . . . . 29 2018-2019 Agency Operations Commoditization: Who’s to Blame? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Six Ways to Improve Your Insurance Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Our Exclusive Company Sponsors provide

Risky Business A Friendly Reminder on Furnishing and Storing MVRs. . . . . . . . . . . . . . . . . . . . . . . . 35

significant support to the IIAW so that

IIAW EXCLUSIVE COMPANY SPONSORS

Errors & Omissions Crisis!!!! What to Do When you Don’t Know What to Do . . . . . . . . . . . . . . . . . . . . . . . 36 Employment Law Court Case Creates Uncertainty for Wellness Programs . . . . . . . . . . . . . . . . . . . . . . 37

we can continue to bring industry leading products, services and world-class events and resources to our members. We thank them for their continued partnership,

Emerging Leaders Spotlight Justin Staebler, Johnson Financial Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

involvement,

Commentary From Counsel Cyber Insecurity: When Crime Pays, and So Does the Insurer. . . . . . . . . . . . . . . . . . 38

learn about how these great companies and

Virtual University Ask An Expert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

and

support

the

independent agency channel! In this issue the IIAW are positioning the independent agency system for success.

Food for Thought. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 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 2018-2019 Executive Committee President............................................................ Jason Bott Robertson-Ryan & Associates - 330 East Kilbourn Ave., Milwaukee, WI 53202 President-Elect............................................. Chris Costakis Avid Risk Solutions- 2501 Parmenter Street, Ste 200A Middleton, WI 53562 Secretary-Treasurer......................................Darrel Zaleski Spectrum Insurance Group, 4233 Southtowne Drive, Eau Claire, WI 5470 Chairwoman of the Board.................................Lise Meyer Meyer Insurance Agency, Inc., P.O. Box 130, Sauk City, WI 53583 State National Director ................................Steve Leitch Leitch Insurance - P.O. Box 85, River Falls, WI 54022 2018-2019 Board of Directors Mike Ansay, Ansay & Associates, 101 East Grand Ave. #11, Port Washington, WI 53704 Nick Arnoldy Marshfield Insurance Agency, Inc., 208 West 5th Street Marshfield, WI 54449 Mike Harrison R&R Insurance Services, Inc., 1581 East Racine Avenue Waukesha, WI 53146 Dan Lau Robertson Ryan & Associates, Inc., 330 East Kilbourn Avenue Milwaukee, WI 53202 Aaron Marsh Marsh Insurance Services, Inc., 11 East Newton Street Rice Lake, WI 54868 Marc Petersen American Advantage - Petersen & Assoc., Inc. 14785 West National Ave. New Berlin, WI 53151 Joanne Lukas Szymaszek Johnson Insurance Services LLC 555 Main Street Racine, WI 53405 Chad Tisonik HNI Risk Services LLC P.O. Box 510187 New Berlin, WI 53151 Pam Utpadel Universal Insurance Advisors, Inc. 100 West Lawrence Street Appleton, WI 54911 WISCONSIN INDEPENDENT AGENT

2018-2019 Committee Chairs Agency Services............................................ Ruth Vorwald Johnson Insurance Services, 7401 144th Ave, Kenosha wi 53142 Automation/Technology................ Cathleen Christensen Hierl Insurance, Inc., Fond du Lac, WI 53937 Emerging Leaders.................................................. Dan Lau Robertson Ryan & Associates, 330 East Kilbourn Ave, Milwaukee, WI 53202 Employee Benefits........................................... Mike Farrell David Insurance Agency, Inc., 1300 South Green Bay Road, Racine, WI 53406 Government Affairs............................................. Jeff Thiel R&R Insurance Services, Inc., P.O. Box 1610, Waukesha, WI 53187 Industry Relations............................................Janel Bazan Johnson Insurance Services, 525 Junction Road, Madison WI 53517 Membership & Marketing........................ Jamie Durocher Arlington/Roe & Co., 5530 Ryan Road, Houston, MN 55943

> A DVERTISERS & INFORMATION AAA Wisconsin............................................. 5, 42 ACUITY.............................................................. 6 AmeriSafe....................................................... 39 AMTrust North America.................................... 19 Badger Mutual.................................................. 41 Berkshire Hathaway/Guard............................. 30 Burns & Wilcox.................................................. 7 Caliper....................................................... 22-23 IIAW Pre-licensing Classes.............................. 27 IIAW CE............................................................ 26 Integrity........................................................ 2, 8 Keystone Insurers Group................................. 34 Liberty Mutual................................................... 9 Motorists..........................................................10 Partners Mutual Insurance.............................. 25 Progressive.......................................................11 Robertson Ryan & Associates........................... 41 Risk Placement Services................................. 20 SECURA...................................................... 12, 24 Sentry.............................................................. 13 SFM.................................................................. 14 Society............................................................. 15 The IMT Group ...........................................16, 44 Travelers.......................................................... 17 West Bend..................................................18, 43 Western National.............................................. 31 OCTOBER 2018 | 3

I O

I E C S

INTRODUCING OUR 2018-2019

IIAW EXCLUSIVE COMPANY SPONSORS

EXCLUSIVE COMPANY SPONSOR

INTRODUCING OUR 2018-2019

IIAW EXCLUSIVE COMPANY SPONSORS

Enhanced Identity Theft Protection just for AAA Members. Enroll in ProtectMyID® for newly enhanced products designed to detect and resolve today’s threats. Bold new features go to even greater lengths to help you take control of your personal information. Plus, AAA Members save more than 40% with exclusive pricing.1 Here’s a sampling of features: Features Price

Credit Monitoring

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Experian® only

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Social Security Number Monitoring Change of Address Alerts Child Identity Monitoring

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Social Media Monitoring Payday Loan Monitoring

Don’t wait for thieves to steal your identity. Enroll now at AAA.com/IdentityTheft. For more information or to becoming a AAA Independent Agent Contact: Leo Plese (630) 328-7076 or lmplese@aaachicago.com ProtectMyID® Essential, ProtectMyID® Deluxe and ProtectMyID® Platinum are provided by Experian®. To be eligible to enroll in either ProtectMyID Essential, ProtectMyID Deluxe or ProtectMyID Platinum, you must be 18 years of age or older and a current AAA Member. A valid email address and access to the internet is required for ProtectMyID Essential. Products subject to change or termination at any time without notice. Certain terms, conditions and restrictions apply. ProtectMyID® Essential, ProtectMyID® Deluxe and ProtectMyID® Platinum are monitoring products designed to help you identify and resolve identity theft incidents. These products are provided in addition to any precautions you should reasonably be expected to take yourself, including protecting your account numbers, passwords, social security number and other personally identifying information. ProtectMyID Essential, ProtectMyID Deluxe and ProtectMyID Platinum cannot stop, prevent, or guarantee protection against incidents of identity theft. 1 Savings based on the average price of a group of similar products as of February 2018. 2 Identity theft insurance underwritten by insurance company subsidiaries or affiliate of American International Group, Inc. (AIG). The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions and exclusions of coverage. Coverage may not be available in all jurisdictions. Review the Summary of Benefits. 18-MS-2655

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EXCLUSIVE COMPANY SPONSOR

Acuity Loves You! PROUD TO PARTNE R WITH THE BE ST INDEPENDENT AGE NTS IN TH E BUSINE SS!

EXCLUSIVE COMPANY SPONSOR

INTRODUCING OUR 2018-2019

IIAW EXCLUSIVE COMPANY SPONSORS

COMPREHENSIVE COVERAGE IS OUR MIDDLE NAME. Only Burns & Wilcox has the depth and breadth of experience to deliver the right solutions right away. Milwaukee, Wisconsin | 262.347.0266 toll free 800.544.5700 | fax 262.347.0440

burnsandwilcox.com

Chicago, Illinois | 312.803.4770 toll free 800.254.5411 | fax 312.803.7629

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EXCLUSIVE COMPANY SPONSOR

We jump through hoops for you. Because you jump through hoops for them. For more about how Integrity can help you help your customers contact: Cathy Colรณn at 920-968-8326 or ccolon@imico.com integrityinsurance.com

EXCLUSIVE COMPANY SPONSOR

As the #1

INTRODUCING OUR 2018-2019

IIAW EXCLUSIVE COMPANY SPONSORS

You understand your clients. Liberty Mutual Insurance understands how to support them. preferred business insurer,* we know your

clients’ needs are unique. That’s why we work with you to tailor

coverage exclusively for them. Talk to your territory manager or visit LibertyMutualGroup.com/Business to learn more.

“Highest Ranked by Independent Agents for Commercial Line Insurers” by J.D. Power.**

*Based on 2016 survey of business insurance buyers on preference of national carriers sold via independent agents. **Liberty Mutual received highest numerical score among commercial lines in the J.D. Power 2018 U.S. Independent Insurance Agent Satisfaction Study, based on 4,021 total responses measuring experiences and perceptions by independent agents among commercial line insurers, surveyed September-November 2017. Your experiences may vary. Visit jdpower.com © 2018 Liberty Mutual Insurance. Insurance underwritten by Liberty Mutual Insurance Co., Boston, MA, or its affiliates or subsidiaries.

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EXCLUSIVE COMPANY SPONSOR

YOU KNOW OUR

SERVICE-CENTERED WAY OF DOING BUSINESS

agencyrecruiting@motoristsgroup.com motoristsinsurancegroup.com

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We form trusting relationships built on loyalty and integrity. What sets us apart is far more than what we do — it’s how we do it.

EXCLUSIVE COMPANY SPONSOR

AGENTS OF

A PREFERRED P A R T N E R T O R E LY O N

INTRODUCING OUR 2018-2019

IIAW EXCLUSIVE COMPANY SPONSORS

When Hurricane Irma hit south Florida, independent agent José Arias was there. And when his agency flooded, he set up a remote location out of his home so he could be there for his customers in their time of need. “Our Progressive rep was the only rep who reached out to us during the storm. He sent me a laptop and a box full of office supplies.” It’s this strong partnership that lays the groundwork for a more certain future—for José and for us.

