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THE TENNESSEE

INSUROR March/April 2010

Vol. 21 No. 2

www.insurors.org

8 16 48

2010 Young Agents Day on the Hill Issue A Policy - On Protection

A “Vetted” Interest

On Your Mark, Get Set...

Why the 2010 State Electoral Races Should Matter to You


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The Tennessee Insuror


contents

THE TENNESSEE

INSUROR Vol. XXI, Number 2 March/April 2010

features

Phone (615) 385-1898 Toll Free: 1-800-264-1898 Email: info@insurors.org Editor: Charles T. Bidek, CPCU Publisher: Daniel D. Smith, Jr.

4 On Your Mark, Get Set... Why the 2010 Electoral Races Should Matter to You

INSURORS OFFICERS

President ................................................................... Tee Zerfoss, III Immediate Past President ........................... Walt Bradshaw, J.D. State National Director .................................................. Brad Smith Vice President, Region II ........................................ Eddie Miller, III Vice President, Region I ............................................. Roger Smith Vice President, Region III and Pres. Elect ....... Ed Gibbons, AAI Treasurer ....................................................................... Joe Hunt, Jr. Secretary ................................................... John McInturff, III, ARM Director, Region I ................................................... Cindi Gresham Director, Region I ................................................ Chris Allison, CIC Director, Region I .......................................................... Bobby Sain Director, Region II .......................... Kevin Hale, CIC, CPIA, CWCA Director, Region II ....................................................... Jimmy Alsup Director, Region II ......................................... Dolly Tate, CIC, CISR Director, Region III ....................................................... Andy Shafer Director, Region III ...................................................... Bob McIntire Director, Region III ........... Steve Bryant, CIC, CPCU, LUTCF, AAI Young Agents Chairperson .................................... Cooper Jones

ADVERTISING

Display advertising rates, deadlines and specifications may be obtained by writing to Insurors of Tennessee, 2500 21st Avenue South, Suite 200, Nashville, TN 37212, calling 615-515-2601, e-mailing dsmith@insurors.org or online at www.insurors.org The Tennessee Insuror is provided to all Insurors of Tennessee members and associate members as a member service.

INSURORS OF TENNESSEE 2500 21st Avenue South, Suite 200 Nashville, TN 37212-0539 www.insurors.org

8

2010 Young Agents Day on the Hill

10

10 Things You and Your Clients Should Know About Banking

14

Imagine...

16

Issue A Policy - On Protection

48

Things Can Go Wrong When You Complete Your Clients’ Applications Protecting Your Clients, Your Employees and Your Business

A “Vetted” Interest

TAAG’s Mike Dill is Fast Becoming an Expert at His High Speed Hobby

departments 21

From Your President

Storming “The Hill”

23

From Your State National Director

25

From Your CEO

29

Education Calendar

31

Government and Legal Affairs

37

Broker Spotlight

39

Company Spotlight

41

Company Briefs

51

Meetings

53

Member Tips

Decisions for Our Future The Choice is Yours

RPS of Lexington

Auto-Owners Insurance Company

3


On Your Mark, Get Set...

Why the 2010 State Electoral Races Should Matter to You 4

The Tennessee Insuror


Regardless of your political affiliation, the 2010 election of state Senators and Representatives will decide which party or parties control redistricting in 2011 of the State Senate districts, State House districts and as importantly, the state Congressional districts. Let’s have a short civics lesson. The state is divided into 33 senatorial districts, from each of which one senator is elected. Senators are elected to four-year terms with those from evennumbered districts being elected in the same general election, and those representing odd-numbered districts being elected two years later. Thus, about half of the 33 senators are standing for election this year. The House of Representatives has 99 House districts from each of which one representative is elected. Representatives are elected to two-year terms with all representatives standing for election at the same time. Finally, the state is divided into nine (9) Congressional districts. Currently Tennessee is represented by 4 Republican and 5 Democratic Congressmen in Washington, D.C. The long run of incumbent victories and relative stability in the state’s Washington delegation is not a coincidence. Redistricting has become as much a science as an art, and the party drawing the lines — until now, the Democrats — has dealt with districts it can’t win by throwing as many voters of the other party as possible into them, leaving fewer unfriendly voters for the remaining districts. In 1974, two Tennessee Republicans lost their congressional seats to Democrats. Considering the state had only eight Congressional seats in the 1970s, this was a huge turnover. But it was the last time either the Democrats or the Republicans knocked off an incumbent Tennessee congressman of the other party. Indeed, not until 2008 did an incumbent again lose an election — and that was a primary, in the 1st district, in which first-term Republican congressman David Davis was beaten by Johnson City mayor Phil Roe. For 3½ decades, turnovers have come as a result of retirement, death, or an incumbent’s decision to seek another office, sometimes because he faced the prospect of being drawn out of his seat in the next redistricting. All of which makes the 2010 situation little short of astounding. Currently, the state Senate is represented by 19 Republicans and 14 Democrats. Even with half of the Senators running for re-election this year, it is almost impossible for the Republicans to lose the majority as a result of the 2010 elections. This means that the Republican Senators will control redistricting for the state Senate, which guarantees that they will make sure to hold onto current seats, as well as make an effort to redraw some other districts to be more Republican friendly. The real game will be played in the State House this year. CurThe Tennessee Insuror

rently there are 48 Democrats, 51 Republicans and 1 Independent, Speaker Kent Williams. Many of you may remember, Speaker Williams was a member of the Republican party until being ousted two years ago for voting himself into the position of Speaker of the House thereby denying the position to Representative Jason Mumpower. Even so, the Republicans consider themselves as holding the majority of the state House of Representatives. With all 99 Representatives up for election, the Democrats are working hard to try to win back some seats, and the Republicans are working hard to keep all of their seats as well as gain one or two more to solidify their majority. The field is constantly changing, as for example Rep. Mumpower recently announced he will not be running for re-election this fall, creating an open seat in Bristol.

Some of the Key 2010 Tennessee Races RACE

CURRENTLY

STATUS

Tennessee Senate 9TH DISTRICT

R

OPEN SEAT

Tennessee Senate 17TH DISTRICT

R

INCUMBENT SEEKING REELECTION

Tennessee Senate 19TH DISTRICT

D

INCUMBENT SEEKING REELECTION

Tennessee Senate 23RD DISTRICT

R

INCUMBENT SEEKING REELECTION

Tennessee Senate 21ST DISTRICT

D

INCUMBENT SEEKING REELECTION

Tennessee House 3RD DISTRICT

R

OPEN SEAT

Tennessee House 8TH DISTRICT

R

OPEN SEAT

Tennessee House 23RD DISTRICT

R

OPEN SEAT

Tennessee Te nnessee House 57TH DISTRICT

R

INCUMBENT HAS NOT YET DECLARED

Tennessee House 62ND DISTRICT

D

U.S. House 4TH DISTRICT

D

U.S. House 6TH DISTRICT

D

OPEN SEAT

U.S. House 8TH DISTRICT

D

OPEN SEAT

Tennessee Te nnessee Gubernatorial Race

D

OPEN SEAT

INCUMBENT SEEKING REELECTION INCUMBENT SEEKING REELECTION

* CURRENT AS OF 3/29/10 5


All the districts will be redrawn by the state legislature in 2011. That’s why both parties will go all out in 2010 to win a majority in the state House. Why does this matter? If the Republicans hold the majority of the seats in the state House of Representatives, then they control redistricting of the House districts. Okay, “so what,” you say? Well, historically the House and Senate have been controlled by different parties and so they had to work together to draw the Congressional map. This typically meant little to no change and the Democrats continued to hold onto the 1 vote majority in the state electorate. However, if the Republicans have control over both the House and Senate, then they control the Congressional map.

difference. If it wasn’t for PACs aggregating money, big money or large contributions made by the very wealthy would rule the roost. PACs tend to reduce the influence of large contributors. Without many people giving to the political process the funding of elections would eventually drift to being funded by your tax dollars. PACs provide a way for everybody to participate in the process.

80 TENNESSEE BLUE BOOK

6

105th General Assembly House Districts*

*Map shows approximate area served.

You may still ask, “How does government and this election really affect me?” Well, we are all affected by ways and means (taxes and fees), as well as through appropriations (expenditures). The insurance business is affected by both. A case in point is the fees charged for your insurance licenses. Tennessee charges a Professional Privilege Tax each year that is It is expected that they will target the 4th District, currentpaid by most professionals, but insurance producers are exly held by Democrat Lincoln Davis. This district already is a empt. If the exemption was removed every producer would swing district that can go either way, and could fairly easily be charged this tax. Multiply that by the number of licensed be redrawn to favor a Repeople in your agency and Current State Senate Districts publican bid. If the 8th you’ll get a sense of why you district held by Democrat need an effective association John Tanner and the 6th involved in government afdistrict held by Democrat fairs. In the legislature, we are Bart Gordon are both capcontinually bombarded by tured by the Republicans bills that, although often well in the 2010 elections, that intentioned, could change allows the members to your business abruptly. Current State House Districts focus on trying to redraw the 3rd district to favor the Giving to your PAC is not Republicans. There is no about charity. It is about doubt that the 8th and 6th your business and how you districts will also receive a make your living. Generally little help in this area. speaking it is a non-deductible business expense, but With the districts being can be as important as your redrawn after the 2010 other business expenses. By census, and if Republicans us giving together as Insumaintain control of both rors, we get the attention of houses in the General Asthe legislators. Any successful sembly, the 8th — and government affairs program other districts — will be is made up of three parts: (1) reshaped to favor the GOP. respected and knowledgePreviously, they were drawn for the benefit of Democrats. able lobbyists; (2) a well funded PAC; and (3) local grassroots That’s why both parties consider this year’s state House races efforts. critical. We will be writing the agency principals in the near future askDoes this really affect you and/or Insurors? Well, in a word, ing each agency collectively to either a write a single check or “Yes!” First, as soon as the legislature adjourns this spring or collect checks from every producer to strengthen our PAC for summer, those individuals running for re-election will be out this year’s election. Our “All In” campaign has proven very efin force collecting campaign contributions and we must be fective, and we are planning to continue it this year. ready. Last year was not an election year and we still received over 60 contribution requests from different individuals, parState law restricts PAC contributions to individuals or LLCs. ties and Political Action Committees (PACs). Additionally, Therefore, if your agency is a sole proprietor, partnership, or those individuals who return and any new members need our an LLC you may contribute to InsurPACTN with a company support and we need their support. check. If your agency is a corporation of any type you cannot use a company check, and must make a personal contribuSo, what is the best way to help? Our Association PAC, Insurtion. We also accept MasterCard and Visa if you prefer. PACTN. One of the best reasons to give to a PAC is to aggregate small amounts of money so collectively we can make a The point is simple – Just Do It. u The Tennessee Insuror


