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IN THIS ISSUE ________________ Electronic document management for everyone How one agency took the paperless plunge Insuring e-commerce and Internet exposures

OTHERS FIRST. Insurance for clients in the business of caring.

Let’s face it. Those who choose human services as a career aren’t in it for the money. And when your life’s work is caring for others—the elderly, the disadvantaged, those with physical or intellectual disabilities—there’s little time to think about insurance. That’s where your agency comes in. With Harleysville’s OthersFirstSM Protection Package, you can give human services prospects the basic protection they need, plus coverage for industry-specific risks like liability from alleged abuse or molestation. And while our product is new, our underwriters have decades of segment experience. So, whenever you have clients whose business is to care, think of OthersFirst—from Harleysville. Interested in representing Harleysville for human services? Call 800.523.6344, ext. 5016, contact your local Harleysville office or visit us online at


Insurance Solutions for Business

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Electronic document management for everyone Going paperless: It’s not a question of if, but when. So set your excuses aside because technology guru Steve Anderson shows you how to make it happen.


Page 12 The paperless leap: How one agency jumped feet first Despite numerous bumps along the way, IA&B-member Altany, Loynd & Lindquist LLC is well on the road to going paperless. Read on to learn what it took — and how it is paying off.

Page 18 Insuring e-commerce and Internet exposures


The growth of the Internet in daily business operations has lead to a boom in exposures to loss. Here, Jerry Milton takes a look at the technological growth spurt and insurance coverage repercussions.

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In every issue

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

4 5 6 7 8 9

Chairwoman of the Board’s Message Member FAQ State News New Members Preventing Errors & Omissions Glance at Events

10 23 30 29 32

Coverage Corner IA&B Partners Technology Update Classified Ads Advertisers Index

Subscriptions: Non-member price: $2.25 per copy or $15 per year. All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two months prior to publication. Advertising rates furnished upon request. Address inquiries to: Primary Agent Editor PO Box 2023 Mechanicsburg, PA 17055-0763 Phone (800) 998-9644 or (717) 795-9100 Fax (717) 795-8347 Periodical postage paid at Mechanicsburg, Pa. and additional entry post office. Postmaster: Send address changes to above address. Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2009-11) is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

Copyright 2009. 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.

Why is TAPCO the

logical choice? Because you’d rather wait minutes —not days—to quote and bind coverage. Because you demand accuracy, quality, responsiveness, consistency. Because “the old way of doing things” keeps getting older.

Commercial and Personal Lines of Excess & Surplus Insurance— quoted, bound and delivered to your e-mail inbox during a five-minute phone call. Accurately. Quickly. Dependably.

Call. Quote. Bind. The Logical Choice.


Board of Directors Officers Kathleen M. Glattly, ChFC, CLU, CPCU Chairwoman Factoryville, Pa. David Rosenkilde, CIC Vice Chairman Reisterstown, Md.

Kathleen Glattly CPCU, CLU, ChFC, AIM

Chairwoman O F


B O A R D ’ S


Robert J. “Buc” Cawley, AAI Immediate Past Chairman Wexford, Pa.

Members Norman F. Basso, CPCU York, Pa. Vincent D. “Chip” Boylan Jr., CPCU Rockville, Md. Henry “Butch” Bradley, Jr. Crofton, Md. Timothy P. Burris Thompsontown, Pa. M. Scott Clemens, CIC, CPCU, CLU, ChFC Souderton, Pa. John T. “Chip” Colwell Jr., CIC Corry, Pa. G. Greg Gunn, CIC Lemoyne, Pa. Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P West Chester, Pa. Diana M. Hornung-Momot, ACSR Wilmington, Del. Linda A. McCann, AAI, CPCU, CPIW Wilmington, Del. Michael F. McGroarty Sr. Pittsburgh, Pa. Scott C. Rogers, CPIA York, Pa. Susan A. Sallada, CIC** Ft. Washington, Pa. William D. Schneider, CPCU, ARM* Pittsburgh, Pa. Robert A. Walbeck, CIC Homer City, Pa.

The ins and outs of technology Technology has affected our industry inside and out — from how we operate and communicate to what exposures we insure and products we offer. While many of us have made the jump to transactional filing, the goal of going paperless still looms on the horizon, a beacon of progress and of uncertainty for some IA&B members. We wonder, “How does the small agency with limited resources take the plunge?” And we ask ourselves, “Is it really worth it?” This issue of Primary Agent includes a pep talk from Steve Anderson, the industry’s resident technology guru. His article walks you right past the stumbling blocks and shows you the benefits — and ease — of going paperless today. Of course this technology influx is affecting our customers and their day-to-day operations as well. And that means new exposures related to e-commerce and the Internet, to name a few. IA&B’s coverages expert, Jerry Milton, penned an article about those risks and the relevant ISO policies … and changes. Have additional technology dilemmas? Then is your resource. Jump online and read through resources on everything technology, from agency workflows and E&O considerations to managing and marketing. Until next month, Kathleen

David B. Wasson Sr., CIC State College, Pa. James M. Watkins* Dover, Del. King W. “Kip” White, LUTCF Fallston, Md. John S. Yasik, CIC Newark, Del. * IIABA National Director ** PIA National Director




I have a horror story with a Workers’ Compensation account placed with the New York State Insurance Fund (NYSIF).

By law, the New York State Insurance Fund (NYSIF) requires 30 days’ advance notice in order to non-renew a policy.

The policy was with NYSIF. I found another carrier prior to the renewal, checked on NYSIF’s canceling procedures, and was told to wait and send the new DEC page along with the cancellation request. I didn’t confirm in writing. Six months after the renewal, my client received a NYSIF bill for $16,000, reflecting an audit from the previous year plus a partial current year premium.


When I called to advise the policy was canceled, NY responded that I needed to cancel the policy 30 days prior to the x-date. They are not budging, and a collection agency ($2,500 in collection fees!) is harassing the client. Can they do this?

Here is a suggested procedure: The insured should send a letter by certified mail, return-receipt requested (postmarked not metered) to a named person in either the underwriting or field services department of the NYSIF more than 30 days prior to expiration, reserving the right to non-renew or cancel on the anniversary date. A suggested form of a reservation of rights letter follows: Re: (policy number) We reserve our rights to place our workers’ compensation coverage elsewhere on the renewal date (MM/DD/YY) should we desire to do so. The letter will result in a notification to the Workers’ Compensation Board by the NYSIF as prescribed by law. Any letter of cancellation or non-renewal of less than 30 days most likely will develop heavy short-rate penalties. And, according to NYSIF procedures, a short-rate penalty will be imposed on non-pay cancellations. The imposition of short-rate penalties is a factor to be considered when taking a risk out of the NYSIF to place it with a private carrier or a self-insured group.


