Primary Agent - September 2012 - DE Edition

DELAWARE

INTHISISSUE:___________

2012 election preview

The Big “I”: a voice in D.C.

Meet DAIAB’s lobbyist

Public affairs committee in action

2012 election overviewPolls, predictions and political commentary have dominated the news for months, so it’sno surprise to anyone that this year’s elections will be pivotal ones at both the state andfederal levels. Whether the political parties in power are able to retain their majorityhold and if so, to what extent, will have a major impact on the social and economicinitiatives considered in the coming years.

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A voice in Washington, D.C.Member agents are represented by a bustling government affairs office and powerfulpolitical action committee in Washington, D.C. Here, the Big “I” staff chronicles its work— and successes — on Capitol Hill.

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Getting to know DAIAB’s lobbyistAs DAIAB’s contract lobbyist, Beverly Sisson helps to maintain the association’s dailypresence in Dover. A veteran of the insurance and legislative industries, she employsher strong relationships with legislators and their staff, as well as with the Departmentof Insurance, to advocate on DAIAB members’ behalf.

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In the driver’s seat: How members steer DAIAB’s legislative effortsDAIAB works to put the agent’s perspective first. And who better to drive theassociation's efforts than agents themselves? The DAIAB Public Affairs Committeeserves as the primary arm of the association’s board of directors and is tasked withexecuting the organization’s advocacy program.

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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 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 # 2012-9 is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

2 Chair of the Board’s Message3 Member FAQ4 State News6 Preventing E&O8 Coverage Corner15 Glance at Events

21 Tools You Can Use29 IA&B Partners32 Technology Update36 Advertisers Index36 Classified Ads36 Last & Least

In every issue

Mission StatementPrimary 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

OfficersNorman F. Basso, CPCU

Chair of the BoardYork, Pa.

G. Greg Gunn, CICVice Chair of the BoardLemoyne, Pa.

Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-PImmediate Past Chair of the BoardWest Chester, Pa.

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.

Michael P. ErtelColumbia, Md.

John L. FrankenfieldTelford, 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.

Craig S. Mader Gambrills, Md.

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

[ 2 ]

Norman F. Basso, CPCU

Chair of the Board’sM E S S A G E

Strengthening our collective voice in a time of change

September often marks change: change in seasons, change inschool year and, here at your agents’ association, change inleadership. Beginning this month, I assumed the role of chairmanof the IA&B Service Group. It is a role that I look forward tofulfilling over the next 12 months.

One of the benefits of DAIAB membership — and one of thereasons that keeps me personally invested in our organization —is legislative advocacy. As busy professionals, we do not have thetime necessary to affect change in Dover and Washington, D.C. But we do have state and federal government affairs teams whowork on our behalf, monitoring legislation and regulations,meeting with elected officials and ensuring independent agents’voices are heard.

I encourage you to review this issue of Primary Agent magazine tolearn about a few of the many ways DAIAB works on your behalfat the state and federal capitol buildings. And furthermore, Iencourage you to support that advocacy work with a contributionto AgentPAC — your association’s political action committee (PAC).As a fellow board member once told me, “If we are not willing tofinancially support the PAC that protects our business and theindependent agency system, then who will? It will be one of yourbest investments.”

As the November elections approach, we face a time of change inDover and Washington, D.C. But despite the unknowns, you cantrust that your association will work diligently on your behalf, nomatter what those changes may be.

Until next month,Norm

Editor’s note: To support to AgentPAC, visitwww.iabgroup.com/AgentPAC.

ANSWER:This is a great follow-up question to last month’s column(August 2012) on the need to secure discontinuedoperations coverage for a retiring customer with anoccurrence-based CGL policy.

First, and most importantly, we would encourage you totell the customer to review the issue with the attorney incharge of the company’s dissolution. This issue is clearlyrooted in law (it speculates on the company’s inability tobe sued post-dissolution), and it would be better suitedfor the customer's attorney to review and answer. Inaddition, note that the answer can vary from state to state,based on the type of entity (profit v. non-profit), on thebusiness structure (LLC, corporation, partnership, et al), oron the type of dissolution (voluntary, administrative orjudicial); all this, again, to illustrate the fact that theattorney should be involved to provide direction as to theextent and duration of potential liability (and consequentlythe need for coverage).

The question, however, does have merit for producers, ifonly to provide guidance on how to overcome theobjection. This particular question happened to pertain toa Pennsylvania customer, but let’s take a quick look atsome conditions applicable to the voluntary dissolution ofa corporation in all three states in IA&B’s footprint.

In Pennsylvania, the statute allows an action to bebrought forth against a dissolved corporation or itsdirectors, officers or shareholders, if the action is broughtwithin two years of the date of dissolution, or other timelimit provided by law, up to two years.

In Delaware, a corporation continues beyond itsexpiration for three years for the purpose of prosecutingor defending suits. In addition, once filed within the three-year timeframe, the corporation will continue until anyjudgment, order or decree has been fully executed.

In Maryland, the corporation continues to exist for thepurpose of paying, satisfying and discharging any existingdebts or obligations, collecting and distributing its assets,and doing all other acts required to liquidate. Any suitbrought prior to filing the articles of dissolution must be

fully executed. Once the articles of dissolution areaccepted by the state, new suits are barred. Maryland’sdissolution process, however, is lengthy and can takeseveral years, during which a suit could be broughtagainst the entity.

With regard to the extent of liability, in Pennsylvania andDelaware, the shareholder's liability is generally limited tothe pro rata share of the asset distribution. Maryland, onthe other hand, is less clear, and does not expresslyindicate a limitation.

Again, this is obviously a cursory and narrow review. Withcircumstances changing slightly, so could the answer. Thebottom line is that, regardless of the circumstances,producers should:

1. Encourage the customer to discuss the issue with theattorney handling the dissolution

2. Always offer discontinued operations coverageto the customer

3. Document both the offer and the customer’s decision

You should refrain from advising the customer on howmuch insurance to secure. The customer should make the decision by himself, or based on his attorney's advice,but not based on yours. Otherwise, whether and howyour customer chooses to secure discontinued operations coverage could suddenly be redirected to your own E&O carrier if the coverage happens to beinsufficient or inexistent.

To read why a customer who is retiring from business andhad an occurrence-based CGL policy needs adiscontinued operations policy, read part I in the August2012 issue of Primary Agent.

DO YOU HAVE A QUESTION? Email 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 look forward to answering your questions!

QUESTION: My customer is dissolving his company: If there are no assets because thecorporation is no longer in existence, what is the risk to the customer, and why should hepurchase discontinued operations coverage?

Member FAQ

State NewsDAIAB scoreseducation award —again DAIAB is proud to announce that theassociation once again has beenrecognized by the IndependentInsurance Agents and Brokers ofAmerica for the quality of its professionaldevelopment programs. The Big “I”recently presented DAIAB with a bronze Excellence in Insurance Education (EIE) Award.

The EIE awards celebrate and recognizestate associations and staff who havemade significant contributions toeducation for their members and theindustry in the key area of classofferings, continuing education,professionalism, designation offerings,industry collaboration, planning goals,marketing, resources and more.

Save the date forDCRB updateMembers can learn the latest on theworkers’ compensation market directlyfrom the Delaware Compensation RatingBureau’s (DCRB) Bruce Decker and Tim Wisecarver. The annual update for DAIAB members will be at 6 p.m. on Nov. 14 at the HiltonWilmington/Christiana in Newark.

Getting the mostCE out of yourdesignation updateTaking the same institute two years in arow will update your designation — butnot count towards continuing education(CE) if it is taken in the same licensingperiod. While producers are generallypretty cognizant of their designationupdate requirements as well as their CE requirements (see link below for arefresher), it is not unusual to haveinterference between the two. To avoidlearning at the last minute about missingcredit hours, agents should ensure thatthe courses or institutes taken aredifferent from one update to the next.

www.iabgroup.com/producer_licensing/de/ce

Neighboring newsAttn. producers with clients who areMaryland employers

The National Council for CompensationInsurance (NCCI) — the designatedlicensed rating and statisticalorganization in Maryland, as comparedto the Delaware Compensation RatingBureau — filed a change in its ExperienceRating Plan formula effective startingwith 01/01/2013 renewals. As a result,some clients’ mods will change, evenwithout a change in their lossexperience, and this will impact theiroverall premium.

www.iabgroup.com/md/ncci_mod

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Primary Agent | September 2012

Fannie Maepublishes FAQ to clarify lenderrequirements for condosMembers’ collective condo headachemay be subsiding. Following the lastupdate to Fannie Mae's Servicing Guide,producers have encountered difficultiesin providing policies and evidence ofinsurance forms that meet lenderrequirements. Major issues included theuse of guaranteed replacement costwording and expecting the insuredvalue to be determined by the insurer.

