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INTHISISSUE ___________: Task force drives UM work AgentPAC insures future Meet IA&B’s lobbyist Public affairs committee in action


Contents PRIMARY AGENT MAGAZINE IA&B puts efforts to address uninsured motorists in overdrive Maryland’s rate of uninsured motorists is on the rise. And thanks to member inputs, IA&B is aware of the trickle-down effects on independent agents and is prepared to study the issue and consider meaningful ways to address it in the coming year. Read on for insight into why the trend exists and how the association plans to address it.

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Insure the future of your profession with AgentPAC IA&B’s government affairs director offers an inside look at how AgentPAC helps to preserve the independent agent profession – and why member support is crucial to its success.

Page 16 Getting to know IA&B’s lobbyist As IA&B’s contract lobbyist, Bryson Popham helps to maintain the association’s daily presence in Annapolis. A veteran of the insurance and legislative industries, he employs his strong relationships with legislators and their staff, as well as with the Maryland Insurance Administration, to advocate on IA&B members’ behalf.


Page 20 In the driver’s seat: How members steer IA&B’s legislative efforts IA&B works to put the agent’s perspective first. And who better to drive the association's efforts than agents themselves? The IA&B of Maryland 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.

Get social with IA&B

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In every issue 2 3 4 6 8 19

Chair of the Board’s Message Member FAQ State News Preventing E&O Coverage Corner Glance at Events

25 31 28 32 32 32

IA&B Partners Tools You Can Use Technology Update Advertisers Index Classified Ads Last & Least

Subscriptions: Non-member price: $2.25 per copy or $15 per year. All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two months prior to publication. Advertising rates furnished upon request. Address inquiries to: Primary Agent Editor 5050 Ritter Road Mechanicsburg, PA 17055-0763 Phone (800) 998-9644 or (717) 795-9100 Fax (717) 795-8347 Periodical postage paid at Mechanicsburg, Pa. and additional entry post office. Postmaster: Send address changes to above address. Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2012-9 is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

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.

September often marks change: change in seasons, change in school year and, here at IA&B, 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 IA&B 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 Annapolis. But we do have a government affairs team who works on our behalf, monitoring legislation and regulations, meeting with elected officials and ensuring independent agents’ voices are heard.

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.

I encourage you to review this issue of Primary Agent magazine to learn about a few of the many ways IA&B works on your behalf at the state capitol building. 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 IA&B 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.” We are working in a time of great change. 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

Lawrence A. Wilson, CIC, CPIA, CPCU, ARM** New Castle, Del.

* 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 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

Premium increase notification exemption

Getting the most CE out of your designation update

Maryland’s exemption to notification for de minimis premium increases begins Oct. 1.

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 or within six months of the previous one. While producers are generally pretty cognizant of their designation update requirements as well as their CE requirements, 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.

IA&B’s priority during the 2012 legislative session, the legislation amends a 2009 law which removed the state’s 20 percent threshold for notices of commercial premium increases. The original law did not include an exemption for de minimis increases, so notices were sent for increases of as little as a few dollars or cents — causing headaches, consumer confusion and loss of business.


New Members Jeffrey Miller Insurance Inc Catonsville, Md. Zacharias Insurance Agency LLC Elkridge, Md.

The exemption will affect premiums in excess of $1,000 with an increase over the expiring policy premium of lesser of 3 percent or $300. (Read: Commercial customers with premiums less than $1,000 still will receive notices, as well as any customer whose premium increase is over $300.) IA&B worked throughout the 2012 session to ensure the legislation’s passage. The association joined forces with several carrier groups to advocate for the bill and worked with the Senate Finance Committee and Maryland Insurance Administration to resolve concerns.

[4] producer_licensing/md/ce

Mapping out IA&B’s future The association’s Member Agent Panels (MAPs) will reconvene this Sept.11-12 in Gaithersburg, Bowie and Towson for their fall meetings. MAPs bring together members to weigh in on industry issues and provide feedback on IA&B’s activities and direction. Input then heads to the board of directors for consideration and planning.

Considering recording calls? Hold the phone 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: w Is it legal to record conversations in Maryland? 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? IA&B’s new member resource shares the do’s and don’ts of telephone recording. record_phone_calls

Prep now for upcoming WC mod changes Producers should begin preparing for the changes in experience modification factors (“mods”) that their clients will face starting with 01/01/2013 renewals. Some clients' mods will change as a result, even without a change in their loss experience, and this will impact their overall premium.

