your next great employee agency management systems...
TRANSCRIPT
Your Next Great Employee
Agency Management
Systems & E&O Claims
Free Flood Seminars
IIABL STAFF
Jeff Albright
Chief Executive Officer [email protected]
Francine Berendson Director of Communications
& Events [email protected]
Mike Edwards, CPCU, AAI Director of Education
[email protected] Kim Jackson
Education & Membership [email protected]
Karen Kuylen Director of Accounting
E. Lee Mowe Marketing Representative [email protected]
Rhonda Martinez, CIC
Director of Insurance [email protected]
Jamie Newchurch Insurance Services
Lisa Young-Crooks Executive Assistant [email protected]
Your Next Great Employee 4
Free Webinars for IIABL Members 5-6
Agency Management Systems and
E&O Claims 6-8
Is there Auto Coverage?? 10-11
10 Trends in P&C Market for 2017 11-14
IIABL March Board Meeting 15-18
115th Annual IIABL Convention 25
Free Flood Seminar 33
Louisiana Agent 3
Ask Mike
19-31
IIABL Calendar 26
Rate & Rule Filings
27
IIABL Partners
38
Tech Tips
15-18
Commissioner’s Corner
33-35
Louisiana Agent 4
Your Next GREAT Employee May Be At ULM
The University of Louisiana at Monroe (ULM) has an outstanding Risk & Insurance Program under the direction of Dr. Christine Berry. Cur-rently, there are 130 bright and energetic young students enrolled in the Risk & Insur-ance Program.
Recently, IIABL board members Mike Scriber, Byram Carpenter and Joe Montgomery, along with IIABL CEO Jeff Albright attended the ULM Risk & Insurance Talent Search to recruit stu-dents into IIABL member agencies.
We were very impressed with the interest and capabilities of the students looking for careers in insurance. These students are looking for opportunities to build a career, and most are willing to move almost anywhere in Louisiana for the right opportunity.
Many agencies are desperately looking for great young talent. Your next great employee may be studying risk and insurance at ULM right now!
Are you looking for great employees with back-ground in insurance? ULM has them!
The University of Louisiana at Monroe’s Risk Management and Insurance department has developed a resume book listing their students who will be graduating within the next two years. A $100.00 donation to this program provides you with the ULM Resume Book with dozens of potential employees.
To order your ULM Risk & Insurance Resume Book, please complete the ULM Resume Book Order Form and mail it to the IIABL office with your $100 check made payable to: ULM Risk & Insurance Program. IIABL will email you the Resume Book upon receipt of your payment.
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Several months ago, IIABL introduced a new
service to members called 24/7 Agency Solu-
tions. If you are not familiar with this product it
is the independent agent solution to “Hi this is
Jake from State Farm.”
In today’s elec-
tronic, instant
information and
feedback world,
independent
agents need to
compete with the
captive agents.
Consumers look-
ing for insurance on the internet is growing by
leaps & bounds. We need to be competitive!!
Below are 3 webinars that will explain the three
services offered through 24/7 Agency Solutions:
Web-site Builder
Click here for the recorded webinar
This webinar will focus on the Advisor Evolved Website Builder, one of the products within 24/7 Agency Solutions program. Chris Langille, founder and CEO of Advisor Evolved, will dis-cuss the importance of having a modern and attractive Website in addition to features and plans Advisor Evolved offers.
Mobile App with Insurance Agent
Click here for the recorded webinar
This webinar will focus on the Insurance Agent Mobile App, one of the products within 24/7 Agency Solutions program. Matt Aaron and Kiki Johnson, founders of Insurance Agent Mobile App, will discuss the importance of proving a mobile app to your customers and demo the mobile app's features.
Free Webinars for IIABL Members
“I am a new agent & through 24/7
Agency solutions I found a great
company to build my website that is
now proudly representing my agency.
I would recommend it to everyone
that wants their agency to stand out”
Priscilla Vann
President of Hometown Insurance
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Answering Service Click here for the recorded webinar
After-hours phone center with Insure Re-sponse
This webinar will focus on the Insure Response An-swering Service, one of the products within 24/7 Agency Solutions program. Sandra Hunter-Lewis, client relation representative of Insure Response, will discuss the importance of proving an Answering Service for you consumers at any time of the day or night and the scope of service they offer. It's time to revolutionize your brand and meet the challenges of the future. IIABL is here to help you become a 24/7 agency - get started today!
Check out the 24/7 Agency Solutions web-site: www.247agencysolutions.com For questions regarding this new service contact Ewa Telenga [email protected] or 888-275-8911
How Agency Management Systems Can Help Defend An E&O Claim
By John Nesbitt
Electronic communication is nothing new. But too many errors & omissions claims still result in a he said/she said credibility dispute. Documenting all interactions with customers and carriers as well as every insurance transaction can be critically important in defending an E&O claim. Without time-stamped documentation, an agency will be left with little more than its em-ployees' memories of conversations that may have taken place years earlier—and your E&O carrier may recommend you settle your claim. Agency management systems provide many ben-efits, not least of which is contemporaneous doc-umentation. Electronic documentation more de-finitively establishes what occurred than hand-written or paper files. Documenting a customer's file through a management system gives you more credible evidence because the automated
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system creates a record of the date and time of the entries, which cannot be manipulated later. All employees should make electronic notes doc-umenting every conversation with customers, carriers or anyone else with whom they discuss coverage. Electronic documentation of specific coverages both offered and declined can be very persuasive evidence during an E&O claim. Many systems also integrate with other agency applications, such as email and word processing systems. This can ensure immediate placement of documents such as applications, quotes, change endorsements, rejections, checklists and other correspondence in the customer's electron-ic file. If your system does not do this automatically, staff should scan such documents and route them to the system. Many systems document emails forwarding a copy of the policy to the cus-tomer or even just forwarding a link to the policy on the carrier's website, which can confirm that the customer received a copy of the policy. Staff
should also automatically enter every certificate of insurance the agency issues for an insured as an activity into the AMS. Some systems will even synchronize with the agency's phone systems to send voicemail messages to the file. When consistently and properly used, a manage-ment system can increase an agency's efficien-cy—and serve as an invaluable ally in successfully defending E&O claims that arise. Quality First While quantity and consistency of documentation is important, so is the quality. Each entry about a conversation should include:
• Who: names and roles of the contact per-son at the client and the agency
• What: specific topics discussed and actions or decisions reached
• When: date and time of the conversation, deadlines and next steps
• Why: reason the conversation took place • Where: place you are in the process—if
possible, close the activity
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From page 7
• How: phone call, email, in-office visit or on location? —J.N.
