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year, start

Fresh fresh


––––––––––––––– 11 resolutions for 2011


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Contents PRIMARY AGENT MAGAZINE 11 Resolutions for 2011 IA&B simplifies making — and following through on – your resolutions. The next pages detail the top 11 resolutions for agencies and the tips and tools to check them off your list.

Page 12

12 Employee handbooks ... more than a paperweight Handbooks are not legally required documents, but they do clarify rules, regulations and practices.

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22 In every issue

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.

4 5 6 8 10 11

Chair of the Board’s Message Member FAQ State News Preventing Errors & Omissions Coverage Corner Glance at Events

25 26 28 28 28

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 PO Box 2023 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. Postmaster: Send address changes to above address. Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2011-1) is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

Copyright 2011. 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.

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Board of Directors Officers David Rosenkilde, CIC Chair of the Board Reisterstown, Md. Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P Vice Chair of the Board West Chester, Pa.

David B. Rosenkilde Sr., CIC

Chair of the Board’s M







Kathleen M. Glattly, ChFC, CLU, CPCU Immediate Past Chair of the Board Factoryville, Pa.

How to be resolute in achieving resolutions


Welcome to 2011!

Joyce M. Bailey, CIC, CRM, CPIW Newark, Del.

Most of us will start this year, like every other, on a positive note. We’ll look ahead and hope for the best: a hardening of the market, a loosening of government’s regulatory grip, a shortening of our to-do list.

Norman F. Basso, CPCU York, Pa. Vincent D. “Chip” Boylan Jr., CPCU Rockville, Md. Henry “Butch” Bradley, Jr. Crofton, Md. Timothy P. Burris Thompsontown, Pa. John T. “Chip” Colwell Jr., CIC Corry, Pa. N. Lee Dotson, CIC, AAI Wilmington, Del. John L. Frankenfield Telford, Pa. G. Greg Gunn, CIC Lemoyne, Pa. Diana M. Hornung-Momot, ACSR Wilmington, Del. Jocelyn R. Howard-Sinopoli, CIC, CISR Butler, Pa. Robert S. Klinger, LUTCF Germantown, Md. Michael F. McGroarty Sr. Pittsburgh, Pa.

And many of us optimistically will tackle New Year’s resolutions with gusto. We’ll lace up those running shoes, pack salads for lunch and pass up leftover Christmas cookies. Of course by mid-January, most things will return to the status quo. We’re only human, after all. (And those Christmas cookies hold up surprisingly well.) This year IA&B has taken it upon itself to make a few resolutions for us. Go ahead, and compare your own resolutions with the ones IA&B outlined for you in this issue of Primary Agent magazine. You likely will find overlap. Since IA&B has a vested interest in our success, they’ve taken the resolutions one step farther. Each one includes a cheat sheet — tips and links to resources that will give us a leg up on seeing them through. So put down those stale cookies, and pick up a pen and paper to begin outlining your approach to tackling these 11 resolutions. You won’t be sorry.

Ann Gallen Moll, CIC Reading, Pa.

Until next time,

Scott C. Rogers, CPIA York, Pa.


Susan A. Sallada, CIC** Ft. Washington, Pa. David B. Wasson Sr., CIC State College, Pa. James M. Watkins* Dover, Del. King W. “Kip” White, LUTCF Fallston, Md. * IIABA National Director ** PIA National Director


Member FAQ QUESTION: Are there any issues and/or best practices on handling certificates with a Blanket Additional Insured Endorsement?

ANSWER: This is an excellent question. Blanket additional insured endorsements have great advantages, but they can give a false sense of security and should not be handled casually.


The most commonly used endorsements are ISO’s CG 20 33 07 04 (“Owners, Lessees or Contractors — Automatic status when required in Construction Agreement with You”), and CG 20 34 07 07 (“Lessor of Leased Equipment — Automatic status when required in Lease Agreement with You”). What’s the upside? Less red tape! The main upside of a blanket additional insured endorsement is that it limits the administrative work associated with frequent requests for additional insured status, since the endorsement grants automatic coverage when agreed to in a written contract. What’s the downside? There are a couple of things to keep in mind: w There must be a written contract requiring the Additional Insured to be added to the Named Insured’s policy: no written contract (and proper provision), no additional insured status! w Coverage provided by the blanket endorsement may not meet the contractual requirements. In this respect, particular attention should be paid to the fact that:

w Instead, use a cover letter to accompany the certificate, where you can provide a statement such as the following for the certificate-holder: “Please find attached a certificate of insurance issued for the referenced client. In addition to the coverages indicated, please note that: The general liability policy includes a blanket automatic additional insured endorsement that provides additional insured status for ongoing operations. For you to have that additional insured status, there must be a written contract between the named insured and the certificate holder that requires such status.” For more information on certificates of insurance and their proper use, log on to, select Agency Operations, then Certificates of Insurance.

DO YOU HAVE A QUESTION? E-mail it to us at Please use “Primary Agent FAQ” in the subject line of your message. You can also fax your question to (717) 795-8347. We look forward to answering your questions!