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2010 Young Agents Day on the Hill On March 23rd, nineteen Insurors Young Agents visited the Tennessee Legislative Plaza to see our state government in action. Included in the group were Young Agent Chairman Cooper Jones of The Crichton Group in Nashville, Alex Aymett of Battle Page Insurance in Franklin, Jeff Coker of CPW Insurance Services in Hendersonville, Steven Enoch of Carthage, Brett Fisher of H.B. Cowan & Co. in Shelbyville, Josh Gibbons of Watauga Insurance in Johnson City, Kevin Lockmiller of V.R. Williams in Winchester, Brad McGee of H.B. Cowan & Co., Mike Norris of Watauga Insurance, Kevin Ownby of Ownby Insurance Service in Sevierville, Paul Pelt of Insurors, Doug Raby of General Casualty in Chattanooga, Jamie Reed of Murfreesboro, Adam Reeves of Westan Insurance in Union City, Chris Rose of V.R. Williams & Co., Chad Snider of Westan Insurance in Martin, Matt Spellings of Westan Insurance in Dresden and Mike Stansbury of Elite Insurance Solutions in Brentwood. The group started their day with lunch at the Hermitage Hotel, where Insurors CEO Chuck Bidek discussed the role that the Association plays in the working lives of agents. General Counsel Ashley Arnold then talked about the involvement

of Insurors members and lobbyists in state government. She touched on topics such as the governing of Licensing and Workers’ Compensation insurance by the legislature and the impact that changes in our insurance system could have if not for the involvement of our Association. After lunch, the group walked over to the Legislative Plaza and sat in on a session of the Senate Commerce Committee. The Committee consists of Chairman Sen. Paul Stanley (R-Memphis), Vice-Chairman Sen. Dewayne Bunch (R-Cleveland), Secretary Sen. Charlotte Burks (D-Monterey), Sen. Mae Beavers (R-Mt. Juliet), Sen. Tim Burchett (R-Knoxville), Sen. Jack Johnson (R-Franklin), Sen. Bill Ketron (R-Murfreesboro), Sen. Eric Stewart (D-Belvidere) and Sen. Reginald Tate (D-Memphis). The Committee makes decisions on legislation concerning commerce, insurance and agriculture. They also have jurisdiction over legislation concerning banking and lending institutions; communications; regulation and licensing of occupations; protections of trade and commerce against unlawful restraints and monopolies; corporations; labor and industrial relations; consumer affairs and consumer protection; and unemployment compensation.

The Young Agent group poses in front of the entrance to the Legislative Plaza

8

The Tennessee Insuror


Getting Involved with Young Agents If you are a Young Agent (those under 40 or with less than 5 years of insurance experience) or know someone who would like info, please contact us at info@insurors.org with the name and e-mail address of the individual(s) who wants to be involved. u

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Serving I nd e

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Once the committee session had adjourned, the attendees were brought into Lt. Governor Ron Ramsey’s conference room to meet with special guests, including the State Commissioner of Commerce and Insurance, Leslie Newman. After a greeting from Lt. Gov. Ramsey, the Commissioner, along with Deputy Commissioner John Morris, addressed issues currently facing the insurance industry in Tennessee, including the new online licensing system the state is currently implementing. They then answered questions before turning the floor over to Rep. Charles Sargent (R-Franklin), a fellow insurance agent and an important member of the Tennessee House when it comes to support for insurance related legislation. Rep. Sargent discussed how key it is for Insurors to have knowledgeable and respected lobbyists like Ashley and Chuck that legislators can turn to for opinions on insurance law. He also talked about how bills with an impact on the insurance business are frequently brought in front of the General Assembly.

A dent gents en

&

One of the items on the Committee’s agenda was the new Workers’ Compensation bill being sponsored by Sen. Ketron.

S in ce 1930

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9


10 Things You and Your Clients Should Know About Banking

by Jim Rieniets, President & CEO of InsBank

1. Extension Of FDIC Insurance Limit Increase You may recall that in response to the banking crisis the FDIC temporarily increased the limit for deposit insurance from $100,000 to $250,000 in October 2008. In May 2009, the limit was extended to December 2013. While not technically permanent, that timeframe certainly makes the $250,000 limit not something most depositors will have to revisit for the next year or two.

2. Unlimited Non-Interest Bearing Checking Account Insurance (TAGP) Set To Expire Another temporary deposit insurance program intended to minimize deposit risks is set to expire on June 30. If a bank participates in this voluntary program, all non-interest bearing transaction accounts and NOW accounts with an interest rate of 0.50% or less are fully guaranteed by the FDIC for the entire amount in the account. Bank trade associations are lobbying to have this coverage extended; but, as of this writing, it will expire at the end of the second quarter of this year.

3. Real Estate Appraisals If you have a commercial loan secured by real estate, don’t be surprised if your bank requires that it be re-appraised when it renews or matures. Generally speaking, bank regulators and auditors are assuming that property values have declined and are pressuring banks to re-appraise properties in many circumstances.

4. Working With A Lender Many businesses have seen a drop in revenues over the past couple years, putting pressure on profits and cash flows. In situations where a business relies on bank credit for financing, it is a good idea to be proactive and have dialogue with a banker regarding plans to manage cash flow and available options for easing financing requirements. In such cases, it is important that a business owner have access to decision makers in the bank.

5. Loan Rates: Why Is My Prime Rate Not “Prime?” Technically, Wall Street’s Prime Rate, the rate most banks use as their floating rate index, is 3.25%. But, for most borrowers 10

that have taken out a new or renewed floating rate loan in the past year and a half, their bank probably required a floor on the floating rate anywhere between 4% and 5%. The reason for this is that banks’ overall cost of funding has not dropped as low as the Fed Funds rate, with a significant portion of funding coming from CD’s as well as competition to preserve savings deposits. With most banks needing to have an overall margin between loans and deposits of 3% to 4%, it is virtually impossible for a bank to lend money profitably at 3.25%.

6. Is Your Bank Still Doing Business? Many banks have such strains on their loan portfolio and capital that they are either unable to make new loans or unwilling to do so. If a company is a current borrower of a bank or looking to apply for a loan at one, it makes sense to inquire as to that bank’s current appetite for loans.

7. Mortgage Rates Still At Historically Low Levels While rates have fluctuated roughly within a bandwidth between 4.875% and 5.75% over the past year or so, mortgage rates continue to be very affordable when compared to historical rates. In the coming months, the government is planning to invest less in mortgage-backed securities, and a number of prognosticators believe that will result in an increase in rates. For anyone contemplating a home purchase, low rates, potential tax credit incentives, and declining real estate values might be a recipe for a good deal this spring.

8. Complexity Of Internet Banking & Cash Management Systems If you utilize internet banking or browser-based cash management systems, your bank may have recently increased the complexity of its login and authentication processes. The business of information security gets increasingly difficult for all businesses that maintain files of client personal data as computer hackers around the globe grow in their number and attempts to compromise data. If your bank does not require a complex login/system for internet banking, you might want to evaluate other options.

9. Deposit Rates: When Will They Get Better? With the Fed Funds rate at an all-time low, overnight rates on The Tennessee Insuror


HTTP://WWW.INSBANKTN.COM

The Tennessee Insuror

11


money market and savings accounts are also very low. Rates on certificates of deposit are marginally better but require one to hold the deposit to a specific maturity. When you look at your account statement and are underwhelmed, keep in mind that the bank is getting nothing better than 0.25% on its own money invested overnight. Deposit rates should rise when loan demand picks up or the Fed moves to increase its Funds rate.

10. What Is The Outlook For Tennessee Banks In 2010?

About the Author Jim Rieniets position as President and CEO of InsBank requires him to manage the day to day activities of the bank, as well as all lending activities. He also serves as a director of InsBank and on the Loan and Investment Committees. Jim’s extensive banking career has included positions as: Branch Manager, Credit Analyst, Commercial Loan Officer, Business Banking Department Manager, and most recently First Vice President/Division Head of Correspondent Banking. u

ROOFING

All indications are that banks nationwide will continue to be under pressure in the coming year, and Tennessee banks aren’t likely to be an exception. With statewide unemployment around 10% and real estate values continuing to pull back from the highs of a couple years ago, banks will continue to have loan losses above historical norms as well as high FDIC insurance premiums to absorb nationwide losses of failed banks.

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The Tennessee Insuror


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plete m o C u Yo When g n o r n Go W tions a C s g n Thi pplica A ’ s t n lie Your C d, J.D., n u L . F wiss Re d S r , a t h n c e i id by R ce Pres i V t n a Assist

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The Tennessee Insuror


Imagine you have a long time friend and customer... let’s call her Mary. Imagine you have written insurance for her businesses for more than 20 years. Imagine Mary calls you and tells you she is starting a new business and needs to get her BOP/CGL, workers’ compensation and all the other usual coverages for this new business. Imagine you think you know everything about her and her businesses. Imagine you get some basic information from her and then complete the applications for her. Imagine Mary comes to your office to sign the applications, but because she’s in a hurry to go talk to her banker, she tells you she’s sure everything is fine so and she doesn’t read or review the applications, she signs them and leaves. Imagine you didn’t insist that she review the applications. Imagine you send them to the carriers, the policies are issued and all is well. Just imagine... Imagine six months later Mary calls you and tells you that one of the employees of this new business has severely injured their back and she needs you to contact the workers’ compensation carrier to report the claim. Imagine you ask her where the employee was injured and she tells you it was while he was working in the neighboring state. Imagine your surprise when you hear the words “neighboring state,” because remember, you know everything about Mary’s business, except that she had employees working in a neighboring state. Imagine, because you never considered she would do that, because she never had before. Imagine, because you didn’t included “all states” coverage on the workers’ compensation policy. Imagine, because the carrier denies the workers’ compensation claim because coverage is limited only to the home state. Imagine the claim is a minimum of $500,000. Imagine the next call you make is to your E&O carrier.