Case Study Consider the following example in which electronic notes or a time-stamped letter in the file would have helped defend an E&O claim. An agent procuring a new policy neglected to have his customer complete a required form. After real-izing the mistake, the agent called the customer and asked her to come sign the form, but the cus-tomer did not do so—and later had an uncovered claim. If the agent had documentation that he gave the customer an opportunity to sign the form but she failed to do so, that would help defend the result-ing E&O claim. The agent said he had a log where he keeps that kind of information, which the E&O claims handler thought might establish that the agent gave his customer an opportunity to correct
the initial oversight—shifting at least some of the responsibility for lack of coverage to the customer. But the log the agent sent the claims handler to review turned out to contain handwritten notes, which did not provide proof of when the agent made them. Without any other documentation that the agent informed the customer of the need to come sign the document, the claim be-came a simple swearing match between the customer's version of events and the agent's, on a claim in which the agent had admittedly neglected to have the customer sign in the first place. The E&O claims handler recommended settling. —J.N. John Nesbitt is an assistant vice president, claims specialist with Swiss Re Corporate Solu-tions and works out of the Overland Park office.
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Is There Auto Coverage for Dealer Loaner Autos, Rent-
al Cars, and Test Driving Vehicles?
Bill Wilson, CPCU, ARM
Consider these four claim scenarios: A personal lines customer puts his Cadillac in the shop for servicing and gets a loaner Caddy from the dealer which he totals to the tune of a $37,000 phys-ical damage loss. The dealer’s insurer covers the damage above a $500 deductible but wants its mon-ey back from the negligent customer. A personal lines customer placed his Acura in the shop for maintenance and was provided with a loaner car which was struck while parked and un-occupied. The damage was $6,500 and the dealer’s insurer expected the customer’s auto insurance to pay. A personal lines customer is test driving a car from a used car dealer and hits a deer. The dealer’s insur-er pays to repair the damage but subrogates against the driver. A personal lines customer is test driving a new car and has an at-fault accident resulting in damage to another vehicle and to the dealer’s auto being driven. Each of these is an actual claim where the customer turned the claim in to his personal auto policy (PAP) insurer and the claim was denied. In the first three cases, the Other Insurance clause was cited so that only excess coverage was provided. Using the cur-rent ISO PAP as the model, this clause says: However, any insurance we provide with respect to a “non-owned auto” shall be excess over any other col-lectible source of recovery including, but not limited to: 1. Any coverage provided by the owner of the “non-owned auto”; 2. Any other applicable physical damage insurance; 3. Any other source of recovery applicable to the loss. The PAP insurers relied on this language making their coverage excess and would only pay for the deductibles on the dealers’ policies. The insureds
were on the hook for outstanding amount. In the case of the $37K Cadillac claim, the agent was able to use their influence to get the PAP carrier to re-spond to the claim but, to my knowledge, the other PAP carriers did not, resulting in the agencies’ per-sonal lines customers incurring out of pocket expens-es of several thousand dollars. In the last claim, the very large national carrier cited this exclusion in their proprietary (non-ISO) auto pol-icy: This insurance does not cover certain losses or situa-tions…. It does not cover a non-owned car while being used or maintained in any auto business by anyone. According to the carrier, the auto was being “used” IN an auto business by someone, so the exclusion applied. This seems to be a rather restrictive inter-pretation but the carrier insisted it was designed to exclude losses involving loaner cars and could be ap-plied to test driving or even rental cars. Note that the “auto business” exclusion above is non-ISO language. ISO’s “auto business exclusion” ap-plies only to insureds: While employed or otherwise engaged in the “business” of…selling…repairing…servicing…storing…or parking vehicles designed for use mainly on public highways. Clearly, the ISO language would not apply to this claim since the insured is not the person engaged or employed in the auto business. However, the propri-etary language could arguably apply to the claim to preclude coverage. Regardless, the ISO Other Insur-ance clause (and the clause in the non-ISO policy) clearly provide coverage only on an EXCESS basis. So, what is the solution? With regard to the “auto business” exclusion applied in the last claim, there’s nothing you can do except, as the agent did in this claim, lobby the carrier to change the exclusion to something more reasonable like the ISO language. The alternative is to not use that carrier’s auto poli-cy. With regard to the Other Insurance clause making coverage excess, the solution probably lies in revis-ing the commercial auto policy of the auto business to make an exception in their subrogation clause (“Transfer Of Rights Of Recovery Against Others To
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10 Trends Expected To Shape The
Casualty Insurance Market In 2017
by: Jayleen R. Heft, PROPERTYCASUALTY360.COM
There's little doubt that it’s a time of intense change for the casualty insurance marketplace. Rapid advances in interconnected technologies and drones, InsurTech disruption, changing workplace dy-namics along with industry profit pressures are ex-pected to shape the casualty market in the year ahead. In their annual look at the state of the casualty insur-ance market, Marsh's U.S. Casualty Practice takes a look at the key developments they expect to influence buyer and insurer behavior in 2017. Based on discus-sions with insurers and their own observations, New York City-based broker Marsh predicts 2017 will contin-
ue to bring more new technologies and business models leading to evolving risks. Here are 10 trends that are likely to affect you and your insurance business in 2017: 10. Increased employer and workers' com-pensation complexities. Barring a major catastrophic event, the workers’ compensation market is expected to favor buy-ers from a risk transfer premium and rate per-spective. But that will not eliminate or fully off-set many of the challenges employers will face in 2017. In 2017 and beyond, as the “gig” econo-my expands and technology further develops, we'll see a continued shift away from the tradi-tional workday and fixed employment locations to part-time, on-demand, and independent con-tractor arrangements. For an employer, this in-creases complexities around the implementation of proper safety procedures and the delivery of
Us”) similar to that in the ISO PAP subrogation clause (“Our Right To Recover Payment”) which says: However, our rights in this Paragraph (A.) do not ap-ply under Part D, against any person using “your covered auto” with a reasonable belief that that per-son is entitled to do so. In other words, revise the business auto policy (BAP) or provide an optional, perhaps premium-bearing, endorsement that disallows subrogation against a permissive use of a dealer auto such as a loaner ve-hicle or while test driving an auto.
