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In This Issue The Future of Car Insurance Self-Driving Trucks Take the Road in Texas How Technology is Reshaping Auto Claims Will Autonomous Vehicles Help Fight Crime?

Americans Like Driving


Texas PIA P.O. Box 700877 Dallas, TX 75370 (972) 862-3333 www.piatx.org

PRESIDENT’S MESSAGE

In This Issue The Future Of Car Insurance: Digital, Predictive and Usage-Based

David Gorman

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How Insurance Pricing for Cars of the Future Could Bring Insurers and Carmakers Together Page 7 How You Can Deliver a Stimulating Sales Presentation

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How Technology is Reshaping Auto Claims

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Americans Like Driving

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Will Autonomous Vehicles Help Fight Crime?

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Self-Driving Trucks Take the Road in Texas

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What Small Business Clients Need to Know About Auto Risks

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How Often Do American Drivers Touch Their Phones? Insurers Know

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Just How Clean Is That Driving Record?

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The Foundation for Top Sales Achievement

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Need for Speed: Drivers’ Common Excuses

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Email: Friend or Foe to Insurance Agencies?

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Texas News Round-Up

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How will emerging technologies impact auto insurance pricing? Will touchless claims for collision repairs soon be a reality? Will selfdriving trucks change the industry in Texas? And will autonomous vehicles perhaps eliminate human error, and therefore the need for insurance altogether? This issue helps answer these questions for you, your agency and your clients. As we know, change is the only constant for independent agents. Yours,

David David (Red) Gorman Office: 214-374-9997 Email: david@redgormaninsurance.com

Welcome New Members Joseph A. Fanelli, Owner

JFITEXAS, LLC

Temple

Ernest DeLeon, Owner

De Leon Insurance Brownsville Agency

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The Future Of Car Insurance: Digital, Predictive and Usage-Based

by Sarwant Singh, Forbes.com Imagine shopping for your next car insurance and the car company offers an insurance that connects a black box, dongle or a mobile phone app, which tracks how you drive, and saves you up to 30 percent on premiums. This, in essence, is the future of connected car insurance, also called usage-based car insurance (UBI), whereby based on how you drive, when you drive and where you drive, you will receive a competitive quote if you are what the technology deems a ‘safe driver.’ Usage-based car insurance started in the late 2000’s as a niche experimental effort by a select number of insurance companies in select regional markets. Fueled by an increase in the number of connected cars and smartphones, it has now become a mainstream offer by most insurance carriers especially across North America and Europe. Driving information can be accessed online or on apps allowing customers to monitor their driving patterns and make needed adjustments to improve their chances for better discounts. Today, big insurance names offer mileage-based, driving behavior-related discounts, and customers now have the option to choose an insurer before they walk out of a dealership with their new car. Pay as you drive (PAYD) and pay how you drive (PHYD) business models are likely to become the preferred types of metrics to calculate premiums. In addition, greater influence of data analytics will see options such as manage how you drive (MHYD), gain momentum beyond 2020. A recent Frost & Sullivan analysis suggests that there is an appetite for UBI policies and is expected to reach close to a 100 million drivers by 2020, dominated by Italy, UK (exceptional push from a safety angle for younger drivers) and the US. With some smartphone apps that provide “try-before-you-buy” (TBYB) options, this is also seen as a “cool” product, which is predominately targeted at millennials, allowing them to find out how safe they are behind the wheel or what score they can obtain and share with followers on social media. Pay-per-ride or pay-per-use models can be expected to become increasingly significant as these “cool” millennials impose their preferences on the market. In a recent interview I had with Jonathan Hewett, Industry Leader in the UBI Space, CMO for Octo Telematics, he stated, “Octo was born out of the dissatisfaction with one-size-fits-all approaches to insurance, which don’t reflect how we actually use our cars. We’ve seen rapid growth year on year in the uptake of telematics policies across Europe and the US, with Octo ending 2016 with more than 4.8 million global users. As the market evolves, we will see things like autonomous vehicles and car sharing become more mainstream, complicating both our roads and the way we insure our vehicles. Telematics data brings clarity and customization to our insurance policies.” Jonathan also spoke about Octo’s portfolio play in terms of device technology ranging from mobile apps, black boxes and connected car technology, as well as the company’s new platform TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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which will take data from any device to deliver insurance telematic services. The platform has the ability to retrieve data from 17 different sensors within the vehicle. By integrating data from these sensors and having a platform approach, combined with on-demand mobility solutions, they can provide 10 to 12 percent reduction in the total cost of ownership of fleet insurance due to crash detection, better claims management and efficiency in getting vehicles repaired and back on the road. Companies like Octo will be key in the future due to their ability to provide insurance, as well as fleet and car sharing management needs, under one integrated platform for their customers. These insurance platforms will become increasingly important as we move towards a future of connected living. Insurance companies will be able to redesign policies where data from auto insurance will be an extension of home, health, life, and even pet insurance policies. Imagine a future where your driving behavior also influences your home insurance (good luck to the Italian and German road rage drivers).

The connected car insurance industry will also see huge competition from startups. Smartphone apps, quote comparison aggregators, and cloud exchange platform players who are leveraging ‘software as a service’ models, are disrupting the insurance industry. TrueMotion, Mojio, Cuvva, for example, are some of the insurance mobile apps leveraging a complete digital experience using telematics data. Companies like Metromile, leverages a plug-in device along with a smartphone app, which provides vehicle health reports, location-based services and tips to help the user with their everyday commute. In the future, we will see premium valuations of usage-based insurance companies and it won’t be a surprise to see more M&A activity in this sector. For instance, Insure The Box, a company that owns brands like drive like a girl (great catchy name) in the UK, sold a 75 percent stake (worth GB£105Mn) to a Japanese insurer, who interestingly is a kiretsu of Toyota. Such links go on to show how car companies with financial arms are showing interest to cover insurance in their fleet and leasing options and making it an interactive tool to create brand loyalty. In closing, just like car companies got into insurance and leasing, they will all in the future adapt and sell User-based insurance solutions. So don’t be surprised if your insurer asks you to fit a black box in your car. You might be concerned about privacy, but for sure it will be cheaper if you are a safe driver who does not accelerate fast and brakes hard.

