texas connection december 2015
DESCRIPTION
Texas Professional Insurance Agents' Digital JournalTRANSCRIPT
TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL DECEMBER 2015
Presidents Corner ………………….……… Page 3
Our Partners ……..……………....……… Page 4
Renters Need Insurance Too ……..……… Page 5
This Month in Texas History ……..……… Page 8
By The Numbers …...…….………...……… Page 10 An E&O Hypothetical ………………….... Page 15
TDI Enforcement Actions …….……..……. Page 23
Word Scramble ……...…….…………..…… Page 25 Classifieds ………………………..………… Page 27
The Last Word ……………………………… Page 28
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 3
Shirley Almany
Our own Santa “Tom Sor-
rels” Claus after spending
the day spreading holiday
cheer. He knows if you’ve
been bad or good so be
good for goodness sake!
HO! HO! HO! Merry
Christmas Tom!! Shirley
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 5
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 5
That’s why it is important to emphasize to your customers that most landlords’ policies cover only structural damage to the building and lia-bility arising from the landlord’s actions. So if a fire hits, he would be able to rebuild. But your customer’s flat-panel TV would not be covered. Likewise, if the building were burglarized, the
It’s hard to believe but many renters still aren’t aware that they need their own insurance, mistakenly believing that their landlord’s policy covers them. As you know, the landlord’s policy will cover the building itself from damage or loss. But if the rented property is burglarized or destroyed by fire, the land-lord’s policy provides no protection for your customer’s personal possessions. Renters insurance is inexpensive and provides great coverage for millions of families.
landlord’s policy would not pay to replace the tenant’s stolen items. With prices for renters insurance often well below $30 a month, that’s not a wise risk to be taking. So what are the main things to emphasize to your customer when considering purchasing renters insurance? (continued on page 6)
stolen while they are on vacation, the renters policy will likely cover them. The same applies to property stolen from their car.
What Property Is Covered? Policies usually provide coverage of typical household items. These include:
Stereo systems and television sets
CDs, DVDs
Cameras & other photo equipment
Movable appliances
Sports equipment
China and glassware
Clothing
Books
Policies often place separate coverage limits on more expensive, unique or easily stolen items. These include:
Home Computers
Cash, including coin collections
Checks, traveler’s checks, securities
Jewelry and watches
Precious and semi-precious stones
Comic books, trading cars, stamps
Antiques and fine art
Goldware and silverware (theft)
Rugs, wall hangings, and tapestries
Firearms (theft)
Furs or clothing trimmed in fur
Boats/watercraft & related equipment
Continued from Page 5
As with any insurance policy, they should pay close attention to the deductible. An-other factor that has a significant effect on premium levels is whether they choose a policy that will reimburse them for the actu-al cash value of lost or damaged goods, or replacement cost value. Actual cash value is the cheapest option and will pay to replace their possessions minus a deduction for de-preciation. Replacement-cost coverage costs more. On the plus side, it will pay the actual cost of replacing possessions with items of “similar kind or quality” with no deduction for depreciation.
Types of Coverage Educating your customers to the types of coverage typically provided on a renters in-surance policy should help at the point of sale and improve retention. Named Perils typically include:
Fire or lightning
Windstorm
Smoke
Vandalism or malicious mischief
Theft
Water damage from failure of plumbing or appliances
Frozen water pipes
Hail
Explosion
Vehicles or aircraft
Renters insurance also protects their per-sonal belongings when they’re off premises. For example, if your customer’s suitcase is
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 6
(continued on page 8)
From the Desk of Bob Dixon:
A husband and wife were having breakfast, when they heard the radio announcer
say: "We are going to have 8 to 10 inches of snow today. You must park your car
on the even-numbered side of the street, so the snow plough can get through."
So the good wife went out and moved her car.
A week later while they are eating breakfast again, the radio announcer said:
"We are expecting 10 to 12 inches of snow today. You must park your car on the
odd-numbered side of the street, so the snow plow can get through."
Again, the good wife went out and moved her car.
The next week they are again having breakfast, when the radio announcer said:
"We are expecting 12 to 14 inches of snow today. You must park..."
Then the electric power went out. The good wife was very upset, and with a
worried look on her face she said, "I don't know what to do. Which side of the
street do I need to park on so the snow plow can get through?"
Then with love and understanding in his voice, the husband replied:
"Why don't you just leave it in the garage this time?"
