Resources Magazine Summer 2003

Integrity, Innovation, and Imagination: The Meaning of the “I” in Your CIC Designation You had the courage to undertake the difficult task of attaining and maintaining your designation. You showed a steadfast commitment to overcome the challenges before you. We built the Society of CIC on a foundation of integrity and imagination. You are a designated insurance professional — your kind of character has defined greatness and success throughout the industry. Integrity…innovation…imagination…C I C.

in this issue…

From the President TURNING PAGES As a CIC, CRM, or CISR, how many times have you sat in class next to a person who was simply turning the pages in the course notebook? This is the person who turns a page, checks his watch, turns the page, stares at the ceiling, or turns a page and looks over to see what you are doing.

The page being turned could represent a minute of the class day, an entire day, an entire year, or it could be the last day of a person’s career.

Each page being casually turned represents a lost opportunity to learn and be a smarter, more competitive person, because in too many cases, these individuals are in class only to “endure the day.” Their goal is to see the day and their career eventually come to an end. When they turn that last page, will they see a notebook richly filled with examples of accomplishment, or just a bare outline of “what could have been?”

There are too many instances of people who work to avoid failure—just survive or endure the day. These are clearly not the results we are collectively trying to achieve. The result we are working for is nothing less than success. It is to honestly strive to meet our goals and then be able to come forward and take pride in our accomplishments. We should never forget the time-tested truth that a person must first have pride in himself before others can be proud of him as well.

The CIC, CRM, and CISR designations represent success to clients, colleagues, and coworkers because they are a reflection of you and your continuing commitment to excellence. As a CIC, CRM, or CISR, you occupy a position of leadership that is both an honor and a responsibility, a significant element of which is to always lead and work for success, and know you’ll be proud of what you see when you turn that last page.

Features 4

A New BOP from ISO Why should we care?

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Crime Rolls On Policing the latest policy changes

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California’s New Construction Defect Law How will it impact the industry?

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Long-Term Care Insurance How to make those premiums seem almost attractive

24

Looking at Your Customer Service from the inside-out and outside-in

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Raising the Bar for expert witnesses

30

Human Resources Laws and Your Agency Learn the rules and the ropes

Departments 12

Are You Game?

Risk management crossword puzzle

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Ruble Vacation Destination Seminars Some updates are just more fun

34

Agencies Use Sales Centers Should yours?

Alliance News 11

Taking it to the RIMS with Lance Ewing, president of RIMS Executive Council

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The National Alliance National Program Schedule Producer School Grads Get High Marks from Board member Bruce McCreadie

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Meet the Chairman of the Board Douglas Hotchkiss, CIC, CPA

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In the News Movers, shakers, headline-makers

President, The National Alliance 2007-0603

Website: www.TheNationalAlliance.com ◆ Email: alliance@scic.com ◆ Phone: 800-633-2165

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he BOP is one of the most important policies we have.

It’s a user-friendly, broad coverage form that fits many of your small business accounts. We feel that it’s important enough to include as a mandatory two-hour segment at every CIC Commercial Property Institute.

However, one criticism we frequently hear at these institutes is, “Nobody uses the ISO form; all company filings are different.” If I am quoting something you may have said (or thought), you may be interested to learn that most carriers follow the ISO wording. Check the definitions and exclusions of one of your company’s forms against an ISO form, and you’ll find that they’re the same, practically word-forword. Each carrier’s arrangement may be unique, but the content is almost identical.

Given this information, you may also be interested to learn that in 2001, ISO introduced a new Businessowners Policy that is significantly different from the BOP we have seen in the past. The edition date is July 2002, and approximately 40 states have approved the filing. Because carriers frequently follow ISO’s lead, underwriters at your companies may be using this new form, or their adaptation of it, in the very near future.

Some Major Changes: ■

The policy still has two basic coverages—Property and General Liability. However, making things simpler, ISO includes just one coverage form, the BP 00 03, a 43-page policy form for both property and liability.

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BP 00 03 provides Special-Form, open-perils property coverage. I’ll say it again: this is the only form. For those risks that qualify for (or wish to purchase) more limited property Causes of Loss, you must attach/request an endorsement to reduce the coverage to specified causes of loss.

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To take care of most of your clients’ particular requirements, ISO offers approximately 40 revised or newly created endorsements, which greatly enhance the flexibility and usefulness of this policy.

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An improvement that will be much easier to implement (and to show to an insured) is that most limit changes made at inception are included on the Declarations Page rather than on endorsements buried in the back of the policy.

Continued on page 6.

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A New BOP from ISO…Continued from page 5.

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Furthermore, to make the policy even more user-friendly, ISO has introduced a four-page coverage index. So, when an insured troubles you for an answer on a coverage issue, rather than fumbling through all 43 pages, you can quickly find a page number and turn to Business Income or whichever section you need.

Of course, your markets may not follow this exactly, but ISO has increased size and coverage eligibilities in several areas. Even tougher exposures like contractors can be covered, though subcontractor costs cannot exceed 10 percent of actual sales, so this will not be your solution for “paper contractors.” Gross sales are increased to a $3,000,000 limit at any one insured location. On the other hand, office buildings are still limited to six stories in height and not more than 100,000 square feet. So, as you can see, some things stayed the same, while others are better.

Improvements in Business Personal Property The Property section still covers the insured’s Building and Business Personal Property. It now includes computers and data subject to exclusions, limits, etc. Another new item within this coverage concerns Business Personal Property of Others that is subject to a written contract governing the insured’s liability “based on the written lease.” The loss payment will be based on the amount of the insured’s liability. However, payment will not exceed the replacement cost of the property or the policy limit. Otherwise, Personal Property of Others is still settled on an ACV basis.

This nice addition should help your small business owner who frequently has written contracts or leases on photocopiers, mail machines, and other personal property, even desks and file cabinets. Keep in mind that this automatic Business Personal Property of Others coverage is included within the Business Personal Property limit, so you need to encourage the insured to purchase adequate limits.

Another improvement in this section is that computers and data are now consid-

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ered Business Personal Property, so there is no longer any need to cover them separately. But again, make sure the limits are adequate.

Some Nice Touches on Business Income The Additional Coverages portion of the BOP mirrors the 2002 Commercial Property Policy. Under this section, Business Income continues with the same coverage wording: “actual loss sustained due to a suspension of operations during a period of restoration.” And as in the past, a direct cause of loss must occur at the described premises. An additional item, however, is the inclusion of a $5,000 limit for Dependent Property Coverage (either buyer or seller). Higher limits are available and a change would be one of the items showing up on the Declarations Page.

Here’s a big change (limitation) you’ll need to pay attention to. Rather than being open limits for 12 months as some policies read in the past, Ordinary Payroll Expenses now are limited to 60 days, with the exception of executive officers, managers, etc. To modify the effect of this limitation, you can specify additional exemptions or inclusions for specific job classifications or employees within this “ordinary payroll” category. These revisions would appear on the Declarations Page.

The policy still includes a 72-hour deductible, but a new endorsement, BP 04 41, can completely remove it. This endorsement was not available in the past, so this brings the BOP more in line with what’s happening in the marketplace with an available ISO Commercial Property Policy endorsement.

Another broadening option under Business Income is Extended Business Income for 30 days beyond the period of restoration. Again, we have flexibility: insureds may increase this limit in 30-day increments, and that change will appear on the Declarations Page.

The new form still has Civil Authority coverage, a nice item that may, in some cases, fill coverage gaps we face in today’s society.

Please keep in mind that while the Business Income coverage provided by the BOP is unlimited in amount, it is still limited by time. Coverage ends at the end of the “period of restoration” or 365 days from the date of loss, whichever comes first.

Coverage Extensions ISO has added Increased Costs of Construction coverage under Section I, Property, but the most that will be paid is $10,000 for updating to current code (in the damaged portion only) of each described building. I admit that it’s doubtful this $10,000 is a meaningful amount when it comes to Ordinance or Law coverage necessary for most clients, but it’s a start, and you can use an Ordinance or Law endorsement, BP 04 46, to increase this basic limit. One of the exceptions to the rule: this limit will appear on the endorsement rather than on the Declarations Page.

The BOP now includes $100,000 for Business Personal Property for 30 days at newly acquired premises. Please note that this still is not a solution for fairs or exhibitions exposures.

The limit for Outdoor Property increases to $500 for any one tree or plant with a $2,500 maximum, and there are no endorsements available to increase this coverage.

Valuable Papers and Records coverage, including cost of research, is now included for $10,000 on premises and $5,000 off premises, with the option to increase again on our now famous Declarations Page.

Glass is included as part of the Building for the building owner, and for the tenant, it is part of the Business Personal Property. Watch your limits to make sure they are adequate to include this value.

Exclusions The majority of the exclusions you will see in the new BOP are the same as those we see in the CPP. However, there are a few new ones.

One important exclusion is errors and omissions in programming or processing of records, installation, testing, or repair of computer systems and electrical disturbance or erasure of computer records.

Business Personal Property Seasonal Increase The wording in this section has not changed. It continues to provide an automatic increase of 25% to allow for seasonal changes in Business Personal Property. This has been a selling point for years, but keep in mind that it still comes with caveats: This increase applies only if the limits of insurance for Business Personal Property are at least 100% of your average monthly values for the 12 months preceding the loss or the time the account has been in business. If the 100% is not met, the seasonal increase does not apply. If you are going to sell this feature, please beware!

Deductibles The standard policy deductible increases to $500, with options from $250 or up to $2,500 available. No dollar deductible applies to Business Income, and no deductible applies at all if the 72-hour deductible has been removed. If an optional deductible over the $500 is selected, the $500 deductible still applies to employee dishonesty, outdoor signs, glass, money and securities, and forgery.

Example: If the insured selects a $1,000 deductible, the $500 deductible still applies to those coverages listed.

Homeowners Policy. If at the time of loss the amount of insurance is less than 80%, the loss will be paid based on Actual Cash Value or the Valuation Formula described in the policy, but never more than the limit of liability. An insured can make a claim for damages on an ACV basis, and still make a claim for replacement cost later, if it is done within 180 days after the loss.

(Note that repairs do not have to be completed within 180 days, but the insured must give notice within 180 days.)

Businessowners Liability The 43-page BOP form includes Commercial General Liability coverage with wording based on ISO’s 2001 CGL filing.

Standard limits are $300,000, which can be increased to $2,000,000.

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A notable revision in the main form is a reference to Internet liability, much like the latest edition of the Commercial General Liability policy.

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The length limit for coverage for nonowned watercraft increases from 26 to 51 feet.

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One very useful new endorsement is a per-project general aggregate, form BP 07 02.

Coinsurance As in the past, the policy does not technically contain a “coinsurance clause.” In the loss payment section, you will still find a paragraph explaining that the limit of insurance must be 80% or more of the full replacement cost of the insured property at the time of loss.

This BOP wording is very similar to the loss settlement provision in the

As in the past, occurrence-based Professional Liability coverage is available by endorsement for funeral directors and barbers, as well as limited pharmacists liability.

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Employee Benefits Liability coverage is available by endorsement, as are a limited Pollution Liability Extension and Liquor Liability coverage.

The BOP is more useful than ever.

As you can see, this policy that nobody cared to learn about is suddenly much

more interesting. The trick to using the new BOP is knowing what it does and does not do, and knowing when and how to use the endorsements. It’s certainly not the solution to all your accounts, but it definitely has its uses for many small businesses. And, if you are familiar with the ISO BOP policy (or one BOP policy), it is much easier to compare the differences among policies with other carriers in your office.

I think you are going to find more and more opportunities to use this BOP. It may even perform its originally intended function of giving smaller insureds more coverage for less money—in a policy that is easier for the agent to use with less trouble

for the underwriter. It’s a significantly improved, win-win-win policy.

About the Author: Rodney R. Rezac, CIC, CPCU, ARM Rod has been in the insurance industry since 1976. He is a past president of the Professional Insurance Agents (PIA) of Kansas and was one of four Kansas agents who founded the original CISR Program.

Rod currently serves as regional director for The National Alliance, responsible for the conduct of CIC and CISR programs in a number of states.

Learn More About this Topic from The National Alliance To learn more about the Businessowners Policy, attend a Commercial Property CIC Institute in your area. Or, if you’re a duespaid member of the Society of CIC, you may want to consider the Small Commercial James K. Ruble Seminar, which covers the BOP. Certain Graduate Ruble Seminars include the topic as well. Contact The National Alliance or your sponsoring state association for more information.

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espite reports that national crime rates have declined in the past two years, a reported property crime occurs every 3.1 seconds.

In the year 2000, an estimated $16.4 billion in stolen property was reported1. This translates into a major exposure for those insureds who own property. As some of the types or methods of theft have changed, so the insurance forms have been (and need to be) modified in order to properly cover these exposures.

1 “Bureau of Justice Statistics Property Crime Trends� Bureau of Justice Statistics—The National Crime Victimization Survey, 2001.

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During the year of the new millennium, we were introduced to new commercial crime coverages. The 2000 Crime form changes were substantial—not only in terms of coverage, but also in how the coverages were organized or structured.

Hopefully, you and most of the insurance community have learned those changes (Resources, Spring 2001—“It’s a Crime Not to Insure!” pgs.10–13). Why? Because beginning on September 1, 2002, most states permitted the implementation of a revision in Commercial Crime and Fidelity forms. The good news is that the changes are few when compared with the 2000 Crime forms. However, in some areas the changes are of real significance or consequence. In this article, we will go over many of these changes.

