October 2017 WI Independent Agent

wisconsin

INDEPENDENT AGENT OCTOBER 2017

OUR 2017-18 IIAW EXCLUSIVE COMPANY SPONSORS SEE PAGE 4

PROFESSIONAL COVERAGE IS OUR MIDDLE NAME. Only Burns & Wilcox has the depth and breadth of experience to deliver the right solutions right away.

Milwaukee, Wisconsin | 262.347.0266 toll free 800.544.5700 | fax 262.347.0440

burnsandwilcox.com

Minneapolis, Minnesota | 612.564.1880 toll free 800.328.1693 | fax 612.564.1881

Commercial | Professional | Personal | Brokerage | Binding | Risk Management Services

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wisconsin

INDEPENDENT AGENT OCTOBER 2017

Open Door Policy Revolutionizing the Convention Experience.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Technology Harnessing the Power of Data: How to Transform your Insurance Brokerage. . . . 20 Improving Customer Experience in Insurance with A . . . . . . . . . . . . . . . . . . . . . . . . . 22 Will Robots take over the Insurance Industry?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

On The Cover…

Employee Benefits How to Harness the Power of Value-added Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . 27

Our Exclusive Company Sponsors provide

Marketing How to use Microsoft Sway to WOW Your Clients. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

can continue to bring industry leading

Errors & Omissions Getting Workers Compensation Coverage Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

products,

Proceed Carefully if you Receive a Subpoena. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Virtual University Ask an Expert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Agency Management 4 Stages to Move your Agency From Maintenance to Multiplication. . . . . . . . . . . . 37 7 Reason Why Emotional Intelligence is one of the Fastest Growing Job Skills. . . 38 Government Affairs State Advisory Panel Recommends Fee Schedule to Contain Medical Costs. . . . . 41

significant support to the IIAW so that we services

and

world-class

events and resources to our members.

We thank them for their continued partnership, involvement, and support of the independent agency channel! Learn more about these great companies starting on Page 4. Preparations are already underway to bring you an

Commentary from Counsel Seventh Circuit Issues Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

industry event unlike any other, InsurCon

Members in the News. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

2018! Stay tuned for more information…

Food for Thought. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Independent Insurance Agents of Wisconsin 725 John Nolen Drive, Madison, Wisconsin 53713 Phone: (608) 256-4429 or (800) 362-7441 ■ Fax: (608) 256-0170 ■ Web: www.iiaw.com Executive Vice President - Matt Banaszynski 2016-2017 Executive Committee President............................................................ Lise Meyer Meyer Insurance - P.O. Box 633, Sauk City, WI 53583 President-Elect.................................................... Jason Bott Robertson-Ryan & Associates - 330 East Kilbourn Ave., Milwaukee, WI 53202 Secretary-Treasurer......................................Chris Costakis Avid Risk Solutions- 2501 Parmenter Street, Ste 200A Middleton, WI 53562 Chairman of the Board................................. Matt Weimer Diversified Insurance Solutions - 100 North Corporate Dr., #100, Brookfield, WI 53045 State National Director ................................Steve Leitch Leitch Insurance - P.O. Box 85, River Falls, WI 54022 2016-2017 Board of Directors Mike Ansay, Ansay & Associates 101 East Grand Ave. #11, Port Washington, WI 53704 Cindy Burns, Burns Insurance 500 South Central Ave., Marshfield, WI 54449 Ryan McClone, McClone Agency 150 Main St. Suite 102, Menasha, WI 54952 Marc Petersen, American Advantage-Petersen Group 15171 W. National Ave., New Berlin, WI 53151 Jack Riesch, R&R Insurance Services P.O. Box 1610, Waukesha, WI 53187-1610 Chad Tisonik, HNI 16805 W Cleveland Ave, New Berlin, WI 53151 Pam Utpadel, Universal Insurance Advisors 100 West Lawrence St. Suite 313, Appleton, WI 54911 Ryan Waite, Neckerman Insurance Services 6200 Mineral Point Road Madison, Wisconsin 53705

WISCONSIN INDEPENDENT AGENT

Darrel Zaleski, Spectrum Insurance Group 4233 Southtowne Drive, Eau Claire, WI 54701

> A DVERTISERS & INFORMATION AAA Wisconsin................................................. 35 Acuity Insurance............................................. 47

2016-2017 Committee Chairs

AM Trust North America.................................. 25

Agency Services ............................................Kim Dandrea M3 Insurance - N19 W24200 Riverwood Dr. Waukesha, WI 53188

Amerisafe........................................................ 31

Automation/Technology ...............Cathleen Christensen Hierl Insurance - P.O. Box 949, Fond du Lac, WI 54936

Badger Mutual................................................. 39 Berkshire Hathaway/Guard............................. 23

Emerging Leaders ..........................................Ryan Waite Neckerman Insurance Services - 6200 Mineral Point Road Madison, WI 53705

Burns & Wilcox.................................................. 2

Employee Benefits.......................................... Mike Farrell David Insurance - 1300 South Green Bay Rd Racine, WI 53406

IIAW Exclusive Company Sponsors.................... 4

EMC................................................................. 40 IIAW Pre-licensing Classes.............................. 32

Government Affairs .......................................Jeff Thiel R&R Insurance Services - P.O. Box 161 Waukesha, WI 53187

IIAW CE............................................................ 36

Carrier Relations ......................................... Kevin Murray Johnson Insurance Services - 525 Junction Road, Madison, WI 53717

Partners Mutual.............................................. 39

Marketing/Membership Development....Jamie Durocher Arlington Roe- 2 Carlson Parkway N., Suite 175 Plymouth, MN 55447 Technical...............................................Timothy Kakuska Robertson-Ryan & Associates - P.O. Box 547 La Crosse, WI 54602

The IMT Group................................................. 35 Pekin Insurance............................................... 39 ProtectYourAgency.com.....................Back Cover SECURA Insurance Companies......................... 28 West Bend....................................................... 42 OCTOBER 2017 | 3

INTRODUCING OUR 2017-2018

IIAW EXCLUSIVE COMPANY SPONSORS

Your membership in the palm of your hand.

AAA Mobile puts all the perks of your AAA Membership at your fingertips. Find discounts at nearby shops and restaurants, or search for hotels in far away places.

Your journey begins with a simple download.

Download the AAA Mobile App for iPhone or Android today to bring your membership to life.

AAA Mobile Key Features: Membership info on your phone Push-button roadside assistance Access to 50,000 AAA Approved restaurants and hotels

To learn more contact: Heidi Nienow Regional Sales Director 608-828-2614 hqnienow@aaawisconsin.com

Discounts at over 164,000 locations Find AAA Approved Auto Repair, AAA branch locations and cheap gas

15-MS-2027 WISCONSIN INDEPENDENT AGENT

OCTOBER 2017 | 5

Independent Insurance Agents Every day, you as independent agents put on a rocking show for your clients. We are proud to give you a standing ovation!

COMPREHENSIVE COVERAGE IS OUR MIDDLE NAME. Only Burns & Wilcox has the depth and breadth of experience to deliver the right solutions right away.

Milwaukee, Wisconsin | 262.347.0266 toll free 800.544.5700 | fax 262.347.0440

burnsandwilcox.com

Minneapolis, Minnesota | 612.564.1880 toll free 800.328.1693 | fax 612.564.1881

Commercial | Professional | Personal | Brokerage | Binding | Risk Management Services

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BE WORRY FREE WITH IMT

We understand the importance of partnerships and take great pride in building strong, stable relationships with our agents and policyholders. Through experienced claims expertise and high-touch customer service, we are there when we are needed most.

Learn how you can represent IMT Insurance & Wadena Insurance at imtins.com/contact_us.

imtins.com | west des moines, iowa

We jump through hoops for you. Because you jump through hoops for them.

For more about how Integrity can help you help your customers contact: Cathy Colรณn at 920-968-8326 or ccolon@imico.com integrityinsurance.com

Your clients are unique.

Their coverage should be, too.

At Liberty Mutual Insurance, we know that your clients have specific needs. As the

#1 preferred business Insurer,* we take the time to work with you to understand them better — then build tailored coverage that’s as unique as they are. For more information, contact your territory manager or visit LibertyMutualGroup.com/Business.

*Based on 2016 survey of business insurance buyers on preference of national carriers sold via independent agents. © 2017 Liberty Mutual Insurance. Insurance underwritten by Liberty Mutual Insurance Co., Boston, MA, or its affiliates or subsidiaries.