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 8
(continued on page XXX)
Continued from Page 6
If your customers have any of these items, you may want to talk to them about purchasing a “floater,” providing additional insurance for a specific valuable or valuables. Floaters cover high-value items for perils not typically included in renters policies, such as accidental loss.
Liability Renters insurance also provides important liability protections. If your customer causes property dam-age or bodily injury to another person through their own negligence, that person can sue them for civil damages. If they leave the tub running and the water leak damages the neighbor’s paintings; they could be forced to reimburse the damage. A renters policy will pay any damages or settlements they become legally obligated to pay. It will also cover legal defense costs, or attorney and court fees. Their renter’s liability coverage protects them no matter where the injury or property damage occurs. If they accidentally trip and injure someone while playing touch football in the park, for instance, cov-erage would apply. Like homeowners policies, renters policies exclude claims for injury or property damage caused while operating a car, boat or other motorized vehicle. Auto and or boat policies are specifically designed to cover this type of claim. Like a homeowners policy, a renters policy also includes “medical payments to others” coverage. This coverage applies to injuries to people other than your customer and their household members that occur on their property. Offering this coverage to your customers will help them avoid the hassle and expense of having to go to court for a relatively minor injury claim. The limits for this coverage varies greatly between policies.
12/1 1939 - Golfer Lee Trevino is born in Dallas, Texas.
12/1 1913 - Mary Martin is born in Weatherford. She stars on Broadway in Peter Pan and South Pacific
12/2 1954 - Television anchor Stone Phillips is born in Texas City, Texas.
12/2 1832 - Sam Houston first sets foot on Texas soil, at the Jonesboro Crossing on the Red River.
12/4 1960 - The Dallas Cowboys play the New York Giants resulting in a 31-31 tie.
12/9 1949 - Professional golfer Tom Kite is born in McKinney, Texas.
12/10 1854 - Richard King marries Henrietta Chamberlain; together they make the King Ranch great.
12/11 1879 - Fort Worth leading citizen Amon Carter is born in Crafton.
12/11 2000 - Alex Rodriguez signs the largest contract in sports history, a $252 million with the Texas Rangers.
12/13 1967 - Actor/comedian Jamie Foxx is born in Terrell, Texas.
12/16 1881 - The Texas & Pacific Railway reaches Sierra Blanca in West Texas, about 90 miles east of El Paso.
12/16 1949 - Rock guitarist Billy Gibbons is born in Houston, Texas.
12/17 1836 - Stephen F. Austin, called the "Father of Texas," dies of pneumonia at age 43.
12/19 1845 - The U.S. Congress approves, and Texas becomes the 28th state.
12/22 1912 - Claudia Alta Taylor, the future Lady Bird Johnson, is born in Kamack.
12/24 1905 - Howard R. Hughes Jr. is born in Houston.
12/24 1852 - The General Sherman goes into service as the first locomotive in Texas.
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 9
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 10
The holiday season is a great time to get some much needed rest, enjoy family and friends, and take time to reflect on the important things in life.
Over 3 trillion dollars generated by the retail industry during the holidays in
the United States.
Holiday sales reflect almost 20% of the retail sales for the year in the Unites
States.
Roughly 800,000 employees are hired in the United States to compensate for
the holiday rush.
About 33 million real Christmas trees are purchased annually in the United
States.
Average cost for a real tree is $40 dollars.
On average, $1.16 billion spent on Christmas trees annually.
On average, people recieve12.9 gifts per person in the United States.
Roughly 127 million shoppers participate in Cyber Monday.
15% of retailers begin holiday promotions on October 1st.
45% of consumers purchase gifts online.
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THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 14
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Ray Reyes or Bob Dixon
(214) 618-2365 (832) 375-0787
When an errors-and-omissions claim against an insurance agency develops, an objective of the E&O carrier and the attorney it assigns to handle the matter is to review the file in question and de-termine the degree of liability, if any. Numerous defenses can be applied based on the facts of the specific case. Defenses include, but are not limited to:
plaintiff failed to give accurate information to the agent
plaintiff misrepresented certain facts to agent
plaintiff failed to read his or her policy
plaintiff signed a policy application containing incorrect information
lack of duty If the agency’s customer had been made aware of a specific coverage but rejected it, generally, one would hope this would position the agency in a positive light. But what if the agency’s customer was not made aware of, say, umbrella coverage, including what it does and how it works? To what degree would this hurt the agency’s defense?