There are three major areas or focuses of change. First, based on suggestions from a variety of persons or organizations, the ISO has introduced a separate kidnap/ransom and extortion coverage. This is seen as an improvement over other coverages that have been offered, and in the case of extortion coverage, it serves as an alternative. Second, with the increasing influence of computers and increase of computers as the subject of crime exposures, a number of endorsements have been developed to enhance current computer coverage provided under the Crime and Fidelity programs. Third, a number of coverage enhancements and modifications have been applied to some of the Crime and Fidelity coverage forms, policies, and endorsements.

an ‘insured person’ for the purpose of demanding money or other consideration in exchange for their release.” The word extortion means an act that causes the threat to do harm either to an “insured person” or “property.” The extortion can include the threat to introduce a virus into the insured’s computer system; the contamination of the insured’s products or goods; or the dissemination, divulging, or utilizing of proprietary information such as formulas, patents, or copyrights.

Kidnap/Ransom And Extortion— Expenses Incurred Those expenses incurred in obtaining the release of a kidnapped victim or an extortion threat are found in this insuring agreement. Some examples of these expenses include: • fees and costs of the Security Firm shown in Declaration hired to negotiate or secure the release of kidnapped; • fees of independent negotiators; • travel costs and accommodations incurred by the named insured or an “insured person”; • hospitalization and medical fees, including psychiatric care or plastic surgery of an insured person within 24 months; • interest costs for any loan from a financial institution taken by the named insured to pay a ransom demand or extortion threat; or • any other reasonable expense incurred by the “named insured” with the insurer’s consent.

Detention Or Hijack The coverage form (Kidnap/Ransom And Extortion Coverage Form CR 00 40) and policy (Kidnap/Ransom And Extortion Policy CR 00 41) provide the coverage through four insuring agreements. The insuring agreements are briefly described below:

Kidnap/Ransom And Extortion— Direct Loss This pays for direct loss resulting from the payment of money, securities and other property or consideration arising from a “kidnap,” alleged “kidnap,” or extortion.

The policy defines “kidnap” as an “involuntary abduction by force or otherwise of

This provides for the payment of various fees and costs associated with obtaining release of the unlawfully detained or hijacked person.

In-Transit Delivery Of Property The loss of money being delivery as payment for a ransom while in the care and custody of a “messenger” is provided in this insuring agreement. While the most common cause of loss would be robbery, destruction is also included within the causes of loss.

Exclusions Most of the exclusions are similar to those found in the other commercial crime coverage forms and policies. One unique ex-

clusion is Surrender Of Property. The form excludes a loss resulting from the surrender of property used as payment of ransom demand if it occurs inside the premises where a kidnap takes place unless the property is first brought in from outside.

Three unusual exclusions that only apply to the Detention Or Hijack Insuring Agreement include: Political Or Military Activity This exclusion eliminates coverage for those persons engaged in military or political activities.

Travel Documents There is no coverage for an insured person who is detained because of improper or inadequate travel documentation.

Violation Of Law Of Foreign Countries This exclusion states there is no coverage for loss arising from the detainment resulting from a violation/s of the laws of a foreign country.

Conditions As in the case of the exclusions, most of the conditions are common to the other crime forms. The following are applicable to Kidnap/Ransom And Extortion: Confidentiality Agreement Due to the nature of the exposure, it is logical to state the importance of the insured’s silence related to the existence of coverage to anyone.

Investigation And Settlement Of Claim The insurer is permitted to settle losses it deems expedient with the insured’s consent. This provision is similar to many professional liability policies and sometimes referred to as a “blackmail clause.”

It receives its nickname because if the insured fails to consent, the insurer is only liable for the amount for which it could have settled the loss.

Territory The territory for this particular coverage is worldwide with a few significant exceptions: 1) No coverage for acts of kidnap in countries where a Travel Warning has been issued by the U.S. State Department unless the country is listed on the Declarations; 2) Applies only to “premises” or “property” located in the U.S. (its territories Continued on page 10.

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Crime Rolls On …Continued from page 9. and possessions), Puerto Rico, Canada, and other countries listed in the Declarations; and 3) If a new travel warning is issued for a foreign country, coverage ceases for any person traveling to that country beginning 24 hours after the issuance of the warning unless the insurer consents in writing.

Endorsements As one might expect, there are several new endorsements related to this Kidnap/Ransom and Extortion coverage. Some of them include: Death And Dismemberment CR 45 02 This endorsement includes coverage to a kidnapped person for a loss of a limb or eyesight or to their estate in the event the kidnapped person dies.

Products Recall Expenses CR 45 03 Coverage is afforded for expenses incurred by the insured to recall products as a result of a threat to pollute or contaminate them.

Business Income And Extra Expenses CR 45 04 A loss of business income and extra expenses incurred by the insured as a result of kidnap/ransom and extortion incident is covered if this endorsement is attached.

Amend Territory Condition To Suspend Coverage For Foreign Business Operations CR 45 05 This endorsement is attached by the insurer so as to suspend coverage for foreign business operations in the event the U.S. State Department issues warning against travel to the that country. After the issuance of the travel warning, coverage ceases after 14 days, unless the insured has obtained written consent.

Settlement Service Kidnap, ransom, and extortion has not been offered by many insurers. Some of these insurers have been reluctant to write this insurance not only because of the uniqueness of the exposure, but also due to the unique resources necessary to effect the successful return of the kidnapped person or the handling of the extortion negotiation. The explanation of the expenses covered in the insuring agreement alluded

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to some of these activities. To facilitate the writing of kidnap and extortion coverage, ISO has teamed up with Amsec International, a security management and loss control company that provides insurers risk-mitigation and response services for their customers. Amsec International provides claims response services, negotiators and contingency planning services.

The following coverage forms and policies are being revised: Commercial Crime Coverage Form (Discovery Form) CR 00 20 Commercial Crime Coverage Form (Loss Sustained Form) CR 00 21 Commercial Crime Policy (Discovery Form) CR 00 22 Commercial Crime Policy (Loss Sustained) CR 00 23 Government Crime Coverage Form (Discovery Form) CR 00 24 Government Crime Coverage Form (Loss Sustained Form) CR 00 25 Government Crime Policy (Discovery Form) CR 00 26 Government Crime Policy (Loss Sustained Form) CR 00 27

Insuring Agreements In the past, Funds Transfer Fraud Insuring Agreement was provided by endorsement CR 04 02. This new insuring agreement includes loss due to fraudulent transfer of funds.

Exclusions Several exclusions have been changed.

Fire An exception has been added to extend coverage for loss or damage to money and securities resulting from fire under the following insuring agreements: • Inside The Premises—Theft Of Money And Securities • Inside The Premises—Robbery Or Safe Burglary Of Other Property • Outside The Premises

Exchange Or Purchases Exchange or purchases or voluntary parting of title or possession of property now applies to Computer Fraud.

Funds Transfer Fraud This exclusion now applies to the Computer Fraud Insuring Agreement so as to avoid any possibility of overlap between the Funds Transfer Fraud and Computer Fraud coverage.

Voluntary Parting Of Title To Or Possession Of Property This exclusion now applies to the Computer Fraud Insuring Agreement.

Computer Fraud Logically, if ISO excludes Funds Transfer Fraud from Computer Fraud, then Computer Fraud should be excluded from Funds Transfer Fraud Coverage.

Conditions One change of conditions is of note. As applied to the Forgery Or Alteration Insuring Agreement, the Electronic And Mechanical Signatures condition will treat electronic or mechanical signatures as handwritten signatures.

Definitions One of the more significant changes comes in the definitions. In past editions of the crime forms and policies, an “employee” has not included a leased worker. This was inconsistent with the liability policies, e.g.

Commercial General Liability. The new definition includes leased workers and removes the necessity of adding CR 25 05— Included Leased Workers As Employees.

Another change to the definition is the inclusion of former employees serving as consultants, guest students, and interns.

The terms “Fraudulent instruction” and “Transfer account” previously found in Funds Transfer endorsement CR 04 02 were moved to the forms and policy consistent with the inclusion of the Fund Transfer Fraud Insuring Agreement.

Employee Theft—Name Or Position Schedule CR 04 08 The coverage that pays for theft committed by employees named or who are in

positions shown in this Schedule was revised to extend applicability to government entities.

Destruction Of Electronic Data Or Computer Programs CR 04 13 This newly introduced insuring agreement pays for loss arising from destruction or damage to electronic data or to a computer system caused by a virus or the malicious acts of a person. The coverage includes expenses incurred by the insured to restore or replace damaged or destroyed electronic data or computer programs. Most commercial property forms provide little or no coverage related to this exposure. Although most computer forms include coverage for this potential loss, there is a great deal of variance from one form to another.

Unauthorized Reproduction Of Computer Software By Employees CR 04 14 The unauthorized reproduction and/or use of software is common. Software agreements usually place restrictions on the number of machines or copies of a particular program. There are actually “software” police to discover such violations and those parties convicted are subject to fines. Usually, a disgruntled or guilt-ridden employee notifies the authorities. The coverage is provided by this new insuring agreement that pays for fines and penalties incurred as a result of unauthorized reproduction of computer software by employees in violation of a licensing agreement with a vendor.

Although many endorsements have been changed to correspond to the previously discussed changes and modifications in forms and policies, there are not many changes of great significance. There is no strong need to review these endorsements. Following are a couple of new endorsements.

Include Computer Software Contractors As Employees CR 25 42 A new endorsement broadens the defi-

nition of “employee” to include computer software contractors.

Add Faithful Performance Of Duty Coverage For Specified Government Employees Or Positions CR 25 43 This is another new endorsement that can be used with the Employee Theft Name Or Position Schedule Insuring Agreement when written for government entities. The coverage will pay for a loss arising from the failure of an employee to faithfully perform his/her duties as prescribed by law.

Conclusion Although the general exposure of crime has not changed over the years, there have been some significant variations in the methods used to commit the crimes. These changes have modified the exposures and stimulated a change of policies and forms that are used by insurance carriers to cover those specific exposures. The 2002 Commercial Crime forms are a reflection of that evolution.

About the Author: Ray Speas, CIC, CPCU, FLMI Ray is an academic director, educational consultant, and seminar manager for The National Alliance. He also teaches at CIC institutes and CISR courses. He has 30 years experience in the insurance industry, including work as a claims representative and training coordinator, and has been involved with insurance education most of his career.

Learn More About this Topic from The National Alliance Crime insurance is an optional topic of the CIC Commercial Property Institute. In some Ruble Graduate Seminars and CISR Advanced Lecture Series courses, crime is presented as a subject.

ance J. Ewing, CRM, ARM, executive director of corporate risk management of the world’s largest gaming company, Park Place Entertainment Corporation, was sworn in as president of the Executive Council of the Risk and Insurance Management Society, Inc. (RIMS) at the national membership meeting in Chicago this past April. This popular CRM faculty member has previously been on the RIMS Executive Council as first vice president and chief risk officer, vice president professional education, and vice president external affairs.

In his “inaugural” speech to the conference participants, Ewing pointed out the challenges to risk managers in what he defines as “this coming age of risk.” To successfully make an “integrated, organizational focus on risk management something with longevity and sustainability is the real test facing the enterprise risk manager,” he explained.

“Leadership and integrity will be the two foundational blocks of my presidency as we move forward together,” Ewing said, and then specified the characteristics that define true leaders: • They keep their commitments. They raise the bar, and realize their responsibilities, staying focused even when out of their comfort zone.

• They keep their promises. They say what they are going to do, then they do it. They deliver. Their success lies in following through.

• They make hard choices and are accountable. They act on situations or situations will act on them. Leaders take ownership for their decisions.

Ewing emphasized that risk managers are the “corporate conscience of our organizations” who have a contract with public trust. While many corporate leaders have quite publicly taken the easy way out, “We have to say and do the right thing,” he concluded.

Ewing’s one-year term as president of the Executive Council began May 1, 2003.

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It’s been proven that crossword puzzles are an excellent workout for the brain. These little brain-teasers are reported to be one way to help stave off the potential ravages of aging gray matter while they increase memory power—the “use it or lose it” contention.

This particular puzzle contains a number of words, terms, and definitions that pertain to the practice

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of risk management. Test your own risk management knowledge and see if you can solve most of this puzzle. If not, it may be time to consider filling in your knowledge blanks by registering for a Certified Risk Managers course. Even if you ace it, there’s a lot you can learn from any one (or all!) of the CRM courses—another proven way to increase your own personal brain power!

Solution on page 17.

Across 2. Surrender of a right 5. Formal social device for transferring risk 7. Event that disrupts normal activities 9. Condition within an exposure that may lead to an incident 13. Cause of loss 14. Amount of money an insurance company charges to provide the coverage described in the policy 20. Civil wrong 21. Accidental 22. Person holding value of another in a position of trust 23. Failure to use that degree of care which is considered to be reasonable 25. Exposure units related to payroll 26. Unexpected incident resulting in injury or damage 27. All components that are allocated to cover losses and expenses 29. Amount of money earmarked for a specific purpose 30. Promisor under a bond 32. Step in risk management process— reducing frequency and severity of losses 33. Units used to measure loss costs Down 1. Uncertainty concerning loss 3. Person who computes statistics relating to insurance 4. Step in risk management process— finding ways to transfer risk and pay for retained losses 6. Demand or obligation for payment as a result of a loss 8. Legally enforceable obligation 10. Step in risk management process— figuring out which risks exist 11. An amount specified in an insurance policy that is subtracted from a loss 12. Financial impact of a loss 14. Uncertainty as to whether the destruction of an object will occur 15. Exposure; can be real or intellectual 16. Step in risk management process—predicting types and amounts of future losses 17. Risk control technique 18. Basis of a claim for damages 19. Use of an insurer to issue insurance policy on behalf of self-insured or captive insurer 24. Office or organization where insurance is sold 28. Entity protected by a surety bond 31. Policy that guarantees the performance of a contract

CICs and CRMs, it’s time to get in touch with your inner benefits!