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Charlie Conover Agency Systems and Experiences Business Leader

INNOVATIONS TO PUSH YOUR BUSINESS FORWARD ADVANCING THE AGENT EXPERIENCE, EACH AND EVERY DAY At Progressive, we’re innovating all the time. With simple, user-friendly tools that make it easier than ever to get a quote, bundle policies and retain customers. It’s smart, it’s fast—it’s Progressive.

Connect.ForAgentsOnly.com *All products not available in all states.

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Dedicated to agent success “All insurance companies say they have great service.

It’s when you hear it from customers that it rings true.

I constantly hear from agents how much they love our people, how knowledgeable they are, and how they’re committed to helping agents deliver results by serving them better than any other carrier.”

Dave Gross, SECURA President & CEO

Genuine people

SECURA’s mission, or passion if you will, is heard loud and clear throughout the company: Make it easy for agents to write and retain profitable business. To that end, their people are knowledgeable, responsive, flexible, and build real relationships. If you don’t know that firsthand, ask someone who works with the company. You’ll be glad you did.

Exceptional service

SECURA’s people also take excellent care of policyholders by offering relevant insurance solutions, sharing safety resources, and handling claims fairly and promptly.

Policyholders appreciate the personal and compassionate service they receive. In fact, the company receives a “Perfect 10” more often than not in claims surveys.

Broad product portfolio

SECURA is driving for growth in all of its broad-ranging lines including Commercial, Personal, Farm-Ag, and Specialty. 

Commercial Lines, the carrier’s cornerstone and largest business unit, serves contractors, retail, light manufacturers, service providers such as restaurants and dry cleaners, and numerous other markets. Its consultative approach to Risk Management and its Workers’ Compensation Nurse Hotline and Crisis Care set it apart from others, giving agents unique offerings to leverage.



Personal Lines is SECURA’s second-largest segment,

with its MILE-STONE® home and auto package. This convenient single policy features lifestyle solutions for travel, toys, jewelry, art, and more. It’s a premium package ideal for Middle America, and gives agents an edge in attracting and retaining customers.



Farm-Ag Lines, grown from the company’s farm heritage, serves a wide range of dairy, crop, and hog farms of all sizes, plus seed dealers, ag transport, custom farming, and dairy products manufacturing.



Specialty Lines covers a variety of unique risks such as

nonprofits, sports and recreation, food pantries, campgrounds, fitness centers, food trucks, and security systems, as well as employment practices liability insurance and professional liability coverage for directors and officers.

Partner only with top agencies

Committed to the independent agency model, the company does business with more than 475 agents in 12 states. Agents value SECURA’s relationship focus and service. Plus, the carrier’s extensive agent training programs provide professional development opportunities for agents to increase sales and profits.

Strong and highly rated

The company aims to outperform the industry overall on topand bottom-line growth and typically does. Its strength is further evident as A.M. Best rates it A (Excellent) and Ward includes SECURA in its Top 50 list, recognizing outstanding financial performance. Agents also rank the company among leading competitors for making business easier.

Positioned for growth

Agents know SECURA is a stable, long-term market for them.

Its growth trend is a result of investing in people, whether building successful relationships with agents or employing the very best. In the future, you will see the company continue devoting resources to people, products, and technology to stay in step with the dynamic market.

Wisconsin proud At Sentry, we understand what you’re looking for in an insurance company. Because we’ve been there ourselves. We got our start in 1904, when members of the Wisconsin Retail Hardware Association formed their own insurance company. But it was the true strength of personalized care and Midwest roots that became hallmarks of the Sentry name.

Since then—never forgetting our roots—we’ve grown to become one of the largest and most financially secure mutual insurance companies in the nation. With more than $14.7 billion in assets, a $4.4 billion* policyholder surplus, and an A+ (Superior) rating from A.M. Best, the industry’s top insurance evaluator, we provide peace of mind to more than one million policy holders.

One conversation at a time.

WISCONSIN VALUES You’ve grown your business right here in Wisconsin. Just like you, we’re proud of our heritage.

We employ nearly 4,000 associates across the country—with more than half in the Stevens Point area. And they’re dedicated. In central Wisconsin alone, more than 400 of them have 25 years or more of service with Sentry.

BENEFITING YOUR CUSTOMERS We offer the knowledge to help you develop an insurance program designed to fit your customers’ needs. Whether their exposures apply to property, general liability, auto, workers’ compensation, or other essential coverages, we’ll work with you to design coverage that works for them.

CLAIMS PROCESSING You’ll also have access to our industry leading claims and technology systems—and so will your customers. That means we’ll be ready to help when you need it most.

SAFETY PROGRAMS But it’s not just about helping when something goes wrong. We’re also here to help your customers avoid risks that can save lives, time, and money. Our team of safety consultants is ready to guide your customers through risk scenarios, regulatory demands, and training or program gaps.

These are just some the ways we can help protect what your customers have worked so hard to build. There’s still more we’d like to share with you. *Assets and policyholder surplus as of Dec. 31, 2015, and represent the aggregate total for all members of the Sentry Insurance Group and are not reflective of any individual underwriting company. A.M. Best rating as of 5/19/2016.

In 1922, eighteen years after Sentry’s founding, Roger Kaland, construction began on the Strongs Avenue building in Midwest Regional downtown Stevens Point.Executive We still use the building today.

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© 2017 Society Insurance

2017-18 IIAW EXCLUSIVE COMPANY SPONSORS

Cyber liability coverage that actually repairs digital damage.

Small detail. Big difference.

Cyber attacks can cause catastrophic financial loss, and in the last 12 months 50% of U.S. small businesses have been breached by hackers.* So it’s more a matter of when your customers will be attacked than if. But with Society, there’s no reason to panic. Our comprehensive cyber liability coverage protects businesses from things other policies usually don’t, like privacy breaches, cyber extortion and payment card company rule violations. Because we understand how to keep your customers truly covered.

To discuss an agency appointment, give us a call at 888-5-SOCIETY or visit societyinsurance.com. *2016 State of SMB Cybersecurity Report

2017-18 IIAW EXCLUSIVE COMPANY SPONSORS

THE TRAVELERS COMPANIES INC. Location Of Company Headquarters: Hartford, CT Founded: 1853 Officers: Lorie Kates, Regional President George Hogan, Regional Director Paul Kyrilis, Regional Vice President - Commercial, Technology, Construction, Public Sector Lorie Kates Chris Hackworth, Regional Vice President - Personal Insurance Lisa Pechan, Regional Vice President - Select James Gallagher, Regional Vice President - National Accounts Casualty Mike Powers, Regional Vice President - National Property John Tsourmas, Zonal Vice President - Excess Casualty Allen Warner, Regional Vice President - Inland Marine Brendan Dunican, Regional Vice President - Ocean Marine Paul Andriscin, Regional Vice President - Boiler & Machinery Beth Printz, Regional Vice President - Claims Gail Schroeder, Regional Vice President - Bond & Specialty Insurance Steve Ringler, Regional Risk Control Director Outlook for the Company’s Future Travelers is an insurance leader, committed to keeping pace with the ever-changing needs of our customers, and anticipating their needs for the future. There is no stronger testament to our dedication to protecting customers from loss than our continued innovation and ability to transform our industry. Travelers is also committed to helping agents grow and be success¬ful. Our people are professionals focused on delivering timely and professional service to you and our customers.

We are local. With over 200 employees in Wisconsin, Travelers delivers the many attributes of a large national carrier through one of the best-staffed field offices in the state. Our staff understands the Wisconsin marketplace and is committed to devel¬oping productive relationships with our agents and our insureds while delivering products and services your customers are looking for. For example: 1. Travelers is the #1 writer of Commercial Lines & Workers Comp in WI.* 2. Travelers has received two “Buyers Choice Awards” from Business Insurance magazine, taking home the top honors among insurers in both the Workers Compensation and Commercial Auto categories.

workers compensation claim program designed to simplify the claim process for injured employees, enabling them to get back to work quickly and safely.

5. Travelers Claim is continually developing innovative tools and resources designed to help you and your customers stay safe, including our Prepare and Prevent site on Travelers.com, and our new Weather Alerts. Offered through Weather Services International (WSI), a professional division of The Weather Company, the weather alerts are sent to subscribers of the service in advance of an approaching storm reaching a particular location.

6. Risk Control On-Demand provides an easy method for your clients to interact with our consultants regarding their risk assessment needs. Using screen share technology, your clients can share videos, photos or other media with a consultant.

