INTHISISSUE ___________: 2012 election preview The Big “I”: a voice in D.C. Meet DAIAB’s lobbyist Public affairs committee in action
Contents PRIMARY AGENT MAGAZINE 2012 election overview Polls, predictions and political commentary have dominated the news for months, so it’s no surprise to anyone that this year’s elections will be pivotal ones at both the state and federal levels. Whether the political parties in power are able to retain their majority hold and if so, to what extent, will have a major impact on the social and economic initiatives considered in the coming years.
Page 10 A voice in Washington, D.C. Member agents are represented by a bustling government affairs office and powerful political action committee in Washington, D.C. Here, the Big “I” staff chronicles its work — and successes — on Capitol Hill.
Page 16 Getting to know DAIAB’s lobbyist
As DAIAB’s contract lobbyist, Beverly Sisson helps to maintain the association’s daily presence in Dover. A veteran of the insurance and legislative industries, she employs her strong relationships with legislators and their staff, as well as with the Department of Insurance, to advocate on DAIAB members’ behalf.
Page 22 In the driver’s seat: How members steer DAIAB’s legislative efforts DAIAB works to put the agent’s perspective first. And who better to drive the association's efforts than agents themselves? The DAIAB Public Affairs Committee serves as the primary arm of the association’s board of directors and is tasked with executing the organization’s advocacy program.
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.
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Chair of the Board’s Message Member FAQ State News Preventing E&O Coverage Corner Glance at Events
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Copyright 2012. All rights reserved. No material may be reproduced in whole or in part without written consent of the publisher. The information in this publication is general in nature and is not intended to serve as legal, accounting, financial, insurance, investment advisory or other professional advice as to any reader’s particular situation. Users are encouraged to consult with competent legal, financial, insurance, investment advisory and or other professional advisors concerning specific matters before making any decisions and we disclaim any responsibility for any decisions or actions by readers. Statements of fact and opinion in Primary Agent are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the IA&B. Participation in IA&B events, activities and/or publications is available on a non-discriminatory basis and does not reflect IA&B endorsement of the products and/or services.
Board of Directors
Norman F. Basso, CPCU
Chair of the Board’s
Norman F. Basso, CPCU Chair of the Board York, Pa. G. Greg Gunn, CIC Vice Chair of the Board Lemoyne, Pa.
Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P Immediate Past Chair of the Board West Chester, Pa.
Strengthening our collective voice in a time of change
Members Joyce M. Bailey, CIC, CRM, CPIW Newark, Del. Henry “Butch” Bradley, Jr. Forest Hill, Md. Timothy P. Burris Mifflintown, Pa. N. Lee Dotson, CIC, AAI Wilmington, Del. Michael P. Ertel Columbia, Md. John L. Frankenfield Telford, Pa. John B. Hollister Milford, Pa. Diana M. Hornung Hanby, ACSR Wilmington, Del. 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. April E. Ressler, CIC Altoona, Pa. Scott C. Rogers, CPIA* York, Pa. David B. Wasson Sr., CIC State College, Pa.
Lawrence A. Wilson, CIC, CPIA, CPCU, ARM** New Castle, Del.
September often marks change: change in seasons, change in school year and, here at your agents’ association, change in leadership. Beginning this month, I assumed the role of chairman of the IA&B Service Group. It is a role that I look forward to fulfilling over the next 12 months. One of the benefits of DAIAB membership — and one of the reasons that keeps me personally invested in our organization — is legislative advocacy. As busy professionals, we do not have the time necessary to affect change in Dover and Washington, D.C. But we do have state and federal government affairs teams who work on our behalf, monitoring legislation and regulations, meeting with elected officials and ensuring independent agents’ voices are heard. I encourage you to review this issue of Primary Agent magazine to learn about a few of the many ways DAIAB works on your behalf at the state and federal capitol buildings. And furthermore, I encourage you to support that advocacy work with a contribution to AgentPAC — your association’s political action committee (PAC). As a fellow board member once told me, “If we are not willing to financially support the PAC that protects our business and the independent agency system, then who will? It will be one of your best investments.” As the November elections approach, we face a time of change in Dover and Washington, D.C. But despite the unknowns, you can trust that your association will work diligently on your behalf, no matter what those changes may be. Until next month, Norm Editor’s note: To support to AgentPAC, visit www.iabgroup.com/AgentPAC.
* Pa. IIABA National Director ** Del. IIABA National Director + Md. PIA National Director
Member FAQ QUESTION: My customer is dissolving his company: If there are no assets because the corporation is no longer in existence, what is the risk to the customer, and why should he purchase discontinued operations coverage? ANSWER: This is a great follow-up question to last month’s column (August 2012) on the need to secure discontinued operations coverage for a retiring customer with an occurrence-based CGL policy. First, and most importantly, we would encourage you to tell the customer to review the issue with the attorney in charge of the company’s dissolution. This issue is clearly rooted in law (it speculates on the company’s inability to be sued post-dissolution), and it would be better suited for the customer's attorney to review and answer. In addition, note that the answer can vary from state to state, based on the type of entity (profit v. non-profit), on the business structure (LLC, corporation, partnership, et al), or on the type of dissolution (voluntary, administrative or judicial); all this, again, to illustrate the fact that the attorney should be involved to provide direction as to the extent and duration of potential liability (and consequently the need for coverage). The question, however, does have merit for producers, if only to provide guidance on how to overcome the objection. This particular question happened to pertain to a Pennsylvania customer, but let’s take a quick look at some conditions applicable to the voluntary dissolution of a corporation in all three states in IA&B’s footprint. In Pennsylvania, the statute allows an action to be brought forth against a dissolved corporation or its directors, officers or shareholders, if the action is brought within two years of the date of dissolution, or other time limit provided by law, up to two years. In Delaware, a corporation continues beyond its expiration for three years for the purpose of prosecuting or defending suits. In addition, once filed within the threeyear timeframe, the corporation will continue until any judgment, order or decree has been fully executed. In Maryland, the corporation continues to exist for the purpose of paying, satisfying and discharging any existing debts or obligations, collecting and distributing its assets, and doing all other acts required to liquidate. Any suit brought prior to filing the articles of dissolution must be
fully executed. Once the articles of dissolution are accepted by the state, new suits are barred. Maryland’s dissolution process, however, is lengthy and can take several years, during which a suit could be brought against the entity. With regard to the extent of liability, in Pennsylvania and Delaware, the shareholder's liability is generally limited to the pro rata share of the asset distribution. Maryland, on the other hand, is less clear, and does not expressly indicate a limitation. Again, this is obviously a cursory and narrow review. With circumstances changing slightly, so could the answer. The bottom line is that, regardless of the circumstances, producers should: 1. Encourage the customer to discuss the issue with the attorney handling the dissolution 2. Always offer discontinued operations coverage to the customer 3. Document both the offer and the customer’s decision You should refrain from advising the customer on how much insurance to secure. The customer should make the decision by himself, or based on his attorney's advice, but not based on yours. Otherwise, whether and how your customer chooses to secure discontinued operations coverage could suddenly be redirected to your own E&O carrier if the coverage happens to be insufficient or inexistent. To read why a customer who is retiring from business and had an occurrence-based CGL policy needs a discontinued operations policy, read part I in the August 2012 issue of Primary Agent.
DO YOU HAVE A QUESTION? Email it to us at firstname.lastname@example.org. 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!
State News Primary Agent | September 2012
DAIAB scores education award — again
Getting the most CE out of your designation update
DAIAB is proud to announce that the association once again has been recognized by the Independent Insurance Agents and Brokers of America for the quality of its professional development programs. The Big “I” recently presented DAIAB with a bronze Excellence in Insurance Education (EIE) Award.
Taking the same institute two years in a row will update your designation — but not count towards continuing education (CE) if it is taken in the same licensing period. While producers are generally pretty cognizant of their designation update requirements as well as their CE requirements (see link below for a refresher), it is not unusual to have interference between the two. To avoid learning at the last minute about missing credit hours, agents should ensure that the courses or institutes taken are different from one update to the next.