This summer Fannie Mae issued an FAQto clarify its position. While imperfect,the FAQ is an improvement: Itacknowledges that the coverage doesnot have to be “as determined by theinsurer” and suggests methods toestimate the amount. Determining 100percent of the insurable value of thebuilding still can be elusive, but the FAQgives some flexibility back to themortgage loan originator in acceptingthe amount of coverage. Finding anacceptable amount for all parties, incollaboration between the insurer andthe borrower, may be easier than it hasbeen in recent months. Producers canaccess the FAQ and use it in theirdiscussions with the lender.

www.efanniemae.com(search HO-6 master/blanket)

How the healthcare law will affect youDAIAB continues to monitor howmembers — as producers, employersand consumers — will be affected bythe Patient Protection and AffordableCare Act (PPACA). A new resource onthe association's website outlines theprovisions that already have beenimplemented, as well as thosescheduled for the coming years. Theprimer is a precursor to upcomingtraining and education opportunities onPPACA that DAIAB will provide.

www.iabgroup.com/de/PPACA_update

Taking the highground to successDAIAB members are invited to the 2012Executive Management Conference inGettysburg, Pa. on Oct. 30-31. Attendeeswill take away the tools, resources andknowledge needed to win the battle forinsurance business. Plus they’ll enjoyhistoric fun, to include a visit to theNational Military Park Museum.

www.iabgroup.com/emc2012

Consideringrecording calls?Hold the phoneRecording telephone calls is a temptingway to reduce E&O exposure andimprove customer service. But beforean agency begins (or continues) thepractice, it is worth knowing:

w Is it legal to record conversationsin Delaware?

w Is customer consent required and,if so, how can it be obtained?

w Do an agency’s producers, CSRs and other staff need toprovide consent?

DAIAB’s new member resource shares the do’s and don’ts of telephone recording.

www.iabgroup.com/de/record_phone_calls

New MembersW E L C O M E

Coen Agency LLCWilmington, Del.

[ 6 ]

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].


When an errors & omissions(E&O) claim occurs, the file,for the most part, will heavilydetermine the direction theclaim goes. Soliddocumentation in the file willhelp the agent’s defense,while little or sketchydocumentation could verywell hurt the agent’s odds ofprevailing. At that point, asthe old expression goes, “It iswhat it is.”

The key for agents is toproactively take the initiativeto implement various losscontrol measures; in otherwords, try to impact thedirection an E&O claim couldgo before it occurs. It may betoo late afterward.

A common strategy E&Ocarriers use when defendinga customer involves theclient’s duty to read thepolicy. Even though this duty imposed on the clientmay not be applied in everystate, an agency initiativecentered on this issue canstill prove beneficial.

Read and understandIn the vast majority of states,the duty for the client to readthe policy states the clientmust read and understandpolicy content, provisions,duties and exclusions.Typically, there is arequirement that if the clienthas any questions, does not

understand the coverage ordiscovers the coverage is notwhat they thought wasrequested, the client shouldcontact the agency to makeany additions, alterations and

modifications to the policy.Some states take it a stepfurther, requiring the client toreject the policy if the policyterms are unacceptable.

So what should the agent do?To bolster this presumptionof the insured’s assent to thepolicy terms, theagent/broker shouldpromptly send the completepolicy to the insured and inthe cover letter urge theinsured to fully review thepolicy — including thedeclarations andendorsements — for accuracyand, to the extent the insuredhas any questions on policycontents, the policyholdershould immediately contactthe producer.

It is important to note thatclient ignorance or astatement such as “I didn’thave the time” are not validdefenses for the client.

ENCOURAGE CLIENTS TO READTHEIR POLICIES

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

In the vast majority of

states, the duty for

the client to read the

policy states the client

must read andunderstand policy

content, provisions,

duties and exclusions.

[ 7 ]

This letter should be general, such as:

Dear “Client,”

Enclosed please find the renewalof your Businessowners’ packagewritten with XYZ Insurance Co. Youwill be receiving your premiuminvoice shortly.

It is important that you take thetime to read this policy to ensureyour understanding of the limitsand the coverages. If there are anyquestions or you wish to make anychanges to this policy, pleasecontact the agency promptly.

The limits of insurance have beenselected by you, and we can’tguarantee that the limit selectedwill be sufficient in the event of amajor loss. Higher limits areavailable upon your request.

Thank you for your confidence in our agency; we appreciate your business.

Sincerely,

Once again, it is best to keep thecover letter general and not restatelimits and coverages in it. The theorybehind this is if you “recap” the limitsand coverages in the cover letter, youare essentially telling your client heor she does not need to read thepolicy because you are telling themwhat’s in it.

Obviously, an agency may choose topersonally deliver policies. If this isthe case, it is still suggested that acover letter be included with thepolicies and brought to the attentionof the party to whom you aredelivering the policies.

Tremendous benefitsAnother common scenario involves apolicy that will be sent directly to thecustomer from the carrier. If this ispertinent in your situation, it is stillhighly recommended that you usethe above letter with a slightmodification. Instead of stating“enclosed please find your renewal,”a phrase such as the following couldbe used:

“You will be receiving the renewal ofyour Businessowners’ policy directlyfrom the carrier, XYZ Insurance Co.When you receive it, it isimportant…”

There are tremendous benefits to thisapproach. Hopefully, the coverageprovided is what was requested. Ifnot, the client should discover thoseareas of concern upon review. Forexample, if the client asked for fullcoverage or remarked “protect mefor whatever can happen,” they willnow find every policy has exclusionsand limitations.

The benefits to your agency are alsotremendous. It shows you want yourcustomers to understand theircoverage, and there may besituations where a customer asks forcoverage modifications that result ina program that better suits theirneeds. It is better to resolve theseissues before the claim occurs thanafter. Lastly, there are many E&Oclaims where such a letterdramatically determined the directionof a specific E&O claim.

This type of initiative can probably beimplemented without too muchadditional work or expense. Thisextra step could just make a bigdifference if an E&O claim comesknocking at your door.

the “A” way — Attitude, Assistance, Adaptability

ATLANTIC SPECIALTY LINES

Independently OwnedReliable & Experienced Underwriters

www

DIANNE SPRAGUE

BARBARA BEAVERSON

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Read up on what the courts have to say about clients’ duty to read their policies. www.iabgroup.com/de/duty_to_read

CoverageC O R N E R

[ 8 ]

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 the

education consultant for

IA&B, working with CISR,

CIC and continuing

education programs.


For the past 37 years, I’vestood in front of a lot ofinsurance folks anddiscussed the Personal AutoPolicy or the Business AutoPolicy. One of the issues thatusually causes someconfusion is employeesdriving their personallyowned autos, company-owned autos or rented autoson company business.Which policy applies –Personal Auto, Business Autoor both? Who’s covered bythe employee’s PersonalAuto Policy? Who’s coveredby the employer’s BusinessAuto Policy? Those are theusual questions.

If our own people aresomewhat confused, I haveto assume that employeesand their employers don’tunderstand how their autopolicies apply to thebusiness use of employee-owned autos, company-owned autos or rentedautos. When employees usetheir autos, company autosor rented autos on business,we may have to rely on boththe Personal Auto and

Business Auto policies forcoverage. But, who’s coveredby each policy?

Situation No. 1:Employees using theirpersonally ownedautos on companybusinessThe ISO Personal Auto Policy (PAP) defines an“insured” as:

1. You or any “familymember” for theownership, maintenanceor use of any auto or“trailer.”

3. For “your coveredauto,” any person ororganization but onlywith respect to legalresponsibility for acts oromissions of a personfor whom coverage isafforded under this Part.

The ISO Business Auto Policy (BAP) defines an“insured” as:

a. You for any covered“auto”

b. Anyone else while usingwith your permission a

covered “auto” youown, hire or borrow,except:

(2) Your “employee” ifthe covered “auto”is owned by that“employee” or amember of his orher household.

(5) A partner (if you area partnership) or amember (if you area limited liabilitycompany) for acovered “auto”owned by him orher or a member ofhis or herhousehold.

Both the employee and theemployee’s company arecovered under the PAP, andthe ISO PAP does notexclude the business use ofprivate passenger autos,pickups, vans or trailers.However, the company’sBAP covers the companyonly (if Symbol 1 or 9 forliability). In order to coveremployees using autos theyown, rent or borrow oncompany business, the

PERSONAL AUTO OR BUSINESS AUTO?

Employees As Insureds endorsement(CA 99 33) must be added to thecompany’s BAP.