He or she will then offer possible solutions and recommend specific Risk Control resources to help your clients manage their exposure. On-site consulting services are still available, and Risk Control On-Demand now gives prompt access to Risk Control professionals that can help your clients solve challenges in real time. Risk Control On-Demand gives your clients access to safety professionals regardless of their location. It enables your clients to connect with a consultant about a variety of topics, including office ergonomics; slip, trip and fall preventions; metal halide lighting; posit-injury management; and more.

3. Travelers Institute cybersecurity guide helps businesses and organizations prepare for and respond to evolving cyber incidents. “Cyber: Prepare, Prevent, Mitigate, Restore” is a multiyear, educational initiative launched by the Travelers Institute in 2016 to raise awareness about cybersecurity and cyber insurance solutions.

Travelers understands that life and business are inherently dynamic and that the best way to serve customers is to deliv¬er insurance that behaves the same way — evolving to keep in step with life and business as they change. Protect your clients under the red umbrella!

4. Travelers ConciergeClaim Nurse® location in Milwaukee is now in its third year. ConciergeClaim Nurse® is a comprehensive

* 2015 AM Best Data

2017-18 IIAW EXCLUSIVE COMPANY SPONSORS

WEST BEND MUTUAL INSURANCE COMPANY Location of Company Headquarters: 1900 South 18th Avenue, West Bend, WI 53095 Founded: April 1894 Officers: Kevin Steiner, President and Chief Executive Officer Mike Faley, Senior Vice President - Human Resources and Administration Rick Fox, Senior Vice President, Chief Actuary, and Chief Risk Officer Murali Natarajan, Senior Vice President and Chief Information Officer Gary Alexander, Vice President - NSI® Bonds Heather Dunn, Vice President and Chief Financial Officer Kevin Steiner David Ertmer, Vice President - Claims Rob Jacques, Vice President - Commercial Lines Jim Keal, Vice President - Argent® Gary Klein, Vice President - NSI Amy Campbell, Assistant Vice President - Customer Experience John Reyzer, Vice President – NSI Finance Mike DeLaney, Assistant Vice President - Argent Loss Control Jim Schwalen, Vice President - Personal Lines & Marketing Mike Kapfer, Assistant Vice President – NSI Underwriting Kelly Tighe, Vice President – Sales Kent Lawson, Assistant Vice President - NSI Claims Derek Tyus, Vice President and Chief Investment Officer Jason Moore, Assistant Vice President – IT Christopher Zwygart, Vice President and Chief Legal Officer Dave Nettum, Assistant Vice President – Argent Claims Debra Cahoon, Assistant Vice President - Human Resources

Products Company Specializes In: West Bend offers a broad-coverage personal lines package with multiple rating tiers for home and auto. Many innovative enhancements and features are also available. The company also offers a full range of commercial products and services, as well as specialty lines, such as social services, sports and leisure, special events, childcare, and bonds through NSI, its specialty division. Its monoline workers’ compensation division, Argent, works closely with agents and policyholders to determine their most critical workers’ compensation needs and improve results through loss control, medical cost containment, and education.

Company Philanthropy The West Bend Independent Agents’ Fund was established in 2006 for nonprofit organizations supported by the independent insurance agents who represent the company. Grants from the fund are aimed at improving these organizations and the lives of those served by them. The Spirit of the Silver Lining® Award honors those agents and nonprofit organizations for their dedication to providing a silver lining to those in need. In 2017, West Bend presented Spirit of the Silver Lining Awards and more than $90,000 to seven nonprofit organizations. Today, grants from the Independent Agents’ Fund total more than $1.1 million.

Outlook for the Company’s Future West Bend is well positioned to capitalize on the current market conditions. In 2017, the company maintained its A (Excellent) rating by A.M. Best. A.M. Best also recognizes West Bend as one of the 100 largest property/casualty insurers in the country. West Bend was again named to Ward Group’s list of the 50 top-performing property/casualty insurers. The company will strive to maintain these rankings by advancing its technology, products, and services, while retaining its small-company, relationship-driven culture.

Every two years, West Bend, along with independent insurance agents who represent the company and key business partners, come together to raise money for the MACC Fund, Midwest Athletes Against Childhood Cancer. Since 2006, West Bend and the company’s independent agent partners have raised $1.7 million for the MACC Fund.

Company Web site: thesilverlining.com

OPEN DOOR POLICY

REVOLUTIONIZING THE CONVENTION EXPERIENCE

BY REDEFINING YOUR AGENCY’S CUSTOMER EXPERIENCE

Thanks to the support of the leading independent agency carriers highlighted throughout our Association’s publications, we can provide our members with industry leading products, services and events tailored toward their evolving needs.

Let’s face it, the insurance industry is rapidly changing. Some may fear this period of transformation while others may embrace it.

Regardless of your view on the state of the independent agency channel, I assure you the future is bright and the IIAW is your strategic business partner to help lead you to the light of continued prosperity.

Engage us in conversation on this transformational period in your agency’s life.

We have a plethora of experts coupled with a variety of tools and resources to not only help you successfully navigate through it, but have fun doing it! Reluctant to take my word for it?

I understand and that’s why you need to check out IIAW’s 119th annual convention and see for yourself the Association in action.

If you haven’t been to an IIAW Convention, you are missing out. What other event in Wisconsin offers you the opportunity to network and interact with over 600 insurance industry professionals while learning from some of the top marketing, sales and customer service experts? H3ll! We have been kicking a$$ at providing a killer convention experience for the last 119 years. Yep, you read correctly. 119 years! We’ve been protecting and empowering independent agents spanning two centuries.

How many other companies have stood the test of time and been around as long as IIAW? Here is just a partial list of the impressive company we keep. a a a a a a a a a a

Independent Insurance Agents of Wisconsin (1899) CNA (1897) Chubb (1882) Travelers (1853) Pabst Brewing Company (1844) Remington (1816) Hartford (1810) DuPont (1802) Jim Beam (1795) Cigna (1792) WISCONSIN INDEPENDENT AGENT

Ok, now back to the Convention! While its early and we are still building out the details of the most prolific insurance industry event in the Midwest, here are a few tidbits we can confirm. Doug Lipp, Blake Morgan and Marcus Sheridan are just a few of the big names we have locked down to dazzle you with their expertise and superior speaking skills.

Don’t recognize their names? Google them!

Until you do, here is a little bit of what they have to say….

“You have to be more human than we have ever been even though we have more technology than we ever have! Everything has changed!” > > Marcus Sheridan

“I learned a valuable lesson while at Disney and I like to pass it along to my audience in every program I lead. Unless we continually strive to improve our products, service or leadership style, we automatically concede defeat to the competition; no one is ever too good to stop improving.” > Doug Lipp

“But when all is said and done, we at The Sales Lion are a company obsessed with the art of communication. Whether it’s textual articles, online videos, audio podcasts, or a speech in front of 10,000– We not only want to be our best but we want to teach others to do the same.

We firmly believe there is a teacher and communicator within each one of us– be it an individual or business– and desire to help each and every person we come in contact with to find this gift…and then use it in such a way that not only does it change their life or business, but others in the process as well.” > Marcus Sheridan

“Budgets Might Be Tight…. Creativity is FREE!” > Doug Lipp “Few companies are able to align customer experience with business strategy and do that across the company.” > Blake Morgan “Last year 75% of companies said their top objective for the year was to improve the customer experience. So basically, every brand under the sun knows customer experience is the only way they that are going to differentiate their product or service. Because let’s face it, so many of our products or services are largely the same.” > Blake Morgan “Artificial Intelligence can take care of mundane business needs so we can focus on high touch customer experiences.” > Blake Morgan

“Trust is the business we are all in and the companies that are obsessing about ‘how can I engender more trust than anyone else in my space’ are the ones that are changing the game.” > Marcus Sheridan

As more details are released pertaining to our 119th annual convention and the impressive lineup of presenters, we sincerely hope that you will bring your staff to this industry leading event sponsored by our Exclusive company sponsors. Engage with us as we help transform the independent agency channel!

> Matt Banaszynski is the Executive Vice President of the Independent Insurance Agents of Wisconsin.

Contact him at matt@iiaw.com.

OCTOBER 2017 | 19

TECHNOLOGY

HARNESSIN

HOW TO TRAN

TECHNOLOGY

Most insurance agents suffer from moderate to severe technophobia.

And big data? Forget about it.

According to a McKinsey & Co. report, the average age of insurance agents is 59, and 25 percent of agents are expected to retire in 2018. Many of them are not likely to make an extra effort to learn about the new tech coming out.

