the tennessee insuror march/april 2010

8INSURORTHE TENNESSEE

March/April 2010 Vol. 21 No. 2 16

2010 Young Agents Day

on the Hill

48Issue A

Policy - On Protection

A “Vetted” Interest

www.insurors.org

On Your Mark,Get Set...

Why the 2010 State Electoral Races Should Matter to You

2 The Tennessee Insuror

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contents

INSURORS OF TENNESSEE2500 21st Avenue South, Suite 200

Nashville, TN 37212-0539www.insurors.org

THE TENNESSEE

INSURORVol. XXI, Number 2March/April 2010

Phone (615) 385-1898Toll Free: 1-800-264-1898Email: [email protected]

Editor: Charles T. Bidek, CPCUPublisher: Daniel D. Smith, Jr.

INSURORS OFFICERSPresident ................................................................... Tee Zerfoss, IIIImmediate Past President ........................... Walt Bradshaw, J.D.State National Director .................................................. Brad SmithVice President, Region II ........................................ Eddie Miller, IIIVice President, Region I ............................................. Roger Smith Vice President, Region III and Pres. Elect ....... Ed Gibbons, AAITreasurer ....................................................................... Joe Hunt, Jr. Secretary ................................................... John McInturff , III, ARMDirector, Region I ................................................... Cindi GreshamDirector, Region I ................................................ Chris Allison, CICDirector, Region I .......................................................... Bobby SainDirector, Region II .......................... Kevin Hale, CIC, CPIA, CWCADirector, Region II ....................................................... Jimmy AlsupDirector, Region II ......................................... Dolly Tate, CIC, CISRDirector, Region III ....................................................... Andy ShaferDirector, Region III ...................................................... Bob McIntireDirector, Region III ........... Steve Bryant, CIC, CPCU, LUTCF, AAI Young Agents Chairperson .................................... Cooper Jones

ADVERTISINGDisplay advertising rates, deadlines and specifi -cations may be obtained by writing to Insurors of Tennessee, 2500 21st Avenue South, Suite 200, Nashville, TN 37212, calling 615-515-2601, e-mailing [email protected] or online at

www.insurors.org

The Tennessee Insuror is provided to all Insurors of Tennessee members and associate members

as a member service.

3

features

departments

8 2010 Young Agents Day on the Hill

10 10 Things You and Your Clients Should Know About Banking

14 Imagine... Things Can Go Wrong When You Complete Your Clients’ Applications

16 Issue A Policy - On Protection Protecting Your Clients, Your Employees and Your Business

48 A “Vetted” Interest TAAG’s Mike Dill is Fast Becoming an Expert at His High Speed Hobby

21 From Your PresidentStorming “The Hill”

23 From Your State National Director Decisions for Our Future

25 From Your CEO The Choice is Yours

29 Education Calendar

31 Government and Legal Aff airs

37 Broker Spotlight RPS of Lexington

39 Company Spotlight Auto-Owners Insurance Company

41 Company Briefs

51 Meetings

53 Member Tips

4 On Your Mark, Get Set...Why the 2010 Electoral Races Should Matter to You


On Your Mark, Get Set...Why the 2010 State Electoral Races Should Matter to You

5Th e Tennessee Insuror

Regardless of your political affi liation, the 2010 election of state Senators and Representatives will decide which party or parties control redistricting in 2011 of the State Senate dis-tricts, State House districts and as importantly, the state Con-gressional districts.

Let’s have a short civics lesson. The state is divided into 33 senatorial districts, from each of which one senator is elected. Senators are elected to four-year terms with those from even-numbered districts being elected in the same general elec-tion, and those representing odd-numbered districts being elected two years later. Thus, about half of the 33 senators are standing for election this year.

The House of Representatives has 99 House districts from each of which one representative is elected. Representatives are elected to two-year terms with all representatives stand-ing for election at the same time.

Finally, the state is divided into nine (9) Congressional dis-tricts. Currently Tennessee is represented by 4 Republican and 5 Democratic Congressmen in Washington, D.C. The long run of incumbent victories and relative stability in the state’s Washington delegation is not a coincidence. Redistricting has become as much a science as an art, and the party draw-ing the lines — until now, the Democrats — has dealt with districts it can’t win by throwing as many voters of the other party as possible into them, leaving fewer unfriendly voters for the remaining districts.

In 1974, two Tennessee Republicans lost their congressional seats to Democrats. Considering the state had only eight Congressional seats in the 1970s, this was a huge turnover. But it was the last time either the Democrats or the Repub-licans knocked off an incumbent Tennessee congressman of the other party.

Indeed, not until 2008 did an incumbent again lose an elec-tion — and that was a primary, in the 1st district, in which fi rst-term Republican congressman David Davis was beaten by Johnson City mayor Phil Roe. For 3½ decades, turnovers have come as a result of retirement, death, or an incumbent’s decision to seek another offi ce, sometimes because he faced the prospect of being drawn out of his seat in the next redis-tricting.

All of which makes the 2010 situation little short of astound-ing. Currently, the state Senate is represented by 19 Republi-cans and 14 Democrats. Even with half of the Senators run-ning for re-election this year, it is almost impossible for the Republicans to lose the majority as a result of the 2010 elec-tions. This means that the Republican Senators will control redistricting for the state Senate, which guarantees that they will make sure to hold onto current seats, as well as make an eff ort to redraw some other districts to be more Republican friendly.

The real game will be played in the State House this year. Cur-

rently there are 48 Democrats, 51 Republicans and 1 Inde-pendent, Speaker Kent Williams. Many of you may remember, Speaker Williams was a member of the Republican party until being ousted two years ago for voting himself into the po-sition of Speaker of the House thereby denying the position to Representative Jason Mumpower. Even so, the Republi-cans consider themselves as holding the majority of the state House of Representatives.

With all 99 Representatives up for election, the Democrats are working hard to try to win back some seats, and the Re-publicans are working hard to keep all of their seats as well as gain one or two more to solidify their majority. The fi eld is constantly changing, as for example Rep. Mumpower recent-ly announced he will not be running for re-election this fall, creating an open seat in Bristol.

Some of the Key 2010 Tennessee RacesSome of the Key 2010 Tennessee RacesSome of the Key 2010 Tennessee RacesSome of the Key 2010 Tennessee RacesSome of the Key 2010 Tennessee Races

Tennessee Senate 9Tennessee Senate 9Tennessee Senate 9Tennessee Senate 9Tennessee Senate 9THTHTHTHTH DISTRICTDISTRICTDISTRICTDISTRICTDISTRICT R OPEN SEAT R OPEN SEAT R OPEN SEAT R OPEN SEAT R OPEN SEATDISTRICTDISTRICT R OPEN SEATDISTRICTDISTRICTDISTRICTDISTRICTDISTRICT R OPEN SEATDISTRICTDISTRICT R OPEN SEATDISTRICTDISTRICT R OPEN SEATDISTRICTDISTRICTDISTRICTDISTRICT R OPEN SEATDISTRICTDISTRICT

Tennessee Senate 17Tennessee Senate 17Tennessee Senate 17Tennessee Senate 17Tennessee Senate 17THTHTHTHTH DISTRICTDISTRICTDISTRICTDISTRICTDISTRICT R R R R RDISTRICTDISTRICT RDISTRICTDISTRICTDISTRICTDISTRICTDISTRICT RDISTRICTDISTRICT RDISTRICTDISTRICT RDISTRICTDISTRICTDISTRICTDISTRICT RDISTRICTDISTRICT

Tennessee Senate 19Tennessee Senate 19Tennessee Senate 19Tennessee Senate 19Tennessee Senate 19THTHTHTHTH DISTRICTDISTRICTDISTRICTDISTRICTDISTRICT D D D D DDISTRICTDISTRICT DDISTRICTDISTRICTDISTRICTDISTRICTDISTRICT DDISTRICTDISTRICT DDISTRICTDISTRICT DDISTRICTDISTRICTDISTRICTDISTRICT DDISTRICTDISTRICT

TTTTTennessee Senate 23ennessee Senate 23ennessee Senate 23ennessee Senate 23ennessee Senate 23TTennessee Senate 23TTTTTennessee Senate 23TTennessee Senate 23TTennessee Senate 23TTTTennessee Senate 23TT RDRDRDRDRD DISTRICTDISTRICTDISTRICTDISTRICTDISTRICT R R R R R DISTRICTDISTRICT R DISTRICTDISTRICTDISTRICTDISTRICTDISTRICT R DISTRICTDISTRICT R DISTRICTDISTRICT R DISTRICTDISTRICTDISTRICTDISTRICT R DISTRICTDISTRICT

Tennessee Senate 21Tennessee Senate 21Tennessee Senate 21Tennessee Senate 21Tennessee Senate 21STSTSTSTST DISTRICTDISTRICTDISTRICTDISTRICTDISTRICT D D D D D

Tennessee Tennessee Tennessee Tennessee Tennessee House 3House 3House 3House 3House 3RDRDRDRDRD DISTRICT RDISTRICT RDISTRICT RDISTRICT RDISTRICT R OPEN SEAT OPEN SEAT OPEN SEAT OPEN SEAT OPEN SEAT

TTTTTennessee ennessee ennessee ennessee ennessee TTennessee TTTTTennessee TTennessee TTennessee TTTTennessee TT House 8House 8House 8House 8House 8THTHTHTHTH DISTRICT R DISTRICT R DISTRICT R DISTRICT R DISTRICT R OPEN SEATOPEN SEATOPEN SEATOPEN SEATOPEN SEAT

TTTTTennessee House 23ennessee House 23ennessee House 23ennessee House 23ennessee House 23TTennessee House 23TTTTTennessee House 23TTennessee House 23TTennessee House 23TTTTennessee House 23TT RDRDRDRDRD DISTRICT R DISTRICT R DISTRICT R DISTRICT R DISTRICT R OPEN SEATOPEN SEATOPEN SEATOPEN SEATOPEN SEAT

TeTeTeTeTennessee House 57nnessee House 57nnessee House 57nnessee House 57nnessee House 57THTHTHTHTH DISTRICT RDISTRICT RDISTRICT RDISTRICT RDISTRICT R

TTTTTennessee House 62ennessee House 62ennessee House 62ennessee House 62ennessee House 62TTennessee House 62TTTTTennessee House 62TTennessee House 62TTennessee House 62TTTTennessee House 62TT NDNDNDNDND DISTRICT DDISTRICT DDISTRICT DDISTRICT DDISTRICT D

UUUUU.S. House 4.S. House 4.S. House 4.S. House 4.S. House 4TH DISTRICT D TH DISTRICT D TH DISTRICT D TH DISTRICT D TH DISTRICT D

UUUUU.S. House 6.S. House 6.S. House 6.S. House 6.S. House 6TH DISTRICT D TH DISTRICT D TH DISTRICT D TH DISTRICT D TH DISTRICT D OPEN SEATOPEN SEATOPEN SEATOPEN SEATOPEN SEAT

UUUUU.S. House 8.S. House 8.S. House 8.S. House 8.S. House 8TH DISTRICT D TH DISTRICT D TH DISTRICT D TH DISTRICT D TH DISTRICT D OPEN SEATOPEN SEATOPEN SEATOPEN SEATOPEN SEAT

TeTeTeTeTennessee Gubernatorial Race nnessee Gubernatorial Race nnessee Gubernatorial Race nnessee Gubernatorial Race nnessee Gubernatorial Race D D D D D OPEN SEATOPEN SEATOPEN SEATOPEN SEATOPEN SEAT

* CURRENT AS OF * CURRENT AS OF * CURRENT AS OF * CURRENT AS OF * CURRENT AS OF 3/29/103/29/103/29/103/29/103/29/10

RACE CURRENTLY STATUS

INCUMBENT SEEKING

REELECTION

INCUMBENT SEEKING

REELECTION

INCUMBENT SEEKING

REELECTION

INCUMBENT SEEKING

REELECTION

INCUMBENT HAS NOT YET

DECLARED

INCUMBENT SEEKING

REELECTION

INCUMBENT SEEKING

REELECTION


All the districts will be redrawn by the state legislature in 2011. That’s why both parties will go all out in 2010 to win a majori-ty in the state House. Why does this matter? If the Republicans hold the majority of the seats in the state House of Represen-tatives, then they control redistricting of the House districts.