Situation No. 2: Employeesusing company-owned autosThe ISO Personal Auto Policy (PAP)defines an “insured” as:

1. You or any “family member” forthe ownership, maintenance oruse of any auto or “trailer.”

4. For any auto or “trailer” other than “your covered auto,” anyother person or organization but only with respect to legalresponsibility for acts or omissionsof you or any “family member” for whom coverage is providedunder this Part. This Provision(B.4) applies only if the person or organization does not own orhire the auto or “trailer.”

The ISO Business Auto Policy (BAP)defines an “insured” as:

a. You for any covered “auto”

b. Anyone else while using with your permission a covered “auto”you own, hire or borrow….

In this situation the company’s BAPcovers both the company and theemployee. The employee is alsocovered by the PAP if the companyauto is a private passenger auto,pickup or van, but the company is notcovered since it owns the auto.

Situation No. 3: Employeesrenting autos for businessThe ISO Personal Auto Policy (PAP)defines an “insured” as:

1. You or any “family member” forthe ownership, maintenance oruse of any auto or “trailer.”

4. For any auto or “trailer” other than“your covered auto,” any otherperson or organization but only

with respect to legal responsibilityfor acts or omissions of you or any “family member” for whomcoverage is provided under this Part. This Provision (B.4)applies only if the person ororganization does not own or hire the auto or “trailer.”

The ISO Business Auto Policy (BAP)defines an “insured” as:

a. You for any covered “auto”

b. Anyone else while using with yourpermission a covered “auto” youown, hire or borrow….

Who rented the auto? The employee.Therefore, the employee’s PAP coversboth the employee and the company,but the company’s BAP covers the

company only (if Symbol 1 or 8 forliability). The employee can be coveredunder the BAP by adding either theEmployees As Insureds endorsement(CA 99 33) or the Employee HiredAutos endorsement (CA 20 54).

When both policies apply, which one isprimary and which one is excess?Employee using personally ownedauto: PAP is primary, BAP is excess.Employee using company-owned auto:BAP is primary, PAP is excess.Employee renting an auto: PAP isprimary, BAP is excess.

Y’all take care!

[ 9 ]

At Harford Mutual, we’re committed to being here for our independentagents and policyholders. Accessible. Experienced. Accountable. Responsive. That’s Harford Mutual. That’s what mutual success is all about. Learn more about opportunities for mutual success with Harford Mutualat harfordmutual.com.

GOVERNMENT AFFAIRS

2012 election overview

Polls, predictions andpolitical commentary havedominated the news formonths, so it’s no surpriseto anyone that this year’selections will be pivotalones at both the state andfederal levels. Whether thepolitical parties in powerare able to retain theirmajority hold and if so, towhat extent, will have amajor impact on the social and economicinitiatives considered in the coming years.


Predicting election winners is always risky business.With the ubiquity of the Internet and the 24/7 newsmedia, one gaffe or political faux pas can turn thetide of public opinion swiftly. One thing is clear

however: Voting patterns over the course of the last severalelections have painted a picture of an American publicincreasingly dissatisfied with both political parties. In the2010 midterm elections, the Republican Party madesweeping gains across the country, picking up 63 seats in theU.S. House of Representatives and six seats in the U.S.Senate. These results were clearly indicative of the Americanpublic voting against the party in power at that time. Butinterestingly, exit polls at the national level after the 2010elections indicated that more than half of the voters had anunfavorable view of the Republican Party at the time of theelection. In the face of ever increasing voter angst andfracturing within the political parties, will the pendulumswing back this year?

There’s a long list of state and federal races to watch in2012. Here are some factors to consider as DAIAB agentsanalyze the current field of candidates:

PresidentWhether President Obama will be relegated to the ranks ofone-term presidents after the votes are counted in Novemberis by far the biggest question mark in this election cycle. The Supreme Court recently upheld the President’s majorfirst-term initiative, the Patient Protection and AffordableCare Act. With Republicans, including Mr. Romney, vowing to repeal the law if given the opportunity (meaning aRepublican-controlled House, Senate and White House), itlooks like voters will have the final say on healthcare reform.Mr. Romney’s message on this divisive issue will beparticularly interesting as the presidential debates getunderway given his support of the same kind of individualmandate during his term as governor of Massachusetts wasjust upheld at the national level.

Pundits are placing varying degrees of importance on theSupreme Court ruling vis-à-vis the November elections, butlook for it to be galvanizing force for the Republican Partynonetheless as it encapsulates the “big vs. smallgovernment” debate that is the heart of the differencebetween the two major political parties.

Anything can, and most likely will happen over the next fewmonths. At the time of this writing, several major factors arestill unknown such as Romney’s choice of running mate and

P

[ 11 ]

Insure the future ofyour professionA well-established, well-funded politicalaction committee is your insuranceagainst legislation that may negativelyimpact your industry and makes it easierto educate and influence legislators onthe issues DAIAB supports.

Show your commitment to thepreservation of your profession bymaking an AgentPAC contribution today.It’s a small premium to pay.

www.iabgroup.com/AgentPAC

the debate performances of thetwo candidates, along with whatis sure to be an unprecedentedlevel of fundraising.

National polls show the twocandidates being neck and neckwith President Obama ahead byonly a few percentage points.Delaware has voted for theDemocratic candidate in the lastfive presidential elections, andPresident Obama won the statewith a 25 percent margin ofvictory in 2008, furthercementing the state’s solid bluestatus, so look for similar stateresults in this election cycle.

GovernorCurrent Democratic Gov. JackMarkell is running for re-electionwith his first term nearly under his belt. In 2008, he beat thenow U.S. Representative forDelaware’s at-largecongressional district, JohnCarney, in a close primary race,and easily won the generalelection two months later. At thetime of this writing (less than aweek before candidates’ filingdeadline), announcedRepublican candidate Jeff Cragg,an insurance executive andbusiness owner, has not yet filedwith the Department of State,which seems to be a trend forthe statewide endorsedRepublican candidates.Regardless, defeating Gov.Markell will be an uphill battle tosay the least, as he appears to bea shoe-in for a second term.

U.S. SenateCurrent U.S. Sen. Tom Carper,first elected to the Senate in2001, is running for re-electionthis fall. Carper, a formergovernor, representative andstate treasurer, has oneopponent in the primaryelection, newcomer and relativeunknown Keith Spanarelli. Onthe Republican side, Kevin Wade,an electrical engineer and smallbusinessman, has beencampaigning up and down thestate for several months, though

he, too, has yet to file with theDepartment of State. Regardless,Sen. Carper should breezethrough both the primary andgeneral elections to win his third term.

U.S. House ofRepresentativesDone once every 10 years afterthe federal census, redistrictingwill play a big role in this year’selection around the country,especially in DAIAB’s sister state,Pennsylvania. Redistricting inDelaware, however, is a mootpoint, since the state has justone congressional district.

Delaware Republicans will havea tough time reclaiming formerCongressman Mike Castle’s seat.In 2010, Republican Castle gaveup his House seat to run for U.S.Senate in a special election forthe seat held by Ted Kaufmanwho was appointed after JoeBiden resigned to become VicePresident. Castle was defeated ina surprisingly competitive andnationally watched primaryelection by Tea Party activistChristine O’Donnell, who thenlost the general election toDemocrat Chris Coons. Castle’svacant House seat was taken byDemocrat John Carney, Jr., nowrunning for re-election.

At this time, the Republicancongressional primary looks to be a battle between theparty’s endorsed candidate, New Castle County CouncilPresident Tom Kovach, and 2010 congressional candidateRose Izzo. As with the threeraces mentioned above, look for this to be another easyDemocratic hold comeNovember.

GOVERNMENT AFFAIRS

[ 12 ]

The conventional

wisdom of the day

is that a combination

of redistricting and

retirements will likely

cause a shake up this

election cycle. Look for

a different Democrat-Republican split in

both chambers after

the election dust settles.

State legislative racesIn Dover this year, all 41 seats inthe House of Representativesand all 21 seats in the Senateare up for re-election. AlthoughDelaware senators typicallyserve four-year terms, in 2010several senators running for re-election were elected to a two-year term so that all sittingmembers could be on the ballotthis year to accommodate theresults of redistricting.Democrats currently hold acomfortable majority in bothchambers, a 26-15 majority inthe House and a 14-7 majority inthe Senate; however, thiscampaign season has broughtwith it numerous surprises which could cause major changes in the state’s 62member General Assembly.

A number of open seat electionswill take place this fall: Speaker of the House Robert F. Gilligan (D-Sherwood Park) shockedmany Legislative Hall insiders byannouncing that he will not beseeking re-election in Novemberafter serving four decades in theHouse. Although he initially filedto run, he later changed hismind and retired at the end ofthe legislative session on June30. Rep. Dennis P. Williams (D-Wilmington North) is leavinghis House post to run for Mayor of Wilmington. Four-term Rep. Teresa Schooley(D-Newark) announced that she, too, is retiring. Rep. Brad Bennett (D-Dover) wasarrested earlier this month for DUI and will not run for re-election either.