Reality... The reality is that this story happens. Maybe not exactly like this, but it happens. It may not be a business customer but it happens with homeowners or personal auto policies or virtually every other type of policy available. Regularly. So what can you do about it? Simple: don’t complete applications for your customers. “But that’s not good customer service,” you may reply. Actually, it is because by having your customer complete the application it gives them an opportunity to really look at what they do and what they want insured. Who better to knows this better than themselves? Regardless of how well you think you know your customer, things change. What was true yesterday, may not be true today. Does that mean you can’t help them if they have questions? Of course not. That is exactly what customer service is all about. But the responsibility to provide accurate information belongs to your customer. If the information on the application is not correct and they filled it out, then they are responsible. If the information on the application is not correct and YOU filled it out, then YOU may be responsible especially if you did not have them review the application. It’s as simple The Tennessee Insuror

as that. So imagine your longtime friend and customer Mary calls you and tells you she has a new business. Imagine you send her the insurance applications. Imagine... Disclaimer 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. About the Author Richard F. Lund, J.D., is an Assistant Vice President of Swiss Re/Westport, underwriting insurance agents errors and omissions coverage. He has also been an insurance agents E&O claims counsel and has presented numerous E&O loss control seminars nationwide, including several for Insurors of Tennessee. u

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15


Issue A Policy - on Protection Protecting Your Clients, Your Employees and Your Business If we were to poll our members regarding their privacy policies and security, most would probably indicate they are sufficiently protecting private information. It is also true that traditionally, most independent agents and brokers have been careful with their clients’ personal information. It is good business. However, the risks have become a lot greater in recent years because the information is stored electronically within the agencies and therefore may be more accessible to more agency employees. In addition, the agency management systems themselves are more exposed to the external world through the Internet. Increasingly, federal and state laws, such as HIPAA, Gramm-Leach-Bliley, the Fair Credit Reporting Act, and state motor vehicle and privacy laws impose specific privacy requirements on agents and brokers and carry significant penalties if the agency does not institute appropriate procedures and safeguards. Here are some examples: 1. The federal Gramm-Leach-Bliley Act requires independent agencies and brokers to proactively implement administrative, technical, and physical safeguards to protect customer non-public personal information. 2. Tennessee agents are now covered by the state’s identity theft law which may require an agency to notify a customer and take other remedial steps (such as procuring credit reports for the customer) if the agency is involved in the customer’s non-public personal information being lost, stolen, misdirected, or otherwise the subject of a security breach. The law does, however, provide a safe harbor if the affected data is encrypted. 3. Beyond the legal requirements, there is the potential of a civil lawsuit should someone’s non-public personal information be improperly stored or discarded. And, finally being proactive about securing customer personal information is just good business, given the devastating impact of having to notify customers that their most sensitive information may have been compromised. In addition, taking proactive steps to prevent a security breach is very likely to be less costly than cleaning up the mess that typically occurs after a breach has occurred. It is important for agency principals to establish privacy protection as a priority for the agency and then to take the steps necessary to implement these protections. Useful information may be found on the IIABA website under Technology Reports 16

on the Agents Council for Technology (ACT) website at www. independentagent.com/act, as well as, several very helpful legal opinions that are available from the IIABA Office of General Counsel on HIPAA and its Privacy Rule, Gramm-Leach-Bliley, and the Fair Credit Reporting Act. Also, don’t forget that the Virtual University has a number of excellent articles on HIPAA, the GLBA, and the FCRA.

HIPAA and Agents HIPAA safeguards “Protected Health Information,” and contains the most elaborate requirements, as well as potential liabilities and penalties. Agents are typically drawn into the regulation’s requirements when they sell or service health or employee benefits insurance and are asked to sign a “Business Associate” agreement by the insurance company or employee benefits client. As part of the American Recovery and Reinvestment Act of 2009, the “Breach Notification Rule” was created requiring notice when there is a breach of unsecured protected health information by business associates of “Covered Entities.” These regulations went into effect on February 22, 2010. Agencies may also be impacted as an employer when they sponsor health plans for their employees and must make sure these health plans are in compliance with the HIPAA Privacy Rule.

Taking Action What should you do? First, ascertain which federal and state privacy laws apply to your agency. It is likely that developing an overall privacy policy and procedures that encompass these requirements is sufficient. These policies and procedures should apply to employee non-public personal information as well as to prospect and customer information. Agents and brokers may want to appoint a privacy officer who has a good knowledge of overall agency operations and charge that individual with developing a detailed understanding of the various privacy laws. That individual can manage the staff team developing and then implementing the privacy policy and procedures, oversee the audit process for compliance, and receive privacy-related complaints and problems. Agents and brokers also may want to appoint a security officer to oversee the agency’s security policies and procedures in order to protect the agency’s information from both external and internal threats-- whether the information is in electronic The Tennessee Insuror


or paper form, or conveyed orally. Another important privacy protection is to limit access to non-public personal information and individually identifiable medical information to only those employees who have a need to see it. Issues to consider include: • • • •

How can the agency’s systems be “locked down” to limit access to particular files to only the appropriate employees who need to see that information? What procedures can be adopted by the mailroom to avoid unauthorized viewing of this sensitive information? What steps can be taken with the technology staff who have broad access to systems information or with vendors who have access to the agency’s systems and info? What procedures should be adopted to assure that individual employee passwords are safeguarded and that the agency immediately terminates a departing employee’s access both to the agency’s systems as well as to the systems of the agency’s trading partners? What communications policies are put in place so that mail and faxes are used to send private health and personal information, rather than e-mail which is not a confidential medium unless sent in encrypted form?

Agents and brokers may want to raise awareness with every agency employee regarding the importance of safeguarding all non-public personal information and individually identifiable health information and employee passwords, and provide training to both existing and new staff as they come onboard with regard to the agency’s privacy policies and procedures. Agency employees can be asked to commit in writing to safeguard the confidentiality of all protected information, to access it only when they have a legitimate business purpose to do so, and to use the information only for the business purpose for which it was intended to be used. Employees with access to non-public personal info and/or individually identifiable health info should take steps to keep it out of view of fellow employees whether it is on the computer or on paper, especially when they are away from their desk. In addition, they may want to create a procedure to verify a caller’s identity before discussing private info with him or her. Here are some other thoughts: •

Portable Media: Any PCs, portable devices, and removable media (i.e. zip drives, flash drives, memory sticks, CDs) taken outside of an agency potentially creates a major new security risk for agencies. E-mail: Agencies should avoid sending customer nonpublic personal information by unsecured e-mail, because regular e-mail is like sending an open postcard through the mail. Ask your IT person how to help protect data while in transit to and from the agency. Health Information: If your agency handles individually identifiable health information for clients or employees, then it also may be subject to the federal HIPAA law.

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The Tennessee Insuror


Back-ups: Your computer and information back-ups represent a major security risk. All back-ups should be encrypted and kept in a secure place.

The 3 Biggest Security Threats Most Agencies Face

While a security threat can come at an agency from many directions, the following threats are probably most likely to cause the typical agency to experience a security breach:

1. An employee theft or inadvertent mistake that exposes customers’ personal information to unauthorized parties. (Inadvertent Mistake Example: Opening an e-mail attachment containing a virus from an unknown source.) 2. Physical loss or theft of a computer, portable device, back up tape or other removable media—all containing customers’ non-public personal information. As these devices have become more portable, and they are regularly taken outside the agency premises, this security risk has multiplied significantly. Also, the substantial risk of a break-in to the agency’s offices and the theft of its computers is often overlooked when an agency develops its security policy. 3. Loss or theft of a password permitting unauthorized individuals to gain access to customers’ personal information. ACT recommends the following common sense precautions to consider mitigating these security threats: • No more passwords on sticky notes. Passwords should be

• •

• • •

kept hidden and private. Agents should note that their carrier agreements are likely to make them responsible if an unauthorized party gains access to the carrier’s systems using an agency password. Escort your visitors throughout the office. Know your night-time cleaning crew. Computer Desktops should be password protected, and employees should log off of their system when they go to lunch, attend a meeting, or leave in the evening. How secure is your office when you leave in the evening? Keep non-public customer and policy information off of PCs, portable devices, and removable media. Encrypt any of this non-public electronic information that leaves the agency office, whenever possible. Encrypt back-ups and keep them in a secure place. Do you need to keep particular types of sensitive personal information in your system, or can you just pull it from a third party source when needed? Would you be better off housing your systems and/or back-ups in a hosted data center employing 24 hour security, the latest security technologies, procedures, and data traffic monitoring, and perhaps even an armed guard?

A proactive privacy strategy makes very good business sense for the independent agent. It responds to evolving client expectations and minimizes the agency’s exposure to prosecution, liability, and negative public relations that can result from a failure to safeguard a client’s private personal info. u

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The Tennessee Insuror


From Your President Storming “The Hill”

On March the 4th, a band of Insurors agents, along with our CEO Chuck Bidek and General Counsel Ashley Arnold, descended upon Capitol Hill for our annual meetings with the Tennessee members of the U.S. House and Senate. We were very fortunate as there was not a cloud in the sky, and for the first time in weeks, it wasn’t snowing. However, once inside the various chambers, the climate was not as nice and tension and stress filled the air. Healthcare Reform was looming and partisan politics were playing their usual role.

onstrated the need for some type of financial services regulatory reform. However, we feel the insurance industry should not be brought into the mix. Our current state regulatory system is working efficiently and effectively. State regulators protect policyholders’ interests by requiring carriers to meet certain financial standards and to act prudently. We are, in a sense, paying the price for a failed company that faltered due to its financial services department and not as a result of their insurance operations.

Armed with the Big “I” position on numerous issues, we sat with our members of Congress and stressed our reasons why they should vote a certain way. The topics for the day included healthcare, insurance regulation, licensing, flood insurance and estate tax reform.

Producer Licensing Reform

Healthcare Reform With regards to healthcare reform, we stressed, as always, that regardless of the outcome, it is imperative that independent agents be involved in the process. We serve as consumer advocates and trusted advisors for individuals and businesses of all sizes, helping clients with coverage questions, claims issues and compliance matters throughout the life of each policy. We also expressed our opposition to a government-run health plan, employer mandates, medical loss ratios and purchasing health insurance across state lines. Although the Obama Administration’s Healthcare Reform Bill passed in late March, the fight is not over on this issue, and the Big “I” will continue to make sure that the independent agent maintains their key role as a guide for consumers. The grassroots efforts of Insurors agents and others did bear fruit in this vote, as Tennessee Democrats Rep. John Tanner and Rep. Lincoln Davis both cast “No” votes on the bill.

Industry Regulation The current economic crisis has obviously dem-

As you are aware, agents and brokers must be licensed in every state in which they conduct business. Complying with varying and inconsistent standards and duplication of licensing processing is costly and time consuming. In this case, Federal legislation is needed for nonresident licensing reform. We support the National Association of Registered Agents and Brokers (NARAB II - HR2554) Reform Act, which establishes a one stop shop for nonresident licenses in all states. This would be a dream come true for those of you that do business in numerous states. Currently, the Act has passed the U.S. House and the Big “I” and other organizations are now pursuing sponsors and trying to build support in the Senate. Ideally, the Act could be included in the Senate’s Financial Services Reform Bill, but that scenario is unlikely at this point.

“...regardless o f t h e outcome, it is imperative t h a t independent agents be involved.”

National Flood Insurance Program Last year, Congress was forced to enact shortterm, temporary extensions of the NFIP on four separate occasions. This year, one extension has already gone through, after a short period where the program actually expired. We strongly believe that these short-term extensions bring instability to the marketplace and undermine consumer confidence. We urged Congress to enact a long-term (five year) extension of the program with the inclusion of

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optional BI, additional living expenses as well as increased maximum limits. The latest news is that Congress will consider at least a one year extension, and should be including some language that will retroactively cover any claims that are made from the 2-day period when the previous extension had expired.

