2014 winter professional insurance agents tennessee edition

Tennessee Edition/Winter 2014

PPACA TRIA

M&A

Cyber liability

NFIP Telematics

2014 trends

Professional Insurance Agents/Winter 2014

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Building Success

Mid South Mutual provides Workers’ Compensation to Home Building, Commercial Trade Contractors and related industries in Tennessee.

Examples of clients we serve include: HVAC Contractors

Bricklayers

Carpenters

Masonry

Building Suppliers

Electricians

Framers

Insulation

Dozing Services

Plumbers

Dry Wallers

Cabinetry

Siding Installers

Painters

Landscapers

Flooring

www.midsouthmutual.com

Contact Wendy Cox-Vetitoe at Wendy.Cox-Vetitoe@bwood.com or 615-263-1763 2

Professional Insurance Agents/Winter 2014

Administered by Brentwood Services Administrators, Inc. Proudly serving the members of the Home Builders Association of Tennessee since 1995.

Dedicated to the advancement of knowledge and informed opinion for the professional enlightenment and growth of the men and women of the insurance industry.

Cover Story

D epartments

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End-of-the-year evaluation Industry experts review 2014; look to 2015

Feature

4 11 15 25 28 30

Update

Readers’ service & advertising index

31

Officers and directors directory

In your corner Sales and marketing Tech talk Tech bit

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The insurance market remained steady in 2014 A review of the economy, acquisitions and the next industry leaders

Cover design: Patty Dykeman Statements of fact and opinion in PIA magazine are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the Professional Insurance Agents. Participation in PIA events, activities, and/or publications is available on a nondiscriminatory basis and does not reflect PIA endorsement of the products and/or services.

President and CEO of PIA Management Services Inc. Mark LaLonde, CPIA, CIC, AAI, Communciation Director Mary E. Christiano, Senior Magazine Designer Sue Jacobsen, Member Information Manager Jaye Czupryna, Advertising Sales Executive Susan Newkirk.

Postmaster: Send address changes to: Professional Insurance Agents of Tennessee, 504 Autum Springs Court, Suite A-2, Franklin, TN 37067.

“Professional Insurance Agents” is published quarterly by PIA Management Services Inc. PIA Management Services, 25 Chamberlain St., P.O. Box 997, Glenmont, NY 12077-0997; toll-free (800) 424-4244; email publications@pia.org. © 2014 Professional Insurance Agents. All rights reserved.

No material within this publication may be reproduced—in whole or in part—without the express written consent of the publisher.

Winter 2014

Professional Insurance Agents/Winter 2014

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Association news Message from EVP Jeff Anderson: The importance and purpose of committess

As many of you know, the PIA of Tennessee decided to formalize our committee process.

We have decided to have four committees for the 2014-15 service year. The makeup and mission of the committees are listed below, but I feel it is important to understand why our organization needs them. We are a volunteer member-serving member organization. We are constantly trying to grow and identify individuals who wish to serve in a leadership capacity on our committees. That is the stepping-stone into our board of directors, and from there into our Executive Council. We have term limits and we need new ideas constantly. If you feel the desire to serve your industry, then join a committee and raise your hand when asked to lead. Trust me, you will get far more out of serving on a committee than you will put in with your time commitment.

Convention Committee

The Convention Committee is comprised of agents and company representatives who work with the PIA of Tennessee staff to put together our annual Convention and Trade Show. They propose the location, entertainment, content and theme to the board of directors. They also volunteer to help with registration and welcoming first-time attendees.

Industry Affairs Committee

Comprised of agents and company representatives, the Industry Affairs Committee finds ways that we can collectively better understand our industry in order to be more successful, efficient and profitable. They will work together to provide best practices, technology enhancements and successful customer service approaches. These findings are shared with the association throughout the year.

Legislative Committee

The Legislative Committee is for agents only and focuses on monitoring legislation on both the state level and Capitol Hill in Washington, D.C. This committee helps to plan the association’s “Day on the Hill” at the beginning of the legislative cycle in the winter as well as “Legislative Day” in the fall in the local legislative offices throughout the state.

Membership Committee

As they say in most volunteer organizations, “Membership is Job No. 1.”

If we are not growing, then we are not going to survive.

We all have a stake in the success of our industry. We have to make those personal contacts, to help agents and company representatives understand the value of being a part of our organization. The Membership Committee is open for both agents and company representatives and seeks active recruiters.

‘Not your father’s CE’

The PIA of Tennessee has joined forces with The CE Partnership to bring you an exciting new option for continuing-education training: Webinars for CE. This is great news, but for many it raises an important question: “What is a Webinar?”

Webinars are through-your-computer CE courses conducted live (not prerecorded), which allow you to view stellar CE programs from your own computer. Webinars combine the convenience of online training with live instruction and interaction with the instructor. Our Webinars have a “Chat Box,” in which you may ask questions and participate in the course. Best of all, at the end of the Webinar, no test is required for CE credit.

Our mission is simple: offer Webinars that provide the best possible simulation of a live classroom environment without the expense of travel and time away from work. Our instructors use a webcam so you will hear and see them teach, address questions and provide answers—all in real time.

And speaking of instructors, our Webinar courses are created and taught by some of the industry’s most recognized and accomplished training experts.

Where else would you have the option to see folks like Chris Amrhein, Jerry Rhinehart, Terry Tadlock, Jerry Hargrove and others several times each month?

They say a picture is worth a thousand words, but we’ll do you one better: For a short video on how our Webinars are sure to win you over, look for the demo link on the website: www.piatn.com.

See you in the Webinars.

Welcome new PIA members*

Thank you to the professional, independent insurance agencies that recently joined PIA of Tennessee, including the following: Kim Broussard Broussard and Associates Franklin, Tenn.

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Professional Insurance Agents/Winter 2014

Gwenda Carroll Hohenwald Insurance Agency Inc. Hohenwald, Tenn.

Leon Wright MJC Insurance Group Nashville, Tenn.

Platinum partner profile AMERISAFE

Services

2301 Hwy 190 West DeRidder, LA 70634 www.amerisafe.com

Doing business in Alabama, Alaska, Arkansas, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Minnesota, Mississippi, Missouri, Nebraska, Nevada, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin.

Senior executives

Allen Bradley, chairman/CEO Janelle Frost, president/COO Chris Lestage, senior vice president of claims Leon Lagneaux, senior vice president of safety Kelly Goins, senior vice president of underwriting Barbara McCrary, vice president of premium audit Tyson Reed, regional vice president of sales

History

AMERISAFE’s underwriting service offers a proactive disciplined approach to underwriting through review of a risk’s unique characteristics and commitment to safety practices that lessen the overall incidence and cost of workplace injuries.

AMERISAFE’s safety service provides safety services at the employer’s workplace as well as conducting prequote safety reviews—a vital component of its underwriting process. The company’s field safety professionals assist clients by identifying potential issues and offering safety programs tailored for the exposures on their work sites.

AMERISAFE’s claims service utilizes intensive claims management practices that the company believes permits it to reduce the overall cost of workers’ compensation claims.

Its field case managers carry low claims workloads, which allows them to provide its insured employers and their injured workers with personalized service facilitating a more prompt resolution of claims.

AMERISAFE’s audit service ensures proper allocation of payroll eliminating year-end audit surprises through verified monthly reporting of premium. Its field auditors visit with its insureds to review their description of operations and assist the insured with reporting processes.

Financial security

AMERISAFE is a specialty provider of workers’ compensation insurance focused on hazardous industries such as aggregates, agriculture, construction, manufacturing, maritime, trucking, oil & gas, roofing and wood products.