Yes, they can. The solution to your particular ordeal will take more effort on your part than on theirs. They have not shown any flexibility in the past on such issues. We would encourage you to put this issue behind you as fast as possible and make sure that procedures are put in place to avoid running into this situation again with them. Producers doing business with NYSIF must be alerted to the fact that specific cancellation/non-renewal procedures are applicable to NYSIF policies. Failure to properly advise clients could lead to cancellation for non-payment, drastic short rates and other unsavory consequences. The NYSIF takes full advantage of provisions written in law and has not displayed much flexibility to producers or clients who do not abide by their rules. With changes in New York’s Workers’ Compensation law, including restrictions on the ability to use Other States coverage for incidental exposures, the number of out-of-state employers (whether from Delaware, Maryland or Pennsylvania) using NYSIF to cover WC obligations has likely increased. Yet producers are generally not aware of their specific cancellation procedures.

You should also expect to be questioned on the reasons why the account was moved (in New York, a field representative will often visit the agent or the client) and be thorough in your explanations of the advantages and disadvantages of the change. In other words, the alternative should be superior to the NYSIF policy, and the client should understand the reasons for the change. For more information on the Workers’ Compensation Law Section 94-Withdrawal from fund, visit newyork/codes/workers-compensation/wkc094_94.html. This FAQ is a joint effort of IA&B and the PIA of NY.

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

Members are encouraged to: w familiarize themselves with these special procedures, w flag all policies placed with NYSIF and w confirm in writing any deviation from these practices discussed with NYSIF. [5]

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Primary Agent | November 2009

State News MAP recap IA&B wrapped up its fall Member Agent Panel (MAP) series in late September. The 13-stop circuit included three meetings in Maryland. The semiannual MAP meetings allow the association’s leadership and staff to gauge members’ needs and find ways to support them. At the spring 2009 meeting, members shared their challenges with the economy, carriers and technology. The fall 2009 MAP series further explored those topics and their effect on productivity and agencies’ bottom line. A brief results summary follows.

Marketing: Members look to referrals as their main lead source. A recent development is the loss of desirable clients to direct writers. Social networking: Most members have yet to utilize social networking sites (Facebook, Twitter, LinkedIn) due to uncertainty of the sites’ role as a business strategy. Technology: Going paperless is a hot topic – members understand the benefits but have reservations about their knowledge of equipment, workflows and legal requirements.

Branding: Participants agreed across the board that branding of an independent agent’s role is needed. There were varying opinions about whether individual agencies or the independent agency system as a whole could best take on that task. Commissions: Revised contingentcommission contracts and a shift in clerical responsibilities from carriers to agencies are a struggle. Economy: Customers continue to actively seek out savings. The result is an increase in agency workload and a decrease in revenue.


Web sites: Most MAP participants have Web sites but need assistance improving them and tackling search-engine optimization. Board members participated in the MAP meetings and, at the October board of directors meeting, began discussion about ways the association can assist with members’ evolving needs. Previous resources borne from MAPs feedback include HR Solution© and the Emergency and Business Continuity Planning Manual. More information about MAPs is available by visiting about_us/maps.asp or by contacting the IA&B Member Service Center at (800) 998-9644, option 0.

G11790_06-07MD.qxp:NovemberPrimAg09 10/14/09 2:09 AM Page 3

Refresher on new laws Increased scrutiny and bonds for title producers

Senate Bill 86 amended Section 10-121 of the Insurance Article by adding language that provides: (A)(1) In this subsection, “Trust Money” means a deposit, payment, or other money that a person entrusts to a licensed title insurance producer in connection with the provision of escrow, closing, or real estate settlement services. (2) Except as provided in paragraph (3) of this subsection, only a licensed title insurance producer may exercise control over trust money. (3) This subsection does not apply to trust money that is entrusted to: (I) A law firm as defined in Section 10-125 of this subtitle; (II) A title insurer. Persons who “may exercise control over trust money” include those with signature authority on a trust or escrow account, those who can approve and/or release wire transfers from a trust or escrow account and those who have day-to-day control of disbursements from a trust or escrow account. The amendments went into effect June 1, 2009, except for Section 2, which became effective Oct. 1, 2009. The bill also increased the amount of the mandated fidelity bond, surety bond or letter of credit from $100,000

to $150,000 each. A bond in the increased amount is required for any producer who applies for a new license or holds an existing license due to renew on or after Oct. 1, 2009. Fidelity bonds for co-op housing

The General Assembly this year passed HB 687 (SB 541) requiring governing bodies of cooperative housing corporations, condominium and homeowners’ associations to purchase fidelity insurance protecting against fraud, dishonesty or criminal acts by its directors, officers, agents or employees. The new requirement took effect Oct. 1, 2009. The amount of coverage needed is the lesser of $3 million or: w for cooperative housing: three months’ worth of gross common charges and the total amount held in all investment accounts at the time the fidelity is issued; w for condo associations: three months’ worth of gross annual assessments and the total amount held in all investment accounts when the fidelity is issued; and w for homeowners’ associations: three months’ worth of gross annual association fees and the total amount held in all investment accounts when the fidelity is issued.


New Members J.E. Oates & Son Insurance Inc. Baltimore, Md.


Social media primer Connecting on LinkedIn. “Friending” on Facebook. Following on Twitter. Curious what the buzz — and the jargon that goes along with it — is all about? Here’s a brief synopsis. LinkedIn ( The aim of this site is to connect professionals. Users create a resumelike profile and then reach out to past and present colleagues to create an online directory of contacts. They can also reach out to their connections’ connections to create new contacts. Chamber of Commerce dinners are so yesterday. Now people rub elbows electronically and network online. Facebook ( This site also encourages users to create profiles (called “walls”) and connect with acquaintances (called “friends”). The focus is more social than professional, and users send messages, play games and post pictures, links and status updates. They join groups and become fans of people, products and companies. Forget the class reunion. People reunite with old friends and share photos online. Twitter ( This site allows users to post text-based messages (called “tweets”), with a maximum of 140 characters, in answer to the question “What are you doing?” Users post status updates and links, and they track (called “follow”) other users’ posts. While posts are public for everyone to read, users can send private notes (called “direct messages”) to other users. Gotta know something pronto? Twitter is where it’s at. From news to babble, information is shared at lightening speed.

