Primary Agent - July 2014 - MD Edition

ALSO IN THIS ISSUE: Job descriptions — an HR insurance policy When are ISO endorsements mandatory?

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Contents PRIMARY AGENT MAGAZINE

The end of the world as we know it

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The rapidly growing Internet of Things (IoT) stands to impact the insurance industry in ways that we, admittedly, cannot yet imagine. IoT supplies the “big data” about which we’ve all heard, and that influx of information creates opportunities and challenges alike for our data-hungry industry. Read on for an understanding of the trend and what it could mean to insurance in the not-so-distant future.

Page 12 Coverage risks in the age of the ‘Internet of Things’ New technologies create new risks, and new risks create the possibility of coverage disputes. Here, attorneys from Hunton & Williams discuss the growing risks associated with the Internet of Things, what coverage gaps could exist, and how insurers may respond.

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22 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

Agency strategies to manage change successfully Few would dispute that we are living in a time of rapid and profound changes.

Managing through all of this change has become a major challenge even for the most tech-savvy agencies, as well as for our carriers and vendors. Read on to learn how to position your agency to prosper by creating a culture that embraces innovation and implementing a defined change-management process.

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In every issue 2 3 4 6 8 11

Chair of the Board’s Message Ask Our Experts State News Preventing Errors & Omissions Coverage Corner IA&B Partners

19 22 26 IBC IBC IBC

My Events Technology Update H.R. Headquarters Advertisers Index Classified Ads C’mon, get appy!

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 at additional mailing offices.

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Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2014-7 is published monthly by IA&B Service Group Inc., a subsidiary of IA&B. Copyright 2014. 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.

G. Greg Gunn, CIC

Chair of the Board’s M

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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.

The future could be here sooner than you think As I write this message, news outlets are buzzing about a new Pew Research Center report predicting what amounts to be the end of the world as we know it by 2025.

Apparently, wearing Google Glass or relying on a Nest Thermostat won’t seem so far-fetched a decade from now. Researchers predict we’ll live our lives through a web of Internet-connected gadgets.

We’ll control our home lawn sprinklers from work and receive notification at home if a pipe bursts at the office. Minus cars flying (although rumor has it they’ll be driving themselves by then!), we’ll live like the Jetsons.

All joking aside, as insurance professionals, we don’t have the luxury of ignoring these trends. Our clients trust us to recognize their exposures and to advise them accordingly. And if this new trend of remote-access, interconnected everything truly is set to explode — the Pew report suggests we’ll nearly quadruple the number of Internet-connected devices by 2020 – we’ve got our work cut out for us. This month’s Primary Agent magazine includes feature articles that delve into into the subject and what it could mean to our industry.

Now please don’t get me wrong; I’m not an alarmist. But I am a pragmatist. And I’m also someone who recognizes that in times like these, perhaps more than ever before, there is great value in the collective power of an agents’ association to advise us on trends and support us in our efforts to (forgive me) live long and prosper.

Until next time,

Scott C. Rogers, CPIA* York, Pa. David B. Wasson Sr., CIC State College, Pa. Lawrence A. Wilson, CIC, CPIA, CPCU, ARM** New Castle, Del.

G. Greg Gunn, CIC

* Pa. IIABA National Director ** Del. IIABA National Director + Md. PIA National Director

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Ask our Experts QUESTION: One of my carriers is adding an endorsement to the renewal and telling me that it is an ISO mandatory endorsement and that they can’t do anything about it. Another carrier is not adding it. Both use ISO. Is it mandatory or not?

ANSWER: ISO “mandatory” endorsements always cause significant confusion … to which you can add that there is often abundant miscommunication accompanying their release. When ISO labels a form as mandatory in a state, it doesn’t mean that it is mandatory for every ISO member to use. Nor does it mean that it is mandated by law or regulation.

Ultimately, the nature of the form will likely dictate how important it is to your insured: Is it an addition of coverage?

A reduction in coverage? A policy administration issue?

Depending on the nature of the change, statutory or regulatory provisions could mandate specific disclosures.

As a result, the carrier may have to provide notification to the insured in addition to the filing.

How is the carrier identified? w A few carriers that are ISO members are identified as “automatically following” ISO. If the endorsement is filed as mandatory by ISO, then the form would be mandatory for those carriers, and they are correct in stating they have to adopt the endorsement.

According to the regulators, however, the number of carriers “automatically following ISO” is the exception rather than the rule.

HAVE A QUESTION? ASK OUR EXPERTS! Rely on our experts to answer your most perplexing questions. Visit the Ask Our Experts section of IABforME.com (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 IAB@IABforME.com. We look forward to hearing from you.

w Most ISO-member carriers are identified as not automatically following ISO, in which case they file with the regulator that:

1) they will be following the ISO filing, or

2) they will submit a different filing. The filing can be that they won’t add the form, that they will add it with a different effective date, or that they will add it with amendments.

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Primary Agent | July 2014

State News State of the workers’ compensation market Industry experts weigh in on workers’ compensation trends and make market predictions -- including potential impacts of the Affordable Care Act -- in the National Council of Compensation Insurance’s (NCCI) 2014 Issues Report, available from our website. Specific topics include: w Updated numbers and observations from NCCI’s annual State of the Line report w A discussion on how the Affordable Care Act might affect the workers’ compensation industry w A comparison of workers’ compensation and group health hospital outpatient payments w An examination of the new challenges that legalized marijuana brings to stakeholders w A comprehensive overview of planned and completed state legislative activities IABforME.com/NCCI_2014_ Issues_Report_04_2014

NCCI continues to raise state’s split point As predicted, the experience mod calculation changes that first impacted Maryland employers’ workers’ compensation policies in January 2013 continue. The National Council on Compensation Insurance (NCCI) confirmed to us that effective Jan. 1, 2014 the primary/excess split point increased to $13,500 and that beginning in 2015 it will rise to $15,000. This follows the Jan. 1, 2013 split point jump from $5,000 to $10,000 – the first increase in 20 years.

If you write workers’ compensation, be ready to remind customers how the NCCI’s Experience Rating Plan changes impact them: Claims dollars are shifting from the excess layer to the primary layer, causing some employers’ mods to fluctuate several points – without any changes to their loss experience.

While the NCCI professes the changes are “revenue-neutral,” they rarely are revenue-neutral to individual employers, as the new calculation is either to their benefit or detriment.

As a reminder, our members-only resources explain the change and what it means for insureds and even share instructions, including a sample customer letter.

