Primary Agent - June 2012 - DE Edition

ALSO INTHISISSUE:________________Rationale for account reviews

Defining “use” of an auto

20 tech-driven trends

DELAWARE

Valley Forge Service Branch: 800.333.3622 | Home Office: Des Moines, IA www.emcins.com

© Copyright Employers Mutual Casualty Company 2011 All rights reserved

I’m celebrating our 100th year by planning for our next 100 years.

Jason Bogart, CPCU, ARM, Vice President of Branch Operations

Our future will be marked by the relationships we forge with you—the independent insurance agents who represent us. You’re the reason we’ll continue to investigate new market opportunities. Why we’ll develop competitive products. Why we’ll maximize the use of new technologies. Why we’ll emphasize ongoing professional development for our staff. By helping you profitably and efficiently grow your agency, EMC Insurance Companies will continue to serve you and your customers today and well into the future.

Rationale for account reviews

Making account reviews part of your agency’s workflow will enhance salesand minimize E&O exposure. Seems like an unbeatable combination, doesn’t it?

Page 8

I thought that was covered!

Jerry Milton shares 10 commonly overlooked coverage gaps. Take a gander, then educate clients on their exposures and options now — before you hear, “I thought that was covered.”

Page 12

20 tech-driven trends

Now that 2012 is well underway, be ready for these 20 technology-driventrends to continue to create both disruption and opportunity for the business world.

Page 24

8

12

24

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

Copyright 2012. All rights reserved. No material may be reproduced in whole or in part without written consent of 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 Editor5050 Ritter RoadMechanicsburg, PA 17055-0763Phone (800) 998-9644 or (717) 795-9100 Fax (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 # 2012-6) is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

4 Chair of the Board’s Message5 Member FAQ6 State News8 Preventing Errors & Omissions10 Coverage Corner20 Tools You Can Use

21 Glance at Events23 IA&B Partners24 Technology Update28 Advertisers Index28 Classified Ads28 Last & Least

In every issueMission Statement

Primary Agent delivers ideas to help InsuranceAgents & Brokers’ members negotiate their uniqueposition as guardians of trust between insuranceconsumers and companies while facing thechallenges of maintaining a small business. PrimaryAgent also supports IA&B’s mission to preserve andadvocate the American Agency System.

Get social with IA&B

[ 3 ][ 3 ]

HANOVER FIRE & CASUALTY serves the working families of our region by offering the insurance they need. No games. No tricks. Just good, solid insurance available to those who really need it. We settle claims promptly and fairly, and we manage to hold our rates. And the fact is, for nearly 100 years, our customers return and renew with us; well, that just drives the point home, doesn’t it?

Would you like to be a Hanover agent? For more information call 800-919-FIRE or visit www.hanoverfire.com. Learn more about our portfolio of products, our easy-to-use agent portal, and our com-petitive commission structure. Call today!

The Secret Is Out!Hanover Agents Love To Tell Their Customers

Why They Are Happy To Be Associated With Us.

GUARDPlusComp • Businessowner’s • Auto • Umbrella

Your wishis granted!

Your Business Is Our Business!®

You want/we offer:

1-

Same-day (often same hour)responses

Sophisticated technology (includinga nationally recognized agencyportal) personalized attention

2-

4-

A strong Workers’ Comp lead line

Special BOP Stretch endorsements

5-

6-

Ease of doing business

Competitive price

Unique product

�

�

PLUS

3- targetingsmall- to mid-sized risks

thatpromotes customer retention

Broad underwriting appetite

Superior claims handling

Favorable compensation

�

�

�

�

Metropolitan areas don’t scare us.

Coastal exposures are considered!

A limited number of appointments are available.Contact us to learn more: www.guard.com/apply

[ 3 ]

OfficersRobert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P

Chair of the BoardWest Chester, Pa.

Norman F. Basso, CPCUVice Chair of the BoardYork, Pa.

David Rosenkilde, CICImmediate Past Chair of the BoardReisterstown, Md.

MembersJoyce M. Bailey, CIC, CRM, CPIW

Newark, Del.

Henry “Butch” Bradley, Jr.Forest Hill, Md.

Timothy P. BurrisMifflintown, Pa.

N. Lee Dotson, CIC, AAIWilmington, Del.

John L. FrankenfieldTelford, Pa.

G. Greg Gunn, CICLemoyne, Pa.

John B. HollisterMilford, Pa.

Diana M. Hornung Hanby, ACSRWilmington, Del.

Jocelyn R. Howard-Sinopoli, CIC, CISRButler, Pa.

Robert S. Klinger, LUTCF, CPIA+

Germantown, Md.

Douglas A. Loesel, CPCUErie, Pa.

Michael F. McGroarty Sr.Pittsburgh, Pa.

Ann Gallen Moll, CICReading, Pa.

April E. Ressler, CICAltoona, Pa.

Scott C. Rogers, CPIA*York, Pa.

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

Lawrence A. Wilson, CIC, CPIA, CPCU, ARM**New Castle, Del.

* Pa. IIABA National Director** Del. IIABA National Director+ Md. PIA National Director

Board of Directors

[ 4 ]

Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P

Chair of the Board’sM E S S A G E

Keeping your cool

Welcome to June! Despite the rising Fahrenheit — andtempting golf courses — summer days are far from lazy in most independent agencies. And at IA&B, it’s much of the same.

Your agents’ association is plowing through the summermonths … monitoring potential tripping hazards, so members can keep their cool.

Legislative roadblocks? Fuhgettaboutit. The IA&Bgovernment affairs team is stationed in Dover andHarrisburg, monitoring the end-of-session legislative fury as you read this.

Compliance pitfalls? Avoid ‘em with the association’s recentlylaunched on-demand, insurance department-vetted seminars.Participants learn how to avoid the most common regulatorymissteps in Maryland and Pennsylvania.

E&O stumbling blocks? They’re no match for IA&B’sresources. Take this month’s Primary Agent magazine featurearticle as an example: Jerry Milton shares 10 commonlyoverlooked coverage gaps.

When the heat (or the air conditioning, for that matter) is on,IA&B is there. Take advantage of your membership.

Best,

Robert B Hall, ChFC, CLU, CPCU, ARM, ARM-P

Member FAQ

ANSWER:There is a significant difference between the two.

WYO Policy: This program is simply the National FloodInsurance Program (NFIP) administered by a Write-Your-Own (WYO) carrier. The policy conditions, eligibility andpricing are all determined by the NFIP.

Mortgage Portfolio Protection Program (MPPP)Policy: The MPPP is the program used for force-placement policies. Properties that are required to carryflood insurance and for which the borrower has notprovided acceptable proof of flood insurance to thelender eventually end up in the MPPP.

Generally, the MPPP is not the best solution for theborrower. It may be adverse to the mortgagor for several reasons:

(1) The MPPP premiums tend to be significantlyhigher than the WYO program, with the cost “rolled”onto the mortgage. The MPPP does not require asmuch underwriting information. For example, ratingwill not take any elevation certificate intoconsideration. The “blanket” rate applied tends toresult in a much higher premium than the NFIPpolicy’s: three to five times higher (if not more);

(2) While it is still a dual-interest policy (coveringboth the homeowner and the lender), it is notunusual for the mortgagee, in the process of force-placing coverage, to cover only the amount ofprincipal still owed rather than insure the propertybased on its replacement cost. In case of a claim, themortgagee will be indemnified, and there will be noproceeds left for the homeowner.

Before placing the borrower into the MPPP, threeseparate instances of notification are required.

w The first notice advises of the requirement to carryflood insurance and of the right to challenge this

requirement. It advises the mortgagor that if noresponse is received within 45 days of the notice, a force-placed policy will be written;

w The second notice is sent 30 days later, if noresponse has been received from the mortgagor. It reiterates the content of the first notice, andinforms that only 15 days remain before force-placement;

w The third notice is sent if no response is receivedand advises of placement of policy, including aflood Dec page.