• there is no coverage for the Additional Insured’s sole negligence (the endorsement limits coverage to “Bodily Injury, Property Damage, Personal & Advertising Injury caused, in whole or in part, by the named insured”); • the CG 20 33 covers ongoing operations only. There is no coverage for completed operations; • the CG 20 33 excludes professional services. w Finally, under a blanket Additional Insured endorsement, all Additional Insureds share the same limits. What about certificates? Obviously, proper handling of certificates includes use of a current form, and no alteration of the form. When a blanket additional insured endorsement is on the policy, here are some suggestions: w Do not check the additional insured box on the certificate. (Leave it blank.) w Do not enter anything regarding additional insureds in the DESCRIPTION box. [5]

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State News Primary Agent | January 2011

On the legislative front

Special welcome IA&B welcomes new public affairs committee chairwoman Linda McCann and members Robert Klinger and Laura DeLauder Haraway. McCann replaces long-time chairman Larry Sanders.

The General Assembly, which remained solidly Democratic in the 2010 election, begins session Jan. 12. Of particular interest this session will be IA&B’s continued monitoring of:

The committee is comprised of volunteer member agents located throughout the state and provides guidance and input on IA&B’s legislative, regulatory and political efforts.

w certificates of insurance w advocacy for a privately run state health exchange w protection of agents from commission-disclosure legislation

Increased minimum limits in effect

w protection of agents as small business owners from increased taxes

The state’s new minimum BI limits are now 30/60, up from the previous 20/40. PD limits remain untouched at 15.

Stay tuned to Primary Agent, Agent Headlines and IA&B’s Twitter feed (@IAB_MD) for updates.

The increase is a direct result of IA&B’s advocacy. Association members reported that low minimum limits harmed the marketplace. IA&B worked diligently to guide the legislation through the General Assembly, including testifying at committee hearings and providing support memos to the full legislature. The law took effect Jan. 1, 2011.


News from the north New York workers’ compensation updates

Become an IA&B insider, join a MAP Primary Agent brings you an insightful look at the issues affecting your workplace, industry and association. These and other issues related to agency operations are brought to life twice a year during Member Agent Panels (MAPs). An IA&B MAP meeting allows association leadership and staff to elaborate on what you read in the pages of this magazine and becomes a forum to get your input. Agency owners and principals are strongly encouraged to join MAPs to have their opinions heard and to help steer the direction of the association. All it takes is 12 hours over two years – one three-hour meeting each April and September in a nearby town. Learn more:

Late last year the New York Workers’ Compensation Board (WCB) relaxed its rules for out-of-state employers. There are now five situations that allow businesses to avoid enforcement actions when New York is not listed in item 3.A of the policy. While far from perfect, this is a vast improvement. The change may – and should – tempt you to review client files. But if you had placed business with the New York State Insurance Fund (NYSIF) that can now be moved, look out. The NYSIF requires 30 days’ advance notice to non-renew a policy … that is, for the client to notify the carrier. Miss the deadline? Save the sob story: The NYSIF displays little flexibility for producers and clients who don’t abide. Producers should familiarize themselves with these special procedures, flag all policies placed with NYSIF and confirm in writing any deviation discussed with the NYSIF. Read more about the New York WCB changes: Read more about the NYSIF’s non-renewal policies:

New York commissiondisclosure reg affects non-residents

Write in the Empire State? Then adopt a New York state of mind and address new commission-disclosure requirements. Resident and nonresident licensees are affected by a new producer-compensation regulation, which took effect Jan. 1, 2011.* The regulation requires that, when a consumer applies for an insurance policy, the producer explains: w The producer’s role in the transaction w Whether the producer will receive compensation from the insurer based on the sale w That the compensation insurers pay may vary depending on the volume of business done with the insurer or profitability w That the purchaser may request more information on the producer’s expected compensation If asked, the producer also must provide a more detailed, written disclosure of anticipated compensation as well as a description of alternatives and the compensation associated with them. IA&B compiled resources to help members comply. These include frequently asked questions, sample disclosure language and updates from the New York State Insurance Department and IA&B’s New York affiliate. Access resources:


* As this issue of Primary Agent went to print, all legal and legislative challenges to the regulation were stagnant. Stay tuned to Primary Agent, Agent Headlines and IA&B’s Twitter feed (@IAB_MD) for any updates.

Preventing Primary Agent | January 2011



While traditional lines of business (Auto, Homeowners’, BOP, Workers’ Compensation) require a solid understanding of the coverage forms, in many respects Professional Liability is in a class by itself.

consultant to the Utica National E&O Program, provided 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 your Errors & Omissions coverage, contact IA&B at (800) 998-9644 or

To begin, the coverage is traditionally written on a claims-made form, as opposed to the occurrence form used on most other lines of business. In addition, it is widely acknowledged that no two forms are the same; this makes coverage comparisons very detailed. Moreover, the terminology is unique, with terms like “retro date,” “full prior acts,” “extended reporting period” and “consent to settle,” just to name a few. As you will note in the claim discussed below, mistakes can occur, and they can be big! When one thinks of Professional Liability, oftentimes the following classes of professional

business come to mind: real estate agents, lawyers, medical professionals, accountants and insurance agents. While these are some of the more common, there are more than 100 additional professional occupations – including appraisers, engineers, pharmacists, court reporters, speech pathologists, consultants, therapists and teachers – that have a Professional Liability exposure. With many of these classes, the General Liability carrier will include a Professional Liability exclusion as it is not their intent to protect that segment of the client’s business. Regarding the coverage form, most (but not all) Professional Liability carriers provide this coverage on a claims-made basis, which means that claims reported during the policy period are covered provided the actual error (which could have occurred months or years ago) was