Okay, “so what,” you say? Well, historically the House and Sen-ate have been controlled by different parties and so they had to work together to draw the Congressional map. This typi-cally meant little to no change and the Democrats continued to hold onto the 1 vote majority in the state electorate. How-ever, if the Republicans have control over both the House and Senate, then they control the Congressional map.

It is expected that they will target the 4th District, current-ly held by Democrat Lincoln Davis. This district already is a swing district that can go either way, and could fairly easily be redrawn to favor a Re-publican bid. If the 8th district held by Democrat John Tanner and the 6th district held by Democrat Bart Gordon are both cap-tured by the Republicans in the 2010 elections, that allows the members to focus on trying to redraw the 3rd district to favor the Republicans. There is no doubt that the 8th and 6th districts will also receive a little help in this area.

With the districts being redrawn after the 2010 census, and if Republicans maintain control of both houses in the General As-sembly, the 8th — and other districts — will be reshaped to favor the GOP. Previously, they were drawn for the benefit of Democrats. That’s why both parties consider this year’s state House races critical.

Does this really affect you and/or Insurors? Well, in a word, “Yes!” First, as soon as the legislature adjourns this spring or summer, those individuals running for re-election will be out in force collecting campaign contributions and we must be ready. Last year was not an election year and we still received over 60 contribution requests from different individuals, par-ties and Political Action Committees (PACs). Additionally, those individuals who return and any new members need our support and we need their support.

So, what is the best way to help? Our Association PAC, Insur-PACTN. One of the best reasons to give to a PAC is to aggre-gate small amounts of money so collectively we can make a

difference. If it wasn’t for PACs aggregating money, big money or large contributions made by the very wealthy would rule the roost. PACs tend to reduce the influence of large contribu-tors. Without many people giving to the political process the funding of elections would eventually drift to being funded by your tax dollars. PACs provide a way for everybody to par-ticipate in the process.

You may still ask, “How does government and this election really affect me?” Well, we are all affected by ways and means (taxes and fees), as well as through appropriations (expen-ditures). The insurance business is affected by both. A case in point is the fees charged for your insurance licenses. Ten-nessee charges a Professional Privilege Tax each year that is paid by most professionals, but insurance producers are ex-empt. If the exemption was removed every producer would be charged this tax. Multiply that by the number of licensed

people in your agency and you’ll get a sense of why you need an effective association involved in government af-fairs. In the legislature, we are continually bombarded by bills that, although often well intentioned, could change your business abruptly.

Giving to your PAC is not about charity. It is about your business and how you make your living. Generally speaking it is a non-deduct-ible business expense, but can be as important as your other business expenses. By us giving together as Insu-rors, we get the attention of the legislators. Any successful government affairs program is made up of three parts: (1) respected and knowledge-

able lobbyists; (2) a well funded PAC; and (3) local grassroots efforts.

We will be writing the agency principals in the near future ask-ing each agency collectively to either a write a single check or collect checks from every producer to strengthen our PAC for this year’s election. Our “All In” campaign has proven very ef-fective, and we are planning to continue it this year.

State law restricts PAC contributions to individuals or LLCs. Therefore, if your agency is a sole proprietor, partnership, or an LLC you may contribute to InsurPACTN with a company check. If your agency is a corporation of any type you cannot use a company check, and must make a personal contribu-tion. We also accept MasterCard and Visa if you prefer.

The point is simple – Just Do It. u

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Current State House Districts

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On March 23rd, nineteen Insurors Young Agents visited the Tennessee Legislative Plaza to see our state government in action. Included in the group were Young Agent Chairman Cooper Jones of The Crichton Group in Nashville, Alex Aymett of Battle Page Insurance in Franklin, Jeff Coker of CPW Insur-ance Services in Hendersonville, Steven Enoch of Carthage, Brett Fisher of H.B. Cowan & Co. in Shelbyville, Josh Gibbons of Watauga Insurance in Johnson City, Kevin Lockmiller of V.R. Williams in Winchester, Brad McGee of H.B. Cowan & Co., Mike Norris of Watauga Insurance, Kevin Ownby of Ownby Insur-ance Service in Sevierville, Paul Pelt of Insurors, Doug Raby of General Casualty in Chattanooga, Jamie Reed of Murfrees-boro, Adam Reeves of Westan Insurance in Union City, Chris Rose of V.R. Williams & Co., Chad Snider of Westan Insurance in Martin, Matt Spellings of Westan Insurance in Dresden and Mike Stansbury of Elite Insurance Solutions in Brentwood.

The group started their day with lunch at the Hermitage Ho-tel, where Insurors CEO Chuck Bidek discussed the role that the Association plays in the working lives of agents. General Counsel Ashley Arnold then talked about the involvement

2010 Young Agents Day on the Hillof Insurors members and lobbyists in state government. She touched on topics such as the governing of Licensing and Workers’ Compensation insurance by the legislature and the impact that changes in our insurance system could have if not for the involvement of our Association.

After lunch, the group walked over to the Legislative Plaza and sat in on a session of the Senate Commerce Committee. The Committee consists of Chairman Sen. Paul Stanley (R-Mem-phis), Vice-Chairman Sen. Dewayne Bunch (R-Cleveland), Sec-retary Sen. Charlotte Burks (D-Monterey), Sen. Mae Beavers (R-Mt. Juliet), Sen. Tim Burchett (R-Knoxville), Sen. Jack John-son (R-Franklin), Sen. Bill Ketron (R-Murfreesboro), Sen. Eric Stewart (D-Belvidere) and Sen. Reginald Tate (D-Memphis). The Committee makes decisions on legislation concerning commerce, insurance and agriculture. They also have jurisdic-tion over legislation concerning banking and lending institu-tions; communications; regulation and licensing of occupa-tions; protections of trade and commerce against unlawful restraints and monopolies; corporations; labor and industrial relations; consumer affairs and consumer protection; and un-employment compensation.

The Young Agent group poses in front of the entrance to the Legislative Plaza


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One of the items on the Committee’s agenda was the new Workers’ Compensation bill being sponsored by Sen. Ketron.

Once the committee session had adjourned, the attendees were brought into Lt. Governor Ron Ramsey’s conference room to meet with special guests, including the State Com-missioner of Commerce and Insurance, Leslie Newman. After a greeting from Lt. Gov. Ramsey, the Commissioner, along with Deputy Commissioner John Morris, addressed issues currently facing the insurance industry in Tennessee, including the new online licensing system the state is currently implementing. They then answered questions before turning the fl oor over to Rep. Charles Sargent (R-Franklin), a fellow insurance agent and an important member of the Tennessee House when it comes to support for insurance related legislation. Rep. Sar-gent discussed how key it is for Insurors to have knowledge-able and respected lobbyists like Ashley and Chuck that legis-lators can turn to for opinions on insurance law. He also talked about how bills with an impact on the insurance business are frequently brought in front of the General Assembly.

Getting Involved with Young Agents

If you are a Young Agent (those under 40 or with less than 5 years of insurance experience) or know someone who would like info, please contact us at [email protected] with the name and e-mail address of the individual(s) who wants to be in-volved. u


1. Extension Of FDIC Insurance Limit Increase

You may recall that in response to the banking crisis the FDIC temporarily increased the limit for deposit insurance from $100,000 to $250,000 in October 2008. In May 2009, the limit was extended to December 2013. While not technically per-manent, that timeframe certainly makes the $250,000 limit not something most depositors will have to revisit for the next year or two.

2. Unlimited Non-Interest Bearing Checking Account Insurance (TAGP) Set To Expire

Another temporary deposit insurance program intended to minimize deposit risks is set to expire on June 30. If a bank participates in this voluntary program, all non-interest bear-ing transaction accounts and NOW accounts with an interest rate of 0.50% or less are fully guaranteed by the FDIC for the entire amount in the account. Bank trade associations are lob-bying to have this coverage extended; but, as of this writing, it will expire at the end of the second quarter of this year.

3. Real Estate Appraisals

If you have a commercial loan secured by real estate, don’t be surprised if your bank requires that it be re-appraised when it renews or matures. Generally speaking, bank regulators and auditors are assuming that property values have declined and are pressuring banks to re-appraise properties in many circumstances.

4. Working With A Lender

Many businesses have seen a drop in revenues over the past couple years, putting pressure on profits and cash flows. In situations where a business relies on bank credit for financ-ing, it is a good idea to be proactive and have dialogue with a banker regarding plans to manage cash flow and available options for easing financing requirements. In such cases, it is important that a business owner have access to decision mak-ers in the bank.

5. Loan Rates: Why Is My Prime Rate Not “Prime?”

Technically, Wall Street’s Prime Rate, the rate most banks use as their floating rate index, is 3.25%. But, for most borrowers

that have taken out a new or renewed floating rate loan in the past year and a half, their bank probably required a floor on the floating rate anywhere between 4% and 5%. The reason for this is that banks’ overall cost of funding has not dropped as low as the Fed Funds rate, with a significant portion of funding coming from CD’s as well as competition to preserve savings deposits. With most banks needing to have an overall margin between loans and deposits of 3% to 4%, it is virtually impossible for a bank to lend money profitably at 3.25%.

6. Is Your Bank Still Doing Business?

Many banks have such strains on their loan portfolio and cap-ital that they are either unable to make new loans or unwilling to do so. If a company is a current borrower of a bank or look-ing to apply for a loan at one, it makes sense to inquire as to that bank’s current appetite for loans.

7. Mortgage Rates Still At Historically Low Levels

While rates have fluctuated roughly within a bandwidth be-tween 4.875% and 5.75% over the past year or so, mortgage rates continue to be very affordable when compared to his-torical rates. In the coming months, the government is plan-ning to invest less in mortgage-backed securities, and a num-ber of prognosticators believe that will result in an increase in rates. For anyone contemplating a home purchase, low rates, potential tax credit incentives, and declining real estate val-ues might be a recipe for a good deal this spring.

8. Complexity Of Internet Banking & Cash Manage-ment Systems

If you utilize internet banking or browser-based cash man-agement systems, your bank may have recently increased the complexity of its login and authentication processes. The business of information security gets increasingly difficult for all businesses that maintain files of client personal data as computer hackers around the globe grow in their number and attempts to compromise data. If your bank does not re-quire a complex login/system for internet banking, you might want to evaluate other options.

9. Deposit Rates: When Will They Get Better?

With the Fed Funds rate at an all-time low, overnight rates on

10 Things You and Your Clients Should Know About Banking

by Jim Rieniets, President & CEO of InsBank


HTTP://WWW.INSBANKTN.COMHTTP://WWW.INSBANKTN.COMHTTP://WWW.INSBANKTN.COM

12 Th e Tennessee Insuror

money market and savings accounts are also very low. Rates on certifi cates of deposit are marginally better but require one to hold the deposit to a specifi c maturity. When you look at your account statement and are underwhelmed, keep in mind that the bank is getting nothing better than 0.25% on its own money invested overnight. Deposit rates should rise when loan demand picks up or the Fed moves to increase its Funds rate.

10. What Is The Outlook For Tennessee Banks In 2010?

All indications are that banks nationwide will continue to be under pressure in the coming year, and Tennessee banks aren’t likely to be an exception. With statewide unemployment around 10% and real estate values continuing to pull back from the highs of a couple years ago, banks will continue to have loan losses above historical norms as well as high FDIC insur-ance premiums to absorb nationwide losses of failed banks.

