06lavoz by Independent Insurance Agents of NM

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COVERAGE

WORK

Five Reasons Your Customers Should Be Protected By New Mexico Mutual

CREATED FOR NEW MEXICO BUSINESSES

Created by New Mexicans for New Mexicans, we understand the diverse operations of our state’s workforce. By placing business with our company, premium dollars stay in New Mexico. We are an A-(Excellent) A.M. Best Rated company and take ownership of providing New Mexico businesses cost-effective workers’ compensation coverage.

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Our tagline, coverage @ work, states our purpose. We protect businesses as well as employees. We ensure that your customers’ business investments are protected from the costs of an accidental injury and provide programs and services to keep their employees safe at work and rehabilitate those who may suffer a workplace injury.

EXCELLENT CUSTOMER SERVICE We distinguish ourselves from the competition by providing the highest standard of customer service. We are a local company that understands the state and your customers’ specific needs, not a faceless 800 number. We are committed to service excellence and our local team of safety and claims professionals know how to take care of injured workers and provide useful and practical information to keep workplaces safe. Our website, which includes safety videos (streaming or checkout), Pay My Bill, File a Claim and many other features, is another valuable resource available to all employers and their employees.

LEADERSHIP AND ADVOCACY FOR NEW MEXICO BUSINESSES

New Mexico Mutual works to ensure that New Mexico continues to be a good place to do business by monitoring legislative and regulatory bodies throughout the year. We are an industry leader in collecting and providing workers’ compensation data to the state of New Mexico. We represent our clients and their employees in Santa Fe by advocating legislation that protects businesses and workers, while keeping the cost of workers’ compensation insurance to a minimum.

PROTECTION FOR EMPLOYEES, SECURITY FOR YOUR CUSTOMERS

INTEGRITY

New Mexico Mutual is recognized as one of the most ethical companies in New Mexico and we’ve earned that designation by being forthright and respecting the relationships we’ve built with our agents, policyholders and injured workers. We have fair processes for employees and employers that are all handled locally. We are financially strong and can be trusted to back your customers when they need us most.

New Mexico’s Experts in Workers’ Compensation www.iianm.org Insurance

iianm’s

Independent Insurance Agents of NM 1511 University Blvd. NE Albuquerque, NM 87102. (505) 843-7231. Fax (505) 243-3367. Web site www.iianm.org. This publication is intended to provide accurate and authoritative information on the subject matter covered, but is distributed with the understanding that neither IIANM, nor any contributing author, publisher, contributor or advertiser is rendering legal, accounting or any other professional service and assume no liability whatsoever in connection with its use. Further, the electronic links to our advertisers and/ or contributors found in this publication are provided as a courtesy to our readers and do not necessarily indicate an endorsement by IIANM. News items from members of Independent Insurance Agents of New Mexico and the general insurance industry are encouraged. The advertising deadline is the fifteenth day of the month, preceding publication. Advertising rates are available upon request. Please contact Rachel Sheffield at rachel@iianm.org for details

IIANM Staff President/CEO Thom Turbett Chief Strategy Officer Marit Peters VP of Member Services Consuelo Trujillo Insurance Programs Administrator Suzie Dodds, CIC Communications Director Rachel Sheffield Member Services Associate Renee Trujillo

2013-2014 Officers Chair Diana Hobbs Vice-Chair Gabe Portillo

Independent Insurance Agents of New Mexico

“La Voz” is the official monthly e-publication of the

Anniversary

On the Cover:

Celebrating 80 Years in New Mexico

This month’s iconic New Mexico locale: Carlsbad Caverns National Park

It sits in the middle of the Chihuahuan Desert. Millions of years earlier a reef developed in the area but was later buried when the sea receded from the area. As time went by the layers of rock that were buried beneath the surface were pushed up and eventually formed the Guadalupe Mountains. Beneath the surface, rich oil deposits caused cracks in the limestone and when rainwater seeped through the cracks it mixed with the brine to create sulfuric acid. This acid ate away the limestone, thus creating the beautiful caverns that exist today. As the mountains lifted above the earth, the water inside naturally drained and left behind the minerals that formed the stalagmites and stalactites, amongst other things, that we see there today. Today there are over 300 caves beneath the surface of the desert, but only 113 of these fall within the confines of the national park.

Features Convention - Exhibitor Registrations Are Now Open

Who Owns Your Data? 06 Save the Date - Union Standard Brings Free CE Classes

Ride-sharing, Car-sharing Services Make Strong Candidates for Commercial Coverage 10 Telematics Two-Some 12 Don’t Neglect the Beneficiary Designation

What Lane Are You in? Low Price? Customer Service? Luxery Brand?

Producer & CSR Tips for Avoiding Surety Claims

Valuing Property in CGL Claims

Problems or Roadblocks

In Every Issue IIANM 2014 Company Partners!

Tech Talk 16 June’s Clickable Calendar 26 Odds n Ends 27

Advertiser Index Acuity

Burns & Wilcox Back Cover Litchfield Special Risks

Secretary/Treasurer Connie Sevier

Market Finders, Inc. 18

National Director Sam Conlee

Mountain States Insurance Group

Immediate Past Chair PJ Wolff

Risk Placement Services (RPS) 15

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Molina Healthcare 08

New Mexico Mutual 02 Towerstone Insurance Services 11

These carriers have partnered with our association to support the vitality of the independent agent system in New Mexico. Take a moment to visit their new page on our site and take advantage of their varied products and services. Independent agents have the freedom to choose!

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IIANMâ&#x20AC;&#x2122;s 80th Annual Convention Sandia Resort & Casino September 24th & 25th, 2014

BATTLE HE T F O DECADES

TRADE SHOW www.iianm.org

Exhibitor Registration is now open!