There are some terrific bonuses that come with the territory when your memberships are renewed and your annual dues have been paid.

The online Member Directory of Certified Insurance Counselors is a golden opportunity to have your name, organization, contact information, and area of specialization listed and within reach of millions. The Member Directory includes the top professionals in the insurance industry—only dues-paid CICs are recognized and registered in the directory.

Plus, we give CICs and CRMs these benefits without a doubt: ●

Access to a new feature on CIC Select: under the Management Liability category, and through AIG’s eWriter program, CICs can submit EPLI & D&O accounts online.

●

A free subscription to The Risk Report, newsletter of the International Risk Management Institute (IRMI).

●

And preferred registration at American Agent & Broker national insurance events.

And did you know that a free subscription to Rough Notes magazine is yours just for the asking?

Go online to www.roughnotes.com to subscribe.

To learn more about your benefits:

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he California Legislature has finally passed a Construction Defect law, SB 800, effective January 1, 2003. In the past, California has been the leader and provided nearly all of the case law on Construction Defect matters to the other states and how they relate to the insurance industry. As such, the new law will no doubt be significant in its impact on the entire industry.

The new law contains a number of interesting items. The bill purports to establish “clear standards and mechanisms for the prompt resolution of claims” and states it is “the intent of the Legislature that this act improve the procedures for the administration of civil justice, including standards and procedures for early disposition of construction defects.”

Whether or not it does so remains to be seen.

Among other things, the bill accomplishes the following: 1. Establishes specific definitions and liability standards of Construction Defects for the first time.

2. Provides 1, 2, 4, 5, and 10- year periods of time for filing actions.

supervision, testing, or observation of construction” against “a builder, subcontractor, material supplier, individual product manufacturer, or design professional” and states that they “shall be liable for” violation of the standards as set forth in the law.

After defining various terms, the bill contains a list of “actionable defects” naming various systems grouped under specific headings such as (this list is not complete) doors, windows, roofs, heating, ventilation, air conditioning, decks, stairs, foundations and slabs, hardscape, stucco, siding, exterior walls, retaining walls, plumbing systems, sewers, showers and baths, ceramic tile, countertops, load-bearing components, foundations, soils, fire protection, electrical, mechanical, manufactured products, irrigation systems, drainage, landscaping, wood posts, fences, paint and stains, noise standards, and more.

The defects are divided into eight areas, although many systems and their standards appear in more than one of these eight areas. They are grouped as: • water issues—18 items

3. Requires that claimants alleging a defect give builders notice of the claim prior to litigation.

• structural issues—4 items, including undefined “significant cracks”

4. Gives builders the right to repair before the homeowner could sue for violation of standards.

• fire protection issues—3 items

5. Provides immunity from liability for thirdparty inspectors.

6. Overturns the decision of the California Supreme Court in the Aas case.

7. Preserves homeowners’ rights to sue if still unhappy after the repair.

As always, the devil is in the details. In this bill, there are plenty of details, to be followed by the inevitable lawsuits and resulting case law “clarifications.” Here are very brief comments about and clarifications of these seven parts of the bill.

1. Establishes, for the first time, specific definitions and liability standards of Construction Defects.

The bill provides for “action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction, design, specifications, surveying, planning,

14

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• soil issues—3 items • plumbing and sewer issues—1 item • electrical issues—1 item • “other” areas of construction—15 items, including undefined “excessive cracks” • and finally, as always, an “other” area that is not defined as to function or component—only that “To the extent that a function or component of a structure is not addressed by these standards, it shall be actionable if it causes damage.”

Depending on the system, this is followed by standards of performance such as that the system shall not allow water or vapor or condensation to flow, enter, or in some cases even come in contact with the building so as to damage another component.

In some cases, no damage to another component is required to be classified as a defect. If the system does not meet the standard, it is considered a defect, and liability is incurred under the act. Other standards dealing with performance apply to other systems.

Please note: The information in this article is for e risk management perspective only. It is not intended check with your legal adviser to determine suitabilit

2. Provides 1, 2, 4, 5, and 10-year periods of time for filing actions.

Obligations under the act constitute express warranties that are mandated for certain periods of time, depending on the product or system involved. For example, “fit and finish” of certain items are mandated to last at least 1 year; wood posts, landscaping, and dryer ducts for 2 years; electrical systems, plumbing and sewer systems, driveways, sidewalks, and steel fences for 4 years; paint and stains for 5 years, etc. As you might expect, most issues are still under the 10- year requirement.

ducational purposes only. It is to be understood from a as a substitute for competent legal advice. You should y, if any, to your specific circumstances.

3. Requires claimants alleging a defect give builders notice of the claim prior to litigation. [no further explanation here...]

4. Gives builders the right to repair before the homeowner can sue for violation of standards.

This is one of the most discussed areas of the law. It provides what we in the past have called a “first right to cure.” What follows is a rather lengthy and explicit procedure and timeline that must be strictly adhered to in order to have the protections of the provision, as well as tolling provisions. There are many stipulations and provisions too numerous to mention here, but builders would be wise to become familiar with what applies to their particular trade and how to best be proactive in their response and comply with all the requirements to gain the maximum protection from this provision.

Good news for subs: If a builder intends to hold a subcontractor or product manufacturer responsible for its contribution to the “unmet standard,” the sub must be notified to allow them to attend inspection(s) and participate in the repair process.

5. Provides immunity from liability for third-party inspectors.

The hope here is to provide better quality construction by making this provision for immunity from liability for third-party inspectors. Standards are set as to who can qualify to be one, as well as the need for $2,000,000 of liability coverage to function as such. Why would they need liability coverage if they are immune from liability? The bill has one glaring exception: the builder who hires the third-party inspectors can sue them. Can you see builders trying to transfer liability to the inspector who “did not

do his job correctly”? Since the homeowner cannot sue the inspector, this would provide protection to the builders if they can convince a court that it was the inspector’s fault, not theirs.

6. Overturns the decision of the California Supreme Court in the Aas case.

This is a significant change. The California Supreme Court decided in the Aas v. Superior Court case that defects must cause actual damage or injury prior to being actionable in tort liability. This new law changes all of that. In addition to Construction Defects being actionable as always under contract, implied warranty, and fraud provisions, the new bill provides liability before any actual damage or injury has been done if the product or system does not meet the definition of the standards. Additionally, many of the previous implied warranties are now express warranties by definition, such as how long certain products and systems should last.

How will the insurance industry react to this provision? Will there be coverage? What exclusions may apply? Time and space does not allow for this and many other questions to be addressed in this analysis.

7. Preserves homeowners’ rights to sue if still unhappy after the repair.

A builder may not obtain a release or waiver of any kind in exchange for the repair work mandated by this process under the law!

After all of this, the homeowner can still sue for violation of standards with either the original problem(s), or the attempted repairs, or both.

There are a number of ways we feel that builders can and should protect themselves with a carefully devised set of construction defect risk management protocols. Careful construction and integration of these protocols can result in a good measure of valuable protections under the new law, as well as protections of the old law that have not been altered: ■

A thorough understanding and application of the law, both proactively and reactively.

■

How the new law fits with prior law and case law.

Continued on page 17.

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lmost everyone has now heard or read about the financial catastrophes that often result from a stay in a nursing home (NH), extended living facility (ELF) or even at one’s own home following an extended illness or injury. Some have personally experienced such problems with their loved ones. Numerous Internet websites review the data, statistics, possible legislation, and provide general education regarding this potential problem. Two such sites are USCare.com and LTCweb.org.

These websites are also excellent sources for the explanation of the various LongTerm Care Insurance (LTCI) terms used in this article. Most insurance carriers that market LTCI have web pages, or links, that can also be beneficial.

Available Options As insurance professionals (whether property and casualty or life and health), two of our main responsibilities are to analyze a risk and then give the decision-maker viable, logical options regarding insuring the risk. Self-insurance is a possible choice in some situations. But to self-insure when the risk of severe financial loss is substantial, well, it’s just not very practical.

Your current clients and friends have choices for dealing with this potential financial tragedy (and the cost is currently averaging about $50,000 annually). The choices are to: 1) be rich, 2) be poor, or 3) be insured.

The first option eliminates the vast majority. The second option requires them to spend down their assists until it reaches a state-mandated level—usually they can only keep about $2,000 in value. Most people are not too keen on the idea of sell16

Resources Summer 2003

ing their assets so they can fund such care.

They would rather the stocks, bonds, land, etc., go to their children or a charity. However, the government does not care! To qualify for Medicaid, the recipient must be really poor!

Do the Math…

The third option usually meets with resistance due to the perceived high cost of the premium. Let’s consider the math. Your client purchases a quality LTCI policy that includes inflation protection (5% compounded), a lifetime benefit, 90-day elimination and $110 daily benefit to be used in a NH, ELF, or at home. If this person happens to be 60 years old, married, and in good health, the monthly premium should be no more than $150 per month ($1,800 per year). Now let’s assume the current annual cost of a nursing home stay in your area is $40,000, and is escalating 5% per year due to inflation. How long would it take to totally recoup your premiums if you have such a need in 15 years? (For this exercise we will not consider the time value of money and we’ll further assume the insurance carrier never raises their rates).

First, the new annual cost of that future stay would now be $83,157! The 15 years of premiums would have totaled $27,000.

You would recover your total premium outlay in about four months. Additionally, this gives you another added benefit—your good client ultimately gets to direct his assets to persons or a charity of his choice.

Okay, now assume this 60-year-old client might consider the purchase of a LTCI policy. Are there any really attractive methods for paying this $150 per month? First, the premium could be paid personally. The IRS allows this person to deduct $940 for

a qualified LTCI (not the actual premium) in year 2003. But he must itemize deductions. And, to actually gain a tax break, the $940 and other allowable personal medical expenses must exceed 7.5% of Adjusted Gross Income (IRC Section 213).

Consequently, most find this tax advantage of little benefit.

Help from HIPAA Possibly, this client’s business could pay the premium for the individually owned contract. Here is where you have a chance to show some premium-paying advantages.

Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), a business (it must be a Regular Corporation—also known as a C-Corporation, or a Professional Corporation) may deduct the entire premium paid for a qualified LTCI contract as a reasonable and necessary business expense (IRC Section 162). This coverage can be for any employee, and the spouse or dependents of the employee. Additionally, the business can pick and choose who to include in this arrangement. It may pay the premiums for the president, vice president, and no one else. Discrimination is allowed. Furthermore, the premiums paid by the business are not reported as income to the employee (IRC 106), and the benefit received by the employee is generally not subject to tax (HIPAA). The rules limit the maximum received benefit at $220 per day in 2003. Thus, major premium-paying advantages are possible in certain businesses.

The tax advantages for other business entities (proprietors, partnerships, LLCs, and S-Corporations) are not as attractive. You should consult a qualified tax advisor for specific tax information.

NOTE: The Long-Term Care and Retirement Security Act (H.R. 831 / S. 627, the Johnson-Thurman Bill) is currently being discussed by Congress. It would give a tax deduction to people who pay at least half the cost of a qualified LTC policy.

This off-the-top deduction would be phased in over six years, starting at 50% in the first year and increasing to 100% by the sixth year. People age 60 reach 100% in four years. The bill also gives individuals with long-term care needs, or their caregivers, a $3,000 tax credit to help cover expenses. The bill does not provide deductions for non-tax qualified LTC policies.

About the Author: Jerry E. Rhinehart, CIC, CLU, ChFC, RHU Jerry serves on the national faculty for The National Alliance and operates a life and financial services agency in Lynn Haven, Florida. He began his insurance career

as an agent in 1975 and in 1984 formed his own independent agency. Jerry has also served as director of education for the PIA of Florida.

Jerry will teach at the following CIC Life & Health Institutes this year: July 10–13 Oct. 20–22 Oct. 22–25 Nov. 19–22 Dec. 4–7

Tampa, FL Honolulu, HI Louisville, KY Plymouth, MA Altamonte Springs, FL

Construction Defect Law…continued from page 15.

■

Understanding the obligations of the homeowner and the protections it gives the builder.

■

Using warranties, contracts, and alternative dispute resolution structured in a way to provide maximum protection.

■

Utilizing affirmative defenses to avoid, prevent, or mitigate liability.

■

Carefully integrating wraps (OCIPs, CCIPS, etc.) with standard CGL policies to address the gaps and exposures that are not covered.

■

Managing the risks associated with Additional Insured Endorsements.

He’ll also teach at these James K. Ruble Graduate Seminars: July 30–Aug. 1 Sept. 29–Oct. 1 Oct. 1–3 Oct. 15–17 Nov. 5–7

Marco Island, FL Ocean City, MD Atlantic City, NJ Charlotte, NC West Point, NY

Learn More About this Topic from The National Alliance Details on long-term care are covered at the Life & Benefits James K. Ruble Seminar, and the subject is an optional topic for the CIC Life & Health Institute.

Risk Management Crossword Puzzle Solution from page 12.