On the Republican side, Rep.Gerald Hocker (R-Ocean View) is running for retiring Sen.George Bunting’s (D-BethanyBeach) seat downstate. Rep.Gregory Lavelle (R-Sharpley) losthis seat to redistricting and willoppose first-term Sen. MichaelKatz (D-Centerville). Senate Minority Whip Liane Sorenson (R- Hockessin) is retiring after 20 years, and another long-timelegislator, Rep. Biff Lee (R-Laurel) is retiring after 22 years.

The conventional wisdom of theday is that a combination ofredistricting and retirements willlikely cause a shake up thiselection cycle. Look for adifferent Democrat-Republicansplit in both chambers after theelection dust settles.

Insurance commissionerLawmakers are not the onlyones vying for office this year.Insurance commissioner is anelected position in Delaware,and this year four candidates,including current CommissionerKaren Weldin Stewart, are in therunning. All four are competingon the Democratic ticket duringthe Sept. 11 primary election. Onthe Republican side, the stateparty has endorsed Ben Mobley,a Morgan Stanley investmentadviser, though at the time ofthis writing, he has not yet filedwith the Department of State.

Earlier this summer, DAIABinvited the four filed insurancecommissioner candidates —Democrats Karen WeldinStewart, Mitch Crane, Dennis

Spivack and Paul Gallagher — toparticipate in an hour-longforum during DAIAB’s AnnualConvention to answer questionsabout their experience, strategiesand goals. CommissionerStewart, Mitch Crane and DennisSpivack agreed to participate,and the group gathered inRehoboth Beach on June 7,along with DAIAB members, todiscuss the future of the state’sinsurance industry. DAIABGovernment Affairs DirectorLauren Brinjac moderated theevent and questioned thecandidates on several topics,including their priority issues in

[ 13 ]


DAIAB invited the

four filed insurance

commissioner candidatesto participate in an

hour-long forum to answer

questions about their

experience, strategies

and goals. The threeparticipating candidates

talked about the

importance of agents and

brokers in the insurancemarketplace and stated

their desire to have an

on-going dialogue with

the Delaware independent

agent and broker community.

the Delaware insurancemarketplace and their perceptionof the role of independent agentsand brokers.

All three candidates spoke oftheir desire to create aconsumer-centric InsuranceDepartment. CommissionerStewart touted her achievementsthus far, including the fact thatshe has made rate filing moretransparent for the public. MitchCrane disputed the currentcommissioner’s claims, statinghis desire to pass laws on proofof notification of cancellationand a law to ban the use ofcredit scoring in the state.Dennis Spivack expounded onhis position that the primaryissue in Delaware is the deliveryof healthcare.

All three candidates talked about the importance of agents and brokers in theinsurance marketplace andstated their desire to have an

on-going dialogue with theDelaware independent agent and broker community.

Since DAIAB’s candidates’forum, the state DemocraticParty has endorsed Mitch Crane,who appears to be running avery organized campaignthroughout the state. No matterthe outcome of the election, theevent served to build DAIAB’srelationship with Delaware’snext insurance commissioner.

What does this mean to you?DAIAB agents have a strongteam in Washington D.C. thiselection cycle that remains inconstant contact with bothcurrent members of the U.S.House and Senate as well aselection challengers in order todetermine who best understandsthe interests of agents andbrokers at the national level.Read more about the Big “I”team and the importance ofcontributing to InsurPAC on page 16.

At the state level, it is moreimportant than ever for DAIAB to project a strong voice withindividual legislative members,through active lobbying,grassroots advocacy andmeaningful levels of AgentPACcontributions.

AgentPAC resources are alwaysstrained in election yearsbecause legislators rely heavilyon organizations like ours tohelp support their re-electionbids. If we want to have animpact on elections, now and in

the future, AgentPAC is the onlymethod we have to competewith the other interests acrossthe state that are making theirvoices heard in the politicalprocess. There are numerousPACs operating in Delaware, andthe only way AgentPAC can keepits head above water and protectyour interests in Dover is withsupport from agents like you.Supporting AgentPAC expandsDAIAB members’ politicalinfluence beyond their individualdistricts because the PACsupports candidates across thestate who will vote on the issuescritical to the insurance industry.

The bottom line is that agentsneed to get politically involved inthe 2012 election and remaininvolved throughout thelegislative session. The best wayto start is by getting out andvoting both in the primaryelection on Tuesday, Sept. 11and in the general electionoccurring on Tuesday, Nov. 6.Pro-agent legislators — andregulators — have a much betterchange of being elected if youare engaged and participating inthe process.

________________________________

By Lauren Brinjac, governmentaffairs director for DAIAB

GOVERNMENT AFFAIRS

[ 14 ]

Date Topic Location

5 CISR—Commercial Casualty Course Erie, Pa.

6 William T. Hold Seminar Pittsburgh, Pa.

10 CISR—Personal Residential Course Mechanicsburg, Pa.*

11 CISR—Personal Auto Course Mechanicsburg, Pa.*

Employment Relationships Seminar Newark, Del.

12 CISR—Agency Operations Course Mechanicsburg, Pa*.

CISR—Personal Residential Course Pittsburgh, Pa.

CISR—Commercial Casualty Course Wilkes-Barre, Pa.

12-15 CIC—Commercial Property Institute Harrisburg, Pa.

13 CISR—Commercial Property Course Mechanicsburg, Pa.*

CISR—Personal Residential Course Altoona, Pa.

14 CISR—Commercial Casualty Course Mechanicsburg, Pa.*

25 CISR—Personal Residential Course Philadelphia, Pa.

CISR—Agency Operations Course Lancaster, Pa.

26 Dynamics of Service Seminar Baltimore, Md.

27 CISR—Personal Residential Course Salisbury, Md.

CISR—Commercial Casualty Course Pittsburgh, Pa.

Glance at EventsS E P T E M B E R C A L E N D A R

IA&B On-Demand TrainingEducation from IA&B is now available online when and where you want it.Visit iabgroup.com/on-demand for more information.

[ 15 ]

*CISR Marathon Week

GOVERNMENT AFFAIRS

A voice inWashington, D.C.How the Big “I” represents member agents

Member agents arerepresented by a bustlinggovernment affairs officeand powerful politicalaction committee inWashington, D.C. Here, the Big “I” staffchronicles its work — and successes — on Capitol Hill.


While member agents are hard at work —maintaining their book of business, respondingto clients and carriers and running theiragencies — lobbyists are hard at work as well,

representing them and their interests in Dover andWashington, D.C. That’s the beauty of associationmembership: Members’ voices are heard even when they arenot, and cannot, be present.

In addition to the DAIAB government affairs team that workson a state level, members are represented by lobbyists fromthe Independent Insurance Agents and Brokers of America(IIABA or the Big “I”), who work in Washington, D.C. Thefollowing pages detail their work.

Tracking a typical dayThe day in the life of a federal lobbyist is, among many otherthings, long and hectic. Fundraisers kick off the day early andcap it off late. The planned — testimonies, in-personmeetings and conference calls — are interspersed with theunexpected (but not uncommon) media requests, calls fromCongressional staff and grassroots initiatives. Momentsbehind a desk are few and far between.

On an early summer day, DAIAB caught up with CharlesSymington, senior vice president of government affairs forthe Big “I.” He shared his schedule — a typical one whenCongress is in session, particularly in an election year.

8 a.m. Attended a fundraising breakfast with House Majority LeaderEric Cantor (R-Va.).

9:30 a.m. Returned to the office for a meeting with Jen McPhillips,senior director of federal government affairs and leadlobbyist on crop insurance, about an amendment by Sen.Kirsten Gillibrand (D-N.Y.) to transfer $5 billion dollars fromthe federal crop insurance program to the food stampprogram. Decided to launch a second oppositional grassrootscampaign through Big “I” associations in approximately 15 rural states, as the amendment would come up for a vote within 24 hours.

[Editor’s note: The amendment was defeated later that dayby a 33-66 vote.]

10 a.m. Met with Ryan Young, senior director on federal governmentaffairs and lead on health care reform, to discuss the pendingU.S. Supreme Court decision on health care reform, what the

W

[ 17 ]

“No one knows how importantrelationships are more thanindependent insuranceagents,” said Symington.

“[Our PAC] allows our federal lobbying team …

to establish or re-establish relationships with electedofficials and their senior staff.”

Big “I” response will be to thevarious scenarios and howCongress will react.

10:30 a.m. Met with Nathan Riedel, vicepresident of political affairs, tocompare notes on some of themore competitive House racesthat came up during thebreakfast meeting with Leader Cantor.