The EIE awards celebrate and recognize state associations and staff who have made significant contributions to education for their members and the industry in the key area of class offerings, continuing education, professionalism, designation offerings, industry collaboration, planning goals, marketing, resources and more.
Neighboring news Save the date for DCRB update Members can learn the latest on the workers’ compensation market directly from the Delaware Compensation Rating Bureau’s (DCRB) Bruce Decker and Tim Wisecarver. The annual update for DAIAB members will be at 6 p.m. on Nov. 14 at the Hilton Wilmington/Christiana in Newark.
Attn. producers with clients who are Maryland employers The National Council for Compensation Insurance (NCCI) — the designated licensed rating and statistical organization in Maryland, as compared to the Delaware Compensation Rating Bureau — filed a change in its Experience Rating Plan formula effective starting with 01/01/2013 renewals. As a result, some clients’ mods will change, even without a change in their loss experience, and this will impact their overall premium. www.iabgroup.com/md/ ncci_mod
Fannie Mae publishes FAQ to clarify lender requirements for condos Members’ collective condo headache may be subsiding. Following the last update to Fannie Mae's Servicing Guide, producers have encountered difficulties in providing policies and evidence of insurance forms that meet lender requirements. Major issues included the use of guaranteed replacement cost wording and expecting the insured value to be determined by the insurer. This summer Fannie Mae issued an FAQ to clarify its position. While imperfect, the FAQ is an improvement: It acknowledges that the coverage does not have to be “as determined by the insurer” and suggests methods to estimate the amount. Determining 100 percent of the insurable value of the building still can be elusive, but the FAQ gives some flexibility back to the mortgage loan originator in accepting the amount of coverage. Finding an acceptable amount for all parties, in collaboration between the insurer and the borrower, may be easier than it has been in recent months. Producers can access the FAQ and use it in their discussions with the lender. www.efanniemae.com (search HO-6 master/blanket)
How the health care law will affect you
Considering recording calls? Hold the phone
DAIAB continues to monitor how members — as producers, employers and consumers — will be affected by the Patient Protection and Affordable Care Act (PPACA). A new resource on the association's website outlines the provisions that already have been implemented, as well as those scheduled for the coming years. The primer is a precursor to upcoming training and education opportunities on PPACA that DAIAB will provide.
Recording telephone calls is a tempting way to reduce E&O exposure and improve customer service. But before an agency begins (or continues) the practice, it is worth knowing:
Taking the high ground to success
w Is it legal to record conversations in Delaware? w Is customer consent required and, if so, how can it be obtained? w Do an agency’s producers, CSRs and other staff need to provide consent? DAIAB’s new member resource shares the do’s and don’ts of telephone recording. www.iabgroup.com/de/ record_phone_calls
DAIAB members are invited to the 2012 Executive Management Conference in Gettysburg, Pa. on Oct. 30-31. Attendees will take away the tools, resources and knowledge needed to win the battle for insurance business. Plus they’ll enjoy historic fun, to include a visit to the National Military Park Museum. www.iabgroup.com/emc2012
New Members Coen Agency LLC Wilmington, Del.
Preventing Primary Agent | September 2012
ERRORS AND OMISSIONS
ENCOURAGE CLIENTS TO READ THEIR POLICIES CURTIS M. PEARSALL CPCU, AIAF, CPIA Curtis M. Pearsall, CPCU, AIAF, CPIA, president of Pearsall Associates Inc. and special consultant to the Utica National E&O Program, supplied this article. Insurance Agents & Brokers Service Group Inc. is the
When an errors & omissions (E&O) claim occurs, the file, for the most part, will heavily determine the direction the claim goes. Solid documentation in the file will help the agent’s defense, while little or sketchy documentation could very well hurt the agent’s odds of prevailing. At that point, as the old expression goes, “It is what it is.”
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 email@example.com.
The key for agents is to proactively take the initiative to implement various loss control measures; in other words, try to impact the direction an E&O claim could go before it occurs. It may be too late afterward. A common strategy E&O carriers use when defending a customer involves the client’s duty to read the policy. Even though this duty imposed on the client may not be applied in every state, an agency initiative centered on this issue can still prove beneficial.
Read and understand In the vast majority of states, the duty for the client to read the policy states the client must read and understand policy content, provisions, duties and exclusions. Typically, there is a requirement that if the client has any questions, does not
In the vast majority of states, the duty for the client to read the policy states the client must read and understand policy content, provisions, duties and exclusions. understand the coverage or discovers the coverage is not what they thought was requested, the client should contact the agency to make any additions, alterations and
modifications to the policy. Some states take it a step further, requiring the client to reject the policy if the policy terms are unacceptable. So what should the agent do? To bolster this presumption of the insured’s assent to the policy terms, the agent/broker should promptly send the complete policy to the insured and in the cover letter urge the insured to fully review the policy — including the declarations and endorsements — for accuracy and, to the extent the insured has any questions on policy contents, the policyholder should immediately contact the producer. It is important to note that client ignorance or a statement such as “I didn’t have the time” are not valid defenses for the client.
This letter should be general, such as: Dear “Client,” Enclosed please find the renewal of your Businessowners’ package written with XYZ Insurance Co. You will be receiving your premium invoice shortly. It is important that you take the time to read this policy to ensure your understanding of the limits and the coverages. If there are any questions or you wish to make any changes to this policy, please contact the agency promptly. The limits of insurance have been selected by you, and we can’t guarantee that the limit selected will be sufficient in the event of a major loss. Higher limits are available upon your request. Thank you for your confidence in our agency; we appreciate your business. Sincerely, Once again, it is best to keep the cover letter general and not restate limits and coverages in it. The theory behind this is if you “recap” the limits and coverages in the cover letter, you are essentially telling your client he or she does not need to read the policy because you are telling them what’s in it. Obviously, an agency may choose to personally deliver policies. If this is the case, it is still suggested that a cover letter be included with the policies and brought to the attention of the party to whom you are delivering the policies.
Tremendous benefits Another common scenario involves a policy that will be sent directly to the customer from the carrier. If this is pertinent in your situation, it is still highly recommended that you use the above letter with a slight modification. Instead of stating “enclosed please find your renewal,” a phrase such as the following could be used: “You will be receiving the renewal of your Businessowners’ policy directly from the carrier, XYZ Insurance Co. When you receive it, it is important…” There are tremendous benefits to this approach. Hopefully, the coverage provided is what was requested. If not, the client should discover those areas of concern upon review. For example, if the client asked for full coverage or remarked “protect me for whatever can happen,” they will now find every policy has exclusions and limitations. The benefits to your agency are also tremendous. It shows you want your customers to understand their coverage, and there may be situations where a customer asks for coverage modifications that result in a program that better suits their needs. It is better to resolve these issues before the claim occurs than after. Lastly, there are many E&O claims where such a letter dramatically determined the direction of a specific E&O claim. This type of initiative can probably be implemented without too much additional work or expense. This extra step could just make a big difference if an E&O claim comes knocking at your door.
Read up on what the courts have to say about clients’ duty to read their policies. www.iabgroup.com/de/duty_to_read
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Coverage Primary Agent | September 2012
PERSONAL AUTO OR BUSINESS AUTO?
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.
For the past 37 years, I’ve stood in front of a lot of insurance folks and discussed the Personal Auto Policy or the Business Auto Policy. One of the issues that usually causes some confusion is employees driving their personally owned autos, companyowned autos or rented autos on company business. Which policy applies – Personal Auto, Business Auto or both? Who’s covered by the employee’s Personal Auto Policy? Who’s covered by the employer’s Business Auto Policy? Those are the usual questions.
Business Auto policies for coverage. But, who’s covered by each policy?
covered “auto” you own, hire or borrow, except:
Situation No. 1: Employees using their personally owned autos on company business The ISO Personal Auto Policy (PAP) defines an “insured” as:
(2) Your “employee” if the covered “auto” is owned by that “employee” or a member of his or her household.