Estate Tax Reform Finally, with regards to estate tax reform, we simply encouraged our members of Congress to do something. It is difficult to plan one’s estate when future estate tax rates have yet to be determined. As it stands now, the estate tax is zeroed out due to congressional inaction on the issue. However, the tax is scheduled to come back with a vengeance in 2011 with a whopping 55% rate and a $1,000,000 exemption. The Big “I” recommends striking a balance by reducing the top rate to 35% and increasing the exemption to $5,000,000 for individuals and $10,000,000 for joint filers. Perhaps, by the time that you read this, some of these issues will already be resolved. Hopefully, our efforts will have be en rewarded and our Tennessee members of Congress will cast votes in our favor. I encourage you to stay or become involved in the grassroots efforts and legislative affairs that effect our industry, as I can assure you that your voice does make a difference. u TAAG ad_12_07

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From Your State National Director Decisions for Our Future? In the first week of March, the Spring National Board of Directors meeting was held in Washington, D.C. after the completion of the Big “I” Legislative Conference and Convention. Some will call it historic and others may call it defining but two things occurred at this board meeting of which you should be aware. First, after over 18 months of debate and study, Trusted Choice will move from an optional program for members to a member benefit that is no longer optional. All Insurors and Big “I” members will be members of Trusted Choice. You will still have the option of whether or not you want to agree to the Trusted Choice Pledge of Performance. As you know it takes some big dollars to create a brand, and this decision solidifies Trusted Choice as the branding effort of our Association. With that very large decision now made your Association can move forward to making it work for all of our agency members. Along with that decision, a new logo has been adopted that combines the Big “I” logo with the Trusted Choice logo. The “bird on the stick” national logo will be retired and modified to be surrounded by the Trusted Choice insignia. I think you are going to like the resulting marriage of these two logos. This will mark the first logo change in 23 years, and the first major redesign in over 70 years. Those are two very important changes and more will come to you from both the national and the state level on those issues. The decisions made were historic according to some individuals who have been a part of the Association for many, many years. They were also among the most difficult we have ever made. Because of the importance of these issues it was decided that a super majority vote should be used rather than a majority and on that basis the changes were adopted into policy. As you already know, Trusted Choice is currently a part of our Titans Radio advertising program and many of our members take advantage of the local advertising benefits. With this change we hope that will be the case to an even greater extent. As we all know, sometimes the best deciThe Tennessee Insuror

sion is not a “yes” or “no” but rather that one was made and therefore allows us to move forward and spend time and resources on making our Association better for all its members. Elections for the executive committee were also held and Randy Laniox of Louisiana was elected to the executive committee. I continue to be impressed by the time and effort and the intelligence of the fellow directors and committee members that serve on this board. It is a dedicated group. Recently you should have received a letter regarding the fundraising kickoff for our national Political Action Committee, InsurPAC-National – recently voted one of the most influential PACs in our nation’s capital. Your contributions to both the state and national PACs are vital for us to have a voice with our legislature. Last year, InsurPACNational topped the $1 million level for the first time ever, and we want to keep that momentum going. Please consider writing the check today. And last, two more items you should look at are the Virtual University (VU) information on Certificates of Insurance and a product called the Virtual Risk Consultant (VRC) – both great benefits to you as members. The VU Certificates of Insurance Resource Section is available at http://www.iiaba.net/eprise/ main/VU/NonMember/Certificates.htm and they have published a white paper and numerous articles that address many of the problems agents face when dealing with certificates.

“...sometimes the best decision is not a “yes” or “no” but rather that one was made...”

The VRC is an online sales and service resource designed to help your agency better serve your customers. Using this tool will lead to increased sales by improving your staff’s knowledge of a prospect’s operation, thus enabling them to better identify and cover customer exposures. It is truly a tool that will help your agency grow while limiting your E&O exposures. Find out more at http://www.insurors.org/Content/NavigationMenu/Products/EO/default.htm#VRC Thank you for the chance to serve you in this way. u

Brad V. Smith 23


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From Your CEO The Choice is Yours?

Just like independent agencies are set apart by the fact that they offer customers a choice of insurance products and companies, your Association has built a portfolio of choices for you when it comes to our Errors & Omissions (E&O) coverage offerings. Insurors and the Big “I” put a lot of time into selecting E&O partnerships that will truly benefit our agency members, and I assure that these programs are some of the best in the industry. We our very proud of our E&O program, which we began marketing and administering in 1988. Over time E&O coverage has changed from being a luxury to being a necessity in order to maintain company appointments and remain in business. The agency business has changed dramatically as well, with lines of business no longer written through state offices with managers who knew agents personally and often times helped to “ensure” the absence of E&O risks. Now lines of business are placed all over the country and E&S brokers are the rule, not the exception. These changes, combined with the emergence of electronic data storage, social media, e-mail and online submission has created a whirlwind of risk for the independent agent. In addition, non-insurance alternatives such as self-insurance, group insurance, reciprocal pools and captives have made the question of “who is represented,” a much more complex one to answer. The majority of agencies are even placing more business with carriers they don’t represent than with the ones they do. Another factor that has changed the landscape of the E&O marketplace is the types of lawsuits being brought against agents. In the past, the key part of E&O was the “O.” Omissions like forgetting to add a new vehicle to the policy or not getting a signature on the right page was brought into play. But now the “E” has reared its ugly head, and it is often more about what you didn’t do that gets you into trouble. Forgetting to offer flood coverage, a PUP or home business insurance is a sure fire way to set a court date. One way to avoid this is to develop an E&O checklist, or to use a product like the Big “I” Virtual Risk Consultant. But even if it can’t be completely avoided, having strong coverage as

a safety net is the best option for your agency.

Your Choices When it comes to offering you choices, we are fortunate to have two of the best companies out there in Swiss Re and Fireman’s Fund. We currently write over 65% of our members coverage, and we would love to increase that number. In talking with our members through the quoting process, we often find that price is the main motivator for purchase, and I would caution you against relying too heavily on “the cheapest way out” when choosing your coverage. Just like you suggest that your insureds read and compare policies before buying, you should approach your E&O decision the same way. Compare coverages, ratings and limits so that you can make a truly informed decision. Lawsuits aren’t the same in this post-Katrina world, and the thought of a total loss on your entire book of homeowners business is one that has to at least be considered. With so many factors in play, E&O premiums will only see a decline if we work together to put as many loss prevention activities in place as possible, and stay dedicated to them. Just as your agency sees Continuing Education for its employees as a way to keep abreast of changes in the industry, a continued vigilance towards E&O risks is just as important. Most claims are still preventable, and developing this culture of prevention in your agency is good for all sides of the equation. The business of properly insuring your E&O exposures is more complicated than ever before. It requires more questions on what seems to be a endless amount of applications. But due to the aforementioned changes to our industry over the last 3 decades they are necessary to design the coverage. Not a week goes by that we don’t have to seek counsel to properly cover a deal or new agency ownership arrangement or cluster partnership arrangement. Likewise we all need to know the source of E&O claims. Are they coming more from commercial or personal? Are claims from large agencies more predominant than from small agencies? Or is the reverse true? Hence,

“...it is of ten more ab out what you didn’t do that gets you into trouble.”

Chuck Bidek, CPCU 25


we have the myriad of seemingly useless questions.

E&O Seminars If you want an opportunity to develop a working, accessible procedures manual for dealing with E&O risks in your agency, consider attending one of our E&O Business Practices courses scheduled throughout the state this year. In addition to E&O tips, attendees will also learn ways to make their agency more profitable and marketing oriented while maintaining E&O safety. Insurors members whose E&O coverage is written with Swiss Re through Insurors may qualify for the 10% loss control credit. Conditions apply to receive credit, but you can contact one of our underwriters listed below for more information:

DON’T GET BITTEN! DON’T GET BITTEN BY AN E&O CLAIM YOU COULD HAVE AVOIDED. Swiss Re policyholders written through the Big “I” Professional Liability Program have access to an exclusive risk management web site. Log on today to fish for E&O claims frequency data, real-life case studies and analysis, sample client letters, sample agency procedures, agency E&O self assessments, podcasts on important E&O topics, and much more.

www.independentagent.com/eohappens

www.independentagent.com/EOHappens

Paul Pelt 615.515.2606 or ppelt@insurors.org Coit Holbrook, CPCU 615.515.2608 or cholbrook@insurors.org Courses currently scheduled are as follows: 5/27 - Memphis 5/28 - Nashville 8/18 - Knoxville 8/19 - Nashville Find more information or register online today at www.insurors.org.

Other Resources Some other resources that I would suggest include the aforementioned Big “I” Virtual Risk Consultant; the “E&O Happens” website, located at www.independentagent.com/eohappens; and the Swiss Re Agency Shield Program. All of these programs are ways to help ensure the safety and financial security of your agency. You can find more information on any of them on our website, or conact one of our underwriters to have your questions answered by phone. To paraphrase a popular airline’s saying, we know that you have choices with your E&O, so thanks for choosing us. u 26

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The Tennessee Insuror


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The Tennessee Insuror


Education Calendar

The Insurors of Tennessee offers education opportunities to member agents across a wide range of insurance specialities that satisfy individuals at many different experience levels. If you are looking to further your career, seeking a professional designation, or need to satisfy continuing education requirements, check out the variety of courses available. Registration is fast and easy at www.insurors.org. More information about each class can also be found online.

CISR 3/30 3/31 4/1 4/14 4/15 5/11 5/12 6/22 6/23 6/24 8/25 8/26 11/18

CIC 4/21-23 5/19-21 6/9-11 9/15-17 11/8-10

Fee: $165

Commercial Property Commercial Property Commercial Property Personal Residential Personal Residential Personal Auto Personal Auto Commercial Casualty Commercial Casualty Commercial Casualty Agency Operations Agency Operations Dynamics of Service

Fee: $395

E&O Seminars

CE: 8

Kingsport Knoxville Chattanooga Memphis Nashville Knoxville Chattanooga Memphis Jackson Nashville Memphis Nashville Nashville

Personal Lines Institute Life & Health Institute Commercial Casualty Institute Commercial Casualty Institute Ruble Graduate Seminar

Local Seminars Laws, Legislation & Lunch Laws, Legislation & Lunch Laws, Legislation & Lunch Laws, Legislation & Lunch

E&O Business Practices E&O Business Practices E&O Business Practices E&O Business Practices

William T. Hold 9/14 11/9

CE: 7

Memphis Nashville Knoxville Nashville

Fee: $145

Hold Seminar (CISRs Only) Hold Seminar (CISRs Only)

CRM

Fee: $420

10/27-30

Practice of Risk Mngmt.

Sales

Fee: $475

12/8-10

Dynamics of Selling

Flood

Fee: $30

8/24

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Nashville Memphis

Nashville

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The Na National Alliance for Insurance Education & Research is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have ďŹ nal authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Website: www.nasba. org. Advanced Curriculum Rating = 20 CPE Credits. For more information regarding administrative policies such as complaint and refund, please contact our oďŹƒces at 800-633-2165.