after any applicable retro date (more on this shortly). On the other hand, an occurrence policy (your traditional GL coverage) covers claims that occur during the policy period. Therefore, the difference is that one form factors in when the claim was reported, while the other form deals with when the claim actually occurred. Retro date vs. full prior acts This is an extremely important concept that will have a huge impact on whether the claim is valid. Using agents’ E&O in our example, for a claim to be valid, the error committed by the agency (example: failure to put collision on a vehicle) must be after the retro date. If it was before the retro date, no coverage would be provided. The retro date is typically shown on the face of the policy. If the declarations sheet states “Full Prior Acts” or “None”

in the area where a retro date would be noted, this essentially means there is no retro date and the insured is protected for errors made regardless of when they were committed. The following E&O claim illustrates this well: The agency’s client, a real estate agent, had a claimsmade real estate Professional Liability policy which was non-renewed based on loss history. The real estate agent made a conscious decision not to replace the coverage due to pricing concerns, as the premium would have been four times higher with a new carrier. He later changed his mind and procured a new claims-made policy with a retro date even with the new policy’s inception date. The client was sued for a loss where the alleged wrongful act occurred during the period covered by the expired policy and prior to the new policy’s retro date. The new carrier disclaimed based on the retro date, and the client was forced to spend $211,000 defending himself. The agent never advised the client to purchase a “tail” for the old policy, which would have covered the loss. In addition, the agent did not fully explain how the “newer” retro date would affect claims based on older wrongful acts. The claim against the agent was settled for $200,000.

As this claim also points out, defense costs in this line of business can be significant. A word of caution: If your client states they want to reduce their premium and would be willing to take a “current” retro date, this should be emphatically discouraged as this leaves a significant gap in protection. This is also strictly prohibited in many states. Other issues/differences to be aware of Virtually all of the policy forms are different, even within the same class of business. Therefore, a Lawyers Professional Liability policy with Company A may be significantly different than a Lawyers Professional Liability policy with Company B. If you are looking to move your client to a different carrier, analyze the two policy forms and be sure to bring any differences to the customer’s attention. Oftentimes, the new carrier may have a coverage comparison form that will be of benefit.

Defense provision – Policies may be written with “Defense in addition to the Limit of Liability” or “Defense within the Limit of Liability.” If the Defense is “within the limit,” any dollars spent defending the customer will impair (reduce) the limit available for any settlement/judgment. Defense (unlimited) in addition to the limit of Liability is the broadest. Deductible – This may be on a loss-only basis or on a combined basis. With loss-only coverage, the insured would not participate in any claims defense, litigation or claimshandling expenses associated with the claim; these would be handled by the carrier. Conversely, with a combined


loss and expense deductible, the insured would participate in these expenses up to the deductible limit. Make sure your customer knows their obligation. Extended reporting period – This is often called a “tail.” While virtually all claims-made policies contain this provision, this does not mean there is consistency among carriers as to the available options. Using agents as the example, if an agency sells its business to another agency, the seller would buy a tail. This provides an additional period of time after the expiration of the policy for which valid claims will continue to be accepted, provided the wrongful act occurred before the end of the policy period. In the claim example cited earlier, the agent should have advised the real estate agent to buy a tail to protect him for any claims that subsequently were made against him. Receipt of the policy – When you send out/deliver the policies, always advise your clients to review the policy to ensure everything is in order. Obviously, the agency should also review the policy to make sure it matches what was requested. If you handle Professional Liability (also called Errors and Omissions), understand its uniqueness – the terms and the coverages. It is unlike most other forms of coverage. In addition, educating your customers is recommended and will certainly have solid benefits.

Coverage Primary Agent | January 2011


DOES THE INSURED EVER HAVE TO PAY THE INSURER BACK FOR DEFENSE COSTS UNDER THE CGL? JERRY MILTON, CIC Jerry M. Milton 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.

The Commercial General Liability (CGL) policy stipulates that the insurer has two distinct obligations – the duty to indemnify the insured for any liability covered under the policy and the duty to defend the insured for any suit seeking those damages even if the allegations are groundless, fraudulent or false. Courts have traditionally held that the duty to defend is triggered whenever the factual allegations or the claims in a suit against the insured present the possibility that the insured may be liable and they are potentially covered under the CGL. Courts also have routinely held that all doubts as to whether the insurer is required to defend are to be resolved in favor of the insured. Even if only one claim of a multi-claim complaint creates a potential covered liability obligation, the insurer must defend the entire suit.

Jerry’s Sports Center was sued by several organizations alleging that the firearms industry was liable for creating a public nuisance which resulted in injury, death and other damages to many of their association members who were the victims of firearms. Jerry’s Sports Center was an insured under a standard CGL policy issued by American And Foreign Insurance Co. (hereinafter referred to as “Royal”). The CGL policy required Royal to defend potentially covered claims, and contained no right of reimbursement of defense costs. Royal provided defense to Jerry’s Sports Center under a reservation of rights letter which stated that it would seek reimbursement for “any and all defense costs incurred in defense of this matter.” While defending Jerry’s, Royal sought a judicial determination that the claim was not covered by their policy. The trial court