AgentsofProgressive.com

JOSÉ ARIAS, ARIAS-REINAS INSURANCE | FORT LAUDERDALE, FL

Vehicle insurance is provided by Progressive Casualty Ins. Co. & affiliates. Home and renters policies are provided and serviced by affiliated and third-party insurers who are solely responsible for claims. Prices, coverages, and privacy policies vary among these insurers.

EXCLUSIVE COMPANY SPONSOR

Discover why agents love working with us

Genuine people – Passionate, experienced associates committed to excellence and service, both for our agents and policyholders

•

Expansive product portfolio – Broad coverage for Commercial, Personal, Farm-Ag, and Specialty lines

•

Easy to do business – Committed to agent-focused solutions to help you grow your business

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Exceptional claims service – Compassionate claims professionals handle even the toughest claims promptly and fairly

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Highly rated – Recognized by A.M. Best as A (Excellent) and Ward’s 50, not to mention high marks from agents and policyholders

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Motivated by mutual success – We meet our policyholders’ needs best by partnering with experienced, independent agents

Competitive coverage options

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•

We are on target to exceed $670 million in direct written premium for 2018, and we’re positioned to continue this trend of profitable growth for years to come. •

Commercial Lines is SECURA’s largest business unit serving a broad range of “Main Street” businesses. Our expanding appetite for contractors, retail, light manufacturers, restaurants, and numerous other markets offer coverage to fit your clients’ needs. Plus, our Workers’ Compensation coverage extends high-quality service to their employees as well.

•

Personal Lines coverage options include our MILE-STONE® home and auto package policy as well as the flexibility your clients want for their active lifestyles. Our policyholders value the added security of Roadside RescuerSM and Travel RescuerSM, not to mention our world-wide umbrella coverage.

•

Farm-Ag Lines taps the hands-on experience of former farm kids to underwrite farm-ag risks of all sizes. Our policyholders include most aspects of the industry, from dairy, hog, and vegetable producers to cash crop, custom farming, and dairy products manufacturers.

•

Specialty Lines provides agents and prospects with an admitted carrier option for difficult-to-place business. Clients range from fitness centers to food trucks and tattoo parlors to nonprofits. We even write special events and weddings to fit your clients’ needs.

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Our independent agents value the long-term partnerships they find with SECURA and our commitment to quality coverage and service. Here are just a few of the reasons they love to work with us.

“When I think of our agency partners, I can’t help but feel appreciative. Our agent customers are the faces of our company across 12 states, and they play a vital role for they bring us their customers. As we continue to grow and evolve with the industry, we’re committed to fostering our mutual success.” — Dave Gross President & CEO

Engage with us online secura.net

EXCLUSIVE COMPANY SPONSOR

Wisconsin proud INTRODUCING OUR 2018-2019

IIAW EXCLUSIVE COMPANY SPONSORS

At Sentry, we understand what you’re looking for in an insurance company. Because we’ve been there ourselves. We got our start in 1904, when members of the Wisconsin Retail Hardware Association formed their own insurance company. But it was the true strength of personalized care and Midwest roots that became hallmarks of the Sentry name. Since then—never forgetting our roots—we’ve grown to become one of the largest and most financially secure mutual insurance companies in the nation. With more than $14.7 billion in assets, a $4.4 billion* policyholder surplus, and an A+ (Superior) rating from A.M. Best, the industry’s top insurance evaluator, we provide peace of mind to more than one million policy holders. One conversation at a time.

WISCONSIN VALUES You’ve grown your business right here in Wisconsin. Just like you, we’re proud of our heritage. We employ nearly 4,000 associates across the country—with more than half in the Stevens Point area. And they’re dedicated. In central Wisconsin alone, more than 400 of them have 25 years or more of service with Sentry. BENEFITING YOUR CUSTOMERS We offer the knowledge to help you develop an insurance program designed to fit your customers’ needs. Whether their exposures apply to property, general liability, auto, workers’ compensation, or other essential coverages, we’ll work with you to design coverage that works for them. CLAIMS PROCESSING You’ll also have access to our industry leading claims and technology systems—and so will your customers. That means we’ll be ready to help when you need it most. SAFETY PROGRAMS But it’s not just about helping when something goes wrong. We’re also here to help your customers avoid risks that can save lives, time, and money. Our team of safety consultants is ready to guide your customers through risk scenarios, regulatory demands, and training or program gaps. These are just some the ways we can help protect what your customers have worked so hard to build. There’s still more we’d like to share with you. *Assets and policyholder surplus as of Dec. 31, 2015, and represent the aggregate total for all members of the Sentry Insurance Group and are not reflective of any individual underwriting company. A.M. Best rating as of 5/19/2016.

WISCONSIN INDEPENDENT AGENT

In 1922, eighteen years after Sentry’s founding, Roger Kaland, construction began on the Strongs Avenue building in Midwest Regional downtown Stevens Point.Executive We still use the building today.

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EXCLUSIVE COMPANY SPONSOR

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EXCLUSIVE COMPANY SPONSOR ÂŠ 2018 Society Insurance

INTRODUCING OUR 2018-2019

IIAW EXCLUSIVE COMPANY SPONSORS

Tried-and-true bar coverage with no surprises.

Small detail. Big difference.

Our TopShelf insurance program for bars and taverns was developed to be the most comprehensive and reliable protection available. We stay on top of industry trends, and tailor our coverage to the unique business needs of each establishment we insure. With Society, your bar customers get protection they can count on, delivered exactly as expected. And as you know, that makes all the difference. If you specialize in bars and are interested in an agency appointment, give us a call at 1-888-5-SOCIETY or visit societyinsurance.com.

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EXCLUSIVE COMPANY SPONSOR IT’S THE SIMPLE THINGS THAT DIFFERENTIATE US FROM OUR COMPETITORS. WE ARE A STRONG MIDWEST REGIONAL CARRIER THAT VALUES OUR RELATIONSHIPS WITH INDEPENDENT INSURANCE AGENTS.

INDEPENDENT AGENTS

People buy their insurance from independent agents because they know them, like them, and trust them. That is exactly the reason independent agents do business with IMT. We use our strong partnership with Wisconsin Independent Agencies to meet and exceed the needs of our personal and commercial lines clients.

FIND US ON IMTINS.COM AMIWORRYFREE.COM

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IMT, consisting of IMT & Wadena Insurance Companies, oﬀers the products needed for a well-rounded property and casualty agency at a competitive price. Wadena Insurance has an excellent and competitive Auto and BOP program, along with Workers’ Compensation, Power Sports, and Boatowners policies. IMT Insurance oﬀers a wide array of personal and commercial products including Farm Liability, Homeowners, Bonds, Commercial Auto, Commercial Property, and Commercial Liability.

TECHNOLOGY IS OUR STRONG SUIT

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PRODUCT LINES

Technology is a vital part of our business at IMT. We develop and maintain our own policy systems – all from our home oﬃce. Our systems are company-tested and agentapproved. In addition, we are committed to Social Media through our presence on Facebook, LinkedIn, Google+, and YouTube.

HISTORY AND FUTURE

We are proud of our Midwest heritage and our long, steadfast history as we have been doing business since 1884. When you think of IMT, you can be sure it is a stable company with an eye on the past and a keen sense for the future. We will continue to live up to our slogan, “Be Worry Free with IMT!”

FINANCIAL STABILITY IS ONE OF OUR STRENGTHS AND BOTH COMPANIES ARE RATED ‘A’ (EXCELLENT) BY A.M. BEST.

IMT Insurance Company Wadena Insurance Company 4445 Corporate Drive West Des Moines, Iowa 50266 Local independent agents interested in learning more about IMT's products can contact Matt Casey at (800) 274-3531, ext. 897.

EXCLUSIVE COMPANY SPONSOR

THE TRAVELERS COMPANIES INC. Location Of Company Headquarters: Hartford, CT Founded: 1853 Officers: Lorie Kates, Regional President George Hogan, Regional Director Paul Kyrilis, Regional Vice President - Commercial, Technology, Construction, Public Sector Chris Hackworth, Regional Vice President - Personal Insurance Lisa Pechan, Regional Vice President - Select James Gallagher, Regional Vice President - National Accounts Casualty

Lorie Kates

Outlook for the Company’s Future Travelers is an insurance leader, committed to keeping pace with the ever-changing needs of our customers, and anticipating their needs for the future. There is no stronger testament to our dedication to protecting customers from loss than our continued innovation and ability to transform our industry. Travelers is also committed to helping agents grow and be successful. Our people are professionals focused on delivering timely and professional service to you and our customers.

5. Travelers Claim is continually developing innovative tools and resources designed to help you and your customers stay safe, including our Prepare and Prevent site on Travelers.com, and our new Weather Alerts. Offered through Weather Services International (WSI), a professional division of The Weather Company, the weather alerts are sent to subscribers of the service in advance of an approaching storm reaching a particular location.

INTRODUCING OUR 2018-2019

John Tsourmas, Zonal Vice President - Excess Casualty Brendan Dunican, Regional Vice President - Ocean Marine Beth Printz, Regional Vice President - Claims Steve Ringler, Regional Risk Control Director

IIAW EXCLUSIVE COMPANY SPONSORS

Mike Powers, Regional Vice President - National Property Allen Warner, Regional Vice President - Inland Marine Paul Andriscin, Regional Vice President - Boiler & Machinery Gail Schroeder, Regional Vice President - Bond & Specialty Insurance

We are local. With over 200 employees in Wisconsin, Travelers delivers the many attributes of a large national carrier through one of the best-staffed field offices in the state. Our staff understands the Wisconsin marketplace and is committed to devel oping productive relationships with our agents and our insureds while delivering products and services your customers are looking for. For example:

2. Travelers has received two “Buyers Choice Awards” from Business Insurance magazine, taking home the top honors among insurers in both the Workers Compensation and Commercial Auto categories.

