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IN THIS ISSUE: What’s ahead for small, traditional agencies Employing “Futureview”

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Is there a positive future for small, traditional agencies? As we reach the end of another year, it’s time to reflect … and to look ahead. Here, Chris Burand — agency consultant and frequent presenter at our Executive Management Conferences — offers his take on where the independent agency system is heading and what is, and isn’t, worth your worry.


Page 10 2013 Executive Management Conference in review Just weeks shy of the 150th anniversary of President Lincoln’s Gettysburg Address, IA&B members gathered on the same hallowed ground to mark a turning point in the battle for insurance business.

Page 16


Why Martin Luther King, Jr. did not say, “I have a plan” Technology-forecaster Daniel Burrus uses the term Futureview to describe the ability to project yourself into the future and then look back at your present position from that future point of view. Read on for his take on how you can benefit from Futureview, using it to determine the future you.

Page 20 Mission Statement Primary Agent delivers ideas to help Insurance Agents & Brokers’ members negotiate their unique position as guardians of trust between insurance consumers and companies while facing the challenges of maintaining a small business. Primary Agent also supports IA&B’s mission to preserve and advocate the American Agency System.

Get social with IA&B

In every issue 2 3 4 6 8 13

Chair of the Board’s Message Ask Our Experts State News Preventing E&O Coverage Corner My Events


IA&B Partners Technology Update Advertisers Index Classified Ads Last & Least

Subscriptions: Non-member price: $2.25 per copy or $15 per year. All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two months prior to publication. Advertising rates furnished upon request. Address inquiries to:   Primary Agent Editor 5050 Ritter Road    Mechanicsburg, PA 17055-0763    Phone (800) 998-9644 or (717) 795-9100    Fax (717) 795-8347 Periodical postage paid at Mechanicsburg, Pa. and additional entry post office. Ride-along enclosed. Postmaster: Send address changes to above address. Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2013-12 is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.  Copyright 2013. All rights reserved. No material may be reproduced in whole or in part without written consent of the publisher. The information in this publication is general in nature and is not intended to serve as legal, accounting, financial, insurance, investment advisory or other professional advice as to any reader’s particular situation. Users are encouraged to consult with competent legal, financial, insurance, investment advisory and or other professional advisors concerning specific matters before making any decisions and we disclaim any responsibility for any decisions or actions by readers. Statements of fact and opinion in Primary Agent are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the IA&B. Participation in IA&B events, activities and/or publications is available on a non-discriminatory basis and does not reflect IA&B endorsement of the products and/or services.

Board of Directors Officers G. Greg Gunn, CIC Chair of the Board Lemoyne, Pa. Diana M. Hornung Hanby, ACSR Vice Chair of the Board Wilmington, Del. Norman F. Basso, CPCU Immediate Past Chair of the Board York, Pa.

Members Henry “Butch” Bradley, Jr. Forest Hill, Md. E. Stephen Burnett, CIC, ARM Wilmington, Del. Richard F. Corroon, CPCU Wilmington, Del. N. Lee Dotson, CIC, AAI Wilmington, Del. Michael P. Ertel Columbia, Md. John L. Frankenfield Telford, Pa. John B. Hollister Milford, Pa. Jocelyn R. Howard-Sinopoli, CIC, CISR Butler, Pa. Robert S. Klinger, LUTCF, CPIA+ Germantown, Md. Douglas A. Loesel, CPCU Erie, Pa. Michael F. McGroarty Sr. Pittsburgh, Pa. Craig S. Mader Gambrills, Md. Ann Gallen Moll, CIC Reading, Pa. Joseph R. Pastor, CPCU, AAI Oil City, Pa. Richard M. Rankin, CIC Lancaster, Pa. April E. Ressler, CIC Altoona, Pa.

G. Greg Gunn, CIC

Chair of the Board’s M






Preparing for tomorrow “Tomorrow is the first blank page of a 365-page book. Write a good one.” — Brad Paisley Somehow, we all tend to find a little time for reflection in December. And, despite the holidays and the January renewals and the fiscal year-end, we all make time to look beyond Dec. 31 and into the next year, too. On the IA&B Boards of Directors, we do the same. At the year’s end, we take stock in where we succeeded and what goals we met. And we acknowledge where we fell short. At the same time, we keep our focus on tomorrow and on how our association can elevate independent agents in the years, and against the challenges, ahead. Over the past year, we’ve made significant strides at IA&B. Our notoriously member-centric organization honed its focus and incorporated members’ input even more. The results – the adoption of an end-user-friendly association management system, the launch of an easier-to-navigate website, the release of new training and education programs, and the addition of a data-breach insurance product for agencies — speak for themselves. You can bet that there will be more where this came from. The IA&B Boards and staff are committed to the future — to the future of IA&B and, most importantly, to your future. Prepare yourself for a great tomorrow. Until next time,

Scott C. Rogers, CPIA* York, Pa. David B. Wasson Sr., CIC State College, Pa.


G. Greg Gunn, CIC

Lawrence A. Wilson, CIC, CPIA, CPCU, ARM** New Castle, Del. * Pa. IIABA National Director ** Del. IIABA National Director + Md. PIA National Director


Ask our Experts QUESTION: I noticed that one of my carriers is requiring me to notify them promptly when one of my staff is leaving: Is that standard?

ANSWER: During the more recent analyses of agency agreements that IA&B has completed, we have become aware that the above notification provision is becoming more and more standard. It likely has less to do with the appointment process, and more to do with information security and due diligence in preventing data breaches. It’s important to pay attention to this provision for various reasons: 1) YOUR BEST INTEREST -- Quite frankly, it’s in your customers’ and your best interest to manage passwords and access to company Web services (that include both company and customer information) in a timely fashion.

