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IN THIS ISSUE: Health care reform in play The case for AgentPAC


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Contents PRIMARY AGENT MAGAZINE

What’s in store for producers in Delaware’s health insurance marketplace

20

As implementation of the Affordable Care Act muddles along, the agent and broker community holds its collective breath — waiting to for the full impact of the law on the industry. Here, IA&B’s government affairs staff provides an overview of what Delaware producers need to know.

Page 12 Insure the future of your profession with AgentPAC The decisions made by government today have a direct impact on the way you’ll practice business tomorrow. This is where AgentPAC, IA&B’s political action committee, comes into play.

Page 20

28 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

Tools you can use: IA&B’s Political Action Center What happens in Dover doesn’t stay in Dover. Of the myriad legislative and regulatory proposals on the table at the Capitol each year, plenty have the potential to impact you as an insurance producer or a small-business owner. Stay in the know — and keep your agency compliant — by tracking hot topics in our new online Political Action Center.

Page 28

In every issue 3 4 5 6 8 10

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

17 24 IBC IBC IBC

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

Subscriptions: Non-member price: $2.25 per copy or $15 per year. All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two months prior to publication. Advertising rates furnished upon request. Address inquiries to:   Primary Agent Editor 5050 Ritter Road    Mechanicsburg, PA 17055-0763    Phone (800) 998-9644 or (717) 795-9100    Fax (717) 795-8347 Periodical postage paid at Mechanicsburg, Pa. and additional entry post office. Postmaster: Send address changes to above address. Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2013-11 is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.  Copyright 2013. All rights reserved. No material may be reproduced in whole or in part without written consent of the publisher. The information in this publication is general in nature and is not intended to serve as legal, accounting, financial, insurance, investment advisory or other professional advice as to any reader’s particular situation. Users are encouraged to consult with competent legal, financial, insurance, investment advisory and or other professional advisors concerning specific matters before making any decisions and we disclaim any responsibility for any decisions or actions by readers. Statements of fact and opinion in Primary Agent are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the IA&B. Participation in IA&B events, activities and/or publications is available on a non-discriminatory basis and does not reflect IA&B endorsement of the products and/or services.

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My Events NOVEMBER & DECEMBER

Date

Topic

Location

NOVEMBER 2013 5

CPIA Position for Success

Mechanicsburg, Pa.

CISR Elements of Risk Management

Philadelphia, Pa.

6

CPIA Implement for Success

Mechanicsburg, Pa.

E&O Risk Management

Dover, Del.

7

CPIA Sustain Success

Mechanicsburg, Pa.

12

E&O Risk Management

Pittsburgh, Pa.

CISR Personal Residential

Mechanicsburg, Pa.

19

10 Ways to Get Sued (Sources of E&O Claims)

Baltimore, Md.

20

CISR Commercial Property

Wilkes-Barre, Pa.

William T. Hold Learning from Losses

Altoona, Pa.

20-23

CIC Commercial Casualty

Ellicott City, Md.

DECEMBER 2013 3-4

James K. Ruble

Lancaster, Pa.

5

CISR Commercial Property

Pittsburgh, Pa.

10-12

Life & Health Licensing Study Course

Mechanicsburg, Pa.

Property & Casualty Licensing Study Course

Philadelphia, Pa.

17

CISR Commercial Property

Mechanicsburg, Pa.

17-19

Property & Casualty Licensing Study Course

Pittsburgh, Pa.

18

CISR Commercial Casualty II

Philadelphia, Pa.

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

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

G. Greg Gunn, CIC

Chair of the Board’s M

E

S

S

A

G

Political advocacy: now more than ever Time is flying. Believe it or not, it has been a year since we were in the thick of Presidential debates and campaigns. Remember all of the jokes about Romney firing Big Bird and Clint Eastwood talking to an empty chair? If nothing else, buildup to the 2012 election gave us a reason to stay awake for the daily take by Leno, Letterman and the rest of the gang. Now here we are in November again. But this year our focus has shifted from candidates’ promises to Congress’s policies, from casting our votes to finding our voice amid health care reform. As you’ve likely noted in IA&B communications, your association’s government affairs staff has been monitoring implementation of the Affordable Care Act and investigating how it will impact us as employers and producers since its passage in March 2010. This month’s Primary Agent is a continuation of that work, as the staff penned articles detailing what we know — and don’t know — about the state’s health insurance marketplace as of early fall. Debates about the federal health care reform law are typically heated. And while it’s a safe bet that we’ll never reach a consensus on its value to the nation, we all can agree that the law has turned the health insurance marketplace as we knew it on its head. But all is not lost, and the battle to preserve our roles and protect our businesses in health insurance and beyond is far from over.

Scott C. Rogers, CPIA* York, Pa.

Now more than ever, I encourage you to support our association’s government affairs work with a contribution to AgentPAC, IA&B’s political action committee. Collectively, we can be a force to be reckoned with in elections and, in turn, policy debates.

David B. Wasson Sr., CIC State College, Pa.

Until next time,

April E. Ressler, CIC Altoona, Pa.

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

E

G. Greg Gunn, CIC

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Ask our Experts QUESTION:

2) The nature of the funds It is important to distinguish money market accounts from money market funds. A money market fund is a mutual fund, and as a result is not insured by the Federal Deposit Insurance Corporation (FDIC). It may or may not be backed (secured) by the U.S. Government depending on how those funds are invested; but to be sure, you would have to discuss this directly with your financial institution and receive a definitive answer. If their answer is not clear, it is best to stay away and find a different investment vehicle.

Can I place the premiums I’m holding in a money market fund “sweep account” to collect interest?

ANSWER: Probably not, and for two reasons: 1) your duties as a fiduciary and 2) the nature of the funds.

For more information on the restrictions and opportunities that stem from your fiduciary duties, review the Fiduciary Responsibilities section at IABforME.com, under Resource Center/Legal Compliance.

1) Your duties as a fiduciary When handling premium funds, you have to make sure you comply with state law and regulation. As a producer, your agency must hold the funds as a fiduciary. What that means is simple: w The funds are not yours

HAVE A QUESTION? ASK OUR EXPERTS! Rely on our experts to answer your most perplexing questions. Visit the new Ask Our Experts section of IA&BforME.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 You are responsible for the funds as long as you are holding them While you generally can invest in interest-bearing accounts, the way you invest is restricted. Generally, you need to: w Have consent from the principal (e.g. the carrier) w Invest in a prudent manner. For Delaware and Pennsylvania, that clearly means that you can only invest in accounts that are insured by the U.S. Government or in instruments that are secured by the U.S. Government, and where no penalty can be levied against the original investment for early withdrawal. In Maryland, the language is not as clear, but the same standards can be followed.