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agreed that the claim was not covered since the plaintiffs did not seek damages for bodily injury to particular individuals. (The Pennsylvania Supreme court later found this ruling “suspect,” but this issue was never appealed.) The trial court also found that Jerry’s had to reimburse Royal the $309,216 of defense costs the insurer had incurred. On appeal, the Pennsylvania Superior court reversed the trial court’s ruling on the issue of the right of the insurer to recover defense costs. This case was then appealed to the Pennsylvania Supreme Court. First, Royal argued that the reservation of rights letter created an implied contract, giving them the right to recover defense costs incurred in a claim that the court determines is not covered by the policy. The Supreme Court rejected this argument on the basis that

an insurer “cannot employ a reservation of rights letter to reserve a right it does not have pursuant to the contract.” Second, Royal claimed there was an equitable right to reimbursement because otherwise the insured would be enriched unjustly by receiving a defense it had no right to receive. The Supreme Court found no merit in this argument and explained that an insurer has a right, as well as a duty, to defend, and in so doing benefits its own interests as well as those of the insured. It further stated that the duty to defend is extremely broad in Pennsylvania and encourages insurers to defend all actions where there is any potential for coverage. On Aug. 17, 2010, in American and Foreign Insurance Company v. Jerry’s Sports Center, Inc., a unanimous Pennsylvania Supreme court ruled that insurers that issue commercial general

liability policies obligating them to defend any suit seeking damages to which the insurance may apply do not have the right to recover defense costs from the insured if a court later determines the suit for damages is not covered by the policy.

Alabama, Hawaii, Illinois, Louisiana, Massachusetts, Texas, Wyoming and now Pennsylvania have held there is no right of reimbursement. In addition, federal court cases on this issue have resulted in different opinions. This opinion is good news for Pennsylvania insureds. Maryland and Delaware, your status is uncertain. However, your courts may pay some attention to the Pennsylvania decision.

The Supreme Court further concluded that to find a right of reimbursement of defense costs would “amount to a reactive erosion of the broad duty to defend” and “would narrow Pennsylvania’s long-standing view that the duty to defend is broader than the duty to indemnify.”

Y’all take care!

There is considerable uncertainty on this issue throughout the country. The Supreme Courts of California and Minnesota and the appellate courts of Florida and New Jersey have recognized an insurer’s right of reimbursement of defense costs for uncovered claims. However, the Supreme Courts of

Glance at Events J A N U A R Y






CISR-Personal Auto Course

Hagerstown, Md.


CISR-Personal Auto Course

Lancaster, Pa.


CISR-Agency Operations Course

Wilkes-Barre, Pa.


William T. Hold Seminar

Mechanicsburg, Pa.


William T. Hold Seminar

Philadelphia, Pa.

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11 Resolutions for 2011 Fresh year. Fresh start. IA&B simplifies making — and following through on — your resolutions. The next pages detail the top 11 resolutions for agencies and the tips and tools to check them off your list. Consider tackling one a month. (And then setting aside next December to celebrate.)

Primary Agent | January 2011

Resolution #1: Renew your membership First things first. IA&B membership pays for itself through access to programs, products and services. Don’t believe us? Read on and see what membership can do for you in 2011….

Resolution #2: Embrace technology What you don’t know can hurt you, as well as your agency’s production, data security and marketing prowess. Technological advances strike fear in the hearts of many agency principals, especially those who achieved great success and built thriving businesses without them. But with these sometimes overwhelming (and questionable, in the case of a few social networking sites) innovations come opportunity. Make 2011 your year for due diligence: Look into the ways technology can benefit your agency. And then make an educated decision on whether the reward is worth the effort.

Electronic document management Going paperless (or as paperless as a business can go) is a challenge relatively few agencies have undertaken. Developing procedures requires thoughtful planning and ongoing review. And implementing them requires multi-level buy-in and thorough training. After all, decades-long daily habits can be hard to break. But from those brave agencies that have paved the way, we know that the rewards are worth the toil. Think: improved customer service, production and carrier relations and reduced E&O exposure. If you take the plunge, jump smartly. Know the state and federal regulations that govern what can and can’t be kept electronically and how long files must be retained.

Record-retention guidelines: Del.: Md.: Pa.: Social networking Ever consider that you, the quintessential networker, might find online social networking second nature? With a little time and exploration, you may discover the concept isn’t so earth-shattering after all.

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“Social networking is not new…. [It] is simply a new tool for the communication you and your staff have always done.” – Rick Morgan,industry expert on technology and marketing


Not just for the young and young at heart, the social Web (YouTube, Twitter, LinkedIn, Facebook and more) is transforming our industry — and nearly all others. Customers expect instant communication and complete transparency. And they’re more likely to do business with people they know … in person or over the Internet. Truth be told, social networking doesn’t require a shift in philosophy. It’s actually an efficient, productive and cost-effective new way to do business the old way —

building relationships one client at a time. Steve Anderson, an insurance technology expert and presenter at IA&B’s 2010 Executive Management Conference, offers sage advice: Start somewhere, and give it 15 minutes per day. Even an old producer can learn new tricks. For guidance, peruse IA&B’s online resources, and let your association lead the way.

PROVIDING MARKET OPTIONS TO HELP YOUR BUSINESS GROW That’s how we deliver distinction. With access to specialized markets, IA&B provides programs that increase your agency’s growth potential. Whether its personal umbrella, home business insurance or workers’ compensation coverage, you can write and keep more business without production requirements and access fees. Enroll in IA&B’s Market Options and maximize your growth. Maximizing your agency’s growth. That’s how we deliver distinction. FOR MORE INFORMATION ABOUT IA&B’S MARKET OPTIONS PROGRAMS, VISIT IABGROUP.COM OR CONTACT THE IA&B MEMBER SERVICE CENTER AT (800) 998-9644.