Its programs (e.g., safety, claims and audit) are designed specifically for these industries.

AMERISAFE is a financially secure company, rated “A” (Excellent) by A. M. Best Co. with a financial size category of IX. AMERISAFE has been a Ward’s “Top 50” from 2009 through 2014. It is a publically traded company listed on the NASDAQ Exchange under the trading symbol AMSF.

PIA of Tennessee and AMERISAFE proud partners for independent insurance agents.

Angela Fuller Spectrum Insurance Group Cookeville, Tenn.

Greg Henson Tennessee Insurance Partners Inc. Dickson, Tenn.

Greg Williams Williams Insurance Agency Inc. Covington, Tenn. *At the time of printing.

Professional Insurance Agents/Winter 2014

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Platinum partner profile Grange Insurance

Tennessee staff

671 S. High St.

Columbus, Ohio 43206 www.grangeinsurance.com

Donya Wilson, regional vice president sales Denise Flatt, regional claims manager Steve Ford, territory sales manager

History

Grange Insurance, with $2 billion in assets and more than $1 billion in annual revenue, is an insurance provider founded in 1935 and based in Columbus, Ohio. Through its network of independent agents, Grange offers auto, home, life and business insurance protection. The company and its affiliates serve policyholders in Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia and Wisconsin. For more information, visit www.grangeinsurance.com.

Doing business in Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia and Wisconsin.

Senior executives

Tom Welch, president and CEO John Ammendola, president, property and casualty insurance Elizabeth Dinnin, president, commercial lines Michelle Benz, president, Life Co. Peter McMurtrie, chief sales & marketing officer

Philosophy

Grange Insurance philosophy is: “Grange believes in true partnership with our agents through the creation of strong, personal relationships based on collaboration, consultation and the delivery of best-in-class products and services to create a mutually beneficial business strategy.”

Appetite

Tom Welch, president and CEO

Grange is a full-lines carrier focusing on personal-lines, commercial-lines and life coverages marketed through our independent agents to our customers. It targets home and auto business, nonstandard auto, farm, small commercial BOP business with BusinessAssure, higher-risk commercial auto business with AutoAccel, commercial package business with CPP, and a full array of life products. Whether it’s for you, your family or your business, Grange offers the right auto, home, life and business insurance solutions to help you protect what matters most.

“Our goal every day is to optimize and activate our understanding of what our agents need from us to be successful.”

—Peter McMurtrie, chief sales & marketing officer

PIA of Tennessee and Grange Insurance proud partners for independent insurance agents.

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Professional Insurance Agents/Winter 2014

PIA of Tennessee and Johnson & Johnson proud partners for independent insurance agents.

Professional Insurance Agents/Winter 2014

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For Immediate Release For more information, contact: Todd Long Assistant Vice President, Corporate Communications and Advertising 614-225-8347 (W) 614-425-6269 (Cell) todd.long@motoristsgroup.com

Consumers Insurance USA receives approval to join The Motorists Insurance Group

COLUMBUS, Ohio (Sept. 5, 2014) – It was announced today that Tennessee-based property/casualty insurer Consumers Insurance USA, Inc., (www.ciusa.com) has been granted regulatory approval to become the newest member of The Motorists Insurance Group (www.motoristsmutual.com).

The approval from Tennessee regulators officially makes Consumers Insurance a wholly owned subsidiary of Motorists Mutual Insurance Company. The stock purchase of Consumers Insurance

by Motorists Mutual was also subject to stockholder approval, which was achieved earlier in the year.

Motorists President and CEO David L. Kaufman, ACAS, MAAA, welcomed the approval and said both companies are looking forward to the future.

“With Consumers Insurance joining The Motorists Insurance Group we are increasing our growth potential into new states and Consumers now has access to a deeper pool of resources,” Kaufman said. “In addition, our companies share the philosophy of always doing what is in the best interests of policyholders and independent agents, which helps make this agreement between Consumers and Motorists a natural fit.”

Consumers Insurance, with headquarters in Murfreesboro, Tennessee, markets niche-oriented products, including personal auto, commercial auto and garage policies, through independent insurance agencies. The company was founded in 1995 by a group of industry professionals and independent agents, and operates solely through the independent agency channel throughout Tennessee, Virginia, Missouri, Arkansas, Alabama, Indiana and Illinois.

“We are excited to officially join The Motorists Insurance Group,” said Consumers Insurance President and CEO David Sciortino. “They demonstrate that they truly value associates, agents and policyholders through their dedication to service and relationships. I am confident our key stakeholders will benefit from our combined knowledge and resources.”

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Professional Insurance Agents/Winter 2014

Motorists veteran leader joins Consumers It was also announced that Shaun D. Gregoire, CPCU, has been selected as senior vice president, Sales and Underwriting at Consumers. Gregoire previously served as vice president of Property/Casualty Marketing and Sales at Motorists Mutual.

“I am looking forward to the benefits that independent agents and policyholders will receive by our two companies joining,” Gregoire said. “Integrating our resources, business model and commitment to relationships will provide agents and their clients word-class service and insurance solutions in communities throughout our operating area.”

Gregoire has more than 20 years of field and management experience in the insurance industry. At Motorists Mutual, he was responsible for marketing the company’s portfolio of personal lines and commercial lines insurance products to independent agents across the six-state operating region of Ohio, Pennsylvania, West Virginia, Kentucky, Indiana and Michigan. He also led Motorists’ efforts to build and enhance agency relationships, oversaw district sales managers in the field and managed agent recruiting, licensing, advertising and corporate communications.

It is expected that Consumers Insurance will pool its premium, losses and underwriting expenses with other companies in the group. In addition, it is anticipated that Consumers Insurance will share the group’s A (Excellent) rating from A.M. Best. Sherman & Company LLC served as Consumers’ financial adviser on the transaction.

Kaufman reiterated that he anticipated no loss of jobs as a result of the purchase.

"We anticipate there will be additional job growth opportunities for both organizations as Consumers Insurance expands its product offerings," he said. "Our prior experience has shown our affiliation model provides the resources that contribute to new employment opportunities."

About The Motorists Insurance Group

Motorists Mutual Insurance Co. is an affiliate of The Motorists Insurance Group. The Motorists Insurance Group, headquartered in Columbus, Ohio, now consists of 11 property and casualty insurance, life insurance and insurance brokerage companies. The group markets insurance solutions through more than 14,000 independent agents and producers in a network of more than 2,000 agencies in states across the Midwest, Northeast and South.

The Motorists Insurance Group is rated A (Excellent) by A.M. Best Company, the leading provider of insurer ratings. The rating measures financial strength and ability to meet obligations to policyholders.

About Consumers Insurance USA

Consumers is based in Murfreesboro, Tennessee, with operations in seven states throughout the South and Midwest. The company is a niche-oriented carrier that markets its products through independent agencies that focus on target markets. ###

Professional Insurance Agents/Winter 2014

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Professional Insurance Agents/Winter 2014

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In Your Survey of cases involving Corner agent/broker E&O

Sullivan is senior partner of Sullivan & Klein, LLP. He can be reached at (212) 695-0910.

By Robert M. Sullivan, Esq.

Often it is difficult to gauge trends in the law when there is a paucity of cases decided at the appellate level in a given state. New York allows what are known as “interlocutory appeals,” appeals that can be taken immediately from a lower court decision before the case is concluded. In Tennessee, interlocutory appeals can only be taken under certain limited circumstances with the permission of the appellate court. Otherwise, an appeal must await the conclusion of the case. As a result, in the states in which interlocutory appeals are not allowed as of right, appellate pronouncements that clarify the body of law are rare. Cases tend to settle or otherwise reach a disposition without appellate intervention.