Understanding when carriers can give policyholders the boot Staying on top of Maryland’s insurance policy cancellation guidelines can be an uphill battle. But members can get the lowdown from IA&B’s online resources — including common questions and their answers on the state’s statutes that govern the cancellation and nonrenewal of commercial lines, homeowners’ and personal auto policies. policy_cancellations

How the health care law will affect you IA&B 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 IA&B will provide. PPACA_update

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. (search HO-6 master/blanket)

IA&B developed a resource, including a sample letter, explaining how the change can affect clients. ncci_mod

Taking the high ground to success IA&B 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.


Preventing Primary Agent | September 2012


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

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.


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Coverage Primary Agent | September 2012



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….

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 company only (if Symbol 1 or 8 for

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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Addressing Maryland's uninsured motorist problem IA&B creates Task Force to study and address issue

Marylandâ&#x20AC;&#x2122;s rate of uninsured motorists is on the rise. And thanks to member inputs, IA&B is aware of the trickle-down effects on independent agents and is prepared to study the issue and consider meaningful ways to address it in the coming year. Read on for insight into why the trend exists and how the association plans to address it.

Primary Agent | September 2012


hile carrying auto insurance is mandatory in the operation of a motor vehicle, the simple fact is that there remain uninsured motorists on the road every day. A report by the Insurance Research Council (IRC) found that about one in seven at-fault drivers in a collision with another vehicle is uninsured. Individual states are charged with tracking and enforcing against uninsured motorists, and some states are much more effective than others. The IRC’s most recent uninsured motorist rates by state, from 2009, show that the best two states — Massachusetts and Maine — have an uninsured motorist rate of 4 percent. Conversely, the worst state, Mississippi, has an uninsured motorist rate of 28 percent. And between those two extremes, there are varying rates among the other 47 states. In Maryland, the uninsured motorist rate has been on a steady increase over the last several decades and, according to the most recent data, is now at 15 percent. This ties Maryland for 15th worst on a national level. Compared to surrounding states (Virginia — 11 percent; Delaware — 11 percent; and Pennsylvania — 7 percent), Maryland performs poorly. These numbers present further questions in Maryland: What is compounding the rate of uninsured motorists in Maryland? What is different in Maryland from other states with lower uninsured motorist rates? What affect does the rate have on the general insurance marketplace in Maryland? And how does a high rate of uninsured motorists in the state affect independent agents?

What is behind Maryland’s uninsured motorist rate While all states have some form of laws on how an insurer must verify insurance to a state, the extent and degree of this verification varies. The four most common approaches across the country for verification are: 1. Insurer must notify Department of Motor Vehicles or other state agency of cancellation or nonrenewal. 2. Insurer must verify financial responsibility or insurance after an accident or arrest. 3. Insurer must verify randomly selected insurance policies upon request. 4. Insurer must submit entire list of insurance in effect, which may be compared with registrations at a state agency. Almost all states utilize approach No. 1 as the main, baseline process of automobile insurance verification. However, most states further supplement their verification process by also requiring one or more of the other three approaches. These

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The uninsured motorist rate has been on a steady increase over the last several decades and is now at 15 percent. This ties Maryland for 15th worst on a national level.


10 most expensive states for auto insurance 1. Michigan, $2,541 2. Louisiana, $2,453 3. Oklahoma, $2,197 4. Montana, $2,190 5. Washington, D.C., $2,146 6. California, $1,991 7. Mississippi, $1,896 8. New Mexico, $1,896 9. Arkansas, $1,836 10. Maryland, $1,807 10 least expensive states for auto insurance 42. Utah, $1,272 43. Virginia, $1,237 44. Iowa, $1,179 45. North Carolina, $1,154 46. Ohio, $1,152 47. Tennessee, $1,146 48. Wisconsin, $1,128 49. Maine, $1,126 50. South Carolina, $1,095

three additional techniques allow for states to further refine their records and also catch those drivers who may slip through the cracks of the first technique. Maryland currently only utilizes verification process No. 1. Verification and subsequent enforcement measures do make an impact. Take, for example, the city of Dallas, Texas. The city passed an ordinance that dictated if a driver is pulled over by law enforcement and unable to provide proof of insurance, his or her car will be towed on the spot, and the driver will be issued a receipt for the vehicle. To retrieve the car, the driver must present the receipt and show proof of insurance and a driver’s license or other ID. The driver also must pay for the cost of