IABforME.com/MD/ NCCI_mod

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Commissioner drives home coverage concerns of ride sharing Transportation network companies, also known as ride-sharing services, are racing into Maryland – with potential insurance coverage gaps hot on their trail. Maryland Insurance Commissioner Therese Goldsmith recently responded with a warning for drivers.

The commissioner’s notice and corresponding press release alert drivers that most personal automobile insurance policies contain exclusions for livery (ISO liability exclusion A.5 under the PP 00 01).

The announcement encourages drivers to contact their insurance producer or insurance company to identify potential coverage gaps and to consider increasing coverage limits and buying a commercial policy with liability, UM/UIM, PIP or comprehensive and collision coverage.

What’s ride sharing all about?

Ride-sharing companies operate similarly to taxi services, but drivers use their own cars. Most use smartphone apps to connect passengers and drivers and to transfer payment – which is considered a “donation” and determined by the rider.

How should I respond if one of my customers is a driver?

Whether insurance carriers have made or will make allowances to afford coverage is a discussion you may need to have with your carriers.

No doubt, the donation-based payment structure many ride-sharing companies use and their common

label of drivers as “volunteers” are meant to circumvent PAP exclusions.

When ride sharing made headlines this winter, we reached out to our ISO contacts. They said that they are monitoring the implications and shared that member carriers feel that the current exclusion properly protects them from the exposure and will address it if the need arises.

We’ll continue to monitor the issue as well, including case law that is bound to develop.

Solicitation of Medicare sales comes under fire Mind your marketing if you sell Medicare. Effective Oct. 1, the Maryland Insurance Article will include Medicare Marketing Guidelines, which will place prohibitions on producers’ soliciting and advertising of Medicare sales, specifically: 1. Soliciting door to door 2. Approaching beneficiaries in common areas 3. Soliciting via telephone or other electronic means Insurance Commissioner Therese Goldsmith recently released Bulletin 14-13 to reiterate SB 68 and its implications for insurance producers who solicit or advertise the sale of Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug Plans and Section 1876 Cost Plans.

Maryland Personal Auto forms facing revisions Applying updates to your agency management system ensures that you’re using the most recent ACORD form editions – including two revised Personal Auto forms effective later this year – and that you’re in compliance with licensing agreements.

What licensing agreements?

It is a violation to issue prior editions of a superseded ACORD form once a new form is introduced. Your obligation stems from the licensing agreement between ACORD and your agency management system vendor (AMS, Applied, etc.). Agency management systems introduce the latest ACORD forms through periodic updates … which all too easily can fall through the cracks at busy agencies.

What form revisions are coming down the pike?

On the horizon for Maryland are two revised forms: the Personal Auto Application ACORD 90 MD (2014/12) and the Personal Auto Application Section ACORD 290 MD (2014/12), effective in December.

WELCOME

New Members Minus & Associates Inc. Oxon Hill, MD Chuks Insurance Largo, MD [5]

Primary Agent | July 2014

Preventing ERRORS AND OMISSIONS

DON’T LET YOUR AGENCY GET SUNK BY AN E&O CLAIM INVOLVING WATERCRAFT 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 IAB@IABforME.com.

The dog days of summer have arrived, so there is a strong likelihood that many customers will be looking to get out on the water. As a result, these customers will be contacting your agency to make sure their watercraft coverage is in order.

Know the differences While there is a good chance the premium for this exposure under a HO policy will be less, there is also a good chance the coverage will be less. As the saying goes, “You get what you pay for.”

Important questions to consider include:

Agents must be aware of any limitations or exclusions in the homeowners’ policy regarding issues such as the engine size and length of the watercraft.

If the watercraft is eligible for coverage under the homeowners’ policy, liability protection may be provided, yet typically physical damage coverage is not. This is potentially an important issue based on the watercraft’s price.

Statistics indicate that in 2012 there were 5,870 thefts of various types of watercraft in the United States, so this is a definite exposure. As one could imagine, jet skis were No. 1 (23 percent) on the theft list, followed by

w Will the watercraft be insured on the homeowners’ policy or via a standalone policy? w Do your customers know the differences?

How about the agency staff? w How knowledgeable are you on what those differences are?

Now is a great time to brush up on those differences so your customer can make an educated decision.

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runabouts (16 percent), utility (fisherman/sedan types), cruisers and then sailboats.

In addition, when insured under a homeowners’ policy, there may not be any coverage for injury to passengers and others, or any coverage for the trailer and accessories.

Once again, this could be a potentially significant exposure.

Yet these two exposures are just a few of the differences. To ensure your customers are more adequately covered – or to at least give them the option to consider – alert them to the benefits of insuring their boat or yacht with a specialty carrier. Here are some additional coverages and exposures that are often automatically included or included for a fee with the specialty carriers: w Roadside assistance if the insured’s vehicle becomes disabled while towing his or her boat

w Coverage for fishing equipment and other personal effects such as water skis

The agent went through another broker to secure replacement coverage with “Company Y.”

w Fuel-spill coverage (Your clients may be legally liable. Do they have the necessary coverage?)

The insured informed the broker that the yacht was stored in the water. The broker completed the application and indicated that the yacht was on land. The policy was issued with a warranty that the vessel was dry docked. The yacht sank while at dock during a storm and the carrier denied coverage.

The agent had received the policy, recognized the problem with the warranty (dry vs. wet dock) and had intended to discuss it with his client and broker. However, the policy sat on the agent’s desk for two weeks and then the loss occurred. Thus, the client never saw the policy.

w Wreckage removal w Medical payments (even for water skiers) E&O claims involving watercraft have involved a variety of issues including: w Territorial restrictions – This can involve specific territories, such as Cuba. In addition, some watercraft policies have limitations that exclude coverage in certain types of water (fresh water vs. salt water) or sizes of water (rivers and lakes vs. larger bodies of water such as the ocean). w Hull coverage – Claims have arisen because the coverage wasn’t written on an agreed-value basis.

Agreed value is certainly broader than actual cash value. w Insufficient limits – Major accidents can occur. Secure high limits and schedule this policy under the umbrella. w Not understanding the binding guidelines relating to the age of the vessel – What are the specific survey requirements?

Attention to detail is critical when insuring this type of exposure.

Consider the following claim and how it could have been avoided: The agent wrote a marine policy for a longtime customer to cover the customer’s yacht. The previous policy was with “Company X.”

The claim was for $1,300,000.

