professional agent de c em b e r | 2 0 1 3
Wh atâ€™s Inside? What's Changed....................15 Skills & Experience..................21 New CIC's & CISR's................25 Crop Insurance.........................29 Additional Insured..................35 Coming Events.. .....................38
Digital Editions of PIAW Magazine Available at
Best wishes for a happy new year filled with health, happiness, and success.
HAPPY HOLIDAYS 2 DECEMBER 13
President Jeff Glass — President, PIA of Wisconsin
The Grinch and Silly Season “And the Grinch, with his Grinch–Feet ice cold in the snow, stood puzzling and puzzling, how could it be so?? It came without ribbons. It came without tags. It came without packages, boxes, or bags. And he puzzled and puzzled ‘till his puzzler was sore. Then the Grinch thought of something he hadn’t before. What if Christmas, he thought, doesn’t come from a store. What if Christmas, perhaps, means a little bit more." —Dr. Seuss That happens to be my all-time favorite Dr. Seuss quote, so fitting for this month’s PIAW article. The holiday season for many of us is the one time of the year where we all get to enjoy our families and friends and create lasting memories, but it’s also the one time of year we all go crazy insane. Let me explain. We all tend to fall into this holiday trap I call “silly season”. Silly season is my self proclaimed time period between Thanksgiving and Christmas. During silly season we all traditionally eat too much, drink too much, spend wildly over budget, and run ourselves ragged and wide eyed all in the attempt to keep up with the hectic holiday pace we selfimpose on ourselves. Looking back to when I was a kid, silly season was always in full swing year after year while growing up. My folks
were “holiday animals”. We had multiple Christmas trees in the house and decorations everywhere. The outside of the house looked like an airport runway. Endless food and booze—my Mom demanded with family and friends that our house was the holiday “cool aid” house where everyone hung out. There was never any shortage of family and friends celebrating the holidays at our house. It was also a family tradition to attend 9 a.m. mass on Christmas morning. I think my folks did that by design to just torture us kids. We always had to wait until after church before we could lay a hand on any gift Santa brought. Talk about the longest hour of church in your life. Now those days are long gone but the memories and traditions will last forever with myself and my family. So if you’re a family who puts the “holiday gas pedal” to the floor or if you’re a more laid back traditionalist—take some time this holiday season and slow down, look around, and enjoy the blessing the good lord has bestowed on all of us and our families. Christmas will come “with” or “without” as the Grinch found out. God Bless you and your family. Merry Christmas J.J. Glass
DECEMBER 13 3
Madison Ron Von Haden, CIC — Executive Vice President, PIA of Wisconsin
Year End Quiz Question #1 : Which U.S., P&C insurance group had the
RECENTLY I WAS ASKED if an agent could send a letter
most admitted assets at the end of 2012?
to all their homeowner insureds, notifying them that the agency will be adding Identity Theft to their policy at renewal. The letter would ask the client to “opt-out” if they didn’t want the additional coverage added.
Answer: Berkshire Hathaway Group, with nearly $200 Billion in assets. (They were followed by State Farm, AIG, Travelers and Liberty Mutual)
Question # 2 : Which U.S., P&C insurance group had the largest policyholder surplus at the end of 2012? Answer: Berkshire Hathaway Group, with nearly $150 Billion in surplus. (They were followed by State Farm, AIG, Travelers and USAA)
Question # 3 : Which U. S., P&C insurer had the most direct written premium at the end of 2012? Answer: State Farm Group with nearly $55 Billion in direct written premium. (They were followed by Berkshire Hathaway, Allstate, Liberty Mutual and Travelers) These figures were released in the new “Insurance Facts and Stats” publication by A.M. Best Company, a renowned statistical rating organization and insurance news source. The above figures give you an insight into the monstrous size of the U.S. property and casualty insurance industry which, in total, amounts to nearly $1.75 Trillion in assets. Overall, our industry did reasonably well in 2012. Policyholder surplus increased to a new record level, net income increased despite low interest rates on investments, and catastrophe losses declined to about $34.2 billion (from $41.3 billion in 2011), including roughly $14 billion when Superstorm Sandy slammed into the east coast.
4 DECEMBER 13
My answer was an emphatic “NO”. The insurance department has long viewed this practice as impermissible. Sometimes called “negative response”, the gist of the practice is that customers are forced to monitor and “optout” of offers in order not to be charged extra at renewal. As independent agents, we often have strong feelings about some of the coverage choices made by our customers. But, the reality is that if we were on the receiving end of this kind of offer, we would likely react the same way they do, and view the offer as an attempt to force us to accept coverage that we just don’t want. While your goal is to protect customers whose coverage you view as lacking, from the regulators’ standpoint, it is an unfair trade practice. The coverage selection needs to be based on an “opt-in” mechanism. From a marketing standpoint, you need to rethink the offer so that your customers make the decision to add the coverage onto the policy, not to remove it. Will it be as effective? Probably not. Will you be less likely to explain yourself to the insurance department and pay a fine? Absolutely.
AND REMEMBER ….My Christmas wish to all of you is peace, prosperity, good health and lots and lots of cookies!
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ROBERTSON RYAN & ASSOCIATES, INC.
DECEMBER 13 5
Boardroom Jodi Cordes, CIC, CRM, RC Insurance Services, Inc. — Director, PIA of Wisconsin
"Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime." Recently I was out in the yard one day and a little girl stopped by to chat as she was passing by while walking with her parents. During our friendly conversation I asked the little girl what she wanted to do when she grew up. She replied, “I’d like to give food and houses to all the homeless people.” Her parents beamed with pride. “Wow. What a worthy goal!” I said, “But you don’t have to wait until you grow up to do that!” I told her. “What do you mean?” she replied. So I told her, “You can come over to my house and mow the lawn, pull weeds, and trim my hedges, and I will pay you $50. Then you can go over to the grocery store where the homeless person is, and you can give this person the $50 to use toward food and a new house.” She thought that over for a few seconds, then she looked at me and asked, “Why doesn’t the homeless person come over and do the work and you can just pay him $50?” This story reminds me of the old Chinese proverb—“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” There are many ways we can do to give and help people. Sometimes just giving to people isn’t enough. While it is a short term solution and is needed at times. We also should look at the long term and provide people with the resources and tools to be able to prosper for themselves and for their family. This seems to be the time of the year when many of us are feeling is the time to give to those that are less fortunate. Many of us give to food pantries, give Christmas gifts to churches that provide gifts to children that would not otherwise receive gifts, and give money to many, many important charities. We should also look at how we can help those that are in difficult situations and out of work. We might be able to provide training and provide opportunities
6 DECEMBER 13
to interview in our agencies and companies to provide a lifestyle themselves and their families. Many of the people that read this are either a business owner, or in a position with a company that is looking for trustworthy people, with a solid work ethic to work in their company doing sales, marketing, or providing service to our “precious goods” our customers. We have the resources to teach, opportunities to learn and make money, and we have a need to grow and make our company more efficient and prosper. Our military vets are some of the hardest working, dedicated individuals available. They may not have college educations, some may not have been in the “traditional” work force, but we have believed and trusted that they will honor our country and protect what is most important to us—our freedom. Why not train and trust that they can help us protect others. There are several resources to use to find these individuals. One of the most recognized is probably the Wounded warriorproject.org. They have a program called “Warriors to Work”. The website contains a link for Employer Resources, here you will find information relating to programs and services for employers, “Why Hire a Wounded Warrior?”, “Interviewing Wounded Warriors” and how to link in with this project. Another resource is DWD of Wisconsin dwd.wisconsin.gov/ veterans/. This webpage has information for Employers including a “Hiring Kit for Employers”. If you are looking to grow your workforce, consider changing the approach slightly and seek out these individuals that learn quickly, have strong leadership skills, have a respect for procedures, and are accountable to actions. Merry Christmas and Happy New Year! I hope 2014 provides you a positive and prosperous year.