6. Risk Control On-Demand provides an easy method for your clients to interact with our consultants regarding their risk assessment needs. Using screen share technology, your clients can share videos, photos or other media with a consultant. He or she will then offer possible solutions and recommend specific Risk Control resources to help your clients manage their exposure. On-site consulting services are still available, and Risk Control On-Demand now gives prompt access to Risk Control professionals that can help your clients solve challenges in real time. Risk Control On-Demand gives your clients access to safety professionals regardless of their location. It enables your clients to connect with a consultant about a variety of topics, including office ergonomics; slip, trip and fall preventions; metal halide lighting; posit-injury management; and more.

3. The Travelers Institute cybersecurity guide helps businesses and organizations prepare for and respond to evolving cyber incidents. “Cyber: Prepare, Prevent, Mitigate, Restore” is a multiyear, educational initiative launched by the Travelers Institute in 2016 to raise awareness about cybersecurity and cyber insurance solutions.

Travelers understands that life and business are inherently dynamic and that the best way to serve customers is to deliver insurance that behaves the same way — evolving to keep in step with life and business as they change. Protect your clients under the red umbrella!

1. Travelers is the #1 writer of Commercial Lines & Workers Compensation in WI.*

4. Travelers ConciergeClaim Nurse® location in Milwaukee is now in its third year. ConciergeClaim Nurse® is a comprehensive workers compensation claim program designed to simplify the claim process for injured employees, enabling them to get back to work quickly and safely.

WISCONSIN INDEPENDENT AGENT

Company Website: www.Travelers.com * 2016 AM Best Data

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EXCLUSIVE COMPANY SPONSOR

WEST BEND MUTUAL INSURANCE COMPANY Location of Company Headquarters: 1900 South 18th Avenue, West Bend, WI 53095 Founded: April 1894 Officers: Kevin Steiner, President and Chief Executive Officer Mike Faley, Senior Vice President - Human Resources and Administration Rick Fox, Senior Vice President, Chief Actuary, and Chief Risk Officer Murali Natarajan, Senior Vice President and Chief Information Officer

The foundation of West Bend’s strategy is to create a robust property and casualty product and service portfolio that provides our independent agency partners with a market for a large percentage of the business they write. Around this foundation we wrap outstanding service – The Silver Lining® – and deep agency relationships that enable us to win in the marketplace. Finally, we recognize that our associates are our greatest asset, and the perpetuation of our outstanding culture is critical to our success. When it comes to understanding commercial risks, we’re proud of the broad base of knowledge shared by the underwriters in West Bend’s Commercial Lines division. Add to that loss prevention professionals who use a hands-on approach to develop programs tailored to the individual business and property/casualty and workers’ compensation claim reps who have the expertise and technology to process claims quickly and efficiently, and you have a quality commercial insurance product provided with unmatched service and dedication to you and your customers. Our Personal Lines division focuses on providing our valued customers with the right coverages through our Home and Highway® package policy. Not only does the Home and Highway offer quality coverages, benefits, and discounts, it’s serviced by knowledgeable and experienced underwriters, many of whom share long and productive relationships with their agents.

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Kevin Steiner

underwriting guidelines. NSI is a leader in providing innovative programs for specialty lines, such as beauty salons and spas, childcare, YMCAs, and health clubs. In addition, NSI’s experienced claim and legal professionals have handled the most difficult claims situations and will do all they can to help protect your customers’ valuable businesses. The professionals at Argent®, West Bend’s mono-line workers’ compensation division, collaborate with you and your customers to improve workers’ compensation performance through innovative and customer-focused loss prevention, medical cost containment, education, and communication. This high-touch, results-oriented approach is custom built to fit each culture and designed to help customers control the cost of insurance. Our associates drive our culture of service and family at West Bend. It’s because of them that we’ve been honored as a Best Place to Work in Insurance for eight consecutive years by Business Insurance and as a Top Workplace by the Milwaukee Journal Sentinel for eight years. We’re also proud of the many awards acknowledging our community service, financial stability, and support of healthy lifestyles for our associates. All of these make West Bend a better company for our trusted agent partners Company Website: thesilverlining.com

NSI®, West Bend’s specialty division, offers insurance programs for market segments or situations that don’t meet standard insurers’

18 | OCTOBER 2018

WISCONSIN INDEPENDENT AGENT

DISCOVER WHAT WE COVER.

We provide

BOP CybermoreLiability than Property General Liability Workersâ&#x20AC;&#x2122; Comp

Commercial Auto

Employment Practices Liability Insurance

Inland Marine Commercial Package monoline coverage.

Get to know AmTrust. Discover what we cover at d20.amtrustinsurance.com AmTrust is AmTrust Financial Services, Inc. located at 59 Maiden Lane, New York, NY 10038. Coverages are provided by its property and casualty insurance company affiliates. In TX, coverage is provided by AmTrust Insurance Company of Kansas, Inc., AmTrust International Underwriters Designated Activity Company, Associated Industries Insurance Company, Inc., First Nonprofit Insurance Company, Milford Casualty Insurance Company, Republic Underwriters Insurance Company, Republic-Vanguard Insurance Company, Security National Insurance Company, Southern County Mutual Insurance Company, Southern Insurance Company, Technology Insurance Company, Inc., or Wesco Insurance Company. In WA, coverage is provided by AmTrust Insurance Company of Kansas, Inc., AmTrust International Underwriters Designated Activity Company, Associated Industries Insurance Company, Inc., Developers Surety and Indemnity Company, Milford Casualty Insurance Company, Security National Insurance Company, or Wesco Insurance Company. Consult the applicable policy for specific terms, conditions, limits, and exclusions to coverage.

We Build Relationships That Thrive

Sharing Knowledge At RPS, our commitment to the success of our agent and broker partners begins with knowledge. With access to over 200 markets, we understand risk, as well as its unique exposures. Our extensive research, modeling and analysis assure confidence that the coverage provided matches the need of your customers. Whether arranging layered structure and pricing, calculating probable maximum loss or creating renewal action plans and timelines, RPS provides the knowledge a true partner expects from a market leader. To learn more how RPS is building partner relationships with retail agents and brokers across the country, we invite you to download our Building Relationships That Thrive at RPSins.com/Relationships. For other information contact Kathy Gallagher-Burton 952.646.6769, Kathy_Gallagher-Burton@RPSins.com or email ContactRPS@RPSins.com. RPSins.com

INSURANCE BARTENDER

THE INSURANCE BARTENDER

A bartender (also known as a barkeep, barman, barmaid, bar chef, tapster, mixologist, alcohol server, flairman or an alcohol chef) is a person who formulates and serves alcoholic, or soft drink, beverages behind the bar. However, throughout time, bartenders have also functioned as dispensers of knowledge, taking on the roles of therapists, advocates, professors and philosophers. In a past life (college), I was fortunate enough to play the very diverse role of bartender. Today, I find that I am routinely called upon to distribute knowledge, buy/dispense cocktails, and take on the role of insurance professor, philosopher or advocate.

It is for this reason in which my column and blog is titled ‘Insurance Bartender’. I plan to use this platform to dispense advice and take requests from ‘patrons’ on what issues I should tackle in my next column or post. I will also preview the topic(s) to be covered in the next edition of insurance bartender in a section titled ‘On Tap’. As always, please don’t hesitate to email me at Matt@iiaw.com or call 608-256-4429 to submit a question or suggestion. As previewed in last month’s “On Tap” section, Megan asked, “Can lenders legally withhold the processing of an escrow payment over not possessing evidence of insurance?”

a payment from escrow. After several hours of research, I couldn’t find anything that would allow the lender to withhold payments from escrow accounts based on inadequate evidence of insurance.

The scenario which yielded the above question arose from a financial institution not accepting the actual policy as an adequate form of insurance, and stating that if they didn’t receive proper evidence of insurance (certificate of insurance to meet their standards) they would withhold the insured’s escrow payment.

I conferred with IIAW’s Legal Counsel, Josh Johanningmeier, on my findings. He indicated that his research failed to produce anything that would contradict my findings. He said the consensus in his firm is that it could be governed by the contract with the lender (mortgage, loan doc, etc.), but that there is no law prescribing that authority to the financial institution. The insured would need to review their contract with their lender to see if it proscribes such authority to the financial institution.

After receiving the question, I immediately questioned how the policy could not be adequate evidence of insurance as its even better than a certificate. I began to conduct some research to determine if the financial institution has any legal basis to withhold WISCONSIN INDEPENDENT AGENT

Agencies should continue to tread lightly as it pertains to issuing certificates of insurance

and use the document(s) prepared by legal counsel in pushing back against illegal requests.

ON TAP In the next edition of Insurance Bartender, I will take a shot at tackling a question from Tina in Wausau on how insurance agencies can successfully implement a fee for service strategy when facilitating enrollment in an individual health insurance product or marketplace. I wrote on this topic several years ago and will update and dispense the latest important information.