Who Owns Your Data? By Daniel Burrus, CEO of Burrus Research

Back in the mid-1980s, I wrote about how GPS would be used to revolutionize our lives. One of my books published back then was called Advances in Agriculture, in which I highlighted how GPS would transform agriculture in the 1990s and beyond. Today those predictions have come true. Thanks to smart tractors from John Deere, as well as harvesters and planters, farmers can use GPS to do much more than plant a straight row of corn. They can also collect data via GPS to determine exactly where in the field they’re getting the best and worst yields, foot by foot, right along as they harvest. Therefore, when they plant seeds in the spring, farmers can plug that data into their planters and know exactly where to plant more seeds to get a bigger return, and where to plant fewer seeds because the ground is not as fertile. This enables the farmers to maximize their yields. All this is great news. And because the data comes from the farmers’ equipment and is downloaded onto a memory stick that stays with the farmer, it becomes the farmers’ intellectual property. It’s their data. However, recently Monsanto, which is one of the biggest companies in agriculture that provides the seeds for genetically-modified crops, has approached the farmers and made an interesting offer: They want all the farmers’ data to go directly from the harvesters and planters to the Monsanto cloud so Monsanto can collect the data on the specifics of each field—what grows well and where. In return, Monsanto will provide the farmers with information on the best ways to work their field as well as the best tools for getting the highest yield and the most profitability. On the surface, that’s a great incentive for the farmers. It makes a lot of sense. But … who owns the data now? Before going any further, I want to be clear in saying that this example is not about whether Monsanto is doing something good or bad; rather, it is about looking at predictable problems and working together to find solutions before problems begin. Now here are some big picture questions that would be good for both farmers and Monsanto to discuss and resolve: If Monsanto can get the majority of farmers to agree to let them collect all harvesting and planting data, wouldn’t Monsanto be able to predict the property values of farms

better than anyone else? Wouldn’t they be able to predict, faster than anyone else, yields and pricing? Wouldn’t they have more success in the commodities market, because they would have access to real-time yield information before anyone else? And that opens up another big question: Does data ownership need to be regulated, because in this case it would give Monsanto an unfair advantage in the market? Perhaps regulators need to take a look, analyze this, and solve problems before they happen. As you can see with this example, it is more important now than any other time in history to look at the future impact of new initiatives and offers, as well as the predictable problems that would result, so we can solve those predictable problems before moving forward. Of course, this Monsanto scenario is just one example. There are many others—some of which can impact your life. For example, there have been several news reports about how Google Now on your smartphone can listen to your television set while you’re watching TV. That could allow Google advertisers to identify what you’re watching so they can give you more targeted advertising based on your real-time viewing habits. Similarly, another recent news article stated that when you’re playing a video game on a new Xbox, the video camera is on all the time and has the capability to watch you play, watch your emotions, and watch how you react. If a video record of this was created, who owns that video data? Or even bigger, who owns your playtime? Additionally, many of the new cars today have a type of “black box” in them, along with the dozens of computers that are onboard. That means the black box can know exactly where you are, how fast you’re driving, and many other details of your driving habits. Who owns that data? The insurance company? The auto manufacturer? The driver? As you can see, there’s a lot of data being collected, and it’s not just by the NSA. It’s by an increasing list of companies that are starting to realize they can monitor everything we do and provide personalized services in real-time. Now is the time to think about it. Who should own your data? This is a vital topic with many predictable problems we need to start solving today, before they wreck havoc on us tomorrow. Over the past two decades, futurist keynote speaker Daniel Burrus has established a worldwide reputation for accurately predicting the future of technological change and its impact on the world of business. He has helped hundreds of clients identify new opportunities and develop successful competitive business strategies based on the creative application of leading-edge technologies.

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We stand tall above the rest. Mountain States has been at the top of the local insurance landscape for more than 75 years. We stand behind you and your clients, offering not only stability and rock solid experience, but also a variety of products -all the things you, as an agent, count on to protect your clientsâ&#x20AC;&#x2122; businesses.

The Mountain Stands Behind You. www.msig-nm.com Albuquerque, New Mexico 505.764.1400

Long House Bandelier National Monument

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New Mexico

Introducing Molina Healthcare’s exciting 2014 Medicare Advantage Prescription Drug Special Needs Plan Molina Healthcare, a Fortune 500 Company, was created more than 30 years ago by Dr. C. David Molina. As an emergency room doctor, he believed that every person should have access to high-quality care. Molina Medicare Options Plus HMO SNP Plan offers a competitive plan design with additional benefits that you can market year round to meet the needs of dual eligible customers.

• Large Provider Network • Comprehensive and Preventive Dental Services • Vision Exams and Eyewear • Transportation • Over-the-Counter Medications and Supplies • Strong Compensation Plan • Renewal Commissions • Competitive Plan • Market Year Round to Dual Eligible Customers

If you have a New Mexico Life and Health License, contact us to learn more. Please contact: Broker Support Unit (866) 440-9788 broker@molinahealthcare.com

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Workers Compensation Underwriting &

S av

e the

ISSUES Date!!!

Date: Thursday, July 24, 2014 Time: 8:45 AM to 2:30 PM (includes Continental Breakfast and Lunch) Location: IIANM Conference Room (1511 University Blvd, NE, Albuquerque, NM 87102) Subject: Workers Compensation Underwriting, and Commercial Roof Issues Guest Speaker: Paul Martin CE Credits: 4 Hours Free CE Credits! Union Standard, and IIANM are pleased to offer a workshop for Workers Compensation Underwriting, and Commercial Roof Issues to anyone in your office that would like to attend. We encourage you to be part of this free workshop sponsored by Union Standard, and IIANM. Those of you that attended Paulâ&#x20AC;&#x2122;s seminar last year are aware of what a great job he does in our workshops.

Workers Compensation Underwriting (Filed for 2 CE Hours) This portion of the workshop will explore the elements of evaluating employers and their workers compensation exposure with an eye toward understanding the carrier reaction to applications, how to approach rehabilitation of poorer risks, and how to educate employers on making themselves attractive to insurers.

Commercial Roof Issues (Filed for 2 CE Hours) This portion of the workshop will explore some common problem areas when managing the risks of commercial building roofs and developing sound insurance approaches with customers. So that we may have a head count for the workshop and lunch, we ask that you please RSVP as early as possible as space may be limited. The expected last day to register will be July 11, 2014, however, this may be flexible depending upon registrations. Please respond to Jeff Weddle at jweddle@usic.com. We have a maximum attendee count based upon the space, so please respond as early as possible in order to get an accurate attend count.