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DECEMBER 13 7
Actions Ted Nickel â€” Commissioner of the Office of Insurance
Madison, WIâ€”OCI has taken the following administrative actions. In many of these cases the respondent denied the allegations but consented to the action taken. Any forfeitures paid in these administrative actions are deposited in the Common School Fund which is administered by the Board of Commissioners of Public Lands. The earnings from this fund are distributed to all public K-12 schools in Wisconsin and are used by school libraries to purchase books. Copies of the administrative action orders may be viewed online at https://ociaccess.oci.wi.gov/OrderInfo/OrdInfo.oci. OCI is responsible for overseeing the operations and marketing of insurance companies and agents in Wisconsin. OCI encourages anyone with a question or a complaint regarding an insurance company or agent to contact the office at this toll-free telephone number: 1-800-236-8517.
Actions Against Agents
Stephana Andres, 258 Mary St., Antigo, WI 54409, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to complete the digital fingerprinting and criminal background check required for licensure. Julie Ann Arens-Costillo, Sheakley Retirement Plant LLC, One Sheakley Way, Cincinnati, OH 45288, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of resident surplus lines licensure. Peter J. Bell, 2613 N. University Dr., Apt. 7, Waukesha, WI 53188, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI, failing to disclose criminal convictions on a licensing application, and having unpaid civil money judgments
action was taken based on allegations of failing to respond promptly to inquiries from OCI and having criminal convictions which may be substantially related to insurance marketing type conduct. Henry Cornett, 10355 W. Plum Tree Cir., Apt. 204, Hales Corners, WI 53130, had his application for an insurance license denied for 31 days. This action was taken based on allegations of failing to disclose an administrative action taken by the state of Wisconsin on a licensing application. Korey L. Crawford, W59N927 Essex Dr., Cedarburg, WI 53012, had her application for an insurance license denied for 31 days. This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application. John George Domagata, S7640 Allbrite Dr., Merrimac, WI 53561, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of inactive licensure in the state of Illinois.
Paul Brooks, 2231 E. Camelback Rd., Ste. 300, Phoenix, AZ 85016, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and owing delinquent child support.
Harold Eugene Doyal, 245 Townpark Dr. N.W., Ste. 200, Kennesaw, GA 30144, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of resident surplus lines licensure.
Martin Carranza, 2231 E. Camelback Rd., Ste. 300, Phoenix, AZ 85016, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a pending criminal charge.
Daniel J. Drought, 1519 Starling Ln., Janesville, WI 53546, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having unpaid civil money judgments.
William R. Cooper, 845 S. 73rd St., West Allis, WI 53214, had his application for an insurance license denied. This
Janet Ferrici, P.O. Box 107403, Milwaukee, WI 53217, had her application for an insurance license denied for 31 days. This [continued on page 10]
88 AUGUST 13 13 DECEMBER
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facebook.com/acuitywow NOVEMBER 13 9
OCI Administrative Actions [continued from page 8] action was taken based on allegations of failing to disclose a criminal conviction on an licensing application.
administrative action taken by the state of Virginia on a licensing application.
Adrian R. Francois, 907 Euclid Ave., Apt. 7, Miami Beach, FL 33139, had his application for an insurance license denied. This action was taken based on allegations of having a criminal conviction and failing to respond promptly to inquiries from OCI.
David C. Johnson, 9550 Copper Creek Ct., Miamisburg, OH 45342, had his insurance license revoked. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to report administrative actions taken by the states of Alabama, Missouri, Virginia, Kansas, Utah, Delaware, and West Virginia to OCI within 30 days.
Kristopher D. Gaffny, 706 Burnett St., Eagle River, WI 54521, had his application for an insurance license denied for 31 days. This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application. Jermaine Untromond Gales, 3807 Hamid Blvd., Fresno, TX 77545, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct. Carmen M. Garcia, 4890 Ashley Ln., Apt. 133, Inver Grove Heights, MN 55077, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of resident surplus lines licensure. Ian Gipson, 1215 Green Oaks Ln., Apt. F, Charlotte, NC 28205, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of current child support payments. Michael R. Hall, 3968 W. 600 N., Leesburg, IN 46538, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of resident state title and legal expense licensure. David C. Hueller, 1930 Wood Ln., Green Bay, WI 54304, agreed to pay a forfeiture of $250.00 and agreed to report criminal proceedings within 30 days of any initial pretrial hearing. These actions were taken based on allegations of failing to timely report criminal charges to OCI. Pauline M. Hurt, W7811 U.S. Hwy. 12, Black River Falls, WI 54615, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI, having pending criminal charges and criminal convictions, and having unpaid civil money judgments. Rodney Wayne Janelle, 1000 118th Ave. N., St. Petersburg, FL 33716, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to disclose an
Kristie Kapke, P.O. Box 115, Lannon, WI 53046, had her application for an insurance license denied. This action was taken based on allegations of having unpaid civil money judgments and failing to disclose an administrative action taken by the state of Wisconsin on a licensing application. Michael H. Kontos, 3872 Village Club Dr., Powell, OH 43065, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of resident surplus lines licensure. Paul L. Kunstmann, 1960 Spring Creek Ct., Green Bay, WI 54311, had his insurance license revoked and was ordered to pay a forfeiture of $100.00. These actions were taken based on allegations of failing to report an administrative action taken by the state of Kentucky, failing to report felony convictions to OCI, and failing to respond promptly to requests from OCI. Diane M. Kuse, 1024 Gross Ave., Green Bay, WI 54304, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to retake an examination required for licensure. Reuben D. Levinsohn, 805 Lantern Hill Dr., East Lansing, MI 48823, agreed to the denial of his application for an insurance license for eight days, agreed to notify OCI of the outcome of pending employment lawsuits, agreed to report any new lawsuits to OCI, and agreed to the voluntary surrender of his license upon a finding of fraud or financial misconduct in a lawsuit. These actions were taken based on allegations of a lawsuit or arbitration involving allegations of fraud, misrepresentation, misappropriation, or breach of fiduciary duty. Jamarr Mayes, 2231 E. Camelback Rd., Ste. 300, Phoenix, AZ 85016, had his application for an insurance license denied. This action was taken based on allegations of having criminal convictions which may be substantially related to insurance marketing type conduct. Joseph M. Milbauer, 149 Hillside Ave., Berkeley Heights, NJ 07922, had his application for an insurance license denied. This action was taken based on allegations of failing to disclose an administrative action taken by the state of Wisconsin on [continued on page 12]
10 DECEMBER 13
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OCI Administrative Actions [continued from page 10] a licensing application and failing to respond promptly to inquiries from OCI.
to establish eligibility to work in the United States as a selfemployed insurance agent.
Robert T. Owen, P.O. Box 600555, Jacksonville, FL 32260, had his application for an insurance license denied. This action was taken based on allegations of failing to reinstate an inactive license and failing to respond promptly to inquiries from OCI.
Kirk Anthony Sempsrott, 5680 Lochwoode Ct., Holt, MI 48842, agreed to a 31-day denial of his application for an insurance license, agreed to report the outcome of pending employment lawsuits to OCI, agreed to report any new lawsuits to OCI, and agreed to the voluntary surrender of his license upon a finding of fraud or financial misconduct in a lawsuit. These actions were taken based on allegations of being involved in a lawsuit or arbitration involving allegations of fraud, misrepresentation, misappropriation, or breach of fiduciary duty.
