Maryland Primary Agent - May 2019

MAY 2019 | MARYLAND

Exclusive Member Magazine

HOW AGENCIES GET HACKED ORDINANCE OR LAW COVERAGE

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IN THIS

6

ON THE COVER: Q&A WITH JERRY MILTON

As Jerry approaches retirement, he looks back over his career.

14 ORDINANCE OR LAW COVERAGE

Is everyone in your agency knowledgeable about Ordinance and Law coverage? Reduce your agency’s E&O risk by educating staff and, in turn, customers.

18 HOW AGENCIES GET HACKED

Security threats go beyond email. Learn about the importance of understanding where data is stored, how it can be accessed, and how third-party vendors interact with your staff.

IN EVERY ISSUE 2 3 4 10 11 12 22 24 24

Chair of the Board’s Message Claire-ification Coverage Corner President’s Message News & Notes IA&B Partners Pics & Posts Education Classified Ads

JOIN US ON SOCIAL MEDIA: Facebook.com/IABforME LinkedIn.com/company/IA_and_B

ORDINANCE OR LAW COVERAGE

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Twitter.com/IA_and_B About IA&B IA&B is the premier resource and champion for independent insurance agents in Pennsylvania, Maryland, and Delaware.

Periodical postage paid at Mechanicsburg, Pa. and at additional mailing offices.

Postmaster: Send address changes to Insurance Agents & Brokers, 5050 Ritter Road, Mechanicsburg, PA 17055.

Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2019-5, is published monthly by IA&B Service Group Inc., a subsidiary of IA&B. Copyright 2019. 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 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. 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 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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CHAIR OF THE BOARD’S MESSAGE

BOARD OF DIRECTORS INSURANCE AGENTS & BROKERS 5050 Ritter Road | Mechanicsburg, PA 17055 800-998-9644 | IABforME.com

OFFICERS

Chair of the Board

John B. Hollister Milford, PA

THE END OF AN ERA

Vice Chair of the Board

Craig S. Mader

H

Crofton, MD

ands down, one of the best parts of working in this industry is the people. I’ve met some incredible folks over the years thanks to insurance, and I know that many of you share that experience. The insurance community truly is one of a kind.

That’s why I wasn’t surprised to read in Jerry Milton’s interview (see pages 6-8) that interacting with his students is his favorite part of teaching. For those of us who have been Jerry’s students over the years, interacting with him has been a favorite part of our continuing education.

As you’ll read in this issue, Jerry will retire at the end of 2019 – after 25 years as IA&B’s education consultant! I’d say that makes him a bit of a legend … and worthy of a proper sendoff, the kind that only the great people of our industry can give.

Raise a glass to celebrate Jerry’s career and contributions at one of IA&B’s upcoming happy hours, beginning in King of Prussia this month. Or submit your favorite stories and anecdotes about Jerry for IA&B to include in a retirement keepsake gift. (Look for more details on pages 6-7.)

In insurance, it’s the relationships we build that turn colleagues into friends and jobs into careers. And it’s the people like Jerry – with his good nature and warm personality – that make it happen.

MEMBERS

Emory Stephen Burnett, CIC, ARM Wilmington, DE

Richard F. Corroon, CPCU Wilmington, DE

Michael P. Ertel Sr.+ Columbia, MD

Len Gieseler, LUTCF Pottstown, PA

G. Greg Gunn, CIC* Lemoyne, PA

Bryan C. Hanes, JD Hagerstown, MD

Lisa A. Leach Goth, CIC New Bethlehem, PA

Shannon Lipniskis Indiana, PA

Elizabeth H. Martin, CIC Millersville, PA

Mark J. Monroe

West Chester, PA

Richard M. Rankin, CIC Lancaster, PA

D. Bradley Rosenkilde Jr. Hunt Valley, MD

Tara S. Silfies, CPCU Bethlehem, PA

Best,

Robert L. Smyrl Jr., CIC Hatfield, PA

Glenn R. Strachan

Ft. Washington, Md

John Hollister Chair of the Board

Lawrence A. Wilson, CIC, CPIA, CPCU, ARM** Newark, DE

J. Marshall Wolff, CIC, CPCU Easton, PA

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

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MAY 2019

Claire-ification IA&B Vice President - Advocacy Claire Pantaloni, CIC, CISR provided this month’s answer.

QUESTION: One of my carriers updated their contract and added a requirement that I carry a Cyber policy. Is this standard?

ANSWER: Not yet, but it’s likely only a matter of time. While Cyber or Privacy/Data Breach policies have been around for some time now, the businesses that have purchased them, so far, have done so of their own initiative.