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Primary Agent | November 2013

State News Del. policyholders to be clued in on terrorism insurance unknowns The pending Dec. 1, 2014 expiration of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) soon will trigger customer notifications. Stay ahead of the game by reviewing the endorsement that your workers’ compensation and employers’ liability policyholders will receive and by preparing your staff to answer their questions. Over the summer, the insurance commissioner approved the Delaware Compensation Rating Bureau filing which will prompt a notification endorsement similar to the one used by the National Council on Compensation Insurance in 38 other states. At the crux of the message is a warning that premiums related to coverage of terrorism or war losses hinge on the reauthorization of the program. The notification will be sent to employers with policies in effect on or after Jan. 1, 2014. dcrb.com (choose Circulars, then number 887)

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Form A causes carrier complaints Carrier concerns over Delaware’s auto coverage election form are on the rise. And so is our advocacy as the Delaware Department of Insurance (DOI) contemplates a response. Carriers recently proposed to amend Delaware’s Form A (auto coverage election) due to a perceived problem with insureds not completing or sending back the form. At issue is uncertainty with the various methods of policyholders’ responses — in writing, by telephone or via electronic means — which carriers argue results in cancellation of policies. The DOI approached us for insight. State regulators suggested issuing a bulletin that outlines carriers’ and producers’ responsibilities with the application process — a potential response that we will monitor to ensure that no additional liability is placed on producers. Track the issue in our Political Action Center by visiting IABforME. com/political_advocacy and then selecting State Issues.


Kent County town faces NFIP probation

Federal criminal history reports required for new state licensees The application process for a state insurance producer license just became a little more time consuming. Delaware Insurance Commissioner Karen Weldin Stewart this fall released a bulletin explaining that new resident applicants and new non-resident applicants declaring Delaware to be their home state must provide a federal criminal history report from the Federal Bureau of Investigation, in addition to a state criminal history report, as part of the application process. The change, which is effective immediately, stems from the July 15 enactment of Senate Bill 44.

If you write flood in Bowers, Kent County, brace your customers for a premium surcharge and yourself, potentially, to search out National Flood Insurance Program (NFIP) alternatives. FEMA officially announced that Bowers will enter probation on Nov. 21 unless minimum floodplain management requirements are met. The town and its 123 flood insurance policyholders were notified of the deficiencies and impending repercussions in August. Under probation, all flood policies written or renewed within at least one year would include a $50 probation surcharge. If Bowers still fails to meet the NFIP’s regulations, it could be suspended from the NFIP by May 21, 2014.

Delaware renewal notices are history Heads up: Your individual and business’s license renewals are due by Feb. 28. But don’t wait for a renewal notice … because it’s never coming. Alert whomever handles your agency’s license renewals that the Delaware Department of Insurance (DOI) discontinued mailing renewal notices. The DOI now posts renewal notices on its website 90 days prior to the renewal date. Licensees are responsible for checking the website to ensure they are up to date with renewal payments. Bulletin No. 20 details the change. Read more about the renewal process at http://www. delawareinsurance.gov/ services/renewlicense.shtml. [7]

Neighboring news: Pennsylvania now emailing licenserenewal invoices Hold a non-resident licenses in Pennsylvania? Mind your email inbox (as well as your standard mailbox during the transition) to maintain it. The Pennsylvania Insurance Department (PID) began sending renewal invoices electronically, starting in July with notices for September license renewals. The department assured stakeholders that the transfer will be secure and display no non-public information. In addition, be on the lookout for a PID outreach campaign which will aim to capture additional licensees’ email addresses. For those licensees who do not have an email address on file, and for those whose emails bounce back to the department, a hard copy invoice will continue to be printed and mailed.


Primary Agent | November 2013

Preventing ERRORS AND OMISSIONS

HOW TO MINIMIZE PRODUCERS’ E&O EXPOSURE

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.

Virtually every year, producers rank first as the most prominent agency staff member who is the alleged “wrongdoer” in an errors-and-omissions claim. Upwards of half of E&O claims are the result of supposed errors or omissions made by producers. When considering the other levels within an agency — customer service, claims, reception, accounting, etc. — it’s really not a surprise that producers have this inglorious distinction. After all, they are the face of the agency for most new business opportunities and for a significant number of renewals, especially commercial lines.

job professionally and ethically can greatly determine the agency’s success, they can also greatly impact, positively or negatively, the agency’s errors-and-omissions risk. Strong technical knowledge a must It is imperative for producers to possess strong technical knowledge for interactions with prospects and customers. After all, to a large degree, the public relies on them for how best to protect their assets. This includes knowing the various classes and lines of businesses to ensure the public is educated and informed properly. Due to changes in the insurance industry, including the periodic introduction of new products, the commitment to learning should be ongoing, regardless of the years a producer has performed his or her job.

Producers have distinct duties and responsibilities, most of which must be handled carefully to avoid potential E&O litigation. While the degree to which these men and women perform this

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Many would contend it is difficult to know everything about every class and line of business. This is true, to a large degree. An exposure analysis checklist can help. (Producer Plus through Vertafore and Producer Online through Rough Notes are two of the more prominent checklists.) A checklist provides solid, in-depth detail on over 650 classes of business and the applicable lines of business. Before going out on a sales call, it would be beneficial for a producer to review this detail as it will enable him or her to converse more intelligently about the exposures and issues facing that specific account. Sales training Yet, it takes more than technical knowledge to be successful and to minimize the potential of an E&O matter developing.


Knowledge with no sales skills — or sales skills without knowledge — is a “glass-half-full” scenario, which can be dangerous for an agency from an E&O perspective. Learning the sales structure/process is critical because how a producer conducts himself or herself during the complete sales process will likely determine the success level achieved and to what degree he or she is an E&O risk. Sales training does not have to be expensive. Affordable, quality sales and marketing training is available. The Certified Professional Insurance Agent (CPIA) program through AIMS provides valuable training focusing on pre-sale, sale and post-sale issues. Know the client Quality exposure analysis checklists provide the ability to build a questionnaire that will enable the producer to know the exposures faced by that specific risk. These should also help to identify potential sales opportunities. A recent industry article noted that only 30 percent of the small businesses affected by Super Storm Sandy had business interruption coverage. Did the producers on these accounts ever discuss the coverage with their respective clients? This question will no doubt be addressed during any potential E&O litigation. Listen When interacting with a client, it is crucial for producers to realize that in many, if not all, states, an insurance producer (agent/broker) has a common-law duty to obtain the coverage the client specifically requests within a reasonable time or inform the client of the inability to do so. Accordingly, producers must do a fair share of listening to what the customer/prospect asks. “Memorializing” these client discussions helps ensure there is no misunderstanding between the parties.