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Ride-sharing, Car-sharing Services Make Strong Candidates for Commercial Coverage

by Brian Anderson

Ride-sharing services such as UberX, Sidecar, Lyft, RelayRides and more are increasingly coming under scrutiny from local municipalities, states and insurance organizations for not carrying the proper insurance coverage. The effect could be that commercial insurance agents have an opportunity to help people who participate in a ride-sharing service or rent their vehicles via or car-sharing service get the proper coverage. Personal car insurance will typically not provide coverage in these situations, even though it is largely being relied upon at this point. Some providers have their own commercial coverage, but it might be effective only if a driver is en route to pick up a ridesharing client or have one in the car. And when people are renting their vehicles to others via a ridesharing service, their personal auto insurance coverage probably won’t be much help. “A personal auto policy does not provide coverage for situations when the vehicle is being used as a rental car,” said Loretta L. Worters, a vice president at the New Yorkbased Insurance Information Institute. “RelayRides, or any peer-to-peer car sharing service, is doing a disservice to its customers by not disclosing to them that they are putting their personal insurance and perhaps their own assets at risk. These companies should let their customers know that if their vehicle is being used as a commercial venture, it should be insured with a commercial policy.” Premiums for individual coverage are based on personal, not commercial, use of an individual's vehicle. "Submitting your car to ride-sharing exposes your auto to greater risk from weather, traffic, and drivers unfamiliary with the vehicle. Some insurers view car-sharing services as a higher risk, so they may cancel or not renew a driver's car insurance policy or increase premiums if a policyholders's vehicle is involved in an accident while it's being rented," Worters said. In the insurance company's eyes, an individual offering their vehicle to strangers increases that individual's risk,

because the person renting the vehicle may not be a good driver. Putting more miles on the car also opens it up to potentially more accidents," Worters said. It also exposes the insurer to greater risk if someone in that car is injured in an accident. Regarding liability, Worters said many of these ride-sharing companies report having $1 million in liability coverage. But then they have stipulations as to when you are driving personally or commercially. "What if there's a dispute about exactly when a fender-bender occurred? Was it while the rental company's insurance covered the car or when your own policy did? I know some [peer-to-peer] companies are experimenting with data recorders and phone apps to track time, mileage and who's behind the wheel so that could help. However there can be a lot of confusion determining when the person is driving for personal or commercial use," Worters said. Due to all these issues, insurance companies, Worters adds, are reluctant to provide personal insurance for people who are active in these types of services. She said people who participate should verify that the ride-sharing or car-sharing services they use carry commercial insurance that is primary on any losses that may occur. "The III supports insurance requirements for car-sharing and ride-sharing services similar to requirements for taxi cab services,” Worters said. “The principle is the same: Personal automobile insurance policies generally do not cover commercial exposures and are not adequately priced to cover commercial exposures — commercial enterprises should therefore be required to carry adequate commercial insurance.” A recent article on Fox News mentioned that cities and states including Seattle, Chicago, Austin, Texas, and Colorado have recently considered enhanced legislation to subject ridesharing operations to stronger commercial insurance requirements. It also noted that ridesharing companies have formed an insurance coalition to study the issue. www.iianm.org

PASSIONATE PEOPLE. UNIQUE SOLUTIONS. IF THEY’RE INJECTING “ICOWONDER INTO THOSE OIL WELLS TO

“

ENHANCE PRODUCTION AND REDUCE POLLUTION?

Pat Ashcraft Energy Insurance Expert On the job since he saw his first pumpjack.

At Towerstone, we look to the future to shape the solutions you need to protect your assets and manage your risk. Whether it’s Oil & Gas, Construction or the Environment, our industry-specific risk management strategists have access to custom-designed wholesale insurance programs and the expertise to implement them. We’ve been living and breathing insurance our whole lives, and our hands-on approach allows you to focus your energy where it should be — on satisfying your clients’ risk concerns.

www.towerstonecorp.com/solutions Toll Free: 972-725-2100 WHOLESALE INSURANCE BROKERAGE | MANAGING GENERAL AGENCY CA: dba Towerstone Insurance Services (Lic#0F60676)

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Telematics Two-Some

Is telematics a double-edged sword for insurance agents? By Caitlin Bronson | Insurance Business America

Roughly 18 to 20 insurance carriers currently offer telematics, or usage-based insurance capabilities, to their policyholders. The devices record driving behavior, which in theory can be used to better predict individual auto insurance premiums. And while a January 2014 survey from Deloitte found roughly half of the driving population views UBI negatively, the industry analyst concedes “the genie is out of the bottle.” “The industry as a whole is not likely to go back to relying only on its traditional methods of assessing auto risks,” Deloitte said in an April report on telematics. The report highlighted that while UBI is still in a developmental stage, it is likely that demand for telematics and the discount it provides will grow. Younger drivers are by far the most likely to adopt telematics, Deloitte found, and as such, may influence the future market. For insurance producers, perhaps the most pressing issue associated with commercial UBI is how it may affect their viability in an already challenging, commoditized market. According to Deloitte analyst John Lucker, telematics may bring both challenges and benefits to producers. The downside to telematics? Potential decreased commissions. “A lot of agents are paid as a percentage of premium, so when a broad program like this is essentially reducing aggregate premium, it could take money out of the pocket of an agent,” Lucker told Insurance Business. “As such, insurance companies need to try to make the agent as whole as they possibly can, otherwise there’s a risk the agent won’t be as supportive of the push to direct customers toward telematics.”