Generally, these early adopters have been businesses that hold a fair amount of personally identifiable information relative to their customers and those which are more keenly aware of the privacy risks surrounding their operations. This is also true of independent agencies.

In the last couple of years, we have started seeing carriers amend their agency contracts to include a provision stating that the agent must carry a Cyber policy in addition to an E&O policy (yet another reason, if one was needed, why agents must read their contracts carefully). Upon signing the agreement, the Cyber policy becomes a contractual requirement.

As side notes to this question, we would add: • On the whole, having a Cyber policy is a wise move for insurance agencies.

•

Cyber policies are not standard, and the main challenge is to review the coverage carefully: Does it include both first-party and third-party coverage? What are the exclusions?

In addition to exclusions, are there any conditions for coverage to apply?

•

IA&B offers several options, both as stand-alone policies and as endorsements to the agency’s E&O. (A note of caution about the endorsements: They tend to offer much narrower coverage than a standalone policy.) If you’d like a quote, contact David Wertz at DavidW@IABforME.com or 800-998-9644, ext. 506.

Ask our experts!

Have a question? Rely on our team to find the answer.

Contact Claire: 800-998-9644, ext. 604 ClaireP@IABforME.com IABforME.com

As more states enact laws governing cybersecurity – such as what New York, South Carolina, and Ohio have done – more agency agreements will incorporate provisions related to cybersecurity, including cyber coverage.

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COVERAGE CORNER

COPY, PASTE, AND … PAY? Owners of IP Say, “Pony Up!”

By Kevin C. Amrhein, CIC

T

he internet is a showcase for much of the world’s “intellectual property” (IP). Finding and using people’s stuff has never been easier.

Employee: I found the perfect image file to complement our “don’t burn leaves too close to your house” social media blitz.

Manager: Looks great! Where did you find the image?

Employee: Online.

Manager: Who created it?

Employee: I dunno’ … some guy?

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Owners of IP who choose to publish such property online often do so along with terms of use that prospective users 1) never read, and/or 2) if they do, don’t take seriously. In other cases, there are no defined terms at all, leaving users to their own due diligence (ha!) regarding compliance. In any case, a person or business using another’s IP is at risk of violating rights of ownership, subject to cease-and-desist, exposed to demand for damages, and possibly litigation costs.

(Wait … so the hilarious cat picture I posted on the agency’s Facebook page is owned by an IP attorney with four kids in college? What are the odds?! )

MAY 2019

Before we get to the insurance stuff, let’s get this out of the way: The old adage “beg forgiveness rather than ask permission” is horrendous advice in this space. Without express permission, strict adherence to defined terms of use, or protection under subjective doctrine like “fair use,” any user of IP assumes risk.

WHAT IS INTELLECTUAL PROPERTY? Exactly what stuff qualifies as IP is unknown, and definitions are broad (and unhelpful) regarding lawful use.

For example, according to the Legal Information Institute, IP is “any product

of the human intellect that the law protects from unauthorized use by others.” (Other than ISO’s definition of “pollutants,” I’m not sure I’ve ever read broader language than that.)

There is less subjectivity as to the four generally accepted categories of IP: patent, copyright, trademark, and trade secrets. The web is packed with definitions/descriptions of each.

Without extensive legal research or access to an IP attorney, there’s no way to know with confidence if something is protected as IP and what its owners are entitled to should an alleged violation occur.

THE SCENARIO Okay … it happened. I received notice that my business owes someone a pile of cash for using IP without permission.

Is my business insured?

This scenario and question was brought to my attention recently by an agent/ colleague attending one of my classes.

Here’s what happened: He found a graphic online and pasted it onto the agency’s website. The graphic was categorized by his web browser as “public domain,” but the IP owner alleged otherwise (before you start blaming the web browser, keep in mind that its terms of use absolve it from liability.) In its complaint, the IP owner alleged that it was able to track the download of the image to the website of a party – my colleague’s agency – intending to use it for financial gain without permission.

He didn’t disclose to me the exact dollar amount demanded but said it was in the “thousands.” I’m not an attorney, so I couldn’t answer his initial question of, “Did I actually do something wrong, or is this a shakedown?” As for the question of insurance, let’s look at some language in the ISO Commercial General Liability

policy. Specifically, in Coverage B – Personal and Advertising Injury Liability.

DEFINITIONS The definition of “personal and advertising injury” includes two offenses of interest in this discussion: f. The use of another’s advertising idea in your ‘advertisement’; or g. Infringing upon another’s copyright, trade dress or slogan in your ‘advertisement.’