1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer.” 3. For “your covered auto,” any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.
If our own people are somewhat confused, I have to assume that employees and their employers don’t understand how their auto policies apply to the business use of employeeowned autos, companyowned autos or rented autos. When employees use their autos, company autos or rented autos on business, we may have to rely on both the Personal Auto and
The ISO Business Auto Policy (BAP) defines an “insured” as: a. You for any covered “auto” b. Anyone else while using with your permission a
(5) A partner (if you are a partnership) or a member (if you are a limited liability company) for a covered “auto” owned by him or her or a member of his or her household. Both the employee and the employee’s company are covered under the PAP, and the ISO PAP does not exclude the business use of private passenger autos, pickups, vans or trailers. However, the company’s BAP covers the company only (if Symbol 1 or 9 for liability). In order to cover employees using autos they own, rent or borrow on company business, the
Employees As Insureds endorsement (CA 99 33) must be added to the company’s BAP. Situation No. 2: Employees using company-owned autos The ISO Personal Auto Policy (PAP) defines an “insured” as: 1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer.” 4. For any auto or “trailer” other than “your covered auto,” any other person or organization but only with respect to legal responsibility for acts or omissions of you or any “family member” for whom coverage is provided under this Part. This Provision (B.4) applies only if the person or organization does not own or hire the auto or “trailer.”
with respect to legal responsibility for acts or omissions of you or any “family member” for whom coverage is provided under this Part. This Provision (B.4) applies only if the person or organization does not own or hire the auto or “trailer.” The ISO Business Auto Policy (BAP) defines an “insured” as: a. You for any covered “auto” b. Anyone else while using with your permission a covered “auto” you own, hire or borrow….
company only (if Symbol 1 or 8 for liability). The employee can be covered under the BAP by adding either the Employees As Insureds endorsement (CA 99 33) or the Employee Hired Autos endorsement (CA 20 54). When both policies apply, which one is primary and which one is excess? Employee using personally owned auto: PAP is primary, BAP is excess. Employee using company-owned auto: BAP is primary, PAP is excess. Employee renting an auto: PAP is primary, BAP is excess. Y’all take care!
Who rented the auto? The employee. Therefore, the employee’s PAP covers both the employee and the company, but the company’s BAP covers the
The ISO Business Auto Policy (BAP) defines an “insured” as: a. You for any covered “auto” b. Anyone else while using with your permission a covered “auto” you own, hire or borrow…. In this situation the company’s BAP covers both the company and the employee. The employee is also covered by the PAP if the company auto is a private passenger auto, pickup or van, but the company is not covered since it owns the auto. Situation No. 3: Employees renting autos for business The ISO Personal Auto Policy (PAP) defines an “insured” as: 1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer.” 4. For any auto or “trailer” other than “your covered auto,” any other person or organization but only
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2012 election overview
Polls, predictions and political commentary have dominated the news for months, so itâ€™s no surprise to anyone that this yearâ€™s elections will be pivotal ones at both the state and federal levels. Whether the political parties in power are able to retain their majority hold and if so, to what extent, will have a major impact on the social and economic initiatives considered in the coming years.
Primary Agent | September 2012
redicting election winners is always risky business. With the ubiquity of the Internet and the 24/7 news media, one gaffe or political faux pas can turn the tide of public opinion swiftly. One thing is clear however: Voting patterns over the course of the last several elections have painted a picture of an American public increasingly dissatisfied with both political parties. In the 2010 midterm elections, the Republican Party made sweeping gains across the country, picking up 63 seats in the U.S. House of Representatives and six seats in the U.S. Senate. These results were clearly indicative of the American public voting against the party in power at that time. But interestingly, exit polls at the national level after the 2010 elections indicated that more than half of the voters had an unfavorable view of the Republican Party at the time of the election. In the face of ever increasing voter angst and fracturing within the political parties, will the pendulum swing back this year?
There’s a long list of state and federal races to watch in 2012. Here are some factors to consider as DAIAB agents analyze the current field of candidates:
President Whether President Obama will be relegated to the ranks of one-term presidents after the votes are counted in November is by far the biggest question mark in this election cycle. The Supreme Court recently upheld the President’s major first-term initiative, the Patient Protection and Affordable Care Act. With Republicans, including Mr. Romney, vowing to repeal the law if given the opportunity (meaning a Republican-controlled House, Senate and White House), it looks like voters will have the final say on healthcare reform. Mr. Romney’s message on this divisive issue will be particularly interesting as the presidential debates get underway given his support of the same kind of individual mandate during his term as governor of Massachusetts was just upheld at the national level. Pundits are placing varying degrees of importance on the Supreme Court ruling vis-à-vis the November elections, but look for it to be galvanizing force for the Republican Party nonetheless as it encapsulates the “big vs. small government” debate that is the heart of the difference between the two major political parties. Anything can, and most likely will happen over the next few months. At the time of this writing, several major factors are still unknown such as Romney’s choice of running mate and
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the debate performances of the two candidates, along with what is sure to be an unprecedented level of fundraising. National polls show the two candidates being neck and neck with President Obama ahead by only a few percentage points. Delaware has voted for the Democratic candidate in the last five presidential elections, and President Obama won the state with a 25 percent margin of victory in 2008, further cementing the state’s solid blue status, so look for similar state results in this election cycle.
Governor Current Democratic Gov. Jack Markell is running for re-election with his first term nearly under his belt. In 2008, he beat the now U.S. Representative for Delaware’s at-large congressional district, John Carney, in a close primary race, and easily won the general election two months later. At the time of this writing (less than a week before candidates’ filing deadline), announced Republican candidate Jeff Cragg, an insurance executive and business owner, has not yet filed with the Department of State, which seems to be a trend for the statewide endorsed Republican candidates. Regardless, defeating Gov. Markell will be an uphill battle to say the least, as he appears to be a shoe-in for a second term.
U.S. Senate Current U.S. Sen. Tom Carper, first elected to the Senate in 2001, is running for re-election this fall. Carper, a former governor, representative and state treasurer, has one opponent in the primary election, newcomer and relative unknown Keith Spanarelli. On the Republican side, Kevin Wade, an electrical engineer and small businessman, has been campaigning up and down the state for several months, though
The conventional wisdom of the day is that a combination of redistricting and retirements will likely cause a shake up this election cycle. Look for a different DemocratRepublican split in both chambers after the election dust settles.
he, too, has yet to file with the Department of State. Regardless, Sen. Carper should breeze through both the primary and general elections to win his third term.
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U.S. House of Representatives Done once every 10 years after the federal census, redistricting will play a big role in this year’s election around the country, especially in DAIAB’s sister state, Pennsylvania. Redistricting in Delaware, however, is a moot point, since the state has just one congressional district. Delaware Republicans will have a tough time reclaiming former Congressman Mike Castle’s seat. In 2010, Republican Castle gave up his House seat to run for U.S. Senate in a special election for the seat held by Ted Kaufman who was appointed after Joe Biden resigned to become Vice President. Castle was defeated in a surprisingly competitive and nationally watched primary election by Tea Party activist Christine O’Donnell, who then lost the general election to Democrat Chris Coons. Castle’s vacant House seat was taken by Democrat John Carney, Jr., now running for re-election. At this time, the Republican congressional primary looks to be a battle between the party’s endorsed candidate, New Castle County Council President Tom Kovach, and 2010 congressional candidate Rose Izzo. As with the three races mentioned above, look for this to be another easy Democratic hold come November.