 • Are commonsense precautions taken, such as not writing passwords down and leaving them in areas that are visible or accessible to others?  • Are guidelines established to change passwords periodically? What frequency or criteria determines change cycles? w  Another standard that must be reviewed applies to terminated employees, and there again, it addresses password management. For example:  • Does the agency’s Security Program include the deletion of a terminated employee’s user name and password as part of the termination procedure, along with retrieving any office key or changing a door access code?

2) LEGAL REQUIREMENTS -- With more federal and state laws and regulations on the books, the web of legal requirements grows larger every year, and some of these requirements could easily be overlooked. You may have implemented training and procedures to protect your customer information, but failing to shut down password access to a departing employee, whether disgruntled or not, could be the famous “weakest link.”

3) AVOIDING A BREACH OF CONTRACT -- Based on the increase in agency agreements containing such language, you could simply be in breach of contract when failing to address these requirements. We have many resources on information security plans required under the Gramm-Leach-Bliley Act and under HIPAA/HITECH. For more on Privacy-related requirements, go to and go to the Resource Center/ Legal Compliance/Privacy.

w For example: Under the HIPAA/HITECH Security rule, password management is one of various “standards” that have to be examined and for which a proper risk management technique must be applied. As part of their risk assessment, companies (and agencies as their business associates) must implement procedures for creating, changing and safeguarding passwords. You must also ensure that staff members are trained on how to safeguard the information and establish guidelines for changing passwords periodically. Your plan should include answers to the following questions:  • Are there policies in place that prevent staff members from sharing passwords with others?  • Is staff advised to commit their passwords to memory?

For more information on the Agency Agreement Analysis (AAA) tool and to access completed reviews, go to the Resource Center/Carrier Issues/Agency & Company Relations.

HAVE A QUESTION? ASK OUR EXPERTS! Rely on our experts to answer your most perplexing questions. Visit the new Ask Our Experts section of IA& (find the link in the website footer) to submit your question and review answers to other frequently asked questions. Or email your question to us at We look forward to hearing from you! [3]

Primary Agent | December 2013

State News Endorsed e-signature service now available at a discount Big “I” Virtual University Committee Chairwoman Cindy Hower presents IA&B Professional Training & Events Director Jessica McWilliams with the EIE Award.

IA&B nabs Excellence in Education Award When you choose our professional training programs, you and your staff score top-notch – and award-winning – education to improve sales and agency operations while reducing E&O exposure. It’s not news that you get great education at a good value from IA&B. After all, it’s what you’ve come to expect. But what is news is that we (once again) have been recognized for it. The Big “I” this fall bestowed Delaware Association of IA&B with a Bronze Excellence in Insurance Education (EIE) Award. The EIE awards celebrate and recognize associations and staff who made significant contributions to education for their members and the industry in the key areas of class offerings, continuing education, professionalism, designation offerings, industry collaboration, planning goals, marketing, resources and more. [4]

Using an electronic signature service like DocuSign saves time and cuts down on expenses, and now IA&B member agencies can benefit at 20 percent off. Member agencies – small and large – can save time by completing transactions in minutes, rather than days, with the DocuSign e-signature platform. Agencies can also save on costs associated with traditional document production and postage. Available now at a 20 percent discount through our affiliation with the Big “I,” DocuSign services are the global standard for electronic signatures. Accessible anytime, anywhere, on any device, DocuSign connects an agency to its customers, partners, carriers and employees, where it can transact business with confidence. Implementing DocuSign is as easy as signing up and logging in. There’s no software or hardware to install or maintain. Simply add documents, add recipients, place “Sign Here” and/or “Initial Here” tabs directly onto the documents, and then send them to customers. serv/DocuSign

Delaware license renewal notices no longer mailed Mark your calendar (or the calendar of whomever handles your agency’s license renewals) to avoid the paperwork and expense affiliated with missing your Feb. 28 license renewal deadline. Don’t wait for the renewal notice that’s never coming to re-up your Delaware resident insurance license. Make a note to renew by Feb. 28. Insurance Commissioner Karen Weldin Stewart announced last fall via Producers & Adjusters Bulletin 20 that the department will no longer mail renewal notices. Instead, it will post the notices online at The electronic posting was anticipated 90 days prior to the renewal date, or late November. Licensees are responsible for checking the website to ensure their license is up to date with renewal payments. As a reminder, resident individuals and business entities are required to renew their licenses by Feb. 28 of every even year.

Federal criminal history reports required for new state licensees The application process for a state insurance producer license just became a little more time consuming. Delaware Insurance Commissioner Karen Weldin Stewart this fall released a bulletin explaining that new resident applicants and new non-resident applicants declaring Delaware to be their home state must provide a federal criminal history report from the

Federal Bureau of Investigation, in addition to a state criminal history report, as part of the application process. The change, which is effective immediately, stems from the July 15 enactment of Senate Bill 44.

