primary agent - october 2009 - pa edition

PENNSYLVANIA

ALSO INTHISISSUE________________How E&O prevention canincrease sales

Coverage checklists

7 voice mail tips to avoidE&O claims

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Gaps that sell: How E&O prevention can increase salesChecklists can go beyond protecting an agency’s bottom line from an E&Oclaim. They might just pad it, too. Read on for ways to turn coverage gapsinto sales.

Page 12

Coverage checklists and E&OTo use checklists, or not to use checklists: That is the question. Here, ChrisBurand makes his case, touting the E&O claim prevention that checklistscan supply.

Page 18

7 voice mail tips to avoid E&O claimsModern technology provides a slew of advantages for keeping the lines ofcommunication open between agents and clients, but it comes along withE&O exposures, too.

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ContentsP R I M A R Y A G E N T M A G A Z I N E

Copyright 2009. All rights reserved. No material may be reproduced in whole or in part without written consentof the publisher. The information in this publication is general in nature and is not intended to serve as legal, accounting, financial,insurance, investment advisory or other professional advice as to any reader’s particular situation. Users are encouraged to consult withcompetent legal, financial, insurance, investment advisory and or other professional advisors concerning specific matters before makingany decisions and we disclaim any responsibility for any decisions or actions by readers. Statements of fact and opinion in PrimaryAgent are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the IA&B.Participation in IA&B events, activities and/or publications is available on a non-discriminatory basis and does not reflect IA&Bendorsement of the products and/or services.

Subscriptions:Non-member price: $2.25 per copy or $15 per year.

All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two monthsprior to publication. Advertising rates furnished upon request.

Address inquiries to:Primary Agent EditorPO Box 2023Mechanicsburg, PA 17055-0763Phone (800) 998-9644 or (717) 795-9100Fax (717) 795-8347

Periodical postage paid at Mechanicsburg, Pa. and additional entry post office.

Postmaster: Send address changes to above address.Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2009-10) is published monthly by IA&B Service Group Inc.,a subsidiary of IA&B.

4 Chairwoman of the Board’s Message5 Glance at Events6 State News7 New Members8 Preventing Errors & Omissions10 Coverage Corner

11 Member FAQ25 IA&B Partners24 Technology Update27 Advertisers Index27 Classified Ads

In every issue

Mission StatementPrimary Agent delivers ideas to helpInsurance Agents & Brokers’ membersnegotiate their unique position asguardians of trust between insuranceconsumers and companies whilefacing the challenges of maintaininga small business. Primary Agentalso supports IA&B’s mission topreserve and advocate the AmericanAgency System.

generalcasualty.com

General Casualty is a registered service mark of General Casualty Company of Wisconsin.QBE and the links logo are registered service marks of QBE Insurance Group Limited.All coverages underwritten by member companies of QBE. © 2009 QBE Holdings, Inc.

GLOBAL SOLUTIONSMEETLOCAL SUPPORT.

We’re General Casualty®.

We’re the regional insurer you already know, always there

to help independent agents with expert field support that

understands local needs. Now that support is stronger

than ever—because we’re stronger than ever. General

Casualty has joined QBE®, providing local hands with the

international reach needed to solve even your most

complex challenges.

We are now QBE Americas Division.

And we’re working for you.

OfficersKathleen M. Glattly, ChFC, CLU, CPCU

ChairwomanFactoryville, Pa.

David Rosenkilde, CICVice ChairmanReisterstown, Md.

Robert J. “Buc” Cawley, AAIImmediate Past ChairmanWexford, Pa.

MembersNorman F. Basso, CPCU

York, Pa.

Vincent D. “Chip” Boylan Jr., CPCURockville, Md.

Timothy P. BurrisThompsontown, Pa.

M. Scott Clemens, CIC, CPCU, CLU, ChFCSouderton, Pa.

John T. “Chip” Colwell Jr., CICCorry, Pa.

Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-PWest Chester, Pa.

Linda A. McCann, AAI, CPCU, CPIWSalisbury, Md.

Michael F. McGroarty Sr.Pittsburgh, Pa.

Scott C. Rogers, CPIAYork, Pa.

Susan A. Sallada, CIC**Ft. Washington, Pa.

William D. Schneider, CPCU, ARM*Pittsburgh, Pa.

Robert A. Walbeck, CICHomer City, Pa.

David B. Wasson Sr., CICState College, Pa.

James M. Watkins*Dover, Del.

King W. “Kip” White, LUTCFFallston, Md.

John S. Yasik, CICNewark, Del.

* IIABA National Director** PIA National Director

Board ofDirectors

The fright of E&O

ERRORS AND OMISSIONS. Did that send chills downyour spine?

In the midst of your hectic schedule, the fear of an E&O suitlikely lurks in the back of your mind. It nags the best of us.And it should because we’re all vulnerable.

The topic, of course, goes beyond covering your agency. It’sa dynamic subject, which is why we’ve dedicated this issueof Primary Agent magazine to the many facets of E&O.

In addition to the monthly E&O column (the Octoberinstallment unveils the dangers when clients reducecoverage, which coincides with these challenging economictimes), you’ll find two feature articles about checklists, onetouting their use as E&O claim prevention, the other assales tools. Finally, we’ve included voice mail-related E&Oprevention tips, as well as a list of relevant seminars, onpage 23.

So when the fear of E&O haunts you, take heart. IA&B isthere to support its members – with coverage solutions froma choice of quality markets and resources like the ones inthis magazine and on iabgroup.com.