Primary Agent | November 2009


IS IT COVERED — YOUR DECISION OR YOUR CARRIER’S? CURTIS M. PEARSALL, CPCU, AIAF, CPIA Curtis M. Pearsall is vice president of E&O for Utica Mutual Insurance Company in Utica, N.Y. 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 Errors & Omissions coverage, contact IA&B at (800) 998-9644 or by e-mail at

In the daily life of an insurance agency, decisions are made that have the potential to greatly impact that agency. More often than not, it is down the road where the impact is truly known. Believe it or not, one area where those decisions can be extremely critical involves the claims department. Some would contend that the issues facing this department are fairly straightforward. After all, a customer calls to report a claim, and based on the agency’s level of claims authority, the department proceeds with putting the process in motion. As we periodically look at evolving trends dealing with E&O claims, the reporting of claims to the underlying carrier — or actually, the lack thereof — can have a significant, potentially disastrous impact on an agency’s operation.

Consider some of the following actual E&O claims involving the agency not reporting the claim to the underlying carrier. Claim reported to underlying carrier but not to the umbrella carrier. The underlying claim went to trial, and because the agent felt that the verdict would not hit the umbrella layer, the claim was not reported. When a $1.3 million verdict was handed down, the claim was then reported to the umbrella carrier. The carrier, in turn, disclaimed for late reporting. The claim was settled by Utica for over $200,000. Failure to report a loss to the CGL carrier following an auto loss (there was non-owned auto coverage on the CGL policy). The agent reported the claim to the personal-line carrier only. When it was reported to the CGL carrier, the carrier disclaimed for late notice, and Utica eventually paid close to $300,000.


Failure to report a claim to the carrier because it was felt that there was no coverage for the claim. Following a tragic accident involving the death of a teen, the agent did not report the claim to the WC carrier since he was of the opinion that the teen was not covered (he was the son of an employee). When the claim was eventually reported, the carrier disclaimed due to late reporting, which was affirmed by the court. The claim was settled by Utica for over $100,000. Failure to fax suit papers to the carrier. Following an auto loss that was reported to the carrier, the client was served with suit papers and brought them to the agency. Due to failure to act on the suit (there was no proof that the suit papers were sent to the carrier), a default judgment was taken against the client. Utica eventually settled the claim for over $100,000.

Failure to properly handle a notice of subrogation. When a fire occurred in a client’s home, the adjacent property was damaged. Upon receiving the notice of subrogation from the next-door neighbor, the agent took it upon himself to investigate and deny the subrogation claim, as he felt that the claim started in the neighbor’s property. A year later, when the agent discovered that his client had caused the loss, he forwarded the subrogation papers to the carrier who promptly disclaimed. The claim was settled by Utica for approximately $10,000. These are just some of the many E&O cases that Utica has received involving failure to report or late reporting of an underlying claim to the carrier. In the

overwhelming majority of these, Utica paid on behalf of the agency. Be certain to establish procedures involving claims and proper claims handling. Issues such as the following should be addressed: When should the claim be reported? It is strongly recommended that the agency notify the umbrella carrier of the claim even if there is doubt that it will penetrate the umbrella later. What coverages are impacted by the loss? Be certain to check the client’s file to determine other policies that could be impacted by the claim.

What judgment should be exercised by the agency in the determination of whether the loss is covered? Is this really the agency’s call? What is the harm in sending information and allowing the carrier to make that critical decision? Claims happen — that is why individuals and businesses buy insurance. They certainly have a right to expect that when the claim is reported to an agency, the matter will be taken care of. This is the agency’s time to fulfill its promise. And there is no doubt that agents play a key role in whether that promise is fulfilled.

Glance at Events N O V E M B E R C A L E N D A R Date




CISR—Personal Residential course

Philadelphia, Pa.


P&C Licensing study course

Allentown, Pa.


CISR—Personal Residential course

Allentown, Pa.

William T. Hold Seminar—Commercial Lines

Altoona, Pa.

William T. Hold Seminar—Commercial Lines

Pittsburgh, Pa.

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

Scranton, Pa.


L&H Licensing study course

Pittsburgh, Pa.


CIC—Commercial Property institute

Erie, Pa.


CISR—Personal Residential course

Scranton, Pa.


P&C Licensing study course

Philadelphia, Pa.


William T. Hold Seminar—Commercial Lines

Allentown, Pa.


CIC—Personal Lines institute

Erie, PA



Primary Agent | November 2009

Coverage CORNER


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

The Insurance Services Office (ISO) recently issued a Circular to their member companies announcing their intention to file revisions to their Commercial Auto program.

Note: Any new language being inserted will be in bold, underlined print and any deleted wording will be shown in [brackets].

It’s about time! Their last revision was March 2006. By the time this revision becomes effective, it will be over four years since they last revised the Commercial Auto forms. Imagine that — four years without a change!

The Supplementary Payments provision is being revised as follows:

education programs.

These revisions, if approved, will have an edition date of March 2010. They will become effective in Pennsylvania and Delaware for all policies written on or after June 1, 2010, and in Maryland for all policies with an effective date on or after June 1, 2010. Most of the changes involve “housekeeping” — clarifying the intent of the policy language. However, they have made a few significant changes and introduced some new endorsements. The following is an overview of the major changes to the Commercial Auto forms proposed by ISO.

Supplementary Payments:

We will pay for the “insured”: All court costs taxed against the “insured” in any “suit” against the “insured” we defend. However, these payments do not include attorneys’ fees or attorneys’ expenses taxed against the “insured”. The purpose of this new wording is to reinforce that Supplementary Payments covers court costs and not the plaintiff’s attorneys’ fees or expenses taxed against the insured.

employee are covered. Therefore, the Fellow Employee exclusion is being revised to reinforce the intent that consequential bodily injury claims brought by family members of employees injured by fellow employees are not covered. The new exclusion reads as follows: “Bodily injury” to: a. Any fellow “employee” of the “insured” arising out of and in the course of the fellow “employee’s” employment or while performing duties related to the conduct of your business; or b. The spouse, child, parent, brother or sister of that fellow “employee” as a consequence of a. above.