11 a.m. Met with John Prible, vicepresident of federalgovernment affairs, to discussthe proper response to a pressinquiry on flood insurance andagent licensing reform.

NoonHosted a fundraiser in the Big “I” Capitol Hill Office forRep. Patrick McHenry (R-N.C.),a member of the HouseFinancial Services Committeeand subcommittee chairmanfor the Committee onOversight and GovernmentReform.

At the same time, Big “I”lobbyists attended three otherfundraising lunches, includingone for Congressman GaryPeters (Mich.-D), who is alsoon the House FinancialServices Committee, that washosted by the chair of the New Democrat Coalition,Congressman Joe Crowley (D-N.Y.).

2 p.m. Participated in a conferencecall interview with DAIAB staff members for an articlethat will run in theirassociation magazine.

3 p.m.Met with Nathan Riedel and a candidate running for the House of Representativesin Indiana to discuss where he stands on small-business issues.

4:15 p.m.Squeezed in desk work!

6 p.m.Along with the other Big “I”lobbyists, attended a total ofsix evening events: fourreceptions and two dinners forsenators and congressmen.

Prioritizing the issuesAt the time of DAIAB’sinterview with Symington, theBig “I” government affairsteam was focused on severallegislative and regulatoryinitiatives. Details follow.

Agent licensing

The National Association ofRegistered Agents andBrokers (NARAB II) legislationwould provide for efficientnon-resident licensing whilepreserving state insuranceregulation and consumerprotections. As of late June,the legislation had beenintroduced in both the Houseand Senate and was awaitingconsideration by the HouseFinancial Services Committeeand Senate Committee onBanking, Housing and Urban Affairs.

“Over the last three weeks, weconducted nearly a dozenmeetings with Senate staff onNARAB II,” shared Symington.

GOVERNMENT AFFAIRS

[ 18 ]

The ABCs of the Big “I” PAC

InsurPac is the political actioncommittee (PAC) of DAIAB’s nationalaffiliate, the Big “I.” InsurPac allowsthe government affairs team inWashington, D.C. to support pro-agent candidates on the federal level.

InsurPac is one of the largest federalPACs in the insurance industry andthe largest, by far, for property-casualty agents. In the 2010 electioncycle, more than 5,000 independentagents from across the nationsupported the committee, helping itraise $1.9 million. InsurPac distributedover $1.6 million to a total of 265races. Of those, 248 supportedcandidates won for a remarkable 93percent victory rate.

As the federal government exercisesmore and more power over smallbusiness, the future of theindependent agency system becomesmore dependent on its engagementin the federal political process.

Support InsurPac by logging intowww.iiaba.net, choosing GovernmentAffairs from the menu and then scrolling to InsurPac.

“Some of those meetings werewith coalition partners from theindustry, and some of those werejust Big ‘I’ meetings.”

During the same time period, theBig “I,” along with the NationalAssociation of Insurance &Financial Advisors and theCouncil of Insurance Agents &Brokers, spearheaded a joint letter to all senators in support of the bill. Ten trade associationsadded their signature to the letter of support.

Flood insurance

The last full-scale reauthorizationof the National Flood InsuranceProgram (NFIP) occurred in 2004.In the past decade, the programexperienced 13 last-minutereauthorizations and fourextended lapses. Through it all,the Big “I” government affairsteam has lobbied for stability forthe program.

“We’ve been conducting a largenumber of meetings, with Senatestaff mainly but also some in theHouse, on flood insuranceextension reform legislation,” saidSymington in late June, about aquarter of the way into the latestshort-term extension.

The team also arranged recentlyfor Jon Jensen, an independentagent from South Carolina andchairman of the Big “I”government affairs committee, to testify before the SenateBanking Committee on the needfor a long-term reauthorizationand reform of the NFIP.

[Editor’s note: Soon after thewriting of this article, a five-yearreauthorization and reform bill was passed by the House and Senate.]

Crop insurance

The Farm Bill, which designatesfunds to the Federal CropInsurance Program, is set toexpire on Sept. 30. In addition tothe grassroots advocacy effortsoutlined above to squelch aharmful amendment, the Big “I”Government Affairs Team recentlyarranged for two agents to testifyon the importance of the cropinsurance program.

Federal regulation

The newly created FederalInsurance Office within theDepartment of Treasury is taskedwith playing a role in internationalinsurance issues and serving asan information source to Congressand the president.

“Our main mission is to ensurethat the Federal Insurance Officedoes not experience any missioncreep or become a precursor to a day-to-day federal regulatorof insurance here in D.C.,” said Symington.

As part of this work, the Big “I”government affairs teamcontinues to provide support to amember agent who serves on theFederal Advisory Committee onInsurance, which advises theFederal Insurance Office.

Health care

The federal health care reform lawincludes a medical loss ratioprovision which stipulates that

carriers must spend 80-85 percentof premium dollars on health careservices, leaving just 15-20percent for all “non-claims costs”— to include agent commissions.

Despite the failure of previouslegislative and regulatory effortsto address the issue, the Big “I”government affairs teamcontinues to argue thatcommissions are passed 100percent to third parties and,therefore, are pass-through feesthat should not be included asadministrative expenses.

“We’ve been supporting a moreinsular piece of legislation onmedical loss ratios that wouldexclude agent commissions frommedical loss ratio calculations,”offered Symington. “There is a billin both the Senate and the Housethat we’ve been stronglysupporting, so we’re spending alot of time on that.”

Taxes

The tax cuts enacted in 2001 and2003 received a two-yearextension in 2010 but once againare slated to expire at the end ofthis year. The Big “I” governmentaffairs team is poised to advocatefor another extension in thecoming months.

“A lot of our members … file atthe individual rate, so if those taxcuts aren’t extended, they’re going to see a huge tax billcoming their way next year,”explained Symington. “We’llspend a lot of time on that duringany lame-duck Congressionalsession that occurs after theelections in November.”

[ 19 ]


Flexing political muscle“No one knows how importantrelationships are more thanindependent insurance agents,”said Symington. “[Our politicalaction committee] allows ourfederal lobbying team to attendfundraising events morning,noon and night here in D.C.And at each of these events, we are able to establish or re-establish relationships with elected officials and theirsenior staff.”

These relationships, of course,do not guarantee votes, butthey do guarantee a seat at thetable when issues that stand to affect independent agents are discussed.

Strength in numbers

InsurPac is one of the largestfederal trade associationpolitical action committees(PACs) in the nation. In the 2010 election cycle, the PACdistributed over $1.6 milliondollars to 265 federalcampaigns and hosted or co-hosted over 60 fundraising

events, many of which wereheld in the Big “I” Capitol Hillconference room. Those dollarswent to support the campaignsof Republican and Democraticcongressmen and senators, as well as candidates for federal office.

“InsurPac boasts an impressivebipartisan track record,” shared Symington. “It’s notwhat party you come from. It’s not whether you’re anincumbent or a challenger. It’s ‘Do you support theindependent agency system?’”

PAC in action

InsurPac commands attentionin Congress, thanks in part toits impressive track record.During the November 2010elections, InsurPac scored a 93 percent congressionalvictory rate in 265 races.

“In the last election cycle, 2010,InsurPac opposed five sittingmembers of Congress whosupported federal regulation ofinsurance,” shared Symington.“That’s one of our top issues, so

we get very aggressive withthat. Four of the five that wewent against lost theirreelection bids, so we like tothink that InsurPac played arole in that.”

Supporting the Big “I” effortsThe Big “I” could not make thelegislative and regulatorystrides it has without thesupport of member agents. Andit’s member agents’contributions — large and small— that add up to thatimpressive pool of money thatallows the Big “I” to be heard soclearly in Congress. To do yourpart, visit www.iiaba.net,choose Government Affairsfrom the menu and then scrollto InsurPac*.

*Note that you must be logged intoas a Big “I” member to view theSupport InsurPac link. For areminder of your user ID andpassword, email [email protected].

________________________________

By Karen Robison, public relationsdirector for DAIAB

GOVERNMENT AFFAIRS

Join the Big “I” team for the dayEvery spring, DAIAB participates in the Big “I” National LegislativeConference (NLC), an opportunity for members to share independentinsurance agents’ perspectives on pending legislation and regulation with their Congressional delegation. The event draws over 1,000 Big “I” membersfrom across the nation.

Save the date and join the Big “I” efforts on April 17-18, 2013. Watch Agent Headlines in the coming months for more information.