Until next month,Kathleen

[ 4 ]

Kathleen GlattlyCPCU, CLU, ChFC, AIM

ChairwomanO F T H E B O A R D ’ S M E S S A G E

Glance at EventsDate Topic Location

1 CISR—Personal Residential course Pittsburgh, Pa.

6 Best Practices of E&O Loss Control seminar Allentown, Pa.

Mistakes That Lead to E&O Claims seminar Erie, Pa.

6-8 P&C Licensing Study Course Mechanicsburg, Pa.

CPIA—Insurance Success Seminars Philadelphia, Pa.

13 CISR—Personal Residential course Baltimore, Md.

14 Compliance Pitfalls seminar Allentown, Pa.

CISR—Personal Residential course Lancaster, Pa.

Coordinating Coverages Under the Company’s andthe Employee’s Auto Policies seminar Pittsburgh, Pa.

15 CISR—Agency Operations course Philadelphia, Pa.

20 CISR—Agency Operations course Salisbury, Md.

21 Dynamics of Service Philadelphia, Pa.

21-23 CIC—Commercial Casualty institute Allentown, Pa.

22 Dynamics of Service Mechanicsburg, Pa.

27 CISR—Agency Operations course Frederick, Md.

CISR—Personal Residential course Mechanicsburg, Pa.

28 CISR—Personal Residential course Reading, Pa.

29 CISR—Personal Residential course Newark, Del.

Don’t wait for a CISR course to come to you — access it fromyour desktop! CISR OnLine is an excellent way to complete acourse you need that may not be scheduled in your area in thetimeframe you need it. You can also mix and match theCISR OnLine course with classroom courses so you can stillmaximize the benefit of networking and face time with the instructor.Register for courses online at iabgroup.com.

O C T O B E R C A L E N D A R

[ 5 ]

State NewsPrimary Agent | October 2009

[ 6 ]

Pennsylvania PublicAffairs Committee:Guiding LegislativeAgendas for Agents

Ever wonder where IA&B gets directionfor its legislative priorities and strategyfor building an effective political actioncommittee?

The Public Affairs Committee, comprisedof volunteer member agents, providesguidance to both IA&B governmentaffairs staff and the Board of Directorson state and federal legislation,regulation, and AgentPAC — the politicalarm of IA&B. Led by a committeechairperson, the composition of thecommittee aims to represent allgeographical areas of Pennsylvania andinclude agents with a variety ofspecialties and backgrounds.

Meeting several times per year, thePublic Affairs Committee has recentlytackled issues including the introductionof a bill to provide workers’compensation coverage to partnersof a partnership or members of an LLC,working to increase minimum auto limitsin the state, and seeking a fix to thesurplus lines tri-declination affidavit.

The Committee is slated to meet onemore time in 2009 in order to morefirmly establish goals and priorities forwhen the state General Assemblyreconvenes in Harrisburg in January of2010 for the second half of its two-yearlegislative calendar.

Have an interest in legislative, regulatory,or political matters? Consider becomingpart of Pennsylvania’s Public AffairsCommittee by contacting IA&B’sMember Service Center toll free at(800) 998-9644, option 0, or bye-mailing [email protected].

AgentPAC update:where we stand for 2009 With warm summer days now feelinglong gone and crisp autumn air,pumpkins, and changing leaves nowthe norm, AgentPAC, the political actioncommittee for Insurance Agents andBrokers of Pennsylvania, is evaluatingits finances for the year to date.

So where does AgentPAC stand inrelation to its goal? The answer isnot encouraging.

Specifically, our 2009 fundraisinggoal is $35,000. To date, receipts toAgentPAC total $21,000. Contributionsare well behind where they needto be, and we have only attained60 percent of our goal.

The numbers paint a clear picture:without your support we will notsucceed in our mission to makeAgentPAC a stronger, more effectivevoice for independent agents inHarrisburg. Your AgentPAC contributiongives IA&B political clout in thelegislature, helping to produceresults on issues that matter to theagent community.

Can you make a commitment to helpus reach our goal? IA&B MemberService Center representatives can takeyour contribution by phone when youcall (800) 998-9644, option 0.

Every contribution brings us closerto achieving 100 percent of our goal.Simply put, your support is needednow and is critical to our successin Harrisburg.

FloodSmart:October ratechangesThe National Flood Insurance Program(NFIP) announced several changes,including to rates for policyholders inall risk areas, effective Oct. 1.

Producers should take note, as theircustomers are receiving their 60-dayrenewal notices and may find changesto their premiums and deductibles.The revised Flood Insurance Manualis available online at www.fema.gov/business/nfip/manual200910.shtm.

In addition, IA&B is offering a floodwebinar, Understanding FloodInsurance, on October 13 to addressthe recent NFIP changes. Registration isavailable by visiting iabgroup.com or bycontacting IA&B’s Member ServiceCenter toll free at (800) 998-9644,option 0, or by [email protected].

Perpetuationplanning pointers

Perpetuation takes planning. Asuccessful transition requires eight to 10years to accomplish. That makes nowthe ideal time for baby boomers whoare heading independent agencies toplan for their retirement.

IA&B’s Oct. 27-28 ExecutiveManagement Conference for agencyowners will focus on perpetuationplanning. MarshBerry presenters willcover how to design a successful planthat drives value, rewards individualsand ensures long-term organizationalviability. Topics will include proactivecontrol of agency value, exitalternatives and economic factors.

Registration remains open. For moreinformation, visit iabgroup.com orcontact IA&B’s Member Service Centertoll free at (800) 998-9644 or locally at(717) 795-9100, option 0.

New MembersW E L C O M E

Aberdeen Insurance Group Inc.North Wales, Pa.

Rizzi Insurance LLCNew Brighton, Pa.

Hurley Insurance Brokers Inc.Pittsburgh, Pa.

Insurance Solutions ConceptMorrisville, Pa.