Needless to say the MPPP is intended as a last resortsolution, when mortgagors have failed to respond to thenotifications that are required as part of the MPPP.Generally, the receipt of the Dec page spurs themortgagor into action. Once the borrower realizes thepremium charged, he often requests cancellation of thepolicy to replace it with a more affordable, standardNFIP option.

Bottom line: If flood insurance is required by themortgagee and the homeowner drags his feet aboutsecuring a policy, it will not help him in the long run, butonly create more headaches. If however, you run intoquestionable force-placement, make sure that it wasdone properly. More information on the MortgagePortfolio Protection Program is available in the NFIPmanual: http://www.fema.gov/pdf/nfip/manual201110/content/10mppp.pdf.

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

QUESTION: What is the difference between a Write-Your-Own flood policy and aMortgage Portfolio Protection Program policy?

State NewsConsequences of a property loss

The “consequential” losses in a coveredproperty claim come in a variety offorms and may or may not be coveredby policy endorsements. The Jerry MiltonSeminar Series returns this summer withConsequences of a Property Loss, thefirst of two new seminars from perennialfavorite Jerry Milton, CIC.

Jerry will bring his vast knowledge ofcoverages along with his unique abilityto offer anecdotes that make it moremeaningful for the class. The second legof the series begins in September withEmployment Relationships — Are BothSides Covered?

www.iabgroup.com/Milton

Agents descend onCapitol, rub elbowswith legislators

Delaware’s Congressional delegation inWashington, D.C. recently gainedindependent agents’ perspectives onpending legislation and regulation.

Nearly a dozen DAIAB member agents inlate April met with Rep. John Carney,Sen. Thomas Carper and Sen.Christopher Coons as part of the annualIIABA (Big “I”) National LegislativeConference. DAIAB also held a legislativereception, sponsored by Travelers.

Hot topics included:

w The importance of an agentcommission carve-out in calculatingmedical loss ratios

w The critical nature of a long-termreauthorization of the NationalFlood Insurance Program

w Support for NARAB II legislation,which would streamline non-resident producer licensing

w Opposition to any expansion of thescope of federal insuranceregulation through the newlycreated Federal Insurance Office.

[ 6 ]

Primary Agent | June 2012

DAIAB members flank Sen. Tom Carper.

Work speeds up as Delawarelegislative sessionwinds downThe state legislature’s pace is picking upas the last day of session, June 30,nears. On the table are several bills of note, including Department ofInsurance priorities and legislation to allow electronic notices of insurance policies.

The DAIAB government affairs team is stationed in Dover, poised toadvocate on members’ behalf. Watch your inbox for updates: Agent Headlines will track activity at theCapitol, and Capitol Connection willprovide a complete session recap,including how the state budget andnewly passed legislation will impact theindependent agency community.

Convention to combinenetworking, CEand politicsDAIAB’s 55th annual convention willallow members to have fun — plus earnCE, network and preview the primaryelection — in the sun.

The June 6-7 event in Rehoboth Beachis expected to draw 250 independentagency staff and company personnel.This year’s agenda includes agovernment affairs forum involving a panel discussion with state insurancecommissioner candidates, and CE courses taught by nationallyrecognized speakers Jerry Milton and Bettye Buffington.

Watch Agent Headlines and futureissues of Primary Agent magazine for a recap.

Power Hour: savethe date — and the link DAIAB members have access to awealth of agency managementresources at www.iabgroup.com. And thanks to theJune 20 PowerHour webinar,Online Goldmine,they will knowwhat they areand how to find them.

DAIAB’s Power Hour series providesfree, members-only webinars on timelytopics. Past webinars covered coverageissues for vacated properties andconcurrent causation. Members canaccess a complete resource libraryonline and watch past Power Hours on demand.

www.iabgroup.com/PowerHour

DCRB releases newexperience ratingcalculatorPlaying the “what if” game with clientsis easier — and more accurate — thanksto a new experience rating calculator.Spurred by agent feedback, theDelaware Compensation Rating Bureau(DCRB) developed the calculator tohelp agents review and discuss aclient's claim activity and how it impactsthe client's experience mod. The toolalso can be used if the mod has notbeen produced to get an indication,assuming all things remain the same.

DCRB Circular No. 874 announces therelease of the experience modificationcalculator and provides information onhow to use the tool.

http://www.dcrb.com/dcrb/circulars/d_pdf/de874.pdf

Earthquakeknowledge putsagents, insureds onsolid groundLast August’s earthquake left manyalong the East Coast shaking in theirboots. Now’s the time to take a crashcourse in earthquake risk and insurance— and then educate your clients.

DAIAB’s online Disaster Centralrepository includes peril-specificresources. Members can log ontowww.iabgroup.com to determineregional propensity to earthquakes andto locate consumer (business ownerand homeowner) endorsement andpolicy information.

www.iabgroup.com/disaster

Reminder ofDAIAB addresschangeSending DAIAB snail mail to no avail?Then update your database to ensure communication reaches DAIAB. Theassociation eliminated its P.O. Box andchanged its four-digit ZIP code.

New mailing address:5050 Ritter RoadMechanicsburg, PA 17055-4879

[ 7 ]

New MembersW E L C O M E

A L Watson Insurance &Financial Agency LLC

Wilmington, Del.

[ 8 ]

CURTIS M. PEARSALLCPCU, AIAF, CPIA

Curtis M. Pearsall, CPCU, AIAF,

CPIA, president of Pearsall

Associates Inc. and special

consultant to the Utica

National E&O Program,

supplied this article.

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 E&O

coverage, contact IA&B at

800-998-9644 or

[email protected].


Over the past few months,several insurance tradepublications have recognizedagencies on a host of bestpractices that have beeninstrumental in thoseagencies’ success. One bestpractice recently cited spoketo the value of performing anaccount review for eachclient or prospect. For severalreasons, this is a tremendoustool that accomplishes many objectives.

Serving and educatingyour customersFirst and foremost is thecustomer service/customercare associated with thisobjective. Performing areview allows the agency tointeract with each client toget an update on the client’sexposures. A client’sexposures can obviouslychange and, unfortunately,some changes can result inexposures not being properlyinsured. Your agency canhelp educate the client bydiscussing the changingexposures – and securingcoverage – before a loss

occurs as opposed to after.Sounds like a smartapproach, doesn’t it?

Look at it from theperspective of an insuranceconsumer. As you look atinsuring your variousexposures, would you ratherbe a client of an agency thattook the time to make surethere are no surprises at thetime of a loss, or would youprefer to be with an agencyyou rarely, if ever, heardfrom, that simply renewedyour policy year after year,and left it up to you tocontact them with any issues?

Looking at personal lines,some recent surveys haveindicated that insuranceagencies write, on average,fewer than 1.5 policies peraccount. When you considerthat at a minimum theaverage personal linesaccount has at least six toeight policy opportunities,this indicates there is somereal potential to writebusiness. In all likelihood,agencies that perform an

agency audit/review have amuch higher averagenumber of policies peraccount. Thus, another solidreason for performing anannual review – you willwrite more business.

_____________________

Your sales will be enhanced, and your E&Oexposure will be minimized.Seems like anunbeatablecombination, doesn’t it?

_____________________

Performing an annual reviewwith each client must be partof your agency’s culture. It isnot suggested, though, doingit for some customers andnot others. A recommendedapproach is to offer it to

DO YOU PERFORM AN ACCOUNT REVIEW FOREACH OF YOUR PROSPECTS/CLIENTS?

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

Account reviewquestionnairesPrefer a mailing over a meeting? CurtisPearsall recommends sending aquestionnaire to uncover exposures(and discounts) and points to exposureanalysis checklists to find questions.

IA&B members enjoy discounted accessto a risk analysis system which includesextensive coverage checklists. Simply logonto the Web to learn more.

Delaware:www.iabgroup.com/de/rough_notes

Maryland:www.iabgroup.com/md/rough_notes

Pennsylvania:www.iabgroup.com/pa/rough_notes

[ 9 ]

every client and, if a client does notwant the review, that should be theclient’s decision.