The Delaware contingent meets with Sen. Tom Carper at the 2012 NLC. From left to right: James Hanby, Diana Hornung Hanby, William Amos, Sen. Carper, Larry Wilson, Lee Dotson, Mary Rowland

[ 20 ]

[ 15 ][ 21 ]

Tools Y O U C A N U S E

Political junkies and casual observers alike find value in DAIAB’s Capitol Connection newsletter.Emailed monthly while the state legislature is in session and as warranted throughout the rest of year, the publication focuses on the state and federal issues poised to affect members as

small-business owners and producers. The newsletter cuts through the clutter of Capitol Hill happenings and shares the specifics of what members need to know and how DAIAB is working on their behalf.

Look for Capitol Connection in your inbox on the last Tuesday of each month during the state legislative session.Peruse the highlights in your email, or click on the links to read more about any legislative or regulatory issue.

Video synopsis

Links for more details

Concise updates

AgentPAC news

Legislator profile

GOVERNMENT AFFAIRS

Getting to know DAIAB’scontract lobbyist

As DAIAB’s contractlobbyist, Beverly Sissonhelps to maintain theassociation’s daily presencein Dover. A veteran of theinsurance and legislativeindustries, she employs herstrong relationships withlegislators and their staff, aswell as with theDepartment of Insurance,to advocate on DAIABmembers’ behalf.


Name: Beverly Sisson

Title: Owner

Company: BHM Insurance Services & Government RelationsInc., bhm-de.com

Education: Registered nurse, graduate of Temple UniversitySchool of Nursing

Q. Why did you become a lobbyist, and how did youenter the field?

A. It wasn’t a plan or a goal but a role that evolved while Iworked at the Delaware Insurance Department.

While working with Commissioner Dave Levinson, part of myjob was to facilitate getting proposed insurance regulatorylegislation introduced and passed. During that time, in orderfor the Department of Insurance to become nationallycertified for solvency standards, we needed to amend theDelaware Insurance Code with enhanced standards forfinancial solvency. The certification requirement came fromthe National Association of Insurance Commissioners.Commissioner Levinson aggressively pursued developingseveral pieces of legislation required to get Delawarecertified, and we were one of the first states to be nationally certified.

That process required me to spend a lot of time working withmembers of the General Assembly and to learn thelegislative process. During my eight years as legislativeliaison for the Delaware Insurance Department, we weresuccessful in getting more than 25 pieces of insurancelegislation introduced and enacted.

Later I worked at the Bayard Law Firm, where VerizonWireless was a client. When I left the firm to go out on myown, Verizon Wireless asked me to continue representingthem in Delaware.

A few years ago, I worked on getting legislation passed toallow for Sunday sales of liquor. After that project, theHighway One Group in Dewey Beach Delaware retained myservices, and I continue to work with them each year. So asit is with all of us, one relationship led to another, and otherdoors opened.

In addition to working with DAIAB, I currently represent theAmerican Council of Life Insurers (ACLI) and the NationalAssociation of Insurance Brokers and Financial Advisors

[ 23 ]

“There is nothing that

replaces personal

relationships and

communications….

Attending local legislative

events and establishingpersonal relationships

are very important.”

(NAIFA-Delaware),VERIZON andsmall business entities in SussexCounty, Del.

Working with DAIAB gives me the opportunity to mix the life and health issues withthe property and casualtyinterests. There are manymembers of the association thatI have known for many years,and it has been fun rekindlingthose relationships.

Q. What do you like mostabout your job?

A. I most like the opportunity to affect public policy in anenvironment that I amcomfortable with. In addition to establishing legislative andagency relationships, I enjoyhelping those I represent achievetheir goals. I enjoy helpingclients understand the processand how to have a presence ontheir own behalf. It’s gratifying to be able to effectivelyparticipate in the legislativeprocess and work in a familiarpolitical environment.

Q. How long have yourepresented DAIAB?

A. I will begin my twelfth yearwith DAIAB this January.

Q. What do you consider yourgreatest accomplishment(s)while representing DAIABmembers?

A. I believe that promoting andfacilitating having meaningfulinput and impact on regulatoryand legislative initiatives hasbeen achieved and remainsintact. The DAIAB staff is very

attentive to regulatory andlegislative developments inDelaware, and the relationshipwith the Department ofInsurance and DAIAB is strongand respected.

Q. What legislative/policyissues do you anticipate willaffect Delaware’s independentinsurance agents in thecoming year?

A. Depending on the results ofthe November 2012 election, theinsurance industry andproducers must be prepared torespond to the initiatives of thecommissioner of insurance. Thedynamics of an elected officecannot be ignored. Issues caninclude, but not be limited to,general consumer-relatedmatters especially as they relateto producers’ responsibilitieswith explaining coverage andexclusions, i.e. hurricanedeductibles, credit scores,automobile exclusions andevolving changes with workers’compensation rates. For thoseproducers involved with lifeinsurance, the current SenateBills 145 & 220 relating to lifesettlements have been verycontentious and will probably beproposed again in 2013. Healthinsurance regulations will varydepending on theimplementation of thepresident’s national healthinsurance program….

Q. What are your upcominggoals for DAIAB?

A. Immediately after theNovember 2012 election, I wouldlike to meet with DAIAB

representatives to review issuesthat may either emerge or re-emerge responding to theinsurance commissioner’scampaign interests. We shouldalso review insurance-relatedlegislation that has been enactedas of July 1, 2012, along withwhat was not enacted. Inaddition to the insurancecommissioner election results,we should review the Senate andHouse election changes and thepossible impact on our industryand producers.

Q. What can agents do toassist your efforts?

A. Producers should be preparedto respond with grassrootsresponses on regulatory andlegislative matters that develop,sometimes on short-notice.There is nothing that replacespersonal relationships andcommunications. Producersshould be aware of senators andrepresentatives in theirresidential and business districts.Attending local legislative eventsand establishing personalrelationships are very important.

As your lobbyist, I report eventson a weekly basis during thelegislative session andemphasize to your governmentrelations representative what Iview to be urgent. I willselectively suggest grassrootscommunications depending on the issue.

In addition to keeping themembership informed, I viewthat the most important part ofthe process is gathering andestablishing a consensus

GOVERNMENT AFFAIRS

[ 24 ]

position that effectively tricklesdown in a meaningful way.

Finally, it is apparent to me thatwith every issue that comes up,i.e. hurricane deductibles, datatracking, exclusions on allpolicies, the questions remains:Who is responsible for informingpolicyholders? I am taking thisopportunity to make membersaware that this is often the crux ofcontentious issues and has beenthis year. The application processseems to be where much of thislies, although the small printexists in the policy.

If all producers functionedaccording to the standards of theDAIAB, in my view, there wouldbe no need for regulatory-mandated disclosures that havebeen proposed during thislegislative session.

Please be mindful that public and political expectation may be directed to producers andnegative publicity can easily be prevented.

Q. Is there anything else you’dlike to share with the DAIABmembership?

A. I continue to enjoy workingwith the DAIAB and am fortunateto work with an incredible groupof true professionals. Theattention and dedication to allDelaware regulatory andlegislative issues by the DAIABgovernment relations staff isextraordinary.

The property and casualty industryis important in everyone’s life, and producers are on the frontlines of protecting and responsible

for keeping consumers informedand responsible for their personaland business risks. In addition to being an invaluable resource, it is my pleasure to represent that DAIAB members are the most knowledgeable and best

informed consumer advocates for the industry that each member represents.

[ 25 ]


From the friendly voices of our customer service staff to the personal visits by our territory managers and underwriters to the promptness of our claims adjusters, we are told time and again …

Our people set us apart.That’s why our agents trust our experience, strength and service. Visit our website to find out about becoming an agent with us.

www.PennNationalInsurance.com

Business Surety Auto Home

Trusted Choice® will enjoy prime-time attention on the Sept. 17 episode of “American Chopper” on the DiscoveryChannel. The show will chronicle the Orange CountyChoppers’ creation of a Trusted Choice-themed custommotorcycle to raise money for Make-A-Wish®.

Trusted Choice, the consumer branding program forindependent insurance agents and brokers, commissionedthe Chopper for Charity as part of a year-long fundraisingeffort. The campaign launched in August with a Facebook initiative: For every “share” fromfacebook.com/TrustedChoice in August, Trusted Choicedonated $10 to Make-A-Wish. (While the final tally wasn’t available before this magazine went to print, a similar social media drive last year netted $170,000.)

The Trusted Choice Chopper for Charity now will travel thecountry — including a stop at the DAIAB ExecutiveManagement Conference, Oct. 30-31 in Gettysburg, Pa.— with proceeds benefiting Make-A-Wish.

Chopper for Charity racesinto America’s living rooms

More onMake-A-WishMake-A-Wish grants the wishes ofchildren with life-threatening medical conditions to enrich thehuman experience with hope,strength and joy. The charity grants a wish somewhere in thecountry every 38 minutes.