Kenneth R. Sloan Insurance AgencyApollo, Pa.

Taurus Financial Services Ltd.Quakertown, Pa.

MIS Agency Inc.East Stroudsburg, Pa.

Harry L. Frankfort Agency Inc.Adamstown, Pa.

Benefit HuntersDresher, Pa.

PreventingE R R O R S A N D O M I S S I O N S

[ 8 ]

PAUL E. WALTERS

Paul E. Walters is claims

manager for Utica Mutual

Insurance Company in

Utica, N.Y.

Insurance Agents & Brokers

Service Group Inc. is the

exclusive agent for the Utica

E&O program in Delaware,

Maryland and Pennsylvania.

For questions regarding this

article or your Errors &

Omissions coverage, contact

IA&B at (800) 998-9644 or by

e-mail at [email protected].

THE PITFALLS OF REDUCING COVERAGE

Primary Agent | October 2009

There are a lot of validreasons why an agent mayrequest reduced coverage fora client. But that doesn’t stopan E&O claim from beingmade. After an economic loss,the client’s memory may bedifferent from the agent’s, andhe or she just may not recallrequesting that reducedcoverage. Two stories emerge,leaving a jury to flip a coin.

Let’s first go back to thosereasons a client might requestlower coverage amounts. Achange in exposure maywarrant less coverage.Concerns over premium costs

may warrant a change incoverage – and in the currenteconomy, that can happenoften. A change may be madeto a law so certain types ofclaims to which a client hadpreviously been exposed areno longer legally viable. Orthe imposition of award capsfor certain types of personalinjury actions by statelegislatures may greatly lowera client’s exposure.

The reasons are all valid;however, communicationwith the client is the key.And good documentation ofsuch conversations is a must.

Take, for example, a claim byan owner of a large, six-building apartment complex.Business was slow, and theclient approached the insuredand asked that two of thebuildings be removed fromcoverage on the CommercialProperty policy to savepremium. Those buildingswere removed from thepolicy. The policy wassubsequently written byanother carrier, and only fourbuildings were listed. (In thatparticular state, there is noduty for a client to read andexamine a policy.)

After policy inception, theclient – without telling theagency – decided to rent thetwo vacant buildings out tovictims of Hurricane Katrina,at government-subsidizedrates. A fire occurred, and thetwo buildings were destroyed.While the agent’s filecontained a copy of therequest to the previous carrierto remove the buildings, therewas nothing in the agent’s filedocumenting the discussionswith the client. The clientstated that he had not wanted

[ 9 ]

the buildings removed. Nothing wassent to the client by the agencymemorializing the request to removethe buildings. The damage to the twobuildings was approximately$1,000,000. Faced with a word vs.word scenario with no documentationto back up the agent, the case waseventually settled for $500,000.

In another example, a restaurantasked its agent to reduce thecontents’ coverage mid-term from$275,000 to $150,000. The carrierlowered the limits as requested andissued a refund which the clientcashed. The policy renewed. And yes,a claim came. A large one. Followinga total loss to the building, the carrierpaid the $150,000 limit for contents.The client claimed he did not read thenew policy and said he thought therefund check was dueto a car being removed from apersonal auto policy. He claimed henever asked for a reduction incoverage. Again, there was nocorrespondence from the agency tothe client documenting the requestfor a reduction in coverage.Following a trial in the matter, thejury chose to believe the client andawarded $125,000 plus interest andattorney fees.

During hard economic times,clients will look for ways to savepremium. Agents will look to holdonto current clients by keepingpremiums down. Carriers will pushagents to market their products in thebest economic light to avoidcompetition. And regardless of thecircumstances, agencies will bevulnerable when there is no cleardocumentation reflecting that a clienthas been told of the reduction and iswell aware of the risks involved inthe event of a loss.

CoverageC O R N E R

[ 10 ]

JERRY MILTON, CIC

Jerry M. Milton teaches

and consults on industry

issues. The legal profession

recognizes him as an

expert on insurance

coverages. He is also the

education consultant for

IA&B, working with CISR,

CIC and continuing

education programs.

THE CGL – COVERED LOCATIONS ANDOPERATIONS


I just completed anapplication for a CommercialGeneral Liability (CGL) policy.I was asked to list all of mylocations and operations. Ithink I did. I hope I did.

What if I did list all locationsand operations, but I addanother location or start anew operation during thepolicy year? Or, what if Ididn’t list them all? Will thisaffect my coverage underthe CGL?

Long ago, and far, far away,we used to write an Owners,Landlords And TenantsLiability (OL&T) policy. Thatpolicy covered bodily injury orproperty damage arising outof “the ownership,maintenance or use of theinsured premises and alloperations necessary orincidental thereto.” The“insured premises” was anylocation listed in theDeclarations. That OL&Tpolicy is now just a faintmemory.

Today’s CGL policy is not anOL&T! It is true that the CGLDeclarations does contain

sections to list all premises,owned, rented or occupiedby the insured and allclassifications of the insured’soperations. However, theterms “premises” and“operations” are not definedin the policy. And nowherein the policy are there anylocation or classificationrestrictions.

Therefore, if I add a locationor start a new operationduring the policy year, I’mcovered. Period. End ofdiscussion. Sure the insurerwould like for me to notifythem of this new location oroperation. Obviously theywould like to get their moneynow for that exposure. But,rating and coverage areseparate issues. If I don’tnotify them, I still get mycoverage now. They’ll get theiradditional premium for theadditional location oroperation at the end of theyear. It’s called an audit.

What if I didn’t list alllocations or operations? Doesthis negate coverage underthe CGL for any location oroperation not listed? The

Representations condition ofthe CGL states that therepresentations made in theDeclarations are accurateand complete and the insurerhas issued the policy inreliance on thoserepresentations. In order todeny coverage, the insurerwould have to prove thatany misrepresentation is“material.”