That being said, a survey of recent cases turned up two cases decided by the Appellate Division in New Jersey that merit some discussion. Both were appeals after final disposition.

The sump pump

In the first case,1 the insured purchased insurance coverage for a new home through a telephone sales agent employed directly by the insurer. In a telephone interview, the agent and the insured discussed the fact that the home was on a hill and it was agreed that there was no need for flood coverage. The policy specifically excluded coverage for flood and in the same exclusionary provision, excluded coverage for

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damage resulting from the failure of a sump pump. According to the insured, she had advised the agent that the home had a sump pump. In addition, the insured allegedly also requested that the agent provide her with “the most inclusive coverage.”

The record reflected that the insured in fact requested and was sold a number of enhancements to the policy. One of the available enhancements was an endorsement adding coverage for damage resulting from the failure of a sump pump, but this coverage was not added. Naturally, after the policy renewed the following year, the insured suffered a loss due to damage from a failed sump pump. According to the agent, the enhancement was offered to the insured and not accepted, a fact denied by the insured. Unfortunately, the agent’s contemporaneous notes allegedly reflecting the conversation regarding the offer and declination of the sump pump coverage were lost.

In a decision by the lower court, the court dismissed the action on the grounds that there was no evidence that the insured specifically requested the coverage for loss due to the failure of a sump pump.

On appeal, the Appellate Division reversed, finding that under New Jersey law an agent has an obligation to inform insureds of all “available coverage.”

The court held that because there was a dispute as to whether the agent in fact discharged his duty and offered the coverage for sump pump, a full trial was necessary to resolve the issue.

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The valuable house

In the second case, at issue was whether an insurance broker was liable to an insured for failing to procure an adequate limit for the property coverage on a home.

In this case, the broker had been the insurance broker for the insured for several years. At one point, the property policy that the insured had on the home was canceled and needed to be replaced.

The broker interviewed the insured on several occasions regarding the underwriting characteristics of the home as well as some other properties owned by the insured. Allegedly, the insured became resistant to the inquiries and told the broker simply to replicate the limits that were on the prior policies.

In addition, the insured provided the square footage of the house to the broker and the figure provided was too low by a factor of almost 50 percent.

The broker utilized the information to calculate the replacement value of the home and determined that the limit of the prior policy was in fact adequate.

Naturally, a fire occurred that destroyed the house and a replacement cost estimate determined that the replacement cost was approximately three times the limit of the policy.

The insured sued the broker contending, inter alia, that the broker failed to estimate the value of the property properly.

Following a lengthy survey of New Jersey law, the Appellate Division granted the broker summary judgment dismissing the action. The court

Professional Insurance Agents/Winter 2014

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recognized that under New Jersey law, an insurance broker has a fiduciary duty to advise insureds regarding appropriate coverage for their stated insurance needs. A broker can be held liable for the failure to advise the insureds to procure a policy adequate to meet their needs because of the specialized knowledge possessed by the broker in the field of insurance.

However, in this case, the court held that there were limits to the duty of a broker when it comes to determining the limit of insurance. In this regard, the broker’s duty is not unbounded and absent an undertaking by the broker to value the property upon which the insured relied, there was no duty imposed upon the broker to determine the property limit in the policy. This is particularly so when, as here, the insured rejected inquiries by the broker to develop information regarding value and told the broker to procure a specific limit.

Analysis

Under the seminal case of Aden v. Fortsh, 169 N.J. 64 (2001), it is generally understood that New Jersey recognizes a fairly broad duty of an agent or broker to advise and procure coverage on behalf of an insured.

However, there are those (like us) who would urge that on the facts in Aden, the Supreme Court merely was finding that imparting specific insurance needs to a broker and relying upon the broker to recommend and/or procure adequate coverage for those needs, created a so-called “special relationship,” which in fact imposes upon the broker a heightened duty.

Under this view, New Jersey may not be so different from the other states of our readership, including Tennessee, which recognize the heightened advisory attendant to the existence of a so-called “special relationship.”

However, in our view, regardless of whether one argues that New Jersey is different from Tennessee in the breadth of the duty of an agent or broker, the result reached in our two New Jersey cases would have been the same in the other states.

In the first case, it was established that the agent discussed coverage needs of the property such as flood coverage and offered the insured a number of enhancements to the policy.

Moreover, according to the agent, he offered the sump pump coverage and the insured declined it. On the fact pattern, we suggest that there was evidence of the undertaking of an advisory duty on the part of the agent and, having done so, a “special relationship” was established imposing a heightened duty on the part of the broker—whether the broker discharged that duty created an issue of fact that required a trial. That result, again in our view, would have been the same as the law of all of the states of our readership.

In contrast, in the second case, the court found the absence of any undertaking by the broker to value the property and the broker was prevented from adducing information to establish the home’s value. In fact, the insured was emphatic as to the limit she wanted on the policy. Again, the results would have been the same regardless of the state.

Thirdly, the lesson in the second case is never to take on a task with which you are not qualified such as calculating the replacement cost of a property.

The broker did not do so. Although the broker did run a calculation (with errant information), the broker did not invite the insured to rely upon that calculation.

Again, the lesson is that if you take on an advisory duty, you have to do it correctly.

“You break it, you take it” is a principle to live by here.

1 Huggins v. Liberty Mutual, 2014 WL 1909347 (N.J. Super. A.D., May 14, 2014) 2

Duffy v. Certain Underwriters at Lloyds, 2014 WL 3557861 (N.J. Super. A.D., July 21, 2014)

Stability. Longevity.

Integrity

Loss avoidance

The two cases afforded some clear lessons for E&O claim avoidance.

Primarily, in the first case, the record indicates that the agent may not have been familiar with the coverages available and the interplay of exclusions versus enhancements available. If one is going to sell an insurance product, one must be familiar with it before recommending it to insureds in order to meet their insurance requirements. If you are not familiar with the product, become familiar.

Secondly, when you make recommendations to insureds and they have been declined, document that fact.

In the first case, the court took great exception to the fact that the agent’s interview notes went missing. Had there been a written confirmation of the insured’s declination of the sump pump coverage, the result in the case may well have been different.

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AGrIbUSIneSS

OIL & GAS

Sales and Hard sell or soft sell?

Marketing

Chapin is president at Complete Selling Inc. He can be reached at johnchapin@ completeselling.com.

By John Chapin

The question, “Is it a hard sell or a soft sell?,” may seem like a no-brainer, but let’s define both of these terms. A hard sell, is not hammering someone into doing something that isn’t right for the person.

Rather, it’s being direct and getting the prospect involved in what he or she needs, cutting through fear, denial and other roadblocks that can stop a sale. A soft sell, is not using touchy-feely language and letting the prospect completely control the process. Instead, it’s listening with empathy and truly understanding your prospect and his or her insurance needs, putting yourself in the prospect’s shoes and sympathizing with him or her and a situation.

With those definitions in mind, there is a fine line between a soft sell and a hard sell—you have

to learn when to cross it. The problem with most salespeople is that they are either hard sell or soft sell—iron fist or velvet glove—not both. You need to be able to use both approaches and you need to know when to use each one. Here are the rules for hard sell versus soft sell.

Choose your approach

As a rule, you want to be soft in the beginning of the relationship. When you are just getting to know the prospect and you’re building rapport, you want to be soft, slow and listen a lot. Once you have a full understanding of the prospects’ insurance needs, then it is time to be direct and make sure they get the insurance policies that are right for them.

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Agency E&O

Has a market for your agency Utica National Business Risk Partners PIAPRO Navigators Rockwood E&S markets Contact Sandy Clive, CPIA, 800-875-7428

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At this point, you need to cut through everything else and push if necessary to get to the sale.