Conclusion We hope this new law can help reduce the number of lawsuits concerning construction defects. Insurance companies, contractors, lawyers, and consumers all have a vested interest in this law and its effects on claims, insurance, and risk management.

About the Author: Robert Marshburn, CIC, CRM, ARM Bob Marshburn is an independent risk manager and nationally recognized expert, consultant, and educator on construction defect and mold liability issues. He is a member of the national faculty of CRM and CIC, and teaches Graduate Seminars on Construction Defect and Mold Liability. He may be reached at Bob@CertifiedRiskManagers.com Bob will teach at the following CRM courses this year: Principles of Risk Management July 9–12 Anchorage, AK Sept. 10–13 Scottsdale, AZ Sept. 17–20 St. Louis, MO Dec.10–13 San Antonio, TX Analysis of Risk Oct. 15–18 Denver (Westminster), CO Practice of Risk Management Nov. 10–13 Atlantic City, NJ Dec. 3–6 Seattle, WA

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ResourcesSummer Summer 2003 1818 Resources 2003

THE NATIONAL ALLIANCE PROGRAM SCHEDULE

CIC Institutes PROGRAM KEY AM CC CP LH PL

Agency Management Commercial Casualty Commercial Property Life and Health Personal Lines

JULY 2003 09-12 09-12 09-12 09-12 10-13 14-17 16-18 16-18 16-19 16-19 16-19 16-19 16-19 16-19 21-24 22-25 23-26 23-26 24-26 30-02 30-02

Tulsa, OK San Juan, PR Shreveport, LA Corpus Christi, TX Tampa, FL Annapolis, MD Indianapolis, IN Denver, CO Cary, NC Minneapolis, MN Albuquerque, NM Little Rock, AR Fargo, ND Fredericksburg, VA Erie, PA Green Bay, WI Memphis, TN Nashua, NH Sacramento, CA West Des Moines, IA Boise, ID

AM AM AM CC LH CP AM LH PL CP CP AM PL CC PL CC AM PL CC AM LH

AUGUST 2003 06-08 06-08 06-08 06-09 06-09 06-09 06-09 06-09 11-13 13-15 13-15 13-15 13-15 13-15 13-16 13-16 14-16 18-21 20-22 20-23 20-23 21-23 21-24

Point Clear, AL Flowood (Jackson), MS Springfield, IL Minneapolis, MN Tucson, AZ Fort Worth, TX Houston, TX Lake Oswego, OR Honolulu, HI Reno, NV Lincoln, NE Lansing, MI Cleveland, OH Indianapolis, IN San Juan, PR Greenville, SC Ontario, CA South Portland, ME Atlanta, GA Albuquerque, NM Dallas, TX Orange, CA Coral Gables, FL

CC LH CP LH CC CP LH CC CC CP CC AM CP CC LH CP PL CC CC AM PL CP PL

SEPTEMBER 2003 10-12 10-12

Grand Rapids, MI Hoffman Estates, IL

LH PL

10-12 10-13 10-13 10-13 10-13 10-13 10-13 11-14 17-19 17-19 17-19 17-19 17-20 17-20 17-20 17-20 17-20 17-20 17-20 17-20 17-20 17-20 17-20 17-20 17-20 18-20 18-20 24-26 24-27 24-27 24-27 24-27 24-27 25-28

Denver, CO Rapid City, SD Metairie, LA Lake Placid, NY Round Rock, TX Wrightsville Beach, NC Tulsa, OK Tampa, FL Birmingham, AL Akron, OH Federal Way (Seattle), WA Atlanta, GA Franklin, TN West Des Moines, IA Minneapolis, MN Springfield, MO Providence, RI Lexington, KY Little Rock, AR Westford, MA Norwich, CT Lubbock, TX Olathe, KS Allentown, PA Salt Lake City, UT Edison, NJ San Diego, CA Indianapolis, IN Wilmington, DE Virginia Beach, VA Anchorage, AK Bozeman, MT Houston, TX West Palm Beach, FL

CC CP CC CP AM CP CC CP LH CC CC AM CC PL CC LH CP CC PL AM PL PL PL CP CC PL CC CP CC CP PL PL CC CC

OCTOBER 2003 01-04 01-04 01-04 01-04 01-04 07-10 08-10 08-11 08-11 08-11 09-11 15-17 15-18 15-18 20-22 22-24 22-24 22-24 22-25 22-25 22-25 22-25 22-25 22-25 23-25 27-30 29-01

Plano, TX Lake Oswego, OR Casper, WY Branchville, NJ Tempe, AZ Appleton, WI Federal Way (Seattle), WA San Antonio, TX El Paso, TX Minneapolis, MN Troy, MI Atlanta, GA Idaho Falls, ID Pittsburgh Area, PA Honolulu, HI Flowood (Jackson), MS Las Vegas, NV Columbus, OH York, PA Dedham, MA Verona, NY Roanoke, VA San Juan, PR Louisville, KY Burbank, CA Erie, PA Hilton Head Island, SC

AM AM CP CP AM PL PL CP LH PL CP CP CC PL LH PL PL PL CC PL CP CC CC LH AM CP CC

29-01 29-01

Baton Rouge, LA St. Louis, MO

LH CP

NOVEMBER 2003 03-06 05-07 05-07 05-08 05-08 05-08 05-08 05-08 06-08 06-08 12-14 12-14 12-14 12-14 12-15 12-15 12-15 12-15 12-15 12-15 12-15

New Cumberland, PA Omaha, NE Federal Way (Seattle), WA Middleton, WI Fort Worth, TX Topeka, KS West Des Moines, IA Knoxville, TN Edison, NJ Costa Mesa, CA Denver, CO Columbus, OH Birmingham, AL Atlanta, GA Oklahoma City, OK Salt Lake City, UT Minneapolis, MN Little Rock, AR Billings, MT Greensboro, NC Austin, TX

CP PL CP CP PL CP CP CP CC LH PL CP AM CC PL CP AM CC CC AM CC

13-15 19-21 19-22 19-22 19-22

Napa, CA Springfield, IL Plymouth, MA Williamsburg, VA Cromwell, CT

CP AM LH LH AM

DECEMBER 2003 03-05 03-05 03-06 03-06 03-06 03-06 03-06 03-06 03-06 03-06 03-06 04-06 04-07 10-12 10-13 10-13 11-13 15-17

Denver, CO Indianapolis, IN Richardson, TX Houston, TX Myrtle Beach, SC Louisville, KY Annapolis, MD Albany, NY Tempe, AZ Lake Oswego, OR Westminster, MA Lansing, MI Altamonte Spring, FL Cincinnati, OH Blue Springs, MO Albuquerque, NM San Ramon, CA Waukesha, WI

CP PL CP AM PL CP CC PL PL CP CP LH LH LH CC LH AM CC

CALL TO REGISTER To register for any CIC institute, call the corresponding state association or Society number listed below.

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Missouri Mississippi Montana Nebraska Nevada New Hampshire

205-326-4129 800-633-2165 602-956-1851 501-221-2444 800-633-2165 303-512-0707 800-424-4244 717-795-9100 800-277-1171 770-921-7585 800-633-2165 800-633-2165 800-628-6436 800-438-4424 800-633-2165 785-232-0561 502-875-3888 800-633-2165 508-628-5452 717-795-9100 508-628-5452 517-323-0041 952-835-4180 573-893-4301 800-633-2165 406-442-9555 402-392-1611 775-882-1366 508-628-5452

New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia-DC Washington West Virginia Wisconsin Wyoming

800-424-4244 800-633-2165 800-424-4244 800-849-6556 800-633-2165 800-555-1742 405-840-4426 360-571-7100 717-795-9100 787-758-1001 508-628-5452 803-731-9460 800-633-2165 800-280-6082 800-633-2165 800-633-2165 508-628-5452 804-264-2582 360-571-7100 800-633-2165 608-274-8188 800-633-2165

BEFORE YOU RESERVE The dates and locations of the programs in these schedules are subject to change.

Before making any travel arrangements, always verify the dates and location when registering for a program.

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THE NATIONAL ALLIANCE PROGRAM SCHEDULE

CISR Courses COURSE KEY AO IC IP PA PR AL

Agency Operations Insuring Commercial Casualty Insuring Commercial Property Personal Auto Personal Residential Advanced Lecture Series* *Advanced Lecture Series is available to CISRs, CICs, CRMs, ACSRs, & CPSRs only.

SR

Dynamics of Service

JULY 2003 01 08 08 08 08 08 08 08 08 09 09 09 09 09 09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 14 14 15 15 15 15 15 15 15 15 15 15 15 15 15 16 16

20

Tyler, TX Pleasanton, CA Anchorage, AK Eugene, OR Knoxville, TN Allentown, PA Corpus Christi, TX San Juan, PR Greensboro, NC Eugene, OR San Juan, PR Pittsfield, MA Troy, MI Houston, TX Denver, CO Mechanicsburg, PA Nashville, TN Fletcher, NC Waco, TX Topeka, KS Baltimore, MD Minneapolis, MN Louisville, KY Malvern, PA Mobile, AL Memphis, TN Kingman, AZ Marietta, GA Cary, NC Phoenix, AZ Albuquerque, NM Phoenix, AZ San Antonio, TX Fargo, ND Southern Pines, NC Idaho Falls, ID Columbia, SC Albuquerque, NM Mars, PA White River Junction, VT Anaheim, CA Little Rock, AR North Platte, NE Austin, TX Reno, NV Tulsa, OK

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SR ALS IP PR SR ALS IP AO IP AO PR IP PR AO AO IC SR ALS IP PR ALS AO IC IC ALS SR PA PR IC IP IC IC PA PA PR AO IC AO IC IP IC AO ALS ALS IC PR

16 16 16 16 16 17 17 17 17 17 17 17 17 18 22 22 22 22 22 22 22 22 22 23 23 23 23 23 23 23 24 24 24 24 24 28 28 29 29 29 29 29 29 29 29 29 29 30 30 30 30 30 30 31 31 31

Raynham, MA Phoenix, AZ Portland, ME Fort Worth, TX Lexington, KY Greenville, SC Brainerd, MN Hickory, NC Rapid City, SD Santa Cruz, CA Phoenix, AZ Oklahoma City, OK Las Vegas, NV Phoenix, AZ White River Junction, VT Richmond, VA Wilmington, NC Gilbertsville, KY Lincoln, NE State College, PA Modesto, CA Richardson, TX Kalamazoo, MI Harlingen, TX Charleston, SC Arlington, TX Wilkes-Barre, PA Cornelius, NC Pasadena, CA Denver, CO Sacramento, CA Hilton Head Island, SC Manassas, VA Tucson, AZ Fletcher, NC Cedar Rapids, IA Boise, ID Saint Paul, MN Lansing, MI Hattiesburg, MS Odessa, TX Savannah, GA Seattle, WA Boise, ID West Des Moines, IA Tewksbury, MA Baltimore, MD Greenville, NC Wichita, KS South San Francisco, CA Seattle, WA Framingham, MA Lancaster, PA Fresno, CA Cornelius, NC Randolph, MA

IP AO IP SR SR AO AO IC ALS PA PR PR IC PA ALS PR PA IP ALS IC AO AO PR AO PR PR IC PR IP PR AO SR PA PR PR AO IC IC AO AO AO AO IC AO AO IP IC IC ALS PR PA IP IC PA SR IP

AUGUST 2003 05 05 05 05 05 05 05 05

Monroeville, PA Salt Lake City, UT Cleveland, OH Houston, TX Auburn, MA Springfield, MO Richmond, VA Flowood (Jackson), MS

IC PA AO IC PA IC IC ALS

05 05 05 05 05 06 06 06 06 06 06 06 06 07 07 07 07 12 12 12 12 12 12 12 12 13 13 13 13 13 13 14 14 14 14 14 14 14 15 18 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20

South Burlington, VT Minneapolis, MN Nashville, TN Providence, RI Saginaw, MI Denver, CO Cleveland, OH Hagerstown, MD Tulsa, OK Fayetteville, NC Danvers, MA Concord, NH Chattanooga, TN Oklahoma City, OK Jacksonville, FL San Jose, CA Fort Myers, FL San Juan, PR Greenville, SC Austin, TX Kalamazoo, MI Mechanicsburg, PA Salisbury, MD Gering, NE Sioux Falls, SD Baltimore, MD West Springfield, MA Las Cruces, NM Malvern, PA Lexington, KY North Platte, NE Rochester, MN Lake Oswego, OR Honolulu, HI Las Cruces, NM Randolph, MA Lincoln, NE Pasadena, CA Honolulu, HI Albuquerque, NM San Antonio, TX York, PA Greenville, NC Concord, NH Bend, OR McAllen, TX Blue Springs, MO Novato, CA Framingham, MA Kenner, LA Albuquerque, NM Visalia, CA Blue Springs, MO Davenport, IA Kingsport, TN Dallas, TX Houston, TX Bend, OR Westport, MA Stockton, CA Allentown, PA Rock Hill, SC Baton Rouge, LA Cape Girardeau, MO Winston Salem, NC Troy, MI Worthington, MN

PA PA AO PA IC IC IC IC PA PA PA PA AO PA PR IP IC PA IC IP PA ALS AO IC AO AO PA IP ALS PA IC PA ALS IP IC PA IC SR IC PA SR IC PA ALS IC PA IC AO PA PA IP IC IC PR AO PR SR PA PA AO IC IC PA IC AO PA IP

20 20 20 20 21 21 21 21 26 26 26 26 26 26 27 27 27 27 28 28 28 28

Glenwood Springs, CO Knoxville, TN Anaheim, CA Tomah, WI Pittsburgh, PA Saint Louis, MO Wilmington, NC Saint Paul, MN Ann Arbor, MI Myrtle Beach, SC Grenada, MS Lafayette, LA Monterey, CA Indianapolis, IN Columbus, OH Louisville, KY Ontario, CA Topeka, KS Ontario, CA Shreveport, LA Phoenix, AZ Fort Worth, TX

PA AO IP SR ALS IC AO IP SR PA PR PA AO ALS ALS PA AO PA IC PA PA PA

SEPTEMBER 2003 03 03 03 04 04 04 04 08 09 09 09 09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10 10 11 11 11 12 15

Gilbertsville, KY PA Tulsa, OK IP Beaumont, TX IP Oklahoma City, OK IP Birmingham, AL PR Winston Salem, NC ALS Butte, MT PA Rapid City, SD IC New York, NY IP Round Rock, TX AO San Juan, PR AO Memphis, TN AO Waco, TX PR Northampton, MA IC Duluth, GA AO Rapid City, SD IP Lisle, IL IC Dallas, TX SR Santa Maria, CA AO Plattsburgh, NY IC Tewksbury, MA IC Hilton Head Island, SC IP VA Beach, VA IP Newark, DE IC Fishkill, NY IP Cincinnati, OH IP Jackson, TN AO Troy, MI AO Minneapolis, MN IC Framingham, MA IC Deerfield (Bannockburn), IL SR VA Beach, VA IC Cedar Rapids, IA SR Go to www.TheNationalAlliance.com for more dates in 2003.