What is a materialmisrepresentation varies fromstate to state or court to court.A material misrepresentationis usually one that, had theinsurer known the true facts,they would have acteddifferently. They may havedeclined the coverage orissued the policy with morerestrictive terms.

If an insurer refuses to pay aclaim based on materialmisrepresentation, they arenot just denying the claim;they are attempting to voidthe policy. In most states amaterial concealment or amaterial misrepresentationcan be grounds for rescissionof the contract.

[ 11 ]

Rescission is an equitable remedycreated by the early courts of England.When an insurance policy is rescinded,the parties are put back in the sameposition they were in before thecontract date. The insured gets thepremium back, and the insurer getsthe policy back.

A material misrepresentation is oftendifficult to prove. But, do insurersattempt to do so on occasion?Yes, they do.

If an insurer wants to limit coverageunder the CGL to a specific or scheduledpremises, they can do so by adding theLimitation Of Coverage To DesignatedPremises Or Project endorsement(CG 21 44). This endorsement covers“the ownership, maintenance or use ofthe premises shown in the Schedule andoperations necessary or incidental tothose premises.” Sounds like the oldOL&T policy doesn’t it? The more thingschange, the more they stay the same.

Insurers are also limiting coverage foroperations by adding their ClassificationLimitation endorsements. Theseendorsements stipulate that coverage isprovided only for those classificationsshown in the Declarations.

Finally, an endorsement that should beadded to the CGL and Excess Liabilitypolicies is the Unintentional E&Oendorsement. This endorsement statesthat the unintentional omission of, orunintentional error in, any informationby the insured shall not prejudice theinsured’s rights under the policy.

Once again, the CGL does not restrictpremises and locations. However, watchout for limitation endorsements – eitherpremises, or classifications, or both. Andtry to get the Unintentional E&Oendorsement. It’s a good one!

Y’all take care!

?QUESTION:How can I verify that an agent or agency is properly licensed in my state?Is there a way to do this without having to ask the person directly?

ANSWER:Most states now offer the ability to check if a person, individual or entity, residentor non-resident, is properly licensed and in good standing. You can go onlinedirectly and check whether the insurance producer and/or the agency isproperly licensed.

Delaware:Go to the Department of Insurance’s Web site: www.delawareinsurance.gov.In the left margin, under Services, click on Insurance Agents. This will take you tothe license verification and status page.

Maryland:Go the Maryland Insurance Administration’s Web site:www.mdinsurance.state.md.us. In the left margin, under the Producers tab,click on Producer Search. A database query is available for both individualsand agencies.

Pennsylvania:Go to the Insurance Department’s Web site: www.ins.state.pa.us. Under Resourcesfor Producers, you will have access to two different databases — one for individuallicensees and one for business entities.

In all three states, the databases are searchable on a number of different criteriaincluding name, type of license, location, etc.

Tip: Tag the Web page as a favorite. Doing business with an unlicensed person is aviolation under most, if not all, producer licensing laws. Whenever you are doingbusiness with another producer or entity, including when you are placing a riskthrough a Surplus Lines broker, make it a habit to check that both the individualand entity are properly licensed in the state where the license is needed.

DO YOU HAVE A QUESTION?E-mail it to us at [email protected]. Please use “Primary Agent FAQ” in the subjectline of your message. You can also fax your question to (717) 795-8347. We lookforward to answering your questions!

Member FAQ

SALES

Checklists can go beyondprotecting an agency’sbottom line from an E&O claim. They mightjust pad it, too. Read on

for ways to turn coveragegaps into sales.

Gaps that sellHow E&O prevention can increase sales

[ 13 ]


Insureds depend on their agent for protection, but toomany agents depend on price to close the deal and “win”the client. Winning on price can be a Pyrrhic victorybecause making the “war” about price kills a majority of

opportunities to establish a long-term relationship. Without aprotection or risk management-based relationship, the agentwill lose the client the same way he gained it — on price.

Insurance is not a commodity. Correctly designed protectionin the wake of a major loss is the difference between theinsured’s utter financial destruction and its restoration tofinancial health. Agents are and must act like more than mere“order takers,” they must be the professionals the protectionthey offer requires.

Becoming and practicing like a professional insurance agentnecessitates analysis of the client’s exposures and anunderstanding of the applicable insurance policy’s limitationsand exclusions. Checklists are the tools of insuranceprofessionals; their use confirms that all relevant questionsare asked, but more importantly they reveal coverage gaps.

_________________________________________________

Checklists are the tools of insuranceprofessionals; their use confirms that allrelevant questions are asked, but moreimportantly they reveal coverage gaps.

_________________________________________________

Checklists win clientsChecklists: Every errors and omissions underwriter and losscontrol representative wants agents to use checklists. Agencyconsultants continually push the use of checklists. Agents, likethe Grinch, imagine all the “noise” they are going to hear atthe next E&O class about, you guessed it, checklists. Butbeyond the hyper-importance of protecting the agency in anE&O suit, checklist can actually help agents SELL MOREBUSINESS and MAKE MORE MONEY.

The “hassle” of using a checklist disappears when viewedfrom the perspective of increased income. But how do theseannoying checklists help the agent sell more business? “Gaps”is the magic word — gaps in protection, gaps in the limits, allmanner of gaps. In other words, checklists find the gaps thatsell the client on the agent, allowing the agent to gain a newclient and write more business.

Regardless of the coverage or client type, there are alwaysgaps between the true exposure and the protection provided.

I

Checklists find the gaps that sell

the client on the agent, allowing

the agent to gain a new client

and write more business.