Primary Agent | September 2012
State legislative races In Dover this year, all 41 seats in the House of Representatives and all 21 seats in the Senate are up for re-election. Although Delaware senators typically serve four-year terms, in 2010 several senators running for reelection were elected to a twoyear term so that all sitting members could be on the ballot this year to accommodate the results of redistricting. Democrats currently hold a comfortable majority in both chambers, a 26-15 majority in the House and a 14-7 majority in the Senate; however, this campaign season has brought with it numerous surprises which could cause major changes in the state’s 62 member General Assembly. A number of open seat elections will take place this fall: Speaker of the House Robert F. Gilligan (D-Sherwood Park) shocked many Legislative Hall insiders by announcing that he will not be seeking re-election in November after serving four decades in the House. Although he initially filed to run, he later changed his mind and retired at the end of the legislative session on June 30. Rep. Dennis P. Williams (D-Wilmington North) is leaving his House post to run for Mayor of Wilmington. Four-term Rep. Teresa Schooley (D-Newark) announced that she, too, is retiring. Rep. Brad Bennett (D-Dover) was arrested earlier this month for DUI and will not run for re-election either.
On the Republican side, Rep. Gerald Hocker (R-Ocean View) is running for retiring Sen. George Bunting’s (D-Bethany Beach) seat downstate. Rep. Gregory Lavelle (R-Sharpley) lost his seat to redistricting and will oppose first-term Sen. Michael Katz (D-Centerville). Senate Minority Whip Liane Sorenson (R- Hockessin) is retiring after 20 years, and another long-time legislator, Rep. Biff Lee (RLaurel) is retiring after 22 years. The conventional wisdom of the day is that a combination of redistricting and retirements will likely cause a shake up this election cycle. Look for a different Democrat-Republican split in both chambers after the election dust settles.
Insurance commissioner Lawmakers are not the only ones vying for office this year. Insurance commissioner is an elected position in Delaware, and this year four candidates, including current Commissioner Karen Weldin Stewart, are in the running. All four are competing on the Democratic ticket during the Sept. 11 primary election. On the Republican side, the state party has endorsed Ben Mobley, a Morgan Stanley investment adviser, though at the time of this writing, he has not yet filed with the Department of State. Earlier this summer, DAIAB invited the four filed insurance commissioner candidates — Democrats Karen Weldin Stewart, Mitch Crane, Dennis
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DAIAB invited the four filed insurance commissioner candidates to participate in an hour-long forum to answer questions about their experience, strategies and goals. The three participating candidates talked about the importance of agents and brokers in the insurance marketplace and stated their desire to have an on-going dialogue with the Delaware independent agent and broker community.
Spivack and Paul Gallagher — to participate in an hour-long forum during DAIAB’s Annual Convention to answer questions about their experience, strategies and goals. Commissioner Stewart, Mitch Crane and Dennis Spivack agreed to participate, and the group gathered in Rehoboth Beach on June 7, along with DAIAB members, to discuss the future of the state’s insurance industry. DAIAB Government Affairs Director Lauren Brinjac moderated the event and questioned the candidates on several topics, including their priority issues in
the Delaware insurance marketplace and their perception of the role of independent agents and brokers. All three candidates spoke of their desire to create a consumer-centric Insurance Department. Commissioner Stewart touted her achievements thus far, including the fact that she has made rate filing more transparent for the public. Mitch Crane disputed the current commissioner’s claims, stating his desire to pass laws on proof of notification of cancellation and a law to ban the use of credit scoring in the state. Dennis Spivack expounded on his position that the primary issue in Delaware is the delivery of healthcare. All three candidates talked about the importance of agents and brokers in the insurance marketplace and stated their desire to have an
on-going dialogue with the Delaware independent agent and broker community. Since DAIAB’s candidates’ forum, the state Democratic Party has endorsed Mitch Crane, who appears to be running a very organized campaign throughout the state. No matter the outcome of the election, the event served to build DAIAB’s relationship with Delaware’s next insurance commissioner.
What does this mean to you? DAIAB agents have a strong team in Washington D.C. this election cycle that remains in constant contact with both current members of the U.S. House and Senate as well as election challengers in order to determine who best understands the interests of agents and brokers at the national level. Read more about the Big “I” team and the importance of contributing to InsurPAC on page 16. At the state level, it is more important than ever for DAIAB to project a strong voice with individual legislative members, through active lobbying, grassroots advocacy and meaningful levels of AgentPAC contributions. AgentPAC resources are always strained in election years because legislators rely heavily on organizations like ours to help support their re-election bids. If we want to have an impact on elections, now and in
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the future, AgentPAC is the only method we have to compete with the other interests across the state that are making their voices heard in the political process. There are numerous PACs operating in Delaware, and the only way AgentPAC can keep its head above water and protect your interests in Dover is with support from agents like you. Supporting AgentPAC expands DAIAB members’ political influence beyond their individual districts because the PAC supports candidates across the state who will vote on the issues critical to the insurance industry. The bottom line is that agents need to get politically involved in the 2012 election and remain involved throughout the legislative session. The best way to start is by getting out and voting both in the primary election on Tuesday, Sept. 11 and in the general election occurring on Tuesday, Nov. 6. Pro-agent legislators — and regulators — have a much better change of being elected if you are engaged and participating in the process. ________________________________
By Lauren Brinjac, government affairs director for DAIAB
Glance at Events SEPTEMBER CALENDAR
CISR—Commercial Casualty Course
William T. Hold Seminar
CISR—Personal Residential Course
CISR—Personal Auto Course
Employment Relationships Seminar
CISR—Agency Operations Course
CISR—Personal Residential Course
CISR—Commercial Casualty Course
CIC—Commercial Property Institute
CISR—Commercial Property Course
CISR—Personal Residential Course
CISR—Commercial Casualty Course
CISR—Personal Residential Course
CISR—Agency Operations Course
Dynamics of Service Seminar
CISR—Personal Residential Course
CISR—Commercial Casualty Course
*CISR Marathon Week
IA&B On-Demand Training Education from IA&B is now available online when and where you want it. Visit iabgroup.com/on-demand for more information.
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A voice in Washington, D.C. How the Big “I” represents member agents
Member agents are represented by a bustling government affairs office and powerful political action committee in Washington, D.C. Here, the Big “I” staff chronicles its work — and successes — on Capitol Hill.
Primary Agent | September 2012
hile member agents are hard at work — maintaining their book of business, responding to clients and carriers and running their agencies — lobbyists are hard at work as well, representing them and their interests in Dover and Washington, D.C. That’s the beauty of association membership: Members’ voices are heard even when they are not, and cannot, be present.
In addition to the DAIAB government affairs team that works on a state level, members are represented by lobbyists from the Independent Insurance Agents and Brokers of America (IIABA or the Big “I”), who work in Washington, D.C. The following pages detail their work.
Tracking a typical day The day in the life of a federal lobbyist is, among many other things, long and hectic. Fundraisers kick off the day early and cap it off late. The planned — testimonies, in-person meetings and conference calls — are interspersed with the unexpected (but not uncommon) media requests, calls from Congressional staff and grassroots initiatives. Moments behind a desk are few and far between. On an early summer day, DAIAB caught up with Charles Symington, senior vice president of government affairs for the Big “I.” He shared his schedule — a typical one when Congress is in session, particularly in an election year. 8 a.m. Attended a fundraising breakfast with House Majority Leader Eric Cantor (R-Va.). 9:30 a.m. Returned to the office for a meeting with Jen McPhillips, senior director of federal government affairs and lead lobbyist on crop insurance, about an amendment by Sen. Kirsten Gillibrand (D-N.Y.) to transfer $5 billion dollars from the federal crop insurance program to the food stamp program. Decided to launch a second oppositional grassroots campaign through Big “I” associations in approximately 15 rural states, as the amendment would come up for a vote within 24 hours. [Editor’s note: The amendment was defeated later that day by a 33-66 vote.] 10 a.m. Met with Ryan Young, senior director on federal government affairs and lead on health care reform, to discuss the pending U.S. Supreme Court decision on health care reform, what the
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“No one knows how important relationships are more than independent insurance agents,” said Symington. “[Our PAC] allows our federal lobbying team … to establish or re-establish relationships with elected officials and their senior staff.”