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Government and Legal Affairs ACORD 24 and 25 Changes Written by Bill Wilson of the Big “I” Virtual University They say that 13 is unlucky, so perhaps that explains why ACORD swiftly went through the working group process following the 13th edition of the ACORD 25 certificate of insurance in January 2009. This group has produced a new September 2009 edition that incorporates possibly the most significant changes since the ACORD 25 was introduced in November 1977. As noted below, this form’s speedy revision more likely resulted from at least three states’ concern with the cancellation clause language based on recent regulatory directives. In September, ACORD revised both the ACORD 24 and ACORD 25 certificates of insurance which are now the approved forms that all agents should start using as soon as possible for the reasons outlined below. If you manually produce certificates, you should use the new forms now if licensed to do so by ACORD. If your certificates of insurance are prepared on your agency management systems, it is important to check with your vendors to see when they will start using the new forms. Recognizing the high frequency usage of these forms, this revision offers an opportunity for agency leaders and staff to look at how these changes affect continuing certificate of insurance issues. As discussed below, the Special Provisions and Notice of Cancellation changes should offer greater E&O claims protection as long as they are used in accordance with ACORD guidelines. Although these two changes should simplify the process, there is the potential for certificateholder pushback. Another change simplifies the verification of waiver of subrogation clauses which is similar to the current additional insured verification by a Yes or No answer. Top 5 ACORD 25 Changes 1-Form Reduced from 2 Pages to 1 Page Everyone will be thrilled to learn that, thanks to the creative wizardry of the ACORD staff and desktop publishing, the ACORD 25 has been reduced from two pages to one page. Aside from the trees we’ll save, this will lessen the potential E&O impact on agencies if the important information and disclaimers on Page 2 have been left off a transmittal. This information has been moved to Page 1 of the form. 2-Disclaimers and Related Information Moved to the Top of Page 1 The disclaimers from both of the former pages have been relocated and consolidated into two segments near the very top of the new form to make them more visible, reduce redundancy, and eliminate Page 2. This is the new wording near the top of the form: The Tennessee Insuror

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). 3-Columns Expanded for Additional Insureds and Subrogation Waivers In the Coverages section of the form, the “ADD’L INSRD” column has been moved to the right of the “TYPE OF INSURANCE” column and renamed “ADDL INSR.” Check boxes have been replaced with fields to capture “Y” for a “YES” response and “N” for a “NO” response. Since it is such a common request, waivers of subrogation can now be indicated in the new column labeled “SUBR WVD” to the right of the “ADDL INSR” column. Column contains fields to capture “Y” for a “YES” response and “N” for a “NO” response. 4-“Special Provisions” Block Revised Often, agents are asked to add all kinds of information in the section of the prior ACORD 25 that was labeled as follows: DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES / EXCLUSIONS ADDED BY ENDORSEMENT / SPECIAL PROVISIONS This box descriptor has been revised to say the following: DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required) This space on the ACORD 25 has often been misused to add all kinds of information requested by the certificate holder, often in violation of the ACORD Forms Instruction Guide (FIG). For example, the FIG says the following: ACORD recommends that the Certificate NOT be used in the following situations: • •

To waive rights To provide information to the owner of a leased motor vehicle or the lender about both liability and physical damage coverages 31


applying to the vehicle (ACORD 23, Automobile Certificate of Insurance, should be used for this) To quote wording from a contract To attach to an endorsement To quote any wording which amends a policy unless the policy itself has been amended

Those states include South Dakota, New Hampshire, and New York. At the recent Mid-America Technical Conference (MATC) in St. Louis, ACORD representative Joel Volker advised that the prior ACORD certificate forms were out of compliance with the insurance laws in those (and perhaps other less vocal) states.

Despite this caveat, all too often agencies would in fact add information about waiving subrogation rights or include specific statements from the contract the insured has signed with regard to additional insured listings, attesting that the policies complied with indemnity agreements or insurance requirements, etc. The certificate has NEVER been intended to be used in this manner. For more information on this, be sure to check out the article in the VU library entitled “Beware Indemnity Agreement Agent Affidavits.”

For example, on August 13, 2009, South Dakota issued Bulletin 09-06 which stated: “Unless there is express written agreement from the insurer in the form of a policy provision, policy endorsement or some other form of binding written guarantee from the insurer that the insurer will follow the cancellation language in the certificate or memorandum of insurance, the person issuing the certificate must in some manner strike or delete the cancellation language from the form.”

• • • •

In addition, as consultant, expert witness and VU faculty member Don Malecki, CPCU, wrote in the October 2009 issue of Rough Notes magazine, in a recent court case, an agent was sued for failing to note on the certificate that an exclusionary endorsement has been added, as prompted by the “EXCLUSIONS ADDED BY ENDORSEMENT” language (see above) in the former ACORD 25. This language has now been removed. This section of the form is designed to be used exclusively for any necessary and warranted description of operations, locations or vehicles. If additional space is required or other information is needed, the ACORD 101 should be attached. 5-Notice of Cancellation Revised The following is the cancellation provision of the former ACORD 25: SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL ___ DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES. This is the cancellation provision of the new ACORD 25: SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. The obvious change is that the ACORD 25 no longer includes a blank line to show how many days cancellation notice the certificate holder MIGHT receive. The new wording simply refers the certificate holder to what cancellation notice is provided by the policy. There are several reasons for this change. The first and foremost reason for the change and the need to expedite it with a September date is that at least three state insurance departments required a change in the language. 32

While a few states have been very specific and vocal on the issue of certificates providing a notice of cancellation, it is our opinion that providing such notice may often be in violation of insurance laws in most states. We are not attorneys and we certainly do not speak for state regulators, but we have reached this conclusion based on the rationale expressed in the discussion below. In addition, this is what the ACORD Forms Instruction Guide (FIG) says: [V]irtually every other state will not allow any change in a certificate of insurance that would attempt to modify a policy unless the revised certificate is filed and approved. In these states, this form can only be changed to reflect the terms and conditions of the policy on which it is reporting. Such change(s) must be approved in advance by the insurance carrier that issued such policy. Notice of cancellation is a POLICY right, not a voluntary service. The policy, often following state law, determines who gets notice of cancellation for what reason(s), and with how much advance notice. Rarely is a certificate holder entitled to notice of cancellation by a policy form, even if the certificate holder is an additional insured. NONE of the ISO additional insured endorsements provide for any notice of cancellation to the AI. In fact, under most ISO commercial forms, the right to notice of cancellation is not even granted to any insured other than the “First Named Insured” unless otherwise indicated by statutory or case law. The insurance policy is a contract between the named insured(s) and the insurance company. Typically, agencies do not provide notice of cancellation to insureds, much less third parties who are entitled to no policy rights. Despite this, we know that many agencies voluntarily provide notice to certificate holders that have no such rights under the policy as a service to their customers, often as a competitive advantage. Aside from the fact that this is expressly illegal in some states and may be, by inference, in others, there are reasons why this practice should be reconsidered. For example, insureds often sign contracts where they agree that the other party will be provided 30 days (or more) noThe Tennessee Insuror


tice of cancellation. The insurer will not provide this notice, but the agency voluntarily agrees to do it. What if the insurer cancels the policy for nonpayment with 10 days notice? The agency has issued a certificate indicating that the certificate holder will receive 30 days notice. Does the agency plan on paying the premium for extending the policy period another 20+ days (and will the insurer actually do this)? Most contracts the insured enters into that require notice of cancellation do not specify whether that applies to cancellation by the insurer or the insured. Many or most policies permit the insured to cancel immediately with written notice or by surrendering the policy. Again, how does the agency plan on providing 30 days notice if the policy has been terminated by the insured? The agent most likely has no legal standing to extend the policy period. In our recent webinar on certificates of insurance, we provided a slide that listed over a dozen court cases where the agent was found liable under a certificate of insurance. Most recently, the greatest success of plaintiff’s lawyers has been in the area of applying fraud statutes or a legal concept known as detrimental reliance. While the plaintiff must prove fraud, is it possible that an agent who indicates that the agency will provide 30 days notice of cancellation (outside any policy provision to that effect) KNOWING that this would be impossible in some situations, could be found guilty of fraud? Most lawsuits against agents involving certificates of insurance have been unsuccessful because the courts have generally found that unmodified ACORD forms with disclaimers intact are not contracts and actionable against the agent. However, some courts have applied the concept of detrimental reliance or promissory estoppel to hold agents liable for statements on certificates that are not true and on which the other party relied to their detriment. We anticipate push-back from certificate holders on the new ACORD forms and we are considering various responses based on what may occur in the coming months. We will continue to use the VU newsletter as the vehicle to keep you informed on developments and Big “I” members are always welcome to log in and use our “Ask an Expert” service when they have certificate or other questions. As a final note, two anticipated questions are, when will my agency management system have the new form and what should I do if someone demands the old ACORD forms? At MATC, Mr. Volker advised, with regard to implementing the new forms and using the old forms that ACORD’s licensing agreement prohibits modifying the forms in any way and requires replacement of superseded forms as quickly as possible, but not longer than one year. We suggest using the new ACORD forms immediately but, according to ACORD’s licensing agreement as we were advised, the older editions cannot be used beyond a year from the time they were replaced. This should also apply to requests from lenders for the 2003 editions of the ACORD 27 and 28. u The Tennessee Insuror

From the Smokies to Graceland, from the Music City to the Chattanooga Choo Choo, where you place your Scheduled Rental Dwelling business matters.

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The Tennessee Insuror


Association Update

Tennessee Agents Attend National Convention

more information.

From March 3rd-5th, a constituency of Insurors members was in Washington, D.C. for the 2010 Big “I” Legislative Conference and Convention. Attendees from Tennessee included Board members Tee Zerfoss, Walt Bradshaw, Brad Smith, Ed Gibbons, Eddie Miller and Roger Smith; as well as members Sharon Simmons, Dave Porch and Kevin Ownby.

Insurors Member Officiating March Madness

Insurors members Roger Smith, Ed Gibbons & George Furlong outside Rep. Tanner’s office

The group attended national meetings, met with their respective members of Congress, discussed the future of our Association and learned about some important new issues facing our industry.

Next year’s National Convention will take place on April 13th15th, so mark your calendars now and watch www.iiaba.net for

image courtesy NCAA

Gary refs an ACC matchup

Insurors member Gary Maxwell, of Gary Maxwell Insurance Agency in Cookeville, gets to see “March Madness” firsthand. That’s because in his spare time he works as a basketball referee for the NCAA. He most recently officiated some of the games in the Providence, Rhode Island, tournament regional, including Villanova’s overtime victory against Robert Morris.

He has been an official since 1992, when he was hired by the Ohio Valley Conference. Since then he has worked his way up and built up a résumé that included working the 2006 Final Four in Indianapolis. A lifelong basketball fan, Gary grew up in Livingston and played at Livingston Academy, which he still claims as his favorite team. u

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The Tennessee Insuror


Broker Spotlight

RPS of Lexington

At Risk Placement Services (RPS), the people are the difference. A national MGA/Wholesaler, RPS is recognized as the largest binding authority MGA in the United States per Business Insurance magazine. Their Lexington office is the home for nearly 100 employees with seven specialty departments. The leadership of the agency has years of experience on the intermediary side of the business.

Seven Specialty Departments RPS specialty placement includes seven departments; Commercial Auto (non-fleet), Garage Coverages, Commercial Auto National Fleet, Aviation Brokerage (added 9/09), Open Brokerage, Commercial Lines Binding Placement and Specialty Personal Lines. Literally representing dozens and dozens of specialty carriers, RPS has the products you need. All of their business is placed with carriers that have a solid financial base. Territorially, the Lexington office wrote business in ‘20+’ states last year. Even if your risk is coastal they’ve had success.