Some gaps are purposed andothers are a surprise to theclient. It’s the surprises theagent needs to discover,explain and win the clientwith. This is done with …checklists.

Gaps lead to opportunities: theopportunity to unseat theincumbent agent; theopportunity to develop astrong agent/clientrelationship; and decreasedlikelihood the client will movesolely due to a lower premium.

No more talk of checklists!There is no more talk ofchecklists from this pointforward, lest you tire of theconversation. The remainderof this article details the twoclasses of coverage/exposuregaps: 1) those that will almostcertainly result in winning theclient when presented; and2) those that don’t necessarilywin the client but rather serveto cement the agent/clientrelationship.

Gaps likely to get theagent hired (aka: “type 1”gaps)“Type 1” gaps themselves fallinto two subcategories: A)those common enough that amajority of insureds within aparticular class have theexposure; and B) gaps souniquely situational and rarethat only a very few insuredsactually have the exposure.Both will win the client, buteach requires a differentapproach.

“Common” coverage gaps(“type 1.A.” gaps) requireskillful introduction andexplanation. The mention ofthese gaps and their solutionsshould be conversational andnot presented “checklist style.”

“Checklist style” sounds likethis, “Looking at my notesfrom our meeting, it appearsthat you have some uniqueexposures that we need todiscuss,” (the “notes” are, ofcourse, the checklist that wascompleted). Don’tmisunderstand, the “checkliststyle” is not wrong, in fact thisis the approach for “type 1.B.”gaps; but it is not the bestapproach for gaps common toa large percentage of insureds.

A conversational approach tocommon coverage gaps ismore effective because it is notnecessarily required to firstfind out if the insured has theexposure, because most withina specific class do. The goal isto impart importantinformation about thesecommon gaps to the insuredand then tell them how to fillthe gaps.

Assume the insured owns a20-year-old building; it’s likelythe building is not totallycompliant with the currentbuilding code. The unendorsedcommercial property policydoes not respond to thisexposure, it requires theattachment of the ordinanceor law endorsement (asdetailed in an earlier series).Before meeting with theinsured, the agent researches

SALES

[ 14 ]

Beyond the hyper-

importance of

protecting the

agency in an E&O

suit, a checklist

can actually help

agents sell more

business and make

more money.

Valley Forge Service Office: 800.362.3620 | Home Office: Des Moines, IA www.emcinsurance.com

© Copyright Employers Mutual Casualty Company 2009 All rights reserved

MAKE EMC YOUR CHOICE FOR MAIN STREET BUSINESSWhen you think main street business, start thinking about the EMC Choice® Businessowners Program. Small and midsize businesses will enjoy the flexible coverage options designed to meet their specific insurance needs, the added value of free loss control services, plus the responsive service from an EMC branch office nearby. So if you still think EMC is just for niche programs, think again. Count on EMC ® for your main street commercial lines marketing, too. For more details, contact your local EMC branch office.

I used to think EMC was ju st for niche commercial programs. Then again, I used to think the moon was made of cheese.

the jurisdictional building codes.At an appropriate place in themeeting (when the questionregarding the age of thebuilding is posed), the agentpauses and says, “I wasreviewing the local buildingcodes and noticed that [nameof jurisdiction] has someunusual requirements. If yourbuilding is damaged beyond 50percent of its MARKET VALUE,it has to be torn down andrebuilt to current buildingcodes. This could be costly.”

Obviously the informationpresented to the client must betrue and relevant. In the aboveexample, the agent has the

opportunity to explain theproblem(s) (as there aremultiple issues) and thesolutions. Because mostbuildings within this “class”(more than 10 or 15 years old)don’t meet building codes, theagent was able to plan aheadand proactively offer a solution(conversational style) ratherthan reactively find a solution(checklist style).

Conversational style doesn’tlook like or feel like selling; it’san exchange of information thatbuilds trust. If the client isunconcerned with the exposure,it’s still in the notes that theexposure was discussed. This

style also moves the insuredaway from basing the decisionon price alone.

______________________________

Capitalize on the gaps towin and tie yourself to the

client for the long term.______________________________

Differentiating between “1.A.”and “1.B.” gaps is rather simple.While both are hot-button gapsthat should convert a prospectinto a client, “1.A.” gaps aregeneral in nature applying to allinsureds in a particular class(i.e. all homeowners’ policiesexclude personal injury, olderbuildings don’t meet code, etc.)where “1.B.” gaps areoperational in nature. Anoperational gap is specific tothe insured and is only knownonce the checklist is complete.The difference between thegeneral nature and operationalnature of these gaps gives riseto the different styles(conversational vs. checklist)used to discuss both.

Agents must look for, preparefor and capitalize on both ofthese client-winning gaps.Advanced preparation andpolicy knowledge are required.

Gaps that cementrelationships (aka “type 2”gaps)“Type 2” gaps are those thatdon’t cause immediate panic orneed in the insured; but thoseon which the insured wants toinvest more time and

SALES

[ 16 ]

discussion. Being able to act asa trusted authority and advisorallows the insured to build trustin the business relationship.

Common “type 2”gaps/exposures includecoverage limits, valuationmethods and contractual risktransfer issues. These, like the“1.B.” gaps above, are nearlyalways operational exposuresunique to the insured.

In the client’s mind, theseexposures/gaps do not requireimmediate attention; but they

want the agent to invest time inresearching the answers andoffering alternatives.

Again, “type 2” gaps are notnecessarily client winners (butthey could be), but they arerelationship clenching.Addressing these issues will tiethe client to the agent far betterthan price.

SynopsisUse checklists to find gaps. Hotbutton gaps require preparationand study (agent has to knowcoverage and about the class of

business being pursued).Capitalize on the gaps to winand tie yourself to the client forthe long term.