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How Insurance Pricing for Cars of the Future Could Bring Insurers and Carmakers Together by Paul Tullis from insurancejournal.com Dan Peate, a venture capitalist and entrepreneur in Southern California, was thinking of buying a Tesla Model X a few years ago—until he called his insurance company and found out how much his premiums would rise. “They quoted me $10,000 a year,” Peate recalled. For all the concern over accidents involving driverless cars, including Tesla’s troubles with its limited self-driving “Autopilot” mode, it’s easy to forget one of the supposed virtues of autonomous vehicles: they will make the roads safer. A sophisticated array of LiDAR, radar and cameras is expected to be more adept at detecting trouble than our mortal eyes and ears. And computers never get drunk, check Tinder or fall asleep at the wheel. Peate, 40, previously started a company called Hixme, a provider of group health insurance. Now, he wanted to launch a new firm specializing in insurance for vehicles with automateddriving modes (and eventually fully-autonomous cars). His experience with the insurer of his old-fashioned, non-driverless car only confirmed the need. When underwriters and actuaries price insurance on a new type of risk, Peate said, they charge more because they don’t have enough data. With so few Model X’s on the road, its safety record was, at best, opaque. But Tesla and other carmakers collect reams of data on their vehicles’ operation in order to improve automation. Peate said he realized “we can get large amounts of data across entire fleets and be able to underwrite without having to wait for years of data” from accidents after they’ve happened. It also enables an insurer to cut premiums for drivers the more they engage autonomous driving. On Jan. 30, Peate announced the creation of Avinew, with $5 million in seed funding led by Los Angeles’ Crosscut Ventures. Its insurance product will monitor drivers’ use of autonomous features on cars made by companies including Tesla, Nissan, Ford and Cadillac, determining discounts based on how the feature is used. Avinew has agreements with most manufacturers, and is working to tie up the rest, Peate said, allowing it to access driving data once a customer gives it permission. Deloitte, in its 2019 insurance outlook report, saw this coming. “The rise of connectivity…has generated a massive amount of real-time data and turned the insurer’s relationship with policyholders from static and transactional to dynamic and interactive.” Avinew said it expects to be writing policies later this year in select states.

Legacy Insurers The transition points to a larger, existential crisis for the multibillion dollar car insurance industry. If nobody’s driving, why do we need auto insurance? TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Premiums—and company revenues—are based on a driver’s likelihood of being in an accident and actual crash rates. With more than 90 percent of accidents caused by human error, taking the driver out of the equation is going to mean big changes for insurers. “This comes up in every strategic conversation,” said Michelle Krause, senior managing director in Accenture’s insurance client service group. The major carriers “are very focused on understanding the technology behind [automation] and what opportunities are available for them.” Krause’s group, with research from the Stevens Institute of Technology in New Jersey, published a report in 2017 forecasting trouble for insurers as automation becomes more widespread. Premiums could drop by 12.5 percent of the total market by 2035, the authors found, and while new insurance product lines centered on autonomous vehicles will offset some of the loss, declining premium revenues will eventually outpace gains. The good news for the industry is that it has time. Stevens estimates that by 2035 there will be only 23 million autonomous vehicles on American roads—less than 10 percent of today’s total. And as of now the technology required for autonomous features is extremely expensive to repair, meaning premiums will initially rise as more cars featuring them roll off dealers’ lots. “When you think of all these sensors and calibration, a little fender-bender could be a much more costly proposition,” said David Ross Keith, an assistant professor of system dynamics at the Massachusetts Institute of Technology. As automation reaches Levels 4 and 5—fully autonomous capability with the option for a human driver to take over, and fully autonomous with no human involvement, respectively— insurance is going to change dramatically.

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“It’s foreseeable that insurance is a much less consumer-facing industry in the future,” Keith said. That’s because the driver won’t be the risky part. “Liability is likely to migrate from the individual to the manufacturer and the licensers of the software that drives the AV,” said Rodney Parker, an associate professor of operations management at Indiana University. Accenture’s report agreed. That means insurers will be selling more policies to companies and fewer to drivers: carmakers and suppliers of communications systems, software, and sensors are going to be on the hook for the failure of their products, rather than drivers paying for not checking their blind spot. More broadly, the nature of risk itself is going to change, said Hyejin Youn, a professor at Northwestern University. With human drivers, “uncertainty is randomness, and random chances follow a normal distribution.” If the risk is in faulty software or sensors, it becomes “more systematic.”

Big Data Nationwide is one insurance company that’s started thinking about this problem. Drivers today are rated based on factors including sex, age and driving history. “If we’re getting data from the vehicle, that rating changes dramatically and gets very complex,” said Teresa Scharn, associate vice president of product development. Insurers are already in the data management business, of course, but “it’s getting to be an even bigger muscle that we have to flex.” Like Nationwide, Allstate is aggressively hiring experts in big data and analytics, according to its president of service businesses, Don Civgin. Determining who’s at fault when something goes wrong could get thorny in this new world. If the LiDAR goes on the blink, is that the carmaker’s fault or the supplier of the lidar? What if the driver failed to get the latest firmware update—so now it’s his fault? If a Cadillac with Super Cruise loses its internet connection, is that on GM or Verizon? What if the car gets hacked and is redirected to a thief’s lot? What if municipal infrastructure managing traffic flow loses its data? “As a society we’ll have to figure out who’s liable for these different things and that will determine who’s required to insure against what risks,” MIT’s Keith said. Youn of Northwestern sees it as a “public policy problem, best addressed in government.” Yet these are all opportunities for the legacy insurance companies quickest to adapt—as well as startups like Avinew. Policies that protect products will become more widespread, while mobility as a service, Keith said, will mean we’ll want to “insure our safety as a passenger” as well. Without a driver, there’s no driver to insure. Nationwide thinks the smoothest road ahead will be one on which insurers and automakers each have a hand on the wheel. “We’re working to build deeper relationships with car manufacturers,” Scharn said. Perhaps that means mergers on the horizon between insurers and automakers? Krause of Accenture said “those conversations are going on as we speak.”

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You Can Deliver a Stimulating Sales Presentation Did you know that 83% of the information in our world is processed by our eyes? It’s no wonder that highlighting a visual component in your sales presentations is vital. “A visually rich presentation keeps the eyes busy and, therefore, keeps the brain more alert and active to learn the information you are presenting.” So says Chet Holmes, corporate trainer, author, business growth expert and lecturer. How can you create your own great presentation? In his book, The Ultimate Sales Machine: Turbocharge Your Business with Relentless Focus on 12 Key Strategies, Holmes offers the following advice for delivering an effective sales presentation:

1. Keep it simple: Too much text or graphics on a page looks cluttered and makes it difficult to read. Try to fill each slide with only one heading and 3 to 4 bullet points.

2. Move things along: Spending too much time on one slide will cause contagious yawning in your audience. It’s better to present a new point and a new slide every 15 or 20 seconds.

3. Wow them: Use facts or statistics that are shocking or unusual. They’ll keep your audience so interested and engaged that they may share your information with others.

4. Use stories: Yes, this is Marketing 101 information, but people love to hear stories. Several good ones scattered throughout your presentation will make your audience happy. Coming up with great stories is worth the effort, because they demonstrably improve recall.

5. Keep them curious: This is another tough one with great payoff. Present your information in a way that keeps the audience on the edge of their seats. Develop rapport: If your audience feels connected to you, they’ll pay more attention. So bond with them. Ask them to share their challenges and problems — and listen closely. Sharing creates instant bonds because people like to know they’re not alone in their experiences. Holmes also lists common presentation mistakes to avoid:

1. Don’t thank prospects for their time. They should thank you when you do a good job. 2. Don’t stuff your hands in your pockets while making a presentation. 3. Don’t sit while making a presentation. 4. Don’t answer questions in the middle of your presentation. Your audience could easily take control of the meeting.