Telematics may bring both challenges and benefits to producers. Lucker said there were numerous ways insurers may work around this issue. First, ensuring agents are compensated based on previous premiums temporarily may support both telematics and the agent. Second, decreasing commission on a year-by-year basis may ensure agents “don’t go over a cliff from the commission perspective.” While lower pay in an increasingly difficult environment is never welcome, there may be a bright side to telematics. According to Lucker, the use of telematics actually “de-commoditizes” the auto insurance product thanks to new, value-added services attached to UBI. For example, drivers are alerted in real time if they speed or take corners too fast. Some telematics devices also allow for “geo-fencing,” a system that sends alerts when the driver goes beyond a certain pre-designated area. This is especially useful for parents with teenage drivers. Finally, marketing offers can be sent to the driver for locations in their vicinity, offering discounts at a nearby coffee shop or restaurant. In the near-term, Deloitte expects telematics to actually be a bifurcating force in the market. While many carriers are adopting the technology, there will be some - pushed by demand from policyholders concerned over privacy issue - that stick to traditional underwriting factors in assessing rates. Currently, careful drivers, concerned parents and policyholders with one or two accidents on their driving records may be good candidates for UBI, Lucker said.

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Telematics on road to widespread adoption among US truck fleets

SOURCE: Insurance Business

Fleet telematics systems – which use electronics and GPS devices to track the location and other characteristics (distance driven, speed, brake usage, time of day, etc.) of vehicles in a fleet – appears to be poised for rapid growth. The information can be very useful in monitoring safe and efficient driving habits and reconstructing accident details. While widespread development of fleet telematics systems has been stymied by a series of patents held by Progressive Insurance (Progressive’s voluntary “Snapshot” telematics device that can reduce auto insurance rates for good drivers has collected over 10 billion miles of driving data since 2008), those patents are under challenge. The U.S. Patent Trial and Appeal Board recently canceled several patents relating to telematics held by Progressive, which could open the door to mass market adoption of fleet telematics. Jeff Stampura, founder and CEO of Advanced Insurance Products & Services, says he is confident that commercial usage-based insurance will be widely adopted. “The insurance industry is always trying to find new ways to differentiate itself and provide more value, and one way is to underwrite risk more accurately,” says Stampura. “In the past, we didn’t have good predictive factors or good data, especially on the commercial side, to do underwriting – or more sophisticated underwriting – and pricing,” Stampura says. “And now, with telematics, that has all changed.” While the presence of a telematics device alone may not impact a client’s rates, using the device to effectively monitor and coach drivers can lead to a discounted rate.

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The National Association of Insurance Commissioners (NAIC) noted in a recent brief that the first Usage-Based Insurance (UBI) programs for personal auto insurance customers began to surface in the US about a decade ago, when Progressive and General Motors Assurance Company (GMAC) began to offer mileage-linked discounts that have since evolved to capture additional driving habit data. Telematics devices measure a number of elements of interest to underwriters: miles driven; time of day; where the vehicle is driven (GPS); rapid acceleration; hard breaking; hard cornering; and air bag deployment. The insurance company then assesses the data and charges insurance premiums accordingly. The NAIC brief says UBI is poised for rapid growth in the US, with many experts predicting that up to 20 percent of all vehicle insurance in the country will incorporate some form of UBI within five years. Data points that can be collected by telematics devices: • Engine RPM • Engine idle time • Fuel consumption • Hard braking • Miles driven • Trip start/stop times • Trip start/stop locations • Rapid acceleration • Seatbelt use • Route taken • Time of crash • Velocity

LIFE & HEALTH

Don’t Neglect the Beneficiary Designation By, Dave Evans Source: IA Magazine For independent agents who spend a lot of time offering whole life insurance and other related financial services products, the “policy illustration” is a familiar exercise. Typically, this involves producing reams of pages of guaranteed and assumed columns showing the policy face value, cash values, riders and other policy considerations. Prior to running the illustrations, the agent has determined several key considerations, including client budget, size of insurance need and who will be the owner and beneficiary of the policy. One area that rarely receives the time and attention it deserves is the beneficiary designation, which also applies to important financial assets like 401(k)s, IRAs and annuities. Even if the initial beneficiary designation makes sense at the time the policy is sold, a client’s life can change dramatically, rendering some beneficiary designations inappropriate later. It’s also important to note that potential beneficiaries can involve not only people, but also charities and trusts. When assets pass at death by contract, they also bypass the probate process, which increases speed of payment and avoids the public disclosures that accompany probate. At the same time, assets that pass by contract take precedent over bequests made by the will. That means coordinating the beneficiaries named in insurance policies (or for jointly titled assets involving a deed) is critical. The agent should make sure that instead of making narrow beneficiary decisions, clients consider the entire estate and coordinate it with the will—especially for estates subject to the federal estate tax (it’s important to note that a few states have lower exemption amounts for state estate taxes). A related consideration is that children under the age of majority (18 or 21, depending on where the client resides) cannot directly inherit assets. To accomplish that objective, the client can use a trust with a named trustee on behalf of the beneficiary.

beneficiary intent, as well as tax considerations like the estate tax exemption and the unlimited marital deduction. And given the complex rules governing distributions following the death of an IRA holder, which will be distributed in accordance with the most recent beneficiary designation on file with the IRA custodian, retirement accounts will also come into play. If no beneficiary designation is on file, or if the named beneficiary does not survive the account owner, then the balance of the account will be paid to the IRA owner’s probate estate. A surviving spouse can “roll over” the IRA into the spouse’s IRA. This enables a younger spouse to wait until age 70½ before starting to take Required Minimum Distribution (RMDs), which the surviving spouse calculates using a more favorable IRS tax table. The surviving spouse’s life expectancy is also recalculated each year so RMDs increase at a slower pace than they would for a non-spouse beneficiary. When a non-spouse individual is named beneficiary, they have two choices for how to receive IRA assets: a lump-sum payment, or RMDs based on life expectancy. A third option, the Five Year Rule, is available if the IRA owner died before reaching age 70½. The only requirement is that the entire IRA must be distributed by Dec. 31 of the year containing the fifth anniversary of the IRA owner’s death. It’s important for independent agents to take the time to find out a client’s circumstances and discuss beneficiary designations, involving the client’s other advisers as needed. Clients—and their beneficiaries—will appreciate the extra effort.