This “offer” would certainly be part of the agency’s defense if anErrors & Omissions claim were todevelop and the customer alleged anuninsured exposure. One of theagencies cited for this best practiceactually requires the review be doneand will not take on a prospect as aclient unless the account agrees to go through the review process. For that agency, it is evident theculture involves establishing andbuilding a relationship with each client.Without a doubt, this “investment”philosophy should be reflected ratherpositively in the agency’s renewalretention results.

Getting it doneThere are numerous ways to performan annual review. The most effectiveinvolves physically sitting down withthe customer for a face-to-facediscussion. This could present somelogistical issues because of thecustomer’s work schedule, so if youragency is open on Saturdays, it wouldallow the customer to stop in. Anotherapproach is conducting the reviewover the phone. Once again, this might present some logistical issuesbecause of work schedules. Plus,because these reviews could lastupwards of an hour, it may be difficultfor the customer to allocate the timeduring the work week.

It is obviously extremely important toexplain clearly the purpose of thereview, emphasizing it is designed forthe customer to understand his or hercurrent coverage and to discuss anyuninsured exposures.

Another approach – and probably amore realistic one – involves sendingthe customer a form which provides a

host of questions for the customer toconsider, such as:

w Do you have any collectibles, fine arts, stamps, coins, etc.?

w Do you have a business in your home?

w Have you installed a home fire or security alarm?

Some questions deal with loss-controlareas that could result in the customerreceiving discounts on currentcoverage. Other questions look touncover exposures where the currentpolicy – for example, a Homeowners’policy – may not be sufficient toprovide the necessary coverage.

Where can your agency get a formcontaining these questions? Many ofthe various exposure analysischecklists (see sidebar) contain thesequestionnaires, which can be easilycombined with a cover letter or e-mailand sent out.

An unbeatable combinationAre you legally required to performthis review? No. In most, if not all,states, the legal standard for aninsurance agent does not require thistype of review. In fact, many statesessentially hold the agent to the levelof an “order taker,” and the agent’srole is to provide the coverage thecustomer specifically requested. Withthis approach, the potential for acustomer suffering an uninsured lossis probably more likely.

If you truly want to assist yourcustomers in protecting their assets, anaccount review is a great tool. Yoursales will be enhanced, and your E&Oexposure will be minimized. Seemslike an unbeatable combination,doesn’t it?

CoverageC O R N E R

[ 10 ]

JERRY M. MILTON, CIC

Jerry M. Milton, CIC teaches

and consults on industry

issues. The legal profession

recognizes him as an

expert on insurance

coverages. He is also an

education consultant for

IA&B, working with CISR,

CIC and continuing

education programs.


Many, many years ago —actually it was 1963 — inBrenneman v. St. Paul Fire &Marine Ins. Co., thePennsylvania Supreme Courtwas faced with determiningwhat is an “accident.” In this case the court stated the following:

What is an accident?Everyone knows what anaccident is until the wordcomes up in court. Then itbecomes a mysteriousphenomenon, and, inorder to resolve theenigma, witnesses aresummoned, experts testify,lawyers argue, treatises areconsulted and even aconclave of 12 world-knowledgeable individualsagree as to whether acertain set of facts madeout an accident, thequestion may not yet besettled and it must bereheard in an appellatecourt.

Listen up, PennsylvaniaSupreme Court: We mayneed your help. What is“use”? The AmericanHeritage Dictionary has 10separate definitions of “use.”Black’s Law Dictionary uses a full page and a half todefine “use.” Both AmericanHeritage and Black’s statethat “use” means “to put into practice, to employ, to utilize.”

Sounds simple, doesn’t it? It should be, but then aninsurance policy isintroduced with the word“use” or “using,” and theissue can get complicated.

Who is an insured under thePersonal Auto Policy includesthe following individuals:

You and your familymembers for theownership, maintenance oruse of any auto or trailer;andAny person using yourcovered auto.

The Business Auto Policydefines insured to include:

Anyone else while usingwith your permission acovered auto you own,hire or borrow.

For individuals, if the lossarises out of the use of anauto, call your personal autoinsurer. Likewise forbusinesses: Call your autoinsurer. If you’re not using anauto, call your Homeowners’or CGL insurer. Therein liesthe problem. When are you“using” an auto?

The following cases are a fewexamples of “use of an auto”:

w An automobile driverwho bit a police officeron the arm during atraffic stop did notqualify as use of anauto. (Colon v. LibertyMutual Ins. Co., NJSuperior Court, Jan. 20, 2012)

WHEN ARE YOU “USING” AN AUTO?

[ 11 ]

w Grabbing the steering wheel toannoy your girlfriend, while shewas driving, did not qualify asuse of an auto. (Sunshine StateIns. Co. v. Jones, Florida Court ofAppeal, Jan. 18, 2012)

w Attempting to lift a portabletoilet onto the top of a deerstand by using a pickup truckand a pulley system qualified asuse of an auto. (Hays v. GeorgiaFarm Bureau Mutual Ins. Co.,Georgia Court of Appeals, Feb. 14, 2012)

w A passenger who opened therear door of a van and jumpedout while it was traveling over50 mph qualified as use of anauto. (Colony Ins. Co. v.Comprehensive RehabilitationCenters, Eastern District ofMichigan, Dec. 21, 2011)

w Individuals who sufferedneurological injuries due toexposure to carbon monoxidefrom a car left running overnightin a garage qualified as use ofan auto. (New London CountyMutual Ins. Co. v. Nantes,Supreme Court of Connecticut,Feb. 21, 2012)

My personal favorite is the case ofSchofield v. Smith, which was decidedby the Wisconsin Supreme Court onJuly 31, 2003.

James Schofield was injured whenRaymond Smith’s gun discharged ashe was unloading it before placing itin Schofield’s van. Schofield filed aclaim against Smith, and becauseSmith had an auto liability policy withAmerican Family, Schofield moved tojoin American Family as a defendant,alleging his injury arose out of the use of an auto.

American Family moved for summaryjudgment and the trial court agreedby reasoning, “There is a differencebetween loading and unloading avehicle and loading and unloading agun while standing near the vehicle.”

The Wisconsin Supreme Court’sdecision included the followingstatements:

The relevant test for coverage,therefore, is whether the ‘use’ ofthe vehicle was sufficientlyconnected with the accident….

Wisconsin courts have consistentlyheld that the use of a truck forhunting is reasonably consistentwith the inherent nature of the vehicle.

Therefore, using the van totransport rifles and ammunition tofacilitate hunting was a reasonable

’use’ of this vehicle, and loadingand unloading of such materialsand equipment, which is a normalincident to such use, constitutes the‘use’ of the vehicle.

Schofield argues that loading a guninto a van includes the preparatoryact of ejecting the shells from thegun. Therefore, the discharge of thegun that caused Schofield’s injuriesarose out of the use of a vehicle.We agree with Schofield.

What constitutes “use” of an auto?There is certainly no consensusamong the courts.

Each case is determined by the factsof that particular case as well as theinterpretation of the word “use” bythe court hearing the case.

Y’all take care!

Get Real! Get MBG

Really.

Real peopleReal people

REAL supportREAL support

REAL solutionsREAL solutions

REAL responseREAL responseREAL response

REAL experienceREAL experienceAt MBG, your clients get claims adjusters with a real sense of compassion...our team earned a 97.5% satisfaction rate on claim service surveys during the height of the 2011 tropical storm season.

MUTUAL BENEFIT GROUPHuntingdon, Pennsylvania

www.mutualbenefitgroup.com

COVERAGES

I thought that was covered!10 coverage gaps that slip through the cracks

On the following pages,Jerry Milton shares 10 commonly overlookedcoverage gaps (in noparticular order). Take agander, then educateclients on their exposuresand options now — beforeyou hear, “I thought thatwas covered.”

[ 13 ]


How many times have we heard, or even said, “I thought that was covered!” All of us know thatinsurance policies cover some losses, exclude some and limit others. However, to compound the

issue, losses that are covered may be excluded byendorsement, and losses that are excluded or limited may be covered by endorsement.