Watch your words Due to the tremendous pressure to sell, producers may be inclined to position themselves and their agency in the best favorable light. While various marketing “puff” may enhance the ability to be successful, producers must be careful and deliberate in the words and phrases used for promotion. For example, advising customers and prospects one is an “expert” or “specialist” could be problematic because it has the potential to raise the legal liability bar to the level of “special relationship.” What’s more, phrases such as “we make sure you are properly covered” should be avoided. That might sound impressive, but can also lead to a potential “special relationship” standard.

this review has been performed and the policies have been verified for accuracy, produces should promptly deliver the policies. In all but a few states, the client has a duty to read the policy, so producers should strongly encourage the customer to do so. If the customer has questions, the agency should be contacted as soon as possible. Being a producer requires tremendous knowledge, professionalism and attention to detail. This will go a long way to ensuring success. Without these attributes, there’s an E&O nightmare waiting to happen. The right choice should be easy to make.

Document, document, document Inherent in all of the interactions, whether with the prospect or the carriers/markets being used, is the need for prompt and professional documentation. This could be a key issue if a problem develops. The quality, promptness and professionalism of the documentation will heavily determine the direction of the E&O claim. As a result, documentation is not an option — it is mandatory. While it might be nice that the customer always buys all of the coverages noted in the proposal, it is likely not the norm. Because of this, producers should get the customer’s sign-off on the coverages/limits they will not be securing. Check the policies You got the order — congratulations. It’s now time to issue a binder and order the policies. Upon receipt of the policies, producers need to spend the time to review them to ensure they reflect what was ordered. Once [9]

Coastal Agents Alliance, LLC


Primary Agent | November 2013

Coverage COR N E R

SEPARATION OF INSUREDS IN PENNSYLVANIA – MAYBE, MAYBE NOT!

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.

Several months ago, or maybe a year, or two or three, I wrote about the importance of the Separation of Insureds provision in liability policies. The Separation of Insureds provision stipulates that the insurance applies as if each Named Insured were the only Named Insured and that it applies separately to each insured against whom a claim is made or suit is brought. Therefore, an exclusion that applies to bodily injury to an employee of “the insured” applies only to the employer of that employee, not any other insureds. If the exclusion applies to “an insured” or “any insured,” then coverage is eliminated for all insureds.

purchase insurance and add Owners as additional insureds. On Dec. 5, 2007 Marina Denovitz, an employee of Leola, was walking down a flight of stairs taking trash to an outdoor container, when the stairs became loose and she fell to the ground. As a result of the fall, Denovitz claimed she sustained physical injury. On Sept. 24, 2009 Denovitz filed a suit against Owners for their alleged negligent maintenance of the building. Owners sought coverage for this claim from Mutual Benefit Insurance Company (“Mutual Benefit”) under two policies issued to Leola – a Businessowners’ policy and a Commercial Umbrella policy. Mutual Benefit denied coverage for Owners on the basis that Owners were not insureds under the Businessowners’ policy, and although Owners were insureds under the Commercial Umbrella policy, the Employer’s Liability exclusion endorsement attached to the policy excluded any coverage under that policy.

On June 6, 2005 Christos Politopoulos and Dionysios Mihalopoulos (“Owners”) purchased a building at 365 West Main Street in Leola, Pa., which included a business known as Leola Family Restaurant. The Owners then created Leola Restaurant Corporation (“Leola”) to run the dayto-day operations of the restaurant. The Owners are corporate officers of Leola. Owners entered into a written agreement with Leola requiring Leola to

Mutual Benefit later withdrew its disclaimer of coverage and agreed to defend Owners with a [ 10 ]

reservation of its right to disclaim coverage in the future and seek judicial determination that no coverage was owed. On March 12, 2010 Mutual Benefit filed suit in the Court of Common Pleas in Lancaster County seeking a declaratory judgment that it owed no coverage to Owners under either policy. On Dec. 27, 2010 the Court granted Mutual Benefit’s motion as to the Businessowners’ policy, but denied its motion as to the Commercial Umbrella policy. On Sept. 23, 2011 Mutual Benefit again filed a Motion for Summary Judgment seeking to eliminate coverage under the Commercial Umbrella policy on the basis that the Employer’s Liability exclusion applies to all insureds, including Owners. The Employers Liability exclusion reads, in part, “This insurance does not apply to ‘bodily injury’ … to: (1) An employee of the insured….” The issue to be determined by the Court was whether Owners were precluded from coverage as a result of the Employer’s Liability exclusion even though Denovitz was not Owners’ employee.


In support of its argument Mutual Benefit relied upon the Pennsylvania Supreme Court case of Pennsylvania Manufacturers’ Association Insurance Company v. Aetna Casualty and Surety Insurance Company, 426 Pa. 453, 233 A.2d 548 (1967). Pennsylvania Manufacturers (“PMA”) insured Niehaus under a standard auto liability policy. Aetna insured Delaware Valley Wood Scouring Company (“Delaware”) under a Comprehensive General Liability (CGL) policy. An employee of Niehaus drove a Niehaus truck to Delaware, where he was injured by a Delaware employee using Delaware equipment.

fire. Thus arson by the husband did not exclude coverage for the innocent wife. This ruling contradicted the Pennsylvania Supreme Court’s decision in the PMA case.

Both PMA and Aetna agree that Delaware became an insured under PMA’s policy by virtue of the policy’s “omnibus insureds” clause. PMA contended that the Employer’s Liability exclusion in the PMA policy excluded coverage for Delaware. Aetna argued that because of the severability (separation of insureds) clause in the PMA policy, the Employer’s Liability exclusion applied to Niehaus only. The Court of Common Pleas of Philadelphia County agreed with PMA and the Supreme Court of Pennsylvania affirmed this decision. The Supreme Court concluded that the severability of interests clause in the PMA policy was inapplicable to the definition of insured in the policy. The Court reasoned, without any apparent basis, that “industry spokesmen” were not likely to have placed great emphasis on the severability of interests clause when placing it into the standard insurance contracts since the clause had little impact on them.