5. Don’t forget to practice your presentation. Nothing is more painful than watching a presenter read note cards word for word. Know your subject well enough to wing it while keeping your eyes on your crowd. If you can watch their reactions, you’ll be able to make in-themoment adjustments that keep their excitement and anticipation high.

6. Don’t forget to make your presentation come to life. 7. Don’t underestimate the power of humor. 8. Don’t just present information. Instead, make connections and draw conclusions for your audience. Help them see why your content is important to them. You can make your next presentation exciting, effective and visually rich. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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How Technology is Reshaping Auto Claims by Jared Kalfus, PropertyCasualty360.com

The auto insurance market is facing a variety of near-term and long-term pressures that could eat into profits. Conversely, new data technologies and innovations are providing the data to combat these threats, helping insurers maximize their potential for a healthy bottom line. In the near term, the industry remains on solid ground. According to Deloitte, in the P&C sector, U.S. premiums written grew 4.6% in 2017, the highest percentage in the past decade, before jumping by 12.7% in the first half of 2018. However, more longer-term outlooks are less clear, mostly because of all the talk of autonomous vehicles. Autonomous vehicle technology, a rise in on-demand transportation and a shifting of liability to manufacturers will shrink the auto insurance sector by more than 70%, or $137 billion by 2050, according to research by KPMG. Several technologies and innovations are reshaping the way auto insurers conduct business. For example, everything from artificial intelligence, machine learning, Internet of Things, big data analytics, automation, chatbots and telematics are all impacting insurers and their business models. More specifically, a handful of these technologies are having a direct impact on how claims are processed for customers and their vehicles. Case in point, the last two years have seen deadly hurricanes hit various locations in the U.S., and these storms provided damage to property, homes and vehicles well into the billions of dollars. When insurance companies need to calculate payouts, the most critical aspect of the entire process is having access to the most timely and accurate valuation on each vehicle in the portfolio. However, not all valuation services are created equal, and leveraging the wrong value, multiplied over several thousand vehicles with payouts, can be financially devastating to an insurer. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Today’s advanced valuations include data analytics to provide more precise valuations. These VIN-specific data resources take into account each individual vehicle’s unique history footprint, helping insurance professionals determine the impact a vehicle’s history has on its value, both current and future. Even with the use of vehicle history reports, insurance professionals are still reliant on automotive values based on an unscientific, subjective, educated guess as to the impact a vehicle’s history has on its value, which often leads to mistakes and inconsistencies in the valuation and payout process during claims processing. Vehicle values that take into account a VIN-specific history can be as much as 31% more precise when compared to the auction transaction price than valuations without a history adjustment included. This is possible since today’s analytics process leverages data that can help professionals quickly pinpoint a more precise valuation on two individual vehicles of the same year, make and model, based on data inputs that take specific vehicle history events into account. Making an inaccurate estimation of appraisal values can decrease margins for a dealer, as well as increase losses for insurance companies and auto lenders. History-adjusted vehicle valuations analyze multiple factors and events in a vehicle’s history such as number of owners, vehicle usage, accident and accident severity, title issues, flood/ hail/fire damage, CPO history, and other variables that are not obvious when physically inspecting a vehicle. Insurers have long relied on vehicle valuation data in order to help determine the right payout for each vehicle damaged or destroyed in an accident or natural disaster such as a hurricane. Over the last few years, these natural disasters have been a large reason why large numbers of vehicles have been destroyed, and there is a good chance this pattern will continue in the years to come. With the right tools and resources, such as data- and analyticsdriven valuation insight that takes into account each vehicle’s unique identifiable history, insurers can be even more precise in determining the exact vehicle payout to keep clients happy and preserve the right margin in each vehicle portfolio.

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Americans Like Driving

They Have Difficulty Trusting Autonomous Features by Tanya Gazdik, MediaPost.com Most Americans enjoy the act of driving their vehicle and remain unfamiliar with semiautonomous features currently available, like adaptive cruise control.

That’s according to a study from Ipsos, which uncovered interesting insights on how drivers feel about self-driving cars. Research confirms new car buyers are simply not ready to hand over the driving responsibilities to their vehicle, even for a short amount of time, says Todd Markusic, vice president, Ipsos Mobility. “A key and possibly overlooked revelation is that almost 70% of new car buyers simply enjoy driving,” Markusic says in a release. “They have spent a lot of money on their vehicle and want to drive it. That is the feature.” The Global Mobility Navigator Syndicated study is comprised of three modules, with the first focusing on autonomous driving. The newly released module contains results from over 20,000 new car buyers from 10 countries. Module two and three are yet to come and will focus on electrification and shared mobility. While there are enjoyment factors to consider in the autonomous future, consumers also have safety concerns. One concern is pedestrian safety as well as the safety of other vehicles, according to the study. The driver’s own safety is a slightly lower concern. Meanwhile, if a driver did use the autonomous mode, 44% said they would still remain focused on the road. This implies a lack of trust in the system’s ability to safely self-drive. Another big worry for consumers is the security of the vehicle’s data, with the possibility of someone hacking into their self-driving system and causing an accident. The auto industry is also battling an awareness issue with the new technology. Globally, only 15% said they knew a fair amount about autonomous features, while only 10% of American vehicle owners are familiar with such features. Continued on page 38 TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Will Autonomous Vehicles Help Fight Crime? by Hannah Smith, PropertyCasualty360.com

Is Your Car a Bounty Hunter? When the term “bounty hunter” is used, most people immediately think of the popular reality television personality, who spends his time pursuing a diverse slate of fugitives across the United States. With the swift development and increasing popularity of autonomous vehicles (AV), at some point in the not-so-distant future, cars might be charged with the duty of bringing lawbreakers to the police, acting as a type of bounty hunter. So, what if you’re leaving work one evening only to find an empty parking spot where your Tesla was parked mere hours before. You call the police and they ask you for permission to take over your car, which you give immediately. The car then receives the command to drive to the nearest police station. If the thief happens to still be in the vehicle when the police take it over, he will be locked inside the car until the police can arrest him. Although this seems advanced and futuristic, law enforcement is reporting that they are taking steps to test the possibility of stopping crimes by taking over autonomous vehicles. Police are working with the car makers because information about AV hacking is invaluable to entities up and down the line of AV manufacturing. GM has begun preparation for issues like this beginning in 2009 by equipping some of its vehicles with an emergency switch that can turn off the engine if the vehicle is stolen.