HMWorkers’Compensation offers asmart approach to

coverage – helping to control lossthrough dedicated service teams; apreferred, cost-saving network; andeffective physician-to-physician casemanagement. To ensure the bestoutcome for all involved, we workside-by-side with our clients, helpingto reduce the incidence of injuries inthe workplace and return employeesto their jobs as quickly as possible.

We know that effectively managingWorkers’ Compensation coverage isessential to our clients’ financialsuccess. Using our expertise to controland reduce Workers’ Compensationcosts from all angles, we develop andimplement customized, effectiveprograms that incorporate losscontrol, case management, networkdiscounts, proactive risk managementtechniques and return-to-workprograms. We manage the entire

process to help keep employees safeand healthy, while generating costsavings that our clients depend on tohelp keep their companies financiallystrong. The outcome is clear in ouroperational performance results andour approach to service.

Through our network savingsprogram, total claims costs werereduced by 56 percent in 2011, andwe passed that savings on to ourclients. We also achieved greater than99 percent technical and financialaccuracy when processing both losttime and medical claims.* Suchaccomplishments, along with ourcommitment to service excellence,have helped us earn high levels ofclient satisfaction.

HM Workers’ Compensation coverageis marketed in Pennsylvania, and wetarget low-to-medium hazardindustries with four wall exposure,including health care, social services,

administrative offices, banks,physicians, service industries, property management, machineshops, restaurants, retail/wholesalestores and manufacturing. Our losscost multiplier ranges offer flexibilitythat helps price each account on itsown merits. HM Workers’Compensation is underwritten byeither Highmark Casualty InsuranceCompany or HM Casualty InsuranceCompany, member companies of HM Insurance Group.

*Performance statistics based on HM Workers’Compensation Operational Performance — 2011 Report, March 2012.

Insurance Agents & Brokers proudly recognizes HM Insurance Group asone of its Platinum Partners. IA&BPlatinum Partners dedicate thehighest level of sponsorship to our organization.

FEATURED PARTNERHM Insurance Group

PRESIDENTMike Sullivan

President & Chief Operating Officer

COMPANY LOCATIONHome Office – Pittsburgh, with regionallocations in Camp Hill and Philadelphia

WEBSITEwww.HMWorkersComp.com

Platinum Profile

Mike Sullivan

Platinum ProfileInsurance Agents & Brokers proudlyrecognizes ACUITY as one of its PlatinumPartners. IA&B Platinum Partners dedicatethe highest level of sponsorship to ourorganization.

FEATURED PARTNERACUITY

PRESIDENT & CHIEF EXECUTIVE OFFICER

Ben Salzmann

COMPANY LOCATIONSheboygan, WI

A.M. BEST RATING “A+” (Superior)

Since opening its doors forbusiness in Pennsylvania in2010, ACUITY has been writing

personal and commercial linesaccounts at a record-setting pace. Infact, written premium for the insureris up an astonishing 92 percent inthe Keystone State through the firstsix months of 2012.

The credit for ACUITY’s growth inPennsylvania goes to its select groupof independent agents. And,according to President and CEO BenSalzmann, no company is morecommitted to agents than ACUITY.“For 87 years, we have donebusiness exclusively throughindependent agencies,” he says. “Webring our experience and dedicationin building strong partnerships toagents in Pennsylvania.”

“Agents always know what to expectwhen they do business withACUITY,” adds Wally Waldhart, VicePresident - Sales andCommunications. That includesACUITY’s unwavering focus onproviding the technology, products,and value-added services that makethe insurer a powerful business ally.

“Almost all insurance carriers eitherare sound in relationships ortechnology, but rarely both,” saysSalzmann. “We bring that uniquecombination of the two, along withfranchise value in Pennsylvania,which makes us a highly covetedmarket for independent agents.”

On the technology front, ACUITY hasfocused on developing and investingin ease-of-business solutions for

agents. ACUITY provides real-time,online policy quotation andapplication, and automatically issuesand delivers policies to agents withinseconds in both personal andcommercial lines. The company hasrecently introduced “ACUITY share,”which allows an agent andpolicyholder to view applicationsand rating details simultaneouslyfrom different locations.

When it comes to buildingrelationships, no company doesmore for independent agents thanACUITY. Over the past five years,agents have earned 100,000continuing education (CE) creditsthanks to ACUITY’s free CE courses,speaking tours, and in-agencytraining. Additionally, ACUITY knowsthe bottom line is vitally important toagents as well. “We pay more incontingent commissions as apercentage of written premium thanour peers,” Waldhart reports.

With strong growth and profitability,ACUITY offers independent agentsremarkable financial stability in anotherwise unstable market. A fiercelyindependent company firmly

committed to remaining mutual,ACUITY is also remarkably well-run:the company is rated A+ by bothA.M. Best and Standard & Poor’s andhas been named to the Ward Top 50Best-Run Companies for 13consecutive years.

ACUITY also offers independentagents stability in staffing, with aremarkable voluntary turnover ofunder one percent. Salzmann creditsthis achievement to being a greatplace to work. In fact, ACUITY isranked as the top mid-sizedemployer in the nation by the GreatPlace to Work Institute.

As a result of its comprehensive andwell-rounded strategy, ACUITYprovides consistency and security inan industry marked by wide marketswings and financial uncertainty.“We are a healthy, strong, stable,and truly regional mutual carrier,”Salzmann says. “We are thankful toPennsylvania agents for the trustthey have placed in us, and we areincredibly optimistic about ourcontinued success in the state.”

Acuity President & CEO, Ben Salzmann

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 agency

system and Insurance Agents & Brokers.Thank you for your continued sponsorship.

PLATINUM LEVELACUITYBerkley Mid-Atlantic GroupDonegal Insurance GroupErie Insurance GroupHarleysville InsuranceHM Insurance GroupInsurance 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 September 2012

GOVERNMENT AFFAIRS

In the driver’s seatHow members steer DAIAB’s legislative efforts

DAIAB works to put theagent’s perspective first.And who better to drive the association'sefforts than agentsthemselves?


The Delaware Association of Insurance Agents &Brokers Public Affairs Committee serves as theprimary arm of the association’s board of directorsand is tasked with executing the organization’s

advocacy program. The committee is focused on theadvancement of members’ common political and legalinterests.

Anywhere from three to 10 members, including a boarddirector, are appointed to the committee by the chairman ofDAIAB’s board. They serve to two-year terms on a staggeredschedule to ensure an appropriate mix of new andexperienced agents take part concurrently.

The committee is responsible for overseeing theadvancement of the legislative, regulatory and legalcollective interests of members in the public affairs arena.This includes representing the association’s interests,providing oversight to AgentPAC and developing positionsand strategies. Given their expertise and knowledge base,committee members are often DAIAB’s go-to agents forresources or testimony before legislators or regulators oninsurance issues.

Current issues for the public affairs committee include:

w Implementation of the federal health care law inDelaware, specifically the state health exchange andhow to best preserve the role of the insurance agent

w Monitoring Delaware Department of Insurancelegislative initiatives

w Continued monitoring of the captive insurance marketin Delaware to address any potential negative impactson independent agents.

w How best to address certificate of insurance abuse in Delaware

DAIAB is always looking for a few good men and women toserve on this vital committee. Contact the DAIAB MemberService Center at 800-998-9644, option 0, or [email protected] to express interest.

[ 31 ]

Current committee members:

ChairwomanMary T. RowlandWillis of DelawareWilmington

John B. AllenAllen Insurance GroupWilmington

Joyce M. BaileyAAA Mid AtlanticNewark

Andrew P. CousinsL & W InsuranceDover

N. Lee DotsonBellevue Insurance ServicesWilmington

Jim M. WatkinsPfister Insurance AgencyDover

Lawrence A. WilsonS T Good InsuranceNew Castle

John S. YasikPoland & Sullivan InsuranceNewark

T

Primary Agent | September 2012 TechnologyU P D A T E

“The consumerization of ITrevolution — sparked by theiPhone — has shifted the ITculture so that the users arethe ones getting the latest,cutting-edge technologiesfirst, and they want to bringthose devices to work.”

— PC World Magazine, Dec. 20, 2011, Tom Bradley“Pros and Cons of BringingYour Own Device to Work”

What is BYOD?Many workers today expectthe companies they workfor to allow them to usetheir personal mobiledevices and personalcomputers at the officeand/or to provide remoteconnectivity to the office via personal devices.Technologists dub this trend “bring your owndevice” (BYOD).