Derek Perkins, 2707 Kernville Dr., Wylie, TX 75098, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI, having a criminal conviction which may be substantially related to insurance marketing type conduct, and owing delinquent child support. John J. Quirk, Jr., 2138 E. Lafayette Pl., Milwaukee, WI 53202, had his application for an insurance license denied for 31 days. This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application. Aleksei W. Reid, 1350 N. Glenville Dr., Richardson, TX 75081, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct. Marco A. Rivera, 9814 Alexa Pl., San Antonio, TX 78251, had his application for an insurance license denied. This action was taken based on allegations of failing to disclose an administrative action taken by the state of Kentucky on a licensing application and failing to respond promptly to inquiries from OCI. Saboura Rokhsari Azar, 1857 E. Kenilworth Pl., Apt. 518, Milwaukee, WI 53202, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing
Shawn M. Sveum, 6329 Pheasant Ln., Apt. F 114, Middleton, WI 53562, agreed to a 60-day denial of her insurance licensing application, agreed to two years of licensing conditions including direct supervision of her employment at a specific agency, successful completion of probation, immediate reporting of any new criminal offenses, and the voluntary surrender of her insurance license if these conditions are not met. If her license is voluntarily surrendered, she further agreed not to reapply for licensure in Wisconsin for a period of five years. These actions were taken based on allegations of having a criminal conviction which may be substantially related to insurance marketing type conduct. Michele L. White, 6685A N. 42nd St., Milwaukee, WI 53209, had her application for an insurance license denied. This action was taken based on allegations of failing to disclose a criminal conviction on a licensing application and failing to respond promptly to inquiries from OCI. L. B. Williamson, 2121 Possum Trot Rd., Wake Forest, NC 27587, agreed to the denial of his application for an insurance license. This action was taken based on allegations of failing to respond promptly to OCI and having administrative actions taken by the states of Colorado, Connecticut, Virginia, and Wisconsin. [continued on page 24]
Don't tie yourself down with outmoded beliefs
Backstage at the circus one time, a visitor noticed that the elephants were kept in place by nothing stronger than a thin rope that tied one leg to a stake in the ground. Puzzled, he asked one of the trainers what prevented these awesome, powerful animals from just snapping the rope and running away. The answer? Raised in captivity, the elephants are held like that from an early age when they're much smaller and weaker. They get so accustomed to the fact that they can't break the rope that eventually they stop trying. When they're fully grown, hey never attempt to pull themselves free. Don't let yourself be held prisoner by beliefs and expectations that are no longer trueâ€”if they ever were.
12 DECEMBER 13
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14 DECEMBER 13
Changed in the World of Agents' E&O?
by Curtis M. Pearsall, CPCU, AIAF, CPIA
Let’s go back in time to 1983. It was around then that some court cases addressed different scenarios of when and by whom an agent could be sued. In many respects, these cases helped shape the landscape for the types of plaintiffs we see with greater frequency today.
About 30 years ago, the typical E&O claim was made by an agency customer alleging the agency did not get the client the coverage he or she wanted. A customer suffered a loss and the agency was the logical entity with which to try to find fault. These cases were somewhat predictable and, in most situations, there was tremendous consistency with the types of E&O cases – whether it was a first-party or thirdparty claim/property or liability. The allegations essentially boiled down to the position by customers that they had no coverage due to one or more of the following allegations: • the policy had been cancelled or non-renewed and the agent had not provided replacement coverage.
• the agency procured the wrong type of policy and the policy procured did not cover the loss the customer just sustained. • a customer’s lack of awareness of applicable policy conditions or exclusions. • the agency misstated the exposure on the application and the customer was unaware of what the agency had advised the company the exposure was. Regardless of the reason, the customer had suffered a loss and insurance did not respond the way he or she hoped it would, so the customer was “out of pocket” some money. The agency seemed to be the logical entity to blame. In other
words, the agent was the “deep pocket.” Insurance companies sued agencies 30 years ago and continue to do so today, probably with greater aggressiveness. The main issue was often that the agency did not follow the underwriting guidelines and bound the carrier to a risk it is alleged it would not have written. Because this customer suffered a claim, the carrier looked to the agency to recoup those claim dollars.
What changed? Court cases started to emerge that were being brought by other than the named insured. One of the issues dealt with the following question: was the coverage the agency failed to provide a compulsory coverage, such as workers compensation, or not? Two of the prominent court cases were brought in Massachusetts. While there have been many other court cases with somewhat similar fact patterns, these two really get to the heart of the matter. The first case was Rae vs. Air Speed, involving the death of an individual employed by of one of the agency’s clients. The client’s request was for workers compensation coverage and benefits. In this case, there was no workers compensation coverage – a compulsory coverage – in effect. The employee’s estate attempted to make a claim directly against the agency, pursuing claims in negligence and breach of contract. The estate claimed the agent agreed, but failed, to procure a workers compensation policy for the customer. The trial [continued on page 16] DECEMBER 13 15
What's Changed? [continued from page 15]
court dismissed the claim on the grounds the agency owed no legal duty to the estate (or the deceased employee). That is, there was no duty to a party other than the insured. This decision was challenged and the matter wound up with the Massachusetts Supreme Court. The court reversed the decision with two critical positions that remain in law today. It found that the estate could bring a direct action against the agent as a third-party beneficiary and, in essence, represent the deceased employee. The allegation was that because the agency did not procure the coverage, the estate of the deceased employee did not receive the benefits to which it was entitled. The court also found in its ruling that the estate could bring a negligence claim (a tort action) against the agent because the agent failed to provide coverage that was mandatory in the state. Thus, the court alleged that the agent should have provided the coverage – or at least had discussion with the customer on the issue of workers compensation because the coverage was mandatory. The court was stating it was an instance of, “You knew that I needed the coverage, why didn’t you provide it?”
The difference in the cases: • If the coverage is a required coverage, an injured third party can assert a negligence claim against the agency that should have provided the coverage. •
Something to think about These decisions will not stop a third party from bringing a negligence claim against the agent even when non-compulsory coverage is the issue. These claims continue to occur, but the odds are in the agents’ favor to prevail. Who are some of these third-party plaintiffs alleging they have suffered a loss potentially because of an agency’s actions or lack of action? •
Insurance companies. While carriers continue to sue their own agents today, the courts are seeing suits where an insurance carrier that is not even one of an agency’s carriers suing an agency. This is driven heavily by various policy language that that looks to transfer liability to another party, such as “the additional insured.” When “errors” occur where the agency does not structure the coverage properly or issues an incorrect certificate of insurance, there is greater possibility that the agency could be involved in an E&O matter.
Property owners, contractors, subcontractors and maintenance companies.
Banks and credit unions are suing agents when these financial institutions suffer a financial loss and look to blame the loss on the agency, possibly for an incorrect binder that was issued. Among the allegations is failure to list the bank/credit union as loss payee.
The courts are seeing cases where agents are suing other agents. A retail agent or a wholesaler that has been sued ends up is suing the retail agency because it’s believed that the retailer is the party at fault.
Agreed and disagreed The second case that modified the landscape was Flattery vs. Gregory, involving an auto accident where the agency’s customer had insurance, but not enough to cover the injuries caused. The agency customer was underinsured for the type of accident that occurred. The injured party in this case was not a customer of the agency; in fact, this individual had no relationship with the agency. However, this did not stop the victim from bringing a suit against the agency for failure to provide the agency’s customer –the party that was in the accident with them – with sufficient limits. The allegation was that the agency had agreed, but failed, to provide its customer with higher limits. After the lower level court dismissed the claim, the case was appealed and was elevated to the Massachusetts Supreme Court. The court agreed with the decision in part, but also disagreed in part. The Supreme Judicial Court held that the contract claim was viable because the plaintiff was an intended beneficiary of that agreement. In other words, they had a claim of damages against the agency customer because they had suffered damages that were not completely paid for by the insurance that was in place. The court held that the negligence claim against the agency was not viable because it was not realistic to think the agency could foresee any injured party relying on its customer to expect any greater coverage than the statutory minimum. The customer had coverage and, while it was only the minimum, the agency had met its obligation to the customer. 16 DECEMBER 13
If the issue is not one of compulsory coverage, the only possible claim must be based on that there was an agreement between the agent and the customer that certain coverage at a certain amount was made but not honored.