Reminder: Several Delaware ACORD forms revised Be sure that you’re using the latest ACORD forms this winter (this may require applying updates to your agency management system). ACORD made (minor) revisions to four Delaware forms, effective Dec. 1: Delaware Personal Auto Application – 90 DE (2010/06) Delaware Commercial Auto, Coverages/Limits Section – 137 DE (2010/08) Delaware Garage and Dealers, Coverages/Limits Section – 138 DE (2012/06) Delaware Personal Auto Application Section – 290 DE (2010/06) Notifications/20130903_Forms Notification.pdf (see pages 10, 12, 13 and 15)

Neighboring news: Pennsylvania now emailing license-renewal invoices Hold a non-resident licenses in Pennsylvania? Mind your email inbox (as well as your standard mailbox during the transition) to maintain it. The Pennsylvania Insurance Department (PID) began sending [5]

renewal invoices electronically, starting in July with notices for September license renewals. The department assured stakeholders that the transfer will be secure and display no nonpublic information. In addition, be on the lookout for a PID outreach campaign which will aim to capture additional licensees’ email addresses. For those licensees who do not have an email address on file, and for those whose emails bounce back to the department, a hard copy invoice will continue to be printed and mailed. Members join ranks of Best Practices Agencies, provide benchmarks Knowing how your agency and producers stack up to others can provide affirmation — and, at times, motivation. That’s the rationale behind the Big “I” Best Practices Study, which this fall added three member agencies from our partnered organization, IA&B of Pennsylvania, to its prestigious ranks of top-rated agencies in the nation. Learn what you’re doing well – and what needs improvement – by benchmarking your agency and producers against those at the nation’s top-rated independent agencies. The Big “I” Best Practices Study provides insight into these agencies’ profit/loss summaries, producer productivity by lines of insurance sold, commission and revenue statistics per top carriers represented, and more. And purchasing the study is not necessary to access results and download a comparison spreadsheet. Simply follow the link below and then select “Study Results” or “Comparison Spreadsheet” from the top menu bar.

Primary Agent | December 2013



The Utica National E&O Program supplied this article. Insurance Agents & Brokers Service Group Inc. is the exclusive agent for the Utica E&O program in Delaware, Maryland and Pennsylvania. For questions regarding this article or your E&O coverage, contact IA&B at 800-998-9644 or

In the world of golf, the subject of mulligans often comes up before a group starts to play. A mulligan is a “do-over.” If a golfer hits a bad shot, he or she can call a mulligan and hit the shot over. The premise is that the second shot will be better than the first, and the first shot won’t count.

A claim example The following claim scenario took place a number of years ago: A bar owner did not have liability insurance but was required by a new landlord to secure GL coverage. The bar owner spoke with one of the bar’s patrons, who happened to be a customer service representative at a local agency. The CSR indicated that the agency would provide the bar owner with a proposal. The proposal was provided and coverage was purchased. There was no documentation in the agency file/management system as to the exact nature and content of the discussion.

Wouldn’t it be nice to have mulligans in errors and omissions? After an E&O claim is made, the producer or customer service representative could get a mulligan – a “do-over” – to fix things, say, if there is no documentation or the documentation is not at the level it should be. If a producer misspoke as to how coverage would apply, he or she could go back, correct themselves and all would be forgiven. This would result in fewer E&O claims and fewer dollars paid out on those claims made.

After a big party at the bar, a patron hit a car, killing the driver, who was president of the senior class at the local high school. When the


bar owner was served with a lawsuit, it was brought to the agency. During a discussion with the agency, the bar owner was advised that the policy did not cover liquor liability claims. The bar owner then filed suit against the agency. During the trial, the CSR admitted, “I can’t document everything. If I did, I would never get any work done.” She testified that she personally delivered the policy when she stopped one night on her way home to have a couple of beers. She said she explained to the bar owner about the protection afforded by the GL policy and that liquor liability claims would not be covered. The producer claimed to have explained this, too. Again, there were no notes in the system reflecting the personal delivery of the policy or the discussion that subsequently developed.

In turn, the bar owner testified that: 1) he was not a sophisticated insurance buyer and 2) he definitely would have bought coverage for liquor liability had he known that the GL policy did not provide it. His comments were something to the effect of “I have a bar, so why wouldn’t I buy coverage for liquor claims?” It is what it is In all probability, the bar owner knew he did not have coverage for liquor claims, but with nothing documented, the legal system found the agent liable and a settlement was reached. Do you think the producer and CSR wish they had a couple of mulligans to fix some areas after the claim was made against them? Without a doubt – but that’s not the way it works. When an E&O claim is made against an agency, the file “is what it is.” While it

is acceptable for an agent to organize the file, at no time should an agent add or delete anything from it. No “do-overs”! So what does this essentially mean? It means that when agency staff – producers, customer service representatives, accounting folks, receptionist, etc. – performs a particular task, if that task should be documented, it gets documented. Imagine the impact on the judge and the jury when the CSR in the above claim admitted she did not document the discussion and that there were other files and discussions that weren’t documented.

the file reflects documentation back to the customer, memorializing the various conversations and decisions. Agencies and their staff must be extremely serious about this and make every effort to have a culture and commitment that tolerates nothing but the best. Using an audit process is a great vehicle for ensuring that agency expectations are met because, in the world of agents’ E&O, unfortunately, there are no mulligans.

Clearly, the odds of an agency prevailing in an E&O matter are strengthened when documentation in the file is handled promptly, professionally and accurately. The odds are also enhanced significantly when

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Primary Agent | December 2013

Coverage COR N E R


JERRY M. MILTON, CIC Jerry M. Milton, CIC teaches and consults on industry issues. The legal profession recognizes him as an expert on insurance coverages. He is also the education consultant for IA&B, working with CISR, CIC and continuing education programs.