That leaves it to the up-and-coming generation of agents. But since they’re learning the tricks of the trade from the senior staff, they’re not learning to appreciate the flood of data that would be available to them through the latest technology platforms.

want to do business with direct writers and cut out the middleman – the agent.

They’re finding cool, modern platforms that boast capabilities such as these:

Does this matter? Yes, it does. Here’s why.

Disintermediation threatens your very existence

This shift toward what’s known as disintermediation threatens the job of every single broker and agent. We see the proof in other industries.

More and more consumers are turning to the internet for insurance quotes. They

Here’s why: The latest platforms, for

20 | OCTOBER 2017

aArtificial intelligence and actionable insights that they can use to tailor an insurance plan to their unique needs

the most part, do make good on their promises. They have a single view of the customer journey. They can often tell the clients what they need, at the minimum, in terms of insurance.

And let’s be honest – most brokers aren’t currently adding value to the agent-client relationship. They’re just adding cost and annoying sales pitches that customers don’t want to sit through. Most agents aren’t tailoring their advice to their clients’ needs. They’re not consultative.

They’re just glorified salespeople. At least, that is how most clients see them.

aData analytics to predict coverage needs

aUser-friendly interfaces

At the end of the day, those agents are actually missing sales opportunities for the brokerage by not having a datadriven, 360-degree view of a client’s situation and needs. So, if consumers can buy straight from a direct writer and get better service, why do they need agents?

The answer is that they don’t … unless you can integrate your knowledge with

WISCONSIN INDEPENDENT AGENT

TECHNOLOGY

NG THE POWER OF DATA:

NSFORM YOUR INSURANCE BROKERAGE a data-driven platform and provide better service than what customers can get on their own.

Most people don’t intuitively know how to create their own comprehensive insurance plan. Even when they educate themselves, they don’t know the nuances of the industry, because they’re not professionals. They’re consumers. They may be insurance literate, but they’re not fluent. You are.

This is where a cloud-based platform gives you a leg up. You get easy access to previously siloed data, so you can get actionable intelligence and provide customers with a valuable, tailored service that they could not possibly get with a DIY approach.

The power of actionable intelligence According to many agency principals and CFOs, it’s difficult to pull any kind of usable data from their existing systems. It’s trapped in a non-integrated, siloed environment, which means they can’t see what’s going on in the business and what’s happening with their producers. They don’t get real-time feedback.

Most of the time, they have to wait days, weeks, or even a month or more to get sales reports. Even then, they’re not getting all the data that’s relevant to the business.

This is another reason why some agencies and brokerages are switching to a cloudbased platform. This type of platform lets you see everything in real time where dashboards reflect the current state of the brokerage. The focus is on the customer experience, and agents can make customized recommendations.

WISCONSIN INDEPENDENT AGENT

For example, integration with third-party applications like Outlook allows agents to capture and store customer details from email so they can be used later during a sales call.

If a client mentions their child is graduating college soon, they are starting a family, or they are buying a new home, these key pieces of information can be scraped, stored and used later to recommend appropriate insurance at just the right time.

Improve the productivity and profitability of your agency The right cloud-based management platform will be modular and flexible. But it will also provide access to the data that can help you grow your agency: 1. Agent performance tracking Managers can monitor the performance of agents and track the time they spend on each client. They can keep tabs on the entire agency, monitor sales totals and track how much business an agent is bringing to the brokerage.

They can even drill down and see how an individual agent’s sales figures, retention and persistency compare to the company as a whole. This can also provide a source of friendly competition amongst agents, motivating them to achieve their optimal performance.

2. Predictive analytics This can help agents make smarter sales presentations by ditching cheesy and irrelevant pitches so they can get to the point with customers, recommending only appropriate products. This way, agents spend

less time on clients but can actually increase sales and profits.

3. Streamlined growth When new products come online, or when the brokerage wants to expand into different markets, the platform can be easily expanded without disrupting the day-to-day operation of the business.

4. Automation Administrative tasks can be automated, reducing the need for manual data entry, which enables the brokerage to become more efficient and easier to scale.

Where to go from here If you choose the wrong insurance agency management platform, you could put your brokerage in more danger of becoming obsolete than it is in right now. Most platforms don’t have tight integration and secure APIs with third parties, for example.

Most platforms don’t give you a top-down, 360-degree view of the brokerage, and most are not data-driven.

Bottom line: most platforms don’t provide easy access to the actionable intelligence you need to compete and thrive in today’s insurance market. So, if you do decide to upgrade, choose wisely. Do your due diligence, and make sure you find a solution that is flexible and robust enough to meet your agency’s data-harnessing needs.

> Roi Agababa, CEO of Novidea at Novidea

OCTOBER 2017 | 21

TECHNOLOGY

IMPROVING CUSTOMER EXPERIENCE

IN INSURANCE WITH AI

AI in the Claims Process The insurance agency is notorious for being fairly stagnant and for avoiding updating processes for years at a time. Filing a claim probably looks the same today as it did decades ago because the industry simply hasn’t grown with technology.

The process typically involves calling the insurance agent and providing details about the incident, whether it is a car accident or home damage, and answering questions related to deductibles, reimbursement, and timing. From there, a claims

Calling an insurance agent, especially to file a claim, is likely pretty far down the list of most people’s favorite activities. In fact, it probably won’t be a surprise to anyone who has ever had insurance or interacted with an insurance company that the insurance industry is one of the least innovative areas for customer service, meaning that customers typically dread interacting with insurance agencies and come away from their interactions disappointed and dissatisfied.

The industry is ripe for disruption, with 25% of insurance professionals set to retire by 2018, leaving a huge knowledge gap in an industry already short on workers.[1] Things are definitely changing, and artificial intelligence is playing a large role. The fast-growing technology has the potential to disrupt the entire industry and greatly improve the insurance customer experience.

TECHNOLOGY

What is AI? Artificial intelligence has been portrayed as robots and virtual reality in science fiction books and movies, but in real life, the technology encompasses so much more. AI can include anything from machine learning software to virtual personal assistants and is growing rapidly and expanding to nearly every device and industry. Artificial intelligence is designed to think like humans but to do it more efficiently than humans; if humans can enter data in a spreadsheet, an AI-fueled chatbot can do it even faster; humans can communicate with customers for customer service issues, but a robot could also do it and pull in a vast amount of data to add to the interaction.[2] One of the most powerful parts of AI is that it can learn and adapt as situations change. Instead of simply being programmed to answer certain questions with rote responses, the newest updates can pull in data about a customer, situation, or the latest research to provide a personalized response.[3] It’s a cost-effective way to personalize the experience and provide up-to-date information to customers.

22 | OCTOBER 2017

adjuster will investigate and decide how much the claim is worth. The customer then gets quotes for the repairs from multiple services, gets the work done, and sends the paperwork to the insurance company for payment or reimbursement.[4] In many cases, claims are still filed in paper form instead of taking advantage of basic technology like email or the internet. As the number of claims increases, such as the 2.6% increase from 2014 to 2016, the pipeline can get backlogged, making the process take much longer.[5] That isn’t for a lack of trying for upgrades by both customers and insurance agents; in many cases, they are the ones lobbying for change.

“In the insurance industry up and down the value chain, there are so many smart people, so much valuable data and a marketplace that is hungry for improvement—new products, services, and service strategies delivered through connected multiple channels,” said Donna Peeples, Chief Customer Officer at Pypestream. “There is a massive opportunity to improve the top-line, manage the middle-line, and deliver positive results to the bottom-line.”

Compared to other industries, insurance lags behind on its use of technology. The claims process is often very manual and depends on people and outdated, disparate systems. If someone is busy or on vacation, a claims request could sit still until the right person is back, without any backup plans in place.

These processes often exist to help the insurance companies with no regard to how it affects the customers. However, the outdated processes actually make it harder for agents and their companies by increasing the workload and forcing them to work with antiquated systems and frustrated customers. Nearly 80% of senior insurance executives recognize the importance of increasing claim automation as a top priority for the industry, but adoption has been slow for many companies.

> Blake Morgan is a customer experience keynote speaker, futurist and author of More Is More. For more on AI and how it can improve the customer experience of insurance please download her free ebook.

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TECHNOLOGY

WILL ROBOTS TAKE OVER THE INSURANCE INDUSTRY?

TECHNOLOGY

Robots already make our cars and one day soon will flip burgers at fast food restaurants. While the trend to automation has been mainly associated with the manufacturing sector, the financial services industry certainly isn’t immune. In fact, that’s the finding of a recent LinkedIn survey, which reports that nearly a quarter of fintech professionals fear automation will also cost them their job.