Bill Wilson, CPCU, ARM, AIM, AAM Founder & CEO, InsuranceCommentary.com
[email protected] or [email protected]
Com•men•tar•y … an expression of opinions or of-fering of explanations
William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of InsuranceCommentary.com. He re-tired from the Independent Insurance Agents & Bro-kers of America in December 2016 where he served as Assoc. VP of Education and Research and was the founder and director of the Big “I” Virtual University for over 17 years. He is the former Director of Edu-cation & Technical Affairs for the Insurors of Tennes-see and, prior to that time, he was employed by In-
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timely and quality medical care to injured employ-ees. 9. Increased purchases of excess liability limits. Insureds make buying decisions based on many pa-rameters: Risk quantification, safety and claims han-dling expertise, likelihood of catastrophic loss, and budgets. These are logical and practical reasons — until there’s an underinsured loss. Hindsight creates second guessers asking why additional coverage wasn’t purchased for a minimal expense. Increased purchases of excess liability limits are ex-pected in 2017. The present soft excess market pro-vides low-cost access to contingent capi-tal. Sophisticated analytical tools exist to quantify the likelihood of a loss greater than the current excess liability limit purchased. “Nuclear verdicts” in the automobile liability and product liability arenas are in the headlines. At the same time, the soft market leaves some room in most insurance budgets. 8. More underwriting scrutiny from a coverage perspective. We'll see more underwriting scrutiny from a coverage perspective in 2017. Differentiation in program choic-es will be more about coverage than price as un-knowns increase and carrier positions begin to di-verge. These differing approaches will occur as clients have access to more analytical data and information to help them better analyze coverage differences. Different cyber, punitive damage, and dispute resolu-tion mechanisms will carry more weight in 2017 than ever before. 7. Sensor technology explosion. Technology advancements, coupled with the ability to digest vast amounts of data and arrive at actiona-ble recommendations, will allow the insurance indus-try to improve loss ratios, analytics, claims handling and workplace safety. The key to unlocking these technologies’ potential benefits rests with the translation of data points into actionable information. Investment in wearable de-vices, other sensors, and dashboard technologies
that purport to translate sensor inputs into data will lead to commercial insurance sensor appli-cations improving both property and casualty loss profiles. 6. A push for higher casualty rates. Insurers’ margins are under pressure and shrinking due to competition, new market en-trants, and downward rate pressures. A need to expand margins will lead to insurers trying to push for higher casualty rates in 2017. Those insurers without a drag from legacy lia-bility and that look to grow market share will once again ensure clients enjoy a soft casualty market in 2017. Legacy writers will need to “sweeten the pot” with flexible terms on cover-age, collateral, and service delivery to help re-tain their business. 5. Progress in the consolidation of per-sonal and commercial automobile insur-ance and products liability. Autonomous vehicles will change historical au-tomobile loss dynamics. The conversion to autonomous vehicles will not be completed in 2017, but we will see stepping stones in the consolidation of personal and commercial automobile insurance and products liability. Time will tell what the future underwriting re-quirements will be for driverless vehicles. 4. Focus back to growth. Since 2008, insurers generally have increased underwriting discipline. With limited investment income opportunities, insurers have largely fo-cused on underwriting profitability rather than premium growth. In 2017, however, this strategy may lose ground. The marketplace appears to be getting more aggressive despite indications that under-writing results are deteriorating and inflationary claim trends will not be offset by rate. This could lead to greater-than-expected volatility for various product lines or industry segments.
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New entrants and incumbent insurers are competing for market share and growth at a time when insurers are reporting increases in medical costs, automobile damage, and claim settlement values. In the long run, rising medical costs, an orga-nized and aggressive plaintiff’s bar, and larger verdicts will likely impact more product lines. For the foreseeable future, however, new car-rier entrants and expanding insurer appetites will bring the industry’s focus back to growth. 3. Ongoing InsurTech disruption. The insurance industry is converging with the technology sector. Capital is looking for a home in disruptive technologies aimed at the insurance industry’s inefficiencies. The insurance industry’s sluggish response to the sharing economy has left a major crack through which InsurTech disruptors could gain a foothold. Further expansion into other parts of the value chain could follow. Slow movement by traditional insurers to be-come more efficient will attract disruption to different parts of their value chain. Initial niche success will lead to broader expansion for the successful InsurTech companies of the future. 2. Transfer of risk of the unknown to specialty product lines. Over the last two years, the Insurance Ser-vices Office (ISO) and insurers have created a number of cyber exclusions for commercial general liability (CGL) policies. Largely, these exclusions seek to eliminate some combination of intangible property damage, nonphysical damage, and advertising or personal-related liabilities that were not originally contemplated by CGL policies. In 2017, insurers will likely continue to create policy language and endorsements that clarify how commercial and personal lines policies address a number of evolving risks, including:
The sharing economy.
Drones.
Self-driving cars.
3D printing.
Genetically modified organisms (GMOs).