The type of person with whom you are dealing also will dictate whether you are hard selling or soft selling and when you need to switch tactics.

With a hard-nosed, straightforward, no-fluff individual, you will go from soft sell to hard sell faster than you will with someone who is more laidback, easygoing and slower in his or her approach.

In some cases, you never need to cross the line between soft sell and hard sell. You will have a great connection with certain people. They will see the opportunity, they will know what they have to do, you will be able to lead them directly down the path toward the sale, and it will seem as natural as taking a walk on the beach. In other cases, you will need to go to a hard sell. You may have someone who truly needs your product or service. The prospects know they need it, and yet fear is holding them back from doing what they know they need to do. At that point, you’ll need to push—skillfully.

A diverse approach

Hard-sell-only and soft-sell-only salespeople vehemently defend their style and say it is the only way to go. To those who use the hard-sell approach, while you may initially make more sales and have some level of success, to hard sell all the time is tiring, will lead to canceled sales and will hurt repeat and referral business. Most people who hard sell all the time are focused on the sale first and the needs of the prospect second. Remember, the prospect always comes first.

To those who use the soft-sell approach, not only will you miss many sales, you’ll also prevent people from enjoying the benefits of your product, which can be devastating. For example, let’s say you’re talking to a married dad of two young children about life insurance. You know he needs it, he knows he needs it and yet, he’s

Professional Insurance Agents/Winter 2014

uncomfortable and you don’t want to push, so he sells you on waiting and you let him off the hook. Three months later, he dies in a car accident and his family is unprotected. His widow has to sell the house, uproot the kids from their school and get three jobs to make ends meet.

While this is a worst-case scenario, if you are sold on your products and know people are better off with them, you still have an obligation to push when someone has a need along with the means to buy your product.

Another area affected by selling style is follow up. Most soft-sell people will follow up once or twice, if they follow up at all. If you only follow up once or twice, you will not make the sale in most cases as the average sale happens after the fifth contact. On the other hand, most hardsell salespeople tend to follow up too much and too early. This approach will irritate most everyone and make selling more difficult.

All considered, it is better to follow up too early and too often and to push a bit too much rather than not enough.

For example, recently a salesperson who called me seven times in seven days made a sale, while the person who only followed up once didn’t—even though I wanted his product more. I think I am probably like most buyers.

The bottom line is: To be the best possible salesperson, you have to develop both the hard and soft side of your selling approach. As with every other area in selling, practice will help you use both tactics and give you the knowledge of when to use each approach.

End-of-the-year evaluation Industry experts review 2014; look to 2015

By Jaye Czupryna

P

IA reached out to some insurance industry leaders and experts to discuss significant events that affected the industry in 2014 and possible forecasts for 2015. Below are the views of Paul C. Blume Jr., senior vice president of state government relations, Property Casualty Insurers Association of America; Sam Friedman, insurance research leader at the Deloitte Center for Financial Services; Gregory Maciag, president & CEO, ACORD; and Richard A. Clements, president, PIA National.

By consensus, the experts agreed that Congress’s actions and the need to extend the Terrorism Risk Insurance Act, and the implications of the Patient Protection and Affordable Care Act, deeply affected the insurance industry this year.

However, for 2015, they cited a range of topics, including ride sharing, increased profitability and more.

Paul C. Blume Jr.

Sam Friedman

Gregory Maciag

Richard A. Clements

What was the most significant happening in the insurance industry in 2014?

Blume: From legislative and regulatory standpoints, it is difficult to narrow the significant developments to a single achievement. However, getting the National Flood Insurance Program on a sound actuarial path for the long term, while taking steps to address the program’s problems and the political pressures of BiggertWaters ’12 implementation have to be among the first topics mentioned regarding key developments in 2014.

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Additionally, the progress made toward the enactment of a long-term reauthorization of the Terrorism Risk Insurance Act is a notable achievement.

House and Senate committees completed hearings and the mark up of their respective bills earlier than in any previous TRIA reauthorization cycle. As the year ends we are hopeful Congress will move legislation to final passage following the November elections.

Friedman: One of the most significant factors was the level of regulatory uncertainty the industry had to endure this year and its impact on the market. A glaring example was the battle over renewal of TRIA. Even if resolved before expiration, the delay left insurers, agents and policyholders in limbo on prices, terms and conditions— or if coverage could be offered at all.

Unfortunately, we see such uncertainty as the rule rather than the exception going forward, as carriers see how additional reform initiatives by state, federal and international regulators play out.

Maciag: On the financial front, having a catastrophe-free year can have a positive ripple effect into the market. On the technology front, the move into social media has been significant. The industry can push better information to the consumer. On the life and health front, the Patient Protection and Affordable Care Act is having a major impact on the business as well.

Clements: This year, we saw major changes in flood insurance. Congress passed the Homeowner Flood Insurance Affordability Act of 2014 (H.R.3370).

It changed the rate structure for policies backed by the NFIP, rolling back some of the rate increases that had been included in the Biggert-Waters Flood Insurance Reform Act of 2012. PIA supports BW 12, but we also worked to improve H.R.3370 with mitigation provisions and the inclusion of grandfathering provisions. As for rates, as insurance agents we have to support risk-based rating—but we want to do it on an affordable basis.

The reauthorization of NFIP in 2017 already is on the front burner.

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We saw a continuation of a new trend first noticed in 2013: more individuals purchasing their own health insurance. This is a byproduct of the PPACA, which will continue as long as the ACA continues.

The year 2014 also marked a reason for celebration: the 75th anniversary of PIANJ and PIANY will celebrate its 75th anniversary in 2015. Both were at the forefront of our battle against Eliot Spitzer’s attack on Main Street agents getting contingent commissions. PIA National filed legal briefs opposing Spitzer’s actions, working hand-in-hand with PIANY and PIANJ. It took several years, but in the end, PIA succeeded.

Were there any surprises?

Blume: The big surprise of the year involved transportation network companies and their controversial expansion of commercial ride sharing across the country. City after city, state after state struggled to find the best way to balance regulations involving TNC activities while ensuring adequate consumer protections. PCI, a staunch supporter of innovation, was adamant that steps be taken to close the TNC’s insurance gaps that could leave drivers, passengers and the public at risk. As 15 states and the District of Columbia considered legislation this year, California led the way in crafting a wellbalanced law that can serve as a starting point for other states in establishing reasonable insurance limits, creating a firewall that protects personal auto insurance from subsidizing commercial activities and offering TNCs flexibility to meet the insurance requirements.

Friedman: The biggest surprise for me was seeing how the use of telematics has grown so quickly, to the point at which we’re on the verge of a transformation in how the auto insurance industry assesses its risks. At first, it was just the giants who could play in this market because they generated a critical mass of data on their own. More recently, we’re seeing smaller carriers sharing data with third parties so they can compete on a relatively level playing field. It’s also going to be interesting to see how carriers

Professional Insurance Agents/Winter 2014

differentiate themselves beyond price as usage-based programs mature.

Maciag: The recent Ebola episodes and related concerns can have a major impact on business. It brings risk management and liabilities to an entirely new level, and makes liability concerns about things like driverless cars, drones and Uber seem less important. I also was surprised about the number of cyber attacks reported this year. There weren’t necessarily more instances, but there’s definitely more honesty and public awareness.

Clements: Earlier this year, the McKinsey Report proclaimed, “The end of an era for the local insurance agent.”

Every few years, our competitors attempt to sound the death knell for independent agents with supposed “studies,” but these efforts never succeed because customers continue to value what agents provide.