About the Author

Jim Rieniets position as President and CEO of InsBank requires him to manage the day to day activities of the bank, as well as all lending activi-ties. He also serves as a director of InsBank and on the Loan and Investment Committees. Jim’s

extensive banking career has included positions as: Branch Manager, Credit Analyst, Commercial Loan Officer, Business Banking Department Manager, and most recently First Vice President/Division Head of Correspondent Banking. u

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14 Th e Tennessee Insuror14 Th e Tennessee Insuror

Imagine... Things Can Go Wrong When You Complete

Your Clients’ Applications

by Richard F. Lund, J.D.,

Assistant Vice President, Swiss Re


Imagine you have a long time friend and customer... let’s call her Mary. Imagine you have written insurance for her busi-nesses for more than 20 years. Imagine Mary calls you and tells you she is starting a new business and needs to get her BOP/CGL, workers’ compensation and all the other usual cov-erages for this new business. Imagine you think you know everything about her and her businesses. Imagine you get some basic information from her and then complete the ap-plications for her. Imagine Mary comes to your offi ce to sign the applications, but because she’s in a hurry to go talk to her banker, she tells you she’s sure everything is fi ne so and she doesn’t read or review the applications, she signs them and leaves. Imagine you didn’t insist that she review the applica-tions. Imagine you send them to the carriers, the policies are issued and all is well. Just imagine...

Imagine six months later Mary calls you and tells you that one of the employees of this new business has severely injured their back and she needs you to contact the workers’ com-pensation carrier to report the claim. Imagine you ask her where the employee was injured and she tells you it was while he was working in the neighboring state. Imagine your sur-prise when you hear the words “neighboring state,” because remember, you know everything about Mary’s business, ex-cept that she had employees working in a neighboring state. Imagine, because you never considered she would do that, because she never had before. Imagine, because you didn’t included “all states” coverage on the workers’ compensation policy. Imagine, because the carrier denies the workers’ com-pensation claim because coverage is limited only to the home state.

Imagine the claim is a minimum of $500,000. Imagine the next call you make is to your E&O carrier.

Reality...

The reality is that this story happens. Maybe not exactly like this, but it happens. It may not be a business customer but it happens with homeowners or personal auto policies or virtu-ally every other type of policy available. Regularly. So what can you do about it? Simple: don’t complete applications for your customers. “But that’s not good customer service,” you may reply. Actually, it is because by having your customer complete the application it gives them an opportunity to re-ally look at what they do and what they want insured. Who better to knows this better than themselves? Regardless of how well you think you know your customer, things change. What was true yesterday, may not be true today.

Does that mean you can’t help them if they have questions? Of course not. That is exactly what customer service is all about. But the responsibility to provide accurate information belongs to your customer. If the information on the applica-tion is not correct and they fi lled it out, then they are respon-sible. If the information on the application is not correct and YOU fi lled it out, then YOU may be responsible especially if you did not have them review the application. It’s as simple

as that.

So imagine your longtime friend and customer Mary calls you and tells you she has a new business. Imagine you send her the insurance applications. Imagine...

Disclaimer

This article is intended to be used for general informational pur-poses only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifi cally disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information con-tained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such ad-vice. The views expressed in this article do not necessarily repre-sent the views of the Swiss Re Group (“Swiss Re”) and/or its sub-sidiaries and/or management and/or shareholders.

About the Author

Richard F. Lund, J.D., is an Assistant Vice President of Swiss Re/Westport, underwriting insurance agents errors and omis-sions coverage. He has also been an insurance agents E&O claims counsel and has presented numerous E&O loss control seminars nationwide, including several for Insurors of Ten-nessee. u

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If we were to poll our members regarding their privacy policies and security, most would probably indicate they are sufficiently protecting private information. It is also true that traditionally, most independent agents and brokers have been careful with their clients’ personal information. It is good business.

However, the risks have become a lot greater in recent years because the information is stored electronically within the agencies and therefore may be more accessible to more agen-cy employees. In addition, the agency management systems themselves are more exposed to the external world through the Internet.

Increasingly, federal and state laws, such as HIPAA, Gramm-Leach-Bliley, the Fair Credit Reporting Act, and state motor vehicle and privacy laws impose specific privacy requirements on agents and brokers and carry significant penalties if the agency does not institute appropriate proce-dures and safeguards. Here are some examples:

1. The federal Gramm-Leach-Bliley Act re-quires independent agencies and brokers to proactively implement administrative, technical, and phys-ical safeguards to protect customer non-public personal information.

2. Tennessee agents are now covered by the state’s identity theft law which may require an agency to notify a cus-tomer and take other remedial steps (such as procuring credit reports for the customer) if the agency is involved in the customer’s non-public personal informa-tion being lost, stolen, misdirected, or otherwise the sub-ject of a security breach. The law does, however, provide a safe harbor if the affected data is encrypted.

3. Beyond the legal requirements, there is the potential of a civil lawsuit should someone’s non-public personal infor-mation be improperly stored or discarded. And, finally be-ing proactive about securing customer personal informa-tion is just good business, given the devastating impact of having to notify customers that their most sensitive infor-mation may have been compromised. In addition, taking proactive steps to prevent a security breach is very likely to be less costly than cleaning up the mess that typically occurs after a breach has occurred.

It is important for agency principals to establish privacy pro-tection as a priority for the agency and then to take the steps necessary to implement these protections. Useful information may be found on the IIABA website under Technology Reports

on the Agents Council for Technology (ACT) website at www.independentagent.com/act, as well as, several very helpful le-gal opinions that are available from the IIABA Office of General Counsel on HIPAA and its Privacy Rule, Gramm-Leach-Bliley, and the Fair Credit Reporting Act. Also, don’t forget that the Virtual University has a number of excellent articles on HIPAA, the GLBA, and the FCRA.

HIPAA and Agents

HIPAA safeguards “Protected Health Information,” and con-tains the most elaborate requirements, as well as potential liabilities and penalties. Agents are

typically drawn into the regulation’s requirements when they sell or service health or employee ben-efits insurance and are asked to sign a “Business Associate” agreement by the insurance company or employee benefits client. As part of the Ameri-can Recovery and Reinvestment Act of 2009, the

“Breach Notification Rule” was created re-quiring notice when there is a breach of

unsecured protected health information by business associates of “Covered Entities.” These regulations went into effect on February 22, 2010. Agencies may also be impacted as an employer

when they sponsor health plans for their employ-ees and must make sure these health

plans are in compliance with the HIPAA Privacy Rule.

What should you do? First, ascertain which federal and state privacy laws apply to your agency. It is likely that developing an overall privacy policy and procedures that encompass these re-quirements is sufficient. These policies and procedures should apply to employee non-public personal information as well as to prospect and customer information.

Agents and brokers may want to appoint a privacy officer who has a good knowledge of overall agency operations and charge that individual with developing a detailed understanding of the various privacy laws. That individual can manage the staff team developing and then implementing the privacy policy and procedures, oversee the audit process for compliance, and receive privacy-related complaints and problems.

Agents and brokers also may want to appoint a security offi-cer to oversee the agency’s security policies and procedures in order to protect the agency’s information from both external and internal threats-- whether the information is in electronic

Issue A Policy - on ProtectionProtecting Your Clients, Your Employees and Your Business

Taking Action

17The Tennessee Insuror

or paper form, or conveyed orally. Another important privacy protection is to limit access to non-public personal information and individually identifiable medical information to only those employees who have a need to see it.

Issues to consider include:

How can the agency’s systems be “locked down” to limit •access to particular files to only the appropriate employ-ees who need to see that information? What procedures can be adopted by the mailroom to •avoid unauthorized viewing of this sensitive information? What steps can be taken with the technology staff who •have broad access to systems information or with vendors who have access to the agency’s systems and info? What procedures should be adopted to assure that indi-•vidual employee passwords are safeguarded and that the agency immediately terminates a departing employee’s access both to the agency’s systems as well as to the sys-tems of the agency’s trading partners? What communications policies are put in place so that mail •and faxes are used to send private health and personal in-formation, rather than e-mail which is not a confidential medium unless sent in encrypted form?

Agents and brokers may want to raise awareness with every agency employee regarding the importance of safeguarding all non-public personal information and individually identifi-able health information and employee passwords, and provide training to both existing and new staff as they come onboard with regard to the agency’s privacy policies and procedures.

Agency employees can be asked to commit in writing to safe-guard the confidentiality of all protected information, to access it only when they have a legitimate business purpose to do so, and to use the information only for the business purpose for which it was intended to be used.

Employees with access to non-public personal info and/or indi-vidually identifiable health info should take steps to keep it out of view of fellow employees whether it is on the computer or on paper, especially when they are away from their desk. In ad-dition, they may want to create a procedure to verify a caller’s identity before discussing private info with him or her.

Here are some other thoughts:

Portable Media:• Any PCs, portable devices, and remov-able media (i.e. zip drives, flash drives, memory sticks, CDs) taken outside of an agency potentially creates a major new security risk for agencies. E-mail:• Agencies should avoid sending customer non-public personal information by unsecured e-mail, because regular e-mail is like sending an open postcard through the mail. Ask your IT person how to help protect data while in transit to and from the agency.Health Information:• If your agency handles individually identifiable health information for clients or employees, then it also may be subject to the federal HIPAA law.


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The 3 Biggest Security Threats Most Agencies Face

While a security threat can come at an agency from many di-rections, the following threats are probably most likely to cause the typical agency to experience a security breach:

1. An employee theft or inadvertent mistake that exposes customers’ personal information to unauthorized parties. (Inadvertent Mistake Example: Opening an e-mail attach-ment containing a virus from an unknown source.)

2. Physical loss or theft of a computer, portable device, back up tape or other removable media—all containing cus-tomers’ non-public personal information. As these devices have become more portable, and they are regularly taken outside the agency premises, this security risk has multi-plied significantly. Also, the substantial risk of a break-in to the agency’s offices and the theft of its computers is often overlooked when an agency develops its security policy.

3. Loss or theft of a password permitting unauthorized indi-viduals to gain access to customers’ personal information.

ACT recommends the following common sense precautions to consider mitigating these security threats:

No more passwords on sticky notes. Passwords should be •

kept hidden and private. Agents should note that their car-rier agreements are likely to make them responsible if an unauthorized party gains access to the carrier’s systems using an agency password.Escort your visitors throughout the office. Know your •night-time cleaning crew.Computer Desktops should be password protected, and •employees should log off of their system when they go to lunch, attend a meeting, or leave in the evening.How secure is your office when you leave in the evening?•Keep non-public customer and policy information off of •PCs, portable devices, and removable media. Encrypt any of this non-public electronic information that leaves the agency office, whenever possible. Encrypt back-ups and keep them in a secure place.•Do you need to keep particular types of sensitive personal •information in your system, or can you just pull it from a third party source when needed?Would you be better off housing your systems and/or •back-ups in a hosted data center employing 24 hour secu-rity, the latest security technologies, procedures, and data traffic monitoring, and perhaps even an armed guard?

A proactive privacy strategy makes very good business sense for the independent agent. It responds to evolving client ex-pectations and minimizes the agency’s exposure to prosecu-tion, liability, and negative public relations that can result from a failure to safeguard a client’s private personal info. u


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From Your President

21

On March the 4th, a band of Insurors agents, along with our CEO Chuck Bidek and General Counsel Ashley Arnold, descended upon Capi-tol Hill for our annual meetings with the Ten-nessee members of the U.S. House and Sen-ate. We were very fortunate as there was not a cloud in the sky, and for the fi rst time in weeks, it wasn’t snowing. However, once inside the various chambers, the climate was not as nice and tension and stress fi lled the air. Healthcare Reform was looming and partisan politics were playing their usual role.

Armed with the Big “I” position on numerous issues, we sat with our members of Congress and stressed our reasons why they should vote a certain way. The topics for the day included healthcare, insurance regulation, licensing, fl ood insurance and estate tax reform.

Healthcare Reform

With regards to healthcare reform, we stressed, as always, that regardless of the outcome, it is imperative that independent agents be in-volved in the process. We serve as consumer advocates and trusted advisors for individuals and businesses of all sizes, helping clients with coverage questions, claims issues and compli-ance matters throughout the life of each policy. We also expressed our opposition to a gov-ernment-run health plan, employer mandates, medical loss ratios and purchasing health insur-ance across state lines.