The definition of “advertisement” includes “a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters.” Subparts a. and b. of the definition – I’m paraphrasing here – say it includes notices published online or on the part of a website designed to attract customers or supporters.

My colleague wasn’t specific about his use of the image, so it’s not clear if item f. is of consideration. However, item g. seems to fit his story. And so far, the allegation seems within the scope of this coverage.

If only there weren’t these annoying provisions called “exclusions.”

EXCLUSIONS Coverage B has a few of them that could be a factor depending on the nature of the allegation. For the purpose of my colleague’s situation, let’s look at exclusion i. Here’s the complete wording:

However, this exclusion does not apply to infringement, in your ‘advertisement,’ of copyright, trade dress or slogan.

The exception to the exclusion is a positive sign for my colleague. The source of the allegation can be summarized as infringement of a copyright and the use of the image on his website seems to fit the definition of “advertisement.”

NOW WHAT? What if the CGL excludes the IP claim?

While my colleague may have coverage, it’s easy to see from the CGL’s language that many IP claims, such as those alleging patent or trademark infringement, are excluded. Specialty (e.g. complicated) policies exist in the marketplace for a variety of IP infringement claims, and counsel from a broker specializing in such coverage is essential.

As is often the case, risk management is the path to avoidance. Review any content for terms before using, and when in doubt, don’t.

That’s all for now. Until the next round… Cheers!

Kevin C Amrhein, CIC, is IA&B‘s newest education consultant.

He works with our CISR and CIC programs, as well as our special topic seminars and live webinars. Catch him at one of our upcoming professional training offerings: IABforME.com/education.

‘Personal and advertising injury’ arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in your ‘advertisement.’

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Q&A WITH

JERRY MILTON

JERRY’S RETIREMENT TOUR Jerry Milton retires at the end of this year. To celebrate, we’re hosting a series of happy hours with him across the region. Each reception runs 5:15-6:15 PM. Save a date to join us!

Tuesday, May 7 Crowne Plaza Philadelphia/ King of Prussia King of Prussia, PA Tuesday, June 4 Crowne Plaza Annapolis Hotel Annapolis, MD Wednesday, July 24 Pittsburgh Marriott North Cranberry Township, PA Monday, Aug. 12 Hershey Lodge & Convention Center Hershey, PA Monday, Sept. 9 Radisson Hotel Harrisburg Camp Hill, PA Monday, Nov. 4 Eden Resort & Suites Lancaster, PA No RSVP necessary. Questions?

Contact the IA&B Education & Events Department at 800-998-9644, option 2.

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I

A&B Education Consultant Jerry Milton, CIC, will retire at the end of 2019 after 25 years with our organization. During that time, Jerry developed and taught our special coverage courses, three-day Commercial Lines School (popular in the 1990s), and later, our on-demand programs and webinars. He also taught extensively for the CIC program.

Jerry’s keen story-telling ability, vast industry knowledge, and genuine good nature have made him a perennial favorite instructor among insurance professionals across the nation. Catch him in his final special coverage seminar – Insuring Contractors – coming to locations throughout the region this fall (IABforME.com/OtherCoverages).

Q. Take us all the way back. How did you get into the business of selling insurance?

A. I graduated from Mississippi State with a degree in mathematics in 1962, and I took a job with IBM as a data processing sales trainee. Back then we were switching everything from punch cards to computers – tape drives, disk drives. It was no comparison to today. We had huge rooms filled with computers.

When IBM decided that their sales force should specialize by industry, I wound up with all of the insurance companies in Mississippi. They sent me to Hartford for MAY 2019

three weeks to learn the industry, and I became enamored with it.

Then IBM wanted to transfer me to New Orleans. I didn’t want to leave Jackson, Mississippi, and a friend of mine told me Connecticut General was hiring, so I took a job there as a brokerage consultant. We were the holding company for Aetna Insurance Company, commonly known as “Little Aetna.” A few years later, I found out about a little agency in Auburn, Alabama for sale. The rest is history. I owned and operated that agency for 14 years.

Q. How has the industry changed over the years? And how has it stayed the same?

A. While some things haven’t changed, so much has – like how we deliver our product to the client. But I still think that insurance is a people-to-people business. It requires some personal contact along the way.

One of my concerns is when I watch TV and see GEICO, Progressive, and The General advertising. They never talk about coverages. It’s always about cost. They’re turning insurance into a commodity, and it was never intended to be that.