The E&O world is a different place than it was 30 years ago. Who knows what changes will occur in the next 30 years? That’s certainly something to think about.n
Curtis M. Pearsall, CPCU, AIAF, CPIA President, Pearsall Associates Inc. and Special Consultant to the Utica National E&O Program
Certified Insurance Service Representative Open to Anyone!
7 WI CE Credits New Course #
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Insurance professionals need training in the risk management process for two reasons. First, insurance is an integral part of their client’s overall risk management program. Second, services provided by carriers, agencies and brokerages are often significant items in the organization’s cost of risk. The course will cover the five powerful steps in this process, which protects not only the organization’s assets, but also its mission and its brand.
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AIA Tired PC BACK 11_9_11:AIA 02.10.10 PC BACK 11/16/11 1:35 PM Page 1
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Education by Todd Davis, CIC All New WI CE course #s
Thursday – February 6 9:00 a.m. - noon Cyber Liability, Exposures & Insurance (3 WI CE) 1:00 - 5:00 p.m. PIA Scavenger Hunt — Sled or Car or, PIA Game Day — Bowling, Billards & Cards 6:45 - 7:45 p.m. Buffet Dinner, Cash Bar Whitetail Inn–St. Germain (buses provided) Friday – February 7 9:00 a.m. - noon Ethical Standards (3 WI Ethics CE) Visit www.piaw.org for print and online registration or call 1-800-261-7429
Member & Non-Member $75
Non Insurance Spouse/Guest $45
Full Name_________________________________________ First Name for Name Tag_____________________________________ Spouse/Guest Full Name ___________________________ First Name for Name Tag_____________________________________ Agency/Company_______________________________________________________________________________________________ Address__________________________________________ City_______________ State_____ Zip____________________________ Phone____________________________________________ Cell or After Hours____________________________________________ Email___________________________________________ WI Ins. License Number________________________________________ Check Payable to PIA, or MC, AMEX, DIS Card #_______________________________________________________ Exp. Date________________________________________ Return to: PIAW, 6401 Odana Rd., Madison, WI 53719 Fax: 608-274-8195 Register online www.piaw.org Confirmation will be emailed upon receipt of registration. No refunds without 10 days notice, substitutions only. 1-800-261-7429 DECEMBER 13 19
Just because you have a hammer and saw in your garage, doesnâ€™t make you a fine finish carpenter.
20 DECEMBER 13
Skills and Experience are When Hiring
By Brad Remillard
A candidate's ability to apply their skills is what counts.
Just to clarify, the word is “irrelevant.” It doesn’t read “not important.” There is a difference between something being relevant and being important. Of course, having the right skills and experiences are important to performing the job, just not relevant when hiring. Skills and experiences are simply the tools one brings to the job. It is one’s ability to use these tools effectively that counts. Just because you have a hammer and saw in your garage, doesn’t make you a fine finish carpenter. Since most people have been taught interviewing is about the candidate’s skills and experiences, the interviewer tends to ask a lot of questions about their past. For example, “What have you done in this area?” or “Have you ever done _____?” Those trained in behavioral interviewing will take those same questions and convert them into asking for an example such as, “Give me an example where you have done X” or “Tell me about a time when you had X as an issue.” All of this may be good to know, but the fact is you really don’t care about any of this. When a candidate shows up on Monday morning, you no longer care about all the things they have done. You only care about one thing, whether or not they can do the job you are hiring them to do. That is all you really care about. Nothing else matters anymore. They may have the best skills and all the right experiences, but if they can’t effectively apply them to do your job, then you really don’t care about their skills and experiences. Have you ever hired a person that had all the right skills and experiences? They interviewed well, had all the right answers, their resume read like the job description, and after you hired them they fell flat on their face? This has happened to just about everyone who has ever hired. Why does this happen? It’s usually because the person’s skills and experiences are not primary indicators of their ability to do your job. These are at best secondary indicators and more often than not, misleading indicators. Yet, these are the indicators that most hiring managers rely on.
Instead, focus the interview on the primary reason for interviewing which is, “Can they do your job?” The key to successful hiring is having a methodology that puts the candidate in the job BEFORE you hire them. It is not about determining if the candidate has the right tools. It is about determining if they can use those tools effectively to get your job done. This is why behavioral interviewing often falls short. Behavioral interviewing was once a quantum leap forward in how interviewing was performed; however, it too has run its course. Great interviewing is more than getting examples of the past. It is about doing your job. The tag line for behavioral interviewing, “past performance is an indicator of future performance” isn’t always the case. A good hiring methodology shifts the focus from the person’s skills and experiences to how they will use these to do your job. If they can’t use these effectively in your company and your position, then they may be a great person but they aren’t the right candidate. This is why a person with all of the right skills and experiences often falls flat on their face. So how do you put the candidate in the job BEFORE you hire the person? 1.
Stop asking questions that start with “have, what, have you, tell me about a time when, etc.” These are all fine to know but they should be used for probing after the example and not for the example. That is a huge difference. The famous, who, what, when, where and why questions are for probing deep and not for opening questions.
“How” questions should be used for the opening question. One of the biggest challenges facing hiring managers is getting them to shift to asking “How” questions. After that you can then begin probing with the five W’s. For example, “How would you decrease costs by 10%?” “How would you increase gross margins by X%?” “How would you go about implementing a [continued on page 22] DECEMBER 13 21
Skills and Experience . . . [continued from page 21]
complete systems upgrade of our ERP system?” “How would you increase market share in your territory?” Then probe deeply with the five W’s.
and experiences in your company, with your culture, your
Now the interviewer is shifting the interview from skills and experiences to having the candidate explain how they would apply these to do the job. If the candidate can’t apply their skills and experiences in the new job, then one has to question whether or not they are the right person regardless of skills and experiences.
leaving or just left.
The reason most hiring processes fail is because it is easy for a candidate to talk about their skills and experiences. Some might even embellish in this area. It is significantly different to explain how they would apply those skills
resources, your budget constraints and all the aspects that make your company unique from the company they are n
Brad Remillard is a speaker, author and trainer with more than thirty years of experience in hiring and recruiting. Through his corporate workshops and industry association speaking engagements he demonstrates how organizations can effectively attract, interview, hire and retain top talent. Brad is also the co-founder of IMPACT HIRING SOLUTIONS and co-author of, “You’re NOT the Person I Hired: A CEO’s Guide to Hiring Top Talent.” For more information on Brad’s hiring training programs or speaking, please visit www.bradremillard.com.
2014 Ethics & Hot Topics Seminars Anyone Can Attend! All Approved for the Utica Premium Discount!
4 Credit CE Day: $65 PIA Member / $90 Non Member 8 Credit CE Day: $145 (includes lunch) The full days, also known as William T. Hold Seminars, are an approved CISR update option. No dues required. John Dismukes CIC, CPCU, AAI, AIS
Patti Gardner CIC, CRM, CPCU
Todd Davis CIC
Radisson – Green Bay
1:00 – 4:45 p.m.
Ethics & Legal Considerations (John Dismukes) 4 WI Ethics CE – course # 61059 May 15 Cranberry Country Lodge – Tomah Certificates of Insurance & Additional Insureds, Workers Compensation, Ethics (John Dismukes) 7 WI CE, 3 of 7 Ethics – new course #s
8:00 – 4:00 p.m.