Judge Wright stipulated that Mutual Benefit’s policy, as written, provides coverage for Owners separate and independent from that provided to Leola, and since Denovitz was not an employee of Owners, the Employer’s Liability exclusion should not be applied to exclude coverage for Owners.

In reaching his decision in Mutual Benefit Insurance Co. v. Politopoulos, et al, Judge Wright of the Court of Common Pleas of Lancaster County, referred to Maravich v. Aetna Life & Casualty Company 350 Pa. Super. 392, 504 A.2d 896 (1986). Aetna issued a Homeowners’ policy to David and Donna Maravich. David Maravich intentionally set fire to the insured dwelling, and Donna sought coverage under the Aetna policy. Aetna denied the claim based on the “neglect of the insured to save and protect the property.” The court concluded that the exclusion for neglect of the insured, even in the absence of an express severability of interests clause applied only to the insured who was responsible for the

The judge further stated his belief that the reasoning and analysis in the PMA case was flawed. He declared that it is well settled in the Commonwealth of Pennsylvania that any ambiguities in an insurance contract must be resolved in favor of the insured and that words are to be interpreted in their normal meaning, unless doing so would be contrary to a clearly expressed public policy.

However, the judge, even though he believed the Supreme Court’s analysis in PMA was flawed and outdated, felt the Court was nevertheless bound by the PMA decision and therefore on Feb. 2, 2012, he granted Mutual Benefit’s Motion for Summary Judgment. Hold your horses! As Yogi Berra said, “It ain’t over till it’s over.” On Sept. 6, 2013 Maria Denovitz and Owners challenged the trial court’s ruling in the Superior Court of Pennsylvania. The Superior Court referred to the Supreme Court’s decision in PMA which has stood for over 45 years and stated that they have no more authority than the trial court to overturn a prior decision of the Pennsylvania Supreme Court. They further stated, “Our opinion as to the soundness of PMA is irrelevant; in matters of Pennsylvania law, we serve only one master.” The Superior Court, after reviewing both sides’ arguments, reached the following conclusion: We believe that Appellants (Denovitz and Owners) must prevail based on the plain language of the Umbrella Policy, which is distinguishable from the language at issue in PMA. The policy at issue in PMA was a

[ 11 ] [ 11 ]

standard automobile insurance contract. As such, it featured an Omnibus provision, which is most commonly used in automobile insurance policies. Such a clause generally extends coverage to anyone who uses the insured vehicle with permission of the insured. Thus, in PMA, the additional insured was not a ‘named insured,’ in the commonsense meaning of that term; rather, the putative insured was qualified under the omnibus clause. In this case, however, the Owners undisputedly were named insureds under the Umbrella Policy. We find the language of the policy clear to the effect that the Employers’ Exclusion does not act to bar coverage to Owners, in light of the detailed language of the severability clause. Moreover, the language we find dispositive is materially distinct from that in PMA, and it is for that reason alone – not any misgivings about PMA – that we reach this result. Order reversed. Case remanded. It appears to me that the Superior Court of Pennsylvania found a way to apply the Separation of Insureds (Severability) clause as intended without contradicting the Pennsylvania Supreme Court’s 45-year-old PMA decision. Does the Separation of Insureds provision apply in Pennsylvania? The Superior Court’s decision says “yes.” However, if a court upholds the Pennsylvania Supreme Court’s ruling in PMA, it doesn’t make any difference what the policy states. “The insured,” “an insured” or “any insured” – it doesn’t matter. Every exclusion in the policy will apply to all insureds and every named insured and every additional insured will have to have their own separate policy. Y’all take care!


INDUSTRY NEWS

Window shopping Delaware’s health insurance marketplace What’s in store for producers

As implementation of the Affordable Care Act muddles along, the agent and broker community holds its collective breath — waiting to for the full impact of the law on the industry. On the following pages, IA&B’s government affairs staff provides an overview of what Delaware producers need to know.

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Primary Agent | November 2013

T

his fall more than just the leaves are changing; the health insurance system as we know it is undergoing a transformation.

The Patient Protection and Affordable Care Act (ACA) was signed into law by the president in 2010 and was designed to expand coverage, lower costs and improve the health care delivery system and health care quality. It represents the most significant government expansion in the healthcare system since 1965 when the Medicare and Medicaid programs were passed. At the time of this writing, open enrollment in the health insurance marketplace was slated to begin on Oct. 1 with coverage beginning on Jan. 1, 2014. Since the ACA’s passage, it has been our mission to preserve the role of agents and brokers in the health care industry and to keep you informed of the law’s implementation every step of the way. The following pages provide an overview of where things stand and what to expect in the months ahead.

———————————————————————————————————

Since the ACA’s passage, it has been our mission to preserve the role of agents and brokers in the health care industry and to keep you informed of the law’s implementation every step of the way. ———————————————————————————————————

Introducing Delaware’s health insurance marketplace As part of the federal health care reform law, each state was asked to choose what type of health insurance marketplace – federally-facilitated, state-based or partnership – they would operate. It’s through the marketplaces that individuals and groups compare health insurance plans and prices in order to access coverage. In hopes of retaining control and maintaining fiscal responsibility, Delaware chose to partner with the federal government and divide all responsibilities and obligations associated with the marketplace. As a result, Delaware administers the plan management and consumer management functions, including enrollment assistance and customer service, and approves and regulates all insurance plans. However, the federal government determines who is eligible to purchase insurance and who qualifies for subsidies. The Feds also monitor the enrollment of eligible consumers and operate the exchange website and call center. The resulting consumer experience is a state-based Choose Health Delaware website (ChooseHealthDelaware.com) that provides answers to frequently asked questions, as well as insight into cost and plan information. But to shop for plans or enroll, individuals, families and

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How to participate in the marketplace To sell plans in Delaware’s health exchange, producers must complete a two-step process and receive authorization.

Part 1: training Get started by creating an account and then following the steps at the Medicare Learning Network (MLN). Visit https://Marketplace. MedicareLearningNetworkLMS.com. w Time: 3½ -4 hours w Tip: Please note that agent/broker training is not compatible with handheld devices. w Tip: To successfully complete the training requirements, register for a curriculum, rather than for individual courses, on the MLN website.