The PIA research from the Partnership in 2011 clearly disputed this (pianet.com/ pia-partnership/agencytouchpoints).

I was delighted to see how PIA responded to the McKinsey report, by challenging its assumptions and disputing its conclusions in the “court of public opinion.” We termed it “a flawed premise wrapped in a faulty analysis” and pointed out that it was not based on research, it was just somebody’s opinion that was incorrect.

What do you think we should expect for the insurance industry in 2015?

Blume: As we look forward to 2015, there will continue to be fundamental threats to foundational concepts such as insurance product certainty through attacks on risk-based pricing and other underwriting practices as well as insurers claims processing practices. We will be engaged in no-fault reform efforts around the country and addressing a wide range of auto body repair issues.

International regulatory issues will become increasingly important as we encourage state and federal officials to oppose potentially harmful global regulatory convergence. Additionally, there are several emerging issues that we anticipate coming up in 2015 such as

medical marijuana and opioid abuse in the workers’ compensation system.

Friedman: The economic recovery appears to be picking up steam, which should fuel faster growth in the job market. Auto and home sales may be on the rise as well. All those additional insurable exposures should help sustain premium growth and bolster profit levels for insurers, while creating new sales opportunities for agents. But, the industry can’t just wait for a rising tide to lift all boats. It needs to innovate to keep growing, in part by figuring out how to profitably cover emerging exposures such as cyber liability. It also needs to make sure to avoid a breach of its own data-rich organizations with hackers becoming bolder and more adept.

Maciag: The new year should see an expansion of innovative products and services to reflect emerging risks and an increased leverage of digital capabilities.

Clements: Increased profitability for the industry is possible in 2015. New lines of insurance created to deal with new risk will add to carriers’ bottom lines, especially cyber liability coverage for small- and mid-sized commercial accounts. Profits could be impacted negatively by the threat from the Ebola virus, which may begin to affect claims costs, depending on whether efforts to prevent the spread of the virus are successful.

In 2015, PIA National will release the results of a major study of the insurance buying preferences of small- and mid-sized commercial-lines customers. This study is being conducted

by PIA National in conjunction with our agency-company council, The PIA Partnership. “Voice of the Customer–Commercial Lines” will be a follow up to the groundbreaking PIA Partnership study, “Voice of the Customer–Personal Lines.”

What do you see as the role of the professional, independent insurance agent in 2015 and beyond?

Blume: The challenges facing agents will continue to intensify as the traditional legislative and regulatory

battles are compounded with the current state of churn and flux in the regulatory climate. However, this offers both challenges and opportunities for improving the regulatory structure, reducing friction costs, and enhancing private, competitive insurance markets.

Agents play a critical role in helping to create the regulatory environment that can enhance the marketplace for consumers, agents and insurers. They also play a vital role in consumer financial literacy, natural disaster preparedness and the recovery education efforts that truly provide individuals in small towns, big cities and everywhere in between with the information and services they need to protect their most valuable assets.

Friedman: Going forward, we’re seeing more small-business insurance being sold direct to consumers over the web, so one of the big challenges for agents is how to maintain their value proposition to avoid disintermediation.

That means being more of a consultative adviser, rather than a price shopper, by helping their clients identify and mitigate against their exposures. They’ll also need to be better connected to customers, particularly via mobile devices and over social media.

Maciag: Those who adapt to change will survive. They need to increase operational efficiency to compete, which means fully embracing technology.

Employees need to be trained to sell, especially to cross-sell and up-sell as a normal part of doing business. Agents also will need to promote the value of their risk management role and attract young people into the business.

Clements: We are at the dawn of a bright, new age for the professional, independent insurance agent. The expansion of choices available to insurance consumers will increase the need for independent agents as professional counselors. As the insurance marketplace becomes more complex, the value of independent advice and counsel will increase. Agents also will be better positioned to take advantage of demographic changes in the marketplace, as they are adaptable and already on

the cutting edge of new forms of communication.

Do you have any New Year’s resolutions?

Blume: This coming year ushers in the “Year of the Sheep,” which is the eighth sign in Chinese astrology.

Lucky number eight is a harbinger for wisdom, fortune and prosperity.

So, our resolutions include taking advantage of this positivity and working to protect insurance product certainty and risk-based pricing. We’ll redouble our efforts to oppose the threat of international bank-centric regulation over the industry. Additionally, we will remain diligent in ensuring that coastal property insurance markets continue to concentrate on competition, rate adequacy and taking steps to reduce the size of wind pools in states like Florida and Texas. Finally, utilizing the new California law as a starting point, we will be looking for opportunities in the states to adopt essential elements of commercial ride-share legislation that will protect drivers, passengers and the public.

Friedman: Gazing into the crystal ball is always fun, but my resolution is to keep it real by producing more data about consumer behavior and preferences that lead to actionable insights, so Deloitte can help insurers and their intermediaries remain relevant and profitable in a rapidly evolving marketplace.

Maciag: No.

Clements: I resolve to introduce the rest of the country to the joys of Mardi Gras, the pleasures of jambalaya and the inevitability of the upcoming 2015 NCAA college football champions—the LSU Fighting Tigers.

Czupryna is PIA Management Services’ member information manager.

Professional Insurance Agents/Winter 2014

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The insurance market remained steady in 2014

A review of the economy, acquisitions and the next industry leaders

By Daniel P. Menzer

T

his year has been a relatively quiet one for the insurance industry, with modest movement in pricing, favorable levels of natural disasters (except for those affected by them) and continued arguments over the sustainability of the Patient Protection and Affordable Care Act. Perhaps some of the biggest news in the industry is the continuation of the merger & acquisition trends that started toward the latter part of 2013, and continues through the first nine months of 2014.

Chart No. 1

Economic, underwriting considerations

According to the Insurance Information Institute, insured worldwide natural disasters for the first six months of 2014 were about 70 percent of the normal level of the last 10 years.

This follows 2013 in which insured natural catastrophe losses were about 60 percent of the 10-year average.

Combine these results with favorable overall underwriting results, an economy that generally continues to improve, the stock market that has kept the “bears” away for more than five years—notwithstanding the gyrations during September and October—and an insurance market that is still yielding price increases, albeit fairly modestly, it’s no surprise the insurance agents are feeling pretty good about things.

According to a recent pricing analysis by MarketScout, shown in Chart No. 1, the composite market conditions have yielded small price increases each month in 2014, and every month since

Source: MarketScout

October 2011. Monthly rate changes in commercial lines went as high as 5-6 percent in 2012 and 2013, but slowed by late 2014, generally bouncing between 1-3 percent.

Although this may not be a perfect analysis of premium rate changes, it has been done consistently over a number of years, and it gives credence to the state of the insurance market, which certainly is not a typical hard market, with moderate levels of pricing changes over the past two to three years.

The I.I.I. has been tracking the quarterly changes in the Gross Domestic Product—generally, an accepted measure of the state of the overall economy.

Over the past five years, there have been only two quarterly periods with GDP declines—or negative growth—and

two of the three highest rates of growth have been reported in the past year.

Additionally, according to the GDP projections, we are expected to see modest economic expansion for the next 12-18 months.

Agency acquisitions

Agency M&A activity in 2014 has been strong, with quarterly announced transaction counts at or near peak levels since 2008. What started out as a gradual increase in activity in 2013 after the dramatic finish of 2012 has continued and expanded through the third quarter of 2014. Perhaps the most significant trend in the M&A activity is the increased deal flow of the private-equity backed brokers (e.g., Hub International, Assured Partners, USI and several other newcomers).