The exclusions and limitations that are contained in thepolicy, or added by endorsement, create gaps in coverage.Can these gaps be filled? Not always, but usually the answeris, “Yes they can.” How do we fill the gaps? Maybe byendorsement, or maybe an additional policy is needed.

Before we can recommend the needed endorsements or any additional policies of insurance, we have to recognizethe gaps in coverage. If we don’t, we might hear or say, “I thought that was covered!”

What are the most overlooked gaps in coverage? I’m sure allof us have our own list. The following is a brief discussion ofthe areas I feel could create major gaps in your clients’insurance programs.

Computers, electronic data and the InternetIt is estimated that over 30 million U.S. households pay theirbills online; over 50 million U.S. households bank online;over 12 trillion emails are generated annually in the UnitedStates.; online sales total over $1 trillion annually; and thereare 150 million websites worldwide that sell a product,provide a service or distribute information. In other words,we have all become dependent on our electronic equipment and the Internet.

The exposures created by the Internet and electroniccommerce are numerous — damage to the equipment,software or electronic data, loss of income and extraexpense due to a shutdown of the system, theft of money or intellectual property, extortion, loss of market share,damage to another party’s software or electronic data, theftof customers’ confidential data, invasion of privacy andidentity theft to name a few.

Do not rely on the standard Commercial Property andCommercial General Liability (CGL) policies to cover theseexposures. The Commercial Property forms limit any loss toelectronic data to an annual aggregate of $2,500 and anybusiness income or extra expense loss resulting frominterruption of computer operations to an annual aggregateof $2,500. The CGL policy excludes any property damage toor loss of use of another party’s electronic data.

H

Can’t getenough Jerry?IA&B’s Jerry Milton SeminarSeries returns this summer.

Coverages expert Jerry Milton, CIC,(and author of this article, as well asthe monthly Primary Agent CoveragesCorner column) will make his roundsover the next two months to deliver afull-day program on the nuances ofcovered property. He will present hisCovered Property — Direct Damage& Consequential Loss seminar atlocations throughout the tri-state area.

July 10 – Baltimore, Md.

July 11 – Newark, Del.

Aug. 1 – Allentown, Pa.

Aug. 2 – Mechanicsburg, Pa.

Aug. 15 – Philadelphia, Pa.

Aug. 21 – Pittsburgh, Pa.

www.iabgroup.com/Milton

The E-Commerce endorsement(CP 04 30) can be attached tothe Commercial Propertyforms, and the Electronic DataLiability endorsement (CG 0437) can be attached to the CGLpolicy. But these endorsementsare very limited.

Several insurers havedeveloped property and liabilitypolicies to address theexposures created by theInternet and e-Commerceactivities. These policies thatspecifically address the Internetand e-Commerce exposuresshould always berecommended to many of yourclients — both large and small.

PollutionBack in the 1970s and ‘80s,Congress decided to clean upour air, water and land. Duringthat period of time, they passedact after act after act. Theseacts, in many cases,established who could be heldliable for pollution cleanup anddamages. In some cases theseacts also established financialresponsibility requirements forcertain businesses. Probablythe best known of these acts is the ComprehensiveEnvironmental Response,Compensation and Liability Act (CERCLA), commonlycalled the Superfund.

Because of all the publicitysurrounding these acts,insurance agents and theirclients took a long, hard look at their General Liability policies. Prior to theintroduction of the CommercialGeneral Liability (CGL) policy in 1984-85, the oldComprehensive GeneralLiability policy covered bodilyinjury or property damagearising out of a “sudden andaccidental” discharge orrelease of pollutants. Thatcoverage ceased with theintroduction of the CGL policyin the mid 1980s.

The CGL policy we write todayhas very limited coverage for apollution claim. Any dischargeor release from the insured’spremises is excluded except fora hostile fire or smoke, fumes,vapor or soot from thebuilding’s heating, cooling ordehumidifying system or hotwater heater. There is coverage

for products-completedoperations claims and limitedcoverage for contractors’operations. However, thislimited coverage is often takenaway completely by adding theTotal Pollution Exclusionendorsement (CG 21 49), which is used by many insurers for certain risks(contractors, manufacturers,processors, etc.).

The Business Auto policy alsohas some limited pollutioncoverage. An accidentaldischarge from the auto’s fuel system or a covered auto striking the container of the pollutant away from the insured’s premises iscovered. However, the cargoexposure (hauling of thepollutant) is excluded unlessthe Pollution Liability —Broadened Coverage ForCovered Autos endorsement(CA 99 48) is added.

The pollution exposure formany insureds is increased bythe very broad definition of“pollutants” in the CGL andBusiness Auto policies.

“Pollutants” mean any solid,liquid, gaseous or thermalirritant or contaminant,including smoke, vapor, soot, fumes, acids, alkalis,chemicals and waste. Waste includes materials tobe recycled, reconditioned or reclaimed.

Many of our clients have apollution exposure, and theydon’t know it, and we don’trecognize it. Over the past fewyears I’ve been involved in

COVERAGES

[ 14 ]

More where thiscame from …Ponder additional coverageconundrums on the IA&B website.Resources, including archived JerryMilton articles, are available byselecting “coverages” from the left-hand menu bar.


several E&O claims againstagents for failure to recommendpollution coverage, includingfumes from a disinfectant usedin a restaurant’s restroom,fumes from a poultry-renderingplant and an excavationcontractor cutting anunderground oil pipeline.Pollution Liability policies areneeded just as much today asthey were 20 or 30 years ago.Also, don’t overlook the moldexposure. Some insurers willadd coverage for mold to theirPollution Liability policies by endorsement.

Damage to your workExclusion l. of the CommercialGeneral Liability (CGL) policystates the following:

“Property damage” to “yourwork” arising out of it or anypart of it and included in the“products-completedoperations” hazard.

This exclusion does not apply if the damaged work or the work out of which the damage arises wasperformed on your behalf by a subcontractor.

This “faulty work” exclusionhas become a highly litigatedissue throughout the country.Courts across the country aresplit on the issue of whetherclaims alleging constructiondefects are covered by the CGL.The primary battle has beenwhether faulty workmanshipconstitutes an accidental“occurrence.”

If you live in Pennsylvania,you’re sick and tired of

hearing “Kvaerner” and“Gambone Brothers.” In bothcases the PennsylvaniaSupreme Court (Kvaerner, 2006)and the Pennsylvania SuperiorCourt (Gambone, 2007) ruledthat faulty workmanship did not constitute an accidental occurrence.

Pennsylvania was the flagbearer, but very few other statesupreme courts have followedtheir lead. Most state supremecourts have taken the oppositeposition and ruled that faultyworkmanship constitutes anoccurrence. These statesinclude Texas, Indiana, Georgiaand Mississippi. The statelegislatures of four states —Arkansas, Colorado, Hawaiiand South Carolina — haveenacted legislation requiringCGL policies to contain adefinition that faultyworkmanship constitutes an occurrence. However, someof these laws are beingchallenged by insurers.

Faulty workmanship is anoccurrence in Indiana but isnot an occurrence in Kentucky.Louisville, Ky. sits on the OhioRiver. Look north fromdowntown Louisville and yousee Indiana. If a contractorbuilds a building in Indiana andanother building in Kentuckyand the electrical subcontractordoes faulty work resulting in afire, the resultant damagewould be covered under thecontractor’s CGL in Indiana,but excluded in Kentucky.Same policy, same insurer.What a mess!

[ 15 ]

Vanishing CGLCompleted OpscoverageProducers (including non-residents)who sell CGL in Pennsylvania, takenote: Contractors’ CGL policiesprobably do not cover theCompleted Operations exposure.

The 2006 Kvaerner Metals v.Commercial Union Insurance Co.decision was the first to upsetPennsylvania’s long-held exceptionthat allowed CGL coverage forsubcontractors’ faulty work. Sincethen, a string of cases havesolidified and expanded theinterpretation to includeconsequential damage.