To register for CISR courses, refer to phone list to the right.

THE NATIONAL ALLIANCE PROGRAM SCHEDULE

CISR Courses

continued.

Remember‌

CALL TO REGISTER

CISR is available OnLine.

To register for any CISR course, Advanced Lecture Series, and/or Dynamics of Service program, call the corresponding state association or Society number listed below.

E

ducation, Designation, Anytime, Anywhere

BEFORE YOU RESERVE The dates and locations of the programs in these schedules are subject to change. Before making any travel arrangements, always verify the dates and location when registering for a program.

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisana

205-326-4129 800-633-2165 602-956-1851 501-221-2444 800-633-2165 303-512-0707 800-424-4244 717-795-9100 800-277-1171 770-921-7585 800-633-2165 800-633-2165 800-628-6436 800-555-1742 800-633-2165 785-232-0561 502-875-3888 225-766-7770

Maine Maryland Massachusetts Michigan Minnesota Missouri Mississippi Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma

508-628-5430 717-795-9100 508-628-5430 517-323-0041 952-835-4180 573-893-4301 800-633-2165 406-442-9555 402-476-2951 775-882-1366 508-628-5430 800-424-4244 800-633-2165 800-424-4244 919-755-0847 800-633-2165 800-555-1742 405-840-4426

Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia-DC Washington West Virginia Wisconsin Wyoming

503-287-7570 717-795-9100 787-792-7849 508-628-5430 803-731-9460 800-633-2165 800-280-6052 800-633-2165 800-633-2165 508-628-5430 804-264-2582 360-571-7100 800-633-2165 608-274-8188 307-283-2052

Ruble Seminars PROGRAM KEY

AUGUST 2003

AMP CO FI GS IHP LC LB ME MP MS MT PL SC TR TRII

06-08 06-08 11-13 13-15 13-15 20-22 27-29

Agency Mgmt. Practices Contractors Financial Institutions Graduate Seminar Insuring Healthcare Providers Large Commercial Life & Benefits MEGA Managing People Marketing & Sales Multiple Topic Personal Lines Small Commercial Truckers Advanced Truckers

JULY 2003 09-11 09-11 16-18 16-18 16-18 23-25 23-25 23-25 30-01 31-02

St. Paul, MN TR Portland (Tigard), OR AMP Gaylord, MI *GS Orange, CA LC Oak Brook, IL *GS Cincinnati, OH *GS Dallas (Richardson), TX MS Seattle (Lynnwood), WA *GS Marco Island, FL *GS Marco Island, FL *GS

Westbrook, CT Lake Ozark, MO Whitefish, MT Grantville, PA Atlantic City, NJ Atlanta, GA Indianapolis, IN

NOVEMBER 2003

*GS *GS SC *GS MP *GS PL

Erie, PA Nashua, NH East Rutherford, NJ Milwaukee, WI Fort Lauderdale, FL Virginia Beach, VA Cambridge, MA Chaska, MN Ocean City, MD

*GS AMP FI IHP MS *GS TRII *GS *GS

OCTOBER 2003 01-03 13-15 15-17 15-17 22-24 22-24 23-25 29-31

Atlantic City, NJ Angola, IN Oklahoma City, OK Charlotte, NC Houston, TX Burlington, VT Fort Lauderdale, FL Atlanta, GA

Downstate, MI West Point, NY Chicago (Lisle), IL Napa, CA Beltsville, MD Nashville, TN

*GS *GS LC GS MT AMP

19-21

Coeur D Alene, ID

PL

DECEMBER 2003 01-03 10-12 10-12

Springfield, VA CO Denver (Westminster), CO LB Chicago (Hoffman Estates), IL *GS

CALL TO REGISTER

SEPTEMBER 2003 08-10 10-12 17-19 17-19 17-19 24-26 24-26 24-26 29-01

05-07 05-07 05-07 10-12 12-14 19-21

*GS *GS *GS *GS *GS *GS *GS MP

Call 800-633-2165 to register for all Ruble Seminars EXCEPT Graduate Seminars marked with an asterisk (*GS). For all seminars marked with an asterisk, call the corresponding state association listed below.

Alabama Arizona Connecticut Delaware Florida Georgia Illinois Indiana Kentucky Maine Maryland Massachusetts Michigan Minnesota Missouri New Hampshire New Jersey New York North Carolina Ohio

205-326-4129 602-956-1851 800-424-4244 717-795-9100 800-277-1171 770-921-7585 800-628-6436 800-555-9742 502-875-3888 508-628-5452 717-795-9100 508-628-5452 517-323-0041 952-835-4180 573-893-4301 508-628-5452 800-424-4244 800-424-4244 800-849-6556 800-555-1742

Oklahoma Oregon Pennsylvania Rhode Island South Carolina Tennessee (IIA) Vermont Virginia-DC Washington Wisconsin

800-324-4426 360-571-7100 717-795-9100 508-628-5452 803-731-9460 615-385-1898 508-628-5452 804-264-2582 360-571-7100 608-274-8188

BEFORE YOU RESERVE The dates and locations of the programs in these schedules are subject to change. Before making any travel arrangements, always verify the dates and location when registering for a program.

Resources Summer 2003

21

THE NATIONAL ALLIANCE PROGRAM SCHEDULE

CRM Courses COURSE KEY

AUGUST 2003

PRI ANA CON FIN PRA

06-09 13-16 13-16 20-23

Principles of Risk Mgmt.

Analysis of Risk Control of Risk Financing of Risk Practice of Risk Mgmt.

SEPTEMBER 2003

Any individual actively engaged in risk management or a related field, including accounting, finance, insurance, loss control, legal, claims, and others, is eligible to attend the CRM Program.

10-13 10-13 17-20 17-20 17-20

JULY 2003

01-04 08-11 08-11 15-18

09-12 09-12 16-19 30-02 30-02

Atlanta (Norcross), GA ANA Anchorage, AK PRI San Antonio, TX PRA New Orleands (Metairie), LA PRI Indianapolis, IN FIN

NOVEMBER 2003

Albany, NY CON Boston (Cambridge), MA FIN Austin, TX CON Raleigh, NC ANA

Scottsdale, AZ PRI Pittsburgh, PA CON Dallas (Richardson), TX CON Orlando (Kissimmee), FL PRA St. Louis, MO PRI

10-13 12-15

Atlantic City, NJ Milwaukee, WI

PRA ANA

DECEMBER 2003 03-06 03-06 10-13 10-13 10-13

Seattle, WA PRA Philadelphia (Langhorne), PA PRI Fort Lauderdale, FL FIN San Antonio, TX PRI San Diego, CA CON

BEFORE YOU RESERVE

OCTOBER 2003 Chicago (Lisle), IL PRA San Francisco (Burlingame), CA FIN Springfield, VA CON Denver (Westminster), CO ANA

The dates and locations of the programs in these schedules are subject to change. Before making any travel arrangements, always verify the dates and location when registering for a program.

CALL TO REGISTER

PROGRAM KEY

AUGUST 2003

DECEMBER 2003

DS Dynamics of Selling DSM Dynamics of Sales Mgmt.

06-08 20-22

03-05

SEPTEMBER 2003

CALL TO REGISTER

03-05 03-05 10-12

Call The National Alliance at 800633-2165 to register for any Dynamics program.

JULY 2003

NOVEMBER 2003

09-11 16-18 23-25

22

New Orleands (Metairie), LA DSM

The Dynamics programs are some of our most popular, highly rated programs, often taken more than once, as “shot-in-the-arm” courses that are proven for giving individual motivation a good jump-start, careers a solid push, and agencies’ bottom-lines a measurable boost.

Napa, CA Milwaukee, WI Providence, RI

DSM DS DS

Resources Summer/Fall Summer 20032003

OCTOBER 2003 15-17 29-31

05-07 12-14

Lansing, MI San Diego, CA

Scottsdale, AZ Las Vegas, NV

BEFORE YOU RESERVE DS DS

DS DS

jcuprisin@scic.com

CIC Editor Rodney R. Rezac, CIC, CPCU, ARM rrezac@scic.com

CISR Editor Mark J. Rolland, CIC, CISR mrolland@scic.com

CRM Editor Marilyn B. Hollar, CRM, ARM mhollar@scic.com

Academy Editor Jack Frick, CIC, CISR, AIS jfrick@scic.com

Contributing Writer Lonni Swanson

Contributing Designer Rhea Groepper

Dynamics Series Dallas, TX DS Charlotte, NC DS Philadelphia (Langhorne), PA DS

Managing Editor James R. Cuprisin, CIC, ARP

Publications Art Director Becky Veach

Call The National Alliance at 800-633-2165 to register for any CRM course.

Nashville, TN DS Denver (Westminster), CO DS

Publisher William T. Hold, Ph.D., CIC, CPCU, CLU

The dates and locations of the programs in these schedules are subject to change. Before making any travel arrangements, always verify the dates and location when registering for a program.

Resources is published by The National Alliance for Insurance Education & Research, P.O. Box 27027, Austin, Texas 78755-2027, 512-345-7932, Fax: 512-3432167, Internet: www.TheNational Alliance.com, email: alliance@scic.com.

At present, Resources is available to duespaid Certified Insurance Counselors (CICs), Certified Insurance Service Representatives (CISRs), Certified Risk Managers (CRMs), and affiliates of The Academy of Producer Insurance Studies. Entire contents Copyright © 2003, The National Alliance for Insurance Education & Research. All rights reserved. Material in this publication may not be reproduced in any form without permission. Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by The National Alliance, provided that the following words are included on any copy: “Reproduced from Resources with permission of The National Alliance for Insurance Education & Research.”

Resources is designed to provide accurate and timely information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in providing legal, accounting, or other professional services. If legal advice or other expertise is required, the services of a competent professional should be sought. The publisher has taken all reasonable steps to verify the accuracy and completeness of information contained in Resources. The publisher may not, however, be held responsible for any inaccuracies or omission of information in any article appearing in Resources.

The Producer School–

Dallas/Fort Worth

September 21-October 10, 2003

Turn Your Novices Into Red Hot Producers in 3 Short Weeks The National Alliance School for Producer Development meets one of the burning challenges agencies and companies face today—training and motivating new producers without breaking the bank and wasting years in the process.

Fire up your new producers with three weeks of intensive, practical training in commercial products and sales techniques in a zero-distraction environment.

Sizzling Savings — Save up to two years of hit-or-miss training time and as much as $150,000 in education costs.

Send your producers-in-training to Texas this September, and we’ll ignite their careers … and your profits!

Producer School HOTline: 800-633-2165

©2003 The National Alliance for Insurance Education & Research

www.TheNationalAlliance.com

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OLD UP A MIRROR! Do we choose to see ourselves only as we’d like to see ourselves, or do we choose to see ourselves in a light similar to how our customers view us? As competitive and caring insurance professionals, we continually spend time and energy working on procedures and activities that will improve or enhance our service to customers. No one will disagree that our job is (or should be!) all about the customer, although sometimes we need to remind others and ourselves in our organizations of this important fact.

We know that service is key to customer retention. We talk about having both external and internal customers. We say that sales brings them in the door and service keeps them here. We tell everyone in the office that each and every function directly or indirectly relates to serving our customers.

Certainly, we send CSRs to Dynamics of Service classes to learn new techniques and skills that will improve our service delivery!

We develop service standards for our personal and commercial lines departments: e.g., quotes/new business should be handled in a particular time frame; renewals and endorsements must be processed within a certain number of days of receipt

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from the company; all departments must answer the phone within a certain number of rings; and calls and emails should be returned within a certain period of time.

price is too high,” comment as an easy, plausible excuse for moving business, when it could have been a composite of various service factors.

All of the preceding policies and procedures result in looking at customer service from the “inside out.” The agency determines what good or quality customer service is from established criteria. The viewpoint is from within the agency, extending out to the customer.