51. Vermont, $995

Estimated Percent of Uninsured Motorists by State in 2009 State Unisured State Unisured State Unisured Mississippi 28% Maryland 15% Virginia 11% New Mexico 26% Texas 15% Delaware 11% Tennessee 24% Illinois 15% South Carolina 11% Oklahoma 24% Wisconsin 15% Wyoming 10% Florida 24% Missouri 14% Oregon 10% Alabama 22% North Carolina 14% Kansas 10% Michigan 19% Nevada 13% Connecticut 10% Kentucky 18% Minnesota 13% North Dakota 9% Rhode Island 18% Alaska 13% South Dakota 9% Indiana 16% Louisiana 13% Utah 8% Washington 16% Arizona 12% Idaho 8% Arkansas 16% Iowa 11% Nebraska 8% Ohio 16% Montana 11% Vermont 7% Georgia 16% Hawaii 11% Pennsylvania 7% Disgtrict of Columbia 15% New Jersey 11% New York 5% Colorado 15% New Hampshire 11% Maine 4% California 15% West Virginia 11% Massachusetts 4% Source: Insurance Research Council

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the tow, a $350 fine and a $20/day charge for storage in the lot. Beyond verification and enforcement measures, there is also a strong correlation between a state’s average insurance premium costs and its rate of uninsured motorists. It goes without further explanation to say that the higher premiums are in a state, the higher the rate of uninsured motorists. Additionally, poor economic conditions are usually tied to an increase in uninsured motorists. According to the IRC, an increase in the unemployment rate of one percentage point is associated with an increase in the uninsured motorist rate of more than three-quarters of a percentage point. The countrywide average of auto insurance premiums for one vehicle for one year is $1,671. Maryland falls into the 10 most expensive states, with an average premium of $1,807. Of the 10 most expensive states for auto insurance, all are within the top half of the nation for the highest rate of uninsured motorists, with most topping the chart. It’s safe to say that Maryland’s minimal approach to verification and enforcement measures, combined with its high average automobile insurance premium, is contributing to the uninsured motorist rate of 15 percent.

Primary Agent | September 2012

Maryland’s minimal approach to verification and enforcement measures, combined with its high average automobile insurance premium, is contributing to the uninsured motorist rate of 15 percent.

that the uninsured motorist claim process is not as easy as a standard claim and requires much more time, work and frustration for the agent and customer. MAP members also reported receiving more frequent questions

about uninsured/underinsured (UM/UIM) coverage. Customers increasingly are seeing the hypocritical nature of the scenario, especially in tough economic times, and know that responsible drivers now need to over-insure

How uninsured motorists affect the Maryland marketplace After monitoring these numbers over the years and reading various commentary on the issue, IA&B began to question the effect of Maryland’s uninsured motorist rate on the industry and, specifically, on agents. As a result, IA&B took the issue to members during the spring 2012 Member Agent Panel (MAP) meetings. IA&B asked MAP members for their thoughts on whether claims with uninsured motorists are on the increase, what problems those claims pose for an agency, and why there is or isn’t a problem in Maryland. General consensus among the panel of members was that uninsured motorist claims are increasing with their customers: What used to be a rare occurrence is now becoming more common and, oftentimes, more severe. In fact, most agents participating in the MAP meetings reported seeing three or more uninsured motorist claims in a year; previously, these agencies encountered only one or two claims per year. They also shared

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 [ 13 ]


Meet the task force Don Cooper Jr. Cooper Insurance Agency Fruitland, Md. Bryan Hanes Antietam Insurance Associates Inc. Hagerstown, Md. Robert Klinger Klinger & Associates Inc. Germantown, Md. Jay Radov Gebco Insurance Associates Inc. Hunt Valley, Md. Paulette Troutner Boizelle Insurance Partnership Gaithersburg, Md. King “Kip” White Jr. American Insurance and Financial Services Inc. Fallston, Md.

themselves for fear of being hit by an uninsured motorist. Members also noted that insurers continue to absorb, and then pass on, costs associated with uninsured motorists. While it is illegal to surcharge a policy for an uninsured motorist claim, companies simply can raise premiums in a state due to overall uninsured motorist costs. And that creates a vicious cycle: Companies need to raise rates because not everybody is paying into the system, and not everybody is paying in to the system because rates are so high. Finally, member agents raised a last point at MAP meetings. The 15 percent of Maryland drivers

who don’t have insurance is a significant number of potential insureds. While not all uninsured motorists would be considered prospects for independent agents, most members stated that forcing these individuals into the market inevitably would bring new business. And in today’s market, agents are looking for new business any way they can find it.