IA&B members have access to aplethora of resources (think:webinar, Q&A, three-partexplanatory series and more) tounderstand the issue and how torespond. Learn more online.

www.iabgroup.com/pa/faulty_work

Any agent insuring a contractormust require the insurer toendorse the CGL policy tostipulate that faultyworkmanship is an occurrence.Otherwise, that contractor willhave little or no completedoperations coverage in somestates, or the insurer could arguethat faulty workmanship is notan occurrence. Don’t accept “no” or “don’t worry about it” for an answer.

Tenant-occupied buildinginsured by the ownerYour insured has leased abuilding. The building owner is insuring the building. All your insured (the tenant) needsis coverage for his or herbusiness personal property, loss of income and liability —right? Not necessarily!

The key question is, “Did the building owner waiverecovery against the tenant?” If not, if the tenant damages the building and the owner’sinsurer pays for the loss, thatinsurer will have the right toseek recovery from the tenant.We call that “subrogation.”

The tenant’s Commercial GeneralLiability (CGL) policy excludesdamage to property rented to oroccupied by the insured, exceptfor damage caused by a fire. Fireonly! We call that “Fire LegalLiability” or “Fire DamageLiability.” Are there other waysthe tenant can damage thebuilding. How about the tenant’semployee running a forkliftthrough the side of the building

COVERAGES

[ 16 ]

Need I say more?Obviously there are many other coverage gaps that can jumpup and bite us. The following is partial a list of additionalcoverages we may overlook and therefore find ourselveshaving to respond to, “I thought that was covered!” Some ofthese issues may be addressed by endorsement. However,others may require an additional policy.

Flood and earthquake: Much of IA&B’s tri-state footprint is vulnerable to both.

Water backup: Remember Hurricane Irene and Tropical Storm Lee?

Personal injury coverage under Homeowners’ policy: Many of us have greater personal injury exposure (think: libel, slander, defamation, etc.) in our personal lives than in business.

Increased loss assessment: Condominium, townhouse and neighborhood associationassessments for property or liability losses are not covered by the association’s policies.

-JM

[ 17 ]


or the tenant’s employee runninga truck through the side of thebuilding? Both of these lossesresulted in E&O claims becausethe tenants discovered they didnot have any coverage when thebuilding owners’ insurerssubrogated against the tenants.

What’s the solution? The bestoption is to ask the buildingowner to include a waiver ofrecovery in the lease. The ownershould consider a cross waiver —the owner waives recoveryagainst the tenant and the tenantwaives recovery against theowner. If the lease doesn’tinclude a waiver, the next optionis to ask the tenant’s insurer toadd Tenants’ Legal Liabilitycoverage to the CGL. Manyinsurers have their ownproprietary form to provide thiscoverage. The third option is towrite a Commercial PropertyLegal Liability Coverage Form,which will cover damage to thebuilding if caused by a coveredcause of loss and results from theinsured’s negligence.

Endorsing the CGL will not takecare of the auto exposure. TheBusiness Auto policy excludesproperty damage to property inthe care, custody or control of theinsured. Will the insurer endorseVoluntary Property Damage? Ifnot, the only option may be theCommercial Property LegalLiability Coverage Form.

CGL aggregate limitsTwo parties get together; decideto enter into some type ofrelationship; and sign a contract.This contract may be a

construction agreement, supplyagreement or a lease of premisesor equipment. The indemnitee(the party to whom a duty isowed) will require the indemnitor(the party who owes the duty) to purchase and maintain certainpolicies of insurance withstipulated minimum limits (e.g., $1,000,000 occcurrence/$2,000,000 aggregate), and theselimits must be “site specific,” “jobspecific” or “location specific.”

The Commercial General Liability(CGL) policy has two aggregates— General and Products-Completed Operations. Theseaggregates are the total that willbe paid for any and all lossesduring the term of the policy. Inorder to satisfy the contractualrequirements of “site specific,”“job specific,” or “locationspecific,” the DesignatedConstruction Projects GeneralAggregate Limit endorsement((CG 25 03) must be added to acontractor’s CGL and theDesignated Locations GeneralAggregate Limit endorsement (CG 25 04) must be added to theCGLs of insureds with multiplelocations. With theseendorsements attached, thepolicy’s General Aggregate (notProducts-Completed Operations)applies separately to each project or location.

No personally owned autosSmall business owners frequentlypurchase and title all their autosin their companies’ names. Theseautos – those used in the businessand those used by the owner andfamily members — are insured

under the company’s BusinessAuto policy. Who is an insuredunder the Business Auto policyincludes the named insured forany covered auto and anyoneelse while using with the namedinsured’s permission a coveredauto the named insured owns,hires or borrows. Therefore, theowner and family members arecovered only while using an autoowned, hired or borrowed by thecompany. They have no coveragefor any auto they hire or borrow.

In order to cover the owner andfamily member for their non-owned auto exposures, we addthe Drive Other Car — BroadenedCoverage For Named Individualsendorsement (DOC) (CA 99 10).What coverages — Liability onlyor Liability, Medical Payments,UM/UIM and Physical Damage?That’s the coverage they’ll havefor a rented or borrowed car.However, the major question is,“Who do we schedule on theendorsement?” The DOC coversscheduled drivers only — it is nota family endorsement. Whatabout children who reach the ageof 16 during the policy term, gettheir license, but are not added?What about children who decideto drive a friend’s car whenthey’re only 14 or 15 years old?

The best solution is to convincethe business owner to title oneauto personally and thenpurchase a Personal Auto policy.The Personal Auto policy coversfamily members — scheduled or not, licensed or not — for the use of any auto.

Company-furnished autosMany companies provide theirkey employees a company-owned auto for their personaluse as a fringe benefit. Theseautos are insured under thecompany’s Business Autopolicy. The employee is aninsured under the BusinessAuto policy while using thatcompany auto with the namedinsured’s permission. Who ispermitted to drive thatcompany car — employee only, employee and spouse,employee and family members,or anybody? Any company thatprovides a company car to an

employee and does not placerestrictions on its use isexposing its Business Autopolicy and company assets toall types of exposures.

Smart companies restrict theuse of the company car to theemployee or the employee andspouse. What if the employee,a family member or someoneelse uses the auto outside thescope of permission? They areno longer an insured under theBusiness Auto policy.

The employee has a PersonalAuto policy insuring thefamily’s personally-ownedautos. The Business Autopolicy has denied coverage.What about the Personal Autopolicy? Sorry! The PersonalAuto policy excludes coveragefor any auto furnished oravailable for the regular use ofthe insured. When an insuredis furnished a company auto,always add the Extended Non-Owned Coverage — VehiclesFurnished Or Available ForRegular Use endorsement (PP03 06) to the Personal Autopolicy. This endorsementdeletes the liability exclusionfor “furnished or available forregular use.”

Vacant buildingsA building doesn’t have to bevacant to be “vacant.” That’saccording to the terms of theCommercial Property BuildingAnd Personal Property Form.Under the Vacancy Conditionof that form, a building is

vacant unless at least 31percent of its total squarefootage is rented and/or usedfor its customary operations. Ifthe building is vacant for morethan 60 consecutive days, thenvandalism, sprinkler leakage,glass breakage, water damageand theft are excluded andindemnification for any othercovered cause of loss isreduced by 15 percent.

How many of you know the“vacancy” status of yourinsured commercial buildings?In today’s economy manybuilding owners have lostseveral of their tenants. Theirbuildings may be partiallyoccupied but, at the same time,be “vacant.” What are youroptions? Maybe the insurer willattach a Vacancy Permitendorsement, or you may haveto write a new policy with amuch higher premium.

Extended business incomeThe Business Income AndExtra Expense Coverage Formagrees to pay for loss ofincome and/or extra expensesincurred during the “period ofrestoration.” In other words,you’re covered while there is asuspension of operations inwhole or in part. Whenoperations are resumed theBusiness Income CoverageForm will continue to providecoverage for any loss ofbusiness income for 30 daysunder the Extended BusinessIncome Additional Coverage.