The ABCs of the Big “I” PAC InsurPac is the political action committee (PAC) of DAIAB’s national affiliate, the Big “I.” InsurPac allows the government affairs team in Washington, D.C. to support proagent candidates on the federal level. InsurPac is one of the largest federal PACs in the insurance industry and the largest, by far, for propertycasualty agents. In the 2010 election cycle, more than 5,000 independent agents from across the nation supported the committee, helping it raise $1.9 million. InsurPac distributed over $1.6 million to a total of 265 races. Of those, 248 supported candidates won for a remarkable 93 percent victory rate. As the federal government exercises more and more power over small business, the future of the independent agency system becomes more dependent on its engagement in the federal political process. Support InsurPac by logging into www.iiaba.net, choosing Government Affairs from the menu and then scrolling to InsurPac.
Big “I” response will be to the various scenarios and how Congress will react. 10:30 a.m. Met with Nathan Riedel, vice president of political affairs, to compare notes on some of the more competitive House races that came up during the breakfast meeting with Leader Cantor. 11 a.m. Met with John Prible, vice president of federal government affairs, to discuss the proper response to a press inquiry on flood insurance and agent licensing reform. Noon Hosted a fundraiser in the Big “I” Capitol Hill Office for Rep. Patrick McHenry (R-N.C.), a member of the House Financial Services Committee and subcommittee chairman for the Committee on Oversight and Government Reform. At the same time, Big “I” lobbyists attended three other fundraising lunches, including one for Congressman Gary Peters (Mich.-D), who is also on the House Financial Services Committee, that was hosted by the chair of the New Democrat Coalition, Congressman Joe Crowley (D-N.Y.). 2 p.m. Participated in a conference call interview with DAIAB staff members for an article that will run in their association magazine.
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3 p.m. Met with Nathan Riedel and a candidate running for the House of Representatives in Indiana to discuss where he stands on smallbusiness issues. 4:15 p.m. Squeezed in desk work! 6 p.m. Along with the other Big “I” lobbyists, attended a total of six evening events: four receptions and two dinners for senators and congressmen.
Prioritizing the issues At the time of DAIAB’s interview with Symington, the Big “I” government affairs team was focused on several legislative and regulatory initiatives. Details follow. Agent licensing The National Association of Registered Agents and Brokers (NARAB II) legislation would provide for efficient non-resident licensing while preserving state insurance regulation and consumer protections. As of late June, the legislation had been introduced in both the House and Senate and was awaiting consideration by the House Financial Services Committee and Senate Committee on Banking, Housing and Urban Affairs. “Over the last three weeks, we conducted nearly a dozen meetings with Senate staff on NARAB II,” shared Symington.
Primary Agent | September 2012
“Some of those meetings were with coalition partners from the industry, and some of those were just Big ‘I’ meetings.” During the same time period, the Big “I,” along with the National Association of Insurance & Financial Advisors and the Council of Insurance Agents & Brokers, spearheaded a joint letter to all senators in support of the bill. Ten trade associations added their signature to the letter of support. Flood insurance The last full-scale reauthorization of the National Flood Insurance Program (NFIP) occurred in 2004. In the past decade, the program experienced 13 last-minute reauthorizations and four extended lapses. Through it all, the Big “I” government affairs team has lobbied for stability for the program. “We’ve been conducting a large number of meetings, with Senate staff mainly but also some in the House, on flood insurance extension reform legislation,” said Symington in late June, about a quarter of the way into the latest short-term extension. The team also arranged recently for Jon Jensen, an independent agent from South Carolina and chairman of the Big “I” government affairs committee, to testify before the Senate Banking Committee on the need for a long-term reauthorization and reform of the NFIP.
[Editor’s note: Soon after the writing of this article, a five-year reauthorization and reform bill was passed by the House and Senate.]
carriers must spend 80-85 percent of premium dollars on health care services, leaving just 15-20 percent for all “non-claims costs” — to include agent commissions.
Despite the failure of previous legislative and regulatory efforts to address the issue, the Big “I” government affairs team continues to argue that commissions are passed 100 percent to third parties and, therefore, are pass-through fees that should not be included as administrative expenses.
The Farm Bill, which designates funds to the Federal Crop Insurance Program, is set to expire on Sept. 30. In addition to the grassroots advocacy efforts outlined above to squelch a harmful amendment, the Big “I” Government Affairs Team recently arranged for two agents to testify on the importance of the crop insurance program. Federal regulation The newly created Federal Insurance Office within the Department of Treasury is tasked with playing a role in international insurance issues and serving as an information source to Congress and the president. “Our main mission is to ensure that the Federal Insurance Office does not experience any mission creep or become a precursor to a day-to-day federal regulator of insurance here in D.C.,” said Symington. As part of this work, the Big “I” government affairs team continues to provide support to a member agent who serves on the Federal Advisory Committee on Insurance, which advises the Federal Insurance Office. Health care The federal health care reform law includes a medical loss ratio provision which stipulates that
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“We’ve been supporting a more insular piece of legislation on medical loss ratios that would exclude agent commissions from medical loss ratio calculations,” offered Symington. “There is a bill in both the Senate and the House that we’ve been strongly supporting, so we’re spending a lot of time on that.” Taxes The tax cuts enacted in 2001 and 2003 received a two-year extension in 2010 but once again are slated to expire at the end of this year. The Big “I” government affairs team is poised to advocate for another extension in the coming months. “A lot of our members … file at the individual rate, so if those tax cuts aren’t extended, they’re going to see a huge tax bill coming their way next year,” explained Symington. “We’ll spend a lot of time on that during any lame-duck Congressional session that occurs after the elections in November.”
Flexing political muscle “No one knows how important relationships are more than independent insurance agents,” said Symington. “[Our political action committee] allows our federal lobbying team to attend fundraising events morning, noon and night here in D.C. And at each of these events, we are able to establish or re-establish relationships with elected officials and their senior staff.” These relationships, of course, do not guarantee votes, but they do guarantee a seat at the table when issues that stand to affect independent agents are discussed. Strength in numbers InsurPac is one of the largest federal trade association political action committees (PACs) in the nation. In the 2010 election cycle, the PAC distributed over $1.6 million dollars to 265 federal campaigns and hosted or co-hosted over 60 fundraising
events, many of which were held in the Big “I” Capitol Hill conference room. Those dollars went to support the campaigns of Republican and Democratic congressmen and senators, as well as candidates for federal office. “InsurPac boasts an impressive bipartisan track record,” shared Symington. “It’s not what party you come from. It’s not whether you’re an incumbent or a challenger. It’s ‘Do you support the independent agency system?’” PAC in action InsurPac commands attention in Congress, thanks in part to its impressive track record. During the November 2010 elections, InsurPac scored a 93 percent congressional victory rate in 265 races. “In the last election cycle, 2010, InsurPac opposed five sitting members of Congress who supported federal regulation of insurance,” shared Symington. “That’s one of our top issues, so
we get very aggressive with that. Four of the five that we went against lost their reelection bids, so we like to think that InsurPac played a role in that.”
Supporting the Big “I” efforts The Big “I” could not make the legislative and regulatory strides it has without the support of member agents. And it’s member agents’ contributions — large and small — that add up to that impressive pool of money that allows the Big “I” to be heard so clearly in Congress. To do your part, visit www.iiaba.net, choose Government Affairs from the menu and then scroll to InsurPac*. *Note that you must be logged into as a Big “I” member to view the Support InsurPac link. For a reminder of your user ID and password, email firstname.lastname@example.org.
By Karen Robison, public relations director for DAIAB
Join the Big “I” team for the day Every spring, DAIAB participates in the Big “I” National Legislative Conference (NLC), an opportunity for members to share independent insurance agents’ perspectives on pending legislation and regulation with their Congressional delegation. The event draws over 1,000 Big “I” members from across the nation. Save the date and join the Big “I” efforts on April 17-18, 2013. Watch Agent Headlines in the coming months for more information. The Delaware contingent meets with Sen. Tom Carper at the 2012 NLC. From left to right: James Hanby, Diana Hornung Hanby, William Amos, Sen. Carper, Larry Wilson, Lee Dotson, Mary Rowland [ 20 ]
YOU CAN USE
olitical junkies and casual observers alike find value in DAIABâ€™s Capitol Connection newsletter. Emailed monthly while the state legislature is in session and as warranted throughout the rest of year, the publication focuses on the state and federal issues poised to affect members as small-business owners and producers. The newsletter cuts through the clutter of Capitol Hill happenings and shares the specifics of what members need to know and how DAIAB is working on their behalf.