Driving members to distinction

Social-networking resources: Del.: technology/ other_resources Md.: technology/other_resources Pa.: technology/ other_resources

Join IA&B’s LinkedIn group and follow us on Twitter: soc_media

Primary Agent | January 2011

Resolution #3: Take data security seriously Think no one’s watching? Think again. As agencies step up their reliance on electronic data storage and transmission, the feds are cracking down on breaches — via legislation and enforcement. In 2009 the first two agents were fined for not having written security plans in place. The latest hurdles stem from the Health Insurance Portability and Accountability Act, best known as HIPAA. As of February 2010, agencies selling even one health policy must

comply with the HITECH Security Rule. Read: an even more stringent informationsecurity program. IA&B’s recently revamped privacy resources walk members down the (many) paths to complete compliance. Start with the online audit, and then work your way through a customized plan of attack.

Private eyes are watching you Think no one will notice a privacy transgression? So did Robert Warren Spruill when he dumped over 1,000 insurance records and documents into an unlocked dumpster.

Privacy resources: Del.: de/privacy Md.: md/privacy Pa.: /pa/privacy

A bystander saw the activity, became suspicious and alerted the media. In the end, Spruill was down $11,000 thanks to an Oregon Department of Consumer and Business Services fine.

HELPING YOU RETAIN CUSTOMERS WHO NEED PREMIUM FINANCING OPTIONS That’s how we deliver distinction. Retain your clients and commissions by providing your insureds payment options to manage their insurance premiums. IA&B’s premium financing program — offered through Premium Finance Brokerage (PFB) — is your solution for helping clients control their cash flow and creating additional revenue* for your agency. Enroll in IA&B’s premium financing program today. Helping independent agencies keep customers. That’s how we deliver distinction. FOR MORE INFORMATION ABOUT IA&B’S PREMIUM FINANCING PROGRAM, VISIT IABGROUP.COM OR CONTACT THE IA&B MEMBER SERVICE CENTER AT (800) 998-9644.

Driving members to distinction

*Maryland law strictly prohibits producers from collecting fees from either the premium finance company or the consumer as a result of placing an insurance contract with a premium finance company.


___________________________ “I could not do what I do without IA&B’s HR resources. There’s so much all in one place, and that makes it much easier to stay on top of it.” – Donna Dates, The Winans Insurance Agency


Resolution #4: Prioritize employee management Putting your own house in order is key — but often swept under the carpet thanks to competing priorities and misunderstandings of rights.

Human resources In many independent agencies, human resources fall onto the plate of already overworked and stretched-too-thin senior management. But loose ends can unravel an agency from the inside out. Take, for instance, that problem employee who poisons staff morale. Or that unfiled I-9 form that carries a daily fine of up to $1,000. Or that position that was never reclassified and now violates state and federal wage requirements. No one, and no agency, has the resources to manage the moving target of human resources compliance without help.

That’s why IA&B offers HR Solution©, a compilation of products and services to help member agencies build a human resources program. IA&B recently updated and refined the tools to account for recently enacted laws and regulations and a new human resources consultant’s feedback. HR Solution includes an audit, customizable employee handbook, administrative guide and access to services and discounts from a contracted human resources consultant. Best yet, it’s all included with membership. (See Resolution #1. Told you renewal gives you a lot of bang for your buck….)

HR Solution: Producer agreements All too often members contact IA&B after their key producer departs — possibly with proprietary information. Producer agreements are, of course, sweeter deals before relationships sour. IA&B expanded its producer agreement toolkit to better assist members in protecting their book of business and the book’s value. The Web-based toolkit walks members through establishing trade secrets, restrictive covenants and compensation plans and provides strategies for assessing damages. Plus, it explains the

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pros and cons of the employee and independent contractor classifications and includes a sample agreement for each.

Producer agreement toolkit: patoolkit

Resolution #5: Prepare for the worst Fires, floods, chemical spills, pandemics … the emergencies that could threaten a small business’s livelihood are endless. And they take a toll: Each year thousands of small- and medium-sized businesses suffer a crisis that disrupts their operations. IA&B members have an ace up their sleeve: an emergency and business continuity planning manual. The turnkey tool consists of a Web-based input module and a customized output that helps agencies prepare for, respond to and recover from an emergency.

___________________________ Disasters cause thousands of businesses to close each year. And at least 25 percent never reopen. – Business & Home Safety, a non-profit initiative of the insurance industry ___________________________

Primary Agent | January 2011

The manual walks agencies through cataloging their business contacts, outlining their operational needs, prioritizing their critical functions and completing risk analyses. The customized takeaway includes timelines, implementation guidelines and recommendations for agencies in crisis. And what separates IA&B’s planning manual from the pack? It’s Web-based, so members’ plans are stored online where they can be accessed anywhere at any time. (Yet another member benefit that reinforces Resolution #1!)

“When I first received my designation, I was out selling commercial insurance,” says L. Allan Boyd, CIC. “What I learned at the institutes gave me the ability to look at an account, pick it apart and offer an intelligent opinion about what was wrong with it. It enhanced my ability to sell insurance.”

Lessor’s Risk coverage in a five-minute phone call.

Emergency and business continuity planning manual:

Resolution #6: Refresh your skills Looking for a competitive edge? A way to improve your value as an employee, help in your interactions with clients and advance your career? Continuing education could be your winning ticket. What’s a designation worth, for instance? Quite a bit in the insurance world. It’s a way to develop knowledge in an everchanging industry, gain clout among colleagues and build trust with clients. IA&B offers hundreds of professional development

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opportunities annually — from pre-licensing prep courses to designation programs to E&O seminars, many of them at discounted prices for members.