Part II: identity verification Confirm your identity within the Center for Medicare and Medicaid Services Enterprise Portal. Go to https://portal.cms.gov/. w Time: 30 minutes w Tip: Allow 48 business hours to elapse after completing your training (step 1) before attempting to access the identity-proofing process. Read answers to our members’ FAQs about the registration process in our online Political Action Center.

IABforME.com/DE_health_ care_reform_FAQs


INDUSTRY NEWS

small-business owners are linked to the federal government’s online health insurance marketplace (Healthcare.gov).

Understanding the Marketplace Assister Program In order to satisfy the millions of uninsured Americans who are looking to gain health insurance coverage through the law, the ACA outlined a navigator program. The navigator workforce is tasked with assisting consumers in the eligibility and enrollment process through the distribution of accurate and impartial information. Delaware will operate its own navigator program – the Marketplace Assister Program. While it is based on the federal navigator program, Delaware’s program will not be funded or managed by the Feds. Delaware’s marketplace assisters will be the main outreach arm in the marketplace and provide ongoing assistance and support to any Delawarean who is looking to gain coverage. Assister duties will be conducted in various parts of the state as they will reach out to enrollees through activities such as health fairs, school functions, civic association events, etc. At issue for many in the insurance industry is that those with the most health insurance knowledge and experience are the ones who are ineligible to serve as navigators and assisters. These forbidden participants include: health insurance issuers, subsidiaries of health insurance issuers, or an association that includes

members of or lobbies on behalf of the insurance industry or health insurance issuer. Assisters will receive their compensation directly from the marketplace program and will not be compensated for enrolling individuals or groups in plans outside of the marketplace. Since they are not licensed insurance producers and do not carry errors and omissions insurance, assisters cannot give insurancerelated advice enroll a consumer in a qualified health plan. If asked a question they cannot answer, the assister is to refer the consumer to an appropriate agency or consumer assistance program, such as an agent or broker.

Outlining producer participation The U.S. Department of Health and Human Services stated numerous times that agents and brokers will play a significant role in the state’s marketplace and, in August, details emerged on the necessary training and certification process. (Please see the sidebar on page 13 for instructions and tips on registering.) The registration process contains two main parts with courses, exams and agreements in both. Once an agent or broker has received their certification in the individual and/or SHOP marketplace, they are able to work with consumers in one of two ways: by directly accessing the federally facilitated marketplace website through their own connection, or by assisting individuals who are attempting to do the same on their own computer. [ 14 ]

Agents and brokers will be compensated and paid directly the insurer, at rates set by the issuers.

Looking beyond the marketplace Repercussions of the ACAmandated medical loss ratio provision continue to impact agents and brokers as well. The requirement took effect in 2011 and mandates that at least 80 percent of premiums collected by health insurance carriers must be spent on claims payments and health care quality improvement. In other words, no more than 20 percent of funds are left to cover all “non-claims costs” — which includes agent compensation.

Monitoring what’s ahead The future — for consumers, employers, producers, carriers and the marketplace as a whole — is anything but clear as we approach the Jan. 1 effective date for coverage purchased through the exchange. Count on your IA&B government affairs team to monitor updates made by Delaware and the Feds and their impact on the agent and broker community.

Kate Ellison, IA&B’s government affairs assistant, contributed this article. Note: Details of the PPACA implementation continue to unfold. Information contained in this article was accurate as of its writing in mid-September but is subject to change. Please monitor Agent Headlines at IABforME.com/news for updates.


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Platinum Profile 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. FEATURED PARTNER Penn National Insurance

OUR OPERATING TERRITORY

OFFICERS Kenneth S. Shutts President & CEO Christine Sears, CPCU Executive Vice President & COO Gregory R. Stine Senior Vice President & CFO/ Treasurer Karen C. Yarrish Senior Vice President, Secretary and General Counsel Robert B. Brandon Senior Vice President, Underwriting Operations

P

enn National Insurance is the regional carrier of choice for more than 800 independent agencies throughout 11 states. We believe that the independent agent provides the absolute best means of distributing insurance products and services, because agents offer the consumer many choices, and the personal attention that helps build relationships and loyal customers. As a mutual company, we are owned by our policyholders. We answer to main street, not Wall Street. We focus our time, attention, and resources on delivering superior financial strength and stability, a comprehensive product portfolio, and most of all, doing what’s right for policyholders. To us, policyholders are much more than insurance consumers. And because of that, all of our business decisions are made with a policyholder-first focus, and

HEADQUARTERS Harrisburg, Pennsylvania A.M. BEST RATING A- (Excellent)

we reinvest all of our corporate earnings and profitability back into the company to serve the needs of providing financial security to all of our policyholder-owners.

Our Strengths A regional property-casualty insurance company serving 11 states with a broad range of commercial and personal insurance products. We employ approximately 850 people in offices in Harrisburg, Pa. (headquarters), and offices thoughout our territory. We have earned Best Places to Work designations in Insurance, IT, Pennsylvania and tow regional programs. A financially strong company with a Financial Strength Rating of A- (Excellent) from the A.M. Best Company. The company wrote $633 million in direct written premiums in 2012, and total assets of $1.45 billion. [ 16 ]

A mutual insurance company, which means that we operate for the benefit of our policyholders. A community-service oriented company known for generous philanthropy, including $3 million to public schools during the last decade. A business partner that sells its products only through local, independent agents, supporting local business growth and stability.

Our Mission We deliver superior property and casualty insurance products and services through independent agents. In doing so, we provide financial security to businesses and individuals that assists them in managing their risk.


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 www.iabgroup.com to get started.