Holiday Inn – Rothschild Certificates of Insurance & Additional Insureds, Workers Compensation, Ethics (Patti Gardner) 7 WI CE, 3 of 7 Ethics – new course #s
8:00 – 4:00 p.m.
1:00 – 4:45 p.m.
Holiday Inn – Fond du Lac
Ethical Standards (Todd Davis) 4 WI Ethics CE, course # 65902 Brookfield Suites – Brookfield Certificates of Insurance & Additional Insureds, Workers Compensation, Ethics (John Dismukes) 7 WI CE, 3 of 7 Ethics – new course #s
8:00 – 4:00 p.m.
$145 per course. Register at www.piaw.org or call 1-800-261-7429
22 DECEMBER 13
CISR Elite: The Designation That Grows With Commitment It is now possible for CISRs to keep their commitment to continuing education and earn the highest recognition—CISR Elite. By taking and passing nine CISR courses—in class or online, they will be honored with the prestigious new status. In addition to a well-rounded education, they will be publically recognized at a conferment ceremony and presented with a CISR Elite pin and a special certificate symbolizing their achievement. The National Alliance will provide designees with a news release template and the CISR Elite logo so clients (and prospects) will know they have gone well beyond the minimum continuing education requirements. Obtaining the status of CISR Elite is evidence of commitment to the agency, the client, and the participant’s personal growth. Earning CISR Elite: — represents increased specialized knowledge — increases earning power — enhances professional status — creates more value for your agency or company When the CISR Program was new there were only five courses to choose from to earn the designation. Today, there are nine courses to choose from, allowing participants to focus on Commercial Lines or Personal Lines. In addition to the Personal Auto, Personal Residential, Commercial Property, Commercial Casualty, and Agency Operations courses, the new CISR courses are: — Commercial Casualty II – BAP, WC, Excess Liability — Personal Lines – Miscellaneous — Life & Health Essentials — Elements of Risk Management It takes 5 passed courses to earn the CISR designation and now committed individuals can take it a step higher to earn CISR Elite. By attending annual updates, a current CISR can earn update credit, state CE credit, and credit towards earning CISR Elite. All CISR courses provide practical information about insurance policies and coverages that can be applied immediately. Each is taught by a seasoned faculty member that has been vetted and approved by The National Alliance. They assist participants in understanding every concept. Even if taking the courses online, an online mentor is available to help candidates have the best possible learning experience. For CISRs planning their future career paths, CISR Elite will offer a practical and distinguished choice. For more information call PIA at 1-800-261-7429.
DECEMBER 13 23
OCI Administrative Actions [continued from page 12]
Actions Against Companies
Arkidus Home Protection, 10300 Southwest 72nd St., Miami, FL 33173, was ordered to pay a forfeiture of $1,000.00, to reply promptly in writing to OCI inquiries, and to cease and desist acting as a warranty plan administrator/warrantor unless it obtains authority to do so. These actions were taken was based on allegations of failing to respond promptly to inquiries from OCI and conducting an insurance business without proper authority. Bankers Life & Casualty Company, 11825 N. Pennsylvania St., Carmel, IN, 46032, agreed to pay a forfeiture of $200,000.00 and agreed to implement a program to ensure compliance with mandates applicable to Medicare supplement products. These actions were taken based on allegations of using unfair claims settlement practices. The Fellowship of Reconciliation, Inc., P.O. Box 271, Nyack, NY 10960, was ordered to pay a forfeiture of $500.00 and was ordered to file an annual financial statement and fees. These actions were taken based on allegations of failing to timely file a required financial statement and fees.
Lovitt & Touche, Inc., P.O. Box 32702, Tucson, AZ 85751, had its application for an insurance license denied. This action was taken based on allegations of failing to disclose administrative actions taken by the states of Virginia and Wisconsin on a licensing application, failing to respond promptly to inquiries from OCI, having a delinquent tax obligation, and failing to provide proof of equivalent resident state licensing. NAACP Legal Defense & Educational Fund, Inc., 99 Hudson St., Ste. 1600, New York, NY 10013, was ordered to pay a forfeiture of $500.00 and was ordered to file an annual financial statement and fees. These actions were taken based on allegations of failing to timely file a required financial statement and fees. Thrivent Financial for Lutherans, 625 Fourth Ave. S., Minneapolis, MN 55415, was ordered to pay a forfeiture of $5,000.00 and was ordered to timely report transactions as required to OCI. These actions were taken based on allegations of failing to timely report transactions to OCI.
Certified Insurance Counselor Each Approved for 20 Wisconsin CE Credits LIFE & HEALTH
January 14-16, 2014 Marriott Madison West – Middleton, WI 608-831-2000 $119 rate through 12/14/13 – includes internet
March 26-28, 2014 Radisson/Oneida Casino – Green Bay, WI 920-494-7300 $99 rate through 3/10/14 includes full breakfast
• life insurance concepts • health insurance concepts Fred Stoor, CIC • long term care insurance • disability income insurance Dennis Stone, CIC, CPCU, CLU
• commercial general liability • additional insureds David Viola, CIC • WORKERS COMPENSATION John Dismukes, CIC, CPCU, AAI, AIS
• Business continuation and succession planning • retirement planning and annuities • planning for personal needs Jo Ann Dickinson, CPA, CIC, LUTCF
new WI CE Course # 69162
Day One: 8:00 – 5:15
Day Two: 8:00 – 5:00
• business automobile coverages • excess liability/commercial umbrella coverages • commercial casualty case study David Pauly, CIC, CPCU, ARM, AAI
NEW WI CE Course # 69299 Day Three: 8:00 – noon, Optional Exam 2:00 – 4:00
$390.00 per institute. Register at www.piaw.org or call 800-261-7429. 24 DECEMBER 13
The CISR Program empowers outstanding individuals to provide exceptional customer service. Join the many thousands of insurance professionals who have already experienced the benefits.
Rebekah Dassion, CISR
Jessica Hulke, CISR
Colleen Nehring, CISR
Jackie Thompson, CISR
Hausmann-Johnson Insurance, Inc. Church Mutual Insurance Co. Madison, WI Merrill, WI
Church Mutual Insurance Co. Merrill, WI
Michael Gaber, CISR
Jennifer Jirovec, CISR
Courtney Odegard, CISR
Mt. Morris Mutual Insurance Company Coloma, WI
TRICOR Insurance Beloit, WI
Church Mutual Insurance Co. Merrill, WI
Church Mutual Insurance Co. Merrill, WI
Church Mutual Insurance Co. Merrill, WI
Sara Ryan, CISR Angela Lemke, CISR, AU, AINS AVID Risk Solutions, Inc.
Cathy Gottschalk, CISR Ansay & Associates LLC Mosinee, WI
Amber Hermus, CISR
Tanya Martin, CISR
Hausmann-Johnson Insurance, Inc. Church Mutual Insurance Co. Madison, WI Merrill, WI
Jared Sedlmayr, CISR TRICOR Insurance Platteville, WI
The Certified Insurance Counselors (CIC) Program has been the insurance industry’s premier, proven source for practical, real-world education since 1969. For insurance professionals everywhere, the 20 hour Institutes represent a thoroughly rewarding learning experience, led by accomplished insurance and risk management speakers. Are you ready to challenge yourself?