Although the Obama Administration’s Health-care Reform Bill passed in late March, the fi ght is not over on this issue, and the Big “I” will con-tinue to make sure that the independent agent maintains their key role as a guide for consum-ers. The grassroots eff orts of Insurors agents and others did bear fruit in this vote, as Tennes-see Democrats Rep. John Tanner and Rep. Lin-coln Davis both cast “No” votes on the bill.

Industry Regulation

The current economic crisis has obviously dem-

onstrated the need for some type of fi nancial services regulatory reform. However, we feel the insurance industry should not be brought into the mix. Our current state regulatory sys-tem is working effi ciently and eff ectively. State regulators protect policyholders’ interests by requiring carriers to meet certain fi nancial stan-dards and to act prudently. We are, in a sense, paying the price for a failed company that fal-tered due to its fi nancial services department and not as a result of their insurance opera-tions.

Producer Licensing Reform

As you are aware, agents and brokers must be licensed in every state in which they conduct business. Complying with varying and incon-sistent standards and duplication of licensing processing is costly and time consuming. In this case, Federal legislation is needed for nonresi-dent licensing reform. We support the National Association of Registered Agents and Brokers (NARAB II - HR2554) Reform Act, which estab-lishes a one stop shop for nonresident licenses in all states. This would be a dream come true for those of you that do business in numerous states.

Currently, the Act has passed the U.S. House and the Big “I” and other organizations are now pursuing sponsors and trying to build support in the Senate. Ideally, the Act could be included in the Senate’s Financial Services Reform Bill, but that scenario is unlikely at this point.

National Flood Insurance Program

Last year, Congress was forced to enact short-term, temporary extensions of the NFIP on four separate occasions. This year, one extension has already gone through, after a short pe-riod where the program actually expired. We strongly believe that these short-term exten-sions bring instability to the marketplace and undermine consumer confi dence. We urged Congress to enact a long-term (fi ve year) ex-tension of the program with the inclusion of

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optional BI, additional living expenses as well as increased maximum limits. The latest news is that Congress will con-sider at least a one year extension, and should be including some language that will retroactively cover any claims that are made from the 2-day period when the previous extension had expired.

Estate Tax Reform

Finally, with regards to estate tax reform, we simply encour-aged our members of Congress to do something. It is difficult to plan one’s estate when future estate tax rates have yet to be determined. As it stands now, the estate tax is zeroed out due to congressional inaction on the issue. However, the tax is scheduled to come back with a vengeance in 2011 with a whopping 55% rate and a $1,000,000 exemption. The Big “I” recommends striking a balance by reducing the top rate to 35% and increasing the exemption to $5,000,000 for individu-als and $10,000,000 for joint filers.

Perhaps, by the time that you read this, some of these issues will already be resolved. Hopefully, our efforts will have be en rewarded and our Tennessee members of Congress will cast votes in our favor. I encourage you to stay or become involved in the grassroots efforts and legislative affairs that effect our industry, as I can assure you that your voice does make a dif-ference. u

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In the first week of March, the Spring National Board of Directors meeting was held in Washing-ton, D.C. after the completion of the Big “I” Legis-lative Conference and Convention. Some will call it historic and others may call it defining but two things occurred at this board meeting of which you should be aware.

First, after over 18 months of debate and study, Trusted Choice will move from an optional pro-gram for members to a member benefit that is no longer optional. All Insurors and Big “I” mem-bers will be members of Trusted Choice. You will still have the option of whether or not you want to agree to the Trusted Choice Pledge of Perfor-mance. As you know it takes some big dollars to create a brand, and this decision solidifies Trusted Choice as the branding effort of our Association. With that very large decision now made your As-sociation can move forward to making it work for all of our agency members.

Along with that decision, a new logo has been adopted that combines the Big “I” logo with the Trusted Choice logo. The “bird on the stick” national logo will be retired and modified to be surrounded by the Trusted Choice insignia. I think you are going to like the resulting marriage of these two logos. This will mark the first logo change in 23 years, and the first major redesign in over 70 years.

Those are two very important changes and more will come to you from both the national and the state level on those issues. The decisions made were historic according to some individuals who have been a part of the Association for many, many years. They were also among the most difficult we have ever made. Because of the im-portance of these issues it was decided that a super majority vote should be used rather than a majority and on that basis the changes were adopted into policy.

As you already know, Trusted Choice is currently a part of our Titans Radio advertising program and many of our members take advantage of the local advertising benefits. With this change we hope that will be the case to an even greater extent. As we all know, sometimes the best deci-

Decisions for Our Future?

sion is not a “yes” or “no” but rather that one was made and therefore allows us to move forward and spend time and resources on making our As-sociation better for all its members.

Elections for the executive committee were also held and Randy Laniox of Louisiana was elected to the executive committee. I continue to be impressed by the time and effort and the intel-ligence of the fellow directors and committee members that serve on this board. It is a dedi-cated group.

Recently you should have received a letter re-garding the fundraising kickoff for our national Political Action Committee, InsurPAC-National – recently voted one of the most influential PACs in our nation’s capital. Your contributions to both the state and national PACs are vital for us to have a voice with our legislature. Last year, InsurPAC-National topped the $1 million level for the first time ever, and we want to keep that momentum going. Please consider writing the check today.

And last, two more items you should look at are the Virtual University (VU) information on Certifi-cates of Insurance and a product called the Vir-tual Risk Consultant (VRC) – both great benefits to you as members.

The VU Certificates of Insurance Resource Sec-tion is available at http://www.iiaba.net/eprise/main/VU/NonMember/Certificates.htm and they have published a white paper and numerous ar-ticles that address many of the problems agents face when dealing with certificates.

The VRC is an online sales and service resource designed to help your agency better serve your customers. Using this tool will lead to increased sales by improving your staff’s knowledge of a prospect’s operation, thus enabling them to bet-ter identify and cover customer exposures. It is truly a tool that will help your agency grow while limiting your E&O exposures. Find out more at http://www.insurors.org/Content/Navigation-Menu/Products/EO/default.htm#VRC

Thank you for the chance to serve you in this way. u

From Your State National Director

Brad V. Smith

“...sometimes t h e b e s t decision is not a “yes” or “no” b u t r a t h e r t h a t o n e was made...”


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From Your CEO

25

Chuck Bidek, CPCU

The Choice is Yours?

“. . . it is of ten more about w h a t y o u d i d n ’ t d o that gets you into trouble.”

a safety net is the best option for your agency.

Your Choices

When it comes to offering you choices, we are fortunate to have two of the best compa-nies out there in Swiss Re and Fireman’s Fund. We currently write over 65% of our members coverage, and we would love to increase that number. In talking with our members through the quoting process, we often find that price is the main motivator for purchase, and I would caution you against relying too heavily on “the cheapest way out” when choosing your cover-age. Just like you suggest that your insureds read and compare policies before buying, you should approach your E&O decision the same way. Compare coverages, ratings and limits so that you can make a truly informed decision.

Lawsuits aren’t the same in this post-Katrina world, and the thought of a total loss on your entire book of homeowners business is one that has to at least be considered. With so many factors in play, E&O premiums will only see a decline if we work together to put as many loss prevention activities in place as possible, and stay dedicated to them. Just as your agency sees Continuing Education for its employees as a way to keep abreast of changes in the indus-try, a continued vigilance towards E&O risks is just as important. Most claims are still prevent-able, and developing this culture of prevention in your agency is good for all sides of the equa-tion.

The business of properly insuring your E&O ex-posures is more complicated than ever before. It requires more questions on what seems to be a endless amount of applications. But due to the aforementioned changes to our industry over the last 3 decades they are necessary to design the coverage. Not a week goes by that we don’t have to seek counsel to properly cover a deal or new agency ownership arrangement or cluster partnership arrangement. Likewise we all need to know the source of E&O claims. Are they coming more from commercial or personal? Are claims from large agencies more predominant than from small agencies? Or is the reverse true? Hence,

Just like independent agencies are set apart by the fact that they offer customers a choice of insurance products and companies, your As-sociation has built a portfolio of choices for you when it comes to our Errors & Omissions (E&O) coverage offerings. Insurors and the Big “I” put a lot of time into selecting E&O partnerships that will truly benefit our agency members, and I as-sure that these programs are some of the best in the industry.

We our very proud of our E&O program, which we began marketing and administering in 1988. Over time E&O coverage has changed from being a luxury to being a necessity in order to maintain company appointments and remain in business. The agency business has changed dramatically as well, with lines of business no longer written through state offices with man-agers who knew agents personally and often times helped to “ensure” the absence of E&O risks. Now lines of business are placed all over the country and E&S brokers are the rule, not the exception. These changes, combined with the emergence of electronic data storage, so-cial media, e-mail and online submission has created a whirlwind of risk for the independent agent. In addition, non-insurance alternatives such as self-insurance, group insurance, recipro-cal pools and captives have made the question of “who is represented,” a much more complex one to answer. The majority of agencies are even placing more business with carriers they don’t represent than with the ones they do.

Another factor that has changed the landscape of the E&O marketplace is the types of lawsuits being brought against agents. In the past, the key part of E&O was the “O.” Omissions like for-getting to add a new vehicle to the policy or not getting a signature on the right page was brought into play. But now the “E” has reared its ugly head, and it is often more about what you didn’t do that gets you into trouble. Forgetting to offer flood coverage, a PUP or home busi-ness insurance is a sure fire way to set a court date. One way to avoid this is to develop an E&O checklist, or to use a product like the Big “I” Virtual Risk Consultant. But even if it can’t be completely avoided, having strong coverage as


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E&O Seminars

If you want an opportunity to develop a working, accessible procedures man-ual for dealing with E&O risks in your agency, consider attending one of our E&O Business Practices courses sched-uled throughout the state this year. In addition to E&O tips, attendees will also learn ways to make their agency more profi table and marketing oriented while maintaining E&O safety.

Insurors members whose E&O coverage is written with Swiss Re through Insurors may qualify for the 10% loss control cred-it. Conditions apply to receive credit, but you can contact one of our underwriters listed below for more information:

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Other Resources

Some other resources that I would sug-gest include the aforementioned Big “I” Virtual Risk Consultant; the “E&O Hap-pens” website, located at www.inde-pendentagent.com/eohappens; and the Swiss Re Agency Shield Program. All of these programs are ways to help ensure the safety and fi nancial security of your agency. You can fi nd more information on any of them on our website, or con-act one of our underwriters to have your questions answered by phone.

To paraphrase a popular airline’s say-ing, we know that you have choices with your E&O, so thanks for choosing us. u


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Education CalendarThe Insurors of Tennessee off ers education opportunities to member agents across a wide range of insurance specialities that satisfy individuals at many diff erent experi-ence levels. If you are looking to further your career, seeking a professional designa-tion, or need to satisfy continuing education requirements, check out the variety of courses available.

Registration is fast and easy at www.insurors.org. More information about each class can also be found online.

Indicates course is presented by Th e National Alliance. Register for these courses at www.thenationalalliance.comRegister Online at www.insurors.org

E&O Seminars Fee: $60 CE: 7

5/27 E&O Business Practices Memphis5/28 E&O Business Practices Nashville8/18 E&O Business Practices Knoxville8/19 E&O Business Practices Nashville

William T. Hold Fee: $145

9/14 Hold Seminar (CISRs Only) Nashville11/9 Hold Seminar (CISRs Only) Memphis

CRM Fee: $420

10/27-30 Practice of Risk Mngmt. Nashville

Sales Fee: $475

12/8-10 Dynamics of Selling Nashville

Flood Fee: $30

8/24 Flood Seminar Nashville

Online Courses (www.iiaba.net/vu) Available from IIABA Virtual University. Member pricing shown.

