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  • Don't Be a Babysitter

    Feb 06, 2020
    By Richard F. Lund, J.D.,
    VP, Sr. Underwriter, Swiss Re Corporate Solutions

    I recently received a question from a Swiss Re Corporate Solutions/Westport Insurance Corporation policy holder: "Are there any real-world claim examples of agents being held liable when they establish a habit of contacting clients when a Notice of Cancellation (NOC) is issued on a direct bill policy; but then they forget and the policy gets cancelled, and the client has a claim, aka babysitting.

    Such claims have been happening for at least the 27 years I have been with the firm although we have advised agencies not do so. I can safely say that this subject comes up at virtually every E&O risk management course I have ever taught or attended, and I regularly saw this type of claim when I was in the claims department. Just to be current, I contacted our claims department team leaders and within 5 minutes Jim Redeker found two recent examples where we paid substantial losses. Both were carrier direct bill policies.

    Jim's initial response was this:

    "Every time a policy cancels for nonpayment of premium and there is a loss, the argument is made that the agent should have done something. In most cases we simply state that the customer received the same notices that our insured received, and our insured has no duty to notify its customer of an impending policy cancellation. We have trouble when the agent failed to notify the customer that the policy was about to be cancelled for nonpayment of premium after the agent has made a practice of providing such notifications in the past. At that point the agency customer has an argument that they relied on our insured to notify them when their premium was due."

    In most cases the agent never had a legal duty to contact the customer, but because they had created an expectation that they would do so, the duty was now in place. And because of that, if they failed to do so they had breached their duty to the customer. If a loss occurred the agent could be held liable.

    Example 1: "The customer alleged that on May 25 the agency mailed notice of policy expiration to the wrong address and unbeknownst to the customer the policy was cancelled. The customer alleged that no one at the agency contacted them to advise the policy would be cancelled.

    The Agency would mail cancellation notices to customer who would then pay. They would wait for the notice from the agency disregarding the notice mailed to them by the carrier. In this case, the agency mailed the cancellation notice to the wrong address, so the customer never paid the bill. There was then a claim made by the customer on the cancelled policy that was denied by the carrier. $101,242 loss paid by Swiss Re Corporate Solutions/Westport on behalf of the insured."

    Example 2: "Mr. (Customer) is claiming that the agency developed a practice and procedure of personally collecting premium payments from Mr. (Customer) but failed to do so in this instance. The agency had a change in staff and was not aware of the previous practice, so the payment was not collected from the customer. The policy cancelled and there was a loss. The carrier denied coverage as the policy had rightfully been cancelled due to non-payment of premium. We paid a total of $204,837 on a death claim for a cancelled auto policy."

    These are just two of many examples where an agency developed a duty that they would not otherwise have resulting in substantial claim against the agency. The lesson for you as young agents (and not so young gents as well,) is simple: on direct bill policies where a Notice of Cancellation has been sent to the customer, DO NOT babysit your customers to make sure they pay the bill on time. HOWEVER, you should contact them immediately after the date of cancellation to see if they want you to try to obtain a new policy.

    Helpful Resources
    The experts on the IIAT Advantage E&O staff can answer all your E&O questions. Give them a call at 800.880.7428. As a member of the Big "I" and IIAT, you have access to the "Virtual University" resourcves.  Below are just a few of the resources available to you that address the issues discussed in this article.

    NOTE: You must use your Big "I" log-in, not your IIAT one, to view these resources. Don't know your log-in/password? Retrieve it here.

     



    This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group ("Swiss Re") and/or its subsidiaries and/or management and/or shareholders. *Richard F. Lund, JD, is a Vice President and Senior Underwriter of Swiss Re Corporate Solutions, underwriting insurance agents errors and omissions coverage. He has also been an insurance agents E&O claims counsel and has written and presented numerous E&O risk management/ loss control seminars, mock trials and articles nationwide since 1992. 
  • Congrats to the Class of 2019 opX Graduates

    Feb 05, 2020

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    Congratulations to the 2019 opX graduates! The class of 12 agents was honored on Monday, Jan. 27, at the Joe Vincent Management Seminar. Now in its third year, the opX Master Agency is a comprehensive professional and leadership development certification program that introduces innovative tools and strategies to build your business and enhance team productivity. The program is comprised of a blend of group sessions and activities, as well as individualized executive coaching and staff workshops. 