Tracy Graves, CIC, AIS
Douglas LeClair, CIC
Ann Nader, CIC, CISR
Society Insurance Fond du Lac, WI
Church Mutual Insurance Co. Merrill, WI
Green Bay Ins. Center, Inc. Green Bay, WI
Dale Kleffman, CIC, CLCS
Sandra Mohan, CIC
Brooke Parker, CIC, CISR
Mauck Insurance Agency, Inc. Niagara, WI
Johnson Insurance Green Bay, WI
Hausmann-Johnson Insurance, Inc. Madison, WI
David Wittmann, CIC,CPCU,CFP,LUTCF Dave Wittmann Ins. & Fin. Agency LLC Little Chute, WI
Attention CICs! Exciting update options. CIC Graduate Ruble Seminar February 18 & 19, 2014 | West Bend Mutual Ins. Co. – West Bend, WI May 13 & 14, 2014 | Marriott Madison West – Middleton, WI 16 WI CE (4 are optional Ethics)
visit www.piaw.org or call PIA at 1-800-261-7429 DECEMBER 13 25
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26 DECEMBER 13
WISCONSIN PIA IS A PROUD SPONSOR OF THE CPIA DESIGNATION PROGRAM The PIA of Wisconsin is a proud sponsor of the Certified Professional Insurance Agent (CPIA) professional designation program. The CPIA designation is comprised of a series of Insurance Success Seminars. These three, one-day workshops teach practical "before", "during", and "after" the sale techniques for insurance producers, sales managers, account managers and company marketing representatives. Participants leave with ideas that will produce increased sales results immediately. In fact, The Insurance Success Seminars are guaranteed: Implement the principles covered in these sessions and experience a 20% increase in personal production within six months, or your registration fee will be refunded! To maintain the CPIA designation: fulfill a bi-annual update by attending one of the core Insurance Success Seminars, an Advanced Insurance Success Seminar, a Pro-to-Pro Retreat, or maintain an active Level 2 or Level 3 membership in the AIMS Society. The CPIA designation is approved by Utica Mutual as part of the premium discount program.
3/12/14 Advanced Commercial Lines Risk Analysis for E&O Loss Prevention - Wauwatosa (7 WI CE) This seminar is open to anyone, approved for the Utica Discount, and a CPIA update option.
The AIMS Society is a national organization dedicated to providing interactive marketing and sales training, ongoing resources and networking opportunities to insurance professionals. www .aimssociety.org You can attend the CPIA courses in any order. No Test. Approved for 7 Wisconsin CE credits. CPIA 1 - Position for Success
CPIA 2 - Implement for Success
CPIA 3 - Sustain Success
During this program, participants are encouraged to focus on internal and external factors affecting the development of effective business development plans. Factors discussed include a review of the state of the insurance marketplace; analysis of competitive pressures; necessary insurance carrier underwriting criteria; and consumer expectations and understanding.
During this session participants will be provided with specific tools for analyzing consumer needs; will learn to utilize risk identification techniques to gather pertinent prospect information; will develop skills necessary to assimilate information gathered into a customized protection program; and will participate in exercises designed to promote effective delivery of proven solutions.
This program focuses on fulfilling the implied promises contained in the insuring agreement. Students will review methods of providing evidence of insurance coverage; will discuss policies and procedures for controlling errors and omissions including policy review and delivery, endorsements, claims-processing, and handling of client complaints. This course includes a review of the Professional Expectations; the Law of Agency; and Legal and Ethical Standards.
CPIA 1 – March 13, 2014 Wisconsin Mutual Insurance Madison, WI
CPIA 2 – August 21, 2014 Radisson Paper Valley Appleton, WI
CPIA 3 – October 9, 2014 Kelmann Restoration Wauwatosa, WI
Course Schedule 8:30 – 4:00 Lunch On Your Own 12:00 – 12:45 Registration Fee per Seminar: Includes Materials, Coffee in the a.m. & Soda in the p.m. PIAW Member $155.00 Non Member $190.00
Register at www.piaw.org or call PIA at 1-800-261-7429 DECEMBER 13 27
It was in 1970 that the first comprehensive agriculture bill was passed and came to be known as the Farm Bill.
28 DECEMBER 13
A Top Priority in the 2013 Farm Bill by Julia Domagalski
Lately, there has been a lot of attention on agriculture policy, from the possibility of soaring milk prices to huge losses of cattle after a fall blizzard to a significant cut in supplemental nutrition assistance to recipients. All of these issues are tied together in an overarching piece of legislation that has come to be known as the Farm Bill. With so many issues addressed in the legislation, the House and Senate have many differences to reconcile before they can send a final bill to President Obama. The Farm Bill finds its roots in agriculture legislation passed in 1933, in response to the surplus of commodities during the Great Depression. From there, agriculture law began to grow to encompass other issues. In 1949, Congress passed a new law that included high, fixed support prices that would trigger subsidy payments but left parts of a 1938 law intact. These two pieces of legislation are permanent law and all agriculture policy passed after 1949 only overrides them for a given period of time. It was in 1970 that the first comprehensive agriculture bill was passed and came to be known as the Farm Bill. However, it was not permanent law and expired after 5 years, requiring Congress to reauthorize it. When a Farm Bill is not reauthorized, our agriculture policy reverts back to our permanent agriculture laws of 1938 and 1949. The Federal Crop Insurance Program, though included in the Farm Bill under Title XII, is actually a separate piece of legislation under the Federal Crop Insurance Act passed in 1980. It is a stand-alone law, which means it does not expire along with the other farm programs when the Farm Bill is not reauthorized. However, placing it within the Farm Bill provides lawmakers with an easier avenue to make reforms to the program, such as expanding coverage to new crops or placing a cap on premium assistance.
The Current State of the Farm Bill On June 10, 2013, the Senate passed its version of the Farm Bill and began to pressure the House to do the same.
Acknowledging pressure from the Senate, the House began to work on its version of the legislation, but it soon became apparent that deep divisions over the Supplemental Nutrition Assistance Program (SNAP), formally known as food stamps, would force them to go a non-traditional route. Republican leadership decided to split the nutrition title off from the rest of the Farm Bill and vote on them separately. On July 11, 2013, the House voted and passed the farm portion, and on September 19, 2013, they voted and passed the nutrition portion. After the House voted on the second part of the Farm Bill, the Senate re-appointed conferees to begin negotiations to reconcile the differences between the House and Senate bills. Bringing the bill to conference is a daunting task and one that is a make-or-break moment for the Farm Bill. Republicans are focused on looking for ways to reduce government spending and have zeroed in on nutrition, as it accounts for 80% of total spending in the Farm Bill, according to the House Agriculture Committee. The House is seeking over 10 times more than the $4 billion in reductions seen in the Senate. This is a major point of contention and could be enough to kill the bill if cuts are too deep for Democrats or not deep enough for Republicans. As for proposed changes to crop insurance, it is likely that the Senate billâ€™s provision to introduce a cap on premium assistance to farmers with an Adjusted Gross Income of over $750,000 will be in the final version. Though it was not in the House passed farm bill, Congressman Paul Ryan (R-WI) submitted a formal request to instruct the conferees to accept this provision and to remove the delayed implementation and study of its effects; it was approved by voice vote. However, many conferees in their first meeting expressed strong support to preserve crop insurance and will attempt to remove this from the final legislation. There is also an area of conflict between the two bills regarding crop insurance and conservation requirements. In the Senate version, there is a prerequisite for farmers receiving crop insurance premium assistance to comply with [continued on page 30] DECEMBER 13 29
Crop Insurance . . . [continued from page 29]
Attention Utica E&O Policy Holders:
conservation requirements, which is absent from the House bill. This is an issue that must be addressed in conference and will likely be subject to debate.
The following PIAW education classes are approved for Utica’s premium discount.