Professional Insurance Agents/Winter 2014

21

Chart No. 2

Chart No. 2 above shows the monthly M&A activity from 2008 through September 2014, along with annual totals of announced acquisitions of agents and brokers around the U.S. and Canada. These totals do not include international transactions outside of North America, nor does it reflect all of the transactions that actually occur since many of them are never reported.

However, it is believed that the number of reported transactions is a reasonable barometer for the M&A activity, albeit not perfect especially for transactions between privately owned agencies.

Quarterly transaction counts for 2014 have exceeded all prior years since the end of the recession, and most of the monthly totals shown in the chart above coming in higher than 2013, with the exception of August.

The first year PE brokers completed more deals than any other category of buyers was in 2012, and they have remained strongly in front ever since.

Banks, once a significant part of agency M&A, have dropped off substantially in 2014, and in fact, have been involved in a number of sales of their agency platforms in recent years. See Chart No. 3.

For the typical privately owned insurance agency, these M&A counts provide evidence of the “seller’s market” they currently are experiencing. As

22

mentioned above, between the generally favorable economic conditions and the insurance pricing conditions still in effect, agency values for third-party sales or internal transactions generally have been favorably affected over the last several years. How long this market demand phase continues is anyone’s guess. For today and likely the nearterm future, if agency principals are considering their exit options, their timing could work to their advantage.

Agency ownership internal perpetuation progress

Selling the business, family-owned or otherwise, isn’t the long-term exit strategy of every agency principal and some are successful keeping their firms private and not being folded into other local or large national firms. Although Chart No. 3

Professional Insurance Agents/Winter 2014

the transaction counts shown above reflect more agencies selling than in prior years, it is still a relatively small number compared to the estimated total number of independently owned agencies spread across the U.S.

Internal ownership succession planning is a long-term process spanning 10 years or more. It is not something that can be addressed and resolved in a couple meetings, or even over the course of a year or two. Some of the most critical components to a successful perpetuation strategy include the following: • adequately skilled individuals able to step in and replace the leadership, vision, management and new business focus of the elder generation; • sufficient capital in the business required to support an internal transfer of wealth; and • agency principals not primarily interested in maximizing sales proceeds.

Without each of the above criteria, it will be difficult for any agency to negotiate an internal perpetuation plan successfully. Not preparing for perpetuation, or poorly planning or executing the perpetuation strategy almost always results in the sale of the business. Many of the agency sales showing up in the transaction counts above represent a failed or nonexistent perpetuation plan. Most owners want or need to create a liquidity event in order to retire with the capital they require, and if it is not done through an internal transaction, there is only one other way, selling to an outside party.

Part of the growth in the M&A levels is a result of the aging population, including many of today’s independent

agency principals. Some agency principals are making the effort within their respective organizations to put themselves in a position to be able to perpetuate internally; unfortunately, there is no means of tracking these situations since they usually are done quietly to avoid any client or competitor issues. However, it should be noted, the agencies best prepared for internal succession transactions often are the agencies that get the most attention and aggressive pricing from outside buyers.

brokerage community continue to be the lack of preparation for internal perpetuation strategies and the third-party sales that often are the result, and the difficulty in recruiting the next generation of agency owners into the industry, which also will result in more third-party transactions if this is not addressed. The good news is that if an internal ownership transition isn’t the goal, there are plenty of well-funded and capable buyers to

provide the liquidity agency principals will need.

Menzer is a principal with OPTIS Partners LLC (optisins.com), a Chicago- and Minneapolis-based investment banking and consulting firm providing M&A, valuation and strategic consulting services to firms in the insurance distribution sector. He can be reached at (630) 520-0490 or menzer@ optisins.com.

Where are the next leaders coming from?

One of the common themes in the insurance—and insurance brokerage industry in particular—is the shortfall in the number of younger individuals coming into the business. Let’s face it; selling insurance hasn’t always had the best reputation from outsiders. However, there has been a greater focus on this issue in recent years, in the press, in educational institutions and in the summer intern programs sponsored by some of the largest insurance brokerages.

A recent ranking of job openings from the U.S. Bureau of Labor Statistics, ranked insurance sales agents eighth in expected job openings between 200818, for people with associates degrees or vocational awards. The University of California, San Diego also released a recent study that showed that insurance sales positions were in the top 10 of best careers for recent graduates. There needs to be a continued focus on attracting, retaining and developing young talent in the insurance world. While this can be financially difficult for smaller agencies, without new blood coming into the business, the local independent, knowledgeable and professional insurance agent will become history.

Summary

This year has been relatively uneventful in the insurance and brokerage community, with some external factors contributing to sustained growth and profitability. All of the public brokers have reported positive organic growth throughout the year, and barring a significant economic or catastrophic event should continue to see favorable movement in revenue.

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CYBER‐LIABILITY 1.0

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A quick snapshot of what is included in each policy is clearly defined below.

Typical Loss Coverage Components

Typical Liability Coverage Components

Will cover costs the insured incurs to...

Will cover claim expenses and damages the insured is legally obligated to pay as a result of the following:

Breach Response/Crisis Management ‐

respond to a network or privacy breach. Includes: Breach notification, PR, forensic consultants, and credit monitoring costs

Cyber Extortion Loss ‐ respond to a threat by third party to commit a network security or privacy breach Business Interruption/Extra Expense Loss ‐ loss of income resulting from a network security breach or a network attack and extra expenses incurred to restore network to original condition

Data Loss ‐ cost to restore data destroyed or altered

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Professional Insurance Agents/Winter 2014

Network Security Liability ‐ Provides coverage for actions that the Insured is legally liable for claims made against the Insured for a Network Security Breach Privacy Liability ‐ Provides coverage for actions that

the Insured is legally liable for claims made against the Insured for a Privacy Breach of PII, PHI or Corporate Confidential Information

Regulatory Coverage ‐ Provides coverage for actions/proceedings and fines/penalties against the Insured by a regulatory agency resulting from a violation of a Privacy Law

Website Media Content ‐ . Provides coverage for actions that the Insured is legally liable for claims made against the Insured for a Media Peril of content on the Insured’s Internet Site Professional Liability‐ . Provides coverage for acts, errors or omissions in the rendering or failure to render professional services to a client of the Insured

Tech BIC for the lessee (revisited) Talk

Corbin is PIA Management Services’ director of research.

By Dan Corbin, CIC, CPCU, LUTC

This is the article an author never wants to have to write. It’s the one where I must repudiate my own words. It’s not like I made an incorrect statement in the Summer 2014 Tech Talk article; the whole intention of the article was wrong. Yeah, I’ve made mistakes before, but nothing I couldn’t sweep under the rug. No doubt, this will hurt my chances of getting into writer’s heaven.

What follows is the article I wish I had written this summer.

Consider the following scenario: An insured business is operating in part of a building leased from its owner. A property loss occurred at the building, but there was no damage to the premises occupied by the insured. The insured wanted to recover income lost for the time access to the business premises was denied or obstructed. What would happen if the insured’s undamaged portion of the building had to be demolished in order to comply with the local building ordinance? How could a professional, independent insurance agent write business income coverage to make the insured whole in these scenarios?

Business income

Both the Insurance Services Office Inc. Businessowners Coverage Form (BP 00 03) and the Business Income And Extra Expense Coverage Form (CP 00 30) require the necessary suspension of operations to be caused by direct physical loss to property located at the premises described on the declarations. In addition, the physical loss must be caused by a covered peril. In the scenario above, there was no damage to that part of the building occupied by the insured or to personal property belonging to the insured. While this appears to preclude coverage, there yet may be ways to get to the desired result for these insureds. Like they say, there is more than one way to skin a cat (although I have no idea why they say this).