Gaining remote control Last November in California, a Tesla was going 70 mph with a turn signal blinking, cruising for miles, and passing exit after exit. A police officer noticed the car and pulled up alongside it, to see the driver with his head slumped over the steering wheel. The officer lit up his lights and turned on his sirens, but the display failed to rouse the driver. The officer guessed, correctly, that the car was driving itself under what Tesla calls Autopilot. Currently, police officers do not have the technology or authority to pull over an autonomous vehicle that is driving via autopilot. Since the driver, in this case, was unresponsive, the officers had to use innovative techniques to get the car safely to the side of the road. One officer blocked traffic while another pulled in front of the offending vehicle and continually slowed down until the two vehicles were stopped. This appears to be the first case where law enforcement has stopped a vehicle on an open road under the control of an automated system, but it surely won’t be the last. AVs can’t drive unchecked on the roads until car makers, lawmakers and police work through several difficult problems. So what if this same situation with the Tesla and the drunk driver were to happen, but the vehicle could pull itself over in response to the police lights and sirens? Since AVs won’t be speeding, driving recklessly, double parking, or running red lights and stop signs, it does seem unlikely that the vehicle will be pulled over, but cars on the road must still yield to emergency vehicles.

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Google and other AV manufacturers have patented programs like “emergency vehicle detection,” technology that can detect lights and sirens and yield appropriately. A bigger issue is how an AV can detect an officer located outside of his cruiser. Human drivers can respond to visual cues, nods, waves and eye contact. An autonomous vehicle will not be able to respond to these clues in the same way. A seemingly easy solution is to give officers a tool that can redirect AVs to a different route where they will not encounter officers on the road. However, giving officers that kind of unchecked authority is a completely unmapped risk. What if the police had the legal authority to make the car safely pull to the side of the road instead of having the vehicle pull itself over of its own accord? Police have been asking for access to “takeover” AVs so that when a vehicle malfunctions the car can be safely pulled over and redirected or driven to a police station. Giving police access to AVs could help with crime control, but allowing unobstructed access to all of the autonomous vehicles on the road might not be the best way to address the issue. If the police can access the network of autonomous vehicles and redirect them, or tell them to go somewhere or do something, in particular, hackers will be able to hack into the system and access all of the connected AVs to do their bidding as well. Waymo has partially addressed this issue by building in help buttons and 24-hour hotlines for drivers to call in the case of a roadside emergency or vehicle malfunction. Waymo’s staff cannot remotely take control of the car, but they can reroute the vehicle if that function becomes necessary after an accident.

Automated vehicle realities The encroaching reality of AVs is going to cause seismic shifts in traffic policing strategies, policies and enforcement. So much of policing sometimes exceeds the bounds of a traffic law infraction but is based on traffic law enforcement. An officer can be pulling over a vehicle for a traffic stop and by observation can detect other lawbreaking activities such as narcotics and human trafficking. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Almost every human driver routinely violates traffic laws. Without the ability to pull over somebody under the pretext of speeding or running a red light, many of these crimes will go undetected. The police could spend days following an AV suspected of being involved in a crime without ever having a reason to pull that vehicle over and stop the illegal activity. Alternatively, what would happen if the AV could somehow determine that the driver was breaking the law by sensing the presence of alcohol in the air or checking recent warrants against owner names and driver’s faces, and instead of driving her home, drove her to the nearest police station? Hacking an autonomous vehicle can potentially take several forms, and we won’t know the extent of the hacking ability until we are further immersed in the AV world. Hackers have already shown that they can cause a vehicle’s engine to stop working. The hacker can use code to tell the vehicle there is something in the path, causing the car to swerve or stop for no reason. Hackers can stop vehicles on the highway, causing unexpected gridlock and they can slow down a car causing slower traffic patterns. Suicide bombers will no longer have to commit suicide to initiate an attack. Instead, they can send a driverless car packed with explosives down a busy city street. While a system that detects empty cars would be useful for situations like this, one of the main attractions to autonomous cars is the on-demand economy. The vehicle would need to be able to pick up a passenger whenever and wherever summoned. This is all very far in the future. Currently, most citizens cannot legally drive autonomous cars on public roads. Police, lawmakers and car manufacturers are all eager to have this technology tested and approved for public use. Traffic infractions, accidents and fatalities will decrease significantly with the implementation and regular use of autonomous vehicles, and public safety is the most important aspect for all parties involved.

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Self-Driving Trucks Take the Road in Texas by Jeff Pettegrew, PropertyCasualty360.com The world of self-driving trucks continues to expand as new technologies are being tested and more companies are emerging with revolutionary-designed autonomous fleets of semitruck tractors that increase safety and efficiency. There’s no denying that these 80,000pound tractor-trailer rigs, which number over two million in the U.S., will disrupt the trucking industry as fleets convert to autonomous units. It won’t be long when it will be normal to see these special trucks on the highway. In 2017, the Texas legislature passed a pair of bills legalizing both driverless vehicles and trucks allowing these new self-driving trucking operations to deliver cargo to every corner of the Lone Star State. Unlike other states such as California, self-driving developers don’t need special permits to test in Texas. Executives with several autonomous trucking firms say that they are working closely with Texas authorities who, supporters say, are big boosters of trucking tech. Even the US Postal Service has tested transporting mail there via robotic trucks. Texas has also kicked off a number of U.S. Department of Transportation projects to promote advanced truck tech with funding from a federal grant that will serve to enhance the safety of all autonomous vehicles in the state. A year-old start-up company in Dallas, called Kodiak Robotics, will be running its driverless trucks on roundtrip hauls of more than 400 miles between Dallas and Houston. For now, Kodiak will have a “safety driver” available in the cab to make sure the robotic trucks don’t misbehave, but the truck fleet, often traveling in convoys, will eventually be monitored remotely through advanced camera technology similar to military drones. The latest technology has extended the autonomous vehicle industry’s LiDAR remote sensing standard of 270 yards to nearly 1,100 yards. There is also a bevy of sensors that monitor thousands of data inputs each second to help navigate and control every function of the truck. The technology is also self-learning. The benefits are pretty obvious: Autonomous trucks can transport goods 24/7 with no mandatory 11 hours per day operating limits; it’s fuel-efficient with little downtime; there are no cell phone, passenger or other driver distractions; and the driverless trucks obey all of the traffic laws. Increased trucking safety and efficiency are clearly the goals.