Even though there will be some adjustments made to the crop insurance program, overall both chambers agree that crop insurance is the cornerstone for a strong safety net for farmers. Throughout the entire process, both sides of Capitol Hill have stood by crop insurance, defeating dangerous amendments that would have decimated the program. It is evident that Members of Congress know the importance of crop insurance and that its continued success is paramount. PIA will continue to advocate for a long-term reauthorization of the Farm Bill that includes reforms to strengthen the crop insurance program. n
Please contact Darcy at PIA for details. 1-800-261-7429 or firstname.lastname@example.org • Any CIC Update • CIC Agency Management • CISR Agency Operations • Dynamics of Service • PIAW Ethics and E&O Seminars • PIAW Conducted In-House Seminars
Julia Domagalski PIA Government Affairs Coordinator
Education Schedule: www.piaw.org or 1-800-261-7429
Through a new partnership with Vertafore, PIAW is offering FREE access to Sircon online licensing and continuing education management services. Login to: www.piaw.org and get started today! USING SIRCON SERVICES, YOU CAN: • APPLY FOR A LICENSE • RENEW YOUR LICENSE • LOOK UP AVAILABLE COURSES • CHECK LICENSE RENEWAL STATUS • CHECK LICENSE APPLICATION STATUS • REQUEST A LETTER OF CERTIFICATION CERTIFI • UPDATE YOUR NAME OR ADDRESS • FIND YOUR LICENSE NUMBER/NPN • CHECK YOUR STATUS WITH A STATE • MAINTAIN YOUR FIRM ASSOCIATION • UPDATE YOUR ADDRESS • UPDATE YOUR EMAIL ADDRESS • PRINT YOUR LICENSE © 2011 Vertafore, Inc. Vertafore, the Vertafore logo and design, Unleash your potential, and the Vertafore trademarks listed are owned by Vertafore, Inc.
30 DECEMBER 13
From the friendly voices of our customer service staff to the personal visits by our marketing managers and underwriters, to the promptness of our claims adjusters, we are told time and again …
Our people set us apart. For information about becoming a Partners Mutual Insurance Agent please contact Lyn Schumann at 262.432.3430 or email@example.com
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PIA Trust Insurance Plans INSURANCE PLANS DESIGNED WITH LOCAL AGENTS IN MIND As a PIA Member* serving Main Street America, you and your employees have access to a variety of highquality, competitively priced insurance plans. Plans available include: > Basic Term Life** > Voluntary Term Life > Dependent Term Life > Hospital Indemnity > Long Term Disability > Short Term Disability > Business Overhead Expense > Accidental Death & Dismemberment
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For additional information about PIA Trust Insurance Plans, please contact your local PIA Affiliate or call the Plan Administrator at 1-800-336-4759. Additional information is also available on-line at www.piatrust.com. Policies or provisions may vary or be unavailable in some states. Policies have exclusions or limitations which may affect any benefits payable. Underwritten by Unimerica Insurance Company, Portland, ME. Administered by Lockton Risk Services.
DECEMBER 13 31
Choose 5 of 9 to improve your 9 to 5. CISR EDUCATION FOR INSURANCE & RISK MANAGEMENT PROFESSIONALS
It still takes 5 courses to earn a CISR designation but now you have the flexibility of 9 course options. This allows you to focus on what’s important to you. We understand not everyone learns the same way or even at the same pace, so we offer courses in the classroom, online and in-house. Find out how CISR can improve your 9 to 5. Call or visit us on the web today.
• • • • • • • • •
Commercial Casualty I Commercial Casualty II Insuring Commercial Property Insuring Personal Auto Exposures Insuring Personal Residential Property Personal Lines Miscellaneous Agency Operations Elements of Risk Management Life & Health Essentials
www.piaw.org 1-800-261-7429 32 DECEMBER 13
We Can Help! TESTIMONIAL “I contacted Brenda at PIA looking for training for a new employee. This The Midwest’s Cluster GroupWOW, I got particular employee didn’t have Premier a background in insurance. * 100% Ownership everything I needed andRetained more! She walked me through the PIA website where * Increased Markets-Over 30 Represented I found a wealth of resources. Pre-licensing, online programs for new hires * Knowledgeable Support Staff (insurance orientation and coverages) and recommended reading. I didn’t Commercial Assistance - Placement realize until now* the extent and of information to members of the PIA. Increased More Stable available Contingencies * Comparative RaterinProvided We found exactly what we needed a user-friendly format. Thanks to the * Retain 90% of Commission excellent resources available through the PIA we will be more confident when * Reduced Cost of Applied Management System hiring people without an insurance background and know that they can get a * Preferred Agency Contracts great start in our industry.”
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Brenda Glueckstein CIC, CISR For more information call Mike Sabourin 866-789-9712
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• Commercial Casualty I •Ethics C o m –m4e WI r c iCE al Casualty II • Elements of Risk Management L i f e –& 8 HWIe aCEl t h E s s e n t i a l s CISR•OnLine • Insuring Commercial Property • Insuring • I n s uPersonal r a n c e P eResidential r s o n a l R e sProperty idential Property • Insuring • I n s uPersonal r i n g P e r Auto s o n a lExposures Auto Exposures • Insuring • P e r sCommercial o n a l L i n e s Property Miscellaneous • A g e n c y O p e r a t i o ns • Insuring Commercial Casualty Exposures • W Agency Operations ebinars (Insurance Community Center) • 2-4 WI CE, No Exam
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DECEMBER 13 33
The “rising-bathtub” allocation method.
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Endorsement and exhaustion of coverage
By Mitchell B. Reiter and W. Richard Kroeger [This is the first article in a series of articles on additional insured endorsements.]
In many types of businesses, it is customary for contracts to require that the upstream parties in the business relationship be made “additional insureds” under the downstream parties’ policies of insurance. To help you educate your insureds on the importance of Additional Insureds endorsements, this article explores some of the hidden pitfalls posed by the specific language of the numerous versions of Additional Insured endorsements and what impact Additional Insured status has on the availability of coverage under primary, excess and other policies (the “exhaustion” of coverage issue). We are aware of at least a dozen “standardized” Additional Insured endorsements used by insurers. Some authors have suggested that when you add in the number of nonstandard manuscript forms written by various insurers, there may be more than 300 different Additional Insured endorsement forms in use. Typically, a liability insurance policy begins with a “grant of coverage,” where the insurer agrees to pay the sums that the insured “becomes legally obligated to pay as damages because of bodily injury, [or] property damage” arising out of an “occurrence” that is covered under the policy. An occurrence simply is an accident (as opposed to an intentional act or omission). Additionally, and equally as important, the policy states that the insurer has the duty to defend the insured against any lawsuit that seeks these damages. This duty applies even if the lawsuit is groundless, false or fraudulent. Additional Insured endorsements extend these duties under an insurance policy to any party that qualifies as an additional insured. Thus, these endorsements transfer risk from one contracting party to another by having the downstream party’s insurance policy provide coverage to the upstream party as if those policies belonged to the upstream party.
Blanket or scheduled? Additional Insured endorsements come in two general styles: “blanket” and “scheduled.” As the name implies, a “blanket” endorsement provides additional insured coverage to anyone who is required to extend coverage under a written contract.
A “scheduled” endorsement requires that the additional insured actually be identified by name. This can be done in the endorsement itself or in a separate schedule of additional insureds. (We will examine the specifics of these types of endorsements more fully in our subsequent articles in this series).