Self-Assessment Tools

One of the biggest problems with the inside-out perspective of customer service is that usually only a small number of individuals have the opportunity to define what is good or excellent service, determine how good their customer service is, and find ways to improve that service.

Standards are often set by those who have never been front-line staff, or have been removed from that type of position for quite some time.

We allow ourselves to be lulled into complacency and resting upon our laurels of good service, simply because we don’t hear many complaints from our customers.

Why is it we forget that we, as customers, rarely complain to an owner/manager when we experience poor customer service? We just don’t go back. Do we think that our customers are any different? Ah! But they can, and do, use the “Sorry, your

There are a number of self-assessment tools that agencies can use to evaluate their service. One of them, “The Quality Journey,” is a great tool created by the Independent Insurance Agents of America (IIAA) for managers to use as an audit of their agency’s performance. It will give the user a good idea of managers’ opinions, who also answer for their staff in the survey. This could be a start, and certainly is better than no self-assessment at all.

A more comprehensive tool is available from Ron Zemke, a well-known guru of customer service, who has authored a readiness assessment for “Knock Your Socks Off Service.” The assessment has versions for both managers and employees and is handled by a facilitator who has prepared for the task. The purpose is to provide the participants with insight into their ability to deliver world-class service, and help them create an action plan for improvement. This type of self-analysis seems to make the best sense. Let the service staff, as well as those who manage them, participate in the process.

It’s important for an organization to assess itself, and this should be done by both the management and their staff, if for no other reason than consensus building. A likely side benefit is that it will help resolve communication gaps and misunderstandings that participants did not know existed. Known and unknown problems will surface, and resolutions will be sought and implemented. A myriad of positive results can occur from this exercise, including, hopefully, improved customer service!

But inside-out can’t be the only method of determining quality service performance. How can we exceed the expectations of our customers if we don’t know what their expectations are? The next step, then, is to look at customer service from the outside-in—asking the customers what they believe great service from us is, or can be!

This is where the going gets tough, and why many organizations stop before they get started. Just HOW do we best get customer input?

Focus Groups Let’s take a brief look at a few of the most common methods. My recommendation is to begin with a focus group. Carefully select (and emphasis on the carefully!) about seven or eight customers who you believe will deliver honest, objective feedback. Send a letter of invitation to these folks, perhaps to a breakfast or lunch in a pleasant, private room for the meeting.

(After all, they are giving up some of their time for your well-being, so it would be courteous to feed them!) Prepare a list of service-related questions and issues that your moderator will present to them. Utilize qualitative questioning with openended questions that will stimulate thinking and get immediate responses. Use probing questions such as, “Tell us what you think is the most important factor in staying with an insurance agency?” When some of them respond, “price,” then query, “Other than price, what would you say is most important?”

It’s important that the moderator be a good listener who speaks only as necessary to facilitate good discussion among all present and keep everyone on track in this limited amount of time. You may want to consider hiring a professional outside consultant for this important role. There

may be a temptation to allow the customer’s sales executives or agents to attend; it is not advisable. Customers will be able to speak more easily and openly without additional agency force present.

Do have someone from your staff present to take good notes for later use.

Useful online resources, which describe how to establish and implement effective focus groups, can be found at www.mapnp.org/library/evaluatn/ focusgrp.htm and at www.mnav.com/ bensurf.htm.

Questionnaires The second method to obtain customer input, written questionnaires, will glean opinions from a broader base. A well-designed survey will be fairly brief, and questions will be concise. Due to the input from the focus group, it will be more relevant than if you were to draft it on your own.

The quantitative research method works best here, which seeks structured responses that you can summarize in numbers, percentages, and averages. If you don’t have someone on your staff who is skilled in developing this type of survey, it will be worth the time and money to seek the assistance of a researcher; a local college could have personnel available for this task. There is actually a sample customer questionnaire on insurance in Chapter 9 of Customer Service for Dummies by Leland and Bailey that could be used as a template. It includes such questions as, “Does the agency understand your needs?” and “What do you think of their knowledge, billings procedures, claims handling, etc?” The customer rates various areas on a scale from 1 to 6.

Of course, the survey should be sent with a SASE (self-addressed, stamped envelope); yet, the response rate will likely be less than 30 percent. But it is an inexpensive and fast opinion-gathering method.

Another quick method of obtaining opinions could be a telephone survey. Frankly, the public is generally so anti-telephone soliciting that I’d skip spending an ounce of effort on this method.

Action Plan About a month after the questionnaires are mailed, tabulate the responses, compare the opinions to your focus group, add in the mix the results from the self-assess-

ment done by management and staff, and prepare an action plan for improvement.

You’ll not want the effort to fail due to ambiguity of responsibility, so it is a good idea to select the person within your organization to oversee the entire project before even starting. Develop an ad hoc team from various departments, both staff and managers (no more than nine), to serve as the steering committee. Once the action plan is developed, make sure there are defined accountabilities with established time frames, and clear responsibility for follow-through.

Last but not least, it is imperative to the success of this customer service project that the leadership drives the effort. The talk must be walked. Nothing can de-motivate staff faster than knowing management teams don’t truly place a priority on serving the customer. We can’t give just lip service to customer service.

Hold up the mirror, and look at customer service both inside-out and outside-in. The reflection will be one that will certainly position your agency to have the best image possible!

About the Author: Connie G. Clarke, CIC, CPCU, AIS, CPIW Connie has performed nearly every function in an insurance agency at some point in her career, and has held positions as a personal lines underwriter with general agencies, and worked her way up from a rater to a regional underwriting manager with a major insurance company. She is now director of training and development with Payne Financial Group in Billings, Montana.

Learn More About this Topic from The National Alliance Providing consistent, quality service is imperative for retaining your customers. The Dynamics of Service program, which is open to all insurance professionals, creates confidence, while rapidly improving service skills.

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n the February 1997 edition of The Insurance Record, Roy Phillips authored a brief article concerning the ruling of the Texas Supreme Court in 1995. The purpose of this article for Resources is to update the circumstances that have taken place in Texas since that time. The American Association of Insurance Management Consultants (AAIMCO) has been especially interested in recent events that encourage the factfinder to scrutinize the qualifications of “expert” witness testimony. AAIMCO members have established standards for the manner in which an insurance agency will be valued, and are pleased to see the bar raised by the Court. AAIMCO members often are called upon to appraise an insurance agency in disputed actions derived from divorce proceedings, bankruptcy filings, adverse tax consequences, buy-sell agreements, transfer and sale agreements, and other disputed actions among partners and shareholders. In addition, they serve not only as expert witnesses, but as the Court’s special master, and as designated party arbitrators or sole arbitrator.

The Expert’s “Job” The bar has been raised in order to qualify “expert witnesses.” The evidence of an expert witness is addressed in Rule 702, the Rules of Evidence in the federal jurisdiction, and has been mirrored at the state level. Members of AAIMCO have long been concerned about some insurance experts who seem to be able to manufacture their own evidence in accordance with what needs to be said.

The use of more expert witnesses has increased in the insurance industry in the past 20 years as issues become technically confusing to the average person or juror, and maybe even the judge. The expert’s job is to provide the fact-finders with relevant and reliable information upon which they can make their determination. Consider for a moment the phrase “expert witness,” and the profile those words paint in the eyes of the average juror. The fact that a person has been presented as an “expert” gives a great deal of credence, even if the theory or technique that the expert will opine about has no relevant or reliable foundation. The opposing attorney may attempt to cloud that expertise by showing that the

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expert is being paid for his testimony, but the picture is still there.

termining whether evidence is relevant and reliable include:

The Daubert Case

1. Whether the theory or technique has been or can be tested

The High Court took aim on gunslingers in the form of a case heard and decided in 1993 (Daubert v. Merrell Dow Pharmaceuticals, Inc.). In that decision, the Justices said that Rule 702 of the Federal Rules of Evidence “requires that scientific evidence be reliable and relevant.”

The Daubert court established three requirements for the admission of expert witness testimony. First, the witness must be qualified. Second, the proposed testimony must be accepted scientific knowledge. Third, the testimony must assist the trier of fact to understand the evidence or to determine a fact in issue. The factors for the trial judge to consider in de-

2. Whether the theory or technique has been subjected to peer review 3. The technique’s known or potential rate of error 4. The general acceptance of the theory or technique by the relevant scientific community At the same time, the Court also designated trial judges as the “gatekeepers” to ensure that any and all scientific testimony or evidence is not only relevant, but reliable.

Subsequent cases required experts to explain how and why they reached their conclusions, and one case specifically said that “all experts are subject to Daubert’s requirement that their testimony constitute general knowledge from their field.” It went on to say that Daubert factors may, in appropriate circumstances, be used to evaluate other kinds of expertise. This might apply in insurance actions regarding coverage and/or standards of care by agents and carriers as well as insurance agency evaluations. So, what was Daubert all about?

The underlying suit arose when two children were born with birth defects. The parents sued Merrell, alleging that because the mother ingested Bendectin, an anti-nausea drug, while pregnant, the drug caused the birth defects. Although there existed some 30 studies of the effects of the drug, all of which concluded that the drug was not capable of causing birth defects, the parents hired eight experts to counter that chain of evidence.

The District Court granted the drug manufacturer’s motion for summary judgment because “the plaintiffs failed to establish that the principle upon which their experts based their opinions were generally accepted by the relevant scientific community.”

Assisting the “Fact-Finder” Let’s back up for a moment and identify the role of the expert witness in cases such as those in dispute from violations of standards of care or the value of an agency.

The expert is there to assist the “factfinder,” which may be the judge or the jury.

His or her testimony must be sired by background, education, and experience, along with acceptable industry standards that have been reviewed and blessed by his or her peers. In short, the evidence presented must be relevant and reliable, since the outcome of the decision is often based upon the testimony of the expert. And it all starts at the trial court level. Those federal and state district judges who have been charged with the responsibility of assuring that the expert has the proper credentials are now being told that they must go one step further, and assure that the expert’s testimony transcends the cloudy arena of junk science.

Courts throughout the nation have adapted the test of Daubert to other than medical/ scientific actions.

One such Texas decision is found in the Robinson case, which employed the consistent factors of Daubert, and added the following: 1. The extent to which the technique relies upon the subjective interpretation of the expert; and 2. The out-of-court uses which have been made from the theory or technique.

Robinson involved the plaintiff’s allegation that the use of a particular insecticide caused damage to their orchard. The Texas Supreme Court set forth the factors that judges should consider as outlined by Daubert, and added the two factors above.

Another example of the emergence of the hybrid of Daubert v. other types of actions is found in a 1998 Texas Supreme Court decision styled: Gammill v. Williams Chevrolet.

The tragic facts of this case concerned the death of a child and severe injury to her sister. It is best characterized as a products liability case against an auto dealer and the manufacturer of the vehicle which sustained a one-car accident. The trial court granted a motion for summary judgment, and the Appeals Court confirmed. It then went to the Texas Supreme Court, which considered the testimony of two plaintiff witnesses. One expert was disqualified as not qualified, and the testimony of the second expert (who was qualified) was ruled unreliable.

Not All Qualify The United States Court of Appeal, Fifth Circuit, in an April 1997 ruling cited the testimony of two expert witnesses in the evaluation of the book of business of an insurance agency. In the matter of “Vance Dunham, Debtor and Texas Truck Insurance Agency v. Harry Cure, Chapter 7 Trustee for Vance G. Dunham, Debtor, Appellee,” the Court ruled that the trustee’s expert presented impressive credentials, extensive involvement in the insurance industry, and substantial experience in valuing insurance agency businesses. The court continued saying, by contrast, that the expert hired by Texas Truck was largely inexperienced in both the insurance industry and the valuation of insurance agency businesses. He is not licensed, and has not worked in the insurance industry. He has

no formal education regarding insurance agency valuation, has not written any articles on valuing insurance agency businesses, and has appraised only two insurance agencies.

The case proceeded from the bankruptcy court where the trustee’s expert opinion was accepted, to the Federal Court, where once again the method that had been developed over a period of many years was accepted, and then proceeded to the Fifth Court of Appeals which made the aforementioned ruling. The expert for the trustee is one of the authors of this article, Roy L. Phillips.

The Texas High Court also ruled that evidence which is not grounded in methods and procedures of science is no more than subjective belief or unsupported speculation and represents unreliable evidence that is of no assistance to the trier of fact, and therefore, is inadmissible. But if that is the case, what are the benchmarks that must be met by the expert, following the Daubert court?

Benchmarks for Experts The Texas Supreme Court ruled that the trial court may consider many factors in making a threshold determination of admissibility of scientific testimony, including, but not limited to: 1. The extent to which the theory has been, or can be tested.

2. The extent to which the technique relies upon subjective interpretation of the expert.

3. Whether theory has been subjected to peer review and/or publication.

4. The technique’s potential rate of error.

5. Whether underlying theory or technique has been generally accepted as valid by relevant scientific community.

6. Non-judicial uses which have been made of the theory or technique.

The Court went on to say that reliability for expert witness testimony applies to all scientific testimony, not to just novel or unconventional scientific evidence. The reliability of testimony pertaining to insurance industry standards can typically be Continued on page 28.

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Raising the Bar… Continued from page 27. established through applicable case law, the insurance code, treatises, and books and articles on the subject including insurance industry education and training material.

This clearly places a significant gatekeeper responsibility on the trial courts.