__________________________

Christopher J. Boggs, CPCU, ARM,ALCM, LPCS, AAI, APA, CWCA

© Insurance Journal,InsuranceJournal.com andMyNewMarkets.com


HELPING AGENCIES AVOIDCOSTLY E&O CLAIMS

IA&B HAS OVER 50 YEARS OFEXPERIENCE TRAINING AGENCY STAFF

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SALES

To use checklists, or not to use checklists: That is the question. Here, Chris Burand makes hiscase, touting the E&Oclaim prevention thatchecklists can supply.

Coverage checklistsand E&O

[ 19 ]


Fact: Most agencies do not use coverage checklists.Question: From an E&O perspective, should they?

One of the weak arguments agents often make for not usingcoverage checklists is that they believe if they use coveragechecklists and mess up, they will be in more trouble than ifthey did not use checklists at all. This argument clearly restson the assumption that a person would rather be providinginadequate coverages to all clients rather than providing theright coverages to some and not others. An opposing attorneyin court would probably summarize this by asking, “So, youprefer being incompetent all the time instead of just some ofthe time?”

A case covered in the Nov. 14, 2005 National Underwriterclearly blows this argument out of the water. The author ofthis great article, Peter Biging, describes the legal reasoningbehind an appellate court ruling against a broker for notoffering a specific coverage to an insured. The reallyinteresting aspect of this case is that the carrier had alreadybeen sued and had already paid! In the author words, “… thecourt held that the issue of whether the insurer should havedefended the claim was independent from the issue ofwhether the business manager and broker failed to providecompetent advice.”

_________________________________________________

The issue really rests on one question:“Are clients depending on you to identify

coverages they should consider purchasing?”

_________________________________________________

In other words, the court’s position in this case was that thebroker was not only in the business of selling insurance but inthe business of providing professional advice, too. The brokerwas responsible for offering professional advice whether achecklist was used or not. So why not make life easier andless risky by using a coverage checklist?

This case is not unique for finding that agents and brokersowe clients professional advice. Many cases and manyjurisdictions, though certainly not all, hold that if agents andbrokers tout themselves as professionals, then they oweprofessional advice to their clients. This case is even morepoignant though because the carrier paid the claim and thebroker still lost.

In a must-read article, “Insurance Agent and Broker Liability”by Douglas R. Richmond in the Tort Trial & Insurance Practice

The court’s position in this

case was that the broker was

not only in the business of

selling insurance but in the

business of providing

professional advice, too.

Law Journal, Fall 2004, theauthor clearly makes adistinction between thoseagents and brokers thatpresent themselves to thepublic as experts and/orprofessionals versus those thatsimply peddle insurance. Thepeddlers clearly have lessresponsibility to advise clientsof coverage issues. To me, theissue really rests on onequestion: “Are clientsdepending on you to identifycoverages they shouldconsider purchasing?”

After a loss, clients will oftenclaim they were dependingon their agent or broker. So ifyou are going to be a peddler,have insureds sign a statementsaying they do not consideryou to be a professional oran expert in insurancecoverages and therefore didnot depend on you to advisethem in any way.

If you do not like thisapproach, a coverage checklistis your best option. Usedearly in the fact-findingprocess, it can minimizequote time and minimize theimportance of price. With acoverage checklist, the agencyis better protected becausethe insured is takingresponsibility for selectingcoverages (if the checklist isused appropriately whichinvolves completing it with theinsured present and with theinsured signing it). The agencycan also better document that

it considered and discussed along range of coverages withthe insured. Last, insureds willprobably buy more insurance,and the more insurance theybuy, the less likely they willhave an uncovered orcontested claim. (For freesample checklists, go towww.burand-associates.com.)

Few agencies use coveragechecklists, and with the waycase law seems to be evolving,insurance professionals aregoing to be held to higherstandards in manyjurisdictions. So, how wouldyou answer the question:“From an E&O perspective,should agencies use coveragechecklists?”

_________________________

Chris Burand is president ofBurand & Associates, LLC, aninsurance agency consulting firm.Readers may contact Chris at(719) 485-3868 or by e-mail [email protected].

Note: Every state and everysituation is different, so obtainlegal advice specific to your stateand situation. None of thematerials in this article should beconstrued as offering legaladvice, and the specific advice oflegal counsel is recommendedbefore acting on any matterdiscussed in this article.Regulated individuals/entitiesshould also ensure that theycomply with all applicable laws,rules and regulations.

SALES

[ 20 ]

Insureds will probably

buy more insurance, and

the more insurance they

buy, the less likely they

will have an uncovered

or contested claim.

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SALES

Modern technologyprovides a slew ofadvantages for keeping thelines of communicationopen between agents andclients, but it comes alongwith E&O exposures, too.

7 voice mail tips to avoidE&O claims

[ 23 ]


Get in the knowabout E&OWhat you don’t know can hurtyou … and your agency.That’s why IA&B offers threeE&O seminars, each of whichhave been approved forloss-control credit.

� Best Practices of E&O LossControl

� 10 Ways to Get Sued

� Mistakes That Lead to E&OClaims — new for 2009

For information or to register,visit www.iabgroup.com andselect Errors & Omissions fromthe left-hand menu, or contactIA&B’s Member Service Center at(800) 998-9644 or locally at(717) 795-9100, option 0.

When customers land in a voice mail, they must beadvised by the message that their expressed needfor coverage does not put coverage in effect andthat they must speak with a licensed agent.

The following tips can help prevent E&O situations:

� Update outgoing voice mail message on a daily basis.

� Always provide an option for callers to reach a “live”person in the office during normal business hours.