Fellow Employee Exclusion:

Audio, Visual or Data Electronic Equipment Coverage:

Several courts have ruled that since the Fellow Employee exclusion does not specifically exclude claims brought by family members of an injured employee, these types of claims against a fellow

The Commercial Auto forms exclude physical damage to any electronic equipment, permanently installed or not, that receives or transmits audio, visual or data signals and is not designed solely for

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the reproduction of sound. In other words, CD and tape players are covered, but nothing else. Currently, the Audio, Visual And Data Electronic Equipment endorsement (CA 99 60) can be used to cover equipment that is not designed solely for the reproduction of sound if such equipment is permanently installed or is removable from a permanently installed housing unit in the auto. Under the new forms, coverage is being extended to all electronic equipment that is either permanently installed or is removable from a permanently installed housing unit and reproduces, receives or transmits, audio, visual or data signals. If this equipment is installed in a location other than those normally used by the auto manufacturer for the installation of such equipment, coverage will be limited to $1,000. However, this limit can be increased by attaching the CA 99 60 endorsement. Transfer Of Rights Of Recovery Against Others To Us (Waiver Of Subrogation) Endorsement (CA 04 44): This is a new endorsement. This endorsement has been part of the Commercial General Liability program for years, but ISO has not, until now, developed a comparable endorsement for the Commercial Auto program. Golf Carts And Low Speed Vehicles Endorsement (CA 04 45): This is also a new endorsement. It is being introduced to address coverage for golf carts and low-speed vehicles that are not subject to Financial Responsibility requirements. The National Highway Traffic Safety Administration defines a lowspeed vehicle as a four-wheel motor vehicle whose attainable speed is 20 miles per hour, but no more than 25 miles per hour on a paved level surface, and has a gross vehicle weight less than 3,000 pounds. Garagekeepers Coverage – Definition Of Customer’s Auto: The current definition of a customer’s auto does not address autos that are in the care of the garagekeeper without the request or consent of the auto’s owner. For example, a vehicle that is disabled along the highway is taken into the possession of a towing company at the request of a public authority.

vehicle owner’s knowledge or consent. [It] A “customer’s auto” also includes any [“customer’s auto” while] such vehicle left in your care by [with you for service, repair, storage or safekeeping. Customers include] your “employees” and members of their households, who pay for services performed. Trailer Interchange Coverage Endorsement (CA 23 98): This is a new endorsement to be used with the Business Auto Coverage Form. This endorsement provides comprehensive, specified causes of loss and/or collision coverages on another’s trailer while the trailer is in the insured’s possession under a trailer interchange agreement. Truckers Coverage Form (CA 00 12): The Truckers Coverage Form has been withdrawn. ISO feels that better coverage can be provided under the Motor Carrier Coverage Form (CA 00 20), which was introduced by ISO in 1993 and has fewer restrictions than the Truckers Coverage Form. Well, that’s about it. Not all, but most, of the changes. Y’all take care!

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The definition of “customer’s auto” is being revised as follows to expressly address these types of situations. “Customer’s auto” means a [customer’s] land motor vehicle, “trailer” or semitrailer lawfully within your possession for service, repair, storage or safekeeping, with or without the

Home Office: Dayna Parker ext. 147 215 885-7300; 800 523-6422 Servicing PA, DE, MD

Maryland Office: Kay Schneck 410-337-9295; 800-392-3771 Servicing MD, DE [ 11 ]


Electronic document management for everyone Going paperless: It’s not a question of if but when. So set your excuses aside because, on the following pages, technology guru Steve Anderson shows you how to make it happen.

Primary Agent | November 2009


any agencies want to go paperless, or at least reduce the amount of paper they handle. The advantages of storing documents electronically are compelling: quicker response times to clients, increased productivity, reduced chance of losing documents and reduced need for file cabinets are just a few. There are many good third-party programs available that help agencies manage documents electronically, but they can be expensive. Many agency management systems also include some functionality to support electronic documents, but the workflows can be cumbersome and time consuming.

_________________________________________________ Any document management solution is first and foremost a workflow issue. _________________________________________________ So, can an agency realize the advantages of electronic document management without breaking the bank? This article will provide some ideas on how an agency of any size can realize the benefits of managing documents electronically while keeping your data in standard, easily accessible formats that can work with any agency management system — or even without one.

Tech tips Steve Anderson’s Tech Tips is a weekly e-newsletter dedicated to the tools, Web sites, gizmos and gadgets that can make an

Step 1: Determine the general workflow Any document management solution is first and foremost a workflow issue. The main questions you need to ask are: Who will be doing the scanning, and when and where will they be doing it? There are three primary ways documents are captured: early capture, desktop capture and late capture. It is important to note that in today’s agency environment the amount of physical mail received by the agency has been reduced. But, receiving electronic documents is on the rise. The primary example is client documents sent to the agency electronically by the insurance company. In an early capture workflow, documents are captured when they arrive in the agency. So, when mail arrives in the agency it is opened, sorted and scanned into the employee’s “electronic inbox.” In the desktop capture workflow, document are delivered to the employee’s desktop, or received as electronic files at the employee’s desktop and captured into the employees “electronic inbox.” Most electronic documents are sent to an individual as an e-mail attachment and received at his desktop. These documents need to be captured into the electronic filing system. Finally, in the late capture workflow, mail is received by the agency, opened, sorted and delivered to the CSR’s desktop.

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agency more productive and more competitive. Better yet? It’s free. Sign up at


The CSR processes the mail and then puts it into a stack to be captured into the electronic filing system later. Most systems today use a “barcode coversheet” that is printed from the agency management system or document management system.

___________________________ To determine what works best for your agency, make sure to involve your employees in this process. ___________________________ To determine what works best for your agency, make sure to involve your employees in this process. Come up with a detailed written workflow that describes how every document that comes through your agency is to be processed. The workflow must clearly show each employee’s responsibility for processing each type of document. At this point, the only concern is who will be doing the scanning and where and when they will be doing it. The details of how it will be done will be determined later.

Step 2: Determine what will be captured Before deciding on what type of hardware and software to buy, you need to know how much paper you expect to scan every day and how many electronic documents you receive. Many agencies think they need to scan every document. Think this through carefully. If a document can be reproduced from an

agency management system or from another vendor system, then it doesn’t need to be printed and captured. The fewer documents you need to scan, the less expensive everything will be, both in terms of hardware and in terms of time users spend scanning. Again, involve your employees in this process. Try to get at least one person from each department who has a good understanding of what their department handles. Come up with an estimate on how many sheets of paper you will be scanning on a daily basis.

Step 3: Determine hardware needs Now we are ready to put the pieces together and get the equipment in place. We will need to determine the following things: File format: There are many file formats available for saving scanned images. PDF and TIF are the most common formats used for saving text documents. Adobe’s PDF format has become the preeminent standard for saving and exchanging electronic documents. PDF files are small in size, and they offer the ability to save both an exact image of the original document and editable (and searchable) text all in one file. For agency purposes, it is critical that the files retain their original appearance and are text searchable. File storage: Saving electronic documents on an existing network server will not impact

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the speed of the server significantly. It is just a question of drive space. If you do not have enough space on existing servers, then you can add a Network Attached Storage (NAS) server. A NAS server is simply a server specifically designed to add storage to a network. We recently purchased a 1 TB (1,000 Gigabytes) hard drive for under $100. Scanners: Now that you know what file format you want to use, scanner selection becomes fairly simple. You need a scanner that scans to PDF files and that can handle the volume of scans you need. Fujitsu scanners offer a full line of scanners that scan to PDF files at the push of a button and include Adobe Acrobat for handling the images after scanning. The important thing to look for is the “duty cycle” of the scanner. The duty cycle indicates how many pages per month the manufacturer has designed the scanner to handle. Try to match the duty cycle to the number of pages you will scan each month. A good entry level scanner for testing or light use is the Fujitsu ScanSnap, which retails for about $500.