Q. What advice would you give to someone who’s just entering the industry?

A. Jump in with both feet and get as much education as you can. Be

SHARE YOUR STORIES

knowledgeable of the products you’re offering. That, to me, is the best advice to give someone starting out.

Q. How did you get into teaching?

A. I had become active in the Alabama Big “I” and served as chairman of their education committee for over 10 years.

I began teaching as a hobby and enjoyed it. There was no continuing education back then.

Then came the mid ‘70s. ISO went through all of these changes and came out with the HO 76 – a complete renovation of the Homeowners’ Policy. They replaced the Auto Family Policy with the Personal Auto Policy, the Commercial Auto Policy with the Business Auto Policy, and the Fire Policy with the Commercial Property Policy. Then the BOP was introduced, and we never had anything like that. For all of the policies we were writing, we had to go back to the drawing board.

All of the changes were drastic changes.

We needed to educate the members of the Alabama Big “I”, and the task fell on me to develop outlines and materials. I became the read-the-policy guy. Every time we looked up, we were out on the road with another class to educate members. Those two years by far had the greatest impact on my teaching career.

When I sold my agency in ‘81, I still needed income. Since I liked teaching, I started looking at it from a full-time standpoint. I said, “Would you pay me to do this?” They said yes, and I was surprised! I started in Alabama, and then taught in Georgia and Tennessee. Then I was contacted by The National Alliance, and the rest is history.

Send us your Jerry Milton anecdotes, quotes, and well wishes. We’ll compile them as a retirement gift. A few insurance friends already shared their favorites on social media: “‘In the old days, at 3:30 PM on a Friday, I’d write up a policy change on a bar napkin and wait ‘til Monday morning. Nowadays, you have to run to your car and call it into the agency, or pop open the laptop and type in the policy change to protect yourself.’ - Jerry” - Blair Aylward “Mr. Jerry was my first instructor of an insurance class held at the Marriott in Moon Township in 1992. Yes, I can remember it like it was yesterday because Mr. Jerry had that kind of impression on me. When I was working toward my CIC and he was my class moderator, I knew I had to say ‘Roll Tide!’ to pass. It was only after I got my CIC that I could say ‘War Eagle!’”

- Jeff Borkowski, CIC, CPCU, ARe “In speaking about certificates, one of [Jerry’s] best sayings was, ‘I ain’t going to jail for you!’ We use that all the time when stressing the importance of holding firm on certificate requirements.”

- Sarah Brown, CIC, CRM, AFIS “One time, during a commercial casualty exam, I was very confused about 3.C states being excluded if they were listed in 3.A. I told Jerry, ‘There must be a typo here,’ and he said, ‘Nope, you just weren’t ... paying attention that afternoon.’”

- Daniel McDevitt “When [IA&B] began offering webinars, Jerry still came to our office to record them. He wasn’t comfortable with PowerPoint, so when it was time to change a slide on the webinar, he would just slap me!”

– Jessica McWilliams “‘Give me a glass of your cheapest chardonnay.’ - Jerry” - Jeff Rosenkilde, CIC Send your stories to IA&B Education Senior Director Jess McWilliams at JessicaM@IABforME.com or 5050 Ritter Road, Mechanicsburg, PA 17055.

continued on page 8

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continued from page 7 Q. What do you like most about teaching?

A. Interaction with the participants is by far is my favorite aspect of my job.

Q. You’ve been a road warrior for years, traveling from your home in Alabama to teach all over the country. Tell us about it.

A. I’ve been fortunate enough to teach in every state in the country, plus Puerto Rico and the Virgin Islands. But I always enjoy coming home.

Q. You hold the CIC designation, plus you’re an instructor and education consultant with the program. What does the designation mean to you?

A. For so many years we didn’t have continuing education. When I first got into the business, I didn’t know diddly squat. When CIC was introduced in Alabama, it fit the bill. It offered a fix to become knowledgeable on policies.

The CIC program forces you to read the policies. That’s always been the most valuable part – reading policies, knowing what’s covered and excluded, and knowing how to discuss it with your clients.

Q. Looking back over your career, what are you most proud of?

A. The relationships I’ve established with the participants, the friends I’ve made, the people I’ve met. That’s by far what I’m most proud of.

committed to mutual success.

Harford Mutual Insurance partners with independent agents in Maryland.

We insure restaurants, contractors, mercantile, and other commercial entities. We’re committed to protecting your client’s business and building yours.

Q. Finally, let’s play Five Favorites!

What is your favorite …

Vacation spot? Right here where I live – on a narrow strip of land between the mainland and the Gulf of Mexico, cut off by the Intracoastal Waterway.