Ethics for Insurance Professionals CE: 3 $75How to Calc. Business Income in 5 Min. CE: 3 $50 *check VU site for current information on CE and pricing

CISR Fee: $165 CE: 8 3/30 Commercial Property Kingsport3/31 Commercial Property Knoxville4/1 Commercial Property Chattanooga4/14 Personal Residential Memphis4/15 Personal Residential Nashville5/11 Personal Auto Knoxville5/12 Personal Auto Chattanooga6/22 Commercial Casualty Memphis6/23 Commercial Casualty Jackson6/24 Commercial Casualty Nashville8/25 Agency Operations Memphis8/26 Agency Operations Nashville11/18 Dynamics of Service Nashville

CIC Fee: $395 CE: 24

4/21-23 Personal Lines Institute Nashville5/19-21 Life & Health Institute Nashville6/9-11 Commercial Casualty Institute Knoxville9/15-17 Commercial Casualty Institute Nashville11/8-10 Ruble Graduate Seminar NashvilleTh e National Alliance for Insurance Education & Research is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have fi nal authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Website: www.nasba.org. Advanced Curriculum Rating = 20 CPE Credits. For more information regarding administrative policies such as complaint and refund, please contact our offi ces at 800-633-2165.

Local Seminars Fee: $30 CE: 2

4/29 Laws, Legislation & Lunch Kingsport4/30 Laws, Legislation & Lunch Knoxville7/14 Laws, Legislation & Lunch Chattanooga7/15 Laws, Legislation & Lunch Nashville

9/14 Hold Seminar (CISRs Only) 11/9 Hold Seminar (CISRs Only) 11/9 Hold Seminar (CISRs Only) 11/9 Hold Seminar (CISRs Only)

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Government and Legal AffairsACORD 24 and 25 ChangesWritten by Bill Wilson of the Big “I” Virtual University

They say that 13 is unlucky, so perhaps that explains why ACORD swiftly went through the working group process following the 13th edition of the ACORD 25 certificate of insurance in January 2009. This group has produced a new September 2009 edition that incorporates possibly the most significant changes since the ACORD 25 was introduced in November 1977. As noted below, this form’s speedy revision more likely resulted from at least three states’ concern with the cancellation clause language based on recent regulatory directives.

In September, ACORD revised both the ACORD 24 and ACORD 25 certificates of insurance which are now the approved forms that all agents should start using as soon as possible for the reasons outlined below. If you manually produce cer-tificates, you should use the new forms now if licensed to do so by ACORD. If your certificates of insurance are prepared on your agency management systems, it is important to check with your vendors to see when they will start using the new forms.

Recognizing the high frequency usage of these forms, this revision offers an opportunity for agency leaders and staff to look at how these changes affect continuing certificate of insurance issues. As discussed below, the Special Provisions and Notice of Cancellation changes should offer greater E&O claims protection as long as they are used in accordance with ACORD guidelines. Although these two changes should sim-plify the process, there is the potential for certificateholder pushback. Another change simplifies the verification of waiv-er of subrogation clauses which is similar to the current ad-ditional insured verification by a Yes or No answer.

Top 5 ACORD 25 Changes

1-Form Reduced from 2 Pages to 1 PageEveryone will be thrilled to learn that, thanks to the creative wizardry of the ACORD staff and desktop publishing, the ACORD 25 has been reduced from two pages to one page. Aside from the trees we’ll save, this will lessen the potential E&O impact on agencies if the important information and disclaimers on Page 2 have been left off a transmittal. This information has been moved to Page 1 of the form.

2-Disclaimers and Related Information Moved to the Top of Page 1The disclaimers from both of the former pages have been relocated and consolidated into two segments near the very top of the new form to make them more visible, reduce re-dundancy, and eliminate Page 2. This is the new wording near the top of the form:

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AF-FORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF IN-SURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL IN-SURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

3-Columns Expanded for Additional Insureds and Subrogation WaiversIn the Coverages section of the form, the “ADD’L INSRD” col-umn has been moved to the right of the “TYPE OF INSUR-ANCE” column and renamed “ADDL INSR.” Check boxes have been replaced with fields to capture “Y” for a “YES” response and “N” for a “NO” response. Since it is such a common re-quest, waivers of subrogation can now be indicated in the new column labeled “SUBR WVD” to the right of the “ADDL INSR” column. Column contains fields to capture “Y” for a “YES” response and “N” for a “NO” response.

4-“Special Provisions” Block RevisedOften, agents are asked to add all kinds of information in the section of the prior ACORD 25 that was labeled as follows:

DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES / EX-CLUSIONS ADDED BY ENDORSEMENT / SPECIAL PROVISIONS

This box descriptor has been revised to say the following:

DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (At-tach ACORD 101, Additional Remarks Schedule, if more space is required)

This space on the ACORD 25 has often been misused to add all kinds of information requested by the certificate holder, often in violation of the ACORD Forms Instruction Guide (FIG). For example, the FIG says the following:

ACORD recommends that the Certificate NOT be used in the following situations:

To waive rights•To provide information to the owner of a leased motor •vehicle or the lender about both liability and physical damage coverages


Those states include South Dakota, New Hampshire, and New York. At the recent Mid-America Technical Conference (MATC) in St. Louis, ACORD representative Joel Volker advised that the prior ACORD certificate forms were out of compliance with the insurance laws in those (and perhaps other less vo-cal) states.

For example, on August 13, 2009, South Dakota issued Bulle-tin 09-06 which stated: “Unless there is express written agree-ment from the insurer in the form of a policy provision, policy endorsement or some other form of binding written guaran-tee from the insurer that the insurer will follow the cancella-tion language in the certificate or memorandum of insurance, the person issuing the certificate must in some manner strike or delete the cancellation language from the form.”

While a few states have been very specific and vocal on the issue of certificates providing a notice of cancellation, it is our opinion that providing such notice may often be in violation of insurance laws in most states. We are not attorneys and we certainly do not speak for state regulators, but we have reached this conclusion based on the rationale expressed in the discussion below.

In addition, this is what the ACORD Forms Instruction Guide (FIG) says: [V]irtually every other state will not allow any change in a certificate of insurance that would attempt to modify a policy unless the revised certificate is filed and ap-proved. In these states, this form can only be changed to re-flect the terms and conditions of the policy on which it is re-porting. Such change(s) must be approved in advance by the insurance carrier that issued such policy.

Notice of cancellation is a POLICY right, not a voluntary ser-vice. The policy, often following state law, determines who gets notice of cancellation for what reason(s), and with how much advance notice. Rarely is a certificate holder entitled to notice of cancellation by a policy form, even if the certificate holder is an additional insured. NONE of the ISO additional in-sured endorsements provide for any notice of cancellation to the AI. In fact, under most ISO commercial forms, the right to notice of cancellation is not even granted to any insured other than the “First Named Insured” unless otherwise indicated by statutory or case law.

The insurance policy is a contract between the named insured(s) and the insurance company. Typically, agencies do not provide notice of cancellation to insureds, much less third parties who are entitled to no policy rights. Despite this, we know that many agencies voluntarily provide notice to cer-tificate holders that have no such rights under the policy as a service to their customers, often as a competitive advantage. Aside from the fact that this is expressly illegal in some states and may be, by inference, in others, there are reasons why this practice should be reconsidered.

For example, insureds often sign contracts where they agree that the other party will be provided 30 days (or more) no-

applying to the vehicle (ACORD 23, Automobile Certifi-•cate of Insurance, should be used for this)To quote wording from a contract•To attach to an endorsement•To quote any wording which amends a policy unless the •policy itself has been amended

Despite this caveat, all too often agencies would in fact add information about waiving subrogation rights or include specific statements from the contract the insured has signed with regard to additional insured listings, attesting that the policies complied with indemnity agreements or insurance requirements, etc. The certificate has NEVER been intended to be used in this manner. For more information on this, be sure to check out the article in the VU library entitled “Beware Indemnity Agreement Agent Affidavits.”

In addition, as consultant, expert witness and VU faculty member Don Malecki, CPCU, wrote in the October 2009 issue of Rough Notes magazine, in a recent court case, an agent was sued for failing to note on the certificate that an exclusionary endorsement has been added, as prompted by the “EXCLU-SIONS ADDED BY ENDORSEMENT” language (see above) in the former ACORD 25. This language has now been removed.

This section of the form is designed to be used exclusively for any necessary and warranted description of operations, loca-tions or vehicles. If additional space is required or other infor-mation is needed, the ACORD 101 should be attached.

5-Notice of Cancellation RevisedThe following is the cancellation provision of the former ACORD 25:

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CAN-CELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSU-ING INSURER WILL ENDEAVOR TO MAIL ___ DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES.

This is the cancellation provision of the new ACORD 25:

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CAN-CELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PRO-VISIONS.

The obvious change is that the ACORD 25 no longer includes a blank line to show how many days cancellation notice the cer-tificate holder MIGHT receive. The new wording simply refers the certificate holder to what cancellation notice is provided by the policy. There are several reasons for this change.

The first and foremost reason for the change and the need to expedite it with a September date is that at least three state insurance departments required a change in the language.


tice of cancellation. The insurer will not provide this notice, but the agency voluntarily agrees to do it. What if the insurer cancels the policy for nonpayment with 10 days notice? The agency has issued a certifi cate indicating that the certifi cate holder will receive 30 days notice. Does the agency plan on paying the premium for extending the policy period another 20+ days (and will the insurer actually do this)?

Most contracts the insured enters into that require notice of cancellation do not specify whether that applies to cancella-tion by the insurer or the insured. Many or most policies per-mit the insured to cancel immediately with written notice or by surrendering the policy. Again, how does the agency plan on providing 30 days notice if the policy has been terminated by the insured? The agent most likely has no legal standing to extend the policy period.

In our recent webinar on certifi cates of insurance, we pro-vided a slide that listed over a dozen court cases where the agent was found liable under a certifi cate of insurance. Most recently, the greatest success of plaintiff ’s lawyers has been in the area of applying fraud statutes or a legal concept known as detrimental reliance. While the plaintiff must prove fraud, is it possible that an agent who indicates that the agency will provide 30 days notice of cancellation (outside any policy pro-vision to that eff ect) KNOWING that this would be impossible in some situations, could be found guilty of fraud?

Most lawsuits against agents involving certifi cates of insur-ance have been unsuccessful because the courts have gen-erally found that unmodifi ed ACORD forms with disclaimers intact are not contracts and actionable against the agent. However, some courts have applied the concept of detrimen-tal reliance or promissory estoppel to hold agents liable for statements on certifi cates that are not true and on which the other party relied to their detriment.

We anticipate push-back from certifi cate holders on the new ACORD forms and we are considering various responses based on what may occur in the coming months. We will continue to use the VU newsletter as the vehicle to keep you informed on developments and Big “I” members are always welcome to log in and use our “Ask an Expert” service when they have certifi cate or other questions.

As a fi nal note, two anticipated questions are, when will my agency management system have the new form and what should I do if someone demands the old ACORD forms? At MATC, Mr. Volker advised, with regard to implementing the new forms and using the old forms that ACORD’s licensing agreement prohibits modifying the forms in any way and requires replacement of superseded forms as quickly as pos-sible, but not longer than one year. We suggest using the new ACORD forms immediately but, according to ACORD’s licens-ing agreement as we were advised, the older editions cannot be used beyond a year from the time they were replaced. This should also apply to requests from lenders for the 2003 edi-tions of the ACORD 27 and 28. u

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Association UpdateTennessee Agents Attend National Convention

From March 3rd-5th, a constituency of Insurors members was in Washington, D.C. for the 2010 Big “I” Legislative Confer-ence and Convention. Attendees from Tennessee included Board members Tee Zerfoss, Walt Bradshaw, Brad Smith, Ed Gibbons, Eddie Miller and Roger Smith; as well as members Sharon Simmons, Dave Porch and Kevin Ownby.

The group attended national meetings, met with their re-spective members of Congress, dis-cussed the future of our Association and learned about some important new is-sues facing our in-dustry.

Next year’s National Convention will take place on April 13th-15th, so mark your calendars now and watch www.iiaba.net for

more information.