When we hear the words “Consent To Settle,” most of us probably think of a policy provision that requires the insured’s consent before the insurer can settle the claim. We tend to forget that the insured cannot settle a claim or make any payment without the insurer’s consent. For example, the Duties In The Event Of Occurrence, Offense, Claim Or Suit condition in the Commercial General Liability (CGL) policy states the following:

The Babcock & Wilcox Co. (B&W) was insured by American Nuclear Insurers (ANI) for their liability exposures at two nuclear fuel processing facilities. Hundreds of plaintiffs alleged injuries due to radiation exposure and filed claims against B&W. ANI paid for the defense of B&W under a reservation of rights. B&W, despite ANI’s objections, settled with the plaintiffs for $80 million plus prejudgment interest of over $15 million. These amounts were less than the policy’s limits.

No insured will, except at that insured’s own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent.

Following the settlement with the injured plaintiffs, B&W sought reimbursement from ANI for the full amount. ANI argued that it had no obligation to reimburse B&W because B&W violated the Consent To Settle clause in their policy, which stated:

In The Babcock & Wilcox Co. v. American Nuclear Insurers, the Superior Court of Pennsylvania addressed the circumstances under which an insured may settle a claim without the insurer’s consent.

The companies may make such investigation, negotiation and settlement of any claim


or suit as they deem expedient. The insured shall not, except at its own cost, make any payment, assume any obligation or incur any expense. No action shall lie against the companies or any of them, unless, as a condition precedent thereto the amount of the insured’s obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the companies. The trial court ruled that B&W would be entitled to reimbursement if the settlement was determined to be fair, reasonable and noncollusive. Thereafter, a jury determined the settlement was fair, reasonable and noncollusive, and the court entered judgment against ANI and in favor

of B&W for $80 million plus prejudgment interest of over $15 million. ANI appealed this judgment. In this appeal, a three-judge panel of the Superior Court of Pennsylvania evaluated the appropriate standard for determining whether an insured is obligated to honor a Consent To Settle clause in an insurance contract when an insurer tenders a defense under a reservation of rights. The three-judge panel agreed that the trial court’s ruling should be reversed, but split 2-1 regarding the appropriate standard that should be applied to evaluate whether B&W could recover its settlement payments. The majority adopted the rule set forth in a 1998 Florida case, Taylor v. Safeco Insurance Co. Based on Taylor, an insured’s obligation to honor a Consent To Settle clause depends 7.5 x 4.625 on whether the insured accepts jgs_umbrella_7.4x4.625v1 2012

an insurer’s tender of a qualified defense. If the insured accepts defense subject to a reservation of rights, the insured is bound by the terms of the Consent To Settle clause. Under these circumstances, if an insurer objects to settlement, the insurer is only responsible for the settlement costs if the insured can show that the insurer’s refusal to settle constituted bad faith. On the other hand, if the insured rejects the insurer’s tender of a qualified defense and furnishes its own defense, the insured retains full control of the litigation. This includes control over the settlement decision, and the insured may recover its fair and reasonable defense and indemnity costs from the insurer, even if the insurer objects to the settlement, if the settlement was entered into in good faith.

On July 10, 2013 the Superior Court reversed the trial court’s ruling, vacated the judgment, and remanded the case to the trial court with instructions to follow the Taylor standard and determine if B&W rejected ANI’s offer of defense under a reservation of rights, and, if so, did ANI act in bad faith by refusing to settle. What will be the final outcome? You can Google, Bing or AskJeeves – The Babcock & Wilcox Co. v. American Nuclear Insurers. Y’all take care!

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Is there a positive future for small, traditional agencies? As we reach the end of another year, it’s time to reflect … and to look ahead. On the following pages, Chris Burand — agency consultant and frequent presenter at our Executive Management Conferences — offers his take on where the independent agency system is heading and what is, and isn’t, worth your worry.

[ 10 ]

Primary Agent | December 2013


s there a positive future for small, traditional agencies? As with most broad looking-into-the-future answers, it depends. It depends on knowledge, commitment and recognizing reality.

Knowledge I find one reason many small, traditional agency owners are discouraged when looking into the future is partially caused by a lack of knowledge. Sometimes they read too much industry press written by inadequately knowledgeable people, and sometimes they just don’t read. (As Mark Twain famously asked, “What is the difference between a man that doesn’t read and one that can’t read? Nothing.”) The inaccurate information being written and causing consternation includes the aging industry, the inability to develop new people, and how a few heavy advertising direct writers are having all the success. ———————————————————————————————————

Writers expressing concern the industry is nearing collapse because of aging agency principals are simply Chicken Littles. ——————————————————————————————————— First, the industry is not really aging. Individuals are aging, as are their peers, making it seem like everyone around them is aging. The average agency owner age has not changed materially since I’ve been in this industry, which has been 25 years. It was 56-58 years old then, and it’s 57-59 years old now. Writers expressing concern the industry is nearing collapse because of aging agency principals are simply Chicken Littles. Second, the ability to develop new people has never been better. The resources for testing, hiring, educating and training new people are of far higher quality and abundance than any time in my career. The problem I see is that few agency owners know of the resources, or they do not use the resources appropriately. Third, the heavy direct advertising is having an effect. It is successful. However, it is a strategy that only applies if the company/agency is big enough to spend enough and if the client target is not primarily interested in more than a superficial transactional relationship. The independent insurance agency system was designed to avoid both conditions. The carriers that originally distributed insurance through independent insurance agencies did not advertise to the general public because they relied on their agents to advertise. Those agents in turn advertised generally on a community platform and marketed on a social platform. The advertisements were at the Little League park, high school yearbooks, local newspapers and so forth. The marketing was through relationships and true social networking versus electronic social networking. These methods worked because the client target was