LinkedIn asked for my thoughts on what this means for the insurance industry. In short, I would say automation isn’t a future inevitability – it’s already here. And in our business, that’s a good thing. Think about it this way: If I’m a local florist, I’m working all the time. If I’m not serving customers, I’m placing orders, meeting with vendors and running all aspects of my business. I know that protecting my business and employees should be a priority, but spending time with an insurance agent to prepare a simple policy is pretty low on my list. The reality today is that a machine or algorithm can probably do a better job quickly producing a policy that meets my needs as a small business owner. It will certainly save me time that I can invest in growing my business.

For insurance professionals, this sounds scary. Like I’m suggesting we don’t need people to write policies. But that’s not true.

Insurance will always remain a people business. It’s just that these people will be doing different things.

In my opinion, the biggest need in our industry will be having people who know how to use this technology to better manage risk for our clients and can help them in a time of need. Our florist will not want to talk with a chatbot or algorithm if he is confused about a business-threatening claim.

Another consideration: we have strong and abundant data from auto accidents, which makes possible an almost exclusively datadriven model in auto insurance. By contrast, data on oil platform accidents is much less rich, so the expertise of the underwriter, along with data, is critical to properly underwrite the risk.

Complexity demands human involvement. Underwriting the risks facing a Fortune 200 or 250 company is complicated and constantly changing. A machine alone can’t do this, so there will always be a need for a skilled person and team at the table for these types of insurance deals.

24 | OCTOBER 2017

So what’s the impact this could have for AIG? Data can improve the work we do and make it more efficient.

And for companies like AIG, that means helping us to be better underwriters and risk managers.

Investment funds like Two Sigma use data intensive quant tools to gain insight about investment decisions, and insurance is no different. When applied to insurers, data-intensive processes – like those used in quant investing to learn everything about a stock – make underwriting better. In fact, just last week we announced that Seraina Macia will be joining AIG’s leadership team to lead the continued development of a technology-enabled platform that is bringing technology and data analytics to risk selection, pricing and claims-handling processes. I believe this will put us at the forefront of the industry.

But despite the opportunities that technology brings us, I recognize there is a human impact. Companies like AIG will always need insurance professionals, but the skillsets and knowledge required of those individuals will evolve over time as we move further into a data driven world. Our future workforce will be staffed with adaptive, tech savvy employees who welcome change, and will help us continually create the industry’s future.

By hiring the right people with the right skills, AIG will not only grow, but stay ahead of digital trends and innovations in the industry. The company will continue to attract top-notch talent, which will help propel us faster to the top of the insurance industry.

Insurance will continue to see and feel the impact of automation, but contrary to the fears of many, it will only make our business better, our customer relationships stronger and help us to attract the right talent for the future.

> Brian Duperreault, President and Chief Executive Officer at AIG

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TECHNOLOGY

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EMPLOYEE BENEFITS

HOW TO HARNESS THE POWER OF VALUE-ADDED BENEFITS As the busy fourth quarter approaches, small group brokers do not want to miss out on opportunities to offer cost-effective, value-added benefits to existing and new health insurance packages. Remembering to build these into your client’s plan options is a smart way to expand your book of business, while providing them with additional services their workers will value and appreciate.

In many instances, small businesses may be inclined to think of health insurance in the most basic terms. This typically translates into “standard” plans that cover baseline medical care such as doctor visits, prescription medications, tests and screenings, treatment services and the occasional trip to the emergency room.

Much of this limited thinking about health insurance tends to be cost-driven. An employer may believe that anything beyond medical coverage is out of reach. Even worse, he or she may not even know that viable options are available for consideration in the first place.

But, with a bit of initiative and a little education, brokers can turn this thinking around to the advantage of both their clients and themselves.

For those working with the right insurance carrier, provider or exchange, there are opportunities for businesses — including those with only a handful of employees — to beef up their health plan packages at affordable rates that involve minimal investment. This means employers can amp up packages to offer options such as dental, vision, life insurance and other ancillary benefits while maintaining profitability.

But, it is up to brokers to educate their small business clients about these types of offerings, WISCONSIN INDEPENDENT AGENT

and to help them understand reasonablypriced options are available. The brokers who can counsel their clients and help them set up these added benefits will earn trust and create win-win arrangements.

Jump-start the conversation Here are some of the ways brokers can benefit by jump-starting client conversations about value-added benefits now: New business prospecting: Providing access to additional products and services via existing benefit offerings is a great way to grow new lines of business. For example, bundling dental and life insurance into an existing benefits plan allows business owners to create a stronger package that employees are incentivized to participate in and more likely to value.

Business retention: Reminding clients there are additional products and services available at reasonable costs is a great way to make them happy — and happy customers stay with their agents. Remember to go beyond the more “common” value-adds. For instance, an employer might identify vision insurance as a “nice to have” feature and not even consider the possibility of a flexible spending account option. Brokers who are at-the-ready with available solutions clients may not be aware of can significantly increase their value as a trusted service provider.

Personalized service: Today’s adviser works in a world where customized service reigns supreme. This can include identifying personalized value-adds such as chiropractic and acupuncture options for employers and their workers. Working with a provider with a built-in perks program, where employees receive regular low-cost discounts to entertainment, local attractions and retailers, is a great way to personalize each and every benefit option. It also delights clients and their employees with different types of unexpected value-adds.

Without a doubt, brokers should keep valueadded options top-of-mind when designing tailored programs for small-group businesses looking for the most cost-effective benefits.

Those who work collaboratively with employers on programs that offer outside-thenorm benefits and perks will reap the business retention and growth rewards.

> Ron Goldstein, CLU, is president and CEO of CHOICE Administrators, which provides health and ancillary insurance options and provider access to small businesses and their employees.

OCTOBER 2017 | 27

MARKETING

HOW TO USE MICROSOFT SWAY

TO WOW YOUR CLIENTS

In the 80s, I convinced my father-in-law to spend some money on improving the quality and look of the policy binders we created and delivered to clients. Some of you know what I mean — the white notebooks with copies of a client’s paper policies along with a brief explanation. We paid to have custom tab dividers created for every major line of coverage as well as a custom printed cover that we could insert into the notebook.

In last week’s TechTips, I described a simple way to create an electronic policy binder using existing capabilities in most PDF software.

Because clients’ expectations of how information should be delivered are changing, PDF may not cut it anymore. You need to be exploring new options for presenting information (in proposals, coverage summaries, or newsletters) in an online multimedia environment.

Easily share by sending a link It is super easy to share and collaborate on a Sway. Others can see your creation on the web without signing up or downloading additional software. Sharing editing rights with others is also a snap. And you can change privacy settings for more control.

Simply use your Microsoft account to get started. Your Sways are synced through the cloud, making it easy to view and edit across your devices.

Experiment with Microsoft Sway That is why you should be testing Microsoft Sway as an option.

Sway is a free app from Microsoft Office. It lets you create and share interactive reports, presentations, personal stories, newsletters, vacation memories, school and work projects, and more. Microsoft Sway is a digital storytelling app that makes it quick and easy to create an engaging presentation. Simply add your content, and Sway will do the rest.

This link will open a Microsoft Sway explaining in more detail how it works. It will also allow you to experience how a Microsoft Sway can improve your communication options.

Microsoft Sway Ideas Following are some suggestions on Sways you might want to create:

a Agency capabilities brochure

Tell your story with interactive content Bring your story to life with interactive multimedia content. It is easy to add text to your images, or snap a picture and pull it right into Sway with your built-in camera. You can also add videos, maps, tweets, vines, interactive charts, graphs, and GIFs.

a Niche marketing information

See suggested search results based on your content Sway-suggested searches help you find relevant images, videos, tweets, and other content that you can drag and drop right into your creation.

No need to juggle apps and web pages to find what you want.

a Coverage explanations

Instantly transform your Microsoft Sway with great designs You do not need to worry about formatting because Sway’s built-in design engine takes care of it. If the first design is not right for you, click the Remix! Button to see other options or customize it to make it your own.

WISCONSIN INDEPENDENT AGENT

a How to file a claim a Convert any articles you have written to a Sway

a Proposals (I do understand this may not be worth the time yet) To create a Microsoft Sway account, go to https://sway. com or for Windows 10 users, download the Sway app.

> Steve Anderson loves technology and writing about it. Learn more at steveanderson.com.