Franchise Effect in Tennessee RPS of Lexington is looking for new appointments in Tennessee. Their approach on new appointments differs from some of their competitors. They request some information via website submission at www.rpslex.com about your agency. Following a phone discussion, they will move to appoint if, “RPS is right for you,” and “you are right for us.” Business should be managed professionally and this approach has served them well. Ultimately, an RPS representative will visit your agency. As a result of this thorough process, RPS is not on every corner in Tennessee, which means when you bring them an account there is an excellent chance they are not quoting it for another Tennessee agent.

Get Started To get your agency started with RPS, please contact Ron Smedley, Marketing Director & Senior Vice President, at 800.432.9348, or by e-mail at ron_smedley@RPSins.com. u

You or someone you nominate may be the next Outstanding CSR of the Year! Call for Nominations: Nominations are now being accepted for the 2010 Outstanding Customer Service Representative of the Year award. The national winner will receive $2,000 cash, a gold and diamond pin, and a framed certificate of recognition. National finalists win $500 and a gold and garnet pin. And if you nominate the national winner, you receive a $1,000 prize! All it takes to enter is a nomination, a letter of recommendation, a competition entry form, and a 1,000-word essay written by the nominee on a customer service topic specified by The National Alliance. Entries are due no later than May 1, 2010. For more information about the contest, the essay topic, and to download forms, visit: www.scic.com/CISR/CompeteWin/CompeteWin.htm

Insurors Contact: Laura Coordinatorin this area. Insert Association name,Thrower, logo, andEducation contact information 615.515.2607 • lthrower@insurors.org Fonts used in this ad are Futura Condensed Light and Medium. © 2010. The National Alliance for Insurance Education & Research.

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The Tennessee Insuror


Company Spotlight

Auto-Owners Insurance Company Auto-Owners Insurance Company stands among the 20 largest insurance companies in the nation; it’s ranked in the Fortune 500; and is rated among the top three percent of all companies for financial strength. Providing Safe. Sound. Secure.® insurance for its more than 3 million policyholders and 6,300 independent insurance agencies is its top priority. Auto-Owners has grown tremendously since 1917, when founder Vern V. Moulton moved the company to Lansing, Michigan, after organizing it in Mount Pleasant, Michigan. At that time the company consisted of one book of policyholders’ names and $174.25 in assets. Despite those humble beginnings, Auto-Owners has remained consistent in its philosophy.

Competitive Advantage Auto-Owners offers competitive advantages for its agents. Some of them are: •

• • • •

Superior customer satisfaction, as demonstrated by its recognition from J.D. Power and Associates studies. In 2009 J.D. Power and Associates, for the second straight year, ranked Auto-Owners “Highest in Customer Satisfaction with the Auto Insurance Claims Experience.” Competitively priced products backed by sophisticated modeling and forecasting tools. A wide variety of products, with broad coverage forms to allow agents to sell with confidence. Enjoys the highest financial ratings by many leading rating organizations. Its 100 percent commitment to the independent agency system, so agents will not be competing with their own company when working with Auto-Owners. A full-service underwriting branch and two claims offices in Tennessee, so agents do business with fellow

The Tennessee Insuror

Tennesseans. Marketing support for agencies, with marketing representatives who call on agents and have full underwriting and quoting authority.

Auto-Owners’ success also stems from its guiding core values. These 10 values make up the heart of Auto-Owners Insurance: Honesty, Hard Work, Prudence, Loyalty, The Team, Our Relationships, Opportunities for Associates, The Customer, Stability and Consistency, and Profit are the values upon which our business has grown, trust has been earned and relationships have thrived. “For 93 years, the focus of our company has been to indemnify insureds when a covered loss occurs,” said Chairman & CEO Ron Simon, “With that in mind, we are very thankful to serve our insureds and their 4.9 million policies, 37,500 agents, and 3,642 associates. We who work in this industry are truly serving others.” Part of the company’s stability comes from experience at the top. The 12 senior officers have a combined 389 years of Auto-Owners experience. Auto-Owners is committed to giving its associates diverse insurance experiences with the company. Many associates have held several different positions, and most of the senior officers have worked in more than one division. Auto-Owners looks forward to continuing its strong relationship with independent agents in Tennessee. Auto-Owners Insurance ranks highest in the proprietary J.D. Power and Associates 2009 Auto Claims StudySM. Study based on 11,616 total responses, ranking 25 insurance providers. Excludes those with claims only for glass/ windshield, theft/stolen, roadside assistance or bodily injury claims. Proprietary results based on experiences and perceptions of consumers surveyed June 2008 - June 2009. Your experiences may vary. Visit jdpower.com. u

Tennessee Contact Jim Baes, Regional V.P. baes.jim@aoins.com 800.325.5293 Tennessee Offices Brentwood (full service) Jackson and Knoxville (claims service only) Company Information Auto-Owners Insurance Co., with $14.3 billion in assets and $4.5 billion in written premium, is an insurance provider based in Lansing, MI. AutoOwners works exclusively with independent agents to offer auto, home, life and business insurance protection. Established in 1916, the company serves policyholders in Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Virginia and Wisconsin. For more info, visit www.auto-owners.com. •

• • • •

Rated A++ (Superior) by A.M. Best for its five property and casualty companies, one of only 10 insurers to receive this rating Rated A+ (Superior) by A.M. Best for its life company Ranked 476th in the Fortune 500 (2009) Received the 2009 Applied Systems Interface Partner Award Honored in 2008 and 2009 for being “Highest in Customer Satisfaction with the Auto Insurance Claims Experience” by J.D. Power and Associates. 39


trust. 40

acuity.com

The Tennessee Insuror


Company Briefs

Builders Mutual Distributes $1.3 Million in Dividends to Policyholders Builders Mutual Insurance Company is distributing a $1.3 million dividend to eligible policyholders in North Carolina, South Carolina, Virginia and Tennessee. While 2009 was a challenging year for the building industry, Builders Mutual and its’ policyholders weathered the economic storm. This dividend distribution is a direct result of policyholders’ conscientious efforts to make safety a priority in their work places, which resulted in a lower number of workers’ compensation claims. Checks are being distributed to more than 6,500 eligible workers’ compensation policyholders, including 482 policyholders in Tennessee who will be receiving over $75,000. “At a time when builders are challenged to reduce costs, it is clear that they haven’t reduced their focus on safety,” stated Mike Gerber, Senior Vice President/CMO. “And, we are committed to providing the resources and training to help our customers stay safe. In 2009, we increased the number of Builders University training classes offered and added more classes taught in Spanish,” Gerber continued. “Additionally, our relationships with the state and local home builders associations have enabled us to help create a culture of safety that is embraced by our policyholders.” The availability of a dividend, which makes this distribution possible, is based on Builders Mutual’s operating results during a particular period. Builders Mutual does not predict or guarantee a dividend distribution in any year; however, they have returned dividends in 21 out of 25 eligible years. It is the safety experience of their policyholders which allows the opportunity for this consistent dividend return.

InsBank Promotes Laney to First Vice President Insurors banking partner InsBank has promoted Frances Laney to First Vice President. In addition to currently managing the operations areas of the bank, her new role reflects increased management responsibilities in InsBank’s deposit services department, which is responsible for overseeing customer service and generating new accounts. Laney, who started working at InsBank in 2002, was previously Vice President of Operations. She will continue to serve as InsBank’s Certified BSA officer, a position she has held since 2008. “We pride ourselves on providing superior personal customer The Tennessee Insuror

service, and Frances’ leadership is one of the primary reasons our customers expect that from us,” said Jim Rieniets, CEO and president of InsBank, “Her years of banking experience at InsBank and other financial institutions have been a valuable asset to the operation our bank.” Laney’s promotion builds upon her extensive 35-year career in the banking industry. Before joining InsBank, she held officer positions with First American Bank, Mt. Juliet (formerly First Southern Bank), Bank of Nashville, and Bank of the South. She is a graduate of the BAI School at the University of Wisconsin with an emphasis in bank operations management and also the Southeastern School of Banking.

Centralia Now Branded in Tennessee as South & Western South & Western General Agency, Inc., has recently announced the launch of its full product line in Tennessee. After the successful merger of Centralia Insurance Service of Memphis into South & Western, producers all across Tennessee have been taking advantage of new web based quote and issue functionality, markets and special incentives to grow their specialtyYes-PublicAutoAd4c_TN_Insurer(4.625x4.875).pdf lines of business. 2/10/10 4:15:10

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“The response we’ve received from our producers has been overwhelmingly positive” said Randy Clarkson, President of South & Western – Memphis, “By being able to now offer a full line of products including specialty personal lines, farm & ranch, commercial P&C and commercial transportation, producers are able to easily handle many of their customer’s specialty insurance needs.” At www.southandwestern.com, producers have the ability to quote and issue personal lines products online. In addition, quotes and electronic submissions can be made for most farm & ranch risks written by independent agents. And now, online premium indications and submissions can be made for 1000s of specialty commercial P&C classes as well as long haul trucking. “Making business easy for our producers is what it’s all about,” added Clarkson, “CSRs in agency offices simply don’t have the time to wait for a quote on a faxed submission to a general agent. They need one access point without having to keep track of multiple passwords in order to get a fast rate.” For more information on South & Western, visit www.southandwestern.com or call 800-492-5351 (option 8 for sales).

Siuprem & SIU Announce Breast Cancer Campaign Siuprem, Inc. and SIU have announced an exciting new initiative, SIUPREM CARES, their new campaign to promote Breast Cancer Awareness. Officially announced on Monday, March 8th, a $5 donation will be made to Breast Cancer Awareness anytime a commercial policy is financed through Siuprem. All commercial premium finance agreements dated March 1st through December 31st of 2010 will be eligible for the donation. With this program, as well as additional donations, they hope to reach or exceed a goal of $50,000. Agents will be seeing the updated Siuprem logo throughout the year. The Siuprem website (www.siuprem.com) has gone pink in support of the initiative. The website will track donation amounts, post events, as well as provide opportunities to share survivor stories and comments from the people in the insurance industry. “Unfortunately, many of us have been directly affected or know someone who has been affected by Breast Cancer. The American Cancer Society estimates the probability of a woman developing breast cancer in her lifetime as high as one in eight. In 2009, estimates showed breast cancer represented 27% of all cancer cases in women and represented 15% of all cancer related deaths. The good news is that through better awareness, early detection methods and improved treatment options, survival rates have continued to trend upwards from 75% in the mid seventies to almost 90% by the middle of this decade.” 42

Siuprem would like to spread the word to independent agents, not only in the Southeast but across the United States. “Together as an Industry we can make a HUGE difference. Millions of women and men are affected by breast cancer, and you don’t realize how close it can hit home,” says SIU Vice President of Operations Tripp Duesenberg. “Thanks for your support. I hope people take advantage of this opportunity. Together we will make a difference.”