While the broker certainly has some liability, the agent is also to blame for not acting on the discrepancy. The case was settled for $750,000, with the agent responsible for 50 percent of that amount.

Tips to consider Such E&O claims can be avoided.

Consider these tips: Completing the application – Sit down with the customer to review each question and explain the coverages in detail. If the customer does not choose the broadest protection, get his or her sign-off for the declined coverages. After the application is completed, require (don’t simply request) that the customer thoroughly review the application’s questions and answers and, if everything looks in order, require the customer to sign the application.

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Receipt of the policy – The agency should review the policy to ensure it matches what was requested. Whether you personally deliver the policy or mail it, include a cover letter advising the client to review it to make sure everything is in order. As evidenced by the claim example above, this should be handled promptly as time could be an issue.

Education and training – Both your staff and your customers can benefit.

The goal is to be certain the staff understands all of the coverages and how they apply. Spend a few minutes in the next week to review your agency’s approach to insuring the various types of watercraft.

Include this as a topic in your next newsletter for customers and as a topic on your website and social media blog or posting. Spell out the benefits of a specialized policy as compared to securing the coverage via the homeowners’ policy. It’s also a great topic to include in your personal lines reviews to ensure that customers know the differences.

Before the phone starts ringing, take the time to get up to speed and learn the finer points of insurance for watercrafts. This could ensure that your agency doesn’t “go down with the ship” in the event of an E&O claim.

Primary Agent | July 2014

Coverage COR N E R

WORKERS’ COMPENSATION – WHEN AND WHERE ARE THEY COVERED?

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.

Over the years I’m sure you’ve been asked numerous times, “Will he be covered by workers’ compensation if he does this?” Or the question may have been, “Will she be covered by workers’ compensation if she does that?” They then describe what “this” or “that” is.

centers and conference facilities.

In July 2011, the company asked Mr. Gravette, who lived in Idaho, to travel to the Gaylord National Resort and Convention Center in National Harbor, Md. for work. On July 10, Mr. Gravette was injured around midnight when he slipped and fell while dancing at the Pose Ultra Lounge & Nightclub located on the resort premises. There was no indication that he was intoxicated at that time.

After hearing what “this” or “that” is, there is a temptation to answer those questions with a “yes” or a “no.” Folks who are smarter may respond with “possibly” or “maybe.” However, the correct answer is, “I just don’t know.” The following Maryland case is a perfect example of workers’ compensation coverage applying to an employee’s injury when, to the naked eye, it appears it should not.

Mr. Gravette filed for workers’ compensation benefits. Both the Maryland Workers’ Compensation Commission and the Prince George’s County Circuit Court rejected his request. The trial judge for the circuit court found that, unlike eating and bathing, dancing at a nightclub wasn’t “reasonably incidental to the travel required by the employer.”

Dallas E. Gravette worked as an audio visual technician for Visual Aids Electronics Corp., which is based in Germantown, Md. They provide audiovisual rental and staging services to hotels, resorts, convention

A three-judge panel of the Maryland Special

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Court of Appeals unanimously reversed the Commission’s and the lower court’s rulings. In reaching their decision, they noted similar cases in which injuries suffered during “reasonable and foreseeable” recreational activities were deemed compensable. Because Mr. Gravette’s dancing took place on the premises of the hotel, and it was not considered dangerous or out of the ordinary, the Court of Appeals ruled he was entitled to workers’ compensation benefits.

The lower court’s decision was reversed and the case was remanded to the Maryland Workers’ Compensation Commission for further consideration.

Are you covered for workers’ compensation benefits if you’re injured while dancing at a nightclub at midnight?

Most of us would want to say “no”. However, the Maryland Special Court of Appeals said “yes.”

Y’all take care!

Good people Make great partners!

Quote a middle market account with Harleysville, and watch your circle of trusted advisors grow in a hurry. First, there’s your field underwriter, who’ll understand your client’s business and recommend the right coverage. Next, your risk services specialist, who’ll assess the hazards of your client’s operation and propose solutions to address the challenges.

And finally, when the account is especially large or complex, our claims business consultant can meet with your client initially, then later to discuss specific losses and trends. For contractors, manufacturers, wholesalers and more, team with our middle market professionals once and you’ll call us again and again. To learn more about this and other benefits of a Harleysville appointment, call 800-523-6344, ext. 5016, or visit our website.

Scan this tag to be sent directly to the agency recruitment section of our corporate website.

Busines s | In land Marine | Person al | Life/Employee Ben efits | Flood | Human S er vices | www. harleys villegroup.com

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

FEATURED PARTNER Mutual Benefit Group CHIEF EXECUTIVE OFFICER Steven C. Sliver, President and CEO HOME OFFICE LOCATION Huntingdon, Pennsylvania A.M. BEST RATING A- (Excellent)

S

ince 1908, the grandfather clock in the lobby of Mutual Benefit Group’s headquarters has steadily measured the minutes of 106 years of service to policyholders.

And for just as many years, Mutual Benefit has steadily relied on independent insurance agents to market its products, remaining committed to a valued partnership with hometown experts who know how to provide their neighbors with uncommon service.

“One of the ways Mutual Benefit demonstrates its commitment to the independent agency system is through its Inner Circle agency recognition program. I’ve been enjoying the opportunity to celebrate with this year’s honorees,” remarks Kevin O’Brien, who joined Mutual Benefit in January 2014 as senior vice president of insurance. “The Inner Circle program rewards agents who consistently display the ability to grow profitably in a tough market while providing exceptional customer service. It’s a way for Mutual Benefit

to show these agents how much we appreciate their dedication to their clients and to the industry.”

The Inner Circle Program provides increased compensation for agents meeting specified premium growth and loss ratio targets. In addition, they receive recognition among their clients, community, and peers. Agents who attain long-term membership qualify to receive the Inner Circle commemorative grandfather clock, a symbol of consistency, reliability, strength, and stability, traits that Mutual Benefit and its policyholders appreciate, traits that Mutual Benefit seeks to model as well.

Agencies who qualified for Inner Circle membership this year based on 2013 results are Affolder & Associates Inc., Pittsburgh, PA; Beiler Insurance Agency Inc., Gap, PA; Indiana Insurance, Indiana, PA; Jack M. Shuck Agency Inc., Huntingdon, PA; C. Kenneth Grant Inc., Coatesville, PA; Malagise & [ 10 ]

Kevin O’Brien Senior Vice President of Insurance

Associates Inc., Bridgewater, PA; Nelson Insurance Services Inc., Eldersburg, MD; Peebly Insurance Inc., Greensburg, PA; Strickler Insurance Agency Inc., Lebanon, PA; and Wolfe Agency Inc., Ford City, PA. “We congratulate this year’s Inner Circle agents, and thank them for their exceptional representation in the insurance industry,” says O’Brien. “Just as we see our agents as valued partners, we hope programs like Inner Circle will help agents see Mutual Benefit as a key partner who is committed to helping them grow their agencies.”