COVERAGES

[ 18 ]

Ordinance orlaw 101Access IA&B’s online resource onordinance or law exposure to learnwhat it means for producers and asample letter for clients.

www.iabgroup.com/de/ordinance_law

www.iabgroup.com/md/ordinance_law

www.iabgroup.com/pa/ordinance_law

[ 19 ]


Upon reopening, it may takemany businesses several monthsto reach their pre-loss incomelevel, and 30 days is notsufficient to cover their loss. Onthe Commercial PropertyDeclarations Page is an OptionalCoverage — Extended Period OfIndemnity. If this OptionalCoverage is activated, businessincome can be extended up to730 days. If Extended Period OfIndemnity is purchased, you’reonly buying additional days.Those days are worthless ifthere’s not a sufficient limit ofinsurance. The policy will pay theloss for the number of daysstipulated, the limit of insuranceis exhausted, or the businessreturns to pre-loss level,whichever comes first.

Ordinance or lawIf a building is subject to anyordinance or law regulatingconstruction or zoning, we knowto add the Ordinance Or LawCoverage endorsement (CP 0405) to cover the costs to upgradethe building in order to satisfycurrent building codes or todemolish the building and rebuildelsewhere. But do we think toadd the Ordinance Or Law –Increased Period Of Restorationendorsement (CP 15 31) to theBusiness Income And ExtraExpense Coverage Form to cover the increased period ofrestoration resulting from theenforcement of any ordinance or law regulating construction or repair?

I certainly hope this review ofpotential coverage gaps has beenhelpful. Y’all take care!

________________________________

Jerry M. Milton, CIC, teaches andconsults on industry issues. The

legal professional recognizes him asan expert on insurance coverages.He is also an education consultantfor IA&B, working with CISR, CICand continuing education programs.

We look for the best independent agents and build relationships that last the duration. We are committed to the independent agency system as the only means to deliver our products. Because of that, we work hand-in-hand to help our agencies grow profitably.

Our agents set us apart.

www.PennNationalInsurance.com

Business Surety Auto Home

We look for the best independent agents and build

Tools Y O U C A N U S EQuick Response (QR) Code

QR(or quick response) codes are showingup everywhere – on milk cartons andbusiness cards, in bus shelters and

instruction manuals, on museum exhibits andsporting-event tickets … even on the Facebookheadquarters’ rooftop. So what are these mysteriousbarcodes and what could they mean for your agency?

First developed in the early ‘90s to track vehiclesduring manufacturing, the two-dimensional codes arenow common in advertising and packaging. Smartphone users download an app that allows them toscan the QR code, which typically includes ahyperlink sending them to a designated Web page.The possibilities are endless for your agency, but afew best practices follow.

Creating a QR code is simple — and free. Enter “create QR code” in a search engine and choose from numerousvendors. Generating your own code is instantaneous.

Choose a mobiledevice-optimized

landing pageShorten the

destination URL toimprove “scanability”

Test the code before publishing Provide instructions

near the codeMake the scan worththeir while

Scan with smart phone to access QR code ideas for agents.

[ 20 ]

Date Topic Location

5 William T. Hold Seminar Lancaster, Pa.

Mistakes That Lead to E&O Claims Mechanicsburg, Pa.

6 William T. Hold Seminar Hagerstown, Md.

DAIAB Annual Convention Rehoboth Beach, Del.

7 CISR—Commercial Property Course Baltimore, Md.

11-12 James K. Ruble Graduate Seminar Annapolis, Md.

11-14 CIC—Commercial Casualty Institute Erie, Pa.

13 Mistakes That Lead to E&O Claims Baltimore, Md.

Best Practices of E&O Loss Control Erie, Pa.

19 Dynamics of Service Seminar Pittsburgh, Pa.

19-21 P&C Licensing Study Course Mechanicsburg, Pa.

20 Power Hour Webinar Online Webinar

21 CISR—Commercial Property Course Philadelphia, Pa.

28 Mistakes That Lead to E&O Claims Pittsburgh, Pa.

Glance at EventsJ U N E C A L E N D A R

[ 21 ]

WHAT YOU DON’T KNOW COULD LEAD TO E&O When it comes to errors or omissions (E&O), you can address the mistakes you know. It’s the onesyou don’t recognize that can land you in court. Teaching independent agents to think differently about hidden exposures or outside the box when employing best practices is the goal of ourupcoming loss-control classes. Our on-demand seminars also address E&O exposures and areavailable anytime, anywhere.

IA&B’s loss-control seminars are taught by experts with extensive experience with independentagencies and are approved for CE and loss-control credit. IA&B members receive a significantdiscount on the registration fees.

Mistakes That Lead to E&O Claims Best Practices of E&O Loss ControlJune 13 Baltimore, Md. June 13 Erie, Pa.June 28 Pittsburgh, Pa.June 5 Mechanicsburg, Pa.

Read more and register at iabgroup.com/E&Oseminars

w Ethical Behavior and E&O (On-Demand)w Compliance Pitfalls and Ethical Responsibilities* (On-Demand)

*includes a Md. edition and a NEW Pa. editionRead more and register at iabgroup.com/on-demand

Platinum ProfileInsurance Agents & Brokers proudly recognizes

Berkley Mid-Atlantic Group, LLC as one of its Platinum Partners. IA&B Platinum Partners dedicate the highest level

of sponsorship to our organization.

FEATURED PARTNERBerkley Mid-Atlantic Group, LLC

PRESIDENT & CHIEF EXECUTIVE OFFICER

Kevin W. Nattrass

COMPANY LOCATIONSHome Office, Glen Allen, Va.PA/OH Region, Harrisburg,

Pittsburgh & Erie, Pa.Capital Region, Glen Allen, Va.

Carolinas Region, Charlotte, Nc.1-800-283-1153

A.M. BEST RATING “A+” (Superior)

WEBSITEwww.wrbmag.com

Berkley Mid-Atlantic Group, LLC(BMAG) is a regional commercialproperty and casualty carrier

organized into three full-serviceterritories with local claim,underwriting and risk managementteams located close to its customersand policyholders. BMAG’s policies areissued exclusively throughindependent agents serving clientsthroughout the Mid-Atlantic Region,including Delaware, Maryland, NorthCarolina, Ohio, Pennsylvania, SouthCarolina, Virginia and Washington,D.C. BMAG is a member company ofW. R. Berkley Corporation, aninsurance holding company foundedin 1967 that is among the largestcommercial lines writers in the United States.

BMAG takes a generalist approach tounderwriting, with a focus on middlemarket commercial accounts within theservice, manufacturing, retail,construction, wholesale and financeindustries. Additionally, with its Marineand Select Market divisions, BMAGoffers niche-oriented coverages fortransportation, schools, social servicesand public entity organizations.

BMAG’s business approach is predicated on sound, disciplinedunderwriting practices, always “doingthe right thing” for agents andpolicyholders and is further exemplifiedin its core values of.... The carrier iscommitted to “Insuring the Future ofBusiness” through its independentagency relationships.

Berkley Mid-Atlantic Group's home office in Glen Allen, Va.

WHAT IS IA&BPARTNERS?The IA&B Partners

program gives company

and allied businesses

the opportunity to

demonstrate their

commitment of support

to independent agents

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 that strongly support the independent agencysystem and Insurance Agents & Brokers.

Thank you for your continued sponsorship.