(continued on page 16)
Continued from Page 15 Some positive E&O initiatives Let’s take the following scenario and look at the various positions. Imagine you are the jury and will be asked to render a verdict. The agency writes a homeowners policy for a customer in 2000. The agency includes a cover letter with the policy requesting that the customer read the policy and contact the agency if there are any questions. The cover letter includes a statement noting that the agency is a full-service agency and encourages the customer to contact the agency if there is any change in the custom-er’s exposure. These are some positive E&O initiatives from the agency … so far. However, for the next 10 years, the agency simply sends the policy with no cover letter. In essence, the agency has a customer for whom it writes one line of business, homeowners. The agency never reached out to the customer inquiring about where the customer’s auto insurance is placed, whether the customer has an umbrella policy, any new exposures, etc.
In that 10-year period, the customer pur-chases a dog for his or her kids. The dog lat-er bites the neighbor’s child, resulting in a lawsuit requesting damages in excess of the liability portion of the homeowners policy. The agency is sued due to the lack of suffi-cient coverage.
While E&O cases will typically be very “fact sensitive” and not totally “cut and dry,” con-sider the following defense positions.
In the agency’s favor In most, but not all, states, the agent is often referred to as “an order taker.” In oth-er words, it is up to the customer to specifi-cally request coverage. Generally, an in-sured must make a specific request for a particular type of insurance coverage to im-pose a duty on the agent to procure that particular coverage. In addition, an insur-ance agent is not required to:
provide an insurance policy that would cover all possible contingencies
advise an insured with respect to cov-erage options
advise the insured as to every exclu-sion contained in the policy
In defense of the agency, it secured the cov-erage the client requested. The customer never contacted the agency for additional coverages or to let the agency know about the “change in the exposure.” Bottom line, the agency fulfilled its duty. A “special rela-tionship” will be difficult to prove because the agency only wrote one line of business. Therefore, is there a good chance the agen-cy will prevail on this legal matter? The odds are in the agency’s favor.
Not in the agency’s favor The customer probably will contend that he or she is not insurance savvy and relied on the agency’s knowledge and expertise. The customer was not aware of umbrella cover-age, but because of the purchase of the dog, had an umbrella been suggested, the customer would definitely have purchased it. (This is always what the customer will say after the loss.) (continued on page 18)
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 16
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In addition, that the agency simply renewed the account “as is,” with a slight increase in coverage A for 10 years, and never contacted the customer to discuss other coverage options or changes in ex-posure, does not position the agency well.
While the agency may prevail, these are exactly the types of situations E&O carriers are seeing with significant frequency. A recent industry study indicated the average number of policies an agency has for each personal lines customer is in the 1.6 area. When considering all potential “selling opportuni-ties,” it certainly seems like some missed opportunities exist. So, even if the agency does prevail, this scenario is resulting in significant defense dollars to defend the agency, which are obviously factored into the price of the E&O product.
What to do differently What could or should the agency have done differently? One initiative that could have easily helped avoid the type of E&O claim above involves the agency actively undertaking a cross-selling campaign. Some approaches to consider:
Use your agency management system to identify scenarios like the one above – with homeown-ers, but no auto (or vice versa) or you have the auto and homeowners, but no umbrella. Develop a letter bringing the specific subject/issue to the customer’s attention. The letter should be edu-cational and include information on why securing the additional coverage is important. Claim ex-amples are a great way to make the point.
When a customer calls in, make it easy for the CSR to identify what coverages the customer does and doesn’t have. This is a great time to bring these additional coverages to the customer’s atten-tion.
In both of these scenarios, if a customer rejects the coverage you are discussing, you must docu-ment, document and document. This documentation should not only be in the file/system, but also in an e-mail back the customer officially noting his or her decision.
Make it a point to touch base with your customer to determine whether there has been any change in his or her exposures, and then act on what you are advised.
Now, take the E&O claim scenario above and add the following to the letter the agency sent: ask the customer for an update on his or her exposures and/or bring umbrella coverage (what it does and how it works) to the customer’s attention. Now, imagine if this communication was ignored by the customer. There is the strong possibility the E&O claim would have never even developed.
Another benefit of these additional “touches” involves the chance that you may just sell some insur-ance along the way. So, if you want to grow your agency, enhance your E&O commitment. Doing this will truly give your business the “best of both worlds.”
by Curtis M. Pearsall, CPCU, AIAF, CPIA President – Pearsall Associates Inc. and
Special Consultant to the Utica National E&O Program
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 18
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Bob Dixon (832) 375-0787
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Pa ge 20
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 22
Contact Us
Need more information on the
benefits of membership?