Meanwhile, insurers will make individual un-derwriting decisions based upon better identi-fication of the root causes of claims. Insurers will also seek to clarify coverage intent with regard to traumatic brain injury and other emerging exposures. 1. More unintended consequences from the Internet of Things (IoT). As interconnected technologies take greater hold and autonomous vehicles, drones, 3D printing, and other new risks emerge, the in-surance industry will need to address the blurred lines between specific forms of cover-age, including general liability, product liabil-ity, cyber insurance, and auto liability.The lev-el of interconnectedness magnifies the poten-tial frequency and severity of adverse events as the impact of an individual loss can ripple through an entire connected system. This possibility directly contributes to insurer ag-gregation fears. In 2017, expect to see more unintended con-sequences from the IoT, leading insurers to look at risk aggregation and possibly change the way they provide coverage for risks asso-ciated with connected devices.
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IIABL MARCH BOARD MEETING
The IIABL Board of Directors met on March 10, 2017 at the Crowne Plaza Hotel in Baton Rouge. Following is a report on the board meeting.
IIABL Secretary-Treasurer, Johnny Beckmann, pre-sented the 2017-2018 IIABL Budget with the board. Revenues continue to decline as a result of the soft market and mergers and acquisitions of independent insurance agencies. The board dis-cussed various ways to increase revenues and de-crease expenses. On a motion by David Perry with a second by Armond Schwing, the board referred the budget to the IIABL Finance Committee for ad-ditional modifications without objection.
IIABL board member, Paul Owen, led a discussion about agent concerns about the Louisiana automo-bile market. Several automobile insurers have left the Louisiana market, and others have restricted underwriting. Underwriting results are negative for the entire industry countrywide, but Louisiana re-
sults are worse than the national average. Con-tributing factors include increased driving due to cheap gasoline, an epidemic of distracted driving (particularly involving cell phones), and the in-creased cost to repair vehicles. Louisiana has a particularly difficult problem with litigation. Loui-siana accident rate and property damage liability claim rate is just slightly higher than the national average. However, our bodily injury claim rate is twice the national average. The board discussed the need for tort reform. Unfortunately, the po-litical consensus is that tort reform is not possi-ble as long as John Bel Edwards is Governor. The board made a commitment that IIABL will lead a push for consumer advocacy to support tort reform at the appropriate time, when the business and insurance industries see the politi-cal opportunity to make a concerted effort for tort reform.
IIABL CEO, Jeff Albright discussed plans for the 2017 Regular Session of the Louisiana Legisla-
ture. Legislators will be limited to 5 regular bills during this fiscal legislative session, so fewer insurance bills are expected. The Louisiana De-partment of Insurance is expected to have 15-20 bills. IIABL’s top legislative priority will be to pass legislation which will clarify a law passed in 2013 to clearly permit agency fees on individual health insurance. Representative Mike Huval will introduce the bill. IIABL will work with PIA, HAFA, LAHU and NAIFA agent associations to pass HB 407.
IABL will also work with LDI to make LA Citizens resident agent requirements reciprocal with oth-er states. Agents from states like Mississippi, who prohibits LA agents from accessing the Mis-sissippi wind pool, will be prohibited from ac-cessing LA Citizens. States like Texas, who al-low LA agents to access the Texas wind pool, will be allowed to access LA Citizens. The board also discussed concerns by the Louisiana Sur-plus Lines Association (LSLA) about R.S. 22: 44.1 which requires all insurance companies to report any reductions in coverage on a renewal policy to the policyholder. LSLA would like to exempt surplus lines insurers. The IIABL Board
agreed to try to work with LSLA to accommo-date their concerns, but want to protect policy-holders and agents with some type of notice when coverages are reduced on renewal. IIABL will work with LSLA to try to amend R.S. 22: 44.1 so that insurers who deliver quotes or poli-cies directly to policyholders will notify policy-holders (with a copy to the agent) and insurers who deliver quotes or policies to agents will no-tify agents.
Jeff Albright reported to the board that LDI Reg-ulation 105, which would have prohibited insur-ance companies from filing for rate increases more often than once every twelve months was rejected by the Senate Insurance Committee.
Jeff Albright has notified Commissioner Donelon of IIABL’s objections to reducing the commercial forms deregulation threshold in Regulation 72 from $200,000 to $10,000. Commissioner Donelon agreed to discuss this matter with IIABL further if any changes were made to Reg-ulation 72.
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Commissioner Donelon sent IIABL a letter in re-sponse to our concerns about Zenefits, a group health insurance “disrupter” out of California. Commissioner Donelon advised that LDI fined Zenefits for licensing violations.
Paul Owens, Jeff Mohr and Jeff Albright met with the LA Contractors Licensing Board about problems with certificate of insurance. The conversation was very productive. Some of the problems agents ex-perience are a result of old legacy computer sys-tems. The Contractors Licensing Board agreed to work on several solutions to resolve problems with agent filings of certificates of insurance.
IIABL Secretary-Treasurer, Johnny Beckmann, re-viewed the January 2017 financial statement with the board.
National Director, Lee Schilling, reported on the IIABA National Legislative Conference, which will be held the first week in May. Over 1000 Big I member agents will be on Capitol Hill lobbying Congress on important issues. NFIP Reauthori-zation in September is the top priority.
The next IIABL Board meeting will be held at the convention in June.
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IIABL Director of Education, Mike Edwards is your source for technical questions. Contact
Mike at [email protected] or 678.513.4390
Subject: Can Ordinance or Law Coverage in HO & CP Pay to Elevate a Building as Required Under a Local Building Code?
Q. I had lunch yesterday with a friend who works for our local Parish government. She raised an interesting question about Ordinance or Law coverage in Homeowners and/or Commercial Property forms. It deals with the requirement to elevate buildings in certain flood zones. At first I thought she was asking about Increased Cost of Compliance in the NFIP flood policy. As it turns out, she said the local Parish government was exploring other ways to help homeowners find sources of financing outside of the flood policy. So her question was about the O&L coverage in HO or CP, where the damage was due to a cov-ered peril, and one of the many building code re-quirements that might apply to repair/reconstruction was the requirement to elevate the building.
A. Very interesting question, and in some cases,
the answer is “yes.” For the discussion which follows, comments and excerpts are based on ISO (Insurance Services Office) forms and endorsements. Proprietary forms may be dif-ferent.