What steps IA&B will take in response The feedback from member agents was invaluable for the IA&B of Maryland Board of Directors. The board saw that this is a growing problem in Maryland, one that is affecting independent agents, their customers and the marketplace. It was also noted that while some attempts have been made over the years to address Maryland’s uninsured motorist rate, there has been no substantial undertaking on the issue.

It’s a vicious cycle: Companies need to raise rates because not everybody is paying into the system, and not everybody is paying in to the system because rates are so high. The board, during a recent meeting, agreed to the formation of an IA&B of Maryland Uninsured Motorists Task Force. Task forces are used at IA&B for

[ 14 ]

specific topics and issues that call for in-depth study. They are comprised of volunteer member agents with interest and experience on the specific issue. In this case, the IA&B Uninsured Motorists Task Force is comprised of six member agents who are charged with completing their work by Nov. 15. This will allow the IA&B of Maryland Public Affairs Committee ample time to consider legislative strategy before the 2013 legislative session. The task force will operate in two distinct phases: 1. Fact finding: Through research, informational meetings and other means, the task force will determine how other states are addressing and enforcing uninsured motorists, as compared to Maryland, as well as determine who the key stakeholders are in this issue. 2. Addressing the issue: Based on information gathered during the fact finding phase, the task force then will suggest meaningful solutions to Maryland’s growing uninsured motorist rate. These potential solutions could be both legislative and nonlegislative in nature. The task force’s findings will be reported to the IA&B of Maryland Board of Directors, as well as the IA&B of Maryland Public Affairs Committee. From there, a decision will be made,

based on the task forceâ&#x20AC;&#x2122;s suggestions, on the strategic direction of the associationâ&#x20AC;&#x2122;s work on the issue. While IA&B does not expect to solve this issue singlehandedly, the goal is to provide a different perspective to the problem. Independent insurance agents see how the issue affects everyone, from the customers they serve, to the companies they represent. IA&B is helping to tap that experience and point of view to provide ideas for meaningful solutions. Members can anticipate updates on the task forceâ&#x20AC;&#x2122;s progress throughout the fall and, following presentation to the board and public affairs committee, a full report on the task forceâ&#x20AC;&#x2122;s findings and recommendations. ______________________________________________

Jason Ernest is legal counsel and vice president of advocacy for IA&B.

Imagine lower risk Weâ&#x20AC;&#x2122;re specialists that protect you PennPRIME is the municipal entity specialist that can clearly illustrate ways to reduce risk. Formed, owned, and governed by our members, PennPRIME offers an array of products and services that are custom-tailored for Pennsylvaniaâ&#x20AC;&#x2122;s cities, townships, boroughs, and authorities. Composed of two insurance Trusts, PennPRIME provides comprehensive property, liability and workersâ&#x20AC;&#x2122; compensation coverage as well as unique service programs like grants, training opportunities and sample loss control policies. Imagine a relationship with an organization that has the leadership, advocacy, HUK7LUUZ`S]HUPHZWLJPĂ&#x201E;JL_WLY[PZL[V[HRL[OLI\YKLUVMYPZRTHUHNLTLU[VMM`V\Y shoulders. Keep up with the latest in risk management. Imagine yourself a member of PennPRIMEâ&#x20AC;Ścall today!

Â&#x2039;  Â&#x2039;^^^WLUUWYPTLJVT PennPRIME is a service program of the Pennsylvania League of Cities and Municipalities

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Insure the future of your profession with AgentPAC

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

Primary Agent | September 2012


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

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

[ 17 ]

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


About the IA&B government affairs team Two full-time staffers and a contract lobbyist — with input from 10 member agents on a government affairs committee — lead Insurance Agents & Brokers of Maryland’s legislative efforts. The IA&B team has a constant presence in Annapolis, advancing laws and regulations that benefit members and monitoring those that could negatively impact agents’ business and the industry as a whole. The team enjoys strong relationships with legislators and their staff, as well as with the Maryland Insurance Administration, and regularly meets with policymakers and regulators to present member agents’ concerns. IA&B also advances independent agents’ positions through a presence on various boards and committees, such as the task force commissioned in 2012 to examine Maryland’s insurers of last resort.