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

OCTOBER 2018 | 21

CALIPER ORGANIZATIONAL MANAGEMENT WEBINAR LIBRARY AVAILABLE TO BIG “I” MEMBERS Need to brush up on hiring skills? Need advice on maximizing the effectiveness of your limited staff? What to hear more about how companies are making it through difficult economic times? Caliper, the Big “I” endorsed provider of employee hiring and development resources, has a library of recorded webinars on such topics. Free, and typically an hour in duration, they feature academics and business leaders sharing their insights, experiences and secrets for success in achieving personal and organizational goals. Below is a sample of the webinar topics available to you. Visit https://www. calipercorp.com/en-us/resources/webinars. aspx to access either the full recordings or presentation slides. • How Effective Leaders Think Strategically and Make Winning Decisions • Uncovering the Leader Within: How to Find Your True North

22 | OCTOBER 2018

• Are You Ready to Start Hiring? How to Bring on the Right People and Make Sure They Succeed • The Three Things You Need to Do to Improve Your Managers and Teams • How to Get New Employees Up to Speed – Faster! • Leading Through Tough Times • How Are Top Companies Selling Through These Tough Times? • Five Steps to Building Teams That Deliver • How to Develop the Future Executives of Your Organization

• Who’s Next? Recognizing and Developing High-Potential Employees • Help First-Time Managers Realize Their Potential Among the products available to you from Caliper is the Caliper Profile, an assessment instrument for measuring an individual’s characteristics, potential and motivation. This personality test, validated by more than four decades of research, measures over twenty five personality traits that Caliper consultants analyze in a variety of combinations to determine how someone will perform in a specific role. Big “I” members can have one completed on a current or potential employee at the discounted rate of $245. For more information, go to www.iiaba.net/caliper WISCONSIN INDEPENDENT AGENT

M&A

s And Acquisitions by Herb Greenberg, Ph.D., Founder and CEO of Caliper As we emerge from the toughest years that many of us have experienced in quite some time, many companies are analyzing their true strengths and weaknesses. Many of us had to restructure, downsize and even merge into new, more diverse organizations to help us make it through. Immediately after a merger, the newly formed organization enters one of the most difficult transition periods imaginable. It is a time of enormous upheaval. At least on corporate culture and many jobs are at stake. It is during this time that the people side of the equation comes into play, when the vision and possibilities of the new organization captures the imagination of everyone within the organization - or does not.

And, it is not simply a matter of keeping the best managers, but how you keep them. Conflicts can arise from a number of issues, not the least of which is: What do you do with very talented professionals who are accustomed to holding positions of power and responsibility? Can they work together in a collaborative effort? How can they focus their energies on helping the newly formed company through this difficult transition, while staying ahead of the competition? How can they obtain insights, information and objectivity about the new people they are supposed to manage? How can they motivate individuals to collaborate and adapt to the new environment? If you don’t know the inherent strengths, limitations and motivations of each of the key managers, the deal will go sideways.

This transition period is when management must quickly determine, foster and inculcate the values, philosophy and style it wishes to see emerge. In a very brief span, management has to establish the operating environment and determine how the new organization will be perceived by its employees, clients and the public.

So, who should you look for? Ultimately, those who can help a new venture rise to its next level bring technical expertise; a desire to sign onto a new vision and help mold a new, emerging culture; an ability to learn quickly; and an ability to inspire others while being able to keep one eye focused on achieving new goals.

At the same time, employees face the stress of an unknown situation. Some employees may leave, either by design or their own decision, and the rest decide whether they want to play the new game under the new rules. Often these decisions are made amid confusion and apprehension. While trying not to set off too many stress signals, management has to determine who has the necessary skills and motivations to help take the new organization forward.

The process of selecting the final management team is an ongoing one which focuses on assessing each senior manager’s strengths and weaknesses; not so much their technical and functional skills as their potential to get along and cooperate productively with their counterparts from the other company, and their ability to provide a strategic viewpoint on managing the merged operations.

It is usually in this frantic, confused environment, immediately after the new organization is created, that, with little forewarning, the most important people decisions are made. These often hastily-formed decisions irreversibly imprint upon the newly-created organization. Not surprisingly, most newly-merged organizations are simply not prepared for this transition phase. By the very nature of two companies merging, the process is never as smooth as a dance. But there are some things the new management can do to make sure that the unfolding arrangement does not look like a wrestling match. The key challenge for management is getting the opportunity to see people in their best light, so that the most intelligent judgments can be made without offering any false promises. Quickly identifying the individuals who can help steer the organization onto a new course is a difficult assignment. One study has found that almost 60 percent of the top managers of acquired companies leave within five years of the acquisition. In some cases, the management team of the acquired firm is the single most valuable resource to be acquired. Therefore, it is important to take aggressive steps to ensure that key people are not discouraged by the acquisition.

Still, there is no simple formula. By its nature, it is a time of reassessment. Some people just can’t psychologically make the shift, and others do not have the necessary skills. There are bound to be fears and conflicts throughout this volatile period. The best thing you can do is let everyone know you understand this is a trying time, then be clear about the goals of the new venture, and how you will approach those goals. You have to get people focused on solving the external problems, rather than worrying about their seating arrangements. By setting a tone that is forthright and caring, and making the transition as short as possible, you will be better able to win cooperation and trust so that an accurate assessment can be made of everyone’s strengths, potential and abilities to contribute to the emerging organization. Ultimately, leadership must communicate openly and consistently to create a vision of the newly emerging organization that is so appealing everyone will want to sign-up. Big I members enjoy exclusive discounts on Caliper tests and services. Visit www.iiaba.net./caliper to learn more.

GOVERNMENT AFFAIRS

CALL TO ACTION: REMEMBER TO VOTE TH TUESDAY, NOVEMBER 6 On Tuesday, November 6, 2018, Wisconsin residents will be asked to go to the polls and cast their ballot in the fall elections. What’s at stake in this year’s midterm elections for our state and country is of tremendous importance and I strongly encourage everyone to make sure to get out, make your voice heard and vote. Voting is one of the most important basic rights and civic

November’s election. IIAW member Jeff Thiel highlighted this request

responsibilities we have as citizens, yet many people still take it for granted. In Wisconsin, according to census data from the previous midterm elections held in 2014, there were approximately 4.4 million eligible voters (Voting Age Population) and 2.4 million people, or just over 50 percent, came out to vote. Some years like in 1990, midterm turnout has been as low as 38 percent. If these statistics were marked as a grade in a high school or college course, we would have failed.

to attendees at the recent Fall Planning session held in Madison last month. Despite the often cantankerous and highly polarized political environment we find ourselves in, exercising the fundamental right to vote can make a difference in your personal and professional life. When it comes to work and protecting our industry, your vote in support of candidates and public officials that demonstrate appreciation for the value that independent insurance agents provide in their communities, will help ensure that the laws and regulations at the state level do not adversely impact your ability to positively serve your customers.

So, what better place to start encouraging turnout than asking for every IIAW member to make a commitment to vote starting in this

There are some very important statewide offices, federal and state legislative elections in November that will decide Wisconsin’s political landscape for the next several years. Visit www.wisconsinvote.org/ candidates-and-races for a full rundown of all the candidates on the ballot. For information on registering to vote, and where to find your local polling place, go to www.myvote.wi.gov/en-us/. And if you have any questions about a particular candidate running for office, please do not hesitate to contact me between now and election day at misha@ leegovernmentrelations.com. Please don’t sit this one out. I hope you will join with me and vote on Tuesday, November 6th.

We look for the best independent agents and build relationships that last the duration. We are committed to the independent agency system as the only means to deliver our products. Because of that, we work hand-inhand to help our agencies grow profitably.

Our agents set us apart. For information about becoming a Partners Mutual Insurance Agent please contact Brian Martin at 262.432.3439 or Mike Ottman at 262.432.3418.

> Misha Lee, IIAW Lobbyist WISCONSIN INDEPENDENT AGENT

OCTOBER 2018 | 25

CONTINUING

EDUCATION

IIAW ONLINE AND ON-SITE CE CLASSES OCTOBER Date 4 5 8 9 10 10 10 15 16 17 18 22 22 29 30

NOVEMBER Date 5 5 7 8 8 9 12 14 15 16 19 27 28 29

DECEMBER Date 3 4 4 5 6 10 10 11 11 12 12 13 14 17 18

Course

Additional Insureds and Certificates of Insurance Workers’ Compensation Prelicensing Life & Health (onsite, Oct 8-11) Business Auto Coverages E&O: Roadmap to Policy Analysis - Part One (Morning) E&O: Roadmap to Policy Analysis - Part Two E&O: Roadmap to Policy Analysis - Part One (Evening) Top 10 Countdown of Personal Lines Coverages & Current Issues An Agent’s Guide to Insuring Nonprofits Business Income - Coverage Analysis through Claims Ethical Dilemmas... Making the Right Choices Prelicensing Property & Casualty (onsite, Oct 22-25) Contractors Property Exposures Condominiums Insuring Hobby and Small Farms

Course

Prelicensing Life & Health (onsite, Nov 5-8) Dispelling the Myths of Workers’ Compensation When the Child Becomes the Parent - Aging Parents and Insurance Decisions E&O: Roadmap to Policy Analysis - Part One E&O: Roadmap to Policy Analysis - Part Two Personal Auto Hot Topics... What You Need to Know Prelicensing Property & Casualty (onsite, Nov 12-15) Life Insurance... Benefits for the Living It’s Not My Fault, or Is it? Liability Issues in Personal Lines Policies Cyber Liability Ethics and the Law Insuring Trusts - Protecting Your Client’s Wishes Commercial General Liability Coverages Insuring Toys and Collectibles

Course

Prelicensing Life & Health (onsite, Dec 3-6) E&O: Roadmap to Policy Analysis - Part One E&O: Roadmap to Policy Analysis - Part Two Condominiums Income After Retirement - Where Does the Money Come From? Prelicensing Property & Casualty (onsite, Dec 10-13) Commercial Property Coverages Additional Insureds and Certificates of Insurance Protecting Your Most Valuable Asset Homeowners Hot Topics... What You Need to Know Ethics and Agent Liability Lying, Stealing, New Types of Fraud: The Importance of Crime Insurance Farm Vehicle and Equipment Coverages Who is an Insured Businessowners Policy (BOP)... Planning for the Unexpected

*TO REGISTER, PLEASE GO TO IIAW.COM*

Time

12-3pm 8-11am 8:30AM-4PM 12-3pm 8-11am 12-3pm 4-7pm 12-3pm 12-3pm 12-3pm 12-3pm 8:30AM-4PM 12-3pm 12-3pm 12-3pm

Time

8:30AM-4PM 12-3pm 8-11am 8-11am 12-3pm 8-11am 8:30AM-4PM 12-3pm 12-3pm 8-11am 12-3pm 12-3pm 12-3pm 12-3pm