Insurors Member Officiating March Madness

Insurors member Gary Maxwell, of Gary Maxwell Insurance Agency in Cookeville, gets to see “March Mad-ness” firsthand. That’s because in his spare time he works as a basketball referee for the NCAA. He most re-cently officiated some of the games in the Providence, Rhode Island, tournament regional, including Vil-lanova’s overtime victory against Robert Morris.

He has been an official since 1992, when he was hired by the Ohio Valley Conference. Since then he has worked his way up and built up a résumé that included working the 2006 Final Four in Indianapolis. A lifelong basketball fan, Gary grew up in Livingston and played at Livingston Academy, which he still claims as his favorite team. u

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The national winner will receive $2,000 cash, a gold and diamond pin, and a framed certificate of recognition. National finalists win $500 and a gold and garnet pin. And if you nominate the national winner, you receive a $1,000 prize!

All it takes to enter is a nomination, a letter of recommendation, a competition entry form, and a 1,000-word essay written by the nominee on a customer service topic specified by The National Alliance. Entries are due no later than May 1, 2010.

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Broker Spotlight

At Risk Placement Services (RPS), the people are the diff er-ence.

A national MGA/Wholesaler, RPS is recognized as the largest binding authority MGA in the United States per Business Insur-ance magazine. Their Lexington offi ce is the home for nearly 100 employees with seven specialty departments. The lead-ership of the agency has years of experience on the interme-diary side of the business.

Seven Specialty Departments

RPS specialty placement includes seven departments; Com-mercial Auto (non-fl eet), Garage Coverages, Commercial Auto National Fleet, Aviation Brokerage (added 9/09), Open Bro-kerage, Commercial Lines Binding Placement and Specialty Personal Lines. Literally representing dozens and dozens of specialty carriers, RPS has the products you need. All of their business is placed with carriers that have a solid fi nancial base. Territorially, the Lexington offi ce wrote business in ‘20+’ states last year. Even if your risk is coastal they’ve had success.

Franchise Eff ect in Tennessee

RPS of Lexington is looking for new appointments in Tennes-see. Their approach on new appointments diff ers from some of their competitors. They request some information via website submission at www.rpslex.com about your agency. Following a phone discussion, they will move to appoint if, “RPS is right for you,” and “you are right for us.” Business should be man-aged professionally and this approach has served them well. Ultimately, an RPS representative will visit your agency.

As a result of this thorough process, RPS is not on every corner in Tennessee, which means when you bring them an account there is an excellent chance they are not quoting it for another Tennessee agent.

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Company Spotlight

Auto-Owners Insurance Company stands among the 20 largest insurance compa-nies in the nation; it’s ranked in the For-tune 500; and is rated among the top three percent of all companies for finan-cial strength. Providing Safe. Sound. Se-cure.® insurance for its more than 3 mil-lion policyholders and 6,300 independent insurance agencies is its top priority.

Auto-Owners has grown tremendously since 1917, when founder Vern V. Moulton moved the company to Lansing, Michi-gan, after organizing it in Mount Pleas-ant, Michigan. At that time the company consisted of one book of policyholders’ names and $174.25 in assets. Despite those humble beginnings, Auto-Owners has remained consistent in its philosophy.

Competitive Advantage

Auto-Owners offers competitive advan-tages for its agents. Some of them are:

Superior customer satisfaction, as •demonstrated by its recognition from J.D. Power and Associates stud-ies. In 2009 J.D. Power and Associates, for the second straight year, ranked Auto-Owners “Highest in Customer Satisfaction with the Auto Insurance Claims Experience.”Competitively priced products •backed by sophisticated modeling and forecasting tools.A wide variety of products, with •broad coverage forms to allow agents to sell with confidence.Enjoys the highest financial ratings •by many leading rating organiza-tions.Its 100 percent commitment to the •independent agency system, so agents will not be competing with their own company when working with Auto-Owners.A full-service underwriting branch •and two claims offices in Tennessee, so agents do business with fellow

Auto-Owners Insurance CompanyTennesseans.Marketing support for agencies, with •marketing representatives who call on agents and have full underwriting and quoting authority.

Auto-Owners’ success also stems from its guiding core values. These 10 values make up the heart of Auto-Owners In-surance: Honesty, Hard Work, Prudence, Loyalty, The Team, Our Relationships, Op-portunities for Associates, The Customer, Stability and Consistency, and Profit are the values upon which our business has grown, trust has been earned and rela-tionships have thrived.

“For 93 years, the focus of our company has been to indemnify insureds when a covered loss occurs,” said Chairman & CEO Ron Simon, “With that in mind, we are very thankful to serve our insureds and their 4.9 million policies, 37,500 agents, and 3,642 associates. We who work in this industry are truly serving others.”

Part of the company’s stability comes from experience at the top. The 12 senior officers have a combined 389 years of Auto-Owners experience. Auto-Owners is committed to giving its associates di-verse insurance experiences with the company. Many associates have held sev-eral different positions, and most of the senior officers have worked in more than one division.

Auto-Owners looks forward to continu-ing its strong relationship with indepen-dent agents in Tennessee.

Auto-Owners Insurance ranks highest in the proprietary J.D. Power and Associates 2009 Auto Claims StudySM. Study based on 11,616 total responses, ranking 25 insurance provid-ers. Excludes those with claims only for glass/windshield, theft/stolen, roadside assistance or bodily injury claims. Proprietary results based on experiences and perceptions of consumers sur-veyed June 2008 - June 2009. Your experiences may vary. Visit jdpower.com. u

Tennessee Contact

Jim Baes, Regional [email protected]

Tennessee Offices

Brentwood (full service) Jackson and Knoxville (claims service only)

Company Information

Auto-Owners Insurance Co., with $14.3 billion in assets and $4.5 billion in written premium, is an insurance provider based in Lansing, MI. Auto-Owners works exclusively with inde-pendent agents to offer auto, home, life and business insurance protection. Es-tablished in 1916, the company serves policyholders in Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Mis-souri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Virginia and Wisconsin. For more info, visit www.auto-owners.com.

Rat• ed A++ (Superior) by A.M. Best for its five property and ca-sualty companies, one of only 10 insurers to receive this ratingRated A+ (Superior) by A.M. Best •for its life companyRanked 476th in the Fortune 500 •(2009)Received the 2009 Applied Sys-•tems Interface Partner AwardHonored in 2008 and 2009 for •being “Highest in Customer Sat-isfaction with the Auto Insurance Claims Experience” by J.D. Power and Associates.


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Company BriefsBuilders Mutual Distributes $1.3 Million in Dividends to Policyholders

Builders Mutual Insurance Company is distributing a $1.3 million dividend to eligible policyholders in North Carolina, South Carolina, Virginia and Tennessee.

While 2009 was a challenging year for the building industry, Builders Mutual and its’ policyholders weathered the eco-nomic storm. This dividend distribution is a direct result of policyholders’ conscientious efforts to make safety a prior-ity in their work places, which resulted in a lower number of workers’ compensation claims. Checks are being distributed to more than 6,500 eligible workers’ compensation policy-holders, including 482 policyholders in Tennessee who will be receiving over $75,000.

“At a time when builders are challenged to reduce costs, it is clear that they haven’t reduced their focus on safety,” stated Mike Gerber, Senior Vice President/CMO. “And, we are com-mitted to providing the resources and training to help our customers stay safe. In 2009, we increased the number of Builders University training classes offered and added more classes taught in Spanish,” Gerber continued. “Additionally, our relationships with the state and local home builders as-sociations have enabled us to help create a culture of safety that is embraced by our policyholders.”

The availability of a dividend, which makes this distribution possible, is based on Builders Mutual’s operating results dur-ing a particular period. Builders Mutual does not predict or guarantee a dividend distribution in any year; however, they have returned dividends in 21 out of 25 eligible years. It is the safety experience of their policyholders which allows the op-portunity for this consistent dividend return.

InsBank Promotes Laney to First Vice President

Insurors banking partner InsBank has pro-moted Frances Laney to First Vice Presi-dent. In addition to currently managing the operations areas of the bank, her new role reflects increased management re-sponsibilities in InsBank’s deposit services department, which is responsible for over-seeing customer service and generating

new accounts. Laney, who started working at InsBank in 2002, was previously Vice President of Operations. She will continue to serve as InsBank’s Certified BSA officer, a position she has held since 2008.

“We pride ourselves on providing superior personal customer

service, and Frances’ leadership is one of the primary reasons our customers expect that from us,” said Jim Rieniets, CEO and president of InsBank, “Her years of banking experience at InsBank and other financial institutions have been a valuable asset to the operation our bank.”

Laney’s promotion builds upon her extensive 35-year career in the banking industry. Before joining InsBank, she held of-ficer positions with First American Bank, Mt. Juliet (formerly First Southern Bank), Bank of Nashville, and Bank of the South. She is a graduate of the BAI School at the University of Wis-consin with an emphasis in bank operations management and also the Southeastern School of Banking.

Centralia Now Branded in Tennessee as South & Western

South & Western General Agency, Inc., has recently an-nounced the launch of its full product line in Tennessee. After the successful merger of Centralia Insurance Service of Mem-phis into South & Western, producers all across Tennessee have been taking advantage of new web based quote and is-sue functionality, markets and special incentives to grow their specialty lines of business.

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“The response we’ve received from our producers has been overwhelmingly positive” said Randy Clarkson, President of South & Western – Memphis, “By being able to now off er a full line of products including specialty personal lines, farm & ranch, commercial P&C and commercial transportation, producers are able to easily handle many of their customer’s specialty insurance needs.”

At www.southandwestern.com, producers have the ability to quote and issue personal lines products online. In addition, quotes and electronic submissions can be made for most farm & ranch risks written by independent agents. And now, online premium indications and submissions can be made for 1000s of specialty commercial P&C classes as well as long haul trucking.

“Making business easy for our producers is what it’s all about,” added Clarkson, “CSRs in agency offi ces simply don’t have the time to wait for a quote on a faxed submission to a general agent. They need one access point without having to keep track of multiple passwords in order to get a fast rate.”

For more information on South & Western, visit www.south-andwestern.com or call 800-492-5351 (option 8 for sales).

Siuprem & SIU Announce Breast Cancer Campaign

Siuprem, Inc. and SIU have announced an exciting new initiative, SIUPREM CARES, their new campaign to promote Breast Cancer Awareness. Offi cially announced on Monday, March 8th, a $5 donation will be made to Breast Cancer Awareness anytime a commercial policy is fi nanced through Siuprem. All commercial premium fi nance agreements dated March 1st through December 31st of 2010 will be eligible for the donation. With this program, as well as additional donations, they hope to reach or exceed a goal of $50,000.

Agents will be seeing the updated Siuprem logo throughout the year. The Siuprem website (www.siuprem.com) has gone pink in support of the initiative. The website will track donation amounts, post events, as well as provide opportunities to share survivor stories and comments from the people in the insurance industry.

“Unfortunately, many of us have been directly aff ected or know someone who has been aff ected by Breast Cancer. The American Cancer Society estimates the probability of a woman developing breast cancer in her lifetime as high as one in eight. In 2009, estimates showed breast cancer represented 27% of all cancer cases in women and represented 15% of all cancer related deaths. The good news is that through better awareness, early detection methods and improved treatment options, survival rates have continued to trend upwards from 75% in the mid seventies to almost 90% by the middle of this decade.”

Siuprem would like to spread the word to independent agents, not only in the Southeast but across the United States. “Together as an Industry we can make a HUGE diff erence. Millions of women and men are aff ected by breast cancer, and you don’t realize how close it can hit home,” says SIU Vice President of Operations Tripp Duesenberg. “Thanks for your support. I hope people take advantage of this opportunity. Together we will make a diff erence.”

ACUITY Sets Growth records in 2009 ACUITY announced its 2009 growth results, which showed continued strong performance across its 19-state operating territory and record-setting achievements.

Personal lines surpassed 150,000 in-force policies and $200 million in written premium, both of which were all-time records. New business revenue was also up nearly 10 percent.