[ 11 ]

Employee assessments Chris Burand cites the resources instrumental in “testing, hiring, educating and training new people.” To learn more about what’s available – and to take advantage of IA&B-member discounts – visit hiring_managing/profiling.


someone wanting a relationship. Going forward then the questions become: Who is your client target? And if it is people wanting superficial transactional relationships, can you afford to advertise adequately? ————————————————

[New agencies] are playing offense to win, and the traditional agents are playing to not lose. Playing to not lose is rarely a winning strategy. ————————————————

Commitment The question is not only can you afford to advertise adequately,

tied to committing oneself to building a future is what causes so many to wonder about their future.

but will you commit to advertise so significantly? Your advertising budget may have to quintuple. Historically, agencies –especially smaller ones – have not had to make much of a commitment once established. This is because once established, agencies’ retention rates were adequate to generate safe cash cows, and since a great many agency owners were satisfied with the cash generated, they could just ride along.

On the other hand, approximately 5,000 new agencies have been created in the last five years. That is an amazing number, and many of these agencies have made a commitment to the future. They haven’t yet experienced the cash cow and flexibility, so they’re just busting their butts to pay the bills. They don’t really have the same concerns. They are playing offense to win, and the traditional agents are playing to not lose. Playing to not lose is rarely a winning strategy, and insurance carriers recognize the difference when appointing agencies.

I hear the concern in many agency owners’ voices these days because they see they have to make a commitment, and they don’t want to do so. One reason they enjoy the business is the flexibility they have, and a commitment can sorely limit that treasured flexibility. The emotion

Continued on page 14



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[ 13 ]

AGENCY MANAGEMENT Continued from page 12 The solution many such agencies have latched onto is a cluster or aggregator. Done well, clusters and aggregators may be a solution, but the majority of these entities have been established sloppily. Sloppiness seems to abound because the members do not want to make a true commitment to an enterprise that ultimately requires a true commitment. These entities are partnerships, and any partnership that truly succeeds requires a complete commitment. Going forward then, the future is truly bright for those willing to make a true commitment to building their agencies every single day. This means

selling every day. This means developing people using the great tools available.

Accepting reality The reality is that owning and running an independent insurance agency is going to get tougher. More business operational knowledge will be required, more insurance technical knowledge will be required, and more leadership will be required. Instead of resting on one’s sales, reality is that no amount of volume will ever be enough. For example, historically in small towns many agencies would grow to some large percentage of the market and then plateau because the


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[ 14 ]

reality was that with their market share, they could not grow much more. The new reality is that it is time to start selling insurance in the next town over. The reality is that more structure is required to minimize E&O exposures, to appeal to younger employees, and to develop new employees more effectively. The reality is that your companies are no longer going to depend on just agencies to make their sales. They know some people only want superficial transactional relationships, and they’re going to advertise to that audience. They know some agency owners are committed, and they know some are not. They know some listen to too many tall tales about what is happening, and they know some are quite well informed. In sum, the reality is that in the past, to put in the terms of the wonderful book by David McNally, The Eagle’s Secret, Survivors could do just fine in this industry. Going forward, this industry has a great future for Thrivers, but maybe not Survivors. In fact, I don’t think I have seen more opportunity for Thrivers than ever before because, historically, the ease with which Survivors survived was an important impediment to Thrivers thriving. Companies protected Survivors, customers would not leave Survivors easily, and the historic independent agency distribution model was designed to protect Survivors. The upheaval pressure Survivors are feeling, causing them to question the future of small traditional agencies, is directly correlated to their position as

IT CAME UPON A MIDNIGHT STEER Survivors. Thrivers are not concerned about their futures because their futures are so bright, they have to wear shades.

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W W W. H A R F O R D M U T U A L . C O M


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A great battle for insurance business 2013 Executive Management Conference in review

Just weeks shy of the 150th anniversary of President Lincoln’s Gettysburg Address, IA&B members gathered on the same hallowed ground to mark a turning point in the battle for insurance business.

r photos See page 18 fo ence. from the confer

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Primary Agent | December 2013


’s fifth annual Executive Management Conference (EMC) drew 150 independent agency owners and principals from throughout the tri-state area to historic Gettysburg, Pa. The two-day event combined first-rate learning opportunities with ample networking and — of course — a few Civil War history lessons. The conference kicked off on Tuesday, Oct. 29 with “Winning the Marketing Game in 7 Steps & 7 Minutes a Day,” a workshop presented by Robert Allen Paul, acclaimed speaker from last year’s EMC. Attendees learned specific tactics and developed a personalized game plan for building a strong agency brand.

Conference sponsors and exhibitors A special thanks to these sponsors whose generous support made the 2013 Executive Management Conference possible. Benefactor sponsors:

Following the annual meeting and the second half of Paul’s workshop, EMC participants chose between seminars on social media and organizational culture. Day one concluded with a welcome reception — where attendees mingled with the event sponsors and James Getty, a nationally renowned Lincoln actor and historian.

Donegal Insurance Group

Wednesday, Oct. 30 offered a full day of workshops. Participants picked among courses covering financial management, advertising and leadership. The final session, taught by returning EMC speaker Chris Burand, delved into producer development and management, specifically contracts, compensation, hiring and expectations.


Harleysville Progressive

Partner sponsors: Amerisafe Berkley Mid-Atlantic Group Capital Source Cumberland Insurance Group

2013 Annual Meeting On the first day of the Executive Management Conference, the IA&B Board of Directors held its Annual Meeting, where association leadership (see pages 22-23 for a directory) recapped the year’s accomplishments and highlighted initiatives planned for 2014.