Resolution #8: Be heard

Professional development: education

The key is finding the best company partners for your clients, your agency and, in the end, your bottom line. IA&B provides a starting point — the biennial Company Satisfaction Index. Based on members’ experiences, the tool allows agencies to benchmark their carrier experiences against others’, research companies before accepting appointments and facilitate dialogue with carriers. The survey rates companies in four categories: products, pricing and underwriting; policy service and claims; technology; and agency/company relationship.

Company Satisfaction Index:

Del.: de/pol_act_ctr Md.: md/pol_act_ctr Pa.: pa/pol_act_ctr

Resolution #9: Set yourself apart from the pack

Resolution #7: Evaluate your carrier relationships Carriers are your partners. They can make your job easier — or place stumbling blocks along your daily workflows. And let’s face it: Most of them do both at one time or another.


Competition is fierce — especially against direct writers and their aggressive advertising budgets. So what’s a small, independent insurance agency to do? “Insurance agents rank at the top as the most influential lobbyists in any district and are considered a reliable source of information,” Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, once said. IA&B members: It’s time to prove it. Legislative advocacy is a top priority for the organization, thanks to direction from the IA&B boards of directors, as well as input from member surveys and Member Agent Panels. But to succeed, IA&B needs members’ support. That means responding to grassroots action alerts, donating to AgentPAC and, of course, helping to identify the organization’s priorities (see Resolution #10: Get involved).

Flaunt what you’ve got! Point out the benefits that you, as an independent agent, bring to the table that an impersonal 800-number or website cannot. Differentiate through service and expertise. Communication is key to cultivating meaningful customer relationships. IA&B members have access to a discounted enewsletter service that simplifies staying top of mind with clients. An additional touchpoint with customers, an e-newsletter allows you to educate them on coverage issues, mitigate their risks and introduce new markets. The e-newsletter service available to members boasts easy setup, customizable templates, an article library, simple mailing-list management and real-time reporting.

E-newsletter service: enews [ 18 ]

Primary Agent | January 2011

Resolution #10: Get involved An association is only as strong as its members … which is one of the reasons IA&B is so successful. IA&B members drive the association through groups like Member Agent Panels (MAPs) and public affairs committees.

___________________________ “Any organization that wants to be valuable to its members has to know what members think. MAPs provide a forum to do that.” – Deb Bellmore-West, Helmbold & Stewart Inc.

___________________________ Make this the year that you have a say. MAPs are forming in 13 locations across the tri-state area. Participants, who attend four meetings over two years, weigh in and provide direction on the association’s activities. Outcomes from past MAP meetings led to producer agreements, fiduciary duties and agency termination resources. MAP attendees’ opinions are shared directly with IA&B leadership and influence decisions affecting programs, products and services. Public affairs committee members serve on an alternating two-year cycle, with the current term running through 2011.

[ 19 ]

Participants meet at critical points throughout the year to provide input on IA&B’s legislative agenda and activities. The next public affairs committees will begin forming in late 2011.

MAPs: get_involved


Perpetuation resources: Del.: perpetuation Md.: perpetuation Pa.: perpetuation

Resolution #11: Plan for tomorrow It’s no shocker that the independent insurance agency community is aging. But the Baby Boomer-dominated field has a dilemma on its hands: how to attract new blood. There is no one simple way to accomplish this feat. Perpetuation requires a culture shift within the industry. From agents to insurers to ssociations like IA&B, everyone within the industry must work with an eye toward tomorrow. For agents, there must be careful and calculated planning in the years leading up to retirement —

whether that involves grooming someone internally or securing the right outside buyer. IA&B’s website includes links to perpetuation and agency valuation resources. At the association level, IA&B recently created ABCs for New Agencies, a start-up guide for those entering the industry. Our goal is to perpetuate the industry by preparing aspiring agency owners for the challenges ahead.

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[ 21 ]


Employee handbooks â&#x20AC;Ś more than a paperweight IA&B members have access to HR SolutionŠ, a compilation of products and services to help them establish or improve their human resources program. Included are base-level consultation services and discounted professional services from Mosteller & Associates.

Primary Agent | January 2011


ood grief! The employee I was about to terminate says she never received a copy of our handbook and she didn’t know the rules. And she’s threatening to sue! Handbooks are not legally required documents for employees. But they do clarify the rules, regulations and practices you utilize to successfully run your business. And they help support your position in the event of a legal process. You may not be able to pitch a save in the above scenario, but you can certainly do something about it in the future. If you do issue a handbook, the short answer, in this case, is to have employees sign an acknowledgment statement of receipt and place it in their personnel file.

While handbooks are helpful in communicating your human resources practices and procedures, have you thought about how the agency is represented by the handbook to employees? To attorneys? How about to judges? To juries? Regulatory agencies (think: the U.S. Equal Employment Opportunity Commission and the state’s Human Relations Commission)? Legal firms have suggested using language that allows for flexibility and gives you the ability to manage based on the situation rather than adhering to a prescribed format. Using words such as “should” or “may” rather than “shall” or

“will” throughout the handbook will help give you latitude. But it’s more important to use clear, concise language that’s easy to understand. Keep procedures to a minimum in the handbook and refer employees to other resources to help them navigate the how-to component.

How do I get from here to there? w Review your current practices, including the unwritten. w Determine what’s legally required. w Check reliable resources for model documents.

What’s the minimum I need to cover if I provide a handbook?

w Consider electronic communication and access for employees.