PLATINUM LEVEL

BRONZE 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

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

GOLD LEVEL

Insurance Placement Facility of PA

ISU Insurance Agency Network Progressive Westfield Insurance

Keystone Insurers Group Inc Mercer Insurance Group Mercury Casualty

SILVER LEVEL

Mutual Aid Exchange

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 Juniata Mutual Insurance Co PSBA Insurance Trust Selective The Philadelphia Contributionship [ 17 ]

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 Zenith Insurance Primary Agent November 2013


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

FEATURED PARTNER Erie Insurance CHIEF EXECUTIVE OFFICER Terry Cavanaugh President and CEO CORPORATE HEADQUARTERS Erie, Pa. A.M. BEST RATING A+ Superior WEBSITE www.erieinsurance.com

I

t’s the rare individual who is motivated by a genuine desire to help others. And it’s the rare company that puts that principle into practice. At Erie Insurance, we’ve been helping people make things right since 1925, working side-by-side with the best independent agents in the business. Our agents and employees are energized by a clear sense of purpose, performing to the best of their ability, because they know the work they do benefits millions of customers’ families and businesses. It’s part of being Above all in SERVICE and it’s why we’re so committed to the independent Erie agents who live and work in the communities they serve. SM

On the strength of these relationships, Erie Insurance has risen to become one of the nation’s most respected property/casualty and life insurers. Today, we’re a Fortune 500 company operating in 11 states and the District

of Columbia. Erie has nearly 4.7 millionproperty/casualty policies in force andmore than $14 billion in assets. As of 12/31/12, EFL has more than $44 billion in gross life insurance in force ($22 billion net of ceded reinsurance).We’re the20th largest property/casualty insurer in the United States, based on total lines net premiums written, and the15th largest home and auto insurer, based on direct premiums written. A.M. Best rates Erie Insurance A+ Superior. We are both proud and humbled to have been consistently recognized for excellence in customer service and to have one of the highest customer retention rates in the industry — more than 90 percent. We’re also one of “Ward’s 50 Top Performers” — the Ward Group’s annual ranking of more than 3,000 insurance companies based upon financial performance.

[ 18 ]

Erie Insurance’s founding principle was to provide its policyholders with as near perfect protection, as near perfect service as is humanly possible, and doing so at the lowest possible cost. That same principle guides us today. We still adhere to disciplined underwriting, fair pricing and a prudent investment philosophy. We still practice the Golden Rule — treating others as we want to be treated. We still thrive on the Erie family spirit, employees and agents working together as a team for the good of our customers and the communities we serve. At our core, we still believe the truth in our founder H.O. Hirt’s words: “Success in business is not a matter of tricks or gimmicks…it is just a matter of simple common sense, mixed with just plain decency.”


For me, IA&B is the voice for independent agents on legislative and regulatory issues. Rick Rankin, CIC Chairman, Pres. & CEO Murray Securus

See how IA&B protects your interests at IABforME.com/Advocacy.

[ 19 ]


GOVERNMENT AFFAIRS

Insure the future of your profession with AgentPAC

The decisions made by government today have a direct impact on the way you’ll practice business tomorrow. This is where AgentPAC, IA&B’s political action committee, comes into play.

[ 20 ]


Primary Agent | November 2013

“We sell insurance every day to our clients. It’s time we, as agents, invest in ‘job insurance.’ That’s what AgentPAC is — it is an investment that helps protect our livelihood.” – Lee Dotson, Bellevue Insurance, Wilmington, Del.

A

s independent agents and brokers, you’re professionals in the field of risk management. You understand that the cost of an insurance premium is small potatoes compared to the cost of a potentially devastating loss from which it could take years, or even a lifetime, to recover. On a daily basis, you help your clients obtain the appropriate levels of coverage to mitigate the myriad risks that are inherent in everyday life. Your ability to do this and do it well is the basis of your livelihood.

Your IA&B government affairs team in action.

But while you’re protecting your clients, who’s protecting you? The insurance industry is increasingly vulnerable in today’s political climate. Health care reform. Federal regulation. Licensing standards. The list goes on and on. The decisions made by government today have a direct impact on the way you’ll practice business tomorrow. This is where AgentPAC, IA&B’s political action committee, comes into play: It protects your business and your livelihood against the many interests competing for attention in the state capitol. AgentPAC is your “job insurance,” and it’s more important than you might think. Like it or not, political action committees (PAC) have become an integral part of American politics on every level. Regardless of one’s opinion about the role of money in politics, the fact of the matter is that it takes a significant amount of it to get elected to public office and, subsequently, to stay in that office. As Will Rogers once joked, “Politics has become so expensive that it takes a lot of money even to be defeated.” The good news is that you don’t have to spend thousands and thousands of dollars all on your own to have an impact and influence on the legislative process in order to protect your industry. In the same way that insurance allows risk to be spread amongst a large group of people so that no one person’s burden is too great, a political action committee allows a group of like-minded individuals to pool their resources in order to act from a position of collective strength within the political process. No single agent needs to foot the entire cost of protecting the insurance industry within the legislature when every agent makes his or her contribution to AgentPAC. AgentPAC takes independent agents’ collective voice to the state capitol. It allows IA&B to support candidates who understand independent agents’ interests. In turn, when elected, these legislators are more likely to listen to agents’ concerns. An AgentPAC contribution is distinctly different from a personal contribution to a candidate. Personal contributions are just that — personal. They’re based on personal relationships or personal

[ 21 ]

In the same way that insurance allows risk to be spread amongst a large group of people so that no one person’s burden is too great, a political action committee allows a group of like-minded individuals to pool their resources in order to act from a position of collective strength within the political process.


GOVERNMENT AFFAIRS preferences regarding political parties and any number of political issues. When a legislator receives an AgentPAC check, there’s no question in his or her mind what that contribution means. It’s a show of support for a candidate who understands the insurance industry and shares its concerns. Does having a strong PAC equate to “buying votes�? Does it mean that IA&B will win the day on every issue? Of course not. It does, however, mean that IA&B will have a seat at the table when issues affecting independent agents are being decided upon by legislators. A well-funded PAC gives the association greater clout and allows the IA&B government affairs team to attend a variety of political events across the state during which time they have the opportunity to interact with and build relationships with legislators.

of the groups whose point of view is taken into consideration?

contribution today. It’s a small premium to pay.

Please consider a contribution to AgentPAC today. Waiting until a legislative crisis comes along to get involved and start contributing is a little like trying to add flood coverage to your homeowners’ policy after finding out that a hurricane is on its way — it’s just too late. A well-established, well-funded political action committee is your insurance against legislation that may negatively impact your industry and makes it easier to educate and influence legislators on the issues IA&B supports. Show your commitment to the preservation of your profession by making an AgentPAC

Visit IABforME.com/ political_advocacy.

These relationships are of the utmost importance. Legislators are presented with hundreds, if not thousands of bills during every legislative session. They can’t possibly be experts on all the topics covered in these pieces of legislation. Lawmakers rely heavily on input and research provided by lobbyists in order to make sense of the various points of view on any given subject. And there’s always more than one point of view on any issue. For every argument in favor of a bill, there’s an equally strong counter argument, with interest groups on either side. Don’t you want IA&B to be one

Lauren Brinjac, IA&B’s government affairs director, contributed this article.