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 IABforME.com to get started.

PLATINUM LEVEL 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

GOLD LEVEL

ISU Insurance Agency Network Progressive Westfield Insurance

SILVER LEVEL

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 [ 11 ]

BRONZE LEVEL Aegis Security Insurance Co Agency Insurance Company AmWINS Program Underwriters Inc Auto-Owners Insurance Company Bailey Special Risks Inc 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 Lebanon Valley Insurance Company MAPFRE Insurance Merchants Insurance Group Mercury Casualty 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 Group of Companies United Fire Group Zenith Insurance Primary Agent July 2014

TECHNOLOGY

The end of the world as we know it On the cusp of the Internet of Things

The rapidly growing Internet of Things (IoT) stands to impact the insurance industry in ways that we, admittedly, cannot yet imagine.

IoT supplies the “big data” about which we’ve all heard, and that influx of information creates opportunities and challenges alike for our data-hungry industry. Read on for an understanding of the trend and what it could mean to insurance in the not-so-distant future.

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Primary Agent | July 2014

T

he terminology is daunting: the Internet of Things (IoT).

Sounds very futuristic, very foreign … very geeky. But, truth be told, IoT is already all around us, influencing our daily lives.

And we’re just on the cusp.

International IT consultant Michael Mayr calls IoT “one of the biggest technological leaps of the last 100 years,” while technology insurer OneBeacon estimates that today there are 10 billion connected devices – and that the number will increase five-fold by 2020. As surmised by industry trade publication American Agent & Broker, “IoT will change every part of the insurance value chain, including product design, pricing, underwriting, service and claims.”

So what is this mysterious development? Essentially, IoT is machines talking to machines over the Internet.

The in-vehicle telematics devices that drive usage-based insurance?

That’s IoT. Those new Nest “smart thermostats” that track forecasts and activity to reduce energy usage? IoT. How about that app that locates a misplaced smartphone? Yep, IoT.

A boon for underwriting, risk management “The Internet of Things will change the property and casualty business,” predicts Donald Light, of researching and consulting firm Celent.

IoT will allow for the collection of an extraordinary amount of data — the more that machines interact, the more information that can be tracked. (Enter the “big data” term you keep hearing about.)

Among the changes for the P&C industry are the positive impacts on underwriting and risk management that will be created by insurers’ access to the wealth of data. Light of Celent elaborates: From an insurance perspective, what is new and different and critically important about this data is that it can provide a much more accurate picture of the exposures, hazards and risks of what is being insured. These analytically driven findings create a second critically important consequence of the IoT: Insurers can create feedback and control processes to command or request things to change their loss-related behavior and performance.

IT consultant Mayr takes the concept one step farther. He predicts an opportunity for insurers to use the data to create and offer customized insurance products and services — a move that he believes will improve insurers’ image, moving them away from “being risk insurers … toward being ‘smart life companions.’” Sam Friedman and Michelle Canaan of the Deloitte Center for Financial Services agree, citing in a recent research report that measuring consumer behavior, for example, can lead to insurers being more relevant in consumers’ everyday lives, increasing their number of touch points and allowing them to “better understand, serve and retain customers.”

With technology such as in-vehicle telematics, some insurers are already jumping into the game. “The genie is out of the bottle,” write Friedman and Canaan. They predict that insurers’ use of “behavioralbased telematics” and other data gleaned from IoT in underwriting [ 13 ]

“IoT will change every part of the insurance value chain, including product design, pricing, underwriting, service and claims.”

TECHNOLOGY

only stands to grow and expand beyond its current usage for auto insurance and into other lines, personal and commercial alike.

of a certain chemical.” Malicious acts aside, this use of IoT could prove deadly in the event of faulty equipment or commands.

Challenges in spades

———————————————

Despite the opportunities for the insurance industry, everything decidedly isn’t coming up roses in relation to IoT.

While on the surface the data accumulated from IoT seems appealing for underwriting and risk management purposes, digesting big data brings big challenges.

Recognizing new exposures By default, IoT will create new risks, and accurately identifying and adequately covering these exposures will require extensive research and development.

As Mayr explains, IoT creates “threats for which there are currently no standard operating scenarios or security concepts.”

These threats come in many forms. For one, as (woefully under-protected) Internetconnected devices and the amount of data they transfer increase in number, so do the number of entry points for hackers to gain personal information. OneBeacon Technology Insurance President John Wurzler cites the late 2013 Target data breach, when hackers accessed point-of-sale software through an HVAC contractor. Most commercial and even new residential HVAC systems (once again, enter Nest) allow for external monitoring through the Internet, which creates new entry points to siphon data.

It doesn’t stop at property loss or loss of income: The threats stemming from IoT could lead to bodily injury as well. Wurzler points to medical “devices that monitor certain functions through an Internet connection and then automatically dispense medication or adjust body levels [ 14 ]

——————————————— Needless to say, the myriad exposures related to IoT are hard to identify, much less quantify.

Sorting through big data While on the surface the data accumulated from IoT seems appealing for underwriting and risk management purposes, digesting big data brings big challenges. Operationalizing massive quantities of information is no small feat. Deloitte’s Friedman and Canaan explain, “The trick, of course, is determining exactly how [big data] … might translate into a valid predictor of risk.”

Furthermore, this assumes that insurers can access the information gleaned from IoT. IoT is advancing much quicker than regulators, so how the government and the courts respond to the concept of funneling vast amounts of data

Partners.

You and your clients. You and Harford Mutual. We’re committed to protecting their business and building yours.

That’s what mutual success is all about.

Explore P&C insurance opportunities at HarfordMutual.com

Primary Agent | July 2014

insurance industry pursue an operating strategy that makes it smaller? And furthermore, if reduced premiums are materially large, will the industry accept a smaller role in the economy? Will it find alternative sources of revenue that build on the loss reduction role in the IoT?

is still unknown. The same goes for consumers. In a January 2014 survey conducted by Deloitte, half of the respondents indicated that they were not in favor of insurers tracking data, such as their driving habits, for use in underwriting. The desire for privacy — however fleeting — remains.