Time

8:30AM-4PM 8-11am 12-3pm 12-3pm 8-11am 8:30AM-4PM 12-3pm 8-11am 12-3pm 8-11am 12-3pm 12-3pm 8-11am 12-3pm 12-3pm

2018 Pre-licensing Class Schedule 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:

LIFE & ACCIDENT/HEALTH January 8-11

PROPERTY & CASUALTY January 22-25

February 5-8 March 5-8 April 9-12

February 12-15 March 19-22 April 23-26

May 14-17 June 4-7 July 9-12

May 21-24 June 18-21 July 23-26

August 6-9 September 10-13 October 8-11 November 5-8 December 3-6

August 20-23 September 24-27 October 22-25 November 12-15 December 17-20

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 CLASS SITE/DIRECTIONS The IIAW is located at 725 John Nolen Dr. in Madison, WI. Day 3 (Wednesday a.m.) 8:30 - 11:30 a.m. ($45) When traveling south on John Nolen, it’s the last driveway SECTION B: Property Policies, cont. & WI Property Insurance Law Day 3 (Wednesday p.m.) Noon - 4:00 p.m. ($45) before Highway 12/18 (Beltline). Located near the Alliant SECTION B: Casualty Policies, Terms & Concepts Energy Center and Sheraton Hotel. Day 4 (Thursday) 8:30 a.m. - 4:00 p.m. ($90) INCLEMENT WEATHER SECTION B: Casualty Policies, cont. & WI Casualty Insurance Law If weather conditions are questionable, use your own judgment regarding your personal safety. If Madison public  Please contact Kerry @IIAW.com for information schools are closed, the IIAW is closed and pre-licensing is about multiple registration discounts. canceled for the day. Canceled classes are made up on The course fee includes all class materials. Materials are Friday. distributed on the first day of class. You receive: HOTEL INFORMATION The Life & Accident/Health or Prop. & Casualty Insurance Students requiring lodging will receive a special rate at the Study Manual. Clarion Suites, 2110 Rimrock Rd. in Madison. Please call The Intermediary’s Guide to Wisconsin Insurance Law. the hotel directly at 608.284.1234, and ask for the The State of Wisconsin Ins. Licensing Candidate Handbook. independent insurance agent’s discount. This provides all the necessary information to obtain a license.

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

AGENCY OPERATIONS

COMMODITIZATION:

WHO’S TO BLAME? Agents are a good target for the blame. I saw a question posted by an experienced agent: “Does an umbrella policy cover...?” The question indicates such a depth of ignorance any answer is simply wasted. There are about 500 or maybe even 5,000 umbrella forms in existence. Hopefully this experienced agent is not treating all these forms the same, but that is what the question tells me they are doing. I saw another question posted, “Does a homeowners policy cover...?” At the very least, differentiate between an HO-3 and an HO-5 or an ISO form versus a carrier specific form. This is agent incompetence painted bright red for the world to see. I agree, there are no stupid questions but certain questions definitely indicate stupidity or at least ignorance and in doing so, these agents create commoditization. If an agent does not differentiate key points when asking a technical question to educated peers, they certainly are not differentiating coverages and coverage options when selling to the public. “Ok, you need a homeowners policy? That will be $695.99. Would you like to pay in full or use our monthly pay plan? Oh, I forgot, would you like fries with that?” If agents and CSRs do not know or cannot articulate key differences in policy forms or even discuss exposures with the public, then the public has NO REASON to know insurance is not a commodity. The result: Insurance becomes a commodity. Then the same agents, companies, and associations cry about the commoditization of insurance. If insurance is not sold correctly, no other outcome is possible. The phantasmagorical opportunity created by this ignorance and incompetence is only for the best agents with the strongest stomachs and/ or for those who need immediate gratification daily. Step up and be bold. Tell the world how great you are by advertising you are professional and then be professional. Tell the world how you will analyze their exposures in detail and then do it. Tell the world you will work with them to identify the best forms for their needs and then do it, all the time, every year the client answers your request to meet with them. I know the E&O people tell you to not advertise that you’re a professional but this is because they are thinking of the incompetents who cannot be professionals. Their advice makes sense for the incompetent. If you are not a professional or you are but don’t follow through, then do not advertise that you are a pro. (As an aside, is it not odd that an agent has the option of not being a professional? Can you imagine saying to a doctor or lawyer, “Don’t advertise that you are a professional doctor if you really are not professional?” Isn’t it sad this industry even has this situation?)

However, if you are a professional and you do your job, your risk of being sued simply for advertising that you are a professional is much lower because if you are doing your job, the odds the client will have an uncovered claim are much lower than if someone who does not differentiate between umbrella forms sold the same person the wrong policy. If you are a pro, do not build your advertising, marketing and sales strategy using an E&O attorney’s advice when that advice is geared to the lowest common denominator! It takes guts but it is fun. Next, disclose your compensation. You know what you pay when you hire professionals so why should your clients not know what you’re paid when they hire an insurance professional? Compensation disclosure is a statement that you are confident of what you are doing. Amateurs hide. If I did not know the difference between homeowners forms, but I was selling homeowners forms, I definitely would not want prospects to know what I was making! Even if I was only making a penny per policy sold, it would be a penny too much! Require real technical education and valuable certification for all your people. Do not permit them to take the “Three hours of CE credit in 15 minutes for $49.99! Plus if you buy now we’ll throw in another hour of CE credit for FREE! Wait, wait, That’s not all. If you pay in full, you will also get this FREE pocket size encyclopedia containing everything you need to know about insurance. BUY NOW!” Mandate they obtain real education so they can communicate with clients the key differences in coverages from one form to another. Make your employees and producers gain the knowledge they need to see exposures and then know what other forms need to be discussed with clients. Take the steps required to boldly exhibit your knowledge, your professionalism, and your expertise because those are values worth buying. No one needs to pay an agent for a commodity. Everyone that wants insurance (versus those consumers who couldn’t care less about insurance and simply want an auto I.D card or a certificate of insurance) needs an agent who is professional, smart, and will work with them individually. Step up and differentiate. Avoid commoditization and the poor profits of commoditization by being or becoming a true professional! > C hris Burand is president of Burand & Associates, LLC, an insurance agency consulting firm. Readers may contact Chris at (719) 485‐3868 or by email at chris@burand‐associates.com.

NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

28 | OCTOBER 2018

WISCONSIN INDEPENDENT AGENT

AGENCY OPERATIONS

PRIVACY COMPLIANCE AND SAMPLE WEBSITE PRIVACY NOTICE Privacy is a hot-button issue of late. Coming on the heels of several major data breaches and data use scandals, state, federal and international legislators and regulators are paying close attention to consumer privacy issues. Some notable laws emerging from this landscape include the following: the National Association of Insurance Commissioners’ (NAIC) Insurance Data Security Model Law, the New York Department of Financial Services (NYDFS) Cybersecurity Regulation, the California Consumer Privacy Act of 2018, and the European Union (EU) General Data Protection Regulation (GDPR), which is perhaps the most sweeping and onerous legislation to date. The GDPR is intended to regulate companies that monitor, market to or otherwise offer any goods or services to EU citizens. EU regulators have the authority to impose stiff fines on violators who fail to comply with the GDPR’s requirements, which include obtaining explicit consumer “optin” consent. Fortunately, the vast majority of independent agents in the US are not subject to the GDPR. For more on the potential impact of the GDPR, members may review an article on the topic from the Insurance Agents & Brokers, accessible at IIABA.net. One key component of any effective compliance program is a privacy policy or notice, which serves as the externalfacing statement of an agency’s practices regarding the collection and use of consumer data. Although the GDPR has prompted a flurry of privacy policy updates, the US has not yet adopted any similar uniform data privacy laws. Instead, companies must comply with a patchwork of federal and state law concerning consumer privacy, such as the Gramm-Leach-Bliley Act (GLBA), the Health Insurance Portability and Accountability WISCONSIN INDEPENDENT AGENT

Act (HIPAA) and an increasing number of state-specific requirements of which agents need to be aware. The failure to comply with a company’s own stated privacy policy or privacy laws in general could result in government investigation or other potential liability. Of note, Title V of the GLBA establishes minimum notice and opt-out requirements for financial sector companies. For more information on the GLBA and its requirements, agents may review a memo on the topic from the IIABA’s Office of General Counsel, accessible on IIABA.net. A sample website privacy policy available at the link below. This sample is focused on US requirements. While it includes some notes about the GDPR (highlighted in blue), merely adopting those changes and publishing a notice does not ensure compliance with the GDPR or other specific laws and regulations not expressly addressed therein. Any agencies subject to more specific privacy regulations should consult other resources and/or professionals and take all necessary action. Any questions regarding this sample should be directed to Ron Berg, Scott Kneeland or Eric Lipton. The Agents Council for Technology (ACT) also provides members with a wide variety of other resources regarding privacy and data security compliance via their “Security and Privacy” web pages. To download a Sample Website Privacy Notice visit https://www.independentagent.com/Resources/ AgencyManagement/ACT/Pages/planning/Website%20 Privacy%20Policy%20Template.aspx or contact IIAW’s office at 608-256-4429.