Dependent property

Suppose the insured experiences a decline in sales because the other business where damage occurred in the building had to cease operations and the insured depends on the customer traffic generated by the other business. This other business is called a “leader location” and lost income resulting from physical damage to a “leader location” caused by a covered peril can be recovered by means of the Business Income From Dependent Properties–Broad Form (CP 15 08) endorsement.¹ The endorsement reads as follows: The “suspension” must be caused by direct physical loss of or damage to “dependent property” at the premises described in the Schedule caused by or resulting from a Covered Cause of Loss.

“Dependent property” means property operated by others whom you depend on to: … d. Attract customers to your business (Leader Locations).

This is a great solution to the business income loss when property damage occurs to “dependent property.” For example, a café that derives most of its lunch business from a large employer in the neighborhood will find this coverage essential if the employer has to shut down due to a property loss.

If the insured is located in the same building as a large retailer, which draws the requisite volume of customer traffic, this coverage will respond when the retailer’s portion of the building is damaged.

Unfortunately, it may not go far enough for all scenarios. The endorsement contains the following exclusion: “Period of restoration” does not include any increased period required due to the enforcement of or compliance with any ordinance or law that: a. Regulates the construction, use or repair, or requires the tearing down, of any property; …

Professional Insurance Agents/Winter 2014

25

If a building ordinance requires the entire building to be demolished, including the insured’s undamaged premises, there will be no recovery of income lost after the date when the property at the premises of the “dependent property” should be repaired, rebuilt or replaced with reasonable speed and similar quality (which does not include the additional time to comply with the ordinance). As a result, there will be a business income coverage gap.

Ordinance or law

At this point, you might suggest adding the Ordinance Or Law–Increased Period Of Restoration (CP 15 31) endorsement in order to fill the gap.

However, the endorsement specifically states that it modifies the Business Income And Extra Expense Coverage Form (CP 00 30), with no mention of the Business Income From Dependent Properties–Broad Form (CP 15 08) endorsement. In addition, the CP 15

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Professional Insurance Agents/Winter 2014

31 endorsement states that income loss resulting from the enforcement of an ordinance or law is covered only “if a Covered Cause of Loss occurs to property at the premises described in the Declarations.” Darn, we just can’t get there from here.

Described premises

We are not giving up yet. Let’s look at the following section of the CP 00 30 form that modifies the described premises with regard to an insured that occupies only part of the building. (a) The portion of the building which you rent, lease or occupy; (b) The area within 100 feet of the building or within 100 feet of the premises described in the Declarations, whichever distance is greater (with respect to loss of or damage to personal property in the open or personal property in a vehicle); and (c) Any area within the building or at the described premises, if that area services, or is used to gain access to, the portion of the building which you rent, lease or occupy.

The expansion of covered premises under item (c) is where we want to focus.

Most likely, a fire on the 23rd floor of a building will not trigger coverage for the insured’s premises located on the fifth floor. But, suppose the elevator is damaged by the fire, that would be an area used to gain access to the fifthfloor premises. Also, consider damage to the building’s utilities (e.g., heating/ air conditioning, electricity, sprinkler system, etc.) as an example of an area that services the premises.

Now, let’s suppose an insured is located at premises at which an adjacent part of the building is damaged. That other part of the building could service or give access to the insured’s premises.

This then, becomes damage to the “extended” premises, triggering business income/extra expense coverage. And, if the policy is endorsed with the Ordinance Or Law–Increased Period Of Restoration (CP 15 31) endorsement, that too will apply to damage at the adjacent part of the building (because it extends coverage

provided by the business income coverage forms). A similar analysis is applicable to forms used in the ISO Businessowners Program. Consequently, even if the insured’s premises suffered no damage, but had to be torn down according to code, business income/extra expense coverage should respond.

Civil authority

Civil authority insurance offers one more potential solution in our quest for BIC/extra expense coverage because it does not require damage to property at the described premises. A civil authority could be the fire department, the police or the town building department. One court said that the term encompasses, “civil officers in whom a portion of the sovereignty is vested and in whom the enforcement of municipal regulations or the control of the general interest of society is confided.”

Access to the insured premises must be denied, not just impaired, because there is damage by a covered peril to property located off, or away from, the insured’s premises. Denial of access either must be in response to a dangerous condition caused by damage to the property or to give the civil authority unimpeded access to the damaged property.

If a building inspector denies occupancy of the insured’s premises while reconstruction of the building takes place, including tearing down and rebuilding the undamaged premises the insured occupies, civil authority coverage will be triggered. However, if occupancy is permitted, but access is restricted to a more inconvenient route, civil authority coverage will not be triggered.

Depending on the circumstances, the insured may recover income lost for up to four weeks. Better yet, this time limit can be extended up to 180 days by means of the Civil Authority Increased Coverage Period (CP 15 32) endorsement.

While this isn’t the solution I had expected, it does appear to be the “silver bullet” for which I was looking. Given that four weeks of coverage is not likely to be adequate, the insured should purchase an appropriate extension (e.g., 60, 90 or 180 days).

¹ The CP 15 08 endorsement follows the business income limits applicable to property damage at the insured’s premises. ISO also provides a Business Income From Dependent Properties– Limited Form (CP 15 09) endorsement that insures the same type of loss, but allows designated limits that are independent of the limits applicable to the insured’s premises under the Business Income And Extra Expense Coverage

Form (CP 00 30). In fact, it’s unnecessary to cover income loss from damage to property at the insured’s premises in order to insure dependent property under this endorsement.

Includes copyrighted material of Insurance Services Office Inc. with its permission. Copyright, Insurance Services Office Inc. 2012.

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Tech To post or not to post?

Bit

Amrhein is the president of the Florida Insurance School of Continuing Education and the CE Partnership.

28

By Kevin C. Amrhein, CIC

The issue: Safety of social-media management and behavior in the agency. The stats (i.e., why you should care): • Forty-seven percent of Americans say Facebook is the top influencer of their buying decisions; • On average, Americans spend 16 minutes of each online hour on Facebook; • Seventy-two percent of individuals aged 30 to 49 are engaged in social media; • Sixty percent of people between the ages of 50 to 60 are active on social media; and • Forty-three percent of those aged 65 or older are engaged in social media.

If the numbers are skewing toward socialmedia use as a top platform for agent/insured communications, what can your agency do to make sure tried-and-true, errors-and-omissions principles are preserved? Here are a few tips:

Recognize that the same standards of discretion your agency practices in the “offline” world apply in the “online” world.

Respect ownership of others’ copyrights, trademarks and intellectual property. Always ask permission and link directly through the source (e.g., don’t just copy and paste URLs unless you have the necessary approvals).

Post disclaimers on agency social-media pages/accounts stating that no individual coverage concerns or claims info may be communicated through social media. If initiated by the insured, agency’s response should be a brief reply stating that discussing personal account information requires a phone call or personal visit.

Judge the comfort level of employees who will use social media to communicate and train

Professional Insurance Agents/Winter 2014

accordingly. Turning someone loose who isn’t comfortable could result in the wrong people getting tagged in posts, public instead of private tweets, and a slew of other risky gaffes, which often result from a lack of training.

Establish and formalize an agencywide policy.

Review with legal counsel and E&O carrier before inception. Clarify with agency staff that the same policy applies to any personal communications they may have with insureds to whom they are connected personally through social media.

Appoint a post manager and set frequent reviews of posted content. Don’t let stuff hang around forever.

For example, check out this well-intended (but ultimately knuckleheaded) situation:

An agency employee posted a testimonial from an insured describing how great the agency was in helping the insured recover from a recent theft claim.