Movie? I’ve got three: To Kill a Mockingbird, Casablanca, and Forest Gump.

Book? Any of the Tom Clancy novels

INSURING BUSINESSES SINCE 1842

HarfordMutual.com | 800.638.3669

Food? Steak Drink? Coffee. My second favorite is chardonnay.

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MAY 2019

SAFE ABOVE ALL Strong and steady, constantly raising the bar. All great accomplishments have a certain level of hazard involved, but AMERISAFE has workers’ comp down to the detail. It’s a large part of why we retain 90%* of our policyholders. The best protection is being proactive.

amerisafe.com - 800.897.9719 *Policyholder retention rate based on voluntary business that we elected for renewal quote: 93.0% in 2017. © 2019 AMERISAFE, Inc. AMERISAFE is a registered trademark of AMERISAFE, Inc. SAFE ABOVE ALL and the AMERISAFE LOGO are trademarks of AMERISAFE, Inc. All rights reserved.

Discrimination claims EM P LOY MEN T PR AC T I C ES L I A B I L I T Y IN S U R A N C E

Are you prepared for a resident

discrimination charge?

All discrimination charges must be defended, even groundless ones. Our EPLI coverage is inclusive of third-party claims to help you further reduce your risk.

CAN COST tens of thousands of dollars in damages ON TOP OF THE

cost for defense

For more information, call one of our Underwriting Leaders: Derek Shaffer (717) 237-7244 or Scott Billett (717) 237-7202.

There’s More for You at Millers

9

PRESIDENT'S MESSAGE

ONWARD & UPWARD: A MESSAGE FROM JASON ERNEST

My message this month is for those of you that place your E&O with IA&B. (If, by chance, you do not – no hard feelings. I think you’ll still find the message informative.)

Thank you.

Thank you for placing your E&O coverage IA&B. Like you, we are an independent agent that is constantly looking out for our customers.

Beyond that, your E&O coverage through IA&B significantly supports the association – which in turn only benefits you further.

The revenue we generate from our insurance sales is invested entirely back in to the programs, products, and services we provide to our members. From awardwinning education seminars that keep you on top of industry changes, to the government, legal, and carrier advocacy efforts

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that protect your business, your E&O policy makes a difference.

We understand there is competition in the E&O marketplace. It is no different than what you experience in your own agency.

But please know that there is no other E&O provider that looks to protect the independent agent, or the independent agent channel, more than IA&B. We have a staff of 25 professional employees who have your back and have a singular goal of making our members better agents. By purchasing your E&O insurance through IA&B, you are directly supporting that cause.

REGULATOR ROUNDTABLE TO ADDRESS FLOOD INSURANCE The flood insurance market is evolving rapidly thanks to National Flood Insurance Program (NFIP) changes and private market growth. As a result, the market has become a priority for state insurance regulators across the nation – including the Maryland Insurance Administration (MIA), which will host a roundtable discussion about flood insurance on Wednesday, May 8.

Recently we’ve been in touch with the MIA to discuss producers’ role in expanding the flood insurance take-up rate, as well as obstacles to achieving that goal. The upcoming roundtable discussion will give us a chance to talk more about opportunities through the NFIP and private market. Additional agenda topics include floodplain management, risk communication, and mitigation.

Watch Agent Headlines for updates.

COMPLY WITH NEW PENNSYLVANIA ANNUITY TRAINING REQUIREMENT Have authority to sell annuities in Pennsylvania? Meet the state’s new annuities suitability training requirement with ease – and without great expense.

IA&B will provide a second offering of its live, four-hour “Annuities – Consumer Protection and Suitability” webinar on Tuesday, May 21, 9 AM-1 PM. IA&B members pay only $50 to attend (non-members pay $140). The webinar is filed for 4 hours of Annuity CEs.

Jason Ernest, Esq. IA&B President & CEO

MAY 2019

ABOUT THE NEW REQUIREMENT All producers (residents and nonresidents alike*) who hold a life and

NEWS & NOTES

annuities license – even if they do not sell annuities – must comply with the onetime training requirement, which took effect Dec. 26, 2018.

Producers licensed before the statute’s effective date must meet the requirement on or before the end of their next complete license period. (For example, if your license expires on March 31, 2019, you have until March 31, 2021 – the end of your next complete license period – to comply.) For those who become licensed after the effective date, the requirement must be met on or before the end of their first licensing period.

IABforME.com/webinars * Maryland resident producers who already completed a similar annuities course can reach out to their carrier to determine if the Pennsylvania requirement can be waived.