Conemaugh Valley Mutual Frederick Mutual Insurance Company Highmark Workers’ Compensation IA&B Service Group Liberty Mutual Insurance Mercury Insurance Group MMG Insurance Mutual Benefit Group

The annual meetin g provided an oppo rtunity for members to review the three state associations ’ achievements.

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Penn National Insurance Prime Insurance Company The Rucker Company Westfield Insurance

EMC 2013


1. Attendees enjoyed two


full days of workshops, presented by Chris Burand, Robert Allan Paul and Ronnie Slone.

2. Keeping with tradition,

this year’s EMC allowed time for networking with fellow agents and carrier partners.

3. Attendees perused the

exhibits of 20 insurance companies and service providers.

4. Lincoln actor and historian


James Getty mingled with attendees during Tuesday evening’s reception.

5. Getty, as Lincoln,

captivated attending agents with an inspiring, and at times amusing, address.


4 [ 18 ]


Listed below are those companies that strongly support the independent agency system and Insurance Agents & Brokers. Thank you for your continued sponsorship.

WHAT IS IA&B PARTNERS? The IA&B Partners program gives company and allied businesses the opportunity to demonstrate their commitment of support to independent agents and receive maximum market exposure. As an IA&B Partner, you will also realize the benefits of IA&B membership to help you succeed in the insurance industry.

DO YOU SEE YOUR NAME? To become an IA&B Partner, choose the sponsorship package that matches your commitment of support. Contact the Member Sales Center at 800-998-9644, 717-795-9100 or visit us online at to get started.



ACUITY Berkley Mid-Atlantic Group Donegal Insurance Group Erie Insurance Group Harleysville Insurance HM Insurance Group Insurance Agents & Brokers Service Group Inc Liberty Mutual Insurance MMG Insurance Company Millers Mutual Group Millville Mutual Insurance Co Mutual Benefit Group Penn National Insurance Swiss Re The Main Street America Group Utica National Insurance Group

Aegis Security Insurance Co Agency Insurance Company AmWINS Program Underwriters Inc Auto-Owners Insurance Company Briar Creek Mutual Insurance Company Chubb Group of Insurance Companies Conemaugh Valley Mutual Insurance Co Countryway Insurance Company Encompass Insurance Foremost Insurance Group GMI Insurance Goodville Mutual Casualty Company Guard Insurance Group Hanover Fire & Casualty Insurance Company Harford Mutual Insurance Co Insurance Alliance of Central PA Inc


Insurance Placement Facility of PA Keystone Insurers Group Inc

ISU Insurance Agency Network Progressive Westfield Insurance

Lebanon Valley Insurance Company Mercer Insurance Group Merchants Insurance Group


Mercury Casualty

Access Insurance Company Allied Insurance American Mining Insurance Co Burns & Wilcox Limited Cumberland Insurance Group Farmers Mutual Insurance Company of Western Pennsylvania Frederick Mutual Insurance Co ICW Group Insurance Companies Juniata Mutual Insurance Co PSBA Insurance Trust Selective The Philadelphia Contributionship [ 19 ]

Mutual Aid Exchange Penn PRIME Municipal Insurance Reamstown Mutual Insurance Company Rockwood Casualty Insurance State Auto Mutual Insurance Company TAPCO Underwriters Inc The Brethren Mutual Insurance Company The Motorists Insurance Group The Mutual Service Office Inc Travelers Tuscarora Wayne Mutual Insurance Company Zenith Insurance Primary Agent December 2013

Primary Agent | December 2013

Technology U P DAT E



not to get elected and not to become rich; it was a dream that was to and for everyone—one meant to elevate the national conversation by providing a goal that at the time seemed impossible but would be worth achieving for all.

Daniel Burrus is considered one of the world’s leading technology forecasters and strategists. He is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technol-

In the months, years, and now decades that followed that amazing speech, his dream became our dream and great strides forward happened and continue to happen every day.

ogy-driven trends to help clients better understand how technological, social and business forces are converging to create enormous, untapped opportunities. The New York Times has referred to him as one of America’s top three

Whenever I think of the “I Have A Dream” speech, I can’t help but think of another great speech that shared a dream and that became a vision that shaped our nation.

business “gurus” in the highest demand as a speaker. For more information on the services and products offered by Daniel Burrus, please visit

When Martin Luther King, Jr. stood on the steps of the Lincoln Memorial 50 years ago and spoke to a great people about their greater future, he didn’t say, “I have a plan.” Instead, he shared a dream that provided a vision of equality and hope for a struggling nation. His dream was

As you have most likely guessed, I’m referring to the 1961 “Special Message to Congress on Urgent Needs” speech, where a young president Kennedy

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painted an insanely bold picture of our future in the language of a dare: “We’ll put a man on the moon and get him back safely— within the decade.” The truly crazy thing, of course, is that we did. What Martin Luther King, Jr. and John F. Kennedy employed was what I call Futureview, and right now it may be our most pressing national challenge. Futureview is your ability to project yourself into the future and then look back at your present position from that future point of view. Futureview is not the same thing as a goal, plan, ambition, or aspiration. It is not something you hope for or try for. Futureview is the picture you hold, for better or for worse, of what you expect and believe about your future.