HOMEOWNERS COVERAGE
HO 00 03 05 11
Homeowners 3 – Special Cover-age
Section I – Exclusions
A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrent-ly or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or
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affects a substantial area.
1. Ordinance Or Law
Ordinance Or Law means any ordinance or law:
a. Requiring or regulating the construc-tion, demolition, remodeling, renovation or repair of property, including removal of any result-ing debris. This Exclusion A.1.a. does not apply to the amount of coverage that may be provided for in E.11. Ordinance Or Law under Section I – Property Coverages;
Section I – Additional Coverages
11. Ordinance Or Law
a. You may use up to 10% of the limit of liability that applies to Coverage A for the in-creased costs you incur due to the enforce-ment of any ordinance or law which requires or regulates:
(1) The construction, demolition, remodel-ing, renovation or repair of that part of a covered building or other structure damaged by a Peril Insured Against;
(2) The demolition and reconstruction of the undamaged part of a covered building or other structure, when that building or other structure must be totally demolished because of damage by a Peril Insured Against to anoth-er part of that covered building or other struc-ture; or
(3) The remodeling, removal or replace-ment of the portion of the undamaged part of a covered building or other structure nec-essary to complete the remodeling, repair or replacement of that part of the covered build-ing or other structure damaged by a Peril In-sured Against.
b. You may use all or part of this ordi-nance or law coverage to pay for the increased costs you incur to remove debris resulting from the construction, demolition, remodeling, renovation, repair or replacement of proper-ty as stated in a. above.
c. We do not cover:
(1) The loss in value to any covered building or other structure due to the require-
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ments of any ordinance or law; or
(2) The costs to comply with any ordi-nance or law which requires any "insured" or oth-ers to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, pollu-tants in or on any covered building or other struc-ture.
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
This coverage is additional insurance.
Comments:
(1) In Section I – Exclusion A.1. [above], there is no coverage for a loss due to any Ordi-nance of Law (O&L). For example, following di-rect damage by a covered peril (fire, windstorm, etc.), local or state building codes may require that certain materials, equipment, or design changes be used in repairing the damage, which
were not a part of the home prior to the loss. Such increased cost to comply with any building code or related ordinance or law is excluded.
(2) At the same time, building codes are not usually triggered by minor repairs or upgrades. Non-compliant features of the home are normally discovered where the damage is substantial, and building permits are needed to effect repairs, with the accompanying inspections, to verify code compliance.
(3) Additional Coverage 11 – Ordinance or Law [above], provides an automatic limit of 10% of Coverage A. This amount can be increased with endorsement HO 04 77 Ordinance or Law Increased Amount of Coverage.
(4) Direct damage by an excluded cause, such as flood, earthquake, termites, etc., do not trig-ger the O&L coverage. However, some insurers will endorse flood and or quake to their proprie-tary coverage forms, in which case there would be O&L coverage for those perils, also. But O&L coverage only applies for damage by a covered peril.
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(5) A note of caution: Not all insurers include the 10% automatic amount of coverage. There would be no coverage in that policy unless add-ed by attachment of HO 04 77. In fact, the 10% automatic coverage in Additional Coverage #11 was not added by ISO until 1994. Prior ISO HO policies provided no coverage without HO 04 77. But adverse case law (including E&O) following Hurricane Andrew in 1992 was a factor in some limited amount of O&L coverage (10% of Coverage A) being automatically in-cluded, with an option to purchase higher limits.
COMMMERCIAL PROPERTY COVERAGE
All three Causes of Loss Forms (CP 10 10 – Basic Form, CP 10 20 – Broad Form, and CP 10 30 – Special Form) exclude any loss caused by the enforcement of any ordinance or law.
CP 10 30 10 12
Causes of Loss – Special Form
B. Exclusions
1. We will not pay for loss or damage caused directly or indirectly by any of the fol-lowing. Such loss or damage is excluded re-
gardless of any other cause or event that con-tributes concurrently or in any sequence to the loss.
a. Ordinance Or Law
The enforcement of or compliance with any ordinance or law:
(1) Regulating the construction, use or repair of any property; or
(2) Requiring the tearing down of any property, including the cost of removing its de-bris.
This exclusion, Ordinance Or Law, applies whether the loss results from:
(a) An ordinance or law that is enforced even if the property has not been damaged; or
(b) The increased costs incurred to com-ply with an ordinance or law in the course of construction, repair, renovation, remodeling or demolition of property, or removal of its debris, following a physical loss to that property.
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Comments:
(1) The O&L exclusion in Commercial Property forms is essentially the same as the one in Homeowners forms. [See discussion above.]
(2) Likewise, there is a limited amount (10%) of automatic coverage for O&L coverage, which is included in the CP 00 10 – Building and Personal Property Coverage Form.
CP 00 01 10 12
Building and Personal Property Cov-erage Form
A. Coverage
4. Additional Coverages
e. Increased Cost Of Construction
(1) This Additional Coverage applies only to buildings to which the Replacement Cost Op-tional Coverage applies.
(2) In the event of damage by a Covered Cause of Loss to a building that is Covered Prop-erty, we will pay the increased costs in-curred to comply with the minimum standards of an ordinance or law in the course of repair, rebuilding or replacement of damaged parts of
that property, subject to the limitations stat-ed in e.(3) through e.(9) of this Additional Cov-erage.
(3) The ordinance or law referred to in e.(2) of this Additional Coverage is an ordinance or law that regulates the construction or repair of buildings or establishes zoning or land use re-quirements at the described premises and is in force at the time of loss.
(4) Under this Additional Coverage, we will not pay any costs due to an ordinance or law that:
(a) You were required to comply with be-fore the loss, even when the building was undam-aged; and
(b) You failed to comply with.
(5) Under this Additional Coverage, we will not pay for:
(a) The enforcement of or compliance with any ordinance or law which requires demoli-tion, repair, replacement, reconstruction, re-modeling or remediation of property due to cont
Louisiana Agent 25
I spoke to a long time member today in regards to
live continuing education courses. He mentioned
that he really gets so much out of going to live
courses but that we were not offering as many as
we had in the past. My response...Waves of
Change. The on-line CE market has forced us to
scale back our live education seminars.