Life events such as a marriage, divorce, birth of a child or death of a family member can impact

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Placing a call to us will put you on the fast track to providing the best solution for your clients. • Underwriting & Brokerage capabilities • Proud members of AAMGA, NAPSLO, PLUS and various state independent agency associations • Excellence in service • Relationship driven COVERAGES • Excess & Umbrella • Fiduciary & Crime • Garage Liability & Physical Damage • General Liability • Inland Marine • Personal Lines • Products Recall

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SCOTTSDALE, AZ 800.475.2626 RPSins.com

Steve

ANDERSON.com by, Steve Anderson (Always feel free to email me with comments, new ideas or products that have worked for you. I will check them out and spread the word!)

Internet Explorer XP Security Hole – The Biggest Problem is Not What You Think

An insurance agent approached me just last week during a break at a seminar I was teaching to ask: “Does my five-person office really need to change to a new operating system when Windows XP is working just fine?” I suspect there are a lot of businesses – especially small and medium-size – asking the same question.

The discontinuation of security patches is the most damaging part of terminating support for XP. Hackers are constantly creating new ways to attack systems. But your computers running Windows XP will no longer be receiving patches to protect them from new malicious exploits. Your system security will continue to degrade over time.

In truth, nothing will immediately change. No features will be disabled, you will not be forced to upgrade, and even technical support will still be relatively easy to come across. Literally millions of articles have been published about Windows XP, and they won’t disappear overnight.

This is especially troublesome for the insurance and financial services industry as they store more private client information than virtually any other business. But – and don’t be fooled – every organization that captures and stores private client information is at risk.

But – and it’s a big but – the biggest problem your organization faces is the financial ruin you will suffer when you have a data breach because you have allowed personal and private client information stored on your systems to be exposed. Federal and state data breach laws will come down on you hard. And you will have no excuse or defense.

Here are a few suggestions on steps your organization can take to temporarily protect your systems:

Microsoft revealed that it has been alerted to a serious security flaw in version 6 through 11 of its Internet Explorer web browser. It is working on a fix and will roll it out to users soon. Unfortunately, if you continue to use Windows XP in your organization, you will not get a fix, leaving yourself vulnerable to attack – and the possible theft of client information. Microsoft created a dedicated webpage that provides more information about the flaw. The company explained: “an attacker who successfully exploited this vulnerability could take complete control of an affected system. An attacker could then install programs; view, change, or delete data; or create new accounts with full user rights.”

• Stop using Internet Explorer until fixed. Use other browsers when you can, including Chrome and Firefox, which are not vulnerable. This can be difficult as many insurance company agency rating and customer service websites only work when using Internet Explorer. The reliance on Internet Explorer only was shortsighted on the carrier’s part. This needs to change so agencies can use whatever browser they deem best. • Inventory. Take the time to inventory your systems. Know exactly which computers within your organization are currently running Windows XP. • Verify your legal responsibilities. Because of the data security requirements contained in the HIPAA / HITECH legislation regarding protecting sensitive personal health information, any organization continuing to use the Windows XP platform after April 2014 will likely be considered www.iianm.org

non-compliant and possibly open to regulatory actions. If your organization has an actual data breach, the fact that your organization negligently compromised security by using a program with a known vulnerability will be problematic at best. • Understand state data breach requirements. Forty-seven states have some type of security breach notification laws. Generally, these laws apply to citizens of the state. If your clients are residents of multiple states, you need to understand the notification requirements of the law in each state. • Move to a cloud-based platform. This may be the time to seriously consider moving your technology infrastructure to a third party. Software as a Service (SaaS) systems are inherently more secure than in-house installations. It will be much easier to upgrade just your workstations than your entire network. • Check cyber liability insurance. If you have purchased cyber liability insurance, check to make sure there are no exclusions or limitations on the policy for using outdated technology. • Obtain cyber liability insurance. If you have not looked into cyber liability insurance, now is the time. • Don’t delay. Plan to move off of Windows XP as soon as possible. Now is the time to take action. Start working on your strategy for moving your organization off Windows XP. Moving to a newer operating system will help you provide a more secure environment in your organization and ensure compliance with HIPAA / HITECH and state data breach statutes.

Should You Purchase a “.Agency” Domain?

Top-level domains (TLDs) have been used since the very beginning of the Internet as a way to categorize the different types of websites. You know these as the extensions used by every website address. The original top level domains were: .gov for government; .mil for military; .edu for academic institutions; .net for network operations centers; www.iianm.org

.org typically for non-profits but not restricted to this use; and .com for commercial entities. In 2000, the Internet Corporation for Assigned Names and Numbers (ICANN) decided to allow seven more TLDs such as .biz, .info, .name, and .pro. A historic change in the Internet domain name system is now underway. 2014 will see the start of the gradual release of almost 1,900 new domain extensions. These new extensions will allow companies of all types to be able to create generic extensions for their brand and names such as .shop, .hotel, .eco, .cpa, and so on. Two of these new domains your organization might want to pay some attention to are .agency and .insurance. While the .com domain has been the standard (the first was assigned in 1985) with currently over 132 million .com websites in the world, it is also significantly harder today to find an appropriate website address using a .com extension. By registering and using one of the new extensions of your domain name, you will benefit from the following: • Drive more traffic to your website. Registering your domain name with multiple extensions and pointing them to your main website can help prospects and customers find your website. • Protect your brand and online identity. It will prevent others from registering your domain with a different extension that attracts customers to their site instead of yours. Domain name extensions were originally added to help identify the domains by function or country of origin. Many of the new domain name extensions will also become recognized over time as an effective way to categorize organizations by interest or functions. To view the list of all the new TLDs, you can go to Name. com’s TLD Watchlist. Here you can see all the new TLDs and also mark the ones you’re interested in so that you can be notified when they become available. Your existing domain registrar (Network Solutions, GoDaddy, etc.) may also offer a similar service. As these new domains become available, you can purchase them for prices similar to those for your existing domains. I suggest you at least explore the idea of registering your organization’s name or brand with .agency and/or .insurance. It’s not a lot of money and you could look back in a few years and be very glad you claimed this part of the Internet for yourself or your organization.