> IIABA’s Agents Council for Technology (ACT)

OCTOBER 2018 | 29

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AGENCY OPERATIONS

SIX WAYS TO IMPROVE YOUR INSURANCE AGENCY There are literally scores of strategies and behaviors that agencies can implement in their quest to achieve great results. However, I’ve found that the greatest results come from focusing on a few selected strategies. The opposite is also true: The more things you chase, the fewer things you catch! Chasing too many strategies certainly doesn’t provide clarity and focus for your team. Too often what they’re chasing becomes the ‘flavor of the week,’ prompting the staff to think, “Don’t worry, this too shall pass,” because they know you won’t stick with it. During a private presentation to a group of agency principals recently, I was asked to identify the traits I see in the best agency leaders. Because it’s such an extensive list, and because I believe that less is more, I narrowed it down to the ‘Key Core Commitments of great agency leaders’. In case you’re wondering, my definition of a great agency leader is “one who achieves consistently great results.” As simple as that sounds, what does it really mean? A few favorite quotes come to mind:

2. Master the mundane. Yes, I’m referring to Blocking and Tackling 101, the core Sitkins Strategies that you’ve read about many times but perhaps haven’t yet mastered. Maybe they’re on your “Someday I’ll” list (the least desirable isle to inhabit!). True agency leaders and top producers have mastered the mundane, and therefore they do the basics better than their competitors. They have a clear vision of how to accomplish their objectives and are relentlessly prepared for every opportunity. Does this sound like your agency? To find out, here are some questions to ask as part of your agency checkup at your next sales or general meeting:

What’s our agency vision or mission?

What’s unique about our agency?

Why should people buy from us?

What’s our 30-second commercial?

“Execution beats talent every time!” “Don’t complain about that which you allow.” I’m especially fond of the latter one, which is from John Burroughs, an American naturalist and nature essayist who spent time here in Fort Myers with his friends Henry Ford and Thomas Edison. What are some of the behaviors in your agency that you allow and yet constantly complain about? You continue to tolerate these behaviors despite the fact that they inhibit great results. What commitments have you made but never followed through on? With the ongoing commoditization and digital disruption in our industry, it’s more vital than ever to commit to results-oriented strategies and behaviors. Here’s what I believe are the top core commitments of great agency leaders. 1. Change the game. Producers and all client-facing team members must stop giving quotes, selling a commodity based on price only and handling day-to-day service transactions, and focus instead on becoming risk advisors. As a rule, they should be investing 80% of their time helping their clients and future ideal clients with risk advice and risk planning and implementation. This applies to personal lines, small commercial, large commercial and benefits.

32 | OCTOBER 2018

a Who’s willing or able to stand up right now and ask me for a referral?

What percentage of your presentations have you rehearsed?

Who has with them their list of future ideal clients?

As mundane as it may seem, I’ll bet the vast majority of agencies would fail this checkup. Furthermore, I’ll bet that most agency leaders couldn’t answer those questions! I’ve often said, “Never ask a question that you don’t want to hear the answer to.” Well, here’s my question for you: “Have you and your agency focused on mastering the mundane, or are you still looking for that magic pill?” 3. Create a culture of accountability. Those who create and implement a culture of accountability win, and those who don’t, lose. It’s that simple and straightforward. As frequently as I’ve discussed the basics of accountability, they bear repeating. Is everyone on your team doing what they said they were going to do? If not, why not, and why are you allowing that? Are you clear

WISCONSIN INDEPENDENT AGENT

about team members’ roles and responsibilities? Do you have a monthly or quarterly Reverse Performance Management meeting with each employee? Does each employee have an ongoing improvement plan? 4. Embrace technology. In the course of my career, one of the most powerful statements I ever heard concerned the impact of technology on business. The message: In the future, what you currently get paid for you may be doing for free (or you might be replaced), and what you currently do for free may be the only way you get paid. Actually, that prediction is already coming true for our industry. Just think about the role of the average agency today. Most are little more than middlemen who take risk from their clients and pass it through to the insurance carrier (e.g., risk transfer). The average agency simply assists in the purchase and placement of insurance and provides reactive client service. Ultimately, these agencies add little value to the transaction, as consumers are starting to discover. These days, technology is handling many of the transactions that used to be handled by agency staff, and it’s multiplying dramatically every day. That’s why you must become a risk advisor. That’s the true “valueadded service” you provide. What’s more, it may be the only way you get paid in the future. (Can you say “digital disruption”?) 5. Embrace relationships and the client experience. I can’t overstate the importance of being aware of digital disruption and the need to differentiate your agency in a crowded marketplace. Doing so requires a thorough understanding of your clients and their specific needs. This means getting as close to them as possible.

WISCONSIN INDEPENDENT AGENT

In defining the client experience, how do you want them to feel after you’ve spent time with them? Have you documented this? Have you conducted training around it? Have you made any “secret shopper” calls to discover how your clients or future clients experience your agency? For example, has a client ever shared with you a piece of correspondence sent by one of your employees, only for you to discover that it’s poorly written and rife with grammatical errors and typos? How do you think that reflects on your agency? 6. Use the power of the 80/20 Rule. All too often, I encounter owners who still believe this rule doesn’t apply to their agency. When is the last time you did an 80/20 analysis of your clients? What about your carriers? In the unlikely event that you really want to shock yourself, take a look at your Super A clients, the top 2%. Don’t be surprised that they represent approximately 33% of your commission income. Also, don’t be surprised that the top 20% of your carriers generate 80% of your commission revenue. Talk about the Vital Few vs. the Trivial Many! It’s time to take action in these areas.

The Bottom Line There you have my top core commitments. These are the strategies and behaviors that will allow you to sell more, retain more and earn more. As always, it’s your choice.

> Roger Sitkins, CEO of Sitkins Group, Inc., is the nation’s number-one “Agency Results Coach.” He established The Sitkins Network™, a territorial exclusive network of high-performing agencies, and The Better Way Agency, a web-based training program that shows agency owners ways to make significant improvements in all areas of the agency. To learn more, please visit www.sitkins.com and follow us on Facebook, LinkedIn and Twitter.

OCTOBER 2018 | 33

“We feel strongly that we can improve on our two primary objectives - providing the highest level of service and cutting edge solutions for our clients.” Jeff Ascher Coverra Insurance Services President

Keystone is proud to welcome its first Wisconsin pioneer partner! Coverra Insurance Services has strong community involvement and they possess the trust and integrity that have been the hallmark of Keystone’s partnerships. Aligning your agency with Keystone provides you the tools that help improve and sustain your success. In the face of an ever-changing industry, agents need unified stability and strength. Because independence works better together.

CONTACT FOR MORE INFORMATION: Elizabeth Schenk 888.892.5905 | eschenk@keystoneinsgrp.com ©2017 Keystone Insurers Group ® All rights reserved. This does not constitute an offer to sell a franchise in any state in which the Keystone Insurers Group franchise is not registered.

A FRIENDLY REMINDER ON FURNISHING AND STORING MVRS

RISKY BUSINESS

As we continue to provide Agency Risk Management solutions for independent agents, we are tasked with providing guidance on a variety of operational practices and agency workflows. This particular area of focus has been requiring our attention more often, and for agencies of all sizes. As we continue to provide Agency Risk Management solutions for independent agents, we are tasked with providing guidance on a variety of operational practices and agency workflows. This particular area of focus has been requiring our attention more often, and for agencies of all sizes. There are many aspects to the issues surrounding obtaining, sharing and storing MVRs for an insured. You are always encouraged to reach out to IIAW staff for specific recommendations on your unique situation, but this article should provide you enough information to assess whether you have a significant agency risk that should be addressed immediately.

Obtaining MVRs – Best Practices and Legal Concerns The use of Motor Vehicle Records (MVRs) is outlined in the federal Fair Credit Reporting Act (FCRA), which is regulated by the Federal Trade Commission (FTC). An MVR is an example of a “consumer report” and must be handled in accordance to federal guidelines. Do I have your attention now? Good. An insurance agency may request an MVR for “the underwriting of insurance”, as outlined in the FCRA, Section 604, as follows: 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b] (a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other: (3) To a person which it has reason to believe (C) intends to use the information in connection with the underwriting of insurance involving the consumer; In the circumstance where an agency is only underwriting drivers for commercial risk, the FCRA does not require the consumer’s written permission to access an MVR. If you are receiving requests from a commercial insured/ employer to pull the MVR for a new employee for the purpose of adding the employee as a driver under the Business Auto Policy, you can feel comfortable doing so without written permission from the new employee. In addition, to inform a commercial insured WISCONSIN INDEPENDENT AGENT

that a new driver does or does not qualify as a driver for underwriting purposes would be considered part of “the underwriting of insurance.” The legal risk, however, is if the agency is providing specific details of an MVR with the employee. Those additional details could qualify the agent as a “consumer reporting agency” (CRA) and no longer simply providing information for the “underwriting of insurance”. There are more detailed steps and procedures for a CRA to follow which are outlined at www.ftc.gov.

Sharing MVRs – Best Practices and Legal Concerns So, what information should be shared from an MVR with an insured/employer? The agency should only be providing written documentation to the insured as to whether coverage can be obtained for the new employee. The agency should NOT be providing the insured with a copy of the MVR. The sharing of MVR information will indicate whether or not the agency is acting as a CRA. This is important to understand, but there is still another significant risk regarding the sharing of MVR information that could exist. The risk is not with the FCRA, but rather, with the MVR Company being used by the insurance agency. Independent Insurance Agents and Brokers of America (IIABA) research shows examples of language used by two MVR providers utilized heavily by insurance agencies: MVR Company A: “The Consumer Reports provided by Company A are for the sole and internal use of the Insurance Agency, and may not be resold, sub-licensed, delivered or displayed in any way or used by any third party. Insurance Agency certifies that it shall order, receive, disseminate and otherwise use the Consumer Reports in compliance with all applicable federal, state and local statutes, rules, codes and regulations. Insurance Agency agrees to indemnify and hold harmless Company A from any and all damages, costs, judgments and expenses.” MVR Company B: “All reports, whether oral or written, will be kept

strictly confidential; except as provided by law, no information from reports will be revealed to any person except the subject of the report. No information will be requested for the use of any other person, agency or organization except with the written permission of Company B. Reports may not be resold or transferred to any other person. The unlawful ordering or use of consumer reports can subject you to criminal and civil penalties in accordance with both federal and state laws.” As indicated in these two excerpts, even if it is legal to for an agency to supply MVRs to commercial insureds, there is a high likelihood that is it not permitted by the MVR provider being utilized by the agency.