Injuries are just one aspect of the job It’s no surprise that other big firms like Daimler (Mercedes), Waymo (Google), Volvo, Volkswagen, UPS and Tesla are all vigorously testing automated trucks. Keep in mind, the stakes are high. Trucks are the backbone of the U.S. economy, moving over 10 billion tons, 70% of all the country’s freight and generating more than $700 billion in revenues in 2017. Trucking is the largest industry in 29 states, with Texas demonstrating steady revenue growth of 2.1% annually for the past five years. With no sign of trucking being slowed down by technology, experts are focusing on the existing and future physical and mental demands of long-haul truckers. In turn, trucking operations using workers’ compensation insurance or the Texas ERISA-based alternative injury benefit plan, expect that truck driver injuries or illnesses will decline in the future. Besides the long hours behind the wheel, other injuries to drivers are often due to the fact TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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that semi-trucks are like mobile warehouses, with drivers performing a wide variety of duties in and around the tractor-trailer and its cargo, often in adverse weather or road conditions. Drivers, particularly with an aging workforce, are understandably more susceptible to back, shoulder and knee claims. It’s a tough and demanding job. Lost time to injuries and the inability to assume meaningful transitional return-to-work duties are a challenge with trucking company fleet scheduling demands. Smaller trucking firms may have no other transitional duties available. The nation’s 3.5 million commercial truck drivers in 2017 experienced 47,860 injuries or illnesses out of a total of 882,730 total occupational injuries. The National Safety Council states that motor vehicle claims are by far the most expensive workers’ compensation claim on average at over $100,000 each. The National Council on Compensation Insurance (NCCI) claims that 28% of the motor vehicle accident workers’ compensation claims were above $500,000 over a five-year period from 2011-2016. The next highest category averaging $60,000 per claim were fractures, crush or dislocation injuries. According to Commercial Truck Insurance HQ, a company that assists in obtaining various trucking-related casualty insurance quotes, typical truck driver workers’ compensation insurance (NCCI category 7219) costs between 8% to 15% of a truck driver’s salary. With an average driver’s salary of $57,000 in 2019, this is an annual employer workers’ compensation premium of $4,580 to $8,550. However, with prior accidents or injuries, some trucking firms can experience annual per driver premium rates as high as $24,960 in Texas and $31,200 in California. Unlike the majority of the country’s labor force, a reduction in frequency and severity of truck driver claims can translate into significant cost savings to the various employers that manage their truck hauling and delivery services. Despite operating challenges like slick roadways, construction zones, severe weather, stalled vehicles or obstructions in the roadway, extreme precautionary measures are woven into the autonomous technology to ensure that safety is the top priority. Lane departure — often a beef with auto vehicles trying to pass trucks on the freeway — is better than ever. Trucks in caravans are expected, for the most part, to stay in the right lanes. Other enhancements include forward collision mitigation, active braking and anti-rollover stability. Enhanced health and wellness are expected for drivers assigned to ride-along in the cab and who will be able to use mobile devices at will or even eat or sleep in the cab as the autonomous unit travels.

The future outlook for truck drivers What about vehicle liability? It’s assumed by most legal and insurance analysts that the firms operating the driverless vehicles are most likely the deep pockets in the event of a serious accident or injury. Liability insurers are banking that trucking firms will have a lower frequency and severity of vehicle liability claims as well. Overall, experts claim the savings to trucking firms using autonomous vehicles will ultimately be in the tens of billions of dollars. This favorably impacts both truckers and their employers as the new technology rolls out. Assuming improved safety comes about for both truck operators as well as other vehicles on the highway interfacing with these trucks, the next big question has to do with truck driver jobs. The trucking industry currently has over 3.5 million Class 8 heavy-duty (GVWR of 33,001 pounds or more) truck drivers, but it has steadily lost its most experienced baby boomer drivers due to retirement or disability. While truckers were highly unionized until the TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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1970s, about 13% of the drivers are in unions and over 10% of truck drivers, about 350,000, are solo owner-operators who own their own trucks. The average age of truck drivers is 55 with 94% being male, averaging only $45,000 per year in annual salary. Sadly, truck drivers also suffer a higher degree of chronic disease including obesity, diabetes and high blood pressure. Adding to severe driver shortages is the fact that younger generations of employees are not interested in being in a sedentary and often lonely job. Long haul truck drivers average 240 nights a year away from home sleeping in the cab, motels or at truck stops eating at diners or fast-food restaurants. Over 100,000 truck driver positions are expected to be open in 2020 alone, with greater shortages predicted for the future. A bigger question will be the nature of work new drivers will experience in the future. What can a truck driver/operator expect as a job description in the future? So how does all of this new technology impact workers? Are truck drivers going to be out of a job? Employers say that their intention is to have truck drivers in the cab to assist in loading and delivery, security, logistics, route planning and communications. So far, trucking companies state that their drivers for the foreseeable future will remain in the truck cab, much like an airline co-pilot, with the ability to take over the driving in the case of emergencies. Automation and robotics have had a huge impact on our country’s workforce, but additional advancements are well on their way. It’s expected, for instance, that ride-sharing programs like Uber and Lyft will be displaced ultimately by autonomous vehicles operating 24/7. This technological leap in transportation should ultimately translate into massive productivity increases. But qualified drivers are needed in the interim to see us through this transition phase before autonomous vehicles, including trucks, are the norm. Our nation’s most important economic asset — employees — may struggle as employment opportunities shift direction, but autonomous driving technologies will change the employment landscape, efficiencies and workplace safety in ways we’ve never witnessed before.

Texas PIA Wins 2019 Membership Growth Award In recognition of net membership growth by a PIA affiliate association, Texas PIA was honored at the Fall National PIA meeting. Our President, David Gorman, was also installed as the National Director for Texas PIA at this event.

Pictured left to right: Robert (Dale) Moon, President Elect, Vicki Reece, Executive Director and David Gorman, President and National Director TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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What Small Business Clients Need to Know About Auto Risks by Joyce Anne Graabel, PropertyCasualty360.com It happens all the time: A small business needs some office supplies so an employee drives to the local Staples to pick up the needed items. But what happens if that driver gets into an accident on the way? Since the employee was carrying out company business, is the company liable for damages?

This is one of the common, but often overlooked, risks small businesses need to be aware of, and it’s up to agents to advise their small-business clients about proper auto coverage needs. This not only grows your business, it also keeps your clients protected. “Any company-owned vehicle should be listed on a commercial auto policy. For example, if the owner of a real estate firm has an auto with a personal auto policy (listed as business use), then hired and non-owned auto liability coverage should be added to the business owner policy,” says Karen Landry, CIC, new business development specialist, SIAA. “Otherwise it should be added to the business’ commercial auto policy.” Hired-auto liability covers vehicles rented by the company for business use. Non-owned auto coverage would cover those employees running errands for the office, Landry explains. “Drive Other Car (DOC) coverage is a must for business owners who have a company car and are not listed on a personal auto policy. Unlike a personal auto policy, the commercial auto policy does not provide that extended coverage for borrowing another vehicle. You have to endorse the policy to add DOC.” “To me, the most important thing for a small business owner to be aware of is that if they have only a commercial auto policy and not a personal auto policy, they need to obtain Drive Other Car coverage,” concurs Rich Savino, managing partner, The Broadfield Group. “This will allow the commercial auto to respond as a personal policy would for a scheduled driver. The other coverage that is important is Hired and Non-owned. Even if the small-business owner does not have a business auto, this coverage should be added to their general liability insurance.” Small businesses should always have commercial auto insurance to protect their company vehicles that carry employees, products or equipment, says Robert Klinger, LUTCF, CPIA, president, Klinger Insurance Group, and president, AIMS Society. “This coverage will help pay for the repair on their company vehicles after damages from accidents. However, this policy will not cover employees’ vehicles unless you purchase the hired and non-owned auto insurance Rider for either your commercial auto policy or business owner policy. This rider will cover employees driving their own vehicles while running errands for the company.” More and more small businesses are engaging with gig employees to get work done. In some cases, Pennachio says, a business will lay off an employee and immediately hire the person back as a to work on a project or independent-contract basis. The risk comes in because traditional general-liability and auto-liability policies are structured to protect businesses for negligent acts arising from owners and employees. “Insuring agreements specifically dictate who is covered,” Pennachio says. “Gig workers are not covered under the businesses’ policies, so the business must rely on the gig worker to maintain appropriate insurance coverage. This is not an easy task, even when businesses are aware of their risks of not doing so.” TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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How Often Do American Drivers Touch Their Phones? Insurers Know by Kyle Stock, PropertyCasualty360.com The distracted driving report by Zendrive, a traffic-data startup, makes it clearer and clearer each year that millions of Americans can’t stop themselves from talking, texting and livestreaming — yes, even using FaceTime — while driving. The results have been increasingly unsettling, showing that drivers in the U.S. are becoming more likely to use their smartphones more often. The company took the usage data from the tens of millions of cellphones it monitors and combined it with a self-assessment to the same drivers: Are you good at focusing on the road?