Reducing risk Taken (admittedly) to the extreme, one could even question the insurance industry’s viability in a world of IoT. American Agent & Broker author Hannah Bender writes:

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As technology evolves at an exponentially increasing pace, we find ourselves standing on the edge of a vast sea of changes ad that IoT will bring: According to a Pew Research Center report released in mid-May, IoT will thrive by 2025, creating a completely “wired” existence.

But how far and how fast the impacts of IoT will reach our industry depends on insurers’ rate of adoption, regulators’ response and – perhaps most importantly – consumers’ receptiveness.

While industry experts and technology forecasters debate how quickly and drastically IoT will impact our lives, one thing is clear: The world is changing, and our industry must be poised to change with it.

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COVERAGES

Coverage risks in the age of the ‘Internet of Things’

New technologies create new risks, and new risks create the possibility of coverage disputes. Here, attorneys from Hunton & Williams discuss the growing risks associated with the Internet of Things, what coverage gaps could exist, and how insurers may respond.

[ 16 ]

Primary Agent | July 2014

T

he “Internet of things” is here. According to Cisco, sometime during 2008, the number of things connected to the Internet exceeded the number of people. Cows, corn, cars, fish, medical devices, appliances, power meters — practically any item imaginable has been or can be connected. Eventually, we will be able to “sync” an entire home so that its heating system is programmed to adjust to weather patterns and inhabitants’ activities, its dishwasher automatically orders soap refills, its refrigerator is always stocked with milk (or beer), and maybe even its lights blink on and off when important emails are received.

These are just a few examples of what can be done with “the Internet of Things” (“IOT”) — ordinary objects and devices able to process and transmit information based upon their environments that they then communicate to servers running algorithms designed to anticipate and address user needs. Businesses ranging from small startups to long-standing conglomerates are now embedding adaptive “smart” technologies into even mundane products, including window shades, light bulbs and door locks.

While IOT devices create obvious value, they also expand risk. In effect, we are creating an “infrastructure for surveillance,” that constantly generates critical, sometimes exceptionally private, data transmitted for use on servers perhaps thousands of miles away.

Although the benefits of this infrastructure are evident, the risks can be hidden within a technological “black box.” The degree to which our well-being depends upon the integrity and security of networks, software and data will increase exponentially.

If an IOT device malfunctions, or if data or software is compromised or lost, individuals and businesses may suffer devastating losses.

Dosages of critical medication might be missed, for instance, or needed medical treatments omitted. In fact, the risks posed by IOT have already attracted the attention of regulatory authorities. This past June, the U.S. Food and Drug Administration surveyed the industry and decided to update its guidance on cybersecurity for IOT medical devices and the Federal Trade Commission held a symposium addressing IOT issues on Nov. 19.

As use of these products continues to expand, such risks will be realized and manufacturers will look to their insurers for defense and indemnity protection. Coverage for products liability is typically provided under liability policies, which can be written on an occurrence or claims-made basis. Liability of the manufacturer of a malfunctioning fire alarm that fails to alert homeowners of a fire should be covered under such policies, as should bodily injuries or property damage caused by other defective products, including products that are part of the IOT. Injuries from such products may result not only from a device’s failure to work but also from a network’s failure to provide communications as needed. These failures, as well as the more traditional product failures, should continue to be covered if insurance is to continue to serve its function and transfer financial risk.

[ 17 ]

While IOT devices create obvious

value, they also expand risk.

———————————————

As always, new technologies create new risks, and new risks create the possibility of coverage disputes.

———————————————

COVERAGES

Liability policies generally define the products’ risk to include all bodily injury and property damage occurring away from premises you own or rent and arising out of your product or your work except: 1. products that are still in your physical possession; or 2. work that has not yet been completed or abandoned.

The policies define “your products” to be any property (other than real property) manufactured, sold, handled, distributed or disposed of by the insured and to include warranties or representations made at any time with respect to the fitness, quality durability, performance or use of your product; and the providing of or failure to provide warnings or instructions.

Liabilities for malfunctions of IOT products appear to fit squarely within this definition. There are, however, some complications that insurers might put forward were they interested in denying coverage, and policyholders will need to examine their insurance proactively to avoid the uncertainty and cost of coverage litigation.

Coverage for IOT risk is complicated by the fact that the devices add value and efficiency by communicating with each other and distant servers on which data is stored and algorithms run. Indeed, this interoperability is the critical and promoted feature of IOT products. To see how this can complicate the coverage question, let us take a concrete example.

Let us imagine a refrigerator — the eFridge — that communicates data concerning the products it holds. When combined with complementary devices — called eShelves — it is able to keep track of all food in the kitchen.

The refrigerator also keeps track of its states, including its internal temperature, and transmits its state data and food stocked to a server maintained by smartKitchens Inc., at a distant location. On this server the data is stored and analyzed by an algorithm designed by smartKitchens’ software engineers. The algorithm, based upon eFridge state data and data on stocked food, generates recommended recipes for the week so that all food is used before it is spoilt.

The recommendations sent from the server to the eFridge appear on a screen on the refrigerator’s front door.

There are two Internet transport protocols, TCP and UDP. The latter is often used when broadcasting within a network is needed (as it is so that the eShelves can be configured) and can be cheaper to implement, but it is also less reliable because communicating devices receive no notice when UDP datagrams — the electronic containers of transmitted data — are lost or dropped. The eFridge is designed to use UDP, and the software engineers have developed their algorithm to deal with the problem of dropped datagrams as follows. Rather than generating a warning that there is incomplete information, the algorithm assumes that the refrigerator’s state is consistent with the average state maintained over

[ 18 ]

the prior two weeks. This is done to avoid multiple appearances of “error” messages on the eFridge door/screen and to increase customer satisfaction.

Now imagine that one week the server fails to receive datagrams regarding the state of the refrigerator on Monday, during which for some unknown reason the temperature inside the refrigerator exceeded room temperature. Unfortunately, as of Monday, the refrigerator contained a pound of mussels, which as a result of the temperature change are spoilt.

Data concerning this temperature increase were not received by the server, and therefore the algorithm, having been designed to assume that the temperature was maintained at its average, recommends a recipe for Wednesday of Mussels Provençale. As a result, the consumer sustains a very serious case of food poisoning and naturally seeks compensation from smartKitchens, which demands coverage from its insurer. Is smartKitchens covered?