Have a question about member
services? Give us a call:
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(972) 862.3333 [email protected]
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You can't tell how good a
man or a watermelon is
until they get thumped.
(Character shows up best
when tested.)
- The Insurance Sage
TEXAS DEPARTMENT OF INSURANCE ACTIONS
Rivas, Koryan Date of Action: 6/18/2015 Location: Angleton Action Taken: Indicted Violation: Insurance Fraud, State Jail Felony
Rountree, Trisha M Date of Action: 6/18/2015 Location: San Antonio Action Taken: Sentenced to 2 years deferred adjudication and fined $1,500.00. Violation: Insurance Fraud, State Jail Felony
Taylor, Brandy Date of Action: 6/15/2015 Location: Richmond Action Taken: Indicted Violation: Insurance Fraud, State Jail Felony
Pickens, Herman Date of Action: 6/11/2015 Location: Houston Action Taken: Sentenced to 12 months deferred adjudication and 60 hours community service. Violation: Misapplication of Fiduciary Property, State Jail Felony
Thomas, Andrew J Date of Action: 6/9/2015 Location: San Antonio Action Taken: Sentenced to 3 years deferred adjudication and 320 hours community service. Violation: Insurance Fraud, 3rd Degree Felony
Guerrero, Joe Date of Action: 6/8/2015 Location: San Antonio Action Taken: Sentenced to 6 years probation, 250 hours community service and fined $1,500.00. Violation: Insurance Fraud, 3rd degree felony
Lozano, Sylvia A Date of Action: 6/8/2015 Location: Edinburg Action Taken: Sentenced to 7 years deferred adjudication, 160 hours community service, fined $350.00 and ordered to pay $23,026.65 in restitution. Violation: Insurance Fraud, 3rd degree felony
: https://wwwapps.tdi.state.tx.us/inter/asproot/fraud/indictments/clips.asp
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 23
THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 25
Arrange each of the following anagrams to form a single insurance related word.
Keep in mind that the anagram is not a clue. It has nothing to do with the insur-
ance related word. Send us your answers to be entered in a drawing to win a fabu-
lous CASH prize! Feel free to call us if you’re stuck.
972.965.2025 Email to: [email protected] or fax to 972. 307.7888
LONE GUITAR
BROWSE A TON
MEAN IDIOTS
A CUT RAY
IN A CRUSHER
SECLUDED BIT
FANCIER END
NO GENT CYNIC
CORAL PRICE
UNICORN ACES
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THE TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL Page 27
ROUT CAT CLAN CONTRACTUAL
MENTORS NEEDS ENDORSEMENT
AS IN UNITE ANNUITIES
TEEN FIB BENEFIT
MET NEW DONS ENDOWMENT
Here’s the answers to last month’s puzzle. Re-
member there’s a $50 prize for the first person to
MILLS TENANTS INSTALLMENTS
WARIEST RAN WARRANTIES
GENIUS RATS SIGNATURES
HERO WOMEN HOMEOWNER
IS ALIBI SITED DISABILITIES
This space is dedicated to all Members!
IT’S FREE! Look for Employees
Buy & Sell Agencies
Sell your Mother-in-Law’s Cat
Sell your mother-in-law!
Post a Happy Birthday Wish to your Boss!!!
Send Ads to [email protected]
the Last word
For more than four decades, the townsfolk of
Kechikan, Alaska went to ‘Indian Joe’ for their
Weather forecast. No one remembered how
or when they started going to Indian Joe…
but everyone knew that his forecasts were ‘right on’. Fisher-men, hunters, hikers… everyone went to him when it was im-portant to know the forecast (which could be pretty danged important in Kechikan.) No one knew how he did it … was it Indian wisdom, an ache in his bones… whatever it was, they relied on it.
One day… like so many days before… the townspeople found
Joe whittling on his front porch…
“Tell us what the weather will be, Joe” they queried.
“Can’t” Joe replied quickly.
“Come on , Joe… You always tell us the forecast…
“Can’t” Joe said again, shaking his grey head.
“What’s wrong, Joe? Are you sick?”
“Nope… Radio’s broke.”
The Moral? The source of the information may be as im-
portant as the information itself. Free advice is usually worth
exactly what you paid for it.