ACUITY Sets Growth records in 2009 ACUITY announced its 2009 growth results, which showed continued strong performance across its 19-state operating territory and record-setting achievements. Personal lines surpassed 150,000 in-force policies and $200 million in written premium, both of which were alltime records. New business revenue was also up nearly 10 percent. In commercial lines, ACUITY set a new policy count record, finishing the year at more than 83,000. Growth in commercial lines was propelled by writing $140 million in new business premium, an amount that surpassed 2008 by more than $5 million. At nearly 55,000, ACUITY also set a new mark for quote requests received, besting the previous year’s record by more than 15 percent. The quote hit ratio also exceeded 35 percent for the third straight year. “ACUITY’s record increase in business in 2009 shows we are offering independent agents the pricing, coverage, and service they need,” said Wally Waldhart, Vice President - Sales and Communications. “We are tremendously proud of the strong partnerships we’ve built with our agents and thankful for the trust they have placed in ACUITY.” ACUITY’s record growth in 2009 is especially noteworthy considering the current economic conditions. “The insurance marketplace remained tremendously competitive in 2009 at the same time the recession has put financial pressure on individuals, families, and businesses,” said Ben Salzmann, ACUITY President and CEO. “Our growth in both new business premium and total policy count shows we are pricing both competitively and fairly,” Salzmann added. “It also enables us to fulfill our mission to protect and enhance the financial well-being of our customers and to rebuild shattered lives.”

United Fire Board Declares Regular Dividend on Common Stock The board of directors of United Fire & Casualty Company declared a regular quarterly dividend on the common stock of 15 cents per share at its meeting on Friday, February 19th. The dividend, which became payable on March 15, 2010, is for stockholders of record as of March 1, 2010. The company has paid dividends every quarter since March 1968. The Tennessee Insuror


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In United Fire’s 2009 financial results, a net loss of 39 cents per diluted share for full-year 2009 was reported, compared with net loss of 48 cents per diluted share for full-year 2008. “Despite our less than desirable underwriting results in 2009, we are pleased to note that our book value per share increased by $1.25 to $25.35 at December 31, 2009. This change is primarily attributable to an increase in our unrealized gains, after tax, which reflects the rising market values of our equity holdings and increases in bond prices as interest rates decreased. Also, our statutory capital and surplus rose slightly to $556.3 million at yearend 2009, which we believe is a testament to our overall financial strength,” said President and CEO Randy Ramlo.

Allstate May Terminate as Many as 3,000 Captive Agents BestWire reported in February that as many as 3,000 existing Allstate agents may be eliminated within the next two to three years. The company plans to base these cuts on production quota levels, and many of these agents have been with company for years according to National Association of Professional Allstate Agents (NAPAA) Executive Director Jim Fish.

based Brentwood National Insurance Company. For half a decade, SUNZ Insurance Company, with its corporate office in St. Petersburg, FL, has been providing Professional Employer Organizations and Staffing Companies with individualized workers’ compensation policies. Their hands-on, personalized service and flexibility are characteristics unique to the industry. Doug Lilak, CEO of SUNZ Insurance Company said, “From inception, our focus has been on the client. When we provide specialized services and work with each client on an individualized plan that best fits their needs, we reduce the risk of disappointment, which in turn, benefits us all.” In the wake of a recession that has haunted nearly every company in the industry, SUNZ has overcome the odds and declining economy to help grow the business and expand into new markets. Currently, SUNZ is in the process of finalizing rate approval in the state jurisdictions that have been acquired through Brentwood National. Once complete, the expansion will focus primarily on the southeast region of the country and will give SUNZ the opportunity to write policies in an additional 12 states - something SUNZ and their current customers have been anxiously awaiting. A partnership between SUNZ and private equity investment firm Palm Beach Capital, made this expansion possible. Palm Beach Capital partners with management teams in middle market buyouts, recapitalizations and growth equity investments.

“Older agents — 50 to 60 years old — who might be servicing their book of business and maintaining high retention and loss ratios, but that isn’t enough for Allstate,” says Fish, “They (Allstate) are looking to add highvalue, production-oriented new agents.” NAPAA President Bob Isacsen, who said Allstate “doesn’t acknowledge we exist,” said the insurer has used agents as a scapegoat for “ineffective leadership.” “You have non-insurance people running the company and running it into the ground, if you ask me,” said Isacsen, who owned an agency for 21 years before selling about three years ago to retire.

SUNZ Acquires Tennessee-Based Brentwood National Ins. Co. SUNZ Insurance Company announced recently that they have acquired Tennessee44

The Tennessee Insuror


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The Tennessee Insuror

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Dave Swanson Calls it A Career After spending 40 years in the insurance business, Dave Swanson, CIC, CPIA, retired from the industry on February 28, 2010. He spent his career working for Aetna, Can, Hanover and finally EMC Insurance. In various positions, Dave called on independent agents in Tennessee, Georgia, Florida and Alabama, all involving marketing and the partnerships developed with the independent agents. He is also past president of the Tennessee 1752 Club as well as the Georgia 1752 Club. In retirement, Dave will be doing volunteer work with the Mission of Hope and Disabled American Veterans (DAV) in Knoxville as well as spending time with four grand children.

Hanover’s Palmer Announces Retirement Donna Palmer, CIC, AU, CISR, a mainstay of the Tennessee insurance industry for many years, recently announced her retirement from the business. Most recently employed by Hanover Insurance Group, Donna is a person who has always been committed to the independent agency system and helping agents. She is a trusted friend to all and will be dearly missed in the Tennessee insurance community.

Employers New Loss Control Web Platform EMPLOYERS announced recently that they have launched their new Loss Control ConnectionSM, a comprehensive Webbased platform that provides policyholders and independent agents with an array of resources to help manage risk and reduce losses. The portal also enables independent agents to deliver online services to their clients as co-branded offerings that can be integrated into their agency websites. As trusted advisors to small businesses, independent agents play an important role in helping their clients make the best workers’ compensation insurance-related coverage decisions for their businesses. Now, agents can offer their clients a compelling yet easy-to-use online service that provides a practical, real-world solution designed to help them contain costs and achieve operational efficiencies. In an industry where it’s sometimes difficult for small businesses to discern between high-value and lowest-cost carriers, EMPLOYERS’ Loss Control Connection makes it easy not only to see the difference, but also to maximize the value.

Travelers Launches Mobile Applications As the number of consumers turning to their easy-touse smartphones continues to rise, Travelers has recently announced the launch of its first mobile applications, “Auto Accident Help” for iPhone® and “Quick Connect” for BlackBerry® smartphones. Both applications are free for anyone to download. Auto Accident Help is available at the 46

iTunes® store and Quick Connect is available on Travelers. com. The new mobile tools provide auto accident assistance for iPhone and BlackBerry smartphone users. Additionally, Travelers customers will have the added advantage of starting the auto claim process directly through the iPhone application and the mobile website. Integrating Travelers’ online claim reporting into the new mobile applications is part of the company’s ongoing mobile strategy that first began with the launch of the mobile Web site in late November 2009. The number of people accessing news and information daily on the mobile Web more than doubled in 2009 when compared to 2008, according to comScore.

Progressive Launches Social Responsibility Website Progressive is now formally reporting on its social responsibility efforts with a new website called “Progressive Together,” accessible at progressive.com/socialresponsibility. Progressive sees social responsibility as part of doing business in keeping with its Core Values, especially the Golden Rule — treating others as they would like to be treated. Site visitors can learn about: • • • • •

Achievements and goals around efforts to reduce, reuse and recycle to secure a sustainable future Information on Progressive business practices aimed at driving positive changes in car insurance Charitable activities and contributions of Progressive employees, agents, and other partners Progressive’s Global Reporting Initiative scorecard and Carbon Disclosure Project report Information and resources on how site visitors can personally make a difference.

This is the first time the company has pulled together all of its social responsibility activities into one place, but Progressive has been committed to acting in socially responsible ways since its founding in 1937.

Zurich Launches Umbrella

Monoline

Hardware

Zurich North America Commercial’s Specialties business unit recently announced it is offering a monoline umbrella product for customers who are engaged in the lumber and hardware industries. This offering is administered by the Huntersville, N.C.-based American Lumber Underwriters and is available to agents and prospective clients nationwide. This umbrella product may be written over any carrier with an The Tennessee Insuror


A-VII rating or better. The American Lumber Underwriters Group umbrella targets a wide variety of lumber and hardware businesses such as sawmills and planing mills, lumberyards and building material dealers, hardware stores, millwork, just to name a few. Coverage limits are available at $1 million, $3 million, $5 million and $10 million.

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AIG Part of Mergers and Acquisitions Trend Recent reports from the Associated Press have shown that mergers and acquisitions are trending upward in 2010, as the deals made so far are up 21% from a year ago. A major part of that increase is due to sales of assets from AIG, including two sales totally over $50 million. The first sale, which is the current largest deal this year, allowed Britain’s Prudential PLC to purchase to purchase AIG’s Asiabased life insurer, AIA Group, for $35.5 billion. A week later, MetLife was able to purchase AIG’s American Life Insurance Co., or Alico, for $15.5 billion. The two deals make up the vast majority of insurance sector purchases this year, with only around $10 billion coming from other sources. Overall, insurance trails only the healthcare industry in merger and acquisition dollars for 2010. u

The Tennessee Insuror

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      

47


TAAG’s Mike Dill is Fast Becoming an Expert at His High Speed Hobby

48

The Tennessee Insuror


After 43 years of helping manage risk, maybe it is only fair that Mike Dill gets to take some risks on the side. Mike spends his work week as the Director of Tennessee Agents Alliance Group (TAAG), but how he spends his weekends is what really gets him going. He and his wife Cindy are Corvette racers, and they’re pretty good at it too. How good? Mike finished 13th in the nation out of 2,597 male competitors in 2009, and Cindy was 6th out of 1,428 females.

Mike appeared on the March/ April 1997 cover

Mike has a penchant for interesting hobbies. You may remember a story The Tennessee Insuror ran on him in 1997, when he was a caretaker for tigers, including the University of Memphis mascot. Or if you know him, you might be aware that he is a licensed funeral director and creamator. But when Mike and Cindy bought their first Corvette, a 1996 C4 model, in May of 2007, they had no idea it would lead to a new passion.