An employee responded to post: “no problem [Mr. Insured]. Staying one step ahead of the thieves … that’s how we roll!”

The post was not removed for several weeks.

During that time, a spree of break-ins affected several of the agency’s insureds; a few of which had purchased policies that did not cover theft.

Social media is engaging. It’s pervasive. Its presence is growing. And, it’s not to be feared by agencies hoping to utilize its benefits. Hopefully, the tips above will provide your agency with a basic platform for safe use.

Information in this article is discussed in Amrhein’s CE course titled: Sound Advice or Sour Grapes: A Curmudgeon’s Take on Social Media in the Agency.

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Hanover Insurance Group

RPS of Lexington

Mid South Mutual Insurance Co. Sagamore Insurance NAI

Tennessee Underwriters

National Security Fire & Casualty

BRONZE

Access Insurance Co. Accident Fund Ins. Co. of America Appalachian Claims Service Applied Underwriters ASI Berkshire Hathaway Guard Ins. Group Bituminous Insurance Builders Mutual Insurance Cos. Donegal Insurance Group EMC Insurance Cos. Genesee General HICI Insurance Ink Underwriting

J.M. Wilson Kentucky National Insurance Co. Mapfre Insurance QQ Solutions Risk Innovations Safeway Insurance Co. Sharp & Robbins Construction, LLC Southern Cross Underwriters Southern Pioneer P&C Southern Trust Insurance Co. Stonewood Insurance Co. Tenn. Agents Alliance Group United Fire Group

Professional Insurance Agents/Winter 2014

29

from the people stronger

who

customer satisfaction

know.

stronger

coverage

stronger

loss control

stronger

defense

Continuous E&O protection since 1966.

504 Autumn Springs Court Suite A-2 • Franklin, TN 37067 Phone: 615-771-1177 • Fax: 615-771-3456 Contact: Sandy Clive, sclive@piatn.com Visit: www.piatn.com

Readers’ service & advertising index ❏ 14 ❏ 20 ❏ 8-9 ❏ 15 ❏ 7 ❏ 2 ❏ 12 ❏ 23 ❏ 26

TENNESSEE

Check advertisers of interest, complete form and fax or mail to: PIATN magazine, 504 Autumn Springs Court, Suite A-2, Franklin, TN 37067.

Amerisafe AmTrust North America Consumer Insurance/Motorist Insurance Group EMC Insurance Johnson & Johnson MidSouth Mutual Insurance Co. M.J. Kelly of Tennessee NAI Penn National Insurance

❏ BC ❏ 11 ❏ 16 ❏ 10 ❏ 24 ❏ 23 ❏ 27 ❏ 13 ❏ 30

Show your true colors

PIA Branding Program PIA Trust Insurance Plans PIATN Agency E&O PIATN CE Partnership PIATN Cyber Liability PIATN Online Education Risk Innovations Summit Utica National Insurance Group

Name____________________________________________________________ Agency__________________________________________________________ Address__________________________________________________________ City/Town & State________________________ZIP_____________________ Phone Number____________________________________________________ Enhance your ad with the impact of color.

Call our sales representative at pcass@piatn.com.

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Professional Insurance Agents/Winter 2014

Directory PIATN officers and directors OFFICERS

President John Keisling, CPIA, CISR Keisling Insurance Agency Byrdstown, TN (931) 864-3116 john@keislingins.com President-elect Joe Kerr, CIC, CPIA Kerr Insurance Services Brentwood, TN (615) 360-7524 joe@kerrinsurance.net Vice President Bill Richards, CPIA, LUTCF Community Insurance Greeneville, TN (423) 638-1422 brichards@greatci.com Secretary Herbert Montgomery Clay and Land Insurance Memphis, TN (901) 767-3600, ext. 107 hmontgomery@clayandland.com Treasurer Chris Mills, CPCU, CIC Mills Insurance Agency Nashville, TN (615) 620-4452 chris@millsinsuranceagency.com Immediate Past President Tina Hutsenpiller, CPIA Hutsenpiller Insurance Services Mt. Juliet, TN (615) 773-2886 tina@hutsenpillerinsurance.com

NATIONAL DIRECTOR

June Taylor, CIC, CPIA, CPIW, DAE Wilkinson Insurance Agency White House, TN (615) 672-4439 june.taylor@wilkinsonins.com

DIRECTORS

Greg Augustine, CPIA The Augustine Insurance Group Clarksville, TN (931) 503-0015 gaugustine@aol.com

EXECUTIVE VICE PRESIDENT

Jeff Anderson, CPIA PIA of Tennessee 504 Autumn Springs Court, Suite A-2 Franklin, TN 37067 (615) 771-1177 janderson@piatn.com

STAFF

Pam Cass, CPIA Convention, Education, Membership (615) 771-1177 pcass@piatn.com

Llew Boyd Southern Insurance Associates Chattanooga, TN (423) 296-0626 llboyd@southins.com

Sandy Clive, CPIA E&O, Member Services (615) 771-1177 sclive@piatn.com

Carl Butcher, CIC, CPA C.L. Butcher Insurance Agency Knoxville, TN (865) 689-5482 carl@clbutcher.com Tom Gernt, CPIA Art E. Gernt Insurance Inc. Crossville, TN (931) 484-3448 tom@gerntinsurance.com Anna Lima-Montgomery, CPIA Montgomery & Associates LLC Brentwood, TN (615) 829-8457 anna@montgomeryassociatesllc.com Dedric Pearson, CPIA Pete Mitchell & Associates Inc. Memphis, TN (901) 345-6176 dedric.pearson@petemitchellins.com Jeff Puckett Boyle Insurance Agency Inc. Franklin, TN (615) 567-8000 jeffp@boyle.cm

Professional Insurance Agents/Winter 2014

31

The PIA Branding Program

Advertising that helps set PIA members apart from — and above — their competition. �������������� ���������������

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��� ����� ������ ������������� ���������� �������� ��� ������ ����� ����� �������������� ������ �� �������������� ��� ����������� ����� ���� ������� ���� �������� ��� ����� ������� �������� ���� ���� ��������������� ��������������������������������������������������������������������������� ������ �� ������ ������������ ��� ������� ����� ��� ���� ���� ��� ����� ������ ������ ������������������������������������������������������������������������������� ������������� ��� ������ ��� ���������� ���� ����� ���������� ������ ������ ��� ��� ���� ���������������

Local advertising for Local Agents Serving Main Street America How does a Professional Insurance Agent separate himself or herself from the pack in a crowded insurance marketplace? Simple.

By taking advantage of PIA’s new print advertising program.

Best of all, this powerful branding tool is available free and exclusively to PIA members, as part of their PIA membership. Company sponsorship of the PIA Branding Program is also free.

PIA has created a series of ten print advertisements that PIA members can run in local publications or print as flyers. These ads focus on the combination of choice and personal support and service that make PIA members Local Agents Serving Main Street America.

Learn More

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These attractive ads can be customized with agency logos and contact information and (optionally) a company logo. There are four general agency ads, two homeowners ads, two auto ads and two commercial lines ads, with numerous variations, sizes, color as well as black and white ads, making a total of 227 ads in all.

National Association of Professional Insurance Agents 400 N. Washington St. • Alexandria, VA 22314-2353 (703) 836-9340 (phone) • (703) 836-1279 (fax) www.PIANET.com • piabrandingprogram@pianet.org

32

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Professional Insurance Agents/Winter 2014

Whether you’re a PIA member now, you’re an agent who has yet to join, or you’re interested in company sponsorship, head on over to PIA National’s website to see the ads and get all the details about the PIA Branding Program: www.pianet.com/piabrandingprogram