� Include a disclaimer on the voice-mail greeting thatexplains how coverage requests and claims are handled.

For example:

You have reached the voice mail of <your name> on<today’s date>, and I will be out of the office all day.Please leave a detailed message, and I will return yourcall as soon as possible. If you require immediateassistance, <provide directions for reaching other staff>who can assist you. Please be aware that coverage cannotbe bound or changed via voice mail, e-mail, fax, or onlinevia the agency’s Web site, and is not effective untilconfirmed directly with a licensed agent. Thank youfor calling, and have a great day.

� Keep the system simple, and avoid putting the callerthrough multiple layers to speak to someone in theagency.

� As soon as possible, input all information from phoneconversations and voice-mail messages into the agencymanagement system. Include the name of the caller, thedate/time and message.

� Confirm in writing with the client any requests receivedby voice mail.

� Create written procedures for handling personalvoice-mail boxes of staff members who are out due tovacation or illness.

W

MELISSA CIBELLI

Melissa Cibelli is PIA’s public

relations specialist.

This article is reprinted from

the July/August edition of

PIA magazine.

Primary Agent | October 2009 TechnologyU P D A T E

[ 24 ]

If you’re involved at all inworking with your agency’sWeb site, you’ve no doubtheard the phrase “searchengine optimization” manytimes before. It’s a relativelynew technique in Web sitemarketing, a must-have for anysite that wants to draw anincrease in traffic.

But, if you’re scratching yourhead, thinking, “What the heckis this SEO stuff,” it’s a simpleconcept to understand. SEO isjust what it sounds like —optimizing your Web site toobtain a higher ranking insearch engine results. Sounds

easy, but don’t be deceived —even some self-proclaimedSEO experts don’t have ahandle on it.

Search engines work byindexing, “crawling” or“spidering” the content on Websites across the Internet andranking them based onrelevance to certain searchterms, determined bycomplicated algorithms. Theseformulas take into accountdifferent aspects of your site,such as content, titles, etc., andweighs them against oneanother, ultimately determininga numerical rank for your page

for the given keywords. Theproblem for SEO professionalsis that these algorithms arehighly protected companysecrets, with good reason:Anyone could manipulatesearch results if they were privyto the formula. Unfortunately,this makes the art of SEOmore difficult, though notinsurmountable.

The good news is that you cando SEO yourself, for free. Unlikepaid advertising, called searchengine marketing, SEO workson raising your ranking in whatare called “organic” searchresults; that is, the results not

SEO: NOT JUST FOR THE TECHIESHow your agency can use search engine optimization in its business plan

WHAT IS IA&BPARTNERS?The IA&B Partners

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and allied businesses

the opportunity to

demonstrate their

commitment of support

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and receive maximum

market exposure. As an

IA&B Partner, you will

also realize the benefits

of IA&B membership to

help you succeed in

the insurance industry.

DO YOU SEEYOUR NAME?To become an IA&B Partner,

choose the sponsorship

package that matches your

commitment of support.

Contact the Member Sales

Center at (800) 998-9644,

(717) 795-9100 or visit us

online at www.iabgroup.com

to get started.

Listed below are those companies thatstrongly support the independent agency

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Chubb Group of Insurance Companies

Companion Property & Casualty Group

Countryway Insurance Company

Encompass Insurance

Foremost Insurance Group

Friends Cove Mutual Ins Company

Goodville Mutual Casualty Company

Grange Insurance Companies

Hanover Fire & Casualty Insurance Company

Insurance Alliance of Central PA Inc

Insurance Placement Facility of PA

Keystone Insurers Group Inc

Lebanon Mutual Insurance Company

Mercer Insurance Group

Merchants Insurance Group

Mercury Casualty

Penn Millers Insurance Company

Penn Prime Municipal Insurance

PMSLIC Insurance Company

Reamstown Mutual Insurance Company

Rhoads & Sinon LLP

Rockwood Casualty Insurance

State Auto Mutual Insurance Company

TAPCO Underwriters Inc

The Brethren Mutual Insurance Company

The Mutual Service Office Inc

The Philadelphia Insurance Companies

Tuscarora Wayne Mutual Insurance Company

UPAC Insurance Finance

Primary Agent October 2009

[ 26 ]

impacted by anyone’s advertising dollars,and instead based solely on site content.As a result, only sites with legitimatecontent that is relevant to the searchquery will come up in the top rankings;companies cannot “buy” a search rank.The closest relative of this method is theaforementioned SEM, where ads end upalongside organic search results, clearlymarked as paid advertising.

You may be asking yourself: Is SEOreally worth all the effort? Does SEOeven matter? According to a study atCornell University, the top-three searchresults from Google get 79 percent of allclicks; in other words, three quarters ofusers never bother to look past these firstfew results, much less another page. Yoursite might as well not exist if your agencyis unlucky enough to end up on thedreaded “page two.”

Now, how can you make SEO work foryour agency site? You can start by figuringout how your customers think.

Pick keywords carefully

If you’re a small, local agency based inAlbany, NY, odds are you’ll be listed onthe hundredth page or so for a search of“New York insurance.” But, you’re morelikely to be on the first page of a query for“Albany New York car insurance.”

You need to pick your keyword battles.While your agency may not stand achance against the big guys when it comesto more generic insurance search terms,you can have success with more specific,local queries. Think about the searchterms your potential customers might beusing to find your agency. Those are theterms on which you want to focus. Theseterms might include: ZIP code; town; state;

agency name (or part of the agencyname); and/or type of coverage(homeowners, auto, business interruption,etc.). From these keywords, settle onabout 10-30 search queries that youbelieve customers will use when lookingfor your services; these will be centerpieceof your SEO efforts.