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What Lane Are You In? Low Price? Customer Service? Luxury Brand? By, Shep Hyken The best companies know what they are good at, and they “stay in that lane.” For example, Ace Hardware is known for its helpful customer service. Nordstrom is known for their brand of legendary service. Zappos is known for their amazing service. What none of these companies are known for is being the low price leader. It’s not that they are high priced either. They are competitively priced and have chosen to compete by delivering value with their customer service. That’s their lane: customer service. Sure, at certain times all of these companies have sales and discounted items. I love the semi-annual sales at Nordstrom. Some great buys can be found. But those are just twice a year, and even with the sale, you still get the great Nordstom experience. On the flip side, you have the Dollar Stores. They advertise an incredibly low priced product. The bargains are sometimes amazing. But, unlike Nordstrom or Ace Hardware, you don’t find sales experts standing in the aisles ready to serve and help the customer. What you usually will find are friendly people at the cash register who smile and say thank you as they take your money and hand you your bag of merchandise. It’s important to note that there is nothing wrong with that. It works well for them. It’s their plan; their focus. It’s the lane they’ve chosen to be in. What really got me thinking about this was the recent news of Radio Shack closing about 20% of their stores. All reports indicate that they are struggling. Or, just like any savvy retail chain, they may just be ridding themselves of low volume stores. How could this happen to a retail industry icon? I may not have the entire answer; however I have a theory of what could have contributed to Radio Shack’s current situation. First of all, I love Radio Shack, and I admit to being a little bit of a geek. As a kid, I loved going to the Radio Shack store and getting what I needed for cool projects. I continue to go to their stores on occasion to buy some electronic accessories. However, the store I visit in the mall today is very different than the store I remember as a kid. I remember going to Radio Shack for things I couldn’t get elsewhere; batteries, wire and cables. They also had cool merchandise that other stores didn’t sell. Today, their merchandising doesn’t give me that impression. Are they in the “hard-to-find-in other-stores” electronics business, the www.iianm.org

phone business, or the TV business? Are they competing with Best Buy and other consumer electronic stores? At some point they switched lanes, but I’m still not sure which lane they switched. Now even though I’ve opened the door a bit on Radio Shack’s strategy, that’s not the discussion I want to get into. This is just an observation that made me think of companies that struggle because they can’t choose a lane and stay in it. Back to the companies mentioned earlier; Ace Hardware, Nordstrom and Zappos.com. We know what lane these companies play in. We know what they stand for. There is no confusion. They have chosen to compete with customer service, and they have done quite well. That lane is obvious. Walmart and Dollar Stores choose to compete on price, another obvious lane. Less obvious lanes might be companies known for industry specific merchandise or very high end merchandise. So, the question is this: Do your customers know what lane you are in? Making a lane change in business isn’t illegal. You won’t get a ticket. But, if not done properly, you will confuse the customer, which reminds me of what someone once said: “A confused customer won’t buy.”

Producer and CSR Tips for Avoiding Surety Claims The relationship between a customer and an agent that helps them secure bonds for their projects is vital to their success. By being aware of the possible pitfalls that can create E&O claims, you will be able to provide bond services to your clients without interruption, and mitigate serious E&O exposures for your agency. Remember working with surety bond is a specialized process in which dabbling can land you in the middle of an E&O claim. It is strongly recommended that you work with an experienced and professional broker that can assist you though the process. E&O Tip #1: Obtain Specific Rate Approval from a Surety - If a client pressures you for a rate, provide a range that includes a low and high estimate (e.g. 1% - 5%). Communicate that you cannot give an exact rate without knowing credit history and other underwriting information. Benefit: By receiving a specific rate from a surety, a contractor will be able to include a more exact amount in his/her bid estimate, and the agent avoids providing inaccurate information. E&O Tip #2: Establish a Checklist for Bid Bond Preparation - The checklist should include the following: � Verify bond form � Verify bid bond amount/percentage � Attach a separate notary signature page for contractor’s signature � Attach Power of Attorney showing name of person who signed bond � Independent review of bid bond to ensure accuracy � All requirements included Benefit: Establishing a checklist will help eliminate the possibility of a contractor’s bid being rejected as a result of bid bond mistakes. This will also eliminate your agency’s exposure to a claim involving a contractor’s lost profit and its ability to cover fixed overhead. E&O Tip #3: Assure Proper and Timely Delivery of Bid Bonds - Confirm delivery address ahead of time and use a reliable overnight delivery service. Benefit: Taking steps to assure proper and timely delivery alleviates the possibility that your client will miss a bid deadline. Delivery date and time will be specified and status can be tracked if reliable overnight delivery is utilized. E&O Tip #4: Never Advise a Contractor to Use a Cashier’s Check as Bid Security in Lieu of a Bid Bond - Notify clients that they must request a bond as soon as they are aware one will be required. If a bid bond cannot be secured in a timely fashion, a cashier’s check should only be used when the surety provides written approval stating that they will support the bid bond. Never assume that the surety will support a bid bond for which a cashier’s check was provided. Benefit: By verifying that a surety will support a bond, the contractor will avoid the possibility that he/she will be out the amount specified in the cashier’s check, triggering him/her to file an E&O claim against the agent. E&O Tip #5: Establish a Written Procedure Requiring Verification of Surety Approval - Set up guidelines regarding what constitutes authorization from the surety and how it should be documented. Agency staff who issue bonds must be notified of this policy and adhere to all requirements prior to delivering bonds to your clients Benefit: By having agency staff receive prior approval, the surety’s trust in your agency will be maintained, and your client’s future surety relationships will not be jeopardized. E&O Tip #6: Train Associates on Specific Criteria Granted by Bond Lines of Authority - Don’t focus solely on single bond size and aggregate limits authorized under the line. Know and understand the other conditions and exclusions before issuing a bond under the line. Benefit: When a line of authority is given by a surety company, it gives the agent authority to issue bonds that fall within the scope of the line. Verifying that the project meets each and every item on the bond line of authority is critical to maintaining the confidence of the surety and protecting your agency against an E&O claim if the project ends up in claim. E&O Tips #7: Deliver All Relevant Information to the Surety in a Timely Manner - Create and adhere to a procedure that calls for providing all known information to the surety that may impact their decision for both bond approval and for the handling of a claim. Benefit: This requirement is included in the agency agreement that is signed with the surety, and honoring it is critical to maintaining the relationship with the companies with whom you do business.