Wanting to get as much enjoyment as possible out of their new purchase, the couple joined the Nashville Corvette Club (NCC), a local group with over 200 members. Becoming active in the club, they deMike behind the wheel of his first Corvette, a 1996 C4 cided to volunteer their time to help NCC work on the Corvette race courses. After working several races, Mike realized pretty quickly that he was on the outside looking in, “They (the racers) were having all the fun! I knew I had to give it a try.” And so he did, racing in his first event in late 2007 in Nashville. He finished 3rd in his class at that race, and he was hooked. After about six months of watching Mike race, Cindy decided she wanted to be behind the wheel as well. As their desire to race increased, the couple began traveling to events across the country Mike stands by the current #610 car, a 2004 C5 model Corvette for weekend races. The increased work load finally took its toll on the ‘96 Corvette, and a blown engine put it out of commission. With racing now a preferred pastime for the Dills, they decided to The Tennessee Insuror

purchase a 2004 C5 Corvette to keep their hobby alive. With their new car ready to roll, it was time to expand the race schedule yet again, and in 2009 they took part in 276 events. They have now taken part in races in Michigan, Florida, North Carolina, Indiana, Mississippi, Alabama, Georgia and of course Tennessee. The courses they run vary from old race tracks to decommissioned military runways. These courses are set up for two types of racing, Road Racing or Autocrossing. Road Racing is usually about a 2 mile setup with regular turns and no speed limit. Autocrossing is usually setup on an old runway, and pylons mark off turns and maneuvers that must be completed by each driver. There is a speed limit of about 80 miles per hour for Autocrossing, which is why Mike prefers the Road Races, “Because I like to go as fast as I can.” One such Road Race course is Putnam Park, a 1.78 mile, 10-turn raceway located in Mount Meridian, Indiana. The course includes such intimidating sections as “The Loop” and “Dead Bear Turn.” A full race weekend at one of the courses usually consists of 14 “events” with drivers running 14 laps on Saturday and 14 The Putnam Park Road Course track laps on Sunday. (image courtesy Putnam Park) Mike and Cindy compete in the Class 1 division of the races, which is known as the “Street Class.” Cars in this division are allowed only minor modifications, and the Dills even drive their race car to the competitions, although they are considering purchasing a trailer for some future trips. There are no sponsors for the race car, and Mike is responsible for his own expenses, including the mechanics he uses to keep the car at peak performance. He is also footing the bill for their tuition at a “high speed school” at the Nashville Superspeedway later this year. The next step for Mike and Cindy is to attend the National Corvette Club Convention, which is taking place on the last weekend in July, and receive their awards.

An Insured Race Car is a Fast Race Car Having been in the insurance industry since he was fresh out of college, including stints with Royal Globe and Pinson & Associates, Mike knows the importance of protecting his race car. He covers the Corvette with his own liability policy, and at races the NCC’s governing body, the National Council of Corvette Clubs, provides each driver with $1 million of liability coverage. “Having that coverage from the National Council is really nice,” Mike adds, “just knowing you are protected lets you really push the limits during the race.” And with the way Mike and Cindy are improving, they may just push the limits all the way to the winners’ circle. u 49


All the Umbrellas A Stand Alone Umbrella For Ev y Risk Now on Big “I” Markets er A personal umbrella policy is arguably the best value in the insurance business—$1 million of insurance coverage for under $200 a year. Most people buy an umbrella policy for its excess coverage, including defense costs. It has, however, far greater value as a risk management tool than just excess coverage. An umbrella policy is how your clients eliminate coverage gaps that fall outside the scope of underlying auto and homeowners policies. Helping your clients understand those gaps is a critical part of the risk management process. That task can be difficult because of the lack of consistency among umbrella policies, both in what they cover and in who they will cover. That is why you now have access to two stand alone personal umbrella policies!

Introducing the Big “I” Markets Umbrella Program For more than 25 years, RLI has been the primary market for members who need access to a stand alone personal umbrella market. RLI has proven to be a strong and, above all, stable market with unmatched financial strength in the marketplace, and RLI is the recommended preferred market for Big I members. It has had 25 years of unparalleled consistency, and last year RLI introduced PUP Special that expanded its underwriting appetite. However, in some circumstances you may have a client whose risk classification and/or coverage needs fall outside of RLI’s guidelines. You can now access an alternative stand alone personal umbrella market on Big “I” Markets where you can place umbrella risks that RLI will not write. Anderson & Murison provides you access to National Casualty’s personal umbrella market. Here are some of the key distinctions between the two markets.

50

Preferred Market - RLI Personal Umbrella • • • • • • • • •

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

Alternative Market - Anderson & Murison • • • • • • • •

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

You can download a detailed chart with information about both the primary and alternative markets now by visiting http://na.iiaa.org/TFT/Web%20Archives/03_02_10/ls.pdf For more on Big “I” Markets visit www.bigimarkets.com u

The Tennessee Insuror


Meetings

Golfing Season is Here Again! MTSU Martin Chair of Insurance Fundraiser Golf Tourney The 26th Annual Tommy T. Martin Chair of Insurance Golf Tournament will be held on Tuesday, April 20th, at the Champions Run Golf Course in Rockvale. This year’s tournament is sponsored by BlueCross BlueShield of Tennessee and is in honor of Dick Hendrick, longtime tournament volunteer leader. For more info, e-mail khollman@mtsu.edu.

Insurors of Nashville Golf Outing & Social The Insurors of Nashville will hold their annual golf tournament on Monday, May 3, 2010, at the Brentwood Golf & Country Club. For more information, or

The Tennessee Insuror

to register for the event, contact Heidi Williams at 615.758.9676 or by e-mail at ionheidi@aol.com.

Memphis Local Board Annual Picnic & Golf Tournament The Memphis local board’s annual picnic will be held on Tuesday, May 11, 2010, at Windyke Country Club. Cost for golf is $150 per player. Tennis ($25 per player) and volleyball ($50 per team) tournaments are also available. Contact Sally Baker Brenner for more information at SallyBSource@aol.com.

Northwest Tennessee Insurors Golf Tournament Date Set The Northwest Tennessee Insurors will

hold their annual golf tournament and pork chop dinner on Tuesday, June 1, 2010, at the Dyersburg Country Club at the Farms. The cost is $45.00 per person; which includes lunch, green fees, cart, and tax. Contact Matt Russell at mrussell@westaninsurance.com for more information or to register.

The Insurors 117th Annual Convention Dates for the Insurors 117th Annual Convention have been set. The 2010 event will take place October 24th-26th in Nashville at the Hilton Downtown. Preparations are underway now to ensure that this year’s convention continues to build on the success we have seen in recent years. Look for more information in our next issue. u

51


The Big I has endorsed the RLI Personal Umbrella Policy for good reasons. RLI is a stable and secure company offering what our members need. The stand-alone nature and the absence of an underlying carrier requirement gives our independent agents flexibility

to grow their books of business. – FR A NK A. MA NCI NI , E S Q .

President & CEO, Massachusetts Association of Insurance Agents

Our Personal Umbrella Policies are different. DI F F ERE NT WORKS

They stand alone. RLI, A+ rated by A.M. Best, has more than 25 years of experience

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providing affordable personal umbrella coverage—so your customers can protect

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their hard-earned assets. It’s easy to access our online quoting, issuance and inquiry

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system so you can quickly see if they qualify. As a member of the IIABA, the RLI

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program is immediately available to you with no volume requirements. To learn more about RLI Personal Umbrella Policies, contact your state association or visit www.rlicorp.com.

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Member Tips

Do Your Clients Only Hear From You at Renewal Time? by Daniel Smith, Director of Communications Without a doubt, the work life of an independent agent is a busy one. You may barely have time to reach out to potential new clients, much less continue to nourish your current ones. But if the only time your current clients hear from you is when it is time to renew, there may be a problem. The old adage about it being more valuable to maintain a current client than to add a new one still holds true today, but there is some work involved. Consider some of these possible methods of communication to maintain an open dialogue with your current clients.

Newsletters Although paper newsletters may be becoming a thing of the past, electronic newsletters are certainly still a viable means of communication. Sending out a monthly or bi-monthly e-newsletter can help keep you on your client’s mind, and can also serve as marketing tool for seasonal lines of business. Using a e-newsletter service like the Big “I”’s RetainNOW, the Tennessee-based Emma® or Constant Contact® can also provide invaluable tracking data for you to utilize.

Blogs Internet web logs, or blogs, as they are commonly referred to, have become commonplace in today’s business world. Having an agency principal maintain a blog can provide a personal connection for your clients and allow them to feel “in touch” with your agency. If you decide to create a blog, be sure to have only one or two authors to maintain a consistent message, and never use a blog as a platform to complain about companies or customers.

Social Media Social Media is a trend that is not going away anytime soon. From Facebook to Twitter to LinkedIn, businesses are using these sites for client retention, branding and prospecting. If you have or decide to create a profile on one of these sites, develop a “best practices” guide or use the one created by ACT to ensure the right message is going out to your clients. With any of these methods, the content is what will set you apart. Having relevant information written in a concise manner and placed in an aesthetic format will ensure that it doesn’t become just another piece of clutter. If you would like assistance in getting a communications platform started for your agency, send me an e-mail at dsmith@insurors.org or call 615.515.2601. u


Directory of Advertisers Advertiser

ACUITY Amerisafe Arlington/Roe & Co. Auto-Owners Insurance Bituminous Insurance Companies BlueCross BlueShield of Tennessee Builders Mutual Delta Dental Donegal Insurance Group EMC Insurance Companies FCCI Insurance Group Grange Insurance Companies Guard Insurance Group Harford Mutual Individual HealthCare Specialists InsBank J.M. Wilson Johnson & Johnson Lemic Insurance Company National Alliance for Insurance Education National Security Group North Alabama Insurance Penn National Insurance Preferred Comp of Tennessee Preferred Property Programs South & Western Southern Cross Underwriters SIU/SIUPREM Summit Holdings Swett & Crawford Tenco Services, Inc. Tennessee Agents Alliance Group Tennessee Underwriters, Inc.

Phone

(800) 242 - 7666 (866) 719 - 0267 (800) 878 - 9891 (517) 323 - 1200 (800) 342 - 5786 (865) 588 – 4612 (800) 809 - 4859 (800) 223 - 3104 (800) 277 - 7442 x1370 (800) 239 - 2005 (800) 226 - 3224 (800) 422 – 0550 (800) 673 - 2465 (800) 638 - 3669 (866) 661 - 6500 (866) 866 - 4268 (800) 595 - 0063 (931) 704 - 0810 (225) 201 - 0107 (800) 633 - 2165 (800) 239 - 2358 x267 (800) 824 - 1740 (800) 395 - 0518 (888) 922 - 2258 (888) 549 - 2465 (800) 492 - 5351 x8 (800) 824 - 4403 (800) 925 - 2546 (800) 971 - 2667 (800) 489 - 7475 (800) 621 - 1313 (888) 320 - 0294 (615) 791 - 1400

Insurors local board Golf Tournaments Nashville - 5/3 Memphis - 5/11 Northwest Tennessee - 6/1 See page 51 for more details

Website

www.acuity.com www.amerisafe.com www.arlingtonroe.com www.auto-owners.com www.bituminousinsurance.com www.bcbst.com www.buildersmutual.com www.deltadentaltn.com www.donegalgroup.com www.emcinsurance.com www.fcci-group.com www.grangeinsurance.com www.guard.com www.harfordmutual.com www.ihstn.com www.insbanktn.com www.jmwilson.com www.jjins.com www.lemicins.com www.scic.com www.nationalsecuritygroup.com www.nai1983.com www.pennnationalinsurance.com www.preferredcomp.com www.umbrellaprogram.com www.southandwestern.com www.scui.com www.siuprem.com www.summitholdings.com www.swett.com www.tenco.com www.taagtn.com www.tnund.com

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The Tennessee Insuror March/April 2010