The event appears to be squarely within the sort of products liability coverage that product manufacturers and distributors expect. There is a product away from the insured’s premises that made a “defective” recommendation and caused bodily injury. As such, there should be coverage.

But an aggressive insurer could construct an argument to the contrary. They might contend that in fact the injury was caused by the algorithm, not the refrigerator, and that had the algorithm been designed to indicate through

Primary Agent | July 2014

an error signal that data had not been received, there would have been no recommendation of Mussels Provençale on Wednesday. Insurers might contend that the algorithm constitutes “work that has not been completed or abandoned,” pointing to the fact that the engineers have the ability to change the algorithm to address the possibility of spoilt mussels and that therefore the risk is not within the product’s coverage.

Such an argument should ultimately fail. The fact that smartKitchens’ software engineers can update the algorithm does not mean that they have not “completed or abandoned” it for purposes of

the insurance policy. Moreover, liability policies generally provide that “work which requires further ... correction ... because of defect or deficiency, but which is otherwise complete, shall be deemed completed.” In fact, here, smartKitchens let the algorithm run as it was designed to and it did so. Nonetheless, although the insured should eventually obtain the benefit of coverage, that could very well be only after protracted and expensive litigation, reducing the value of the insurance purchased.

There is another argument as well the insurer might make.

Since about 2003, liability policies have generally included an exclusion — exclusion p, on

the Insurance Services Office Inc. form — barring coverage for damages arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data.

As used in this exclusion, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CD-ROM[s], tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment.

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An insurer might contend that the problem was created, not by the eFridge, but by the loss of electronic data, when the packets were dropped. They might use this argument to contend that coverage is barred.

Again, however, the insured should prevail were the insurer to make such an argument.

The algorithm functioned as it was designed. It did not fail to process data, but processed data exactly as intended. It was merely responding as designed to an unfortunate consequence of the decision to implement the UDP protocol. But here too, the insured is likely to find itself in an expensive coverage dispute, depriving the insured of the value of the insurance purchased.

As always, new technologies create new risks, and new risks create the possibility of coverage disputes. These disputes should be resolved in the insured’s favor, as it is the responsibility of an insurer to draft policy language to clearly and unequivocally exclude risks. This rule has special force where, as in our example, there is an expectation that liability for products would be covered.

It should, in other words, be the responsibility of underwriters to understand the products they insure and clearly state if they do not desire to cover an attendant risk. Nonetheless, as the use of IOT devices continues and expands, the past has taught that we can expect to see risks expand and insurers attempt to restrict coverage.

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[ 20 ]

Lon Berk is a partner in Hunton & Williams’ insurance counseling and litigation practice. He counsels clients on issues arising out of cyber insurance and has written and spoken extensively on the topic.

Paul Moura is an associate in Hunton & Williams’ Los Angeles office where he focuses on insurance recovery matters and related litigation.

This article presents the views of Lon Berk and Paul Moura and does not necessarily reflect those of Hunton & Williams or its clients, or Primary Agent magazine.

The information presented is for general information and education purposes. No legal advice is intended to be conveyed; readers should consult with legal counsel with respect to any legal advice they require related to the subject matter of the article.

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Primary Agent | July 2014

Technology U P DAT E

AGENCY STRATEGIES TO MANAGE CHANGE SUCCESSFULLY w

JEFF YATES Jeff Yates is the former executive director of the Agents Council for Technology (ACT).

ACT’s mission is to bring the stakeholders in the independent insurance agency distribution system together to advance the use of the most effective business processes, practices and technologies, in order to enhance productivity, service, marketing, sales and security.

This article reflects the views of the author and should not be construed as an official statement by ACT.

Few would dispute that we are living in a time of rapid and profound changes. Consumers’ expectations are changing fast, often shaped by their experiences in other industries. More and more consumers are “connected” and will communicate with their business partners using any device that is handy to them at the time. These consumers

are also empowered by social media and will use these tools to research their potential business partners, as well as to spread the word when they receive bad service.

New technologies are enabling businesses to enhance the consumer experiences that they provide and to differentiate themselves from their competitors.

[ 22 ]

Managing through all of this change has become a major challenge even for the most tech-savvy agencies, as well as for our carriers and vendors.

What are the key trends that will affect my business materially? Where will my major competitors be in five years? Which new technologies should I implement and when?

Primary Agent | July 2014

Agencies can position themselves to prosper in this rapidly changing environment by creating a culture that embraces innovation and implementing a defined changemanagement process. Below are several insights gleaned from ACT discussions to assist agencies in managing change successfully within their firms.

Management sets the tone Agency management plays a key role in creating a culture where innovation is prized as a core value of the business. These agency leaders look at new technologies and other innovations strategically, as tools that will give them a competitive advantage. They encourage ideas from every source – most especially from their employees and clients – as to how the agency can do things better.

Clients are surveyed regularly, and some agencies have even set up client advisory councils to test ideas and get fresh thinking.

These agency leaders are involved in their associations and organizations like ACT, AUGIE (ACORD User Groups Information Exchange) and their user groups, as well as with their carriers, to keep up with the latest innovations available to them and the benefits other agencies are deriving from these implementations.

The ACT website (www.iiaba.net/act) contains a number of resources to assist agencies in considering the key trends that are likely to affect them and how their fellow agencies are changing to position themselves for the future.

Keeping up with innovation in other industries Innovative agencies also are keeping up with the innovations taking place in other industries, because consumer and business expectations increasingly are being shaped by the experiences they have in these other industries. Agents can also learn from their business clients by asking them about their recent innovations and their resulting impact.

Daniel Burrus, the author of Technotrends, notes that successful businesses of the future will not only need to be “agile” but “anticipatory.”

Agility is important in reacting to competition. But being anticipatory enables you to become the competition because you are thinking through the “hard” trends that will affect you and, you foresee where your consumers and your competitors will be in the future in light of these trends. (“Hard” trends are those that are certain and permanent.) The anticipatory firm begins to make the changes now to position itself to be where its consumers and competitors will be in the future.

The other key for successful implementers of change is to create metrics, so that you can quantify whether the change has been a success or not.

Employee involvement & training are key The agencies that are implementing change successfully involve their employees in the shaping of that change. Employees – representing all of the disciplines affected by the change – work together in teams to implement it. Employees are empowered to innovate based upon the firm’s principles and are rewarded for doing so. There is an understanding that many innovations [ 23 ]

Agencies can position themselves to prosper in this rapidly changing environment by creating a culture that embraces innovation and

implementing a defined changemanagement process.

will not work perfectly at the start and will need to be modified and enhanced. These employees are also encouraged to work through these issues and to pursue problems with their carriers and vendors until they are fixed.