PLATINUM LEVELACUITYBerkley Mid-Atlantic GroupDonegal Insurance GroupErie Insurance GroupHarleysville InsuranceHighmark Casualty Insurance CoInsurance Agents & BrokersService Group Inc

MMG Insurance CompanyMillers Mutual GroupMillville Mutual Insurance CoMutual Benefit GroupOhio CasualtyPenn National InsuranceSelective Swiss ReThe Main Street America GroupUtica National Insurance Group

GOLD LEVELProgressive Westfield Insurance

SILVER LEVELAccess Insurance Company Allied InsuranceAmerican Mining Insurance CoCumberland Insurance GroupFrederick Mutual Insurance CoJuniata Mutual Insurance CoPSBA Insurance TrustThe Philadelphia Contributionship

BRONZE LEVELAegis Security Insurance Co

Agency Insurance Company

AmWINS Program Underwriters Inc

Auto-Owners Insurance Company

Briar Creek Mutual Insurance Company

Builders Insurance Group

Chubb Group of Insurance Companies

Countryway Insurance Company

Encompass Insurance

First General Services

Foremost Insurance Group

Goodville Mutual Casualty Company

Guard Insurance Group

Harford Mutual Insurance Co

Hanover Fire & Casualty Insurance Company

Insurance Alliance of Central PA Inc

Insurance House

Insurance Placement Facility of PA

Keystone Insurers Group Inc

Lebanon Valley Insurance Company

Mercer Insurance Group

Merchants Insurance Group

Mercury Casualty

Penn PRIME Municipal Insurance

Reamstown Mutual Insurance Company

Rockwood Casualty Insurance

State Auto Mutual Insurance Company

TAPCO Underwriters Inc

The Brethren Mutual Insurance Company

The Motorists Insurance Group

The Mutual Service Office Inc

Travelers

Tuscarora Wayne Insurance Company

Zenith Insurance

Primary Agent June 2012

Primary Agent | June 2012 TechnologyU P D A T E

No matter what industryyou’re in, your companycan’t survive withouttechnology. And these days,even non-technicalemployees know thattechnology goes waybeyond desktop computersand networks. From smartphones and tabletcomputers to mobile apps

and could-basedtechnology, there’s aplethora of technologicaladvancements to not onlykeep track of, but also toprofit from. To staycompetitive, yourorganization needs toanticipate the futuretechnology trends that areshaping your business and

then develop innovativeways to implement them inyour organization.

Now that 2012 is wellunderway, be ready for thefollowing 20 technology-driven trends to continue tocreate both disruption andopportunity in the businessworld. But rather than just

THE TOP 20 TECHNOLOGY-DRIVEN TRENDS FOR 2012

DANIEL BURRUS

Daniel Burrus is considered one of

the world’s leading technology

forecasters and strategists. He is

the founder and CEO of Burrus

Research, a research and

consulting firm that monitors

global advancements in technology

driven trends to help clients better

understand how technological,

social and business forces are

converging to create enormous,

untapped opportunities. The New

York Times has referred to him as

one of America’s top three

business “gurus” in the highest

demand as a speaker.

For more information on the

services and products offered by

Daniel Burrus, please visit

www.burrus.com. For Burrus’

mobile Web app, text

DANBURRUS to 99000.

[ 24 ]

react to them, be pre-active to futureknown events and plan how yourcompany will profit from them now.That’s the only way you’ll gaincompetitive advantage in the coming years.

1. Rapid growth of Big Data. BigData is a term used to describe thetechnologies and techniques used tocapture and utilize the exponentiallyincreasing streams of data with thegoal of bringing enterprise-widevisibility and insights to make rapidcritical decisions. High SpeedAnalytics using advanced cloudservices will increasingly be used as acomplement to existing informationmanagement systems and programsto tame the massive data explosion.This new level of data integration andanalytics will require many new skillsand cross-functional buy-in in order tobreak down the many data andorganizational silos that still exist. Therapid increase in data makes this afast-growing, hard trend that cannotbe ignored.

2. Cloud computing andadvanced cloud services will beincreasingly embraced by business ofall sizes, as this represents a majorshift in how organizations obtain andmaintain software, hardware andcomputing capacity. As consumers, wefirst experienced public clouds (thinkabout when you Google or Apple’sMobileMe and now iCloud). Then wesaw more private clouds and hybridclouds from businesses such asFlextronics, Siemens, Accenture andmany others, all using the cloud to cutcosts in human resources and sales-management functions. This was onlythe beginning, as cloud services

enable the rapid transformation of all business processes.

3. On-demand services willincreasingly be offered to companiesneeding to rapidly deploy newservices. Hardware as a Service(HaaS) joins Software as a Service(SaaS), creating what some havecalled “IT as a service.” All will growrapidly for small as well as largecompanies, with many new players ina multitude of business processcategories. These services will helpcompanies cut costs as they provideaccess to powerful software programsand the latest technology withouthaving the expense of a large IT staffand time-consuming, expensiveupgrades. As a result, IT departmentsin all industries will be increasinglyfree to focus on enabling businessprocess transformation, which willallow organizations to maximize their return on their technologyinvestments.

4. Virtualization of storage,desktops, applications andnetworking will see continuedacceptance and growth by both largeand small businesses as virtualizationsecurity improves. We will continue tosee the virtualization of processingpower, allowing mobile devices toaccess supercomputer capabilities and apply it to processes such aspurchasing and logistics, to name a few.

5. Consumerization of ITincreases as the source for innovationand technology continues to be drivenby the consumer thanks to rapidadvances in processing power,

storage and bandwidth. Smartcompanies have recognized that thisis a hard trend that will continue and have stopped fightingconsumerization. Instead, they are turning it into a competitiveadvantage by consumerizing theirapplications, such as recommendingsafe and secure third-party hardwareand apps. Encouraging employees toshare productivity-enhancingconsumer technology will become awise strategy.

6. Gamification of training andeducation will fuel a fast-moving hardtrend using advance simulations andskill-based learning systems that areself-diagnostic, interactive, game-likeand competitive, all focused on givingthe user an immersive experiencethanks to a photo-realistic 3Dinterface. Some will develop softwareusing these gaming techniques towork on existing hardware systemssuch as the Xbox and PlayStation. Asocial component that includessharing will drive success.

7. Social business takes on a newlevel of urgency as organizations shiftfrom an Information Age “informing”model to a Communication Age“communicating and engaging”model. Social software for businesswill reach a new level of adoptionwith applications to enhancerelationships, collaboration,networking, social validation andmore. Social search will increasinglybe used by marketers andresearchers, not to mention WallStreet, to tap into millions of dailytweets and Facebook conversations,providing real-time analysis of manykey consumer metrics.

[ 25 ]


8. Smart phones and tabletsbecome our primary personalcomputers, and the mobile Webbecomes a must-have capability. An enterprise mobility strategybecomes mandatory for all sizeorganizations as we see mobile data,mobile media, mobile sales, mobilemarketing, mobile commerce, mobilefinance, mobile payments, mobilehealth and many more explode. Thevast majority of mobile phones soldglobally will have a browser, makingthe smart phone our primarycomputer that is with us 24/7 andsignaling a profound shift in globalcomputing. This new level of mobilitywill allow any size business totransform how they market, sell,communicate, collaborate, educate,train and innovate using mobility.

9. Tablet computers withenterprise-level Web apps will beused to transform sales and servicesupport and then move to purchasing,logistics, just-in-time training andmuch more.

10. Intelligent electronic agentsusing natural language voicecommands takes off with Apple’s Siri,rapidly followed by Android, Microsoftand others all offering what willbecome a mobile electronic conciergeon your smart devices including yourphone, tablet and television. Soonretailers will have a Siri-like salesassistance, and maintenance workerswill have a Siri-like assistant. Thepossibilities are endless.

11. Digital identity managementwill become increasingly important toboth organizations and individuals asnew software allows users to better

manage their multiple identitiesacross business and personalnetworks. Next Generation Biometricswill play a key role in both identitymanagement and security.

12. Visual communications takevideo conferencing to a new levelwith programs like SKYPE, FaceTimeand others giving us videocommunication on phones, tabletsand home televisions. Visualcommunications will be integratedwith current video conferencingsystems, fueling this as a mainrelationship-building tool forbusinesses of all sizes.

Are these the onlytechnology-driven trends

for 2012 to be aware of? Of course not. As we all

know from past experience,technology is always

evolving, resulting in new trends emerging andnewproductsappearing every day.

13. Enhanced locationawareness will accelerate the numberof business-to-consumer apps forsmart phones and tablets that willtake geo-social marketing and sales toa new level of creative application,driving rapid growth.

14. Geo-spatial visualizationcombines geographic informationsystems (GIS) with location-awaredata, radio frequency identification(RFID) and other location-awaresensors (including the current locationof users form the use of their mobiledevices) to create new insights andcompetitive advantage. Earlyapplications include logistics andsupply chain to name a few.