Step 4: Software and procedures At this step you’ll need to make decisions about the following items, as well as define procedures for scanning, saving, finding and viewing the document you have captured: Software for saving images: Most scanners include software for


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acquiring and saving images. We recommend either Adobe Acrobat ( or Scansoft PaperPort ( Both of these programs save files in PDF format and are easy to use. Although these programs can be purchased separately and used with almost any scanner, we recommend purchasing scanners that include one of these programs. Saving files: If you have an agency management system that supports attaching electronic documents to a client file, then you should explore the specific options that are available to you within that system. Look carefully at the number of steps required to associate a document with a client or policy. You may find that the process is not as streamlined as it could be. Using network folders: This part can be a bit technical and if you don’t understand what we mean by a folder structure, don’t worry — you’re not alone. Talk to your in-house IT department or your outsourced IT vendor who works on your network. A folder structure is a hierarchical structure of drives, folders, and files in which files are organized on a hard drive. Conceptually, this is just like organizing a traditional filing cabinet. There are two common methods of creating folder structures: saving files in customer folders or saving files by transaction date folders (transactional filing). Much has

been written about transactional filing vs. filing by customer, and that discussion is beyond the scope of this article. From a document management standpoint, either method can be used effectively. The point here is that some standardized structure should be used. A “by customer” structure might look something like F:\Documents\ Customer\CustomerName\. A “transactional” structure might look like: F:\Documents\Year\ Month\Day…

___________________________ Much has been written about transactional filing vs. filing by customer…. From a document management standpoint, either method can be used effectively. ___________________________ File names: Special attention must be given to how captured images are named. Detailed file names are critical as they will be a primary way to find the file later. Even if you are using OCR, detailed file names are important. When you scan a document, you must save it in the appropriate location in the file structure. You should put enough information in the file name for you to be able to find it by searching for key words later. An example file name format might be: “Year-Month-Day CustomerName Letter PolicyType PolicyNumber Endorsement Request.PDF.”

[ 16 ]

This might wind up looking like: “2000-09-15 Anderson Letter Auto 123456789 Endorsement Request.PDF.” Months or years later, if a CSR needs to find this file and searches for “Anderson” and “Auto,” this file will show up in the list. Put some thought into these file names and come up with standards that everyone follows. Finding files: Using the folder structure described above, a user can simply navigate to the right folder and view the files contained within that folder. Another method, which may be faster, is to use a program to search for specific text contained within the file. There are many software programs available to search for files. Windows itself offers some file search capability. We recommend using Copernic Desktop Search. This is a free program that indexes and searches files on a hard drive. It is easy to use, it searches the text layer of PDF files, has little impact on your PC’s performance, and returns search results quickly. To find a file, you type in the key words you want to search for and the software retrieves all matching files. The more key words that are entered, the more refined the results will be. OCR (Optical Character Recognition): When you scan a file with a scanner, you are taking a photograph of it. Even if the scanned document was a text document, it is still saved as a picture. This means you

Primary Agent | November 2009

cannot edit or search on the text in the document itself. This is why detailed file names are so important: The file name is the only thing you can search for. OCR software looks at a saved image and converts the characters to text. You can then save the file as an editable and searchable document. We strongly recommend using OCR on your scanned images. You should still have good file names in case the OCR does not recognize the text properly. Both Adobe Acrobat and PaperPort have the ability to OCR a scanned document. If you don’t want to take the time to OCR each individual document as it is being saved, you can purchase OmniPage Professional for about $599. OmniPage will OCR all the PDF files in a specific folder as a batched job that runs each day. This can be a big time saver, reducing the number of steps each employee performs when saving images.

Step 5: Security and backup Security: One concern many people have with using electronic documents is they can often be easily modified. This could lead to an E&O exposure because any employee could modify or delete a file as needed. This is a fairly simple thing to resolve — if you don’t skip this step. Securing files and folders can get a bit technical, and we recommend you discuss it in more detail with your IT support. Almost all networking systems offer the ability to

[ 17 ]

secure the files in a folder structure. The following rights can be granted or restricted: View, Create, Modify and Delete. We recommend that you grant your users the ability to view and create files in the folder structure but restrict their ability to modify or delete them. Backup: If your servers crash, your files are gone, and the only way to get them back is by having a good backup available. Most networks already have some mechanism for backing up data, and your electronic documents should become part of that system. Make sure it has the capacity to back everything up and make sure it works. Always test your backup regularly!

Putting it all together Following the steps outlined above allows an agency of any size to have a full-featured and easy-to-use document management system. This allows the agency to realize the advantages of quicker response times to clients, increased productivity, reduced chance of losing documents and reduced need for file cabinets.

__________________________ Steve Anderson has been a licensed insurance agent for over 30 years. He helps agents maximize productivity and profits using practical technology. He can be reached at Visit his web site at for additional resources and information.

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The paperless leap: How one agency jumped feet first Despite numerous bumps along the way, IA&B-member Altany, Loynd & Lindquist LLC is well on the road to going paperless. Read on to learn what it took — and how it is paying off.

Primary Agent | November 2009


ryan Gusmar joined Altany, Loynd & Lindquist LLC in 2007 after working in the IT department of Travelers Insurance for almost seven years. It was that background that fed his interest in going paperless.

“I felt I could make the most immediate impact on the technology side of the business,” explains Gusmar. So in July 2008, the 87-year-old Brackenridge, Pa.-based property and casualty agency left its old agency-management system behind and purchased Applied TAMOnline, along with AMS SilverPlume for its comparative rater. The transition hasn’t been easy, but, so far, it has paid off.

Overcoming obstacles One of the most difficult parts of the process was gaining employee buy-in, especially from those who were successful for many years relying on paper, according to Gusmar.

Bryan Gusmar (sitting) and his brother, David, oversaw the agency’s paperless transition.

“My advice is to use statistics and testimonials to help employees understand that it’s not work for work’s sake, but a step toward making their job easier,” he continues. Over time, his employees have gained a comfort level with and respect for the new processes and technology. Although even today, Gusmar admits, they sometimes fall back on old habits. Additional stumbling blocks have been the time-consuming setup and installation associated with comparative rating and policy downloading, as well as the carriers’ slow response in developing these technologies on their end. “We found that policy downloading and comparative rating are not standardized throughout the insurance industry,” he says. “Some carriers support downloading and comparative rating for only a few lines of business, while others none at all.” The final obstacle was cost. “Upfront costs can be very expensive,” explains Gusmar of the initial setup, training and software. “The monthly fees aren’t cheap either.”