    Congrats to the 2019 graduates!

    • Jacob Eisenrich, Weatherby-Eisenrich
    • Eric Bua, Weatherby-Eisenrich
    • Ashley Cordle, Elliott Insurance
    • Sonya Edwards, Bryan Insurance Agency
    • Kyle Beggs, RCI Insurance
    • Lindsey Mitschke, The Nitsche Group
    • Brian Archer, Southern Quality Insurance Group
    • Chris Campbell, Ag-Pro Insurance Services, LLC
    • Mike Karageorge, SWBC Insurance Services, Inc.
    • Cari Senefsky, IIAT Insurance Agency
    • Mark Bridges, INSURICA
    • Dana Mickey, Frost Insurance Agency, Inc.
                Sponsored by
                   

    Interested in opX? The next session starts Feb. 17, 2020.
    Get more info.

    “OPx has been transformational for our organization by helping us ensure each team member is in the right role and by teaching us to intentionally build our culture. We now have the best team we've had in years, and each person is functioning in their sweet spot. Consequently, we're achieving our goals more effectively and with greater ease. Marit and the OPx curriculum has been a catalyst moving us toward a brighter future.”

    Jacob Eisenrich, MD
    Vice President | Weatherby-Eisenrich, Inc. 

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  • How to Get Started with Workers' Comp and What You Can Expect

    Jan 31, 2020

    When a workplace injury occurs, workers' compensation coverage ensures that your client's business and their employees are protected. There are many benefits that come with workers' comp coverage so it's important as an agent to know how to answer your client's most common questions about what they can expect.

    • How much does a workers' comp insurance policy cost?
    • How do I buy workers' comp?
    • What should I look for when I'm buying workers' comp?
    • How does it work?
    • What are the benefits of choosing Texas Mutual?

    To help you get started, this article covers the cost of workers’ comp, how you can purchase coverage and what you can expect with Texas Mutual.

      This is the second article in Texas Mutual's workers’ comp basics series. Read part one to learn what every business should know about workers’ comp

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    • Ask Regina: I have been told by an attorney that Uninsured Motorist selection forms are not required in Texas. Is that true?

      Jan 21, 2020

      A. In Texas, Uninsured Motorists coverage must be provided on every policy unless the insured rejects it in writing. The rejection applies to all subsequent renewals with the same company. The code also says that limits must be offered in amounts desired by the insured but not greater than the Bodily injury and Property Damage limits on the policy. The attorney is technically correct – the company only has the obligation to get a written rejection signed, not a selection form. Most carriers require a signed selection form because without one they have no documentation proving the insured wanted limits less than the full UM limits.  

    • Reinventing Retirement in the Insurance Industry

      Jan 14, 2020

      Baby boomers (born roughly between 1946-1964) are exiting the workforce in droves — as 10,000 of them turn 65 every day. But many employers aren’t yet prepared to replace them, resulting in a growing talent gap.

      Industries like insurance are particularly vulnerable because boomers are retiring at the same time there’s a shortage of millennials entering the industry. This shifting dynamic has become a hot topic — one that is shining a light on boomer retirement and its impact on businesses and the economy.

      These days, nothing about retirement is predictable. According to a recent article in theWahve_logo Chicago Tribune, the changing nature of retirement presents employers with three core challenges:

      1. It’s hard to plan when baby boomers will retire. Boomer retirement dates are constantly changing. Some boomers retire early, and some retire late. In general, though, retirees are living longer and retiring later
      2. It’s difficult to know what retirement looks like. As stated in the article, nobody has a clear definition of what ‘retirement’ means these days since it’s no longer “a magic moment when you stop working entirely.” Retirement (or pretirement) today might include in-home offices, communal workspaces, flexible hours and video-meetings. Work arrangements become less tied to geography and 40-hour weeks, and more attuned to where and when employees work most efficiently for their employers’ purposes. As retirement’s chronological age is redefined, the physical factors influencing remote work and flexible hours will redefine retirement as well. 
      3. It’s hard to figure out how to replace boomers, especially in certain industries like insurance, which are staffed by fewer young professionals than many other sectors. The insurance industry has an abundance of qualified, sharp, motivated and experienced professionals who are prepared to continue working as they approach and reshape the landscape of retirement. While they are virtually irreplaceable, our wisest move is to employ them, honor their work-life balance needs, and continue to innovate as insurance firms that are prepared to serve clients with engaged, experienced employees.

      Due to this uncertainty about the when, what and how of retirementmany businesses are adopting flexible work models that delay the when in its entirety and stave off the immediate how of replacing veteran workers. As mentioned in the Tribune, “the share of companies offering older workers partial-year employment and shorter hours is expected to rise sharply. About two in five companies surveyed are considering offering part-time work or flexible hours by 2020, nearly double the current rate.”

      This approach benefits both employers and baby boomers. Boomers who want or need to work can keep working while enjoying a flexible schedule. Employers get to keep their experienced workers while opening space for up-and-coming younger employees. 

      It’s time to build smart, flexible, mutually beneficial solutions that pair talented veteran insurance professionals with insurance companies who need their skills. Veteran workers boost company culture with knowledge, motivation and experience. They benefit from being able to contribute economically and professionally while gradually shifting into fewer working hours. Companies retain top talent while maintaining a diverse workforce that meets their clients’ needs.

      Retirement certainly isn’t cut and dry like it once was, but our life expectancy and economic landscape are not what they once were, either. As people live longer and need to work longer, retirement deserves a revamped definition — one that honors pretirees’ goals and needs and keeps our businesses growing, as we leverage our industry’s most experienced talent. 

      About the Author

      Sharon Emek, Ph.D., CIC, is the founder and CEO of Work At Home Vintage Experts (WAHVE). WAHVE is an innovative contract talent solution that matches retiring, experienced career professionals with a company’s talent needs. WAHVE bridges the gap between an employer’s need for highly skilled professional talent and seasoned professionals desiring to extend their career working from home. From screening to placement, WAHVE is a comprehensive solution to qualifying, hiring, and managing experienced remote talent. Opinions expressed here are the author’s own. 

    • Why Agencies Need to Promote Opportunities for Young People

      Jan 09, 2020

      All of the economic data suggests that the economy is going great and we are nearly at full employment. At the same time, there is anecdotal evidence that the current generation of young workers will not end up as wealthy as the previous generation. Why is this the case?

      While job opportunities are plenty, the quality of employment in the white-collar sector—other than for graduates of the best business schools—appears to be weak. The opportunities for young employees to work toward earning a six-figure income are very limited, except in the insurance agency and brokerage space—and few people are aware of this.

      Clearly, there is a perception problem that the insurance distribution industry has yet to overcome. In my view, it’s because the insurance brokerage industry doesn’t do a good job of promoting itself to young workers.

      I think back to my experience as a college senior seeking employment where all the on-campus interviews in the insurance industry were for jobs selling life insurance. For many young adults, it is still the case, and there is the perception that the readily available positions are only in this unappealing segment.

      Two other thoughts come to mind from my youth. The first is the memory of a “debit man” coming to our door to collect money from my grandmother for her life insurance policy. The second is a scene from a Woody Allen movie where a prisoner, who did not behave while incarcerated, had to spend time in solitary confinement with a life insurance salesperson, truly a grave punishment.

      Many years later, I discovered that the property-casualty brokerage space is markedly different than the life insurance space, and the property-casualty field is full of young people who are engaged in the industry, often because of a family connection.

      In p-c, I’ve met more “juniors” and “thirds” carrying their family name than I can count. All of them affirmed that while an insurance career is usually off the radar screen for most college students, they were grateful to be in a career that provided a good lifestyle with the flexibility and autonomy provided by a healthy income.