15. Smart TV using apps will geta major boost in the marketplace,fueling a major shift in home viewing.Ever wonder how you could haveover 500 cable or satellite channelsand nothing to watch? You didn’t haveapps on your TV allowing you topersonalize the experience. This is thebeginning of a major shift that willtake place in living rooms globally.Look for Apple to introduce the iTV(living room size iPad).

16. Multiple app stores for allsmart phone, tablet and televisionoperation systems (Android,Blackberry, Windows and others) willtake off, creating an abundantdistribution and sales ecosystem forall. This will cement the revolutionversus evolution that apps softwarerepresents. We will see business app stores for the enterprise startingthis year.

17. 3D displays for smartphones and tablets will be thebreakthrough that will drive wide-scale consumer acceptance of 3Dcomputing. 3D computing for theenterprise will grow rapidly formilitary, medicine, fashion,architecture and entertainmentapplications.

[ 26 ]

TECHNOLOGY UPDATE

18. eBooks, eNewspapers andeMagazines pass the tipping pointdue to the abundance of smartphoneswith readable displays, tablets thatprovide a full-color experience, andpublishers providing apps that give abetter-than-paper experience byincluding cut, copy, paste, print andmultimedia capabilities. In addition,eBook readers will have high qualitywith a low enough price to bring in the masses.

19. Interactive multimediaeTextbooks will finally take off thanksto Apple’s iBook Author and othercompeting tools, freeing new publishers

to create compelling and engagingcontent, and freeing students from a static, expensive and literally heavy experience.

20. Wireless machine-to-machineapplications such as two-way meterreading, surveillance, vending machine and point-of-sale solutionstake off thanks to faster wireless data networks.

Spot your own trends. Are these theonly technology-driven trends for 2012to be aware of? Of course not. As we all know from past experience,technology is always evolving, resulting

in new trends emerging and newproducts appearing every day. That’swhy smart organizations stay ahead ofthe trends by anticipating them,adapting them to their uniqueenvironment before the competitiondoes and ultimately enabling theorganization to profit from them. The more you’re able to do that, thesooner your organizations will reachthe next level of success.

JGSI N S U R A N C E

A subsidiary of

Umbrella Programs thatGive You More OptionsPreferred Property Program gives you broader,more flexible coverage with a range of limitsOur umbrella liability policies are written by XL Insurance with Chubb InsuranceGroup for the excess layer—two of the industry’s most highly rated carriers.We offer four umbrella limits, with coverage you can rely on.

• $5 to $25 Million in umbrella coverage with up to $50 Million in total limits.

• Hi-Rise apartments up to 35 stories eligible, with higher eligible by referral.

• Excess of D&O, General Liability, Auto, Employers Liability, EmployeeBenefits and more.

• Developer-sponsored boards eligible.

Contact us for a quote:

[email protected]

Service is our specialty; protecting you is our mission ®

960 Holmdel Road, Holmdel, NJ 07733

7

XL Insurance is the global brand used by XL Group pic’s insurance companies.Our XL policies are underwritten by Greenwich Insurance Company.

®

[ 27 ]


Brokers Surplus Agency . . . . . . . . . . . . . . . . .IBC

EMC Insurance Companies . . . . . . . . . . . . . . . .1

Guard Insurance Group . . . . . . . . . . . . . . . . . . .3

Hanover Fire & Casualty . . . . . . . . . . . . . . . . . . .3

IA&B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .IBC

IA&B Partners Program . . . . . . . . . . . . . . . . . . .21

Interstate Insurance Mngmnt. . . . . . . . . . . . .OBC

Millers Mutual Group . . . . . . . . . . . . . . . . . . .IFC

Mutual Benefit Group . . . . . . . . . . . . . . . . . . . .11

Penn National Insurance . . . . . . . . . . . . . . . . . .19

Preferred Property Program . . . . . . . . . . . . . . .27

Ad Index

ClassifiedA D V E R T I S E M E N T S

DISCOVER THE BENEFITSOF A PARTNERSHIP

WITH FAYETTEINSURANCE ASSOCIATES

Uniontown, PA 15401Website: www.fayins.comEmail: [email protected]

SOUTHEAST PA PRODUCERS & AGENCIES

Professional agency since 1926 locatedin Feasterville, Bucks County, Pa. Call for confidential information and a review of our services. Contact Ray Reinard at 215-375-8600, Ext. 119.

If you would like to place a

Classified Advertisement, simply

fax your ad on company letterhead

to 717-795-8347, and we will take

care of the rest.

[ 28 ]

Pity insurance adjusters for the role they play? According to

the satirical website The Daily Quarterly, you’re not alone.

The site recently mocked (or flattered, depending on your

perspective) the profession with an article claiming that

Academy Award-winning actor Daniel Day-Lewis left an

upcoming movie, in which he would have played an insurance

adjuster, after less than a day of job shadowing.

The spoof included a (faux) statement from the actor: “I’d

rather spend 10 years working in the heat on some oil rig, like

I did before doing ‘There will be blood,’ … than deal with

people on their auto accident. Never again….”

While there is likely little to no truth behind the article, it

struck a nerve and went viral on the Internet — especially

among under-appreciated insurance adjusters.

Source: The Daily Quarterly

----------------------------------------------------------------———————-------The Last & Least column is dedicated to the industry’s oddities —from creative claims and kooky coverages, to (tasteful) jokes andstrange stories. Submit yours to [email protected], subject line: Last & Least. The editor will happily protect sources’ anonymity upon request.

Insurance adjusters’ 15 minutes of fame

IF YOU HAVE THE TOOLS,WE HAVE THE INSURANCE.

Residential Contractors with up to five employees canfind great deals on liability and tools insurance atBrokers Surplus Agency! We represent UTICAFirst Insurance, one of the largest writers of small contracting firms in the Northeast!

Blanket Additional Insured coverage and UTICA’sown “Toolbox Endorsement” which includes 7 bundledadditional coverages saves your customers hundredsof dollars! Call or e-mail us today for a quick quote.Artisan program available in DE, MD, NJ & PA

Contact: Dennis Marsaglia, Ext. [email protected] Frisch, Ext. [email protected]

Brokers Surplus Agency, P.O. Box 2849, Warminster, PA 18974 � Call (215) 443-9900

Our ApartmentProgram offers a great combination of competitive pricingand coverage for your customers!

Five or more units are eligible for this great program. An optional Apartmentizer Coverage Endorsement isalso available which includes 34 additional coveragessuch as: Landlord/Owner Furnishings

Loss of EarningsLock ReplacementUtility InterruptionWater Back-Up of Sewers & Drainsand much more!

Apartment program available in DE, MD, NJ and PA

Contact: Dennis Marsaglia, Ext. [email protected] Frisch, Ext. [email protected]

Brokers Surplus Agency, P.O. Box 2849, Warminster, PA 18974 � Call (215) 443-9900

July 10 Baltimore, Md.July 11 Newark, Del.August 1 Allentown, Pa.

August 2 Mechanicsburg, Pa.August 15 Philadelphia, Pa.August 21 Pittsburgh, Pa.

Read more at iabgroup.com/Milton

The “consequential” losses in a covered property claim come in a variety of forms and may or may not be covered by policy endorsements. In this seminar, Jerry sorts it all out through his vast knowledge of coverages and his unique ability to offer anecdotes that make

it more meaningful for the class.

The Consequences of a Property Loss

Dates/Locations

Marcellus Shale Coverages

If you have clients involved in the rapidly expanding Marcellus Shale natural gas industry—and who doesn’t these days?—Interstate has the coverages you need for water haulers, dumps and other ancillary classes.

In Pennsylvania, Delaware, Indiana, Kentucky, Maryland, Michigan, New Jersey, Ohio, Virginia & West Virginia2307 Menoher Blvd. Johnstown, PA 15905814-255-7878 1-800-452-0297 Fax 814-255-6010

If your client hauls any commodity for the natural gas drilling industry, Interstate can insure them!

Documents

Primary Agent - June 2012 - DE Edition