Embracing advantages Despite the challenges, Gusmar talks highly of the payoff, specifically efficiency. “Applications, drivers’ lists, cancellations, no-loss forms, etc. can be centrally and electronically stored, which gives CSRs and producers easy access and helps them communicate more efficiently,” he says. “Centralized data also allows producers to work from home or anywhere else they have computer access.”

[ 19 ]

“My advice is to use statistics and testimonials to help employees understand that it’s not work for work’s sake, but a step toward making their job easier.”


There is also the timesaving associated with comparative rating, a clear advantage that helped win over staff. “Our CSRs and producers can process home, auto and small business quotes with multiple carriers at once,” he explains. Other benefits are reduced office-space requirements, due to fewer bulky file cabinets and tab files, and reduced use of office supplies and postage, thanks to faxes, scans and e-mails. “We’ve also found that it’s easier when marketing reps come in to show them price comparisons and why we are or

aren’t placing business with them,” says Gusmar. Finally, there is the peace of mind associated with increased data security — and reduced E&O exposure: “Everything is stored in an offsite data center or backed up on an office server.”

Looking ahead By its nature, technology is ever evolving. And that means an agency’s quest for efficiency and advancement never ends. Altany, Loynd & Lindquist LLC is no exception. Next, the agency plans to invest in several high-volume

[ 20 ]

multi-functional devices to scan documents quicker and reduce toner and paper consumption. Despite his — at times exhaustive — efforts, Gusmar is sold on the move. As the industry standardizes and more companies invest in download technologies, he envisions a future where ease-of-doingbusiness prevails.

__________________________ For more information on technology and agency workflows, review Steve Anderson’s article on page 12 or visit and select Technology from the left-hand menu.

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Insuring e-commerce and Internet exposures

The growth of the Internet in daily business operations has lead to a boom in exposures to loss. Here, Jerry Milton takes a look at the technological growth spurt and insurance coverage repercussions.

Primary Agent | November 2009


uman beings have been using some sort of device to perform calculations since day one. First there were the fingers, followed by tally sticks, counting rods, the Roman abacus, mechanical calculators, cash registers and accounting machines. Now we have the computer.

Computers have come so far, so fast The advent of the modern computer probably began as early as 1937 with the development of a relay-based computer, the Model K, at Bell Labs. The first electronic computer was the Electronic Numerical Integrator and Computer (ENIAC), which was introduced in July 1946. It could add or subtract 5,000 times per second — and it weighed over 30 tons. The 1950s and ‘60s saw the beginning of widespread use of electronic computers. However, these computers were large, costly systems and were primarily owned or leased by large institutions — corporations, universities, banks, insurance companies and governmental agencies. IBM introduced the first personal computer (PC) on Aug. 12, 1981 and commissioned Microsoft to write the operating system (DOS). IBM sold 100,000 PCs by Christmas 1981 — far exceeding their expectations. Next, Compaq introduced their IBM-compatible PC in 1982, followed by the Macintosh Apple in 1984. Nothing has been the same since. With the widespread use of PCs came the demand for networking systems that allowed computers to talk to each other. Prior to 1982, there were several separate networking systems for computers, but computers could only talk to other computers on the same network. A protocol was developed for internetworking, where multiple networks could be joined together. The spread of internetworking grew into the idea of a global network based on standardized protocols and was officially implemented in 1982. Today we know this global network as the Internet. Why have I spent all this time and space talking about the development of computers and the Internet when this article is about insuring the exposures created by e-commerce activities? Primarily to illustrate how far we’ve come in such a short period of time — and to recognize where we are now. Today, it is estimated that: w 75 percent of U.S. households own a computer w 30 million U.S. households pay their bills via the Internet w 50 million U.S. households bank online w Over 50 percent of the U.S. population shops and buys online

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Increased use of and dependence on the Internet to conduct business has created many new exposures to loss…. These types of losses are more prevalent than most of us realize.


___________________________ The Insurance Services Office (ISO) has made numerous changes to its Commercial Property and Commercial General Liability policies to limit or exclude damage to electronic data (first-party and third-party) and e-commerce liability losses. ___________________________ w 12 trillion e-mails are generated annually in the U.S. w Online sales total approximately $1 trillion w 1.6 billion people access the worldwide web annually w 150 million Web sites worldwide sell a product, provide a service or distribute information

Advent of the Internet brings new exposures This increased use of and dependence on the Internet to conduct business has created many new exposures to loss. For example: A disgruntled employee deleted his employer’s (an engineering firm’s) entire database. The cost to restore the files was $2 million, and the estimated loss of income was $8 million. A retail firm’s Web site was vandalized by hackers (they inserted profane language), and

the site was shut down for nine hours. The cost to restore the Web site and the estimated loss of income was $1.8 million.

contained language that was offensive to another employee. She sued the company, alleging workplace harassment.

A company received an e-mail claiming the sender had penetrated its firewall and copied its customers’ credit card information. The sender threatened to post this information on the Internet unless $1 million was paid within 24 hours.

A trade association posted files on a Web page that contained copyrighted clip art. The company owning the copyright for the clip art sued the association for infringement.

A disgruntled employee used her personal computer to access her company’s customer database, which she printed and then sold to a competitor. A company’s Web site was secure, but its e-mail system was infected by a virus. An employee transmitted this virus via e-mail to several customers. Those customers filed claims against the company for the costs of “cleaning up” their systems. A university accidentally posted the records of 62 children on its Web site for eight days. The information included names, dates of birth, home addresses, schools attended and psychological records. An employee sent an e-mail to several officers of his company that questioned the professionalism of a service vendor. The officers distributed the e-mail throughout the company. The vendor learned of the e-mail and sued the company, alleging the e-mail was derogatory. An employee posted a joke on his company’s e-mail. The joke

[ 26 ]

A bank sued the firm that wrote its software for excess payments made to savings account customers. The program calculated the interest on the accounts at 5.25 percent quarterly rather than 5.25 percent annually. These types of losses are more prevalent than most of us realize. A recent Internet crime and security survey of 1,400 businesses indicated that: w 85 percent had security breaches of their systems w 15 percent had incurred a business interruption of up to two days as a result of an attack by a hacker w 70 percent had unauthorized access to company files by employees w 40 percent had unauthorized access to company files by outsiders w 20 percent had theft of proprietary information w 95 percent had some loss due to virus contamination w 95 percent had inappropriate use of e-mails by employees

Computers cause coverage conundrums Do our traditional property and liability policies cover these losses? Maybe or maybe not. Over the past eight years, the Insurance Services Office (ISO) has made numerous changes to its Commercial Property and Commercial General Liability policies to limit or exclude damage to electronic data (firstparty and third-party) and e-commerce liability losses. In April 2002, ISO modified its Commercial Property Building And Personal Property and its Business Income And Extra Expense Coverage Forms to exclude loss to electronic data. In that same revision, ISO added an Additional Coverage for Electronic Data (Building And Personal Property Form) and Interruption Of Computer Operations (Business Income And Extra Expense Forms). This Additional Coverage provides the grand and glorious sum of $2,500 for all loss during the policy year. As part of the 2002 revisions, ISO introduced the Electronic Commerce (E-Commerce) endorsement (CP 04 30). The insured purchases a limit of insurance to cover loss due to electronic data incurred while conducting commerce via the Internet or other computerbased interactive communications network. The loss must be caused by a Covered Cause of Loss, which includes virus or malicious code.