Distracted driving is more predictive of an eventual loss claim than virtually any other behavior, including speeding and braking. Those who tend to use cellphones at the wheel have 20% more insurance claims than others in the risk-pool, according to TrueMotion.

The worrying verdict: American drivers have no idea how often they use their phones. The most distracted drivers in Zendrive’s sample gave themselves high marks for paying attention, with roughly one-third of the worst multi-taskers considering themselves “extremely safe.” “It’s just terrifying,” said Zendrive CEO Jonathan Matus. “We’ve built these highly addictive experiences and people can’t help themselves.” Matus should know — he helped design Facebook’s mobile app before launching Zendrive, a service intended to help insurance companies and fleet managers identify bad drivers. Basically, he’s now trying to short-circuit all of the work he did in his previous job to hook us to our phones. Fully autonomous vehicles that will safely subtract humans, leaving us free to focus on our screens, remain a long way out. The laws that prohibit drivers from touching smartphones are patchy and difficult to enforce. In the meantime, safety regulators, insurance companies and technologists have turned to an incremental fix for distraction: monitoring the driver, not the vehicle. The hope is that awareness may just succeed where policies and penalties haven’t.

The data paints a clearer picture Zendrive now has its monitoring technology on 60 million phones, roughly one of every four U.S. drivers. TrueMotion, a rival, is tracking distraction and other driving metrics for eight of the top 20 U.S. auto insurers. A third provider, Cambridge Mobile Telematics, monitors distracted driving for 35 insurers, including State Farm. The reason for all this data is that at least one in five U.S. auto insurance policies now offers a potential discount if the customer consents to a vehicle monitor. Taken together, there’s a very complete picture of the dangerous driving that has led to the 15% surge in annual U.S. traffic fatalities from 2014 to 2016. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Distracted driving is more predictive of an eventual loss claim than virtually any other behavior, including speeding and braking. Those who tend to use cellphones at the wheel have 20% more insurance claims than others in the risk-pool, according to TrueMotion.

Can awareness be enough?

Millennials Worst Offenders When It Comes to Using Cellphones While Driving Auto insurance carriers remain wary of drivers who increasingly use their phones while behind the wheel. Millennials are the worst offenders, according to a new global driving study from Liberty Mutual Insurance. Approximately 86 percent of millennials in the United States said they’ve used a phone previously while driving, even as almost half agree that their phone is a major distraction behind the wheel. About 79 percent of respondents admitted to glancing at an incoming call or text while driving, and 72 percent said they’ve glanced at phone notifications while behind the wheel. Just over half admitted to sending emails or texts while driving. By contrast, 72 percent of U.S. Gen X respondents said they’ve used their phone when driving, as did just under 50 percent of baby boomers. The numbers were also proportionally smaller for Gen X and baby boomer respondents versus millennials for glancing at calls or texts, looking at notifications, sending emails or texts, and using social media apps. Other findings from the study: •

47 percent of millennials admit to driving aggressively compared to 22 percent of baby boomers.

63 percent of millennials also multitask while driving, with added tasks including eating or applying makeup. That compares with 54 percent of Gen X and 37 percent of baby boomers.

Early indicators suggest simple awareness may be an effective antidote. Cambridge Mobile said distraction levels drop by 35% among participants who check their data regularly. Early trials among those using the ConnectedTravel app show a 40% reduction in phone use; four out of five participants check their driving metrics daily. Early results point to market triumph over bad behavior that our lawmakers, police and many advocacy groups have struggled to deter. Underwriters who are best able to identify distracted-driving tendencies are better able to price the accompanying risk. Most insurance companies still only offer discounts for good cellphone behavior, but a growing number are using the findings to raise rates on serial tap-and-swipers. While the proliferation of robot chaperones is encouraging, the data they are collecting is grim. Distraction has increased in every part of the country, despite a rash of new laws intended to curb cellphone use at the wheel. Zendrive said distracted driving levels increased by 10% in the past year. Today, the company considers one in 12 drivers a phone addict — on their phones at least onethird of the time at the wheel — and that measure is climbing fast. At the current rate, one in five will fall into that category within three years.

from CarrierManagement.com TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Just How Clean Is That Driving Record? by Ella Brennan, PropertyCasualty360.com An individual’s driving record is often one of the most important variables in insurers’ rating and underwriting plans. Risky driving behavior is also correlated to a higher frequency of filing a home insurance claim and signals increased mortality rates in life insurance. State Motor Vehicle Reports (MVRs) have traditionally been viewed as the ‘gold standard’ by insurers to verify an individual’s driving record; however, MVRs can be expensive. MVRs may also lack conviction activity, which could be “costly” to insurers in terms of missed premium and unidentified risk. However, combining MVR information with court record data provides a more comprehensive view into a person’s driving record, often filling in the gaps that can be present in MVRs alone. Incorporating court record information into a national driving record solution allows insurers to optimize their expenses, eliminating MVR orders when the driver has no infractions on their record. The MVR is administered through a state agency, often called the Department of Motor Vehicles (DMV). The DMV receives and transcribes violation conviction information from the courts. This transcription process of recording convicted traffic and criminal traffic data is usually automated, but lag times, errors and/or omissions can occur, especially in states where manual processes are used. Louisiana is a notable example, where only 28% of violations that were submitted to the Louisiana Office of Motor Vehicles throughout 2016 were posted by year-end. In addition, MVRs may not include a full history of a person’s driving record. Some states exclude zero or low point tickets, such as low speeding tickets. For example, a person could have multiple DUIs across differing states or counties that will never show, since is treated as a first offense in that particular county. According to TransUnion’s internal research, over half of the guilty DUI convictions found in court records were not on the Texas MVR. MVRs may also exclude convictions related to out-of-state violations — tickets a person receives while driving in a state other than where they live or maintain a driver’s license. In addition, prior state violations, those received and recorded under a prior driver’s license, may also be inconsistently transferred to the new driving record. Although most states participate in some type of violation sharing (e.g., interstate reciprocity rules, including the Driver’s License Compact), not all states participate consistently. According to TransUnion production statistics, out-of-state or prior state tickets comprise a significant percentage of all violations, and when combined with inconsistent sharing between states may mean the insurance industry is not getting the full risk profile of any given driver. During a two-month sampling of TransUnion production transactions, 32% of ratable violations returned were out-of-state. TransUnion’s database contains 6.1 million out-of-state tickets, and some of those are likely not recorded on the resident state MVR. Based on these counts, there may be a potential hidden surcharge of $1 billion from these out-of-state convictions where some interstate reciprocity restrictions exist. Continued on page 38 TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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The Foundation for Top Sales Achievement by John Chapin As the saying goes, “A house is only as strong as its foundation.” It takes a strong foundation to ensure sales success. Following are the six high-achievement ingredients necessary to build that strong foundation.