Why is BYODimportant?Mobile devices — along withtheir applications and on-the-go Internet access —provide attractive optionsfor speed, connectivity andproductivity. Many peoplewouldn’t think of spendingtheir workday without aBlackberry, iPhone,Android, iPad or otherdevice to access company

DANIELLE JOHNSON

Danielle Johnson is the vice

president, director of information

technology at InsurBanc, which

IIABA and the W.R. Berkley

Corporation established to assist

independent agencies with their

specific banking needs. This article

reflects the views of the author and

should not be construed as an

official statement by ACT.

[ 32 ]

“BRING YOUR OWN DEVICE” OPPORTUNITIES AND RISKS Employees expect it, but employers need to manage the risks

systems and data. Most important,senior managers want to use thesedevices and are using theirorganization’s technology morebecause of them.

Many employees see their ownpersonal devices as superior to thoseprovided by their employers.Employees also tend to believe theyare more productive if allowed to usetheir own devices for work and datasyncing between office and home.

Thus, BYOD is significant becauseemployee-owned devices are nowaccessing company systems and beingused for work purposes, whichpresents security and privacyconcerns to the employer.

Employers see the inherent value in amore mobile, more connected andmore productive workforce. Manyemployees and managers have noproblem connecting and addressingwork issues after hours and/or on theweekends. It can be considered amotivational strategy.

What are the security risks?BYOD mobility offers access toenterprise data, systems andcorporate email. Employees can store and process data and connect to networks.

While BYOD may be considerednecessary and convenient, this type of connectivity can raise significantdata security and privacy concernswhich lead to potential legal andliability risks.

Consider:

1. The device gets lost or stolen with access to company data and systems.

2. The device contracts a virus or has malware installed that canobtain company logins and datafrom that device.

3. The personal device user —however good his/her intentionsare — can in effect becircumventing company security standards.

4. The company cannot control theuse of the personal device shouldthe employee allow children orfriends to use the device.

5. The employee may use the deviceto place files in personalapplications in the cloud which may not be secure.

6. The employee plugs a mobiledevice into the USB port of his or her office computer therebytransmitting a virus to the office desktop.

Here are some facts to consider whentrying to balance personal deviceaccess with security:

Employees don’t perceive the risk.Many employees perceive the use oftheir own devices at work as placingno extra burden on technical support.

But dealing with any data or systemsecurity issue requires know-how andtechnical resources.

Executives perceive the risk but aren’t fully ready. In August 2011, a Deloitte webcast poll of more than1,000 U.S. information technology and business executives found that 28 percent of respondents believethere are unauthorized personaldigital assistants (PDAs) and/or tabletsconnecting to company systems,especially to email servers. About 87 percent of respondents thinktheir systems are at risk for a cyberattack originating from a mobilesecurity lapse, the poll reported.

The same poll found 40 percent ofrespondents are unaware of whethertheir organizations have strategies orcontrols to enforce mobile security.Further, it found that only 24 percentof respondents believe that “alldevices connecting to my intranet are authorized.” Only 17 percentreported that they monitor for rogue connections.

Malware is on the move. Malwarethat targets mobile devices isincreasing, reported IBM SecuritySolutions researchers in a fall 2011whitepaper. Citing an IBM securityresearch report, the whitepaperpresented statistics showing thatmobile operating systemsvulnerabilities tripled from 60 to aprojected 180+ from 2009 to 2011.

Enterprise systems and mobilesystems are catching up with each other. While many corporationshave for years allowed Blackberry-based access to email and other company systems, users are now demanding that


Employers see the inherent value in a

more mobile, more connected and more

productive workforce.

[ 33 ]

[ 34 ]

iPhone/Android-based smartphonesand tablet computers be providedaccess to these same services.

How do you proceed onceBYOD is determinednecessary?Since there are risks to the minglingof personal devices and work systems,companies must take the lead inassessing and managing the risks soas to safeguard their systems anddata. Some simple steps include:

1. Institute a strong written BYODpolicy that is consistent with theorganization’s employee handbookpolicies such as the IT policy andacceptable use policy.

2. Determine which data to protect.

3. Define what devices will be supported.

4. Determine which employees needremote access via personal devices.Do not open BYOD participationbeyond those employees that have a strong business reason formobile access.

5. Define security requirements.

6. Train and educate employeesconcerning policy and BYOD use.

7. Monitor employee mobile devicesfor compliance with yourorganization’s policy.

8. Secure employee’s authorization to“wipe” the employee’s mobiledevice remotely (restore to theoriginal factory state), as acondition of giving access to any of the business’s systems.

9. Place controls over access to anduse of the company’s wirelessInternet. For example: Do not

broadcast your wireless SSID,restrict access to employees only using MAC address filtering in the router and invoke WPA 2 on the router.

Security solutionsIf an enterprise is allowing employeesto use their own mobile devices, thefollowing security measures should be implemented.

1. Require strong phone startup PINwhich is at least six to eightcharacters long. If not supported,use the maximum allowed. Reducethe PIN-required timeout setting tono longer than 10 minutes.

2. Require specified encryption and anti-malware software on each device.

3. Require and install mobile trackingsoftware/applications which allowonline access to track the locationof a lost/stolen phone and theability to perform a lock/screamand/or remote data wipe. Secureemployee’s authorization to takethese actions on the device if thedevice is misplaced, lost or stolen,as a condition to giving theemployee access to the business’ssystems and data.

4. Do not allow“broken”/”rooted”/“jailbroken”devices on your network. Thesephones have removed limitationsinstalled on the phone by thecarrier allowing the user to runapps and files not approved bycarriers. This process opens thedevice up to security risks.

TECHNOLOGY UPDATE

[ 35 ]

PennPRIME is the municipal entity specialist that can clearly illustrate ways to reduce risk. Formed, owned, and governed by our members, PennPRIME offers

an array of products and services that are custom-tailored for Pennsylvania’s cities, townships, boroughs, and authorities.

Composed of two insurance Trusts, PennPRIME provides comprehensive property, liability and workers’ compensation coverage as well as unique service

programs like grants, training opportunities and sample loss control policies.

Imagine a relationship with an organization that has the leadership, advocacy,

shoulders. Keep up with the latest in risk management. Imagine yourself a member of PennPRIME…call today!

Imagine lower risk We’re specialists that protect you

PennPRIME is a service program of the Pennsylvania League of Cities and Municipalities

5. Large enterprises monitoring multiple devices andplatforms should consider mobile device management(MDM) software. MDM software centrally controls andprotects the data and configuration settings for all mobiledevices in the network. MDM also can provide a securedocument delivery platform and end-to-end datatransmission encryption.

The opportunities of BYOD are present — and here to stay.As an analogy, home security is more complex for a biggerhouse with more entrances and windows. So too is systemssecurity more complicated as smartphones and otherremote devices present new entry points to be analyzedand protected.

All of the security tips presented here are simply guidelinesto aid agencies in diminishing security and privacy risksand managing them. However, none can be guaranteed100 percent effective.

Atlantic Specialty Lines Inc. . . . . . . . . . . . . . . . .7

Guard Insurance Group . . . . . . . . . . . . . . . . . .35

Harford Mutual Insurance Co . . . . . . . . . . . . . .9

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

IA&B Partners Program . . . . . . . . . . . . . . . . . . .29

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

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

Penn National . . . . . . . . . . . . . . . . . . . . . . . . . .25

PennPRIME Insurance . . . . . . . . . . . . . . . . . . .35

Preferred Property Program . . . . . . . . . . . . . .IBC

Ad Index

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[ 36 ]

Barbara Tracy’s homeowners’ policy included theft coverage fortrees, shrubs and other plants, so when 12 of her marijuanaplants were stolen, she submitted a claim. Her insurer, USAACasualty Insurance Company, paid $8,801 on the claim, butTracy sued, stating that the plants were worth $45,600.

Tracy argued that Hawaii law allowed her to possess andcultivate marijuana and, therefore, she had an insurable interest.USAA argued that Tracy had no insurable interest because itwould be illegal to use the insurance payout to buy marijuanaand that it would be illegal to require an insurer to covermarijuana due to the federal Controlled Substances Act (CSA).

The U.S. District Court for the District of Hawaii first held thatTracy had an insurable interest due to state medical marijuanalaws. But the court then ruled that federal law — including theCSA, under which marijuana is prohibited — trumps state lawand, therefore, an insurance policy covering marijuana plantswould be an illegal contract and unable to be enforced.

Source: IRMI Personal Lines Pilot, Tracy v. USAA Cas. Ins. Co.

----------------------------------------------------------------———————-------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.

Marijuanaplants stolen,insured lefthigh and dry

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October 30-31, 2012Gettysburg, Pa.EMC 2012 will help you develop a strategyand tactics to position your agency forstrength in the battle for business.Topics include:

w branding and marketingw staff evaluation and compensationw agency valuation

w agency agreements

w social media and 24/7 service

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Documents

Primary Agent - September 2012 - DE Edition