In commercial lines, ACUITY set a new policy count record, fi nishing the year at more than 83,000. Growth in commercial lines was propelled by writing $140 million in new business premium, an amount that surpassed 2008 by more than $5 million. At nearly 55,000, ACUITY also set a new mark for quote requests received, besting the previous year’s record by more than 15 percent. The quote hit ratio also exceeded 35 percent for the third straight year.

“ACUITY’s record increase in business in 2009 shows we are off ering independent agents the pricing, coverage, and service they need,” said Wally Waldhart, Vice President - Sales and Communications. “We are tremendously proud of the strong partnerships we’ve built with our agents and thankful for the trust they have placed in ACUITY.”

ACUITY’s record growth in 2009 is especially noteworthy considering the current economic conditions. “The insurance marketplace remained tremendously competitive in 2009 at the same time the recession has put fi nancial pressure on individuals, families, and businesses,” said Ben Salzmann, ACUITY President and CEO. “Our growth in both new business premium and total policy count shows we are pricing both competitively and fairly,” Salzmann added. “It also enables us to fulfi ll our mission to protect and enhance the fi nancial well-being of our customers and to rebuild shattered lives.”

United Fire Board Declares Regular Dividend on Common Stock

The board of directors of United Fire & Casualty Company declared a regular quarterly dividend on the common stock of 15 cents per share at its meeting on Friday, February 19th. The dividend, which became payable on March 15, 2010, is for stockholders of record as of March 1, 2010. The company has paid dividends every quarter since March 1968.


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In United Fire’s 2009 financial results, a net loss of 39 cents per diluted share for full-year 2009 was reported, compared with net loss of 48 cents per diluted share for full-year 2008.

“Despite our less than desirable underwriting results in 2009, we are pleased to note that our book value per share increased by $1.25 to $25.35 at December 31, 2009. This change is primarily attributable to an increase in our unrealized gains, after tax, which reflects the rising market values of our equity holdings and increases in bond prices as interest rates decreased. Also, our statutory capital and surplus rose slightly to $556.3 million at year-end 2009, which we believe is a testament to our overall financial strength,” said President and CEO Randy Ramlo.

Allstate May Terminate as Many as 3,000 Captive Agents

BestWire reported in February that as many as 3,000 existing Allstate agents may be eliminated within the next two to three years. The company plans to base these cuts on production quota levels, and many of these agents have been with company for years according to National Association of Professional Allstate Agents (NAPAA) Execu-tive Director Jim Fish.

“Older agents — 50 to 60 years old — who might be servicing their book of business and maintaining high retention and loss ra-tios, but that isn’t enough for Allstate,” says Fish, “They (Allstate) are looking to add high-value, production-oriented new agents.”

NAPAA President Bob Isacsen, who said All-state “doesn’t acknowledge we exist,” said the insurer has used agents as a scapegoat for “ineffective leadership.”

“You have non-insurance people running the company and running it into the ground, if you ask me,” said Isacsen, who owned an agency for 21 years before selling about three years ago to retire.

SUNZ Acquires Tennessee-Based Brentwood National Ins. Co.

SUNZ Insurance Company announced re-cently that they have acquired Tennessee-

based Brentwood National Insurance Company.

For half a decade, SUNZ Insurance Company, with its corporate office in St. Petersburg, FL, has been providing Professional Employer Organizations and Staffing Companies with individualized workers’ compensation policies. Their hands-on, personalized service and flexibility are characteristics unique to the industry.

Doug Lilak, CEO of SUNZ Insurance Company said, “From inception, our focus has been on the client. When we provide specialized services and work with each client on an individualized plan that best fits their needs, we reduce the risk of disappointment, which in turn, benefits us all.”

In the wake of a recession that has haunted nearly every company in the in-dustry, SUNZ has overcome the odds and declining economy to help grow the business and expand into new markets. Currently, SUNZ is in the process of finalizing rate approval in the state jurisdictions that have been acquired through Brentwood National.

Once complete, the expansion will focus primarily on the southeast region of the country and will give SUNZ the opportunity to write policies in an addition-al 12 states - something SUNZ and their current customers have been anxiously awaiting.

A partnership between SUNZ and private equity investment firm Palm Beach Capital, made this expansion possible. Palm Beach Capital partners with man-agement teams in middle market buyouts, recapitalizations and growth equity investments.


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iTunes® store and Quick Connect is available on Travelers.com.

The new mobile tools provide auto accident assistance for iPhone and BlackBerry smartphone users. Additionally, Travelers customers will have the added advantage of starting the auto claim process directly through the iPhone application and the mobile website.

Integrating Travelers’ online claim reporting into the new mobile applications is part of the company’s ongoing mobile strategy that first began with the launch of the mobile Web site in late November 2009. The number of people accessing news and information daily on the mobile Web more than doubled in 2009 when compared to 2008, according to comScore.

Progressive Launches Social Responsibility Website

Progressive is now formally reporting on its social responsibility efforts with a new website called “Progressive Together,” accessible at progressive.com/socialresponsibility.

Progressive sees social responsibility as part of doing business in keeping with its Core Values, especially the Golden Rule — treating others as they would like to be treated.

Site visitors can learn about:

Achievements and goals around efforts to reduce, reuse •and recycle to secure a sustainable futureInformation on Progressive business practices aimed at •driving positive changes in car insuranceCharitable activities and contributions of Progressive •employees, agents, and other partnersProgressive’s Global Reporting Initiative scorecard and •Carbon Disclosure Project reportInformation and resources on how site visitors can •personally make a difference.

This is the first time the company has pulled together all of its social responsibility activities into one place, but Progressive has been committed to acting in socially responsible ways since its founding in 1937.

Zurich Launches Monoline Hardware Umbrella

Zurich North America Commercial’s Specialties business unit recently announced it is offering a monoline umbrella product for customers who are engaged in the lumber and hardware industries. This offering is administered by the Huntersville, N.C.-based American Lumber Underwriters and is available to agents and prospective clients nationwide.

This umbrella product may be written over any carrier with an

Dave Swanson Calls it A Career

After spending 40 years in the insurance business, Dave Swanson, CIC, CPIA, retired from the industry on February 28, 2010. He spent his career working for Aetna, Can, Hanover and finally EMC Insurance. In vari-ous positions, Dave called on independent agents in Tennessee, Georgia, Florida and Alabama, all involving marketing and the partnerships developed with the indepen-

dent agents. He is also past president of the Tennessee 1752 Club as well as the Georgia 1752 Club.

In retirement, Dave will be doing volunteer work with the Mis-sion of Hope and Disabled American Veterans (DAV) in Knox-ville as well as spending time with four grand children.

Hanover’s Palmer Announces Retirement

Donna Palmer, CIC, AU, CISR, a mainstay of the Tennessee insurance industry for many years, recently announced her retirement from the business. Most recently employed by Hanover Insurance Group, Donna is a person who has always been committed to the independent agency system and helping agents. She is a trusted friend to all and will be dearly missed in the Tennessee insurance community.

Employers New Loss Control Web Platform EMPLOYERS announced recently that they have launched their new Loss Control ConnectionSM, a comprehensive Web-based platform that provides policyholders and independent agents with an array of resources to help manage risk and reduce losses. The portal also enables independent agents to deliver online services to their clients as co-branded offerings that can be integrated into their agency websites.

As trusted advisors to small businesses, independent agents play an important role in helping their clients make the best workers’ compensation insurance-related coverage decisions for their businesses. Now, agents can offer their clients a compelling yet easy-to-use online service that provides a practical, real-world solution designed to help them contain costs and achieve operational efficiencies. In an industry where it’s sometimes difficult for small businesses to discern between high-value and lowest-cost carriers, EMPLOYERS’ Loss Control Connection makes it easy not only to see the difference, but also to maximize the value.

Travelers Launches Mobile Applications

As the number of consumers turning to their easy-to-use smartphones continues to rise, Travelers has recently announced the launch of its first mobile applications, “Auto Accident Help” for iPhone® and “Quick Connect” for BlackBerry® smartphones. Both applications are free for anyone to download. Auto Accident Help is available at the


A-VII rating or better.

The American Lumber Underwriters Group umbrella targets a wide variety of lumber and hardware businesses such as sawmills and planing mills, lumberyards and building material dealers, hardware stores, millwork, just to name a few.

Coverage limits are available at $1 million, $3 million, $5 million and $10 million.

AIG Part of Mergers and Acquisitions Trend

Recent reports from the Associated Press have shown that mergers and acquisitions are trending upward in 2010, as the deals made so far are up 21% from a year ago. A major part of that increase is due to sales of assets from AIG, including two sales totally over $50 million.

The first sale, which is the current largest deal this year, allowed Britain’s Prudential PLC to purchase to purchase AIG’s Asia-based life insurer, AIA Group, for $35.5 billion. A week later, MetLife was able to purchase AIG’s American Life Insurance Co., or Alico, for $15.5 billion. The two deals make up the vast majority of insurance sector purchases this year, with only around $10 billion coming from other sources.

Overall, insurance trails only the healthcare industry in merger and acquisition dollars for 2010. u


TAAG’s Mike Dill is Fast Becoming an Expert at His High Speed Hobby

49Th e Tennessee Insuror 49Th e Tennessee Insuror

After 43 years of helping manage risk, maybe it is only fair that Mike Dill gets to take some risks on the side. Mike spends his work week as the Director of Tennessee Agents Alliance Group (TAAG), but how he spends his weekends is what really gets him going. He and his wife Cindy are Corvette racers, and they’re pretty good at it too. How good? Mike fi nished 13th in the nation out of 2,597 male competitors in 2009, and Cindy was 6th out of 1,428 females.

Mike has a penchant for interest-ing hobbies. You may remember a story The Tennessee Insuror ran on him in 1997, when he was a caretaker for tigers, including the University of Memphis mascot. Or if you know him, you might be aware that he is a licensed fu-neral director and creamator. But when Mike and Cindy bought their fi rst Corvette, a 1996 C4 model, in May of 2007, they had no idea it would lead to a new passion.

Wanting to get as much enjoyment as possible out of their new purchase, the couple joined the Nashville Cor-vette Club (NCC), a local group with over 200 members. Becoming active in the club, they de-cided to volunteer their time to help NCC work on the Corvette race courses. Af-ter working several races, Mike realized pretty quickly that he was on the outside looking in, “They (the racers) were having all the fun! I knew I had to give it a try.” And so he did, racing in his fi rst event in late 2007 in Nashville. He fi nished 3rd in his class at that race, and he was hooked.

After about six months of watch-ing Mike race, Cindy decided she wanted to be be-hind the wheel as well. As their desire to race increased, the couple began traveling to events across the country for weekend races.

The increased work load fi nally took its toll on the ‘96 Cor-vette, and a blown engine put it out of commission. With racing now a preferred pastime for the Dills, they decided to

purchase a 2004 C5 Corvette to keep their hobby alive.

With their new car ready to roll, it was time to expand the race schedule yet again, and in 2009 they took part in 276 events. They have now taken part in races in Michigan, Florida, North Carolina, Indiana, Mississippi, Alabama, Georgia and of course Tennessee. The courses they run vary from old race tracks to decommissioned military runways. These courses are set up for two types of racing, Road Racing or Autocrossing. Road Racing is usually about a 2 mile setup with regular turns and no speed limit. Autocrossing is usually setup on an old run-way, and pylons mark off turns and maneuvers that must be completed by each driver. There is a speed limit of about 80 miles per hour for Autocrossing, which is why Mike prefers the Road Races, “Because I like to go as fast as I can.” One such Road Race course is Putnam Park, a 1.78 mile, 10-turn raceway located in Mount Meridian, Indiana. The course includes such intimidating sec-tions as “The Loop” and “Dead Bear Turn.” A full race weekend at one of the courses usu-ally consists of 14 “events” with driv-ers running 14 laps on Saturday and 14 laps on Sunday.