OCTOBER 2017 | 29

ERRORS & OMISSIONS

GETTING WORKERS COMPENSATION COVERAGE RIGHT The year is 1910. The ponderous William Howard Taft is President, the Boy Scouts of America youth organization is incorporated, the first (unofficial) Father’s Day is observed, and the first workers compensation statute in the United States is enacted in New York, unleashing what would become a pivotal change in the U.S. insurance landscape.

Such statutes, now legislated in all 50 states and the District of Columbia, provide essential medical, disability, rehabilitation and death benefits for employees’ job related injuries and diseases, regardless of fault. Prior to the enactment of these statutes employers could assert a variety of defenses - e.g., contributory negligence and assumption of risk - to injured employees’ claims. The difficulty in overcoming such defenses resulted in a majority of injured employees going without compensation.

Workers Compensation statutes remove the employees ability to sue their employer in exchange for providing no fault protection and certain payment – but only if the statute applies.

It is essential that an agent procuring workers compensation coverage for a client know which persons and types of employment are covered by the applicable workers compensation statute. Some statutes exempt employers with employees under a specific number. Others exempt employers of a

certain type, e.g., farm labor and domestic workers. An agent’s knowledge regarding the type or classification of persons is essential to accurate reporting, in order to lessen or completely erase any additional premium that may be assessed after an audit.

Typically employers are not required to provide workers compensation insurance to contractors who receive a 1099 form at the end of the year. However, disputes frequently arise over whether a worker is an employee or an independent contractor. Employment status is a question of fact, not of law. Courts will decide the dispute on a case-by-case basis and consider a number of factors such as the duration of employment, the method of payment, the right to exercise control over the work, who supplies the tools and equipment necessary to complete tasks, and who sets the work schedule. Historically, the courts interpret the definition of employee broadly to err on the side of providing protection to injured workers.

Independent contractors may employ others. An insurance agent should remind his or her client to obtain proof of workers compensation insurance from the independent contractor for the independent contractor’s own employees. Injuries aside, the business that uses the contractor’s services may be found responsible for those workers. Similarly, the business’ workers compensation carrier may require it to pay premiums based on the cost of the subcontracted work.

Leased employees and temporary employees should also be considered by an insurance agent when procuring workers compensation coverage for a client, in order to avoid additional premium being assessed after audit. Temporary employees are hired for a short period of time during peak times or to replace employees on vacation or otherwise out of the office. The company providing the temporary employee usually provides workers compensation insurance. Leased employees, however, work continuously

This article is intended to be used for general informational purposes 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 specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained 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 advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders. Copyright 2010 Swiss Re America Holding Corporation

30 | OCTOBER 2017

WISCONSIN INDEPENDENT AGENT

ERRORS & OMISSIONS for the same business and are subject to control just like a regular employee. They are commonly referred to as ‘co-employees’ of the leasing contractor and the hiring contractor. In this type of arrangement a PEO (“professional employer organization”) typically is responsible for providing workers compensation coverage. However, in order to avoid a dispute after an audit, the classification of these types of persons should be discussed with the agency client, and the agent should document that discussion.

An actual E&O claim arose in the situation where the agency’s client had a written independent contractor agreement with the injured worker, but it was determined that the injured party was actually an employee of the agency’s client. The injured party sued the client, which in turn filed a lawsuit against the agency asserting a general negligence claim. The damages the agency client claimed, along with additional premium, included expenses and monetary

damages paid to the injured worker. The agency client also claimed business loss due to the entity, for whom the job was being completed at the time of the injury, cancelling a future contract with the agency client. The lost business claim significantly increased the settlement value of the case as it was claimed for the four years the cancelled contract would have been in effect.

This claim example highlights the possibility and likelihood that, if accurate information is not provided at the time of original application, the damages that may be claimed against the insurance agency are more than just the additional premium that will be assessed at audit.

President Taft keenly observed that, “Too many people don’t care what happens so long as it doesn’t happen to them.” Well, in the growing arena of agents E&O claims, it is increasing likely that, sooner or later, an E&O claim will happen to you. For that reason, it bears remembering what the Boy

Scouts have been preaching since 1910: ‘Be prepared.’

In the workers compensation context this means doing your homework and ensuring that the information reported on the application accurately describes the customer’s business operation.

This includes ensuring that persons are accurately classified as employees and that an accurate number of employees is reported. The misclassification of employees when determining class codes and the understatement of payroll at the time of application can cause additional premium to be assessed after an audit. Avoiding the shock of having an additional premium assessed after an audit will, in turn, facilitate the retention of agency customers – something we all care about.

> Cara Gates is an assistant vice president, claims specialist with Swiss Re Corporate Solutions and works out of the office in Overland Park, Kansas. Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas, a member of Swiss Re Corporate Solutions.

Arborist Construction Lumber Roofing Trucking Wholesale WISCONSIN INDEPENDENT AGENT

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OCTOBER 2017 | 31

2017 PRELICENSING CLASS SCHEDULE

Conducted at State Association Headquarters, IIAW prelicensing classes fulfill the study requirements for life, health, property and casualty. Full course materials — not just an outline — are included with registration. The classes are:

REGISTER AT IIAW.COM 2017 CLASS DATES

!Designed to help you pass your state licensing examination. !The quickest way to meet the Wisconsin education hours requirement. !Taught by experienced insurance professionals who know the business. !Conducted in a comfortable classroom with free parking. !Approved by the Office of the Commissioner of Insurance.

IIAW MEMBER PRICING: $340 - Pricing given for full class

registrations.

NON-MEMBER PRICING: $355

L IFE & A CCIDENT /H EALTH February 6-9

P ROPERTY & C ASUALTY February 20-23

March 6-9

March 27-30

April 3-6

April 17-20

May 15-18

May 22-25

June 5-8

June 19-22

July 10-13

July 24-27

August 7-10

August 21-24

September 11-14

September 25-28

October 9-12

October 23-26

November 6-9

November 13-16

Day 1 (Monday) 8:30 a.m. - 4:00 p.m. ($85) SECTION A: Principles of Insurance & General WI Ins. Law Ethics Day 2 (Tuesday) 8:30 a.m. - 4:00 p.m. ($90) SECTION B: Life Policies, Terms & Concepts Day 3 (Wednesday a.m.) 8:30 - 11:30 a.m. ($45) SECTION B: Life Policies, cont. & WI Life Insurance Law Day 3 (Wednesday p.m.) Noon - 4:00 p.m. ($45) SECTION B: Accident & Health Policies, Terms & Concepts Day 4 (Thursday) 8:30 a.m. - 4:00 p.m. ($90) SECTION B: Accident & Health, cont. & WI Health Insurance Law

December 4-7

December 11-14

Property & Casualty

You may also take individual classes.

DAILY SCHEDULE

Life & Accident/Health

Day 1 (Monday) 8:30 a.m. - 4:00 p.m. ($85) SECTION A: Principles of Insurance & General WI Ins. Law Ethics Day 2 (Tuesday) 8:30 a.m. - 4:00 p.m. ($90) SECTION B: Property Policies, Terms & Concepts CLASS SITE/DIRECTIONS The IIAW is located at 725 John Nolen Dr. in Madison, WI. Day 3 (Wednesday a.m.) 8:30 - 11:30 a.m. ($45) When traveling south on John Nolen, it’s the last driveway SECTION B: Property Policies, cont. & WI Property Insurance Law Day 3 (Wednesday p.m.) Noon - 4:00 p.m. ($45) before Highway 12/18 (Beltline). Located near the Alliant SECTION B: Casualty Policies, Terms & Concepts Energy Center and Sheraton Hotel.

Day 4 (Thursday) 8:30 a.m. - 4:00 p.m. ($90) INCLEMENT WEATHER SECTION B: Casualty Policies, cont. & WI Casualty Insurance Law If weather conditions are questionable, use your own judgment regarding your personal safety. If Madison public ! Please contact Katie@IIAW.com for information about multiple registration discounts. schools are closed, the IIAW is closed and prelicensing is canceled for the day. Canceled classes are made up on The course fee includes all class materials. Materials are Friday. distributed on the first day of class. You receive: HOTEL INFORMATION • The Life & Accident/Health or Prop. & Casualty Insurance Students requiring lodging will receive a special rate at the Study Manual.

Clarion Suites, 2110 Rimrock Rd. in Madison. Please call • The Intermediary’s Guide to Wisconsin Insurance Law. the hotel directly at 608.284.1234, and ask for the • The State of Wisconsin Ins. Licensing Candidate Handbook. independent insurance agent’s discount.