Storing MVRs – Best Practices and Legal Concerns My number one rule of thumb when I am reviewing the information in a customer file of an agency management system is to keep only the information you need and only for the length of time you need it. Using this guidance, an agency should consider whether they are saving the MVR reports or if they are being destroyed once the underwriting information has been provided to the insured. The agency should maintain only the documentation sent to the insured regarding the underwriting action taken on the new employee but should not keep the entire MVR in the insureds file. According to the FTC, insurers must comply with the Disposal Rule outlined on the FTC website. This rule indicates that consumer information, such as that found in an MVR, should be properly and securely disposed of “once your business is finished with” it.

Recommendations Many agencies are not aware of the abovementioned information and will ask what steps they should take to make sure they are in compliance with FTC guidelines. I recognize that I may be telling you to eliminate a service that you believe provides value to your commercial insureds, but if you are facing $4,000 fines, per incident, CONTINUED ON NEXT PAGE

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

OCTOBER 2018 | 35

ERRORS & OMMISSIONS | Crisis Management Coverage

CRISIS!!!!

What do you do when you don’t know what to do?

Crisis! Scandal! Imbroglio! Disaster! What do these words have in common? They all relate to what could happen to your agency if someone, or something, causes your agency’s reputation to be put on the line due to some outside force. Agencies from time to time will face significant incidents – from a disgruntled customer who turns to social media to damage your agency’s reputation, to an employee involved in a local scandal. Every day we see where an individual or company has had an event that suddenly causes a situation where they must deal with - what are seemingly unbearable - circumstances and they are thrust into the local, regional or even national news. As a result, the general public begins to take a different view of them, and that could lead to a serious reputational problem. Examples of what could happen include workplace violence, negative portrayals on social media, negative publicity from civil litigation, or even death of an individual. If you don’t have Olivia Pope (the lead character in the TV show “Scandal” portrayed by Kerry Washington) on your speed dial, what do you do? You would turn to a crisis management specialist. These specialists can help an agency limit the negative impact of events on their reputation by helping you identify the issues and stakeholders, use clear decision-making to deal with the crisis, develop a plan to deal with the issues, and then proceed with the plan.

In 2016, Swiss Re Corporate Solutions implemented a new coverage for agents insured by Westport Insurance Corporation to address just these issues called “Crisis Management.” The coverage provides assistance (up to $20,000 reimbursement per policy period) for fees, costs, and expenses incurred by a named insured in addressing a “crisis event.” What is a “crisis event”? It can include the death, or debilitating illness, of a sole proprietor; national or regional news exposure regarding the professional services of an agency that is reasonably likely to have a negative impact on its reputation, community relations, public confidence or goodwill; an incident of workplace violence or the filing of an involuntary bankruptcy petition against the named insured. Think of this coverage as something to help protect your people, your assets, and your brand.

Here are a few examples: An agency had a disgruntled customer that began a social media campaign to discredit the agency due to their (unfounded) belief that the agency had failed to properly provide coverage for them. The carrier denied the customer’s claim; they sued the agency and lost and then decided to exact their revenge via social media. The agency notified the Swiss Re claims department, and the claims team contacted a crisis management expert to examine the problem and take action to

protect the agency’s reputation. What happens when a sole proprietor passes away and a family member wants to continue the business but is not sure what to do? In this situation, assistance is provided to help the family member act to publicize the transition and work to develop a plan to let the public know. Another situation might involve the negative publicity to an agency when it is determined that an employee committed a criminal act, be it fraud, embezzlement, or even some violent crime, that would cause the agency to be put in an unfavorable light. Again, the agency would contact the claims department and they would assist them in contacting a crisis management expert to help them work through the situation and help restore the public’s confidence in the agency. While the policy provision is for reimbursement, in all of these situations, the agency should contact the Swiss Re/Westport claims team at the start and they will assist them in contacting the appropriate party to help them work through the situation. Even if you aren’t sure if there’s a crisis event, contact them and they will be glad to help you work through it. > 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.

© 2018 Swiss Re . All rights reserved. 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

A FRIENDLY REMINDER ON FURNISHING AND STORING MVRS or even up to two years imprisonment, your value to your insureds will likely decrease anyway. There are a variety of employee screening services available to your insureds for background checks, and you should refer your commercial insureds to these screening services if they are looking for additional information outside of the standard insurance underwriting functions you can provide. All agencies should also verify that they

36 | OCTOBER 2018

are educating their employees on what is considered an ‘underwriting’ function and what could be considered an ‘employee screening’ activity. This education should cover guidelines outlined by the FCRA and also be clearly outlined in an employee handbook or procedure manual. In addition to how to share the information found on an MVR, the procedure should also clearly explain how to properly dispose of the MVR once the information has been shared with

CONTINUED FROM PREVIOUS PAGE

the insured.

Resources As always, you are welcome and encouraged to reach out to IIAW staff with any questions pertaining to agency operations, including specific MVR-related workflows. You can also find great information on the national IIABA website, www.iiaba.net, as well as the FTC website, www.ftc.gov. WISCONSIN INDEPENDENT AGENT

EMPLOYMENT LAW

COURT CASE CREATES UNCERTAINTY FOR WELLNESS PROGRAMS In May 2016, the Equal Employment Opportunity Commission (EEOC) issued final rules under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA). The Final Rules apply with respect to an employer wellness program that (1) makes “disability-related inquiries” or requires participants to undergo medical examinations (e.g., biometric screenings), and/or (2) asks

(D.D.C., Aug. 22, 2017), the AARP argued that the Final Rules’ 30% incentive/penalty ceiling was too high for a wellness program to be considered voluntary. The D.C. District Court held that the EEOC “failed to adequately

they must take heed of the D.C. Court’s rulings. Now, the Final Rules’ 30% incentive/penalty ceiling is no longer valid. Instead, the D.C. District Court’s rulings create uncertainty as to what level of incentive/penalty threshold is

an employee’s spouse to provide certain information about the spouse’s health. Specifically, the Final Rules clarified that a wellness program generally would be considered “voluntary” for these purposes even if it offered an incentive for an employee’s participation (or imposed a penalty if an employee chose not to participate) of up to 30% of the total cost for self-only coverage of the applicable health plan. Many employers relied on the Final Rules to design their wellness programs when those programs implicated the applicable ADA and GINA requirements. However, in AARP v. United States EEOC

explain its decision to construe the term ‘voluntary’ in the ADA and GINA to permit the 30% incentive level adopted in both the ADA rule and the GINA rule.” Further, the Court remanded the Final Rules back to the EEOC for reconsideration, but left them in effect for the reconsideration period. However, the D.C. District Court ultimately ordered that the challenged incentive/penalty threshold portion of the Final Rules be vacated effective Jan. 1, 2019. The removal of this portion of the Final Rules has had a significant impact on employer wellness programs. As employers design their wellness programs for 2019 and future years,

permitted under the ADA and/or GINA. This hole in regulatory guidance will be a major consideration for employers and will likely remain an area of significant uncertainty until the EEOC issues new rules. Accordingly, employers should contact legal counsel to discuss their options for 2019 and later. If you have any questions regarding these or other wellness program issues, please contact Todd Cleary (tcleary@gklaw.com) or Daniel Barnes (dbarnes@gklaw.com) of Godfrey & Kahn’s Tax & Employee Benefits Practice Group. > Todd Cleary and Daniel Barnes Godfrey & Kahn, S.C.

EMERGING LEADER SPOTLIGHT Each month we will be featuring one of the active members of our Emerging Leaders Committee. Our October Emerging Leader is Justin Staebler, Johnson Financial Group in Waukesha, WI Tell us your name and a little more about you: My name is Justin Staebler and I live in Delafield. My office is in Waukesha,WI at Johnson Financial Group.

events I think I have gotten the best learning out of are the PriSim event and also bringing in Brent Kelly.

How long have you been on the Emerging Leaders committee? I believe its been about 7 years!

Why should a new agent join the EL committee? You meet so many great people in our industry that you become great friends with. It also gives you some insight into our industry.

How did you hear about the Emerging Leaders Committee? I learned about the Emerging Leaders Committee from Matt Banaszynski and Dave Dunker.

What is your spirit animal? I have no clue.

Why did you choose to become active with the Emerging Leaders committee? I saw this committee as a great opportunity to help get more people involved in our industry and also to help me as I moved into more leadership roles.

Where is your favorite vacation spot? My favorite places to travel are Aruba and also to the mountains.

What is your favorite EL event or activity that you’ve done with the EL group? I do always really enjoy the Sales and Leadership Conference because there are so many great speakers that come in. Two of the

What is one professional goal for you in the next 3-5 years? To double the sales of our group and over double our revenue in my line of business.

WISCONSIN INDEPENDENT AGENT

Do you have any pets? Yes a dog (and my wife and kids have 2 cats).

OCTOBER 2018 | 37

COMMENTARY FROM COUNSEL

CYBER INSECURITY: WHEN CRIME PAYS, AND SO DOES THE INSURER Insurance coverage decisions across various jurisdictions are rarely a model of consistency. It often takes decades for courts to reach a ‘general rule’ when it comes to interpreting policy language regarding coverage grants and exclusions (and even then, states will differ). The virtually infinite unique factual scenarios that accompany insured (or excluded) losses add to the delay and uncertainty. Add criminal activity to the mix—or better yet, cyber-crime— and the stakes and complexity skyrocket.

cloud computing firm. The spoofing incident occurred in typical fashion: a fraudster emailed an employee in Medidata’s accounts payable department, asking the employee to transfer $4.8 million to China, purportedly for a company acquisition. The email was “spoofed” so that it displayed the company president’s name, picture and email address. The transfer was also approved by other company officers after the spoofed email and before the transfer was made.