Video synopsis Links for more details
Concise updates AgentPAC news
Look for Capitol Connection in your inbox on the last Tuesday of each month during the state legislative session. Peruse the highlights in your email, or click on the links to read more about any legislative or regulatory issue.
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Getting to know DAIAB’s contract lobbyist
As DAIAB’s contract lobbyist, Beverly Sisson helps to maintain the association’s daily presence in Dover. A veteran of the insurance and legislative industries, she employs her strong relationships with legislators and their staff, as well as with the Department of Insurance, to advocate on DAIAB members’ behalf.
Primary Agent | September 2012
Name: Beverly Sisson Title: Owner Company: BHM Insurance Services & Government Relations Inc., bhm-de.com Education: Registered nurse, graduate of Temple University School of Nursing
Q. Why did you become a lobbyist, and how did you enter the field? A. It wasn’t a plan or a goal but a role that evolved while I worked at the Delaware Insurance Department. While working with Commissioner Dave Levinson, part of my job was to facilitate getting proposed insurance regulatory legislation introduced and passed. During that time, in order for the Department of Insurance to become nationally certified for solvency standards, we needed to amend the Delaware Insurance Code with enhanced standards for financial solvency. The certification requirement came from the National Association of Insurance Commissioners. Commissioner Levinson aggressively pursued developing several pieces of legislation required to get Delaware certified, and we were one of the first states to be nationally certified. That process required me to spend a lot of time working with members of the General Assembly and to learn the legislative process. During my eight years as legislative liaison for the Delaware Insurance Department, we were successful in getting more than 25 pieces of insurance legislation introduced and enacted. Later I worked at the Bayard Law Firm, where Verizon Wireless was a client. When I left the firm to go out on my own, Verizon Wireless asked me to continue representing them in Delaware. A few years ago, I worked on getting legislation passed to allow for Sunday sales of liquor. After that project, the Highway One Group in Dewey Beach Delaware retained my services, and I continue to work with them each year. So as it is with all of us, one relationship led to another, and other doors opened. In addition to working with DAIAB, I currently represent the American Council of Life Insurers (ACLI) and the National Association of Insurance Brokers and Financial Advisors
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“There is nothing that
replaces personal relationships and communications…. Attending local legislative events and establishing personal relationships are very important.”
(NAIFA-Delaware),VERIZON and small business entities in Sussex County, Del. Working with DAIAB gives me the opportunity to mix the life and health issues with the property and casualty interests. There are many members of the association that I have known for many years, and it has been fun rekindling those relationships. Q. What do you like most about your job? A. I most like the opportunity to affect public policy in an environment that I am comfortable with. In addition to establishing legislative and agency relationships, I enjoy helping those I represent achieve their goals. I enjoy helping clients understand the process and how to have a presence on their own behalf. It’s gratifying to be able to effectively participate in the legislative process and work in a familiar political environment. Q. How long have you represented DAIAB? A. I will begin my twelfth year with DAIAB this January. Q. What do you consider your greatest accomplishment(s) while representing DAIAB members? A. I believe that promoting and facilitating having meaningful input and impact on regulatory and legislative initiatives has been achieved and remains intact. The DAIAB staff is very
attentive to regulatory and legislative developments in Delaware, and the relationship with the Department of Insurance and DAIAB is strong and respected. Q. What legislative/policy issues do you anticipate will affect Delaware’s independent insurance agents in the coming year? A. Depending on the results of the November 2012 election, the insurance industry and producers must be prepared to respond to the initiatives of the commissioner of insurance. The dynamics of an elected office cannot be ignored. Issues can include, but not be limited to, general consumer-related matters especially as they relate to producers’ responsibilities with explaining coverage and exclusions, i.e. hurricane deductibles, credit scores, automobile exclusions and evolving changes with workers’ compensation rates. For those producers involved with life insurance, the current Senate Bills 145 & 220 relating to life settlements have been very contentious and will probably be proposed again in 2013. Health insurance regulations will vary depending on the implementation of the president’s national health insurance program…. Q. What are your upcoming goals for DAIAB? A. Immediately after the November 2012 election, I would like to meet with DAIAB
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representatives to review issues that may either emerge or re-emerge responding to the insurance commissioner’s campaign interests. We should also review insurance-related legislation that has been enacted as of July 1, 2012, along with what was not enacted. In addition to the insurance commissioner election results, we should review the Senate and House election changes and the possible impact on our industry and producers. Q. What can agents do to assist your efforts? A. Producers should be prepared to respond with grassroots responses on regulatory and legislative matters that develop, sometimes on short-notice. There is nothing that replaces personal relationships and communications. Producers should be aware of senators and representatives in their residential and business districts. Attending local legislative events and establishing personal relationships are very important. As your lobbyist, I report events on a weekly basis during the legislative session and emphasize to your government relations representative what I view to be urgent. I will selectively suggest grassroots communications depending on the issue. In addition to keeping the membership informed, I view that the most important part of the process is gathering and establishing a consensus
Primary Agent | September 2012
position that effectively trickles down in a meaningful way. Finally, it is apparent to me that with every issue that comes up, i.e. hurricane deductibles, data tracking, exclusions on all policies, the questions remains: Who is responsible for informing policyholders? I am taking this opportunity to make members aware that this is often the crux of contentious issues and has been this year. The application process seems to be where much of this lies, although the small print exists in the policy.
for keeping consumers informed and responsible for their personal and business risks. In addition to being an invaluable resource, it is my pleasure to represent that DAIAB members are the most knowledgeable and best
informed consumer advocates for the industry that each member represents.
If all producers functioned according to the standards of the DAIAB, in my view, there would be no need for regulatorymandated disclosures that have been proposed during this legislative session. Please be mindful that public and political expectation may be directed to producers and negative publicity can easily be prevented. Q. Is there anything else you’d like to share with the DAIAB membership? A. I continue to enjoy working with the DAIAB and am fortunate to work with an incredible group of true professionals. The attention and dedication to all Delaware regulatory and legislative issues by the DAIAB government relations staff is extraordinary. The property and casualty industry is important in everyone’s life, and producers are on the front lines of protecting and responsible
From the friendly voices of our customer service staff to the personal visits by our territory managers and underwriters to the promptness of our claims adjusters, we are told time and again …
Our people set us apart. That’s why our agents trust our experience, strength and service. Visit our website to find out about becoming an agent with us. Business t Surety t Auto t Home
www.PennNationalInsurance.com [ 25 ]
Chopper for Charity races into America’s living rooms More on Make-A-Wish Make-A-Wish grants the wishes of children with life-threatening medical conditions to enrich the human experience with hope, strength and joy. The charity grants a wish somewhere in the country every 38 minutes.
Trusted Choice® will enjoy prime-time attention on the Sept. 17 episode of “American Chopper” on the Discovery Channel. The show will chronicle the Orange County Choppers’ creation of a Trusted Choice-themed custom motorcycle to raise money for Make-A-Wish®. Trusted Choice, the consumer branding program for independent insurance agents and brokers, commissioned the Chopper for Charity as part of a year-long fundraising effort. The campaign launched in August with a Facebook initiative: For every “share” from facebook.com/TrustedChoice in August, Trusted Choice donated $10 to Make-A-Wish. (While the final tally wasn’t available before this magazine went to print, a similar social media drive last year netted $170,000.) The Trusted Choice Chopper for Charity now will travel the country — including a stop at the DAIAB Executive Management Conference, Oct. 30-31 in Gettysburg, Pa. — with proceeds benefiting Make-A-Wish.