This provides all the necessary information to obtain a license.

To register, click the Education tab on IIAW.com. For Wisconsin exam info, visit prometric.com.

32 | OCTOBER 2017

WISCONSIN INDEPENDENT AGENT

ERRORS & OMISSIONS

PROCEED CAREFULLY IF YOU RECEIVE A SUBPOENA Over the past few years, we have seen an increase in the number of subpoenas served on insurance agents even if they are not a party to the litigation.

How those subpoenas are handled can mean the difference between whether or not they develop into E&O lawsuits. The purpose of this article is to instruct and inform you as to how to proceed should you ever be served with a subpoena in litigation wherein you are not a party to the lawsuit.

Any agency receiving a subpoena should proceed with caution. Though the caption on the subpoena does not list the agency as a party to the litigation, the fact remains that a legal proceeding is pending and it is not difficult for the lawsuit to be amended to add the agency as a party.

Sophisticated attorneys will often serve subpoenas in order to try and obtain documents or testimony that could help support a claim against your agency. For this reason, we suggest every agency should have procedures in effect as to exactly what must be done if it receives a nonparty subpoena.

An agency that receives a subpoena is legally obligated to comply with that subpoena, or it runs the risk of possibly being held in contempt of court, even if the subpoena is somehow defective. A subpoena cannot simply be ignored or disregarded. For this reason, Swiss Re Corporate Solutions always suggests that an attorney be involved to assist the agency in responding to any subpoena received. Often, a subpoena is defective because it fails to comply with the statutory requirements for service, or it requests information that is beyond what is permissible. If your agency responds without the assistance of counsel, it is possible that it will be complying with an improper subpoena and, thus, disclosing information that it is not required to be disclosed pursuant to state law.

In fact, responding to a defective or improper subpoena may result in an agency disclosing information that may be protected by state insurance regulations or Federal laws. Therefore, an agency that responds to a defective or improper subpoena puts itself at risk of facing a possible E&O claim, lawsuit, or possible regulatory action.

There are three types of subpoenas that an insurance agency and insurance agent might receive when the agent and agency are not parties to a lawsuit. One, a subpoena that demands documents and electronically stored information (“ESI”). It is important for you to be represented by a lawyer when you produce the documents and ESI. For example, the documents and ESI might contain financial information about the insured that is confidential and might not otherwise be something to which the party issuing the subpoena has a right to obtain.

The documents and ESI should be reviewed by your lawyer to ensure the proper documents and ESI are disclosed.

The second type of subpoena requires someone to appear at a deposition or trial to testify. Usually it is a deposition for a lawsuit involving one of your insurance customers. Again, it is important for an agent to be represented by a lawyer. The lawyer will review the pertinent materials with you and help prepare you for your testimony at the deposition. It is preferable to be prepared when you testify. It diminishes the chance the agency will be brought into the lawsuit as a party.

Moreover, a lawyer will attend the deposition with you to ensure the rules of court are followed and that your rights are protected. For example, the rules of court, depending upon the state, usually require the agency to be compensated for the work it performs producing the documents and compensation for an agent’s professional time spent attending a deposition. Your lawyer will negotiate the compensation with the attorney who served the subpoena on your agency.

The third type of subpoena is a combination: a subpoena that commands your agency to produce documents and commands a person from the agency to testify at a deposition. You should contact Swiss Re Corporate Solutions. We will assign an experienced lawyer to review the materials, prepare you for testifying, and to ensure the rules of court are followed.

Many E&O policies contain language that defines a “claim” or “potential claim” against the agency as including the receipt of a subpoena. For this reason, it is a good practice for every agency to review the language contained in its E&O policy related to subpoenas so that it understands the policy terms and provisions related thereto.

Our recommendation has always been that when an agency receives a subpoena it should immediately advise Swiss Re Corporate Solutions of the subpoena. For example, the language contained in the Swiss Re Corporate Solutions E&O policy, issued to MIIAB members through Agents Assistance Corporation, defines a claim as including the receipt of “a summons, a subpoena, or any other notice of legal process.” As such, an agency that receives a subpoena and responds to it on its own without notifying its E&O insurer runs the risk that it failed to report a claim in compliance with the terms of its E&O policy. This failure to provide notice to the insurer could potentially result in a disclaimer of coverage

by Swiss Re Corporate Solutions for any claim or lawsuit that may arise in connection with it.

Every insurance agency should make certain that it has an established procedure in effect concerning how it will deal with any subpoena it receives. It should also ensure the procedure is known and followed by all employees. As part of that procedure, there should be a method for notifying the E&O insurer for the agency about a subpoena it receives. If, after being notified about the subpoena, the E&O insurer declines to assign counsel to assist in responding to the subpoena, the agency should then consider whether it may be best to retain counsel on its own. By following these steps, the prudent insurance agency will be in a better position to avoid becoming a party to litigation related to a subpoena it receives. > Mark Shackelford, Senior Underwriter, Vice President Swiss Re Corporate Solutions

This article is intended to be used for general informational purposes 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 specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained 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 advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders. Copyright 2010 Swiss Re America Holding Corporation WISCONSIN INDEPENDENT AGENT

OCTOBER 2017 | 33

VIRTUAL UNIVERSITY

ASK AN EXPERT

The Virtual University’s Ask An Expert (AAE) service may be our best known member benefit. Daily we receive questions from members wanting help with denied claims, coverage and procedural issues, and agency management concerns. Our faculty includes some of the

nation’s foremost leading experts in the insurance industry. These volunteer faculty members generally charge for the time they give to our members. Think about that, the insight you get through our AAE service costs nonmembers THOUSANDS!

We had a staff meeting this morning, and the subject of gift cards came up. Since they are increasingly popular, we were concerned about coverage. Is there any coverage under the Homeowners’ Policy if they are lost or stolen, etc.? These days, a person could easily have several hundred dollars worth of cards after Christmas, birthdays, graduation or a wedding?

Great question! The ISO Homeowners Policy (both 2011 and 2000 editions) treats gift cards the same as cash, providing just $200 in the aggregate — meaning that’s the total amount of coverage for all items in that category (see excerpt below), no matter how many cards an insured had. In addition, cards that are “lost” would not be covered at all, since the perils that apply to Coverage C are named perils only, unless an insured has the HO 00 05. Note also that while cash and every other type of property in that category is subject to the Section I deductible, the deductible is subtracted from the loss to covered property, and never to an internal limit (such as the $200 cash limit).

For example, if the insured suffered a covered loss to $1,000 worth of gift cards, the $500 HO deductible (if that is the deductible used) would be subtracted from the $1,000 loss, then payment is subject to the $200 limitation (which can be increased).

While gift cards have been around for several years, it wasn’t until the HO-2000 edition of the Homeowners Policy that ISO included language addressing how they were covered under the policy. In the HO-2011 and HO-2000 editions, they are referred to as “stored value cards,” and not “gift cards” – see excerpt below.

However, in the previous 1991 edition, since gift cards were not specifically mentioned, there was some confusion between coverage

for gift cards vs. credit cards, which were covered for $500, with no deductible. While most authorities assumed that gift cards should be treated as cash, the HO 00 03 04 91 edition policy provided no specific guidance on that point.

Here is the relevant excerpt from the HO-2011 and HO-2000 editions of the HO 00 03: C. Coverage C – Personal Property 3. Special Limits Of Liability The special limit for each category shown below is the total limit for each loss for all property in that category. These special limits do not increase the Coverage C limit of liability. a. $200 on money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart cards.

Lastly, under ISO rules, the $200 limit on cash and similar items of property (including stored value cards) can be increased up to $1,000 in the HO-3, using endorsement HO 04 65 Coverage C Increased Special Limits of Liability. (Use the HO 04 66 with an HO-5.) Also, check with your individual markets to see if they adopted this optional coverage.

What is the best process to train the Agency staff on binding authority with each appointed carrier? Should every Agent have a copy of the agency agreement or is there a better method? > Make use of a notebook containing clearly explained guidelines outlining the procedures, market positions and appetite of each carrier.

Discuss this at meetings with agency personnel. Young or newer agency personnel must have the CL or PL manager consent to bind anything during the learning process. > Add each carrier’s binding authority to your agency management system so everyone can access them anytime. You’ll need to keep it up to date. Regardless, every licensed person in your agency should be trained on the binding authority of every carrier. Violation of binding authority is a common claim carriers make against agencies. > Summarizing authority into an Excel spreadsheet everyone can access would be easiest.