The next thing he said to me was that he could go
to the convention to get live CE courses and that
he has never been. I seized the moment to ex-
plain to him the value of attending the IIABL Con-
vention.
Oceans of Opportunity
1) Quality CE program with outstanding instruc-
tors
2) Updates from the Commissioner of Insurance
3) IIABA representative to keep us up-to-date on
the national scene
4) So many opportunities to network with compa-
nies, brokers, vendors, fellow agents and the
list goes on
If you have never attended the IIABL convention I
encourage you to make a priority this year!
Our outstanding program this year includes:
Ron White-Triple Your Memory,
Triple Your Business
Virginia Bates:
Serious Insurance Games
Improving Your Revenue Stream
IIABL All Day Tailgate on the Beach
Rock it out with The Tip Tops
Download the following forms:
2017 IIABL Convention Registration Form
2017 IIABL Convention Exhibitor Registration Form
2017 IIABL Convention Sponsorship Form
2017 IIABL Company & Broker Reception Form
2017 IIABL Tentative Convention Program
Webcasts
E&O Risk
Management
May 2, May 13th, May
18th, June 6th, June
10th, June 15th
Available on Demand
Ethics
May 8, May 16, May 26,
June 6, June 19, June
21
Available on Demand
Flood
May 17th, June 16
Available on Demand
Commercial &
Personal Lines
Courses
Click above title for
courses & dates for
2017
Available on Demand
Seminars
2017 Flood Classes
5/9—Bossier City
5/9—Monroe
5/10—Lafayette
5/11—Kenner
5/11– Covington
IIABL Fall Education
Conference
October 19
Shreveport Convention
Center
Events
Trusted Choice
Make A Wish Bowling
Fundraiser
April 28th—Shreveport,
Monroe, Lafayette,
Baton Rouge
IIABR Charity Golf
Tournament
May 4, 2017
Carter Plantation
Young Agents @ The
Races
May 17, 2017
Louisiana Downs
Bossier City
IIAGNO 39th Annual
Seafood Soiree’
May 19, 2017
Southport Hall
New Orleans
On-Demand Webcasts
Masters Series: The Master Series are unique agency
management courses from industry experts. in the
Masters Series.
CSR Training: The Customer Service Representative is key employee in every agency and is a difficult commodity to find.
Environmental Strategists (eS) Becoming a certified environmental Strategist™ (eS) will equip you with the knowledge to identify, man- age and transfer environmen-tal exposures impacting eve-ryday business.
Cyber Risk Manager (cyRM) Completion of the Cyber Ex-posures & Insurance – Train- ing for Agents & Brokers course qualifies you to regis-ter for the cyRM certification for FREE.
Pre-Licensing
Online prelicensing 3 optional study packages
available Click here
for additional information
Louisiana Agent 26
Louisiana Agent 27
Company
Coverage Type Overall % Impact:
Overall $ Impact:
Number of Policyholders:
Changes
Direct General Ins Co Right Choice Program
19-Private Passenger Auto
+9.1% +$173,332 748 No effective date provided
Direct General Ins Co Right Choice Advantage Pro-gram
19-Private Passenger Auto
+9.9% +$90,962 292 No effective date provided
American Home Assurance Co Commerce & Industry Ins Granite State Ins Co Illinois National Ins New Hampshire Ins Co Ins Co of the State of Pennsyl-vania AIG Assurance Co AIG Property Casualty Co
16 – Workers Comp -8.10% -$4,720,243 335 New: 5/1/2017 Renewal: 5/1/2017
Oak River Insurance Co Berkshire Hathaway Homestate Redwood Fire & Casualty Ins
16 – Workers Comp -9.8% -$1,676,189 83 New: 5/1/2017 Renewal: 5/1/2017
Continental Casualty Co Prof E&O Liability Accountants Prof Liability Program
-3.6% -$40,417 422 New: 5/1/2017 Renewal: 5/1/2017
All Savers Insurance Co Excess Stop Loss – Employer(s) Plan
18.3% $503,346 41 New: 10/1/2017 Renewal: 10/1/2017
Allstate Property & Casualty 19_Private Passenger Auto, LA Trailer Pro-gram
30.0% $516,903 4,999 New: 6/26/2017 Renewal: 6/26/2017
Louisiana Agent 28
Continued page 30
tamination by "pollutants" or due to the presence, growth, proliferation, spread or any activity of "fungus", wet or dry rot or bacteria; or
(b) Any costs associated with the enforce-ment of or compliance with an ordinance or law which requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or as-sess the effects of "pollutants", "fungus", wet or dry rot or bacteria.
(6) The most we will pay under this Addition-al Coverage, for each described building insured under this Coverage Form, is $10,000 or 5% of the Limit of Insurance applicable to that building, whichever is less. If a damaged build-ing is covered under a blanket Limit of Insurance which applies to more than one building or item of property, then the most we will pay under this Additional Coverage, for that damaged build-ing, is the lesser of $10,000 or 5% times the value of the damaged building as of the time of loss times the applicable Coinsurance percentage.
The amount payable under this Additional Coverage is additional insurance.
(7) With respect to this Additional Coverage:
(a) We will not pay for the Increased Cost of Construction:
(i) Until the property is actually repaired or replaced at the same or another premises; and
(ii) Unless the repair or replacement is made as soon as reasonably possible after the loss or damage, not to exceed two years. We may extend this period in writing during the two years.
(b) If the building is repaired or replaced at the same premises, or if you elect to rebuild at an-other premises, the most we will pay for the In-creased Cost of Construction, subject to the provi-sions of e.(6) of this Additional Coverage, is the increased cost of construction at the same premises.
(c) If the ordinance or law requires relocation to another premises, the most we will pay for the Increased Cost of Construction, subject to the provisions of e.(6) of this Additional Coverage, is the increased cost of construction at the new premises.
(8) This Additional Coverage is not subject to
the terms of the Ordinance Or Law Exclusion to the extent that such Exclusion would conflict with the provisions of this Additional Coverage.