An AgentPAC contribution is distinctly different from a personal contribution to a candidate. Personal contributions are just that — personal. They’re based on personal relationships or personal preferences regarding political parties and any number of political issues. When a legislator receives an AgentPAC check, there’s no question in his or her mind what that contribution means. It’s a show of support for a candidate who understands the insurance industry and shares its concerns. Does having a strong PAC equate to “buying votes”? Does it mean that IA&B will win the day on every issue? Of course not. It does, however, mean that IA&B will have a seat at the table when issues affecting independent agents are being decided upon by legislators. A well-funded PAC gives the association greater clout and allows the IA&B government affairs team to attend a variety of political events across the state during which time they have the opportunity to interact with and build relationships with legislators. These relationships are of the utmost importance. Legislators are presented with hundreds, if not thousands of bills during every legislative session. They can’t possibly be experts on all the topics covered in these pieces of legislation. Lawmakers rely heavily on input and research

[ 18 ]

provided by lobbyists in order to make sense of the various points of view on any given subject. And there’s always more than one point of view on any issue. For every argument in favor of a bill, there’s an equally strong counter argument, with interest groups on either side. Don’t you want IA&B to be one of the groups whose point of view is taken into consideration? Please consider a contribution to AgentPAC today. Waiting until a legislative crisis comes along to get involved and start contributing is a little like trying to add flood coverage to your homeowners’ policy after finding out that a hurricane is on its way — it’s just too late. A well-established, well-funded political action committee is your insurance against legislation that may negatively impact your industry and makes it easier to educate and influence legislators on the issues IA&B supports. Show your commitment to the preservation of your profession by making an AgentPAC contribution today. It’s a small premium to pay. Visit ______________________________

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






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Employment Relationships Seminar

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CISR—Personal Residential Course

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Lancaster, Pa.


Dynamics of Service Seminar

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CISR—Commercial Casualty Course

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*CISR Marathon Week

IA&B On-Demand Training Education from IA&B is now available online when and where you want it. Visit for more information.

[ 19 ]


Getting to know IA&B’s contract lobbyist

As IA&B’s contract lobbyist, Bryson Popham helps to maintain the association’s daily presence in Annapolis. A veteran of the insurance and legislative industries, he employs his strong relationships with legislators and their staff, as well as with the Maryland Insurance Administration, to advocate on IA&B members’ behalf.

Primary Agent | September 2012

Name: Bryson F. Popham Title: Partner Company: Popham & Andryszak, P.A. Education: Juris Doctor

Q. Why did you become a lobbyist? A. I became a legislative aide for my local legislator when I was an independent insurance agent in my real life. Because insurance is heavily regulated at the state level, I saw many different kinds of legislative proposals on our business, and I became interested in how those proposals became law. Q. How did you enter the field? A. I was a principal in an independent insurance agency and a PIA [Professional Insurance Agents of Pennsylvania, Maryland and Delaware — a precursor to today’s Insurance Agents & Brokers] member. My interest in legislative issues coincided with the PIA’s need for a lobbyist in Maryland, and I was probably the only registered lobbyist at that time who was active in the insurance business.

“Our constant challenge is to provide relevant information to legislators about our business and

Q. What do you like most about your job? A. Working with the volunteers on our public affairs committee. These are the people who take time away from operating their agencies to come to meetings, call legislators and set legislative policy for the association. It’s a privilege to work with them.

about the value of our

services…. I can say with pride that legislators frequently look to

IA&B for answers when they have an issue involving

Q. How long have you represented IA&B? A. Since 1982. Q. What do you consider your greatest accomplishment(s) while representing IA&B members? A. This job is not about individual accomplishments. To be effective, a lobbyist must be several things: educator, advocate and analyst, among others. The lobbyist needs to remember that issues important to your clients may not have the same degree of importance to legislators. In the 90-day session of the General Assembly each year, more than 2,500 separate bills are introduced, and it’s easy to lose your issue in that mass of legislation. So in order to have a legislator focus on your issues, a lobbyist must first analyze the issue, educate the legislator and advocate your position in the

[ 21 ]

insurance producers.”


strongest possible terms. Oh yes, and you often have to do all of this in a 10-minute conversation walking from the legislator’s office to a committee room. Sometimes my greatest accomplishment is simply getting a legislator’s attention. Elected officials are increasingly disconnected from business – especially small business. There are far fewer business owners in the Maryland legislature today than there were 25 years ago, and less than a handful of them are insurance producers. Because most legislators do not know our business, they can be tempted by simple solutions to complex problems, such as cutting commissions when insurance rates increase. Our constant challenge is to provide relevant information to legislators about our business and about the value of our services. This is a collaborative effort between IA&B staff, IA&B members and myself. I can say with pride that legislators frequently look to IA&B for answers when they have an issue involving insurance producers. Q. What legislative/policy issues do you anticipate will affect Maryland’s independent insurance agents in the coming year? A. Over the last several years there have been efforts to address perceived market availability issues, e.g., medical malpractice in 2005, by reducing producer commissions.