Ingredient 1 for high achievement: Be in sales for the right reasons. The first thing I look for in a potential new sales rep is people skills. In order to have long-term success and become a top achiever, you must be able to understand and communicate with people while also having a great capacity for empathy. Genuine caring and a desire to serve and help people is a must. In addition, one must also have a burning desire to succeed. A desire to make a lot of money is a good place to start. But it’s also important to know why making a lot of money is important. These reasons should be ones that enhance both the life of the salesperson as well as the lives of those around them and the world as a whole.

Ingredient 2 for high achievement: The right attitude and beliefs. What is your daily attitude like? Do you always see solutions when you face problems? Do you stay positive in the face of all challenges? Looking for the positive side of a situation is a habit, and, like most good habits, it can be developed. I’m not saying you need to have a smile on your face 24/7 and believe issues never arise in life. What I am saying is: Don’t allow yourself to go to the other extreme of complete negativity and get overwhelmed to the point where you can’t act. When you see a tough situation, recognize it, try to find some positives, keep a good attitude, and ultimately resolve the situation as quickly as possible. What is your motivation level? You need to be highly motivated and ready to work as hard as you have to in order to reach the top and remain there. How about self-confidence? To get to the top in selling requires high self-confidence and high self-esteem. Are you a self-starter or do you need someone to give you a push? To get to the top in sales, you must be a self-starter. You must be motivated from within rather than needing someone to keep pushing you or keep you driven to succeed. To get to the top, you must also be a consummate professional and exude integrity—at all times. Finally, do you see yourself as a person who is completely responsible for your life and what happens in it? This kind of responsibility is the cornerstone needed for great achievement.

Ingredient 3 for high achievement: A willingness to pay the price for success. How far are you willing to go in order to be successful? There is a price for success and top salespeople have chosen to pay it. Are you willing to do whatever it takes, ethically, to get to and stay at the top? TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Ingredient 3 for high achievement: A willingness to pay the price for success. How far are you willing to go in order to be successful? There is a price for success and top salespeople have chosen to pay it. Are you willing to do whatever it takes, ethically, to get to and stay at the top?

Ingredient 4 for high achievement: “Hanging out” with the right people. Who do you hang around with and where are they going? You must hang around with successful people who are growing personally and professionally and who support your goals and dreams. Birds of a feather do flock together, and the wrong group of people can drag you down quickly. This doesn’t mean you need to immediately discard your friends and family if they aren’t completely supportive of you. However, as you progress toward your goals, you may find yourself gathering a new, different group of friends and hanging out with certain negative people less often. Let friends and family know the track you’re on and ask them to help or even to join you in the adventure.

Ingredient 5 for high achievement: Good health. How is your health? It isn’t possible to operate at your highest levels both mentally and physically if your health isn’t good. If you are tired, run down, or frequently ill, you will not be motivated, and you will not perform well. You need to get plenty of sleep, eat properly, and exercise on a regular basis in order to be a consistently top salesperson. Good health also includes your overall mental condition. While sleeping, exercising, and eating right will help your mental state, you must also develop the ability to handle stress, unexpected problems, and other similarly negative things that may affect your emotions.

Ingredient 6 for high achievement: A life with balance and growth. While the beginning of your sales career, or a new job, will be heavily weighted toward your career for the first three to five years, you don’t want to go all-in on your career at the expense of everything else. You must still make time for health, the people in your life, and other things that are important to you. Considering you have 168 hours in a week, there is time to spend 70 hours, or more, at work, and still take care of the other Continued on page 36 areas your life. But it’s going

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Need for Speed: Drivers’ Common Excuses by Heather Turner, PropertyCasualty360.com Some drivers like to put the pedal to the metal — so much so that an estimated 41 million Americans will receive a speeding ticket each year, according to Statistic Brain. A recent survey conducted by CarInsurance.com asked 1,000 drivers about their speeding habits including when, why, how often and how much they speed. In addition, researchers asked drivers to reveal the excuses they give to police officers to avoid a speeding ticket. The study found a large gender difference in speeding behavior. Thirty-six percent of the drivers surveyed said they have never been pulled over for speeding. Of those drivers, 71% were female, and 29% were male. In general, most respondents were okay with speeding — but just slightly. More than four-fifths of respondents admitted to driving over the speed limit by as much as 15 mph. But just 3% are truly living in the fast lane; they confessed to driving 30 mph or more over the limit. Drivers had a range of reasons why they were caught speeding, from being late to meet friends to running behind for a concert, event or commitment. The most uncommon excuse — used by just 1% of respondents — was “bringing home hot food and didn’t want it to get cold.” By giving an excuse, 50% of drivers surveyed successfully avoided a speeding ticket. What are the most common excuses drivers give to get out of a speeding ticket?

9% told the police officer that they had a bathroom emergency. 11% said they didn’t see the speed limit sign. 11% told the officer they had a medical emergency. 11% said they were running late to drop-off or pick up a child. 14% said they were driving the same speed as everyone else. 18% claimed they were running late for work. 24% said they didn’t realize they were speeding. Continued from “The Foundation for Top Sales Achievement”, page 35