      Oh, and by the way, there are ownership opportunities, the income is recurring and the product being distributed is a necessity and practically recession-proof—not too shabby! The positive attributes of the insurance brokerage field are almost too numerous to mention, but it appears that they are not being mentioned, even a little.

      The industry needs to do a better job of communicating these opportunities to young, career-seeking adults. Agency principals can’t just rely on family to both populate and perpetuate their agencies.

      Owners need to reach out to the local college or business school, start internship programs, connect with leadership in insurance-specific college fraternities and simply let younger folks know that their dreams and aspirations may be more attainable with a career in insurance.

      About the Author
      Robert Pettinicchi is the executive vice president and chief lending officer for InsurBanc. A division of Connecticut Community Bank, N.A., InsurBanc is a community-focused commercial bank specializing in products and services for independent insurance agencies.



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      IIAT insurance recruiting specialist partner Questpro can help you hire, train and retain the next generation of insurance professionals. 
      Learn More.

    • Don't Miss the Drama at the Joe Vincent Management Seminar!

      Jan 09, 2020
      The Joe Vincent Management Seminar is coming up, Jan. 26-28, in Austin! The seminar will kick off with an E&O mock trial, "Bushwood Country Club vs. Noonan's No Risk Insurance Agency,"  based on characters from the comedy classic Caddyshack. The trial will feature real attorneys and audience members will be the jury. While the characters are fictional, the facts and circumstances are based on real errors and omissions claims that have been made against Swiss Re Corporate Solutions policy holders. 

      CE and Risk Management Credits
      The trial is approved for 2 CE credits. If you're a Swiss Re or Allianz E&O policyholder, attending the Mock Trial counts towards 2 hours of your required 3-hour risk management credit.

      Get More Info & Register for the Joe Vincent Management Seminar

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    • Limits Lie: How to Choose Your Agency's Errors & Omissions Limit

      Jan 09, 2020

      Three days. That's how long the driver had been working for his new employer, a trucking company. His truck was solid—no mechanical issues at all.  Unfortunately, you could not say the same for the trucker. He had been on the road since 5 a.m., so when he came to a highway slowdown at 7 p.m. due to construction and a work lane closure, the driver was slow to react.

      He struck the rear of a Toyota Prius at an estimated 78-82 m.p.h. which set off a chain reaction that included seven other vehicles holding a total of eighteen occupants. One of the vehicles caught fire, killing its driver and three passengers. Two more people were killed and four were injured.

      The accident happened due to driver fatigue and methamphetamine use, according to the National Transportation Safety Board, which included the failure of the pre-employment screening process—the driver had four wrecks in the preceding three years—as a contributing factor.

      The trucking company had just $1-million limits to address this claim, while the insurance agency, which allegedly had assumed responsibility for screening drivers, had $5 million in coverage both per claim and in the aggregate—to defend the resulting E&O claim. 

      The initial demand from all parties totaled more than $150 million. That begs the question: Was $1 million enough coverage for the trucking company? Was $5 million enough for the insurance agency that placed that policy?

      The answer to the latter depends on the nature of the customer. The more valuable the property where coverage is placed and the higher the potential liabilities faced by an auto or commercial general liability customer, the larger the potential for an excess of limits E&O loss.

      Large claims happen more than you realize, and yet, they are only part of the story. With a $5-million aggregate limit in place, most insureds believe they are unlikely to be overcome by a series of small, unrelated claims in a single policy period. There is some truth to that but some peril, as well.

      A significant scenario leading to an uncovered excess exposure is a series of claims stemming from a single catastrophic event. When Hurricane Harvey struck the Houston area, an estimated 1 million cars and trucks were destroyed. When an agency places a significant quantity of homeowners, auto or trucking coverage in the path of a storm, they could see a lot of claims for missing or inadequate coverage and failure to recommend adequate flood/wind coverage.

      With these considerations in mind, a thorough analysis of your E&O limits should consider:

      • The policy limits in place for your largest customers because, if missing, those limits may define the damage model in your E&O claim.
      • The nature of the customer’s business, such as industrial, trucking, manufacturing and larger companies that incorporate your customer's products and services into their larger exposure.
      • The number of insureds located in close proximity to each other, which can set up the potential for multiple catastrophe-related losses, creating a serious aggregate loss exposure.
      • And, most importantly, the agency’s risk appetite in the face of these perils.