Exhaustion of coverage The Additional Insured endorsement also impacts the priority of insurance coverage available to the parties and how that coverage is used up (or “exhausted”). The standard terms of insurance policies are structured using a concept of “horizontal exhaustion” when coverage is provided by multiple insurance policies. For example, although most contracts in the construction business require that primary insurance be provided to the downstream and upstream parties under the downstream party’s commercial general liability policy, followed by the downstream party’s excess liability policy (this is “vertical exhaustion”), these policies normally are written using the concept of “horizontal exhaustion,” which is a different coverage scenario. Under the horizontal-exhaustion concept, all CGL policies that provide coverage to the upstream parties must be exhausted completely before coverage is triggered under the first excess policy. This has been described as the “rising-bathtub” allocation method. Imagine that every CGL policy is represented by a set of blocks that lies side-by-side along the bottom of a bathtub, with the excess policies stacked on top. When the water rises in the bathtub, each of the CGL policies gets wet (or is triggered) before any of the excess policies are submerged. Thus, coverage is triggered “horizontally” across all of the CGL policies before any excess coverage above is triggered “vertically.” If an insured agrees to provide additional insured coverage under his or her policy to the other party and agrees that all the coverage to the additional insured’s CGL policies be primary, the horizontal-exhaustion concept used in the insurance policies is not appropriate. Under the “risingbathtub” scenario, an insured would have to have his or her CGL policy amended so the CGL policy would cover the [continued on page 36] DECEMBER 13 35
Additional Insured . . . [continued from page 35] entire floor of the bathtub. Then the insureds excess/umbrella policy would have to be the second layer to cover the entire bathtub. All other parties’ CGL policies would rest in a third layer on top of the insureds excess policy. The excess policies of the other parties would rest on top of that as a fourth layer of coverage. As the tub begins to fill and the water begins to rise (i.e., claims begin to be filed), the CGL policy, and then the excess policy are the only policies that get wet (or are triggered). Thus, the CGL excess policies will provide “primary” coverage for all claims until the point where they are exhausted and no more coverage is available. Only then will any other available policies from the other parties be triggered.
Final thoughts Additional Insured endorsements come in a variety of formats, each of which is designed specifically to provide a certain amount of coverage for certain activities. These endorsements are designed to transfer risk between parties. When acting in connection with a primary coverage endorsement, the Additional Insured endorsement can even impact the availability and exhaustion of other insurance coverage. n Reiter is a partner and Kroeger is a manager of Goldberg & Connolly’s policyholder coverage practice. They can be reached at (516) 764-2800. Visit www.goldbergconnolly.com. —Reprinted with permission from PIA Management Services Inc.—
PIA of Wisconsin is honored by Utica National Insurance Company!
PIAW received the award for most submissions at a recent awards dinner in Atlanta, Georgia. Wisconsin ranks as one of the consistent leaders in production and profitability of E&O business through Utica. Pictured l/r: Brian Lytwynec, President & COO, Utica National Insurance Group; Darcy Brown, Member Benefits Coordinator, PIA of Wisconsin; Tony Sychtysz, Senior Vice President & National Sales Director, Utica National Insurance Group; John Burns, E&O Underwriter, Utica National Insurance Group, and Ronald Von Haden, Executive Vice President, PIA of Wisconsin.
36 DECEMBER 13
DECEMBER 13 37
PROFESSIONAL INSURANCE AGENTS OF WISCONSIN, INC. OFFICERS
Mr. Jeff J. Glass, President A.F. Glass Insurance Agency PO Box 1149 Lake Geneva, WI 53147 Phone 262-248-5555 Fax 262-248-5544 firstname.lastname@example.org
Mr. Thomas Budzisz BWO Insurance Group, LLC 2111 E. Rawson Ave. Oak Creek, WI 53154 Phone 414-768-8100 Fax 414-768-8110 email@example.com
Ms. LouAnn Herriges, CIC, CISR Vice President Anderson's Insurance Associates 17500 W. Liberty Lane New Berlin, WI 53151 Phone 262-789-8500 Fax 262-754-6038 firstname.lastname@example.org
Ms. Jodi Cordes, CIC, CRM RC Insurance Services, Inc. 1320 Walnut Ridge Dr. Ste. 200 Hartland, WI 53029 Phone 262-367-8611 Fax 262-367-8529 JCordes@rcinsure.com
Mr. Rick Clements, LUTCF, MDRT Treasurer Clements Ins. Agency, Inc. 317 N. 6th St. Wausau, WI 54402 Phone 715-842-1664 Fax 715-848-3337 email@example.com
Mr. Matt Cranney, CIC M3 Insurance Solutions, Inc. 3133 W Beltline Hwy Madison, WI 53713 Phone 608-273-0655 Fax 608-273-7783 firstname.lastname@example.org Mr. John W. Klinzing, CIC Affiliated Ins. Agencies of WI, LLC 3830 Atwood Ave. Madison, WI 53714 Phone 608-310-3924 Fax 608-441-8787 email@example.com
Mr. Trey Neher, CIC, CISR THZ Insurance Group 420 E. Northland Ave. Appleton, WI 54911 Phone 920-730-0123 Fax 920-833-6870 firstname.lastname@example.org Ms. Tracy A. Oestreich CIC, AU, CPIA Anderson Ins. Associates, Inc. W177N9856 Rivercrest Dr., Ste. 215 Germantown, WI 53022 Phone 262-789-8500 Fax 262-754-6038 email@example.com
Ronald Von Haden, CIC Executive Vice President firstname.lastname@example.org Darcy Brown Member Benefits Coordinator email@example.com Heather Falk, CISR Bookkeeping firstname.lastname@example.org Mandy Penn Administrative Assistant email@example.com Becca Prestbroten Special Project Coordinator firstname.lastname@example.org Brenda Steinbach Education & Convention Director email@example.com
WINTER GET-AWAY Minocqua (9 WI CE, 3 of 9 Ethics)
CISR ELEMENTS OF RISK MANAGEMENT Rothschild, Brookfield (7 WI CE)
CIC RUBLE GRADUATE SEMINAR West Bend (16 WI CE, 4 of 16 are optional Ethics)
ADVANCED COMMERCIAL LINES ANALYSIS FOR E&O PREVENTION Wauwatosa (7 WI CE)
CPIA 1 Madison (7 WI CE)
CISR COMMERCIAL CASUALTY 2 Madison (7 WI CE)
CIC LIFE & HEALTH Middleton (20 WI CE)
38 DECEMBER 13
Ms. Kathy M. Mulder Nolan Insurance Agency LLC PO Box 238 Brandon, WI 53919 Phone 920-346-2241 Fax 920-346-5600 firstname.lastname@example.org
STAFF PIA of Wisconsin, Inc. 6401 Odana Road Madison WI 53719 Phone: 608-274-8188 Toll Free: 800-261-7429 Fax: 608-274-8195 Toll Free Fax: 866-203-7461 www.piaw.org
Mr. Brian MacGillis, CPIA Secretary MacGillis Agency, Inc. W3934 County Highway H PO Box 100 Fredonia, WI 53021-0100 Phone 262-790-0000 Fax 262-790-0004 email@example.com
Mr. Dennis Kuhnke, CIC, CPIA PIAW National Director Jack C. Loyda & Associates, Ltd. 4414 N. Oakland Ave. Shorewood, WI 53211 Phone 414-332-5150 Fax 414-332-7267 firstname.lastname@example.org
25 ETHICS Green Bay (4 WI Ethics CE) 26-28
CIC COMMERCIAL CASUALTY Green Bay (20 WI CE)
CISR PERSONAL LINES MISCELLANEOUS Brookfield, Madison (7 WI CE)
CIC RUBLE GRADUATE SEMINAR Middleton (16 WI CE, 4 of 16 are optional Ethics)
Hot Topic/William T. Hold Tomah (7 WI CE, 3 of 7 are Ethics)
CISR PERSONAL RESIDENTIAL Green Bay, Brookfield (7 WI CE)
CIC COMMERCIAL PROPERTY Milwaukee (20 WI CE)
HOT TOPIC/WILLIAM T. HOLD Rothschild (7 WI CE, 3 of the 7 are Ethics)
DYNAMICS OF SERVICE Fond du Lac (7 WI CE)
DECEMBER 13 39
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