Federal Rules of Evidence 702 Earlier, we mentioned Federal Rules of Evidence 702. As of December 1, 2000, it reads as follows: If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based on sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

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In another U.S. Supreme Court decision (Kumbo Tire Co. v Carmichael), it was decided that the court should ensure that “an expert, whether basing testimony upon professional studies or personal experiences, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.”

Moreover, in another Texas case (Broders v. Heise), it was held that the expert’s expertise must extend to the specific issue before the court which would qualify the expert to give an opinion on that particular subject.

So, how does this impact those of us in the insurance business? It is our opinion that the Daubert case is favorable to those “experts” who provide relevant and reliable testimony to the fact-finder concerning what they can support. On the other hand, those experts simply in the business of creating evidence will fail to measure up to the higher standards required, and they will not fare as well.

About the Authors: Roy L. Phillips, CIC, CISR, AAI, CPIA, and Thomas H. Veitch, JD, CIC, CPCU, CLU Roy is an active agent and vice president for King-Phillips Insurance Agency in Houston, TX, selling group benefits and P&C insurance. He is a licensed risk manager, as well as an industry consultant and vice president with Dan R. King & Associates. He can be contacted at rphlconsult@kingphillips.com.

Tom is an attorney for the law firm of Soules & Wallace in San Antonio, Texas. He is board certified with respect to estate planning and probate law.

He can be contacted at tveitch@soulesand wallace.com.

he National Alliance School for Producer Development took home a great report card from Bruce M. McCreadie, CIC, AAI, CPIA, director of business development for Lassiter Ware Insurance, with offices throughout Florida.

McCreadie became familiar with the Producer School when the pioneer program was held at Florida State University in Tallahassee. He has served on the FSU faculty in the Department of Risk Management and Insurance, and is also a national faculty member for The National Alliance.

Now that almost three years of statistics are available for assessing Producer School results, McCreadie has been so impressed with the findings that he sent three new producers to the school that was held in San Francisco this past January.

“The statistical information indicates that the normal learning curve of 3-5 years for new producers is being effectively reduced through attendance at this three-week intensive training program,” McCreadie reports. He added that some specific results are particularly impressive: “One of our attendees actually closed two accounts for over $110,000 in premium the first month back from school!”

producers and is entirely taught by practicing, veteran producers. The result is that participants are given a realworld, working knowledge of the sales process, coverage identification, application submission, proposal presentations, and how to work with the agency and insurance company team members to effectively get results.”

“The Producer School offers today’s insurance agencies the opportunity to take producers who are relatively new to the industry, and turn them into productive, self-sufficient members of the agency team,” McCreadie explained. “What makes this school stand out from others is that it was developed by top insurance

The three new producers Lassiter Ware Insurance sent to the Producer School had all been involved in sales in their previous careers. “They called me almost daily from the School, full of enthusiasm about the new skills and tools they were learning and mastering.

Their skills were evident when they re-

Dr. Hold with Bruce McCreadie at The National Alliance headquarters in February.

turned to their branch offices, and each is a viable and producing agent for our agency,” McCreadie enthused. Lassiter Ware Insurance is a very successful Florida agency where the latest in technology and marketing and sales ideas have been implemented and are continually updated.

McCreadie states conclusively that he can “strongly recommend The National Alliance Producer School to every agency with new or novice producers, or anyone considering hiring new producers and struggling with how to effectively train them. The return on your investment will prove to be one of the best in your portfolio!”

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he following article provides an overview of some of the employment laws that might be applicable to insurance agencies. It should be noted that this article deals with the federal laws (not state laws), and the number of employees in an agency will impact the applicability of the laws.

Fair Labor Standards Act The Fair Labor Standards Act was created to establish minimum wage, overtime pay, record keeping, and child labor standards for non-exempt employees. A non-exempt employee is one that doesn’t fall into one of the FLSA’s exempt categories. If an employee is not exempt, you MUST pay him/her overtime for hours in excess of 40 per week.

There are four tests to determine whether or not an employee is exempt from overtime. ● Executive—If their primary duty (80% of their time) is management and they direct the work of two or more full-time employees. ● Administrative—If their primary duty is office work which relates to the agency’s management policies or business operations. ● Outside Sales ● Professional—If the work requires advanced knowledge and they must exercise discretion and judgment.

CSRs are hard to categorize. In some agencies they may be exempt, while not in others. Check with an employment law attorney for an opinion.

Many agencies think they can escape paying overtime by paying their employees on a salary basis. Whether a person is paid hourly or a salary is irrelevant as to whether they are entitled to overtime. The question is: are they exempt or non-exempt?

Assume you have non-exempt employees and have a written policy in your employee handbook that says “No overtime unless approved by management.” Yet you, as management, know that a person is coming in early and/or staying late to get his/her work done. If an employee chooses to put in extra hours and you as the employer know about it, you must still pay overtime. Otherwise, you have been unjustly enriched.

Equal Pay Act The Equal Pay Act prohibits employers from paying different wages (based on sex) for equal

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work. But it isn’t as simple as saying “Equal Work = Equal Pay.” Equal work really means equal skill, equal effort, and equal responsibility. Assuming everything else is the same, can you pay a man more than a woman if: ● He has his CPCU and CIC designations? ● He has been in insurance 20 years and she only has 10 years of experience, even though she has been with the agency longer? ● He has been with your agency longer? ● He has a larger book of business?

The answer in all four situations is “yes,” because they deal with experience, training, and education measured by the requirements of the job. The four key exceptions to the Equal Pay Act are compensation based on: a seniority system, a merit system, a system measuring quantity and quality of production, or a differential based on any factor other than sex.

But wait a minute. Isn’t it OK to pay a woman more than a man? No, the Equal Pay Act says that you can’t pay employees of one sex less than employees of the opposite sex. It doesn’t say anything about male or female.

Age Discrimination In Employment Act (ADEA) The ADEA protects employees over age 40 against age discrimination. Suppose you have an employee who is 50 years old. Do you have an ADEA problem if you replace the 50-year-old with 32-, 42-, or 62-year-old?

Regardless of the age of the replacement, if you terminate someone over 40 because of age, you have a problem. Can you terminate them for non-age-related reasons or for cause? Sure. Just don’t say they are “too old to do the job.”

Pregnancy Discrimination Act Basically, an agency must provide pregnant employees with the same benefits as individuals with any other short-term disability. If you pay 50 percent of salary for eight weeks for a short-term disability, you must do the same thing for pregnant employees.

Management cannot pre-establish a beginning date for maternity leave or the length of time for maternity leave. You also cannot force the employee to resign or take a leave of absence.

But the law doesn’t just cover pregnant employees, it also covers pregnancy-related medical conditions and pregnant applicants. If any employee has an abortion and there are complications, the PDA applies.

The PDA also covers discrimination against applicants who are pregnant but able to perform the job.

Jury Systems Improvement Act So you have a small, four-person agency and your CSR has just been picked for the O.J. Simpson jury. Can you fire her? Nope!

The JSIA applies to all employees, regardless of the number of employees, and is enforced by the Federal Courts. You can’t discharge, threaten to discharge, intimidate, or coerce any employee because of service on a jury.

Federal Wiretapping Act The FWA prohibits employers from intentionally intercepting any wire, oral, or electronic communication that takes place on the premises of any business.

So while you can look at emails that one employee sends to another, you are not allowed to look at incoming or outgoing email messages. Or can you? If the agency gives the employees reasonable notice that they may be monitored, you can monitor them. You should explain why monitoring is a business necessity and have the employees sign a memo in agreement.

Uniformed Services Employment & Reemployment Rights Act An employee is called up for service in Iraq.

Do you have to keep his or her job open until the employee returns? In most cases, the answer is “yes.” This law requires you, as an employer, to provide limited job protection to an employee returning from U.S. military service, as long as he or she was not dishonorably discharged.

To make matters even more difficult for the employer, the employee does not have to decide until the end of military service whether or not to seek reemployment. But if the employer’s circumstances have changed so much that reemployment is impossible or unreasonable, reemployment is not required.

State Statutes Most states have their own non-discrimination / fair employment laws, which are modeled after federal laws. But be careful, many states have made their laws more restrictive, thereby offering greater protec-

tion for employees. Before acting on any human resource issue that has governing law, check with an employment law attorney to make sure that you are in compliance with both the state and federal laws.

CYA (Cover Your Assets) What are some of the ways you can protect your agency regarding employment practices? Obviously, an Employment Practices Liability insurance policy is a good start. You should also implement the use of: ● employment applications, ● employee handbooks, ● job descriptions, and ● employment agreements.

Of course, all these should be signed by the employee.

More Information In addition to employment law attorneys, there is a lot of information on the web. An especially useful website for more information is www.dol.gov. Additionally, CIC offers a four-hour class, “The Legal Responsibilities of the Agency Owner as an Employer,” as part of the Agency Management Practices Ruble Seminar as well as in select Graduate Studies Ruble Seminars.

About the Author: Jonathan J. Persky, CIC, CPA, PHR Jon is the president of Optimum Performance Solutions, LLC, a management consulting company for independent agencies, and has held positions as controller, chief financial officer, and personnel director. Jon is a member of the national faculty for The National Alliance, and the author of The Academy study, Maximizing Agency Value II: A Guide for Buying, Selling, and Perpetuating Insurance Agencies.

Jon will teach at the following CIC Agency Management Institutes: July 16–19 Little Rock, AR Aug. 20–23 Albuquerque, NM Dec. 3–6 Houston, TX Jon will also teach at these Agency Management Practices Ruble Seminars: July 9–11 Sept. 10–12 Nov. 19–21

Portland (Tigard,)OR Nashua, NH Nashville, TN

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The National Alliance Presents:

James K. Ruble

Vacation Destination Seminars Meetings of the Minds Where You Won’t Mind Meeting Relax, unwind, and enjoy the beauty of what the world has to offer you while doing your update.

Not sure what to expect? Hot Topics, Hot Spots!

If your idea of fun while earning your updates includes hot topics that meet today’s demands, expert faculty, reacquainting yourself with colleagues and meeting new friends while discovering exciting places, you’ll find all this at a James K. Ruble Seminar in one of these lavish vacation destinations.

Maximize your learning with programs that fit your schedule and your lifestyle. And find out more about state-specific CE credits via our CE Guide.

Some updates are just more fun than others!

Reserve your space today at a Ruble vacation destination seminar.

www.TheNational Alliance.com (click on “Registration”) or call 800-633-2165

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IN-House Programs

Give Your Team the Home Field Advantage In-House Team training on your own home turf is efficient and affordable!

Our courses are perfectly suited for training an entire staff at your own place of business – when and where you want it.

Benefits ■

Cost-effective: Eliminate travel-related expenses and reduce time away from the job. The per-person fee is surprisingly low!

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Convenient: Specify training for a particular group, department, or everyone in your organization.

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Consistent: The entire staff learns the same information at the same time.

Bring out your employees’ personal best when you bring these popular programs in-house: CIC institutes

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Customized: Program emphasis can be placed where you need it most, and it is always state-specific.

Hassle-free: We take care of the details—from continuing education filings and faculty travel arrangements to course workbooks and supplies.

www.TheNationalAlliance.com

800-633-2165

CISR courses CRM courses Dynamics of Service Dynamics of Selling Dynamics of Sales Management The National Alliance School for Producer Development

©2003. The National Alliance for Insurance Education & Research

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es, agencies are using sales centers to drum up new business and assign responsibilities to increase overall efficiency and employee productivity. By way of explanation, a sales center is a systematic approach to identify and contact prospects with direct mail and/or telemarketing to obtain ex-dates and make appointments. This system relieves pro-

ducers of their prospecting responsibilities and allows them to spend more time on sales.

The Academy of Producer Insurance Studies has conducted a survey to find out how agencies are operating their sales centers and the results of using sales centers. A number of the key findings are included in this article.

In what areas are agencies using sales centers?

Of the agencies surveyed which operate a sales center, 96% of them are using it for commercial lines business, 36% are using it for life and health business, and only 11% are using a sales center for personal lines business.

How much new business production is being developed from the sales center?

For agencies using a commercial sales center, 44% of their new business commission is a result of the sales center leads. For agencies with a life and health sales center, 37% of their commissions are derived through the sales center. Personal lines sales centers are generating about 28% of an agency’s personal lines new business commission.

Thus, the sales centers do make a significant contribution by

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adding more new business revenues and clients.

How many agencies are using direct mail to contact prospects?

Just over two-thirds, 68%, of the surveyed agencies are using direct mail as part of their sales center strategy. Of these agencies, 95% of them follow up by phone to contact these prospects again. The direct mail gets the agency’s name in front of the clients, so that when the agency does call, the prospect has some name familiarity with the agency, making the process of getting an ex-date or setting an appointment a little easier.

Who performs the telemarketing in the agency sales centers?

The person or persons who perform the telemarketing for the sales center varies from agency to agency. This person needs to be somewhat sales oriented and have good communication skills. It doesn’t hurt to have some basic insurance knowledge either. Ideally, an agency doesn’t want to have to assign their producers or CSRs to handle these telemarketing responsibilities; it’s best to hire someone specifically for the telemarketing job, if possible, and let producers and CSRs concentrate on sales and service, not prospecting. The reality is that many different agency employees serve as telemarketers for sales centers, as evidenced by the following survey results:

Ideally, agencies should hire someone to work primarily as a telemarketer for the sales center; 34% of the agencies did this.