Legislators who do not know what services agents provide often promote this “solution.” This illustrates the need for greater education of legislators (see above) but also to have IA&B members contact legislators directly, preferably in the district where our members live and work. Legislators will pay attention to constituents who vote.

“Agent participation is essential to the success of IA&B’s legislative efforts. While legislators are accustomed to dealing with a lobbyist like me, there is no substitute for the views of an agency principal whose business is directly affected by a legislative proposal.”

Another issue that concerns our IA&B Public Affairs Committee has been recent market restrictions in the availability of homeowners’ insurance in coastal areas. We must continue to get the message out to legislators and regulators that independent agents are uniquely positioned to address the needs of our insureds with a selection of

[ 22 ]

products from different insurers. This is an advantage that the direct writers do not have. Q. What can agents do to assist your efforts? A. [Response from Bryson in 2007:] Agent participation is essential to the success of IA&B’s legislative efforts. While legislators are accustomed to dealing with a lobbyist like me, there is no substitute for the views of an agency principal whose business is directly affected by a legislative proposal. If the agent is a constituent of the legislator, the impact is obviously greater. IA&B has been truly fortunate to have a dedicated group of members who will step up when asked to engage in grassroots lobbying. [Response from Bryson in 2012:] I gave the answer above when you asked this question of me several years ago. It is still true today. Constituents who vote exert a powerful influence on the legislators who represent them. If an IA&B member is willing to take on a new client on behalf of our industry – the client being a local legislator – the benefit may not show up on a commission statement, but we will see it in the laws that are enacted, and the bills that are defeated, in Annapolis. It is a modest investment in time and effort that can have a big payoff for all of us.

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


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.


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.



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 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

Encompass Insurance


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 IA&B’s legislative efforts

IA&B 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 IA&B of Maryland 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 IA&B’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 IA&B’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 Maryland, specifically the state health exchange and how to best preserve the role of the insurance producer

Current committee members: Chairwoman Linda McCann Bay Shore Insurance, Salisbury Vincent “Chip” Boylan Willis of Maryland, Potomac Bryan Hanes Antietam Insurance Associates, Hagerstown

w Exploring ways to combat Maryland’s uninsured motorist rate in conjunction with the separate IA&B Task Force dedicated to the subject

Robert S. Klinger Klinger and Associates, Germantown

w Continued monitoring of the certificates of insurance legislation and its effects across the state

Arthur W. Lambert Lambert Insurance Agency, Baltimore

IA&B is always looking for a few good men and women to serve on this vital committee. Contact the IA&B Member Service Center at 800-998-9644, option 0, or e-mail to express interest.

Craig S. Mader Craig S Mader Insurance Agency, Crofton Charles McClenahan Landmark Insurance, Princess Anne Jay A. Radov Gebco Insurance Associates Hunt Valley E. Larry Sanders III Edward L Sanders Insurance Agency La Plata King "Kip" White, Jr. American Insurance and Financial Services, Fallston

[ 27 ]

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”

[ 28 ]

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.

[ 29 ]

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:

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.

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.

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,

[ 30 ]

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. 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 — 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.



olitical junkies and casual observers alike find value in IA&Bâ&#x20AC;&#x2122;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 IA&B is working on their behalf.


Video synopsis

Links for more details Concise updates

AgentPAC news Legislator profile

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.

[ 31 ]


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

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

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.

Ad Index Atlantic Specialty Lines Inc. . . . . . . . . . . . . . . . .7 Guard Insurance Group . . . . . . . . . . . . . . . . . .15 Harford Mutual Insurance Co . . . . . . . . . . . . . .9 IA&B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .IBC IA&B Partners Program . . . . . . . . . . . . . . . . . . .25 Interstate Insurance Mngmnt. . . . . . . . . . . . .OBC Millers Mutual . . . . . . . . . . . . . . . . . . . . . . . . .IFC Penn National . . . . . . . . . . . . . . . . . . . . . . . . . .13 PennPRIME Insurance . . . . . . . . . . . . . . . . . . . .15 Preferred Property Program . . . . . . . . . . . . . .IBC

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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.

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

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Primary Agent - September 2012 - MD Edition  
Primary Agent - September 2012 - MD Edition  

Primary Agent - September 2012 - MD Edition