Google yourself

Take a look at your list of key searchphrases. Try typing each one into a searchengine like Google. Where do you stand?Are you already coming up at the top forsome of your important search terms? Or,has your agency been relegated to thedark depths of page-five obscurity?Establish a starting point, so you canmeasure continuously your work andgauge the success of your SEO efforts.

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[ 27 ]

Work from the ground up

Content is king. Without good content,your efforts in SEO are all but useless.Search engines are smart, and nothingbeats quality original content when tryingto reach the top of the rankings. Think ofyour site in terms of potential clients;what can you provide for them via theInternet? Positioning yourself as a localresource for insurance needs rather thanjust a repository for agency contactinformation will help make your contentmore valuable. Also, try to incorporateyour targeted keywords and phrases inmeaningful ways throughout your site.Don’t fall into the trap of just tossingthese words in anywhere you can —a search engine will pick up on thisand likely lower your ranking forfraudulent practices.

Mind the “meta data.” Meta data is theinvisible information provided to searchengines by your Web page. So whyaren’t you taking advantage of it? Metadata gives you to opportunity to tellsearch engines exactly what your page isabout. Want to see what your Webpage’s meta data contains right now?Right click your page and click “ViewPage Source.” Look for any tags thatinclude the word “meta”— this is whereyou will find the information you need.This data falls into two categories:keywords and description. Your key-words should mimic the ones that youdetermined for your site earlier, whilealso including specific terms for the pagethat you are working on. For example, apage focusing on your commercial-linesofferings should include phrases like“business insurance” or “corporate carcoverage.” Your description shouldexplain exactly what it is that is found onyour page (i.e., “The Smith Agency is afull-service professional insurance agencyoffering personal and commercial-linespolicies in Albany, N.Y.”) The description

also is the short blurb that appears aftera link to your site in search results — somake it valuable and accurate.

If your meta data doesn’t seem up topar, ask your site’s Web master toupdate it with the keywords anddescriptions that suit your agency best.

Eye-catching titles. Often thought to beone of the heaviest contributors to beingfound on search engines, page titlesoften are overlooked. Think of page titlesjust as you would book titles whilebrowsing in a store—the title needs to beinteresting and compelling in order foryou to decide to purchase it. The samegoes for your Web site; your title needsto be descriptive, specific and enticing toyour audience.

Create links. Your ranking in searchengine results not only is a result of yourown site’s popularity, but the popularityof sites that link to you. So the next stepin upping your rank is to find relevantsites that could potentially link to you.Notice the word relevant — it will do nogood for an insurance agency site tohave a link on a celebrity gossip site. Thepages you want to be on need to berelated to your site’s content—thinkindustry associations, your local chamberof commerce, carriers you do businesswith, etc. And, while a simple text linkwill help, having a link back that isincorporated in content, directly relatedto your business, is the best kind ofboost for your ranking.

How do you get started? Make a list of allthe organizations and companies withwhich you already have a relationshipand offer reciprocal links — that is, a linkfrom their site in exchange for a linkfrom yours.

Search engines are blind. Usuallyshortened to “alt tags,” alternate imagetext has proven to be another invaluablemethod of incorporating your keywords

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If you would like to place a

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into your Web site. Search enginescannot actually see pictures (yet), thusrely on the alt tags to determine what animage is displaying. Take advantage ofthese tags as an opportunity to employkeywords effectively and help directsearch engines to your site.

Claim your identity

If you have ever run a search for youragency name, you may have noticed thatsearch engines will have some kind oflocal business results. Google, inparticular, does a nice job of this,providing a map and directions to yourbusiness. But, what if that information iswrong? The Internet is not infallible, andit is your responsibility as therepresentative of your agency to takecontrol of your online identity. How todo it? Google pulls its local results fromSuperpages.com — search for yourbusiness there and click on the “AddInfo” option. There, you can claimownership of your agency and adduseful information to the listing: servicesoffered; hours of operation; key contacts;etc. Other search engines, like Yahoo!and MSN, also will allow you tomanipulate your agency’s listing, so besure to take a look at you results acrossas many sites as possible.

Additionally, you can help assure correctlisting information by submitting yourWeb site directly to each search engine.This not only will make sure that youragency is depicted accurately via search,but also can help boost your ranking insearch results. You can start by checkingout Google’s site submission atgoogle.com/submityourcontent.

Patience is a virtue

So you’ve followed this advice and youshould now check Google feverishly tosee your agency results skyrocket, right?No — you need to have patience when it

comes to SEO. It might take up to sixmonths for your ranking to be affected.Sure, it’s frustrating; but more thanunderstandable when you remindyourself that sites like Google areresponsible for indexing and maintainingaccurate search results for the millions ofWeb pages on the Internet. It’s quite theworkload, and it means that your sitemay not be a top priority.

Now what?

Just because you’ve initiated the SEOprocess doesn’t mean that you can washyour hands of it. Maintenance is the keyto keeping a top search-result rank. Startwith your content: keep it fresh; be sureto update it regularly. What good is aWeb site with information that is yearsold? On the same token, aim to updateyour title tags and meta data every sixmonths or so, in accordance with your

new content. This will ensure that searchengines are indexing your site properlyand giving suitable results to their users.

You also may want to consider hiring aprofessional to manage your SEO efforts,particularly if you are not well versed inWeb design or Internet marketing.Whether a firm or a freelancer, anexperienced hand can help you easilyset up and continuously monitor yourwork on SEO.

Whether you take it on yourself ordecide to hire an old pro, SEO is notsomething you can continue to ignore.Where you fall in search engine results isimportant; taking action to improve yourranking can help potential clients findyou quickly and bring new businessthrough your front door today.

TECHNOLOGY UPDATE

primary agent - october 2009 - pa edition

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