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Valuing Property in CGL Claims Virtual Universityâ&#x20AC;&#x2122;s Ask an Expert

ulty

VU Fac

A third party files a claim demanding replacement of property negligently damaged by your insured. Does the CGL policy respond on a replacement cost (RC) basis or actual cash value (ACV)? What if there is a contract in place that requires replacement cost, not ACV, valuation for damage?

"Our insured is a tenant in a building. He has a fire and is making claim under Fire Legal Liability. The insured signed a lease agreeing that damages would be settled on a REPLACEMENT COST basis. The insurer states that all fire legal liability claims are always settled on an ACV basis for valuation purposes. We cannot find any support for their opinion in the form and would like your opinion." Interesting question. Legal liability is typically a matter of statutory, case or contract law. Barring any unlikely statutes that deal with the issue you describe, that leaves us with case law and contract law pertaining to leases and the CGL policy. In general, liability claims are settled on an ACV basis as established by case law in many jurisdictions. However, legal liability can often be modified by contract, in this case a lease, unless prohibited by statute. Below are some comments from our faculty. As you'll see, there is not a consensus opinion on this, so we'd be interested in the opinions of any of our learned readers. Faculty response... If the damage was in fact repaired, how could the damages be less than the cost of repairs, another consideration in determining "value"? Faculty response... I think they owe replacement cost for damages, but sadly, I think it would likely go ACV in court. That said, it's up to the court and not the policy. Faculty response... I think the company would have a hard time not paying what the insured is liable for. It is legal liability and not first party. It is building damage legal liability, not ACV legal liability. While ACV is normally the settlement basis for legal liability claims, an added point FOR replacement cost coverage is that the insured is contractually liable for it and a lease is an "insured contract" under the CGL. Faculty response... The CGL policy pays amounts for which the insured is legally responsible. Usually this is legal liability in tort and www.iianm.org

most jurisdictions hold that the valuation methed is ACV, not RC. The insured can incur liability by contract, but the CGL only responds if the insured would have been liable for such damages in tort in absence of the contract (not the case here) or if it is an "insured contract." Since a lease is an insured contract, it's quite possible that recovery could be on a RC basis if made a part of that contract. For the contractual assumption of liability for settlement on a RC basis under contracts that are not "insured contracts," I think ACV would apply. Since I'm not an attorney, I think you'd have to get a legal opinion on this. Faculty response... With a liability policy, we only pay what the insured is legally obligated to pay (or would be). The injured party is only entitled to their real damages. So, a CGL policy would pay ACV for an 8 year old TV. A contract would change nothing. Contractual liability pays if an insured assumes liability of someone else to pay for LEGALLY imposed BI or PD of that someone else to a third party. The valuation process would be the same. Contractual has nothing to do with the performance of a contract. Performance equals surety and, of course, that only pays when the insured (principal) is broke. Faculty response... The CGL carrier is only obligated to pay tort damages which usually result in a fair market value analysis. That is the difference between the value of the item before the loss and its value after the loss. Faculty response... The CGL does not include a valuation clause mentioning either ACV or R/C. The insuring agreement only states that it will pay for covered BI and PD when the insured is legally liabile for the injury/damage. The amount paid then will be determined by settlement or court decision.

Click here to view additional faculty responses and also other related articles. You will need to log-in to view, so if you do not know your log-in info, send Rachel an email.

Problems or ROADBLOCKS All of us plan. Some of us do so formally. We do written plans with long term goals, short term (annual) objectives, action plans that spell out the activities we need to do in order to achieve our objectives and budgets. Most plan much more informally. We plan to grow each year. We may even establish some methods of supporting that growth. Then we proceed to do what we feel we need to do in order to support that growth. Of course, those agencies that write their plans and establish ROAM (Realistic, Objective, Achievable and Measurable) objectives and action plans are much more likely to achieve their goals more so than those who strive to improve but don’t write their plans. But whether you have written plans or informal plans, a key to your plan’s success is how you face the inevitable problems or roadblocks that arise in the course of your personal or business lives. Each time you encounter an issue or reason that a planned course can not be pursued you have options: 1. Just keep going the way you have been going and chalk up the plan to a failed attempt. At least you tried, right? 2. Change your goal each time you find a problem that makes the plan difficult to continue. 3. Find a solution to the problem that permits you to continue to pursue the same objectives that you set. If you were driving to an important event and you found your route blocked by a sign that reads “road construction ahead. Road Closed in 50 feet” would you: a) Turn around and go home? b) Turn right or left and go around the closure? c) Change your plan to do something else instead of what you had planned? This example defines the difference between a PROBLEM and a ROADBLOCK. First, if the event was one that you desired to attend, and the sign read that you have to go around the block to avoid the construction you have only one easy alternative. This is neither a problem nor a roadblock to your plans since you have a ready alternative that will still get you to your goal.