How you view the future shapes how you act in the present; how you act in the present shapes your future. Your Futureview determines the future you. My concern is that for many Americans today, the Futureview is bleak. In India and China, the prevailing Futureview is positive. Young and old alike are actually excited about their future. The atmosphere crackles with an optimistic, can-do energy. Visit the airport in Beijing and ride the train that transports passengers from terminal to terminal. On its walls you’ll see posters highlighting Chinese entrepreneurs, their dreams and accomplishments. Get off the train and into the city: everywhere you look, you’ll see evidence of seemingly impossible ideas becoming reality. Dreams are everywhere. The result? These people are moving forward, proactively building their future. They see a bright tomorrow. So they’re creating it. And here in the U.S.? The American Futureview is mostly negative, filled with apprehension and fear. This is the first generation of parents since World War II who do not believe their children will have a better, richer life than they did. Making the Impossible Possible A few years ago, I had the opportunity to converse with Neil Armstrong, the first man to set foot on the moon. He said that in the years following Kennedy’s articulation of that goal, NASA engineers would periodically hit a major roadblock and declare the goal impossible. Each and every time, the response from those in charge was the same: “We’re going to the moon.” So the engineers would go back to their benches with a renewed determination to do the impossible. Every time they hit a snag, that unshakable Futureview held them to their task. “They kept solving those unsolvable problems,” Armstrong added, “until one day, there I was—walking the lunar surface.”

greater than the prevailing Futureview suggests. We are in a time of massive, technology-driven, transformational change, pregnant with opportunity. Realize it or not, we have an unprecedented ability to create new products, new services, new markets, and new careers — provided we exercise the Futureview it takes to see them. If we don’t, they will remain invisible. And you can’t build what you can’t see. The problems we face today are not economic or technical in nature. They are largely in our minds. We need to take a fresh, close look at what it is we’re looking at. What is your Futureview? What is the Futureview of your organization? What is the Futureview of the leaders you report to? From a national perspective, the sooner we start looking at the extraordinary opportunities before us and seeing a picture so insanely bold that we feel compelled to reach for it, the sooner we can get about the business of seizing those opportunities and transforming our society—for generations to come.

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And here we are, fifty years later. Who is standing up to paint us an insanely bold picture of our future? Who is calling out that impossible dare, naming it so we can all go about the great work of achieving it? So far, the answer is, “nobody.” Everyone seems too busy casting blame and keeping their eyes glued to the problems. Here’s the good news: the potential for real innovation, growth, and new prosperity in the United States is vastly

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a Berkshire Hathaway company

Rated A+ (”Superior”) by A.M. Best Company

2013-2014 Board of Directors

Norman F. Basso, CPCU

Henry “Butch” Bradley Jr.

E. Stephen Burnett, CIC, ARM

IA&B Service Group Immediate Past Chairman E.K. McConkey & Co. Inc. York, Pa.

Bradley Atlantic LLC Forest Hill, Md.

Insurance & Financial Services Wilmington, Del.

Richard F. Carroon, CPCU

N. Lee Dotson, CIC, AAI

Michael P. Ertel Sr.

Weymouth, Swayze & Carroon Insurance Wilmington, Del.

Delaware Association of IA&B Chairman Bellevue Insurance Services Wilmington, Del.

IA&B of Maryland Vice Chairman The Jacobs Company Columbia, Md.

John L. Frankenfield

G. Greg Gunn, CIC

John B. Hollister

Franconia Insurance & Financial Services Telford, Pa.

IA&B Service Group Chairman Gunn-Mowery LLC Lemoyne, Pa.

Rodgers-Olver-Polley Insurance Milford, Pa.

Diana M. Hornung Hanby, ACSR

Jocelyn R. Howard-Sinopoli, CIC, CISR

Robert S. Klinger, LUTCF, CPIA

IA&B Service Group Vice Chairwoman Thomas J. Hornung & Associates Wilmington, Del.

IA&B of Pennsylvania Chairwoman C.W. Howard Agency Inc. Butler, Pa.

PIA National Director Klinger and Associates Inc. Germantown, Md.

Douglas A. Loesel, CPCU

Michael F. McGroarty Sr.

Craig S. Mader

Loesel-Schaaf Insurance Agency Inc. Erie, Pa.

McGroarty & Bradburn Insurance Inc. Pittsburgh, Pa.

IA&B of Maryland Chairman Craig S. Mader Insurance Agency Inc. Crofton, Md.

Ann Gallen Moll, CIC

Joseph R. Pastor, CPCU, AAI

Richard Rankin, CIC

IA&B of Pennsylvania Vice Chairwoman Gallen Insurance Inc. Shillington, Pa.

Barr’s Insurance Oil City, Pa.

Murray Insurance Associates Inc Lancaster, Pa.

April E. Ressler, CIC

Scott C. Rogers, CPIA

David B. Wasson Sr., CIC

Teeter Insurance Agency Inc. Altoona, Pa.

IIABA National Director The Glatfelter Agency York, Pa.

Wasson Insurance Agency Inc. State College, Pa.

Lawrence A. Wilson, CIC, CPIA, CPCU, ARM

Delaware Association of IA&B Vice Chairman IIABA National Director S.T. Good Insurance New Castle, Del.