(9) The costs addressed in the Loss Pay-ment and Valuation Conditions and the Replace-ment Cost Optional Coverage, in this Coverage Form, do not include the increased cost attributa-ble to enforcement of or compliance with an ordi-nance or law. The amount payable under this Additional Coverage, as stated in e.(6) of this Additional Coverage, is not subject to such limitation.
Comments:
(3) This Additional Coverage is titled “Increased Cost of Construction” (ICC), since its provisions are meant to be set apart from the O&L exclusion. [A.4.e.(8)]
(4) In order for this ICC to apply, Replacement Cost is required to be included in the policy. [A.4.e.(1).]
(5) A very important restriction for ICC is that coverage does not apply to any ordinance or law the insured was required to comply with prior to the current loss, but failed to do so. [A.4.e.(4)(a)(b).] Assume the insured had previously done some renovations, upgrades, repairs, etc., and did not comply with certain building code require-ments he was required to meet in conjunction with such work. In a subsequent loss, the ICC coverage (as well as the O&L coverage provided under CP 04 05) would not cover the expense of upgrading this prior work to current code.
(6) Coverage under the ICC provision is limited to $10,000 or 5% of the coverage limit on the build-ing. [A.4.e.(6).]
(7) The Ordinance or Law endorsement (CP 04 05) is available for higher O&L limits, and has some unique differences with the Homeowners endorsement (HO 04 77).
CP 04 05 10 12
Ordinance or Law Coverage [Excerpts only – the endorsement runs 4 pages.]
B. Application Of Coverage(s)
The Coverage(s) provided by this endorse-ment applies only if both B.1. and B.2. are satis-fied and are then subject to the qualifications set forth in B.3.
Ask Mike continued from page 24
2.a. The building sustains direct physical damage that is covered under this policy and as a result of such damage, you are required to com-ply with the ordinance or law; or
b. The building sustains both direct physi-cal damage that is covered under this policy and direct physical damage that is not covered under this policy, and as a result of the building damage in its entirety, you are required to comply with the ordinance or law.
c. But if the building sustains direct physi-cal damage that is not covered under this policy, and such damage is the subject of the ordi-nance or law, then there is no coverage under this endorsement even if the building has also sustained covered direct physical damage.
3. In the situation described in B.2.b. above, we will not pay the full amount of loss otherwise payable under the terms of Coverages A, B, and/or C of this endorsement. Instead, we will pay a proportion of such loss, meaning the proportion that the covered di-rect physical damage bears to the total di-rect physical damage.
Comments:
(8) In certain circumstances, such as a severe thunderstorm, it is quite possible that there will be damage from covered (windstorm) and excluded (flooding) causes of loss. Where the combined damage from both contribute to trigger the threshold for O&L coverage, the amount payable for O&L will be prorated in proportion that the covered damage (windstorm) bears to the total damage. [B.2.b. and B.3.] This assumes that the threshold for triggering the requirement to comply with the current code was damage done “from any cause,” or “regardless of the cause of the dam-age,” or words to that effect. That is, the com-bined damage reached the threshold (often 50%).
(9) Conversely, in other situations, where there was windstorm and flood damage, the excluded cause of loss alone (flood, in our example) could be sufficient to trigger the requirement for code compliance. Contrasted with the building code wording in (8) above, this code might require compliance “where damage from flood” exceeds the threshold (often 50%) for floodplain compli-ance. In that situation, there is no O&L coverage at all, for windstorm or flood damage. [B.2.c.]
BUILDING CODES
For additional information on the Louisiana build-
Louisiana Agent 31
ing code, see TA #259 New Building Codes – No Pain, No Gain. Most state and local building codes are based on a series of model codes prepared by the ICC: International Code Council. At present, there are about a dozen different code manuals, including the International Existing Building Code (IEBC), which would be an important reference when O&L issues arise after damage to existing buildings.
These materials are intended for educational purposes only and should not be relied upon as legal advice. Please consult a qualified attorney
Are You Insurance ALL the Right People?
2pm—3:30pm Central Time CE is not offered on this webinar Cost: $69.00
Register Here!
Who qualifies as an insured in the commercial general liability (CGL) policy and the business auto policy (BAP)? More importantly, how should the insured be listed on the policy? You must be careful who you list as and how you list an insured. Get this wrong and there may be NO coverage (an E&O nightmare).
Only attend this session if you are interested in learn-ing:
Who is granted insured status in the CGL and
BAP;
Who you can and should extend coverage to in
these forms;
Who is not and should not be included; and
The weird requests additional insureds often
make.
Louisiana Agent 30
REGISTRATION & LOCATIONS
FREE FLOOD COURSES EXCLUSIVELY FOR IIABL MEMBERS
Presented by: Gregg Porter w/Selective Flood
□ May 9, 2017 8am – 11am Bossier City – Hilton Garden Inn
2015 Old Minden Rd
□ May 9, 2017 2pm – 5pm Monroe - Courtyard Marriott
4915 Pecanland Mall Drive
□ May 10, 2017 8am – 11am Lafayette – Hilton Garden Inn
2350 W Congress St
□ May 11, 2017 8am – 11am Kenner – Crowne Plaza
2829 Williams Blvd.
□ May 11, 2017 2pm – 5pm Covington – Staybridge Suites
140 Holiday Blvd.
Download Registration Brochure
prescription pain relievers and heroin nearly
quadrupled between 1999 and 2014.
This is an issue making headlines around the na-
tion with several studies pointing to rising death
rates due to drug overdoses. In one study re-
ported by The New York Times, the rising death
rates for young white males have made them the
first generation since the Vietnam War to experi-
ence higher death rates in early adulthood than
the previous generation. There are an estimated
$55 billion in health and social costs related to
prescription opioid abuse each year and another
$20 billion in emergency department and inpa-
tient care for opioid poisonings across the coun-
try. The Centers for Disease Control and Preven-
tion estimates that the problem is especially
acute in Louisiana which has an overdose death
rate exceeding the national average.