[ 27 ]

In December 2001, ISO added the following wording to the definition of property damage in the Commercial General Liability (CGL) policy: “For the purposes of this insurance, electronic data is not tangible property.” Since property damage means physical injury to or loss of use of “tangible property,” this wording excluded coverage for damage to a third-party’s electronic data. Not totally sure that putting an exclusion in a definition would work, in December 2004, ISO added exclusion p. (Electronic Data) to Coverage A — Bodily Injury And

Property Damage. Exclusion p. excludes loss of, loss of use of, damage to, corruption of, inability to access or inability to manipulate electronic data. Probably redundant, but in ISO’s mind, better safe than sorry. When ISO revised the CGL to exclude damage to electronic data, they introduced the Electronic Data Liability endorsement (CG 04 37). This endorsement allows the insured to buy a limit of insurance for loss to electronic data. But, and this is a big but, the endorsement covers damage to electronic data only if it results from injury to tangible property.


___________________________ Do I want to depend on the ISO Commercial Property and Commercial General Liability forms to fully cover my Internet and e-commerce exposures? I don’t think so! ___________________________ In December 2001, ISO also added several new exclusions to Coverage B — Personal And Advertising Injury. These exclusions apply to insureds who design or determine content of Web sites for others; provide Internet search, access, content or service; host, own or control an electronic chatrooms or bulletin boards; or use another’s name or product in their e-mail address, domain name or metatag without authorization to do so. In December 2007, ISO added exclusions to both Coverage A and Coverage B to exclude any violation of the TCPA and CAN-SPAM laws. These are federal laws that regulate telephone solicitations and the transmission of e-mails that are considered spam. Do I want to depend on the ISO Commercial Property and Commercial General Liability forms to fully cover my Internet and e-commerce exposures? I don’t think so! In the late 1990s, before ISO revised their policies to restrict and exclude loss to electronic

data and losses arising out of e-commerce activities, many of our insurers began to develop insurance products designed to insure the first-party property and the third-party liability risks related to e-commerce activities. Some of these policies provide property coverage only. Some cover liability only. And, some are package policies, covering both property and liability. The property policies cover damage to the electronic data caused by a virus, harmful code or malicious instruction; theft of proprietary information; and loss of income and extra expenses because of damage to the data, threat of a virus or a denial of service attack. Many of them also cover extortion arising out of the insured’s computer operations. These losses are usually covered whether caused by an employee or a third party. The liability policies cover injury or damage because of a wrongful act, error or omission; the spread of a virus; infringement; invasion of the right of privacy; and defamation. Some of these policies also cover liability arising out of the rendering or the failure to render any professional services.

Ask questions before selling policies These Internet and e-commerce policies that have been developed by various insurers are different. No two are the

[ 28 ]

same. The following are a few questions, definitely not all, you should ask when reviewing any Internet or e-commerce insurance policy. w Are all policy coverages included, or is the coverage provided only if a limit for that coverage is shown in the Declarations? w Is the deductible a “per claim” deductible subject to a “per loss” maximum, or a “per loss” deductible”? w Are acts of both employees and third parties covered? w Does the form cover any acts of a hacker (virus, worm, etc.), theft of intellectual property, theft of money and securities, loss of income and extra expenses, and extortion? w Does the loss of income coverage cover the loss of future earnings? w Is liability coverage provided for any e-commerce activity, media liability, advertising liability, personal injury, infringement of copyright, title or slogan, and professional activities? w Are defense costs paid within limits? w Does the insurer have a duty to defend or will they indemnify the insured? w If professional liability is covered, is it blanket or for scheduled activities only?

w Are there any limitations for the theft of customers’ personal data? w Are there any limitations for the theft of credit card information?


Parting thought: Do not rely on the traditional property and liability policies to cover e-commerce exposures. If they conduct business via the Internet, they need e-commerce insurance. Y’all take care!

__________________________ 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.

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Primary Agent | November 2009

Technology U P DATE


KEL PLASKET, CPCU, AAI Kel Plasket, CPCU, AAI, principal of Operations Management Consulting, LLC, is a consultant specializing in insurance agency operations management. He works with agencies to increase their growth, productivity and profit through analysis, solutions and implementation. He can be contacted at (256) 765-9953 or Kel produced this article for the Agents Council for Technology (ACT), a part of the Independent Insurance Agents & Brokers of America. For more information about ACT, visit or contact Jeff Yates, ACT Executive Director at This article reflects the views of the author and should not be construed as an official statement by ACT.

Is your agency experiencing a little stress getting business placed in today’s marketplace? Have putting out fires, meeting last-minute deadlines and jumping through hoops become commonplace with your renewals? Has the staff’s daily routine been dictated by constant turmoil? Is it difficult to keep up with the rapidly changing markets and underwriting guidelines? Does the staff really look forward to coming to work every day? If any of this sounds familiar, welcome to the independent agency experience. The good news is that it doesn’t have to be like this! Let’s first take a look at what causes an agency to be placed in this position. The renewal process starts when the monthly expiration list is distributed — typically anywhere from 90 to 150 days prior to the renewal date. Many times, this list sits without being looked at for the next 30-60 days. There is inconsistency among account managers within most agencies as to what is done with the list. Some order loss

runs; some have marketing strategy meetings; some send information-gathering packets to the client or set up an appointment to review the account; and some just allow the account to renew as is with limited to no client contact. Many agencies rush to send incomplete applications to numerous carriers to block the competition from quoting. Many of these submissions contain last year’s underwriting information because “there has not been time” to gather updated information or “the client has not been responsive” to requests. There is also an excessive amount of remarketing being done. Thus begins the time consuming process of back-and-forth phone calls between the underwriters, agencies and clients as they attempt to piece together a viable submission that contains all of the required underwriting information and associated supplemental applications to get an accurate quote. [ 30 ]