STILL TIME TO APPLY FOR IA&B EDUCATION SCHOLARSHIPS We’re offering education scholarships again for member agencies to use toward licensing, designations, and CE. Apply (no essay required!) by May 31. We’ll announce the recipients at the end of June.

NEW SILVER PARTNER J.M. WILSON Portage, MI

NEW MEMBERS OLD LINE INSURANCE AGENCY INC. Pasadena, MD ADVANCED FINANCIAL SECURITY INC. Waynesboro, PA SMITH INSURANCE GROUP INC. Shavertown, PA

The bulletin serves to:

IABforME.com/scholarships

• Recommend that producers "advise their clients to consider the costs and benefits of flood insurance coverage"

YOUR ROLE IN EDUCATING CONSUMERS ON FLOOD

• Remind producers who sell flood insurance that they must complete two CE credits in a designated flood course to renew their license

Prioritize educating your clients on their flood risks and insurance coverage options, as the Maryland Insurance Administration (MIA) continues to raise the alarm on consumers’ “lack of understanding” of the issue.

The MIA recently released Bulletin 19-03, which replaces last year’s Bulletin 18-11.

WELCOME

The new bulletin clarifies consumers' lack of understanding of “whether flood insurance is available to a homeowner in an area not designated as a Special Flood Hazard Area by FEMA.”

Of note: Our Flood Insurance live CE webinar is approved for three FLD CE credits in Maryland. Register to join us when it returns on Wednesday, June 26 from 9 AM-noon.

IABforME.com/webinars

NEW PARTNER & MEMBERS JACK KUSTRA AGENCY Lafayette Hill, PA LENNON FINANCIAL GROUP Hatboro, PA SHETTER INSURANCE AGENCY Chambersburg, PA CENTRAL PENN INSURANCE PARTNERS INC. Harrisburg, PA MALUCHNIK INSURANCE & FINANCIAL SERVICES Windber, PA

DON MANAGEMENT INSURANCE SERVICES New Castle, PA ESTES INSURANCE GROUP LLC Irwin, PA AIS INSURANCE GROUP INC. Malvern, PA Learn more about membership by contacting IA&B Vice President – Membership Tim Wonder.

800-998-9644, ext. 351 TimW@IABforME.com IABforME.com/membership

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IA&B PARTNERS PROGRAM

OUR FEATURED PLATINUM PARTNER Insurance Agents & Brokers proudly recognizes Penn National Insurance as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.

OUR MISSION We help people feel secure and make life better when bad things happen.

FEATURED PARTNER Penn National Insurance HEADQUARTERS Harrisburg, PA A.M. BEST RATING A- (Excellent) OUR EXECUTIVE TEAM Christine Sears President & CEO Robert Brandon Executive Vice President & COO Jacquelyn Anderson Senior Vice President, CFO/Treasurer Karen Yarrish Senior Vice President, Secretary & General Counsel

100 YEARS OF MAKING LIFE BETTER WHEN BAD THINGS HAPPEN Penn National Insurance has come a long way from life on the farm. Its founders were members of a Pennsylvania farmers’ lobbying organization that wanted to lower the cost of workers’ compensation insurance for farmers who operated steam-driven threshing machines. In 1919, they founded the Pennsylvania Threshermens’ and Farmers’ Mutual Casualty Insurance Company, which evolved into today’s Penn National Insurance.

As the U.S. economy transitioned from agricultural to industrial, Penn National Insurance changed with the times. The company expanded into lumbering and sawmill insurance when that industry dominated Pennsylvania’s

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IABforME.com/Partners2019

THANK YOU

economy. It developed insurance programs for coal mines. As cars became affordable for everyday people, the business grew in automobile insurance. Following World War II, as new suburbs sprang up and home ownership soared, it grew in providing homeowners insurance, and became a leading insurance provider for a diverse array of main-streetAmerica businesses.

Thanks to these partners for supporting the independent agent network.

Now, Penn National Insurance ranks in the top 10 percent of property-casualty insurance companies in the country. The 15-story headquarters for its 11-state operating territory sits a few blocks from the small, rented room where its founders set up shop in 1919, making it one of just a few large employers founded in Harrisburg that still operate their headquarters in the city.

ACUITY

Today, some of the insurance coverages and services Penn National Insurance offers would be unrecognizable to the farmers who founded the firm, including cyber liability insurance, telematics to help drivers operate their vehicles more safely, online services and a mobile app to respond more quickly to policyholders.