Mike and Cindy compete in the Class 1 division of the races, which is known as the “Street Class.” Cars in this division are allowed only minor modifi cations, and the Dills even drive their race car to the competitions, although they are consid-ering purchasing a trailer for some future trips. There are no sponsors for the race car, and Mike is responsible for his own expenses, including the mechanics he uses to keep the car at peak performance. He is also footing the bill for their tuition at a “high speed school” at the Nashville Superspeedway later this year.

The next step for Mike and Cindy is to attend the National Corvette Club Convention, which is taking place on the last weekend in July, and receive their awards.

An Insured Race Car is a Fast Race Car

Having been in the insurance industry since he was fresh out of college, including stints with Royal Globe and Pinson & As-sociates, Mike knows the importance of protecting his race car. He covers the Corvette with his own liability policy, and at races the NCC’s governing body, the National Council of Cor-vette Clubs, provides each driver with $1 million of liability coverage. “Having that coverage from the National Council is really nice,” Mike adds, “just knowing you are protected lets you really push the limits during the race.”

And with the way Mike and Cindy are improving, they may just push the limits all the way to the winners’ circle. u

The Putnam Park Road Course track(image courtesy Putnam Park)

Mike behind the wheel of his fi rst Corvette, a 1996 C4

Mike stands by the current #610 car, a 2004 C5 model Corvette

Mike appeared on the March/April 1997 cover


A personal umbrella policy is arguably the best value in the insurance business—$1 million of insurance coverage for un-der $200 a year. Most people buy an umbrella policy for its excess coverage, including defense costs. It has, however, far greater value as a risk management tool than just excess cov-erage.

An umbrella policy is how your clients eliminate coverage gaps that fall outside the scope of underlying auto and hom-eowners policies. Helping your clients understand those gaps is a critical part of the risk management process. That task can be diffi cult because of the lack of consistency among umbrel-la policies, both in what they cover and in who they will cover. That is why you now have access to two stand alone personal umbrella policies!

Introducing the Big “I” Markets Umbrella Program

For more than 25 years, RLI has been the primary market for members who need access to a stand alone personal umbrel-la market. RLI has proven to be a strong and, above all, stable market with unmatched fi nancial strength in the marketplace, and RLI is the recommended preferred market for Big I mem-bers. It has had 25 years of unparalleled consistency, and last year RLI introduced PUP Special that expanded its underwrit-ing appetite. However, in some circumstances you may have a client whose risk classifi cation and/or coverage needs fall outside of RLI’s guidelines.

You can now access an alternative stand alone personal um-brella market on Big “I” Markets where you can place umbrella risks that RLI will not write. Anderson & Murison provides you access to National Casualty’s personal umbrella market. Here are some of the key distinctions between the two markets.

Preferred Market - RLI Personal Umbrella

Limits up to $5 million available•You can keep your current homeowner/auto insurer•New drivers accepted - no age limit on drivers•Up to one DWI/DUI per household allowed•Auto limits as low as 100/300/50 in certain cases•Competitive, low premiums for increased limits of liabil-•itySimple, self-underwriting application that lets you know •immediately if the insured is acceptedE-signature and credit card payment options•Immediate coverage available in all 50 states plus D.C.•

Alternative Market - Anderson & Murison

L• imits up to $10 million availableIdeal for risks that have drivers with multiple violations/•accidentsWill consider high profi le personalities such as elected of-•fi cials, athletes, media personalities & entertainersWill consider risks with prior liability losses exceeding •$25,000Drivers over age 75 acceptable with two violations•Drivers under age 22 can have minor violations•Driver exclusion endorsement available for drivers with •unacceptable driving recordsWritten on “A” rated Scottsdale paper•

You can download a detailed chart with information about both the primary and alternative markets now by visiting http://na.iiaa.org/TFT/Web%20Archives/03_02_10/ls.pdf

For more on Big “I” Markets visit www.bigimarkets.com u

All the UmbrellasA Stand Alone Umbrella For Eve ry Risk Now on Big “I” Markets


MeetingsGolfing Season is Here Again! MTSU Martin Chair of Insurance Fundraiser Golf Tourney

The 26th Annual Tommy T. Martin Chair of Insurance Golf Tournament will be held on Tuesday, April 20th, at the Champions Run Golf Course in Rockvale. This year’s tournament is sponsored by BlueCross BlueShield of Tennessee and is in honor of Dick Hendrick, longtime tournament volunteer leader. For more info, e-mail [email protected].

Insurors of Nashville Golf Outing & Social

The Insurors of Nashville will hold their annual golf tournament on Monday, May 3, 2010, at the Brentwood Golf & Country Club. For more information, or

to register for the event, contact Heidi Williams at 615.758.9676 or by e-mail at [email protected].

Memphis Local Board Annual Picnic & Golf Tournament

The Memphis local board’s annual picnic will be held on Tuesday, May 11, 2010, at Windyke Country Club. Cost for golf is $150 per player. Tennis ($25 per player) and volleyball ($50 per team) tourna-ments are also available. Contact Sally Baker Brenner for more information at [email protected].

Northwest Tennessee Insurors Golf Tournament Date Set

The Northwest Tennessee Insurors will

hold their annual golf tournament and pork chop dinner on Tuesday, June 1, 2010, at the Dyersburg Country Club at the Farms. The cost is $45.00 per person; which includes lunch, green fees, cart, and tax. Contact Matt Russell at [email protected] for more in-formation or to register.

The Insurors 117th Annual Convention

Dates for the Insurors 117th Annual Convention have been set. The 2010 event will take place October 24th-26th in Nashville at the Hilton Downtown. Preparations are underway now to ensure that this year’s convention continues to build on the success we have seen in recent years. Look for more information in our next issue. u

The Big I has endorsed the RLI Personal Umbrella Policy

for good reasons. RLI is a stable and

secure company offering what our members

need. The stand-alone nature and the

absence of an underlying carrier requirement

gives our independent agents �exibility

to grow their books of business.

–FRANK A. MANCINI , ESQ.

President & CEO,

Massachusetts Association of Insurance Agents

“

”

They stand alone. RLI, A+ rated by A.M. Best, has more than 25 years of experience

providing affordable personal umbrella coverage—so your customers can protect

their hard-earned assets. It’s easy to access our online quoting, issuance and inquiry

system so you can quickly see if they qualify. As a member of the IIABA, the RLI

program is immediately available to you with no volume requirements.

To learn more about RLI Personal Umbrella Policies,

contact your state association or visit www.rlicorp.com.

Our Personal Umbrella Policies are different.DIFFERENT WORKS

Without a doubt, the work life of an independent agent is a busy one. You may barely have time to reach out to potential new cli-ents, much less continue to nourish your current ones. But if the only time your current clients hear from you is when it is time to renew, there may be a problem. The old adage about it being more valuable to maintain a current client than to add a new one still holds true today, but there is some work involved. Consider some of these possible methods of communication to maintain an open dialogue with your current clients.

Newsletters

Although paper newsletters may be becoming a thing of the past, electronic newsletters are certainly still a viable means of communication. Sending out a monthly or bi-monthly e-news-letter can help keep you on your client’s mind, and can also serve as marketing tool for seasonal lines of business. Using a e-news-letter service like the Big “I”’s RetainNOW, the Tennessee-based Emma® or Constant Contact® can also provide invaluable track-ing data for you to utilize.

Blogs

Internet web logs, or blogs, as they are commonly referred to, have become commonplace in today’s business world. Having an agency principal maintain a blog can provide a personal con-nection for your clients and allow them to feel “in touch” with your agency. If you decide to create a blog, be sure to have only one or two authors to maintain a consistent message, and never use a blog as a platform to complain about companies or cus-tomers.

Social Media

Social Media is a trend that is not going away anytime soon. From Facebook to Twitter to LinkedIn, businesses are using these sites for client retention, branding and prospecting. If you have or decide to create a profile on one of these sites, develop a “best practices” guide or use the one created by ACT to ensure the right message is going out to your clients.

With any of these methods, the content is what will set you apart. Having relevant information written in a concise manner and placed in an aesthetic format will ensure that it doesn’t become just another piece of clutter. If you would like assistance in get-ting a communications platform started for your agency, send me an e-mail at [email protected] or call 615.515.2601. u

Do Your Clients Only Hear From You at Renewal Time?

Member Tips

by Daniel Smith, Director of Communications

ACUITY (800) 242 - 7666 www.acuity.com 40

Amerisafe (866) 719 - 0267 www.amerisafe.com 12

Arlington/Roe & Co. (800) 878 - 9891 www.arlingtonroe.com 35

Auto-Owners Insurance (517) 323 - 1200 www.auto-owners.com 18

Bituminous Insurance Companies (800) 342 - 5786 www.bituminousinsurance.com 47

BlueCross BlueShield of Tennessee (865) 588 – 4612 www.bcbst.com 55

Builders Mutual (800) 809 - 4859 www.buildersmutual.com 7

Delta Dental (800) 223 - 3104 www.deltadentaltn.com 24

Donegal Insurance Group (800) 277 - 7442 x1370 www.donegalgroup.com 2

EMC Insurance Companies (800) 239 - 2005 www.emcinsurance.com 13

FCCI Insurance Group (800) 226 - 3224 www.fcci-group.com 17

Grange Insurance Companies (800) 422 – 0550 www.grangeinsurance.com 30

Guard Insurance Group (800) 673 - 2465 www.guard.com 19

Harford Mutual (800) 638 - 3669 www.harfordmutual.com 22

Individual HealthCare Specialists (866) 661 - 6500 www.ihstn.com 36

InsBank (866) 866 - 4268 www.insbanktn.com 11

J.M. Wilson (800) 595 - 0063 www.jmwilson.com 41

Johnson & Johnson (931) 704 - 0810 www.jjins.com 9

Lemic Insurance Company (225) 201 - 0107 www.lemicins.com 27

National Alliance for Insurance Education (800) 633 - 2165 www.scic.com 37, 51

National Security Group (800) 239 - 2358 x267 www.nationalsecuritygroup.com 7

North Alabama Insurance (800) 824 - 1740 www.nai1983.com 12

Penn National Insurance (800) 395 - 0518 www.pennnationalinsurance.com 56

Preferred Comp of Tennessee (888) 922 - 2258 www.preferredcomp.com 43

Preferred Property Programs (888) 549 - 2465 www.umbrellaprogram.com 44

South & Western (800) 492 - 5351 x8 www.southandwestern.com 33

Southern Cross Underwriters (800) 824 - 4403 www.scui.com 9

SIU/SIUPREM (800) 925 - 2546 www.siuprem.com 28

Summit Holdings (800) 971 - 2667 www.summitholdings.com 20

Swett & Crawford (800) 489 - 7475 www.swett.com 26

Tenco Services, Inc. (800) 621 - 1313 www.tenco.com 47

Tennessee Agents Alliance Group (888) 320 - 0294 www.taagtn.com 22

Tennessee Underwriters, Inc. (615) 791 - 1400 www.tnund.com 20

Directory of Advertisers Advertiser Phone Website Page

Insurors local boardGolf Tournaments

Nashville - 5/3Memphis - 5/11Northwest Tennessee - 6/1See page 51 for more details

A movement calls for action and action creates results–for your

employees and your company. Choose our medical, dental and

vision health care plans, extensive networks and health and

wellness coaching to move your business toward a healthier future.

Get into the movement. Call your broker or visit BCBST.COM.

BE PART OF THE MVMT FOR LIFE.

BT939_8.5x11_TNInsuror.indd 1 11/4/09 4:56 PM

Insurors of Tennessee2500 21st Avenue South Suite 200Nashville, TN 37212

We’re all about finding solutions. From developing programs for unique business

classes to providing training to help minimize

loss exposures. From creating fast and simple

automation solutions for better agency workflow

to quick claims resolutions. These are just some

of the ways we give our agents and policyholders

big solutions for their business and personal

insurance needs. Not to mention our competitive

products and pricing.

BigSolutions

Visit us at www.PennNationalInsurance.com to find out how you can become an agent with big opportunities for growth.

What do you expect from your insurance carriers?

PRSRT STDU.S. Postage

PAIDNashville, TN

Permit No. 380

the tennessee insuror march/april 2010

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