There are a few policies and practices that ought to be considered as basic to handbooks:

w Get input from other managers or employees as they review the draft handbook.

w Handbook acknowledgment receipt w At-will employment statement w Equal employment opportunity w Harassment, including sexual harassment w Accommodations for disability (ADA) or religion w Leave programs (FMLA) or other medical time-off arrangements w Attendance w Paid time-off programs w Company or intellectual property w Benefits eligibility w Background checks and drug testing w Handling confidential information w Payroll practices and pay policies

[ 23 ]

w Or, check IA&B’s website for the HR Solution© model handbook. Editor’s note: HR Solution contains a compilation of products and services, including a ready-to-use associate handbook template. Access to HR Solution is included with IA&B membership but is limited to those individuals designated as agency administrators within the IA&B database. To access HR Solution, visit To add an agency administrator, contact IA&B’s Member Service Center at 800-998-9644, option 0.

________________________ Jeffrey W. Gerhart, CEBS, MBA, provided this article on behalf of Mosteller & Associates, IA&B’s contracted human resources consulting firm.

Platinum Profile Insurance Agents & Brokers proudly recognizes Ohio Casualty™ as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.

FEATURED PARTNER Ohio Casualty™ CHIEF EXECUTIVE OFFICER Mike Winner, President & CEO COMPANY HEADQUARTERS Fairfield, Ohio REGIONAL OFFICES Fairfield, Oh.; Lexington, Ky.; Camp Hill, Pa.; Columbia, Md. UNDERWRITING OFFICES Columbia, Md.; Delaware Valley, Pa.; Pittsburgh, Pa. & Camp Hill, Pa. A.M. BEST RATING “A” (Excellent) WEBSITE


hio Casualty is one of the eight super regional companies that comprise Liberty Mutual Agency Corporation (LMAC). The company’s market focus is small and mid-sized commercial lines. Over the past ten years, Liberty Mutual has assembled an impressive lineup of companies and products for independent agents across the country. LMAC, the largest business unit of Liberty Mutual, writes business exclusively through independent agents and brokers. Agents positioning for the future are developing strong relationships with the organization to share in the company’s growth and success. LMAC has a unique business model in the industry. The Regional Companies provide responsive front-line service to agents as they work together closely in local markets while the LMAC national backbone provides the back office support such as systems, finance, product development and specialty claim expertise bringing the benefits of national scale to regional companies.

As a result of these and other actions, Liberty Mutual has moved up the Fortune 100 list to number 71 based on 2009 revenues. The company promises to be a major force in the coming years. For agents in Pennsylvania, Delaware, and Maryland, a contract with Ohio Casualty is also the gateway to connections with Liberty Agency UnderwritersTM, Liberty International UnderwritersTM, Liberty Mutual Global, and Liberty SuretyFirstTM. These specialized divisions write monoline Umbrella and Excess Casualty, Ocean Marine, Bonds, and other specialty products. Ohio Casualty also has dedicated underwriting units for specialty Inland Marine, Schools and Farms. While Liberty Mutual is a relative new-comer to the Independent Agency system, the company has taken strong positions to defend the independent agency compensation model.

Ohio Casualty works hard to provide the tools Independent Agents need to be successful. “We feel so strongly about our agency-focused culture that we trademarked the tag line Vested in Our Agents’ SuccessTM to show our dedication and commitment to our agent partners.”

Mike Winner President & CEO

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 Erie Insurance Group Harleysville Insurance Insurance Agents & Brokers Service Group Inc Millers Mutual Group Millville Mutual Insurance Co Mutual Benefit Group Ohio Casualty Penn National Insurance Selective Swiss Re The Main Street America Group Travelers Utica National Insurance Group

Aegis Security Insurance Co


Insurance Placement Facility of PA

Allied Insurance MMG Insurance Progressive

SILVER LEVEL Access Insurance Company American Mining Insurance Co Cumberland Insurance Group Donegal Insurance Group Frederick Mutual Insurance Co Harford Mutual Insurance Co Juniata Mutual Insurance Co PSBA Insurance Trust The Motorists Insurance Group Westfield Insurance Zenith Insurance

Agency Insurance Company Auto-Owners Insurance Company Briar Creek Mutual Insurance Company Builders Insurance Group Chubb Group of Insurance Companies Encompass Insurance First General Services Foremost Insurance Group Goodville Mutual Casualty Company Grange Insurance Companies Hanover Fire & Casualty Insurance Company Insurance Alliance of Central PA Inc

Keystone Insurers Group Inc Lebanon Mutual Insurance Company Mercer Insurance Group Merchants Insurance Group Mercury Casualty Penn Millers Insurance Company 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 Mutual Service Office Inc Tuscarora Wayne Insurance Company Primary Agent January 2011

Primary Agent | January 2011

Technology U P DATE


MAUREEN WALL BENTLEY Maureen Wall Bentley is executive vice president of brand strategy for Aartrijk, an insurance industry branding firm. Maureen prepared this article for ACT and can be reached at For more information about ACT, contact Jeff Yates, ACT Executive Director at This article reflects the views of the author and should not be construed as an official statement by ACT.

Sometimes the problem with “the next big thing” is that all the buzz around it can drown out the legitimate value hidden beneath. Take social media. Many independent agents have become so overwhelmed by the constant clucking about this “must do” marketing tool that they simply have dismissed it as non-essential and faddish – and then promptly gone back to business as usual. And, in a sense, these agents are half-right: Some of the social networking communities will be lost in a blink, overtaken by the next “next big thing.” But many will be with us for a long while. And underneath all the tweeting, friending and geolocating is a valid core that independent agents should heed: Relationships increasingly have a digital component and learning to effectively use these tools can enhance your offline relationships and build your agency brand.