      You may have been lucky this year. The big claims and big storms may have passed you by, so your current limits may have been adequate. Then again, is 'may be' good enough for you, or is it time for a second look?

      About the Author
      Matthew Davis is a vice president and claims manager at Swiss Re Corporate Solutions, working out of the office in Kansas City, Missouri.
       Insurance products underwritten by Westport Insurance Corporation, Kansas City, Missouri, a member of Swiss Re Corporate Solutions.


      IIAT Advantage E&O Has the Coverage for You!

      Your agency E&O coverage needs to match your type of operation. IIAT Advantage E&O  has a program that will fit! 

      IIAT is one of the longest-standing providers of Agency E&O coverage in Texas with strategic carrier partnerships specifically designed with the needs of Texas agents in mind. This means, you have options. 

      Exclusive access to carriers like Swiss Re/Westport and Allianz (formerly known as Fireman’s Fund Insurance) give us a competitive edge. Additional access to both Admitted and Non-Admitted markets allows us the freedom to advocate for you with a variety of carriers and to customize coverages as necessary. 

      We are stable, established, competitive, and have the top claims team available.

      Let IIAT Advantage E&O Advocate for You! Email IIAT Advantage E&O or call 512.493.2431 today! 

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    • Save on Marketing and Branding with the Trusted Choice Marketing Reimbursement Program

      Jan 09, 2020

      IIAT members can receive reimbursement funds for cobranding their marketing materials with the Trusted Choice® logo, purchasing a website through Web.com or signing up for an Advantage subscription. The Trusted Choice® Marketing Reimbursement Program (MRP) was created to ease the financial burden of branding efforts for independent insurance agents.

      With the MRP program, agents can receive reimbursement funds for cobranding their marketing materials with the Trusted Choice® logo, purchasing a new website throughthe Big "I'"s partnership with Web.com or signing up for an Advantage subscription.

      Starting in January, the program will be structured with the following reimbursement tiers:

      • Tier 1: Agencies receive up to $750 for using the Trusted Choice logo on any consumer-focused items, including but not limited to advertising, promotional items, store signage and collateral items, such as business cards or stationery. Each agency location may receive reimbursement for 50% of costs with a lifetime maximum reimbursement of $750.   
      • Tier 2: Agencies receive a $500 reimbursement for creating a new website through Web.com, which covers the full cost of set-up fees and the first month of service.
      • Tier 3:  Upgrade your agency listing on trustedchoice.com for 3 months and receive reimbursement for 50% of the costs up to $250. Only valid for those who have not had an Advantage subscription on trustedchoice.com in at least 2 years.

      To complete the MRP application or for more information, visit Trusted Choice agent resources or email Ambrie Jones.

    • IIAT Endorses Scottish American as Market Resource for Independent Agents

      Jan 09, 2020
      # Scottish American logo LION CTR v20131231kv (char spac exp 3 pt, 60pt font)IIAT is pleased to endorse Scottish American as an IIAT Advantage market resource for members seeking markets for carriers they can not access on their own. Scottish Americanhas access to both traditional Excess and Surplus Lines coverages as well as several special programs for targeted industries.
       
      Two years ago, IIAT transitioned the management of its LevelFirst MGA to Scottish American in order to increase market availability, improve levels of service, and gain access to new technologies.
       
      IIAT has been pleased with the transition and, effective Jan. 1, 2020, Scottish American has acquired the LevelFirst book of business. Scottish American will continue servicing IIAT members’ LevelFirst policies moving forward. As a LevelFirst producer, you will continue with the same producer code as originally provided with no changes.
       
      “Scottish American is a great resource and we want to continue a relationship with them that will be beneficial to IIAT members,” said IIAT President and Executive Director Marit Peters.

      For additional information, please contact Marit Peters, mpete@iiat.org, or 512.476.6281.
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