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[ 22 ]


ost there when it matters most there when it matters m

Technology

At Donegal we understand that “ease of doing business” is vital in determining the value of a carrier to any independent agency. That’s why Donegal focuses on providing superior technology including fully automated web-based systems for Personal, Commercial and Farm Lines to give our agents optimal efficiency in quoting and issuing policies. And while we’re pleased to offer advanced technology equal to any of the national carriers, Donegal constantly strives to improve and enhance that technology. Donegal’s commitment to delivering superior technology to make your job easier… another way Donegal is there when it matters most.

To learn more visit www.donegalgroup.com or call Rick Kelley at 1-800-877-0600 x7360.

[ 23 ]there when it matters most


Primary Agent | November 2013

Technology U P DAT E

BECOMING A SOCIAL BUSINESS: A MODEL FOR SUCCESS

RICK MORGAN In addition serving as a consultant to ACT and chairing the ACT Social Web Work Group, Rick Morgan (rick@Aartrijk.com) is senior vice president with branding consultancy Aartrijk. He has four decades of experience in innovative technology, marketing and publishing in the independent insurance agency system. Rick produced this article for ACT (www.independentagent.com/ act). It reflects the views of the author and should not be construed as an official statement by ACT.

“Neither do men put new wine into old bottles: else the bottles break, and the wine runneth out, and the bottles perish: but they put new wine into new bottles, and both are preserved.” (Matthew 9:17, King James version of the Bible)

put in charge. Disruption in day-to-day office procedures results with little if any real benefit. Clearly, there is a difference between organizations that simply engage in social activity and execute social media tactics, and those that actually become social businesses.

This parable accurately identifies the dynamic our industry grapples with as it tries to adapt, stay relevant and make sense of the many challenges it faces in today’s rapidly evolving business environment. More often than not, agencies try to make social and mobile technologies work within the constructs of outdated business models, organizational structures and traditional processes. The result is an effort that fails. For example, social media is treated simply as a marketing tactic, a Facebook Page is launched and an administrative employee is

What is a social business? A Google search will turn up hundreds of definitions. Understanding what a social business model is and how it differs from a traditional business model is not all that simple. The concept of social business is new and still evolving. Yet, the definition below is a good start. I have followed Amber Naslund, president of Sideraworks, on several social channels for the past four years and consider her to be a pioneer and thought [ 24 ]

leader in this space. Here’s her take: Social business is the creation of an organization that is optimized to benefit its entire ecosystem (customers, employees, owners, partners) by embedding collaboration, information sharing, and active engagement into its operations and culture. The result is a more responsive, adaptable, effective, and ultimately more successful company. Social business can encompass using external social media, but it’s not a requirement. Technically, an organization can be a social business without engaging publicly in social media at all. The concept of social business is more than theory. A growing


number of agencies realize the need to adapt and understand that their business must be transformed or reinvented. They realize the need for a comprehensive social strategy that is clearly aligned with business goals. (Too often this is not the case. An Altimeter survey of nearly 700 social media professionals and executives found that only 34 percent of businesses felt that their social strategy was connected to business outcomes.) Further, these agencies have senior management involvement, organizational alignment and operational processes in place that enable execution of their social strategy. They also understand the need to integrate social methodologies into their organizations in order to enable their businesses to adapt to the fast and ever-changing business environment. These agencies know that use of new technology, as well as social and mobile initiatives, will only be successful if there is an organizational and cultural transformation that changes the way employees work, interact with one another and communicate with customers and prospects — in essence, a reinvention of the agency. The concept of reinvention is not new to our industry. When we first started installing agency management systems, we found that there was a big difference between just using “automation” vs. becoming an “automated agency.” Only when agencies reinvented operational processes and procedures (remember transactional filing?) did their investment in technology start paying off. Only when management became involved did agency management systems transition from being primarily accounting systems to tools that supported agency service, sales and marketing activity.

As difficult as process change is – changing an agency culture and the “people part” is even harder. It all starts with leadership. Leadership Charlene Li, founder of Altimeter Group and Keynote speaker at the 2013 ACORD Insurance Systems Forum, said this about social business adoption: “The biggest determinants, by far, of whether you will be successful at social business are leadership and culture.”

As difficult as process change is — changing an agency culture and the “people part” is even harder. It all starts with leadership. As mentioned above, all the technology in the world is useless if operational processes and organizational behaviors aren’t changed. Change starts from the top, and an agency’s senior management and leaders are the ones responsible for facilitating this change. That is, success depends on change-management initiatives being driven by agency leadership and practiced at every level from senior management down to customer service and support personnel. Thus, executives must not only talk about changing the organization; they must also become involved and demonstrate the behaviors that drive change. This is often referred to as “transformational leadership, ” where the leader provides employees with an inspiring mission and vision for the organization and encourages them to challenge the status quo and to alter the landscape in which the business competes. [ 25 ]

What does a social business look like? It is difficult to understand exactly what a social business is and how it is different from a traditional business by a definition alone. Perhaps looking at some examples of the operational and organizational changes a growing number of agencies are making will make it easier to understand what becoming a social business means. Trust employees Empower and trust your employees to participate on social sites on the agency’s behalf and trust that they will do the right thing. Consider starting a blog and use it to educate your customers and prospects and demonstrate your subject matter expertise. But also use it to build and strengthen your brand personality. Agency staff will be the foundation for building a fully collaborative social business. A shift in employee behavior becomes a key success factor in driving organizational change. Encourage your employees to build personal brands on social sites. Thus, opting out of social networking activity is not an option. Successful social businesses depend upon a team effort. They create processes that support organizational consistency. For example, when a new employee joins the agency and wants to start blogging or tweeting on behalf of the agency, a process should be in place that governs employee training and certification in the social media policy that the agency has in place. Flexible and responsive work The definition of work changes – the incoming workforce will demand a more open and flexible work environment. Options as to how, when and where work happens are expanded. For example, new models in the form of small virtual offices, expanded geographic locations, flexible work hours, 24/7 availability,


TECHNOLOGY UPDATE

outsourcing and niche or expertisedriven agents are transforming how we define work. For example, becoming a social business means producers — in addition to using social tools to create personal brands — spend less time behind desks and more time in the field making “real life” contact, meeting in places like Starbucks. Collaborative work environment Develop a collaborative (vs. hierarchical) organizational structure. The new social and connected cultures have set new expectations when it comes to speed of communication and response. Traditional hierarchically structured agencies will not be able to adapt to this new standard of consumer expectation. Further, information must be available and shared – not horded, restricted or reside in silos. In fact, many agencies are inviting customers to participate in agency decisions. For example, they have customers sit on the agency’s board of directors or participate in advisory councils. Become transparent in your communication. Customers and employees expect to communicate more seamlessly and develop personal relationships. Agencies have found that this is one of the best ways to build trust. Community involvement Become personally involved in your real-life community, including active involvement and support of charitable initiatives. The profiles of successful agencies reflect social values that are embedded in the core of the organization. This is also a key value for customers — they want to do business with a company that is socially responsible.