In my July 2017 Independent Agent column, I highlighted some decisions involving business email scams—commonly known as ‘email spoofing’ or ‘social “The Medidata court’s holdings give life to potential coverage engineering fraud.’ for spoofing attacks under commercial crime policies.” – which involve someone hacking into a corporate email server. Once breached, the perpetrator has the ability to Medidata was insured under a commercial crime policy with Chubb. access the company’s emails and to send emails that look like they The policy contained a computer fraud coverage, which protected legitimately originated from an employee—typically a high-level against: officer or manager. The hacker then sends emails to the company’s clients, or other third parties, requesting wire transfers of large “Direct loss of Money, Securities or Property … resulting directly sums of money. The unsuspecting recipient then fulfills the request from Computer Fraud committed by a Third Party.” but, instead of helping out a client, the money disappears into an often-untraceable offshore account. The decisions discussed in that The policy defined Computer Fraud as: 2017 column (from the Ninth Circuit Court of Appeals and the U.S. District Court for the Southern District of Texas) showed that cyber“The unlawful taking or the fraudulently induced transfer of Money, crime (and email scams) can easily fall through the cracks of crime Securities or Property resulting from a Computer Violation.” policies, computer fraud coverage, funds transfer fraud coverage and D&O policies. Computer Violation, in turn, was defined to include: But all hope is not lost—a July 6, 2018 decision from the Second Circuit Court of Appeals found coverage for a $4.8 million email spoofing incident suffered by Medidata Solutions, a New York-based

38 | OCTOBER 2018

“The fraudulent … entry of Data into … a Computer System [and] change to Data elements or program logic of a Computer System.”

WISCONSIN INDEPENDENT AGENT

COMMENTARY FROM COUNSEL

The trial court (the U.S. District Court for the Southern District of New York) found coverage and the Second Circuit affirmed. How the two courts got there may prove to be a roadmap for future email spoofing coverage cases. First, the trial and appellate courts both rejected Chubb’s argument that Medidata did not suffer a “direct loss” because several employees took additional steps after receipt of the email before the transfer was approved. The appellate court held that those intervening steps were insufficient to “sever the causal relationship between” the attack and the loss. This holding is a fairly expansive view of the causation requirement typically applied to policies requiring a “direct” loss to occur. Second, and more interestingly, the court considered the receipt of an email by the insured to constitute the “fraudulent entry of data into a computer system” or a “change of data elements,” because the email entered Medidata’s computer system and, when it was received, it contained fraudulent information. The courts were unpersuaded by

arguments that the policy language required that the thief fraudulently enter or change data in the insured’s computer system, resulting in the loss, for coverage to apply. The Second Circuit summarized its holding as follows: “[T]he attack represented a fraudulent entry of data into the computer system, as the spoofing code was introduced into the email system. The attack also made a change to a data element, as the email system’s appearance was altered by the spoofing code to misleadingly indicate the sender.” The Medidata court’s holdings give life to potential coverage for spoofing attacks under commercial crime policies. The decision’s influence on other courts may soon be revealed, as there is a similar case in the Sixth Circuit, on appeal from a Michigan federal court. Stay tuned for updates on cyber-crime decisions in the courts, as well as the evolution of social engineering fraud coverage endorsements. > Josh Johanningmeier, IIAW General Counsel

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OCTOBER 2018 | 39

VIRTUAL UNIVERSITY

ASK AN EXPERT Q:

BIRD/LIME Scooters

Some broad homeowners’ policies might provide liability coverage but most forms likely will not. You would need to review each of your carriers to determine coverage status under the HO policy, PUP policy and availability of endorsement to the PAP.

We have had discussions inside our agency with regard to the rise of bike/ scooter rental by the hour. More specifically BIRD / LIME scooters due to the values associated with some of their products. We have asked several underwriters for general opinions on where our insureds could secure coverage for both Physical damage to the rented scooter, as well as, and more importantly, for their Personal liability.

----In my view, electric scooters and similar devices are within the definition of “motor vehicles” for both Section I and Section II (and thus excluded).

Personal Liability from a Homeowners or Renters policy is unlikely to cover the use of an E-Bike because they’d be excluded as “motor vehicles.” Some motorcycle policies covering an owned motorcycle or scooter might extend Liability to non-owned scooters, but even then the insurer may argue that shared vehicles might be available for the insured’s regular use. Some Personal Umbrellas might not require underlying coverage, generally when a vehicle isn’t included in the definition of “recreational vehicle,” and could drop down to provide third party Liability. The damage to the E-Bike exposure might be under $1,000 and manageable without insurance.

----As you’ve indicated, the property risk, although important, is small change compared to the liability exposure. Unless you find a carrier with a special endorsement for these devices, I don’t think the HO policy will be the answer to either exposure. A personal umbrella might be the answer. You’ll need to study the coverage carefully, and your clients will need to understand that there will probably be an SIR. These exposures illustrate one of the most difficult challenges to agents--the great unknown. It’s similar to the rental of jet skis, and a host of other stuff, that might or might not be covered by everyday homeowners policies. It’s not perfect protection, but agents need to constantly educate clients on emerging risks and the problems they pose for insurance policies. This is especially serious because clients often don’t know anything about Bird Scooters, jet skis, et al, until they’re on vacation and one of the kids says, “Hey, let’s rent a [fill in the blank].” Will they pay attention if your newsletter points out this exposure? Probably not, but you might score a point or two when the E&O claim comes.

----Most HO policies would likely not cover this, depending on the speed of the vehicle and the exact wording of the policy exclusions. Where I live, these vendors must be licensed. The licensing authority should require that they insure the exposure. ----This is not limited to Bird/Lime scooters. People rent larger scooters all the time. Any coverage would depend on the policy form. The ISO PAP would exclude liability coverage because the scooter is a vehicle with fewer than four wheels. There’s probably no physical damage coverage either, unless you can convince the carrier that it’s a private passenger auto (within the definition of “non-owned auto”), which would be a real stretch. It definitely meets the definition of “motor vehicle” on the ISO homeowners’ policy – a self-propelled land or amphibious vehicle. There might be liability coverage (but no physical damage coverage) on the policy as long as the scooter is not subject to registration for use on public roads or property. The best, and possibly only, solution might be to purchase coverage from the rental agency.

----Advice to customers: They can be fun but they are dangerous and most people have no insurance for liability arising of their usage of a Bird scooter. Some might have medical insurance for injuries they sustain while on a Bird. There is no universal approach to coverage for exposures arising out of your use of Bird scooters. Use them at your own risk. Bird itself tells the customers “YOUR AUTOMOTIVE INSURANCE POLICIES MAY NOT PROVIDE COVERAGE FOR ACCIDENTS INVOLVING, OR DAMAGE TO, THIS VEHICLE. TO DETERMINE IF COVERAGE IS PROVIDED, YOU SHOULD CONTACT YOUR AUTOMOTIVE INSURANCE COMPANY OR AGENT.”

Business-Owned Front-End Loader vs. Personal Vehicle I have a situation and I was hoping you could point me in the right direction. I have an insured that has a business in which he uses a front-end loader. He was unloading the front-end loader from a business truck. After he unloaded it he put blocks under the tires so it would not move. The loader ended up moving and running into his personal truck that he has insured on a personal policy. He only has other-than-collision (OTC) on the personal use truck and his personal carrier is saying that it would be Collision because the loader is considered the same as a vehicle hitting it. I am thinking he wouldn’t have coverage under this business policy since it was his own truck that was damaged by his business equipment. Am I thinking correctly? This is a collision. Collision is defined as impact with another vehicle or object. However, since this is a personally owned vehicle, and the insured has a “business,” it could be that the business is a separate legal entity. If that is the case, the GL for the loader should pay for the damage to the vehicle. But if the business entity is an individual - John Smith - and John Smith owns the pickup, then there is no liability to a 3rd party – you can’t be liable to yourself. But if the business is Smith Excavating, Inc. and damages John Smith’s pickup, then the GL could pay the damage.

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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WISCONSIN INDEPENDENT AGENT

----It’s a collision loss. No coverage on the PAP. The BAP excludes PD to property owned by an insured. No coverage there either if the business entity is an individual. ----There does seem a question as to whether the damaged truck was owned by the same person that damaged it or was the business that damaged it a corporation? As a corporation is separate and distinct from its owners, the BAP or CGL may provide liability coverage for damage to the personally owned truck. But that does depend on ownership. ----In regard to the final question (“I am thinking he wouldn’t have coverage under this business policy since it was his own truck that was damaged by his business equipment. Am I thinking correctly?”), the response is, you’re probably thinking correctly. I say “probably” because we do not know from your narrative the legal status your insured’s business. For example, if your insured’s business is a sole proprietorship (e.g., “John Smith, dba John’s Business”), you are indeed thinking correctly. One cannot be liable to oneself. On the other hand, if your insured’s business is a corporation or LLC, and the front-end loader is owned by that incorporated or legally formed business entity, you would have a good case for the damage to the insured’s personally-owned truck being covered by the CGL of the business’ LLC or corporation based on your description of the event. If the business is indeed a sole proprietorship, the insurer is correct: this is a straightforward collision loss.

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A. Simple, the Producer maintains 100% ownership without a non-compete.

Learn More: Chris Illman I cillman@robertsonryan.com I 800.258.0277 I www.RobertsonRyan.com WISCONSIN INDEPENDENT AGENT

OCTOBER 2018 | 41

FOOD FOR THOUGHT

Serving AAA Members, even on two wheels. While you’re out enjoying this year’s ride, here’s a refreshing tip for AAA Members: AAA now offers roadside assistance for bicycles. AAA Bicycle Service is a new benefit with every membership that provides transportation for you and your bicycle if it breaks down on your ride. It’s one more way AAA helps members relax and enjoy the ride!

Learn more today! Contact Leo Plese (630) 328-7076 or lmplese@aaahicago.com AAA Bicycle Service is available in Florida, Georgia, Iowa, Michigan, Minnesota, Nebraska, North Dakota, Tennessee, Wisconsin and portions of Illinois and Indiana. 17-IA-2064A

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