The innovative agency makes sure it has the right employees in the correct spots. These agencies are looking for employees who are willing to embrace change and who know how to ask the right questions to get their jobs done correctly. These qualities have become the top factors these agencies look for in candidates – even more important than the individual’s insurance expertise.

Some agencies also are striving to have a staff makeup that reflects the multiple generations and ethnic groups their firm is serving, to encourage diverse thinking and more effective understanding of each of their client segments. These agencies are also more willing to delegate

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authority and responsibility to employees in areas where they have a special interest and skill (in social media, for example).

In order to achieve a successful implementation, these agencies tell their employees the “why” for the change, how it fits with the agency’s vision (which the employees have bought into) and then thoroughly train them on how to implement the change effectively. Once the agency implements the new workflow or technology, the employees are expected to use it, so that there is consistency throughout the agency.

Innovative agencies also provide their employees with training that helps them to become more effective employees in areas such as teamwork, leadership and management.

“Slow down in order to speed up” This expression, coined by Paul Fuller of Strategic Insurance Software, expresses so well the importance of the agency’s taking the time to make sure the change it is pursuing – whether a new technology, workflow, etc. – is the right solution. Employees should be given uninterrupted time to confirm that their defined solution is the correct one. In addition, rather than just automating a traditional workflow that was devised for a paper world, these agencies rethink the workflow from the ground up in light of the new possibilities that have been enabled by technology.

[ 24 ]

Willingness to experiment Successful agency innovators are willing to experiment with new technologies and continue to “tweak” them based upon feedback from clients and others.

Creating a mobile friendly website and mobile apps provide great examples. There is no question mobility and the “connected” consumer are both “hard” trends that will increasingly affect us.

Steve Anderson reports in a recent TechTips that 43 percent of Google searches are local and 74 percent are performed via a mobile device.

So, it makes good sense for agencies to position themselves for this inevitable change, fully realizing they are going to have to enhance these mobile tools over time based upon the features that consumers ask for and use.

Another good example where agents are experimenting with new technology tools involves Internet marketing. Agencies continue to measure the effectiveness of the social media ads they run and modify the criteria until they hit upon a strategy that attracts the most correct leads, most cost effectively.

The keys for these innovative agencies are: (1) to be willing to experiment; (2) to measure the effectiveness of each change they make; and (3) to refine the implementation as needed.

Innovations save time & money Successful innovations often cut the time it takes to accomplish particular processes. For example, Stu Durland, a New York independent agent, found that he was able to cut his agency’s turnaround time to receive signed

client documents from an average of 23 days to three to five days by implementing an electronic signature tool. Think about all of the time and follow ups this one innovation is saving his agency!

Similarly, Applied Systems has been able to greatly speed up its responsiveness to customers by creating faster communications vehicles for reporting issues and implementing an Agile development process, which brings together multi-functional teams to work with customers to devise and implement solutions without delays.

position. None of these specific implementations, however, is as important as positioning the agency to implement change successfully.

The agency that embraces innovation as a basic value, keeps up with key trends and opportunities both within the industry and in other industries, empowers its employees to participate in the change process and implements a defined change management process – will position itself effectively for an environment that will continue to experience rapid and profound change.

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H.R.

Primary Agent | July 2014

H E AD Q U ART E R S

JOB DESCRIPTIONS – AN HR INSURANCE POLICY

KAREN H. DIGIOIA Karen H. DiGioia provided this article on behalf of Mosteller & Associates, IA&B’s contracted human resources consulting firm. Reach out to Karen for more information on FLSA compliance or with other human resources questions.

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compilation of products and services – available exclusively for our member agencies – that simplifies establishing or improving your human resources program.

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One of the more difficult aspects of HR administration is the creation and upkeep of job descriptions. It sounds like a simple task – document the responsibilities of and requirements for each position. However, this documentation process is so daunting that many of us find a simple solution to it — we don’t do it.

Before I launch into information that will (I hope) make the process simpler, let’s talk a little bit about why job descriptions are important.

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Why create job descriptions What is a job description?

Seems like a simple question – a document that lists the basic responsibilities and requirements for a job. But it’s important to back up a little bit.

At its most basic level,

a job description is a communication tool. This is why it’s important. It’s not about the document.

It’s about communication!

Think of job descriptions as an HR insurance policy – ensuring that you have clearly “covered” —————————————

Think of job descriptions as an HR insurance policy — ensuring that you have clearly “covered” all aspects of a job and communicated them to your employees.

——————————————

all aspects of a job and communicated them to your employees.

To begin with, the process of writing a job description ensures that you, as the business

[ 26 ]

owner or manager, have thought fully about the expectations for a job.

Many of us have concepts in our minds about what we expect, but the act of putting these thoughts into words will enable us to communicate them clearly with others.

The end result of this process, a clearly written job description covering the primary responsibilities and expectations now becomes a communication tool – a document that is at the heart of many important conversations with your employees.

How to use job descriptions A job description should be used when hiring/orienting a new employee or promoting an employee into a new position. A detailed review of the job description with the employee ensures

Primary Agent | July 2014

that they have a clear understanding of their responsibilities and your expectations. Job descriptions eliminate the need for mind-reading on the part of the employee and also decrease the possibility that, at some point in the future, the employee says “I never knew I was responsible for that.” Having your employees sign off on their job description, keeping a copy in your file and giving them one for theirs is an HR best practice that will ensure you’re never in the position to hear “I didn’t know….”

A job description should be a part of every performance discussion you have with your employees. When preparing to provide feedback, whether through an annual review process or another performancerelated conversation, the manager should first review the job description to ensure that they begin with a clear picture of the job in their head. This is also a perfect time to make any updates that may be necessary.

(can often be found online), the Job Description Analysis, Template and Sample, all found in HR Solution (IABforME.com/emp_mgmt). Then, talk with and observe your employees who are doing the job. Ask them to fill out the Job Description Analysis form if you feel this is appropriate and helpful. Finally, start writing.

Job identification information This includes basic information for identifying the job: position title (make sure it’s unique for the position), department, reporting and salary level information. This is generally the easy part.

Job summary This provides a brief, concise description that summarizes the overall purpose and objective of the position and the results that are to be accomplished. It should be no longer than one to three sentences and should answer the following questions:

Finally, in the unfortunate circumstance that you have to take disciplinary action, the job description serves as the basis of these conversations and your “proof” that an employee was aware of their responsibilities and your expectations.

w Why does this job exist?