The continuous, last-minute urgency in beating the renewal date deadline causes a lot of frustration in many agencies. The account managers have become more like clerical paper pushers instead of professional insurance consultants. They have lost control of their desks, and daily processing backlogs have become the norm. As a result, true, pro-active client service suffers. Causes of CL processing problems Of course there are some underlying reasons that cause most of these problems surrounding the marketing of renewals: w Lack of ownership of the renewal process w Absence of a strict renewal timeline w Inconsistencies in how accounts are handled and who handles them w Limited accountability

w Poor data integrity (staff does not trust the data on the agency management system) w Client underwriting information is stored in numerous places w Multiple carrier submissions are being sent with the prospect of only receiving a minimal number of quotes w Proposals do not adequately prefill from the database w Paper processing backlog continues to increase While staff tends to blame the carriers for delays, the truth of the matter is that the agency has the ability to be in total control of every piece of the renewal process except the time frame for receiving quotes from the carriers and receiving the actual renewal policy. Many agencies have difficulty in seeing this because no one has taken full ownership of the renewal process. Owning the renewal process The account managers need to own the renewal process. By this I mean they must control, complete and/or delegate each task of the renewal process to ensure the various specific timeframes are met. One individual must be totally responsible for making sure everything comes together when it’s supposed to. This assigns accountability and eliminates overlapping of roles between producers, marketers, account managers and account assistants. The account manager (or delegated individual) should: w Send submissions to only the carriers that can be responsive to the clients’ coverage needs w Remarket only those accounts where the premiums and/or coverages can truly be improved w Evaluate the true need for spending significant time quoting multiple markets

w Work on building a stronger client relationship in order to minimize the time spent remarketing with numerous carriers over and over again Consider developing a Stewardship program for larger accounts. This will enable the agency to stay in contact with the client more consistently throughout the year and make the renewal process less of a burden. It also places an emphasis on the client relationship and redirects the focus away from renewal dates and anticipated price increases. Renewal timeline Create a renewal timeline that identifies specific tasks, responsibilities and roles. Organize the best use of the staff’s time throughout the year to maximize productivity and growth opportunities. The appropriate renewal timeline for your agency should be created by looking at the renewal process in reverse order. Decide when you would like to receive your renewal policies from the carriers and then work backwards to determine when: w You need to bind coverage w You need to put your proposal together w You have to have your quotes from the carriers w Your submission must be sent w You must have collected the updated renewal information from your client w You must hold your renewal strategy meeting w You need to run the expiration list in order to accomplish all of the above time frames you have set The best proven time frame for beginning the renewal process is 120-150 days prior to the renewal. [ 31 ]

Whoever is responsible for collecting updated renewal information from the client should be held accountable for: w Gathering all necessary information (including supplemental applications) within the specified time frame w Communicating with clients to stress the importance of gathering data earlier to enable an opportunity to provide better rates, carriers, coverages, service, etc. w Creating templates that make it as easy as possible for the client to provide updated information within the required timeframes As information is received, the account manager should update the agency management system immediately. This will make the submission process an easier task. Your underwriters will look forward to receiving timely, complete and accurate submissions. Eventually the agency will begin to receive quotes sooner than the current experience. Keeping renewal information together Information management is instrumental to the renewal marketing process. All client underwriting data regarding the marketing process should be kept in one place that the staff agrees to use. This will make it easier to review an account, create and track carrier submissions, and put a final proposal together for the client. Use of the agency management system, scanning system or a combination of both will work as long as the process is standardized within the agency. Some agencies use a “Marketing Analysis Document” (a plain Word document) or “Marketing Activity” to record all pertinent information for every carrier submission in one place. This makes it easy for anyone to find the immediate status of the account. Many agencies have implemented a specific scanning procedure for their marketing process.


Documents included in the submission are scanned to a “submission file” and then e-mailed to the underwriter as an attachment. Agency proposal templates When all of the quotes are finally received from the carriers, it is time to put the final proposal together for the client. There should be an agency proposal template that prefills all client data directly from the agency management system that limits the need for corrections and rewrites. The agency should not allow the “core” proposal to be altered, but additional pages can be added as necessary to customize for a specific account, including the attachment of schedules electronically. The entire process for creating a final proposal should not take a lot of time. After coverage is bound and the renewal policies are finally received from the carrier, they should be processed immediately (verified, invoiced, agency management system updated, cover letter written, etc.) and sent out to the client. The worst thing to do is to put them in a pile until all of the policies are received for that account. This immediately adds to the backlog, makes it difficult for the accounting department to reconcile the account to the carrier statement and does little to improve the service to your client. If the client wants to receive all policies at the same time, the agency should still process each policy upon receipt to ensure any needed corrections are ordered immediately. Centralized marketing The concept of “Centralized Marketing” is taking a foothold in a number of agencies. Marketing responsibilities are handled by a marketing person or department as opposed to having account managers and producers

involved in the marketing process. This allows the staff to focus on their strengths, improves carrier relationships, raises the level of client service and creates capacity within the organization. Carriers actually like to limit their contacts within an agency as it improves communication tremendously. The challenge for the agency is to determine exact transition points when responsibility is transferred from producer to marketing to service staff. In most agencies, a centralized marketing department is primarily created to handle new business submissions. As the comfort level and expertise increases, the remarketing of larger renewals is added to the department’s responsibilities.

standards, time frames and roles are being maintained. A strong quality management program that holds staff accountable for their actions and nonactions will meet with great success. Please keep in mind that an effective marketing process is not achieved overnight. Routine meetings and open communication with the staff and carriers is essential. The agency’s management team must also continuously support the process by providing the tools and leadership required to implement these changes. Many agencies across the country have already successfully met the challenge. With the current economy, now is the best time to set the wheels in motion for your organization.

New business marketing plan The agency should also have in place a new business marketing plan. This document describes the type of business the agency wants to write, but more importantly, it lists the types of business that should not be written. Do not be afraid to walk away from new business if it does not fit within your marketing guidelines. I have seen so much time and effort wasted on attempting to place accounts that are outside of the agency’s capabilities. Either the agency does not have the standard markets to write the account adequately; or there is a lack of in-house expertise to service it properly; or there is not enough lead time to develop an adequate submission. Successfully managing change The most difficult part out of all I have discussed above is to get the staff and producers to change the way they are currently doing things and adopt a consistent process. Don’t expect them to do it on their own. Someone needs to be assigned to monitor the entire process to ensure that the agency’s new

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[ 32 ]

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Primary Agent - November 2009 - MD Edition  
Primary Agent - November 2009 - MD Edition  

Primary Agent - November 2009 - MD Edition