Technology Deploy technology that facilitates collaboration. Technology will not change an organization’s culture. However, having a strong understanding of your agency’s cultural objectives will have an impact on your technical requirements, choice of technology and how to implement and configure it. Clearly, there will be need for agency management system technology to support the new social business model.

As difficult as process change is — changing an agency culture and the “people part” is even harder. It all starts with leadership. Responsive marketing Most personal lines and small commercial customers are interacting with agents and insurers across the full range of channels: in-person, by mobile device, by phone and even through services like Skype or Google Hangouts. It is necessary to understand your customer and adjust your marketing and communications accordingly. For example, shift marketing dollars from traditional marketing channels to digital ones. (i.e., Yellow Page ads to digital/online marketing). Keep track of the communications preferences of your clients and be prepared for communications of different types from a wide variety of devices.

[ 26 ]

Reinvention of Agency Processes In addition to organizational and cultural changes, many traditional processes are also in need of reinvention. We need to think through how many of our everyday processes might and should change, enabled by the new technologies available to us. Everything from managing passwords, e-signatures, certificates of insurance, ID cards, online self-service, mobile options, policy delivery, billing and payment options, and even coverage offerings must change to meet current customer service expectations. Summary It is important to remember that consumer expectations are set by the culture, not the industry. The culture is shaped by new technologies and innovative applications of those technologies by other industries and social institutions. We have become a “social culture” and a “connected society,” where consumers are increasingly connected and empowered through changing technology to interact with and shape the world around them. Local agents are not on the verge of extinction, but we do need to change and adapt. We are past the theoretical stage – there are a growing number of agencies that have started to make the shift/transformation. Agencies that are able to make the transition and become social businesses will be well positioned to meet the challenges of the new business landscape and the demands of the new social culture and connected society. Tying this to the opening parable, they are putting new wine in new bottles.


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INSURANCE

Statement of Ownership, Management and Circulation Title of Publication Primary Agent

Publication Number 0274-9025

Date of Filing 09/24/2013

Mailing Address of Known Office of Publication 5050 Ritter Road Mechanicsburg PA 17055

Number of Issues Published Annually 12

Annual Subscription Price $15.00

Complete Mailing Address of the Headquarters of General Business Offices of Publisher

Editor Karen Robison IA&B Service Group Inc. 5050 Ritter Road Mechanicsburg PA 17055

Publisher

Owner

IA&B Service Group Inc. 5050 Ritter Road Mechanicsburg PA 17055

IA&B Service Group Inc. 5050 Ritter Road Mechanicsburg PA 17055

Frequency of Issue Monthly

The purpose, function and non-profit status of this organization and exempt status for federal income tax purposes has not change during the preceding 12 months. Extent and Nature of Circulation A. Total Number of Copies B. Paid Circulation (1) Mailed Outside-Country Paid Subscriptions (2) Mailed In-Country Paid Subscriptions (3) Paid Distribution Outside the Mails (4) Paid Distribution by Other Classes of Mail C. Total Paid Distribution D. Free or Nominal Rate Distribution (1) Free or Nominal Rate Outside-Country Copies (2) Free or Nominal Rate In-Country Copies (3) Free or Nominal Rate Copies Mailed (4) Free or Nominal Rate Distribution Outside of Mail E. Total Free or Nominal Rate Distribution F. Total Distribution G. Copies Not Distributed H. Total I. Percent Requested

Average No. of Copies of Each Published Issue During Preceding 12 Months 1,635

Actual No. of Copies of Single Issue for September 2013 1,630

1,544 0 0 0 1,544

1,536 0 0 0 1,536

40 0 0 0 40 1,584 51 1,635 97%

40 0 0 0 40 1,576 54 1,630 97%

[ 27 ]


Tools

YOU CAN USE

IA&B Political Action Center

S

earching for a one-stop shop to monitor all things political? Then IA&B’s new online Political Action Center fits the bill.

What happens in Dover doesn’t stay in Dover. Of the myriad legislative and regulatory proposals on the table at the Capitol each year, plenty have the potential to impact you as an insurance producer or a small-business owner. Stay in the know — and keep your agency compliant — by tracking hot topics in our new online Political Action Center.

Give it a whirl at IABforME.com/political_advocacy.

Frequent the Political Advocacy tab for the latest in state and federal legislative and regulatory news Select a topic, then link to read a summary, status report and our position

Scroll between state and federal issues, as well as AgentPAC updates

[ 28 ]


Classified ADVE RTI S E M E N T S

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

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

Ad Index (AIMS) Agricultural Ins Agency . . . . 22 Coastal Agents Alliance . . . . . . . . . . . 9 Donegal Insurance . . . . . . . . . . . . . . 23 Guard Insurance Group . . . . . . . . . . 15 Harleysville Mutual Ins Co . . . . . . . . . 1 IA&B Partners Program . . . . . . . . . . 17 IA&B . . . . . . . . . . . . . . . . . . . . . . . . . 19 Interstate Insurance Mngmnt. . . . OBC Mid-Atlantic . . . . . . . . . . . . . . . . . . . 15 Millers Mutual Group . . . . . . . . . . . IFC Preferred Property Program . . . . . . 27

Insurance gets a leg up on real estate Beauty — and former George Clooney flame — Stacy Keibler recently insured her 41½-inch long legs. Her take on the insurance-buying process? The “lots of paperwork” required made it “as hard as buying a house.” Mind that feedback next time you’re insuring a celebrity’s body parts — or a neighbor’s new car. Source: businessinsurance.com ________________________________________________________________

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


3($&( 21($57+

In Pennsylvania, Delaware, Indiana, Kentucky, Maryland, Ohio, Virginia & West Virginia 2307 Menoher Boulevard • Johnstown, PA 15905 814-255-7878 • 1-800-452-0297 • Fax: 814-255-6010 www.interstate-insurance.com

November 2013 DE  
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