However, if either you didn’t want to go to the event in the first place because of the lack of true commitment to the event OR the blockage was closure of the only bridge to your route in 100 miles, it is now a problem, but not necessarily a roadblock to your successful venture. You still have two alternatives. Go 100 miles out of your way or go home. A PROBLEM exists when you cannot pursue your planned activity and you have multiple courses of action that you can take to still accomplish your goal. A ROADBLOCK exists when you cannot pursue your planned activity and you have NO alternatives. Note that an issue that keeps you from your goal that only has one alternative is neither a problem nor a roadblock. Your only decision is whether you are committed enough to your objective to pursue it in the alternative fashion. Our goal in planning is to only permit PROBLEMS, never ROADBLOCKS. When confronted with an issue that keeps you from achieving your goal, make sure that you (or whoever approaches you with the issue) have at least two alternatives to its solution. If there is only one potential resolution, why has the issue arisen in the first place? The only reason that an issue comes to your attention is a) if there is a question about the planned objective’s relevance or commitment, or b) if you must make a decision regarding one of the potential solutions. www.iianm.org

Be aware that if you make plans and then involve your staff without their involvement in the creation of the plan, you will encounter tacit approval of your plans, at best. They work for you. Whether or not they believe in your goals or your plans they will most likely support you as long as it doesn’t cause them any problems. However, unless they have a stake in the success of the goal, issues that will naturally arise could become either PROBLEMS or ROADBLOCKS. Issues will arise in any plan. Count on it! But if you make clear to your employees that they simply need to inform you of any change of course if it is the ONLY alternative toward accomplishing a goal, it will speed your progress. Never object to your staff bringing you PROBLEMS as long as they bring you at least two alternatives to the problem’s solution. A part of your job as the owner/manager is to teach the staff how to identify solutions and how to select the best alternative. When they bring you a PROBLEM and two alternatives, ask them which they would choose and why and then help them evaluate whether the decision was correct. When others bring you ROADBLOCKS, recognize that they either haven’t put sufficient time into identifying solutions or they want to stop the goal from being accomplished. Help them analyze the issue to see if any alternatives exist. Don’t do it for them. If they were given the responsibility to pursue the goal and encounter resistance, they should also be accountable for identifying alternatives. If they are trying to stop the goal or activity, find out why. They may not understand the ramifications of lack of success and want things to continue the way it has been most comfortable for them. Regardless, if you find the goals necessary for the success of your business, don’t permit roadblocks to stop you. Convert issues into simple problems with alternatives or eliminate them completely with simple alternatives that will permit you to pursue your original course of action.

Reprinted from The PIPELINE, the national newsletter for agency principals. The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 30 years. Call 800-779-2430, E-mail info@agencyconsulting.com, or visit www.agencyconsulting.com for information about the content of this article or PIPELINE subscription information. www.iianm.org

IIANM's Agents and Brokers Education Network (ABEN) unique webcast platform lets you skip the travel and the hassle of traditional CE. A wide array of available courses cover the most relevant, up-to-date topics taught by top industry experts. View live streaming video, submit questions, take notes and get full access to written materials. Additionally, ABEN's helpdesk is standing by 24/7 to assist you should you encounter any difficulties. Show Dates: Nightmares on Insurance Street Type: P&C Credits: 3 May 15 June 12 August 26 Dueling Additional Insured Endorsements Type: P&C Credits: 2 May 22 September 11 June 4 October 9 July 31 November 17 August 26 December 18 Cyber Insurance Type: P&C Credits: 2 May 06 June 03 July 08 August 05 E&O Risk Management - Meeting the Challenge of Change Part 1 & 2 Type: P&C Credits: 3 (each part) May 22 September 9 June 10 September 25 June 26 October 14 July 8 October 23 July 24 November 11 August 12 November 20 August 28

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JOB BANK Attention hiring managers, students or insurance professionals. View available job listings and descriptions or post your resume for prospective employers. We will be encouraging universityâ&#x20AC;&#x2122;s to use this resource for job placement and will need agencies and companies to be actively posting job opportunities as they become available. Click here to take advantage of IIANMâ&#x20AC;&#x2122;s Job Bank.

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Odds ends Fast Tempo Music AMPS-UP Workouts Research finds that when people listen to faster music they pedal faster on stationary bikes. This in turn increased their heart rates and improved the possible health benefits of their workouts. So next time you’re at the gym, grab that walkman and tune into something with a good, fast beat.

~adapted from O, Oprah Magazine

The economy needs you to take a vacation Trying to convince your boss that you need a vacation? Tell him or her that time off is good for the economy. An analysis by Oxford Economics for the U.S. Travel Association found that more than 40 percent of U.S. workers don’t take their full allotment of paid time off (PTO) during the year, representing an average of 3.2 unused vacation days per worker in 2013—and a total of 429 million. Aside from the risk of exhaustion and career burnout, unused vacation days have a negative impact on the U.S. economy as a whole. The study estimated that if employees took full advantage of their PTO days, the economy would enjoy the benefits of more than $160 billion in sales and $21 billion in tax revenues, as well as supporting 21 million jobs in areas like retail, transportation, and manufacturing. Workers taking just a single additional day off would boost spending by $73 billion. So go ahead and take some vacation. It’s your patriotic duty.

Repel Mosquitoes Naturally Eat foods that are rich in vitamin B-1. These include sunflower seeds, Brazil nuts and fish. Or pop a 25- 50 milligram B-1 supplement three times a day starting two weeks before expected exposure. Plant marigolds wherever possible...or line your yard with potted geranium plants. These will keep mosquitoes away from your porch, patio, yard, or pool. ~Chicken Soup & Other Folk Remedies

Kitchen Hacks you HAVE to try... Check out these kitchen and patio ideas

Retirement prospects are looking up (mostly) In a possible sign of renewed optimism, fewer U.S. workers are planning to delay their retirement. A study by Harris Corp. for CareerBuilder found that 58 percent of employees over 60 currently say they’re putting off retirement, down from 61 percent in 2013 and even farther below the 2010 high of 66 percent. More good news: Fifty percent of employees in the study say they expect to be able to stop working within the next four years, an improvement from 47 percent in 2013. Now the bad news: Ten percent of workers 60 or older don’t believe they’ll ever be able to fully retire, a figure almost unchanged from 11 percent last year.

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If you cannot place all of your clients’ personal insurance needs, they will find someone who can.

When it comes to personal insurance, every part matters. Because when one piece goes missing, the entire account could come undone. At Burns & Wilcox, we can insure individual portions of their coverage or the whole account. So you do not have to turn away any business. We have the expertise, resources and experience that can only come from being the leader in wholesale personal insurance. That is why no one has you covered like Burns & Wilcox. Albuquerque, New Mexico | 505.346.2583 toll free 866.643.8538 | fax 505.822.0092 albuquerque.burnsandwilcox.com Commercial • Personal • Professional • Brokerage • Binding • Risk Management Services