Platinum Profile Insurance Agents & Brokers proudly recognizes HM Insurance Group as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.
FEATURED PARTNER HM Insurance Group PRESIDENT Mike Sullivan President & Chief Operating Officer COMPANY LOCATION Home Office – Pittsburgh, with regional locations in Camp Hill and Philadelphia WEBSITE www.HMWorkersComp.com
Workers’ Compensation offers a smart approach to coverage – helping to control loss through dedicated service teams; a preferred, cost-saving network; and effective physician-to-physician case management. To ensure the best outcome for all involved, we work side-by-side with our clients, helping to reduce the incidence of injuries in the workplace and return employees to their jobs as quickly as possible. We know that effectively managing Workers’ Compensation coverage is essential to our clients’ financial success. Using our expertise to control and reduce Workers’ Compensation costs from all angles, we develop and implement customized, effective programs that incorporate loss control, case management, network discounts, proactive risk management techniques and return-to-work programs. We manage the entire
process to help keep employees safe and healthy, while generating cost savings that our clients depend on to help keep their companies financially strong. The outcome is clear in our operational performance results and our approach to service. Through our network savings program, total claims costs were reduced by 56 percent in 2011, and we passed that savings on to our clients. We also achieved greater than 99 percent technical and financial accuracy when processing both lost time and medical claims.* Such accomplishments, along with our commitment to service excellence, have helped us earn high levels of client satisfaction. HM Workers’ Compensation coverage is marketed in Pennsylvania, and we target low-to-medium hazard industries with four wall exposure, including health care, social services,
Mike Sullivan administrative offices, banks, physicians, service industries, property management, machine shops, restaurants, retail/wholesale stores and manufacturing. Our loss cost multiplier ranges offer flexibility that helps price each account on its own merits. HM Workers’ Compensation is underwritten by either Highmark Casualty Insurance Company or HM Casualty Insurance Company, member companies of HM Insurance Group. *Performance statistics based on HM Workers’ Compensation Operational Performance — 2011 Report, March 2012.
Platinum Profile FEATURED PARTNER ACUITY PRESIDENT & CHIEF EXECUTIVE OFFICER Ben Salzmann
Insurance Agents & Brokers proudly recognizes ACUITY as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level of sponsorship to our organization.
COMPANY LOCATION Sheboygan, WI A.M. BEST RATING “A+” (Superior)
ince opening its doors for business in Pennsylvania in 2010, ACUITY has been writing personal and commercial lines accounts at a record-setting pace. In fact, written premium for the insurer is up an astonishing 92 percent in the Keystone State through the first six months of 2012.
The credit for ACUITY’s growth in Pennsylvania goes to its select group of independent agents. And, according to President and CEO Ben Salzmann, no company is more committed to agents than ACUITY. “For 87 years, we have done business exclusively through independent agencies,” he says. “We bring our experience and dedication in building strong partnerships to agents in Pennsylvania.” “Agents always know what to expect when they do business with ACUITY,” adds Wally Waldhart, Vice President - Sales and Communications. That includes ACUITY’s unwavering focus on providing the technology, products, and value-added services that make the insurer a powerful business ally. “Almost all insurance carriers either are sound in relationships or technology, but rarely both,” says Salzmann. “We bring that unique combination of the two, along with franchise value in Pennsylvania, which makes us a highly coveted market for independent agents.” On the technology front, ACUITY has focused on developing and investing in ease-of-business solutions for
Acuity President & CEO, Ben Salzmann
agents. ACUITY provides real-time, online policy quotation and application, and automatically issues and delivers policies to agents within seconds in both personal and commercial lines. The company has recently introduced “ACUITY share,” which allows an agent and policyholder to view applications and rating details simultaneously from different locations. When it comes to building relationships, no company does more for independent agents than ACUITY. Over the past five years, agents have earned 100,000 continuing education (CE) credits thanks to ACUITY’s free CE courses, speaking tours, and in-agency training. Additionally, ACUITY knows the bottom line is vitally important to agents as well. “We pay more in contingent commissions as a percentage of written premium than our peers,” Waldhart reports. With strong growth and profitability, ACUITY offers independent agents remarkable financial stability in an otherwise unstable market. A fiercely independent company firmly
committed to remaining mutual, ACUITY is also remarkably well-run: the company is rated A+ by both A.M. Best and Standard & Poor’s and has been named to the Ward Top 50 Best-Run Companies for 13 consecutive years. ACUITY also offers independent agents stability in staffing, with a remarkable voluntary turnover of under one percent. Salzmann credits this achievement to being a great place to work. In fact, ACUITY is ranked as the top mid-sized employer in the nation by the Great Place to Work Institute. As a result of its comprehensive and well-rounded strategy, ACUITY provides consistency and security in an industry marked by wide market swings and financial uncertainty. “We are a healthy, strong, stable, and truly regional mutual carrier,” Salzmann says. “We are thankful to Pennsylvania agents for the trust they have placed in us, and we are incredibly optimistic about our continued success in the state.”
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.
ACUITY Berkley Mid-Atlantic Group Donegal Insurance Group Erie Insurance Group Harleysville Insurance HM Insurance Group Insurance Agents & Brokers Service Group Inc
Aegis Security Insurance Co
MMG Insurance Company Millers Mutual Group Millville Mutual Insurance Co Mutual Benefit Group Ohio Casualty Penn National Insurance Selective Swiss Re The Main Street America Group Utica National Insurance Group
Lebanon Valley Insurance Company
Progressive Westfield Insurance
Merchants Insurance Group
Agency Insurance Company AmWINS Program Underwriters Inc Auto-Owners Insurance Company Briar Creek Mutual Insurance Company Builders Insurance Group Chubb Group of Insurance Companies Countryway Insurance Company First General Services Foremost Insurance Group Goodville Mutual Casualty Company Guard Insurance Group Harford Mutual Insurance Co Hanover Fire & Casualty Insurance Company Insurance Alliance of Central PA Inc Insurance House Insurance Placement Facility of PA Keystone Insurers Group Inc Mercer Insurance Group Mercury Casualty Penn PRIME Municipal Insurance
SILVER LEVEL Access Insurance Company Allied Insurance American Mining Insurance Co Cumberland Insurance Group Frederick Mutual Insurance Co Juniata Mutual Insurance Co PSBA Insurance Trust The Philadelphia Contributionship
Reamstown Mutual Insurance Company Rockwood Casualty Insurance State Auto Mutual Insurance Company TAPCO Underwriters Inc The Brethren Mutual Insurance Company The Motorists Insurance Group The Mutual Service Office Inc Travelers Tuscarora Wayne Insurance Company Zenith Insurance Primary Agent September 2012
In the driver’s seat How members steer DAIAB’s legislative efforts
DAIAB works to put the agent’s perspective first. And who better to drive the association's efforts than agents themselves?
Primary Agent | September 2012
he Delaware Association of Insurance Agents & Brokers Public Affairs Committee serves as the primary arm of the association’s board of directors and is tasked with executing the organization’s advocacy program. The committee is focused on the advancement of members’ common political and legal interests. Anywhere from three to 10 members, including a board director, are appointed to the committee by the chairman of DAIAB’s board. They serve to two-year terms on a staggered schedule to ensure an appropriate mix of new and experienced agents take part concurrently. The committee is responsible for overseeing the advancement of the legislative, regulatory and legal collective interests of members in the public affairs arena. This includes representing the association’s interests, providing oversight to AgentPAC and developing positions and strategies. Given their expertise and knowledge base, committee members are often DAIAB’s go-to agents for resources or testimony before legislators or regulators on insurance issues. Current issues for the public affairs committee include: w Implementation of the federal health care law in Delaware, specifically the state health exchange and how to best preserve the role of the insurance agent w Monitoring Delaware Department of Insurance legislative initiatives w Continued monitoring of the captive insurance market in Delaware to address any potential negative impacts on independent agents. w How best to address certificate of insurance abuse in Delaware DAIAB is always looking for a few good men and women to serve on this vital committee. Contact the DAIAB Member Service Center at 800-998-9644, option 0, or e-mail email@example.com to express interest.