Hopefully I’ve sold you on the importance of this sometimes underappreciated document. Let’s move on to talk about the key sections you should cover in your job descriptions and hopefully, simplify the process for you going forward.

You may find that it’s easier to write the summary after you’ve completed the following section.

Where to begin To get started, gather any information that you may already have that’s related to the job – things like old job descriptions, sample job descriptions

w What is the person in this job responsible for accomplishing? w What is the overall end result of the job?

Essential duties and responsibilities This section provides a list of accountabilities (generally between five and seven) that covers the tasks, duties and responsibilities that are most important to get the job done, listed in priority order and inclusive of quality and quantity standards. This is not an exhaustive list of every task

[ 27 ]

Job description demo Learn more about the importance of job descriptions and access a sample through HR Solution — our membersonly, proprietary collection of human resources products and services. Simply visit IABforME.com/emp_mgmt, follow the links to the Administrative Guide, and then find a 13-page section on job descriptions.

performed. Some tips as you work through this section: w Structure your sentence in the following manner: Verb/Object/ Explanatory Phrase w Use active verbs in present tense w Use descriptive/explanatory words that clarify why, how, where and how often For example: Manage (verb) expenses (object) in adherence to approved budget (explanatory phrase) Minimum qualification – education, knowledge, competencies and experience These topics can be broken up into several sections or combined under a single Minimum Qualifications section.

Some tips for this section: w State the minimum qualifications (education, specialized knowledge, previous work experience) needed to perform the job

H. R. HEADQUARTERS

w Can state preferences as well as requirements w Include required certifications/ licensing w To ensure that the things you are listing as “required” truly are, look at your current incumbents – if they don’t meet the “requirements” you’ve listed and are doing the job successfully, perhaps you’re overstating the requirements w Specify experience that can be substituted for formal education Supervisory responsibilities This section should detail any supervisory authority that resides with the position, including titles which report to this position, if applicable.

Physical and mental job requirements

What did that all mean? Here’s an example that will hopefully make it clearer: Frequently (frequency) lifts, carries or otherwise moves and positions (nonprejudicial language) objects weighing up to 25 pounds (intensity) Typically (non-prejudicial language) bends, stoops and crouches on a regular basis (frequency) to adjust setting on machinery (operational linkage) Working conditions If the position has any unusual working conditions, they should be stated in the job descriptions. Some examples include: w High or low temperatures w Excessive noise w Close quarters

level of the work being performed by employees assigned to this job title. This is not an exhaustive or comprehensive list of all duties, tasks and responsibilities. Employees will be expected to perform duties that do not appear on the job description. Management reserves the right to amend and change responsibilities to meet business and organizational needs as necessary.

Additionally, this does not establish a contract for employment.

Conclusion There’s no way around it — writing job descriptions (or “HR Insurance Policies”) takes time and effort.

However, my hope is that this column has helped clarify why it’s a process that’s well worth the time and effort and also has simplified the process a bit.

This section details the physical and mental demands of the position and ensures compliance with the ADA. Some tips here include:

w Contact with hazards Most commonly, this section will read “typical office environment.”

Remember, as part of your IA&B membership benefits, you can contact me for advice and clarification. You can reach me at 610-779-3870 or via email at karen@mostellerhr.com.

w Detail the physical demands for successfully performing principal responsibilities (walking, sitting for long periods of time, visual acuity, lifting, etc.)

Approvals and acknowledgement

Happy “policy” writing!

w Use non-prejudicial words such as “typically” to acknowledge the possibility that alternate manners of performance may be reasonable, as determined on a case-by-case basis w Give reference to frequency, intensity and/or duration to help establish the level of the work demand w Provide operational linkage to establish the importance to the job

This final section generally includes signoff by the manager who wrote the job description and also the signature of the employee, providing verification that the employee has read and understands the job description (this should be completed when an employee is hired or transferred into a job and each time the job description is revised).

Disclaimer As a job description is generally considered a legal document, each one should include a general disclaimer statement. For example: The above job description is intended to describe the general nature and

[ 28 ]

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Forward resume and cover letter to: Tom@CommunitySure.com If you would like to place a Classified Advertisement, simply fax your ad on company letterhead to 717-795-8347, and we will take care of the rest.

Ad Index ARI Insurance Company . . . . . . . . IFC Coastal Agents Alliance . . . . . . . . . . 25

Description: HootSuite allows you to share and schedule posts from up to five social network accounts — including Twitter, Facebook, LinkedIn and Foursquare — all from one app.

Maintaining your agency’s social presence just became less time consuming and complicated.

Cost: Free Customer rating: iTunes.com:

Google Play:

Harleysville Insurance . . . . . . . . . . . . 9

Prerequisite: First visit hootsuite.com and set up an account.

This will provide a dashboard from which you can manage multiple social network accounts from your desktop computer.

From there, download the app to take your show on the road.

IA&B Partners Program . . . . . . . . . . 11

Learn more: hootsuite.com

Guard Insurance Group . . . . . . . . . . 25 Harford Mutual Insurance Co . . . . . 14

IA&B . . . . . . . . . . . . . . . . . . . . . . . . . 21 Interstate Insurance Mngmnt. . . . OBC Penn PRIME Municipal Insurance . . 20 Preferred Property Program . . . . . . 15

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The “C’mon, get appy” column aims to uncover apps that can benefit you at the office and, in some cases, at home as well.

Submit suggestions to IAB@IABforME.com, subject line: Primary Agent submission.

8F ,OPX UIF %SJMM If you have clients involved in the rapidly expanding Marcellus Shale natural gas industry—and who doesn’t these days?—Interstate has the coverages you need for water haulers, dumps and other ancillary classes.

If your client hauls any commodity for the natural gas drilling industry, Interstate can insure them!

Marcellus Shale Coverages r " 3BUFE $BSSJFST r &YUSFNFMZ $PNQFUJUJWF 3BUFT r 8SJUJOH "DDPVOUT PG "MM 4J[FT r 0XOFS 0QFSBUPST UP -BSHF 'MFFUT

In Pennsylvania, Delaware, Indiana, Kentucky, Maryland, Michigan, New Jersey, Ohio, Virginia & West Virginia 2307 Menoher Blvd. Johnstown, PA 15905 814-255-7878 1-800-452-0297 Fax 814-255-6010

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