So, how can you sift through all the noise to leverage the true benefit of social media? In short, think strategically and use some common sense. Herein, a few thoughts to get you started. Have a plan. If you don’t have a holistic marketing-communications plan for your agency, you’re almost certainly wasting money and you probably have no idea what’s working or why. Draft a plan that outlines the following elements, and include any social media efforts; don’t separate social networking from your overall activities. Goals. Be as specific as possible. For example, “Increase new middle market accounts by x percent” is better than “Grow commercial lines revenues.” Budget. The best agencies budget between 3 and 5 percent of revenues for marketing (1 to 3 percent for very large firms), with more [ 26 ]

funds allocated in years with big projects, such as a major rebrand. Keep in mind that Web development is far less expensive than it used to be and that social media can be virtually free. Audiences. Building a profile of your targeted buyer will enable you to better identify good vehicles (publications, websites, etc.) and develop messaging. Messaging. List all the points you want to convey in your plan, realizing that not every message is appropriate for every audience, campaign or outlet. Vehicles. Identify the various publications, radio stations, websites, etc. that you want to use for advertising, and which you might target for PR efforts (they may not be the same). Include any direct marketing efforts as well as social media and blogging.

Responsible parties. It is best to have one person internally supervising all the efforts, but identify all contributors, including those posting to social media, blogging, drafting bylined articles or being interviewed for local press. Metrics. Include short-term measurements such as Google analytics, incoming calls and readership numbers, but consider long-term goals, as well, such as new business from current clients, increased commercial revenues and retention. Assign a community monitor. Keeping track of your agency’s online posts and followers’ responses can take time – but you don’t have to do it yourself. Assign the task to someone who enjoys social networking and “gets” the immediacy of it. While this may be a young producer or college intern, don’t rule out older employees, as social media use is growing leaps and bounds among Boomers.

Think service – and listen. Some of the most successful social media adopters use their online presence more for service and customer communications than for marketing. One agent, for example, posts weather warnings and other local news on his Facebook and Twitter accounts. Because he’s not spamming with promotional material, he has developed a healthy following – and the appreciation of those who avoided the downed tree or the flooded byway because of his tweet. Such low-key posts reinforce his position as a good guy in the community, which helps his agency brand.

Esurance, the online auto provider, pays careful attention to any online conversations about its brand so that it can respond in real time to unhappy customers or other malcontents. Think of your social networking sites as a rolling customer survey. (And don’t think that these negative comments

Follow offline rules. You wouldn’t (or shouldn’t) go to a Chamber of Commerce dinner and talk non-stop about yourself or your agency. Rather, you’d engage other people in a more personal way – ask about their business or kids or new car, or commiserate over last week’s loss for the home team. And, most important, you’d listen. These same standards of conduct should be followed online as well. If you don’t – just like in the offline world – people will avoid you. Be brand consistent. Your social media presence should share the look, feel and messaging of your agency’s other touch points. So, if your website promotes your agency as commercial-lines oriented, then your tweets should be in sync. And if your agency’s color palette is typically gray and green, don’t dress up your Facebook page in blue and gold. Think both strategically (Are we telling the same story in our online and offline touch points?) and tactically (Does our avatar (online representation) reflect our logo?). Conducting an image assessment every few years is a great way to align all the pieces that communicate your brand. [ 27 ]

won’t happen if you’re not listening online; they will, but you’ll be none the wiser.) Don’t expect miracles. Anyone who tells you they are quadrupling sales through social media is likely blowing smoke. That may sound like an excuse to toss aside a social media effort altogether, but it’s not. Social media, like many branding vehicles, can be powerful in keeping your agency front of mind, and it is wonderful for humanizing your firm. But you wouldn’t (or shouldn’t) expect one ad in the local paper to transform your business, and you should be equally realistic about social media. Editor’s note: For more information about strengthening your online presence and using websites and social media effectively, visit and select “Technology” from the left-hand navigation menu and then “Other Resources.”

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Frederick Mutual Ins Co . . . . . . . . . . . . . . . . . .21 Guard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 IA&B Partners Program . . . . . . . . . . . . . . . . . . .25 IA&B Series Ad . . . . . . . . . . . . . . . . . . .14, 15, IBC Interstate Insurance Mngmnt. . . . . . . . . . . . .OBC Penn National Insurance . . . . . . . . . . . . . . . . . .19 Preferred Property Program . . . . . . . . . . . . . . .27 TAPCO Underwriters . . . . . . . . . . . . . . . . . . . . .17 Tri-State General Ins Ag . . . . . . . . . . . . . . . . . .20

[ 28 ]

Shampoo brand Head & Shoulders took out a $1 million insurance policy in connection with becoming the “official shampoo of the NFL.” Lloyd’s of London wrote the policy. Sources: Pittsburgh Post-Gazette; ----------------------------------------------------------------———— 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.



That’s how we deliver distinction.

MAPs bring members together to discuss issues affecting their agencies and how IA&B may be able to help address those concerns. IA&B is now recruiting members for a new two-year term (a total of four meetings held in your region). Please consider nominating yourself for this rewarding opportunity. LEARN MORE ABOUT MAPS AND HOW YOU CAN VOLUNTEER AT IABGROUP.COM/GET_INVOLVED, OR CALL THE IA&B MEMBER SERVICE CENTER AT (800) 998-9644.

Driving members to distinction

Primary Agent - January 2011 - MD Edition  
Primary Agent - January 2011 - MD Edition  

Primary Agent - January 2011 - MD Edition