spend 70 hours, or more, at work, and still take care of the other areas of your life. But it’s going to require that you be a master of your time. For short periods, you can devote an inordinate amount of time to one area of your life and neglect the others. However, if you do that for too long, your attitude will suffer tremendously, along with your health and relationships. You may not get to each area every day, but in the course of a week, be sure each area of your life is getting its share of attention. Finally, you must be passionate about what you are doing, and you must always be growing personally and professionally. The six ingredients above are necessary for consistent, long-term top performance. If you don’t have these six essential ingredients in place, you will face some daunting challenges. The good news is that all of these ingredients can be learned. Granted, few of them are mastered easily if you haven’t already developed them. However, if you are truly committed to becoming a top salesperson, you can develop them. There is always hope. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Email: Friend or Foe to Insurance Agencies? by Curtis M. Pearsall, CPCU, AIAF, CPIA President – Pearsall Associates, Inc. and Consultant to the Utica National E&O Program Email was first created in 1971, but it didn’t start to play a big role in people’s lives until the 90s. It has contributed to our level of communication becoming more written and less verbal. Many years ago, the sound of phones ringing and staff talking on the phone were extremely common in insurance agencies. Nowadays, agencies are quieter as email communication has become more the norm. From an insurance agency perspective, has this been a good thing? Generally, the answer to that question is probably, “Yes.” Email has created the ability for agencies to communicate with their various customers (clients, insurance carriers, wholesalers, etc.) in a fairly efficient manner. Pre email, for an agency to bind coverage, to secure information, or to get updates on a client’s exposures, agency staff had to either pick up the phone and hope they would get the party they desired or use regular mail, which had its advantages and drawbacks. Today, email has largely replaced both of these approaches. A typical question from many agency’s staff, especially on matters dealing with an errors and omissions (E&O) claim, deals with the issue of whether email is an acceptable and legal form of communication. The question is whether the email is clear, whether the recipient consented to receive email communications, and whether the email was received. With respect to the latter issue, emails can get deleted or caught in the recipient’s spam filters. Approaches to address the acceptability of emails include written certification from a customer that you can communicate by email and to which address, and written acknowledgment that the recipient received the email. Some agencies use an approach that requests the recipient send back an email stating something to the effect of, “I got your email.” What about the issue of the client sending the agency an email requesting the binding of coverage? Can the client presume that by sending the agency an email that the coverage is, in fact, bound? Let’s look at an actual claim and give consideration to any lessons to be learned. This claim arose out of a hit-and-run involving a minor child. The client allegedly sent an email to the agency to add a vehicle to their auto policy. The email got caught in the agency’s spam filter and thus the agency never saw the email. As a result, no coverage was bound for the additional vehicle. The customer never followed up with the agency until after the accident, several months later. It is not clear why the client didn’t contact the agency especially when a revised declaration page and premium should have been anticipated. It appears that they presumed that by contacting the agency (via email), coverage was technically bound. What could the agency have done better? While it is certainly much more common that agencies include on their voicemail greetings a statement such as, “Please note, coverage cannot be bound or amended without written verification by an agency representative,” it would be advisable for agencies to include something similar on their emails. Including the voicemail statement as part of the signature line on their emails, would make it very clear to clients that they cannot simply send an email on some change in coverage and expect that the coverage has been bound. This is a form of client accountability. It would be wise for the agency to advise clients (for all existing clients and then especially on all new business) the various “do’s and don’ts” on communicating with the agency in the form of an engagement letter. When an E&O claim occurs, the defense of the agency could be potentially impacted by taking steps to ensure clients understand the rules of engagement, especially when it comes to matters involving email. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Continued from “Americans Like Driving”, page 17

“Getting vehicle owners to actually experience how good these systems truly are would have a tremendous impact on changing consumer perception relative to autonomous [driving],” Markusic says. “Meanwhile, only 30% of new car buyers in the U.S. have a positive opinion of the autonomous mode feature and only 25% would consider the feature in their next vehicle.” The study revealed drivers would be interested in certain connected car features today. In a list of 16, the top-rated selection was the accident avoidance feature. This would automatically apply the brakes and steer a vehicle away from obstacles in an accident. The study also uncovered a strong correlation between interest in a feature and willingness to pay for it. As automakers continue to invest in technology, they might consider directing more money and attention toward marketing and education, so consumers actually understand how to use the features the vehicles of today already have. Continued from “Just How Clean Is That Driving Record?”, page 33

Since MVRs are expensive and can be incomplete, many insurers are turning to a comprehensive solution that includes court records and MVRs. As the pre-cursor to information that flows to the DMV, a database of court records can overcome many of the sharing restrictions and exclusions that may exist with the DMV record. Not all systems are equal but with advanced matching capabilities, and where court records are available, insurers can have access to advanced solutions that provide the ability to identify violations for drivers, despite changes to their name, address or driver’s license number. Through a more comprehensive view of a driving record, insurers can improve pricing precision and risk selection, while consumers with truly ‘clean’ driving records can benefit in the form of lower insurance premiums.

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Texas News Round-Up Widespread Damage, Five Deaths in Texas Linked to Imelda The widespread damage brought to the Houston area by one of the wettest tropical cyclones in U.S. history came into broader view as floodwaters receded to reveal the exhausting cleanup effort that lies ahead for many communities and homeowners....more RCV, ACV Policy Changes Are Coming, Texas Windstorm Insurer Says The Texas Windstorm Insurance Association is alerting agents about an important, upcoming change to the policy conditions that determine how covered losses are settled....more Texas Insurance Department’s New Division to Focus on Health Market The Texas Department of Insurance has created a new division to focus exclusively on the complex issues facing health insurance and selected Richard Lunsford as the deputy commissioner of the new Life and Health Division.…more Texas Seeks Comments on Proposed Rules for Surprise Medical Bill Law The Texas Department of Insurance is accepting comments on proposed rules to implement Senate Bill 1264, which protects consumers who have state-regulated health plans from surprise medical bills in certain situations. The proposed rules establish procedures for the mediation and arbitration programs authorized by the legislation.…more Texas Mutual Pays $623.3K Dividend to Lone Star Auto Dealers Safety Group Workers’ compensation insurer, Texas Mutual Insurance Co., has awarded a dividend of $623,341 to the Lone Star Auto Dealers Association (LSADA) Safety Group, which includes franchised auto, truck, RV, boat and motorcycle dealerships....more

Texas Auto Insurer of Last Resort Files for Rate Increases The Texas Department of Insurance has extended the period in which recent rate increase request by the Texas Automobile Insurance Plan Association (TAIPA) may be approved....more Man Convicted of Workers’ Comp Fraud Must Repay $7.2K to Texas Mutual Texas Mutual Insurance Co. reported that a Travis County district court sentenced Ramon S. Flores of Kingwood on workers’ compensation fraud-related charges....more Officials: Half of Texas Local Governments Hit by Ransomware Have Recovered Texas authorities say they aren’t aware of any money paid to hackers who used ransomware to target more than 20 communities last month....more Texas Again Has the Most People Without Health Insurance The rate of Texans without health insurance rose for the second year in a row, making it once again the most uninsured state in the nation, according to data released Tuesday by the U.S. Census Bureau....more Texas Insurance Department Wants to Know: What Rules Need Changing? The Texas Department of Insurance announced earlier this year it would begin collecting input from stakeholders on specific agency rules that appear to be problematic. The agency said the process is part of its plan to modernize and improve all aspects of the department....more Walmart Sued by Couple Wounded in El Paso Mass Shooting A couple wounded in the Aug. 3 mass shooting at a Walmart in El Paso, Texas, has sued the retailer, claiming the store lacked proper security, in what their lawyers called the first lawsuit over the attack….more Do you have news to share? Email vicki@piatx.org with your story.

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Profile for Texas Professional Insurance Agents

Texas Connection October 2019  

Texas Connection October 2019  

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