But the farmers who founded it would certainly recognize its continued devotion to helping people feel secure and making life better when bad things happen. After all, they have been doing that for 100 years.

PLATINUM PARTNERS Agency Network Exchange LLC BBSI Donegal Insurance Group Erie Insurance Group Farmers Mutual Fire Insurance Company of Marble Insurance Agents & Brokers Service Group Millers Mutual Group Penn National Insurance Plymouth Rock Assurance The Main Street America Group BECOME A 2019 PARTNER TODAY

Penn National Insurance Headquarters: Harrisburg, PA

Personal & Commercial Commercial Only Partners Mutual Insurance An Affiate of Penn National Insurance Headquarters: Milwaukee, WI

Branch Offices

Interested in becoming a partner?

Please don’t hesitate to contact us.

Jess McWilliams Education Senior Director 800-998-9644, ext. 503 JessicaM@IABforME.com

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ORDINANCE AND LAW HOW COVERAGE KNOWLEDGE PREVENTS E&O

By Curt Pearsall, CPCU, AIAF, CPIA

Is everyone in your agency knowledgeable about Ordinance and Law coverage? There’s a good chance that some aren’t even familiar with this fairly unique but very important coverage.

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O

COVERAGE TYPES

rdinance and Law coverage is typically included on Homeowners’ policies. The standard coverage is usually a low percentage of the Coverage A limit – around 10% with higher percentage limits available for an additional premium. Ordinance and Law coverage can pay not only for rebuilding a destroyed home, but also for upgrading the home so it meets current building codes.

Ordinance and Law coverage can include three separate types of coverage:

CLAIM EXAMPLE When looking at a claim that involved Ordinance and Law coverage, the lowest policy amount was not enough. The claim alleged the agency failed to procure the requested coverage for the agency’s client. The key issue was that the agency staff member was unaware of the differences in three options under the Ordinance and Law coverage. He thought the client had limits of $100,000 under this coverage when, in fact, she only had $10,000.

After the client’s roof suffered hail damage, it was determined the building code had changed and now required the client to add a membrane coating under the roof. The client was seeking $100,000 under the Ordinance and Law coverage, far more than the $10,000 policy limit. The client sued for the additional $90,000. She alleged that the agency failed to procure the requested coverage and did not properly understand the options/coverage provided. An E&O claim was brought against the agency.

Could this type of claim happen in your agency?

Coverage for Loss to the Undamaged Portion of the Building In some jurisdictions, the building code may require that a partially damaged building be demolished. The coverage states that if this type of ordinance is in place and enforced by the local authorities, the insurance policy will treat the claim as a total loss even though the building was damaged only partially.

Increased Demolition Cost This type of coverage applies to the cost of the demolition to the undamaged portions of the building.

Increased Cost of Construction This type of coverage applies to any increased expenses incurred to upgrade, repair, or replace the building while conforming to the current building laws or ordinances.

The basic coverage in the Homeowners’ policy may not be enough for these associated costs, as in the claim example above.

At a minimum, the agency should make the client aware of what the Ordinance and Law coverage can provide and of the available limits.

Some agency staff may think the coverage is only for older homes, but that is not true. There is a possibility that homes built 10 years ago could have this exposure if the municipality where the client resides has undergone some type of a building code change.

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MAY 2019

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When looking at a claim, … the key issue was that the agency staff member was unaware of the differences in three options under Ordinance and Law coverage.

KNOW YOUR COVERAGES What is the No. 1 cause of E&O claims?

Inadequate coverage! So what is the best solution for selling the right coverages?

Knowing your coverages.

— Curt Pearsall

People who know their coverages sell more coverage. After all, it is so much easier to sell a product/service you understand.

Agencies should consider the following tips for Ordinance and Law coverage:

Additionally, when a prospect/client foregoes purchasing a coverage they most likely need, most producers who know their coverages find it easier to push harder because they have the confidence their knowledge provides.

AGENCY TIPS

• Provide agency staff – personal and commercial lines alike – with the necessary training to ensure they know the coverage and how to explain it properly.

• All proposals should include reference to this coverage and the additional limits available for purchase.

• There should be clear documentation with the client’s signature of any agreed upon coverages and limits.

• Consider educating current and prospective clients on the importance and implications of this coverage, possibly in an awareness campaign that could generate additional sales.

Typically when discussing Homeowners’ coverage, agents discuss the more prominent threats (fire, theft, etc.). But during these conversations, they should not discount the importance of Ordinance and Law coverage.