Another good option is to use an outside telemarketing service or have the sales center assistant, who normally handles the clerical duties, do the telemarketing, if he or she has good communication skills. One objective of many sales centers is to relieve producers of the calling and prospecting and give others this responsibility. An agency may not necessarily want their top CSRs to do the telemarketing either if others can handle this responsibility.

How many agencies use target marketing for generating new business?

A high percentage, 82%, of the agencies surveyed are using target marketing to focus on a certain type of industry or business. A sales center is a good way to implement this type of strategy.

Much of the target marketing seems to be carrier driven. That is, agencies find a product from a carrier that they feel is competitive and then market it to the appropriate prospects. For target marketing, 84% of the agencies used one of their carrier’s existing products and 20% of the agencies used an existing product made available by a managing general agency or E&S broker. A lesser number of agencies used a strategy that was more agency driven, as 31% of the agencies had an exclusive product developed for their agency.

Which individuals are involved with the sales center on a regular basis?

The chart at the top of the next column shows what our survey found out about the individuals who work in the sales center on a regular basis:

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Monitoring and Control—Sales centers should be structured to monitor results of all sales personnel and set goals and guidelines to reach and follow.

Summary

Preferably, agencies should try to limit producers’ involvement in the sales center and let others do much of the work.

Larger agencies have some advantages with staffing sales centers as they have a large employee pool from which to choose, in addition to hiring from outside the agency.

What are some of the benefits of using a sales center?

As mentioned, freeing up producers to spend more time on sales is one benefit of using a sales center. Agents in the survey identified a number of reasons for forming a sales center, as listed below: ■

Help new producers—New, inexperienced producers do not get many referrals and need the leads developed from the sales centers to generate business.

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Consistency—The sales center consistently obtains leads for producers and follows a consistent approach to obtaining new business prospects.

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Focus—Agencies can focus on larger accounts, accounts in which they have expertise, and profitable accounts with the direction provided by a sales center.

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Structure—The sales center can help in providing all sales personnel with a better organized system of getting leads and following up on those leads in a consistent, organized manner.

The Academy will be publishing a study on sales centers, prospecting, and target marketing in the second half of 2003. In the meantime, agencies should determine whether they need to install a sales center or try to improve one they already have in place. Sales centers take time to set up, but can be worthwhile in the long run.

Even without using a sales center, agencies need to consistently strive for improvement with prospecting, telemarketing, target marketing, and other marketing and sales functions. Having an organized sales team that follows a common methodology should be a goal for all agencies, and with the changing dynamics of the industry, agencies need to rethink their strategies and re-tool their sales systems on a continual basis.

About the Author: James R. Cuprisin, CIC, ARP Jim is the research director for The Academy of Producer Insurance Studies and the editor of Resources magazine. He works with developing surveys and conducting studies on insurance and risk management issues. His past experience includes working as an underwriter for two different insurance companies.

Learn More About this Topic from The National Alliance The Academy will soon be publishing the results of the sales center survey in a study.

When complete, the availability of this study will be included on our website and information will also appear in the next issue of Resources magazine.

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Shaping the future of your profession since 1983 Like most of the best research conducted today, the work of The Academy takes place in the background: ■

Contributing to the curricula of the CIC, CRM, and CISR Programs;

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Breaking new ground with research that directly affects the success of the insurance and risk management communities; and

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Publishing studies that can change the way you do business—38 studies in all.

The Academy has been working for YOU for two decades. Here are some of our best-selling, current studies to use in your office!

The Insurance Essentials Handbook† This is our top-selling book over the last year. It’s great for explaining the P&C world to your newest employees. They can learn basic insurance terms, concepts, coverages, exclusions, etc. $30 + $5 shipping and handling. †

Not available in Delaware, Maryland, or Pennsylvania.

Growth and Performance Standards (GPS) Our flagship study since 1988, agencies depend on these benchmarks for direction. A companion CD calculates your agency averages and compares them to the GPS standards. Compare your income and expense numbers and productivity measures to the top-performing agencies. $35 + $5 shipping and handling. Add $10 to include the CD.

Maximizing Agency Value II: A Guide for Buying, Selling, and Perpetuating Insurance Agencies Due to demand, we updated the study and included a CD with the sample agreements. As purchases and mergers continue, so will the need for this guide. Learn how to analyze other agencies, maximize current value, and increase your future net worth. $57 + $5 shipping and handling.

The Three Faces of Executive Liability: D&O, EPL, and Fiduciary Exposures and Coverages (2nd Ed.) If you watch the news, you know these coverages are needed in today’s society. See how the author’s knowledge and unique perspectives can help you out. Gain a valuable understanding of the exposures, coverages, and risk management techniques. $25 + $3 shipping and handling.

To purchase the publications you need, call 800-526-2777, or visit The Academy’s website at www.TheNationalAlliance.com. Remember, Academy affiliates receive a 10% discount.

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Jack R. Bagwell Douglas Hotchkiss, CIC, CPA, president of Texas-based Hotchkiss Insurance Agency, Inc., has been selected as the new chairman of the CIC Board of Governors. He brings a contagious enthusiasm for National Alliance programs to the office, and cites “the pride in the product,” and “recognized value in the marketplace” as primary benefits to participants, designees, and their agencies and companies. The new board chair emphasized that The National Alliance is in a class by itself because the broad selection of programs offered meet the professional development needs of virtually everyone and anyone in the insurance industry—from the newcomer to the experienced veteran.

Hotchkiss looks forward to working with The National Alliance to accelerate the growth and national recognition of all programs, enabling a greater number of insurance professionals to participate in—and benefit from—these exceptional educational opportunities.

American AGENT & BROKER, with support from The National Alliance for Insurance Education & Research presents:

The Personal Lines and Small Business

Insurance Forum Tour 2003 Three cities, three opportunities to attend these important, one-day conferences:

October 28, 2003 • New York City November 20, 2003 • Chicago December 5, 2003 • San Francisco Building on the success of the 2002 Program Business Summit, American AGENT & BROKER will hold three events on the Insurance Forum Tour 2003, featuring the latest developments in products, markets, exposures, and sales practices.

Presentations from top producers, consultants, and well-known industry practitioners will be the order of the day.

Learn how to generate more business by: • Improving your prospecting and sales techniques • Selling more coverage to your current clients

Society members of CIC are for a 10% eligible discount!

• Better serving your clients while lowering your own E&O risks Property & casualty insurance producers, MGAs and other wholesalers, home-office marketing executives, and product marketers or service providers targeting personal lines and small-business insurance should plan to attend at least one of these events!

For additional information, visit our website at www.agentandbroker.com/conferences. Or contact Linda Brumitt in the conference department: lbrumitt@pfpublish.com; 800-706-2745, ext. 5546, or 314-824-5546.

The unexpected death of Jack Bagwell on January 17, 2003, brought profound sadness and a flood of fond memories to those of us at The National Alliance who have known and worked with him over the years.

The National Alliance is forever grateful for the significant professional and personal contributions Jack made as a founding faculty member of the James K. Ruble International Seminar, Academy Board member, and committed supporter of the CIC Program on an international basis.

Jack, a member of Lloyds of London, was involved in both the London and international insurance marketplace for over 40 years. He aided CICs in the placement of their international business and provided introductions to various London and Lloyds underwriters.

Two scholarships in his name were awarded at the last Ruble International Seminar held in Bermuda.

“Jack Bagwell left a lasting impression on everyone he met—his charming personality combined with an almost unlimited knowledge of international business,” remembered friend and colleague William T. Hold. “He left an indelible mark on the Society of CIC and the history of The National Alliance.”

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A National Alliance Record— CIC and CRM Earned in One Year

Avrohm Wisenberg Scholarships

Robert J. Dreiling, CIC, CRM, managing vice president of Grayhawk Companies in Richardson, Texas, accomplished something no one else can claim: He earned both his CIC and CRM designations within one calendar year.

Not only does this say a lot about his tenacity, educational commitment, and test-taking skills…it says a lot about what he knows and can offer to clients. We salute Rob for this amazing achievement—what an inspiration and testimonial for our programs!

The latest recipients of the Avrohm Wisenberg CIC scholarships and $100 cash prizes were Kirsten LaBauve, of Swett & Crawford in Dallas, Texas, and Melissa Hendricks, with Specialty Insurance Managers, Inc., in Austin, Texas. The Society of CIC donates the scholarships to the Texas Surplus Lines Association (TSLA) each year. Insurance Record

Rhode Island Agent Receives Distinguished Graduate Award Ann Lazzareschi, CIC, CMA, CFM, CBM, AIAF, finance supervisor for Beacon Mutual Insurance Company, in Warwick, Rhode Island, was presented with the Distinguished Graduate Award in the Associate in Insurance Accounting and Finance (AIAF) program from the Insurance Institute of America (IIA). The award is given each year to the person who earns the highest grade average for the national examinations in the Institute program. News Release

Texas Agent Pens Mystery Novel

CISR Board Member Named Insurance Pro of the Year

Wes Bailey, of Bailey Insurance & Financial Services of Waco, Texas, has written his first novel, A Voice in the Dark, a murder mystery filled with political intrigue and Texas Friday night football as the backdrop.

The Cape Cod Insurance Agents Association recently named Kathleen F. Silvia, CIC, CPCU, CPIW, of The Fair Insurance Agency in Centerville, Massachusetts, as the organization’s Insurance Professional of the Year. The award was made in recognition of Silvia’s outstanding service and leadership in the insurance industry and community.

The Standard

Bailey, a former director for the Independent Insurance Agents of Texas, has written several articles for the Insurance Journal of Texas and is a CIC faculty member. Independent Agent Magazine

Henri Kahn Insurance Serves Laredo for 40 Years Henri D. Kahn Insurance Service opened its doors in Laredo, Texas, more than 40 years ago, and went into property and casualty insurance in 1991. The company that opened with one employee (now there are 10) sells all types of insurance, but specializes in commercial and business insurance. The principal’s son, Greg Kahn, CIC is the technical manager for the company. Laredo Morning Times 38

Kirsten LaBauve

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Melissa Hendricks

Abbott to Head Up New Office James W. Abbott, CIC, has joined Roberts & Dennis Insurance Group as an account manager for transportation insurance clients. Abbott will manage the newly opened Greenville, South Carolina office. News & Record

CIC Elects Six to Board

Two Wooster Agencies Merge The Johnston-Miller Insurance Agency and Campbell Insurance Service, both located in downtown Wooster, Ohio, are solidifying an affiliation that’s been in place for several years by becoming one business. Johnston-Miller-Campbell will specialize in automobile, home, life, and commercial insurance services. Darin Campbell, CIC, is the principal owner, and previous owner Jim Fleming will act as consultant and licensed producer. The Daily Record

Recently selected to serve on the Board of Governors for the Society of CIC are these nationally recognized industry leaders: Kevin J. Brady, CIC, is vice president of Gallagher Captive Services, Inc., a division of Arthur J. Gallagher Inc., in Itasca, Illinois.

R. Cleve Folger, Jr., CIC, CPCU, is the owner of TriSure Corporation in Cary, North Carolina, the largest privately held agency in the Research Triangle Area of North Carolina.

Jim Fleming (left) and Darin Campbell (right) with Johnston-Miller-Campbell staff members.

DiPirro Named Client Advisor Insurance Club of Buffalo Elects President Liane Wind, CIC, CPCU, CPIW, account executive for Zurich North American Small Business, has been elected president of the Insurance Club of Buffalo.

The club hosts Buffalo “I-Day,” one of the largest insurance conventions in the country. The last “I-Day” took place April 3, 2003. Alden Advertiser

Duane M. DiPirro, CIC, CPCU, AU, of Lancaster, New York, has been named client advisor at Marsh of Buffalo, an insurance brokerage and risk advisement company. DiPirro is responsible for the servicing and placement of large commercial property and casualty accounts in the Upstate New York office.

Lancaster Bee

AMERISAFE Promotes Allen Bradley AMERISAFE, a specialty workers compensation insurance group in DeRidder, Louisiana focused on hazardous industries, announced the promotion of C. Allen Bradley, CRM, to president and chief operating officer. Bradley has held a broad spectrum of insurance management positions in his eight years with AMERISAFE. News Release

Delaney Joins USC Faculty Cindy Delaney, CIC, employed as a licensed insurance broker at Gilroy, Kernan & Gilroy in New Hartford, New York, has joined the adjunct faculty at the Utica School of Commerce’s main campus. The Central New York Business Journal

Ralph Hamm, Jr., CIC, CRM, CPCU, CLU, is CEO/partner of Texas AGA, Inc., and president of CIAdirect in Dallas, Texas.

Tad Krug, CIC, is chairman and CEO of Ramsey, Krug, Farrell and Lensing (RKF&L) in Little Rock, Arkansas.

E. Larry Lujan, CIC, is President and CEO of Manuel Lujan Insurance, Inc., and Lujan Enterprises, Inc., with offices in Albuquerque, Belen, Taos, and Santa Fe. Steven A. Reichman, CIC, is principal and executive vice president with The NIA Group, LLC, in Paramus, New Jersey.

“The wealth of industry experience and academic resources represented by these new Board members is immeasurable,” said William T. Hold. “This is a great opportunity for The National Alliance to draw on their wisdom and insight to ensure that our programs continue to lead the industry.”

IIAANY Elects Costello Board Chair Rochester, New York agent John R. Costello, CIC, tops the list of new officers elected by members of the Independent Insurance Agents Association of New York, Inc. Costello, a partner in Costello, Dreher, Kaiser Insurance was installed during the association’s 120th Annual Business Meeting. News Release

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