Current committee members: Chairwoman Mary T. Rowland Willis of Delaware Wilmington John B. Allen Allen Insurance Group Wilmington Joyce M. Bailey AAA Mid Atlantic Newark Andrew P. Cousins L & W Insurance Dover N. Lee Dotson Bellevue Insurance Services Wilmington Jim M. Watkins Pfister Insurance Agency Dover Lawrence A. Wilson S T Good Insurance New Castle John S. Yasik Poland & Sullivan Insurance Newark
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Primary Agent | September 2012
Technology U P DATE
“BRING YOUR OWN DEVICE” OPPORTUNITIES AND RISKS Employees expect it, but employers need to manage the risks
DANIELLE JOHNSON Danielle Johnson is the vice president, director of information technology at InsurBanc, which IIABA and the W.R. Berkley Corporation established to assist independent agencies with their specific banking needs. This article reflects the views of the author and should not be construed as an official statement by ACT.
What is BYOD? Many workers today expect the companies they work for to allow them to use their personal mobile devices and personal computers at the office and/or to provide remote connectivity to the office via personal devices. Technologists dub this trend “bring your own device” (BYOD).
“The consumerization of IT revolution — sparked by the iPhone — has shifted the IT culture so that the users are the ones getting the latest, cutting-edge technologies first, and they want to bring those devices to work.” — PC World Magazine, Dec. 20, 2011, Tom Bradley “Pros and Cons of Bringing Your Own Device to Work”
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Why is BYOD important? Mobile devices — along with their applications and on-the-go Internet access — provide attractive options for speed, connectivity and productivity. Many people wouldn’t think of spending their workday without a Blackberry, iPhone, Android, iPad or other device to access company
Primary Agent | September 2012
systems and data. Most important, senior managers want to use these devices and are using their organization’s technology more because of them. Many employees see their own personal devices as superior to those provided by their employers. Employees also tend to believe they are more productive if allowed to use their own devices for work and data syncing between office and home. Thus, BYOD is significant because employee-owned devices are now accessing company systems and being used for work purposes, which presents security and privacy concerns to the employer. Employers see the inherent value in a more mobile, more connected and more productive workforce. Many employees and managers have no problem connecting and addressing work issues after hours and/or on the weekends. It can be considered a motivational strategy. What are the security risks? BYOD mobility offers access to enterprise data, systems and corporate email. Employees can store and process data and connect to networks. While BYOD may be considered necessary and convenient, this type of connectivity can raise significant data security and privacy concerns which lead to potential legal and liability risks. Consider: 1. The device gets lost or stolen with access to company data and systems.
2. The device contracts a virus or has malware installed that can obtain company logins and data from that device. 3. The personal device user — however good his/her intentions are — can in effect be circumventing company security standards.
Employers see the inherent value in a more mobile, more connected and more productive workforce.
4. The company cannot control the use of the personal device should the employee allow children or friends to use the device. 5. The employee may use the device to place files in personal applications in the cloud which may not be secure. 6. The employee plugs a mobile device into the USB port of his or her office computer thereby transmitting a virus to the office desktop. Here are some facts to consider when trying to balance personal device access with security: Employees don’t perceive the risk. Many employees perceive the use of their own devices at work as placing no extra burden on technical support.
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But dealing with any data or system security issue requires know-how and technical resources. Executives perceive the risk but aren’t fully ready. In August 2011, a Deloitte webcast poll of more than 1,000 U.S. information technology and business executives found that 28 percent of respondents believe there are unauthorized personal digital assistants (PDAs) and/or tablets connecting to company systems, especially to email servers. About 87 percent of respondents think their systems are at risk for a cyber attack originating from a mobile security lapse, the poll reported. The same poll found 40 percent of respondents are unaware of whether their organizations have strategies or controls to enforce mobile security. Further, it found that only 24 percent of respondents believe that “all devices connecting to my intranet are authorized.” Only 17 percent reported that they monitor for rogue connections. Malware is on the move. Malware that targets mobile devices is increasing, reported IBM Security Solutions researchers in a fall 2011 whitepaper. Citing an IBM security research report, the whitepaper presented statistics showing that mobile operating systems vulnerabilities tripled from 60 to a projected 180+ from 2009 to 2011. Enterprise systems and mobile systems are catching up with each other. While many corporations have for years allowed Blackberry-based access to email and other company systems, users are now demanding that
iPhone/Android-based smartphones and tablet computers be provided access to these same services. How do you proceed once BYOD is determined necessary? Since there are risks to the mingling of personal devices and work systems, companies must take the lead in assessing and managing the risks so as to safeguard their systems and data. Some simple steps include: 1. Institute a strong written BYOD policy that is consistent with the organization’s employee handbook policies such as the IT policy and acceptable use policy. 2. Determine which data to protect. 3. Define what devices will be supported.
4. Determine which employees need remote access via personal devices. Do not open BYOD participation beyond those employees that have a strong business reason for mobile access. 5. Define security requirements. 6. Train and educate employees concerning policy and BYOD use. 7. Monitor employee mobile devices for compliance with your organization’s policy. 8. Secure employee’s authorization to “wipe” the employee’s mobile device remotely (restore to the original factory state), as a condition of giving access to any of the business’s systems. 9. Place controls over access to and use of the company’s wireless Internet. For example: Do not
broadcast your wireless SSID, restrict access to employees only using MAC address filtering in the router and invoke WPA 2 on the router. Security solutions If an enterprise is allowing employees to use their own mobile devices, the following security measures should be implemented. 1. Require strong phone startup PIN which is at least six to eight characters long. If not supported, use the maximum allowed. Reduce the PIN-required timeout setting to no longer than 10 minutes. 2. Require specified encryption and anti-malware software on each device. 3. Require and install mobile tracking software/applications which allow online access to track the location of a lost/stolen phone and the ability to perform a lock/scream and/or remote data wipe. Secure employee’s authorization to take these actions on the device if the device is misplaced, lost or stolen, as a condition to giving the employee access to the business’s systems and data. 4. Do not allow “broken”/”rooted”/“jailbroken” devices on your network. These phones have removed limitations installed on the phone by the carrier allowing the user to run apps and files not approved by carriers. This process opens the device up to security risks.
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5. Large enterprises monitoring multiple devices and platforms should consider mobile device management (MDM) software. MDM software centrally controls and protects the data and configuration settings for all mobile devices in the network. MDM also can provide a secure document delivery platform and end-to-end data transmission encryption. The opportunities of BYOD are present â€” and here to stay. As an analogy, home security is more complex for a bigger house with more entrances and windows. So too is systems security more complicated as smartphones and other remote devices present new entry points to be analyzed and protected. All of the security tips presented here are simply guidelines to aid agencies in diminishing security and privacy risks and managing them. However, none can be guaranteed 100 percent effective.
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Marijuana plants stolen, insured left high and dry Barbara Tracy’s homeowners’ policy included theft coverage for trees, shrubs and other plants, so when 12 of her marijuana plants were stolen, she submitted a claim. Her insurer, USAA Casualty Insurance Company, paid $8,801 on the claim, but Tracy sued, stating that the plants were worth $45,600.
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Tracy argued that Hawaii law allowed her to possess and cultivate marijuana and, therefore, she had an insurable interest. USAA argued that Tracy had no insurable interest because it would be illegal to use the insurance payout to buy marijuana and that it would be illegal to require an insurer to cover marijuana due to the federal Controlled Substances Act (CSA). The U.S. District Court for the District of Hawaii first held that Tracy had an insurable interest due to state medical marijuana laws. But the court then ruled that federal law — including the CSA, under which marijuana is prohibited — trumps state law and, therefore, an insurance policy covering marijuana plants would be an illegal contract and unable to be enforced. Source: IRMI Personal Lines Pilot, Tracy v. USAA Cas. Ins. Co.
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