Curt Pearsall, CPCU, AIAF, CPIA, president of Pearsall Associates, Inc., wrote this article for Utica National E&O Program. IA&B is the exclusive agent for the Utica E&O program in Delaware, Maryland, and Pennsylvania.

The material contained in this article is for informational purposes only and is not for purposes of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.

Furthermore, if an insured still does not buy the coverage, producers who understand their coverages seem better prepared to discuss how the insured, in deciding to self-insure, should prepare themselves and their balance sheets in the event of a claim.

If you want to minimize your E&O exposures, increase your sales, and better protect your clients, learn your coverages.

Chris Burand is president and owner of Burand & Associates LLC, a management-consulting firm specializing in the P&C insurance industry.

You can reach him at 719-485-3868 or chris@burand-associates.com.

17

TECHNOLOGY UPDATE

HOW AGENCIES GET HACKED

By Jason Gobbel

A

s an IT professional, I constantly stress the importance of training staff how to recognize security threats.

The response I most often receive is, “We teach our people not to click links, so we’re fine.” But security threats go far beyond the mailbox. I have seen several recent successful attacks that were executed using nothing more than publicly available information and industry knowledge.

Let’s assume, for a moment, that I am a hacker looking to do bad things. Here’s how I could use a combination of easily attainable information and industry knowledge to compromise an agency.

18

First, I’ll start with a little reconnaissance.

Many agencies publish email addresses, direct dial phone numbers, and carrier appointments on their own websites. By using the agency’s website, I can gather a list of employees, learn the agency’s organizational structure, and find the carriers they represent.

The agency website may contain a link to a client portal that will tell me the vendor they use for their agency management system. If not, most agencies use one of two providers, so I can make an educated guess. I will use this information to craft a plausible MAY 2019

story, and then call employees directly: Hi Bob, this is Frank calling from [agency management system vendor] support. I’ve been working with [manager name] on a [carrier name] issue, and we’ve noticed multiple logins from your account. Given the amount of security incidents we’ve seen lately, I just wanted to make sure there’s not an issue. Would you mind getting me connected to your computer, so I can check it out?

Once an employee lets me in, I will have access to a great deal of information. Under the guise of troubleshooting, I will extract a copy

of the user’s documents and mailbox, so I can review the data at my leisure.

I will find configuration files, unique software installers, and remnants of a data conversion that will expose the agency’s vendor-designated identification number.

I will gain the employee’s trust by confirming that a problem does exist but insisting that it’s not his or her fault.

Someone simply misconfigured the computer. It’s an easy fix, but one that will take some time. I will apologize for the interruption this has caused.

Lastly, I will ask the employee if he or she minds sharing the agency management system credentials with me, so that I can do some further clean up and testing without interruption to the work day. If he or she agrees, I can establish my own access to the agency management system and have unfettered access to the entire client database. Mission accomplished!

In the above scenario, there are several opportunities for the agency to thwart my attempts at access:

LIMIT PUBLIC INFORMATION It’s common practice for agencies to showcase their entire staff, as well as their email addresses and direct phone numbers.

However, it’s important to reduce the amount of public contact information, so that communication comes through proper channels.

ESTABLISH THIRD-PARTY POLICIES Understanding how third-party vendors contact your staff is crucial to maintaining security. Staff members should be well versed in who may contact them, how that contact will happen, and what information is appropriate to share.

TRUST, BUT VERIFY A common tactic of hackers is to convince you that your boss has already approved of what’s being requested, and he or she may be displeased with a delay in response. It’s important to verify the request with your manager or supervisor before taking any action or granting access.

SECURE YOUR DATA It’s a lot easier to compromise a single computer than a vendor’s infrastructure.

So once files are no longer immediately needed, it’s important to attach them to client record and clean up the local copies.

Security awareness is about far more than simply being mindful of your mailbox. It’s about being cognizant of where data is stored, how it can be accessed, and how third-party vendors interact with your staff. It’s important to establish a security awareness training program that goes beyond the mailbox, and educates employees on what’s possible and how it’s executed.

I encourage you to make these topics part of your recurring staff meetings, so security is never out of mind.

Jason Gobbel is the chief technology officer of Kite Technology Group.

Blending a unique background of insurance and technology expertise, he consults with independent agencies across the country on topics of cloud adoption, security posture, and strategic planning. Contact him at jason@kitetechgroup.com.

DATA BREACH INSURANCE Threats to your agency’s data go far beyond malicious emails.

Cybercrime is a real threat, and hacking attempts are becoming more sophisticated every day.

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David Wertz 800-998-9644, ext. 506 DavidW@IABforME.com

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