We see the devastating effect of these substance
Louisiana’s Opioid Ad-
diction and Its Effect
on Insurance
Over the past several years Loui-
siana has become part of a
growing and alarming problem in
our country: the increase of opiate substance use
disorders. I warned of this issue last fall following
a study from the Workers Compensation Re-
search Institute reporting that one in six injured
workers in Louisiana was identified as having
longer-term use of opioids, the most prevalent
out of the 25 states included in the two-year
study period. According to the U.S. Department
of Health and Human Services, the rate of over-
dose deaths nationally involving opioids including
Commissioner’s Corner
Louisiana Agent 34
use disorders in our premiums for both health
care and workers’ compensation insurance.
Abuse of these drugs can lead to lost time from
work and possible disability and death. Opioid
addiction can be especially insidious because
many users first encounter the drug as pre-
scribed by a doctor and those of us most sus-
ceptible to addiction are often struggling with
another medical problem such as chronic pain.
In our “on the go” society, opioids can help
mask the signs that patients have not allowed
themselves sufficient time to heal after surgery
or an injury thus extending the length of time
opioids are needed to manage pain.
Pain can be a huge burden and opioids can and
do have a part to play in pain management.
There is a balance in allowing medical practition-
ers to prescribe the course of treatment that
best fits a patient’s needs while also considering
quality of life and future outcomes. However, as
we become more acutely aware of the dangers
of opioid addiction, we must be vigilant at every
point in the pain management process to ensure
that these drugs aren’t falling into the wrong
hands and that we aren’t creating more victims.
A recent study in the Annals of Surgery found
that providing guidelines to surgeons on the
amount of opioid pills to prescribe to patients
after a specific surgery cut the number of pills
prescribed by 53 percent and many patients did-
n’t consume all of the pills they were prescribed.
Judicious prescribing of opioids at the time of
care and careful monitoring for chronic pain con-
ditions is necessary. However, once patients are
determined to no longer need opioids for pain
management, smart and planned withdrawal is
needed. For those patients that have developed
a dependency, there needs to be judgement-
free help and resources. For the majority of pa-
tients that will not experience dependency, vigi-
lance is still necessary. According to the authors
of that recent study in the Annals of Surgery,
illegal users consume as much as 71 percent of
legitimately prescribed opioids. In fact, 80 per-
Louisiana Agent 35
cent of the global opioid supply is consumed in the
United States. And they are finding those pills in
the medicine cabinets of family, friends and neigh-
bors.
National Prescription Drug Take Back Day provides
a safe, convenient and responsible means of dis-
posing of expired or unused prescription drugs
while also educating the general public about the
potential for abuse. Created by the Drug Enforce-
ment Agency, the event offers an opportunity for
consumers to safely and securely remove drugs
that can contribute to accidental poisonings and
overdoses.
The Take Back Day has removed millions of
pounds of prescription drugs from homes and al-
lowed them to be safely disposed of without pollut-
ing our environment and water supplies. This
year’s event will be held on Saturday, April 29. I
encourage all Louisiana families to check their
homes, automobiles and offices for unused or ex-
pired prescription drugs and to turn them in on
Take Back Day. In a state with more opioid pre-
scriptions than residents this problem has already
reached epidemic proportions. By removing them
from our homes and public spaces, we can begin
the difficult process of freeing our family mem-
bers, friends and communities from the clutches
of this unforgiving addiction.
Young Agents Afternoon at The Races
May 17, 2017
3:30pm—7:30pm
Come join young agents, company & broker friends for an afternoon at the races. A suite has been re-
served for this event from 3:30pm—7:30pm at Louisiana Downs in Bossier City. . There will be appetizers,
beer, wine & cocktails available. Each registrant will be given 2 drink tickets.
Online registration available via the IIABL website under Education & Events Calendar.
GOLD LEVEL
BRONZE LEVEL
SILVER LEVEL
Louisiana Agent 37
AMERISAFE AMERICAS INSURANCE BANKERS INSURANCE CNA INSURANCE
EMC INSURANCE
FCCI GROUP FOREST INSURANCE GULFSTREAM P&C
HOMEBUILDERS SIF LANE & ASSOCIATES LUBA WORKERS’ COMP MAISON INSURANCE
MARKEL FIRST COMP RPS COVINGTON SUMMIT CONSULTING
IIABL 2016—2017
BOARD OF DIRECTORS & OFFICERS
Richard D. Jenkins
President
Moore & Jenkins Insurance—Franklinton
Neil Record
President Elect
Record Agency, Inc.—Clinton
John L. Beckmann, III
Secretary/Treasurer
J. Everett Eaves—New Orleans
H. Lee Schilling, Jr.
National Director
Schilling & Reid Insurance—Amite
David Dethloff
Past President
Dethloff & Associates—Shreveport
Derek Canchola
Young Agent Representative
Blumberg & Associates—Baton Rouge
Byram H. Carpenter, III
Moreman, Moore & Co—Shreveport
Brenda Case
Lowry-Dunham, Case & Vivien—Slidell
Joseph Cunningham, Jr.
Cunningham Agency—Natchitoches
Donna DiCarlo
Riverlands Insurance Services—LaPlace
Morris Funderburg
Reeves, Coon & Funderburg—Monroe
Ross Henry
Henry Insurance Service—Baton Rouge
Bret Hughes
Hughes Insurance Services—Gonzales
Philip McMahon
Paul’s Agency—Morgan City
Joe King Montgomery
Thomas & Farr Agency—Monroe
Joseph A. O’Connor, III
The O’Connor Insurance Group—Metairie
Paul Owen
John Hendry Insurance Agency-Zachary
Martin Perret
Quality Plus—Lafayette
David T. Perry
Arthur J. Gallagher RMS—Baton Rouge
Robert Riviere
Riviere Insurance Agency—Thibodaux
Armond Schwing
Schwing Insurance Agency—New Iberia
Michael D. Scriber
Scriber Insurance Services—Ruston
Donelson P. Stiel
David H. Stiel, Jr. Agency—Franklin
Louisiana Agent 38