IAB of PA Revenues: Membership Dues Professional Training Events & Member Products Royalties & Commissions Other Total Revenues



474,132 1,442,243 124,660 598,562 12,466 2,652,063

93,111 386,458 44,573 102,903 4,845 631,890


Combined IAB-Associations



25,810 53,676 80,728 36,536 6,496 203,246

Expenses: Membership Commission Professional Training Events & Member Products Publications Advocacy Corporate & Management Depreciation Taxes & Other Total Expenses







Net Operating Income (Loss)




(11,581) $











$ 26,690



$ $ $ $ $ $

IAB Service Group

593,053 1,882,377 249,961 738,001 23,807 3,487,199



Change in Net Assets

Combined IAB

(4,045) $ $ (9,000) $ (1,399,520) $ $ (1,412,565) $


1,156,586 63,313

333,453 14,459

52,715 46,486

1,542,754 124,258

(62,880) (10,584) 75,270

33,428 1,146,117

54,834 234,713

13,829 58,370


102,091 1,439,200 3,326,234


3,054,160 131,757 61,497 3,435,464





$ (1,412,565) $


2,783,158 97,831 5,593,335

75,270 100,495 3,155,855 131,757 61,497 5,349,133















(1,596) (1,337,505)


589,008 1,882,377

117,931 112,780 1,479,874


Pension related change Investment gain from mutual funds

2,045,157 1,473,544 3,518,701

Intercompany Eliminations





IA&B maintains a strong balance sheet with over $9 million in assets, $6 million in member equity and no debt, with $244,000 net income for the year. IA&B supports the activities that our members value — effective advocacy, timely compliance resources and quality education. We’re 1,400 members strong across three states. Approximately 7,000 participants attend over 175 IA&B classes annually. And 1,900 members buy their agency insurance coverage through us. This allegiance to IA&B, combined with our carrier partnerships, supports the financial strength of the organization.


ASSETS IAB of PA Cash & Cash Equivalents Premium Fiduciary Cash Accounts Receivable Mutual Fund Investments Prepaid Taxes Prepaid Expenses Total Current Assets




86,411 1,650,336 104,831 3,745,394

Property and Equipment, net



15,052 246,422 9,973 563,686


Cash whose use is limited, board and donor Inter-Corporate Loan Investment in Big I Reinsurance Co. Investment in IAB Service Group Other Assets Total Other assets

Total Assets


383,729 150,000 90,000 486,082


Combined IAB-Associations $

14,376 33,600 8,119 396,643


IAB Service Group $

115,839 1,930,358 122,923 4,705,723 -

568,940 417,730 308,144 57,299 16,753 63,399 1,432,265







30,000 12,005

120,000 600,100 1,288,276

1,286,759 1,286,759


$ 4,158,412

Intercompany Eliminations $


Combined IAB $

(254,667) (254,667)



3,105,543 417,730 169,316 1,987,657 16,753 186,322 5,883,321 1,439,388 418,176





$ 4,855,205

$ 690,090

$ 448,704


(600,100) (750,100)

120,000 1,286,759 1,824,935

$ (1,004,767) $ 9,147,644


Total Current Liabilities Long-term liabilities, retirement obligations Total Long Term Liabilities Net assets, unrestricted: Designated funds Undesignated

Total Net Unrestricted Assets Accumulated other comprehensive loss, defined benefit pension plan, net of deferred tax Total Liabilities and Net assets $

IAB of PA 1,418,624

IAB of MD 230,058


DAIAB 110,486


Combined IAB-Associations 1,759,168

IAB Service Group 678,386

Intercompany Eliminations (254,664)

Combined IAB 2,182,890

1,273,439 1,273,439

(150,000) (150,000)

1,123,439 1,123,439



387,168 3,049,413

24,991 435,041

10,468 327,750

422,627 3,812,204



422,627 5,899,653








(1,004,764) $

(480,962) 9,147,647









(480,962) 4,158,412 $

[ 24 ]

The accountants’ review for the fiscal year, which ended March 31, is on file at IA&B headquarters. These statements are a summary of that report.

Classified ADVE RTI S E M E N T S

SOUTHEAST PA PRODUCERS & AGENCIES Professional agency since 1926 located in Feasterville, Bucks County, Pa. Call for confidential information and a review of our services. Contact Ray Reinard at 215-375-8600, Ext. 119.

If you would like to place a Classified Advertisement, simply fax your ad on company letterhead to 717-795-8347, and we will take

Santa’s insurance list

care of the rest.

Ah, the man in red. He operates a booming, international operation that features as many exposures as the Griswolds have Christmas lights. We’ve made a list (and checked it twice!) of Santa’s insurance needs:

Ad Index (AIMS) Agricultural Ins Agency . . . . 15 Coastal Agents Alliance . . . . . . . . . . 15 EMC Insurance Companies . . . . . . . . 7 Guard Insurance Group . . . . . . . . . . 21 Harford Mutual Insurance Co . . . . . 15 Harleysville Mutual Ins Co . . . . . . . IFC IA&B Partners Program . . . . . . . . . . 19 IA&B . . . . . . . . . . . . . . . . . . . . . . . . . 12 Interstate Insurance Mngmnt. . . . OBC Mutual Benefit Group . . . . . . . . . . . 14 Preferred Property Program . . . . . . . 9

w Liability coverage since he traipses through his customers’ homes w Property coverage for his workshop on the North Pole w Commercial auto coverage for that sweet sleigh ride of his w Product liability coverage for the manufacturing and supplying of myriad toys w Employment practices, health and workers’ compensation coverage since he employs countless elves w Wind and flood coverage due to the conditions at the North Pole Source: Gregory Boop, Business Insurance ________________________________________________________________

The Last & Least column is dedicated to the industry’s oddities — from creative claims and kooky coverages, to (tasteful) jokes and strange stories. Submit yours to, subject line: Last & Least. The editor will happily protect sources’ anonymity upon request.

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Primary Agent - December 2013 - DE Edition  
Primary Agent - December 2013 - DE Edition