> I truly believe, and many E & O programs preach, that every staff member should read through each agreement as there are specifics to each job function. For your particular question, management should create, monitor and update these items and prepare a quick cheat sheet for all staff members to review when writing, reviewing and updating coverage. > In my humble opinion as an E&O instructor, the agency should have a manual or an intranet page that spells out the binding authority for every company they represent. Every employee should be trained and have a copy of the manual for reference. When changes are made, all employees should be immediately notified and the manual page for that company > Chris Boggs, Executive Director of the Independent Insurance Agents revised. and Brokers of America (Big “I”) Virtual University.

The Virtual University is a Big “I” members-only resource. Many articles are based on real-life questions received by the Ask an Expert service. This service ensures that the information is current and topical. Go to www.independentagent. com/Education/VU/. You will need to login with your IIABA username and password before using the VU. The IIABA does not assume and has no responsibility for liability or damage which may result from the use of any of this information.

34 | OCTOBER 2017

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CONTINUING EDUCATION

IIAW IN-PERSON CLASSES

E&O Risk Management: How to Manage Changing Risks and Opportunities – Lunch provided!

6 CE Credits Approved Date: November 28, 2017 Location: IIAW State Headquarters Time: 9:00 AM – 3:00 PM

ABEN ONLINE CE CLASSES Ethics in Today’s Changing Times 4 CE Credits Approved Date: October 19, 2017 Location: ABEN Online – iiaw.aben.tv Time: 2:00 PM – 6:00 PM Insuring Condominiums 2 CE Credits Approved Date: October 17, 2017 Location: ABEN Online – iiaw.aben.tv Time: 9:00 AM – 11:00 AM CDT Certificates of Insurance – Emerging Issues and Other Stuff that May Scare You! 3 CE Credits Approved Date: October 11, 2017 Location: ABEN Online – iiaw.aben.tv Time: 10:00 AM – 1:00 PM Cyber Gaps, UASs and TNCs 3 CE Credits Approved Date: October 17, 2017 Location: ABEN Online – iiaw.aben.tv Time: 9:00 AM – 12:00 PM E&O Risk Management: Meeting the Challenge of Change 6 CE Credits Approved Date: October 19, 2017 Location: ABEN Online – iiaw.aben.tv Time: 9:00 AM – 3:45 PM

IIAW ONLINE CE CLASSES E&O: Roadmap to Policy Analysis, Part 1 3 CE Credits Approved Date: October 17, 2017 Location: IIAW Webinar – iiaw.com/events Time: 8:00 AM – 11:00 AM OR 4:00 PM – 7:00 PM E&O: Roadmap to Policy Analysis, Part 2 3 CE Credits Approved Date: October 17, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM Top 10 Countdown of Personal Lines Coverages & Current Issues 3 CE Credits Approved Date: October 19, 2017 Location: IIAW Webinar – iiaw.com/events Time: 8:00 AM – 11:00 AM Ethics & the Law 3 CE Credits Approved Date: October 23, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM Insuring Toys & Collectibles 3 CE Credits Approved Date: October 24, 2017 Location: IIAW Webinar – iiaw.com/events Time: 8:00 AM – 11:00 AM Ethics & Agent Liability 3 CE Credits Approved Date: September 27, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM

Farm Property Coverages 3 CE Credits Approved Date: October 25, 2017 Location: IIAW Webinar – iiaw.com/events Commercial Property Endorsements that Can Make Time: 12:00 PM – 3:00 PM You Money!

Life & Health Solutions for Business 2 CE Credits Approved Challenges Date: November 7, 2017 3 CE Credits Approved Location: ABEN Online – iiaw.aben.tv Date: October 26, 2017 Time: 9:00 AM – 11:00 AM Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM

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AGENCY MANAGEMENT

4 STAGES TO MOVE YOUR AGENCY FROM MAINTENANCE TO MULTIPLICATION We need true insurance leadership now more than ever in the insurance industry.

Why is leadership so vital? Our clients need us at our best. Our communities need us at our best. Our organizations need us at our best.

To be at our best, we must know how to lead ourselves so that we can lead others.

Leadership is often discussed but rarely understood. For many years of my professional career, I didn’t fully grasp the importance of leadership…..mainly because I didn’t fully understand it.

From 2000–2015, I worked as a commercial property and casualty producer for two large midwest insurance agencies. In 2003, I began to first understand the importance of personal growth and development, but it was many years after that before I realized that I was more than an insurance agent….I was a leader.

I firmly believed that the only way to be a leader was to pay someone’s salary. Leadership in my mind was a position that was appointed or awarded. A leader had power, prestige, and lots of money. As a young insurance agent, I felt that had none of those things.

Therefore, I didn’t spend any time learning about leadership or developing myself as a leader. Looking back, I realize that was a terrible mistake. However, several years ago, I read a description of leadership that I had never heard before and it completely changed my way of thinking. It came from my current mentor and #1 leadership expert, John Maxwell. He said, “Leadership is influence, nothing more nothing less.”

One of the most influential leaders in modern history is the Mother Theresa. Mother Theresa was truly a humble servant and did not hold a lofty title or position. However, she was someone who demonstrated that leadership is influence, nothing more, nothing less. When Mother Theresa spoke, others listened. That is the sign of a true leader.

Level 1: Modeling I have four children (#5 is on the way) and there is no doubt that children are influenced WISCONSIN INDEPENDENT AGENT

by what they see more than by what they hear.

Modeling begins by living a life of integrity.

Integrity is the quality most needed to succeed in business. As my mentor states, “Integrity commits itself to character over personal gain, to people over things, the service over power, the principle over convenience, to the long view over the immediate.”

Without integrity, there is no trust and without trust you have nothing.

Trust is the single most important factor in personal and professional relationships. It is the glue that holds people together and the key to becoming a person of influence.

It’s easy to get caught up in looking good or saying the right thing, but if you really want to start to become a person of influence and lead with authority, you must walk the walk. That starts with modeling.

Level 2: Motivating Being a motivational influencer means that you encourage people and communicate with them on an emotional level. Motivating is the next step of influence after modeling.

Modeling can be done from a distance, but motivation is about getting closer so you can really make a significant impact on the lives of others.

Effective motivating comes through nurturing, listening, and understanding the people you want to influence. Think of people who have motivated you throughout your life.

There is not doubt that these people made a long lasting impression.

Level 3: Mentoring I have had several mentors in my life. Some have come from books and audio recordings, others from those I worked with, and others mentors I have paid so that I could grow and learn from them.

Mentoring is pouring your life into other people and helping the reach their potential.

When you successfully mentor someone, you can see first-hand the impact you are making

to help them achieve the results they want.

To be a high-level mentor, you must learn the enlarge people, become a navigator, connect, and empower others to be at their best.

Level 4: Multiplying This is the highest level of influence and I believe is the most needed in the insurance industry today. Many insurance agencies are being bought out or are simply stagnant because they have not invested the time or energy into developing others.

To be a true leader, you must grow others while you grow yourself. Average organizations gain followers, while great organizations grow leaders.

Everyone has the ability to get to this fourth level of influence, but it requires unselfishness, generosity, and commitment.

Studies have shown that 85% of leaders produce followers, 10% of leaders produce leaders, but only 5% of leaders reproduce leaders.

It’s easier get somewhere first, but more significant when you bring someone along with you.

There is a significant power in multiplication.

When you reproduce leaders you raise your influence to a new level, you raise your new leaders’ personal potential, you multiply your resources, and you ensure a positive future for your organization.

Bottom Line: We influence someone every day of our lives.

Is your influence positive or negative? There is no neutral. You are either adding emotional deposits into others lives or you are making withdrawals.

Leadership is one thing…..influence.

It doesn’t matter if you are influencing your team, your clients, or your community; you have the ability and responsibility to become a person of “positive” influence in the lives of others. > Brent Kelly, Executive Coach- Sitkins Group

OCTOBER 2017 | 37

7 REASONS WHY EMOTIONAL INTELLIGENCE IS ONE OF THE FASTESTGROWING JOB SKILLS According to the World Economic Forum’s Future of Jobs Report, emotional intelligence will be one of the top 10 job skills in 2020.

The awareness that emotional intelligence is an important job skill, in some cases even surpassing technical ability, has been growing in recent years. In a 2011 Career Builder Survey of more than 2,600 hiring managers and human resource professionals, 71% stated they valued emotional intelligence in an employee over IQ; 75% said they were more likely to promote a highly emotionally intelligent worker; and 59% claimed they’d pass up a candidate with a high IQ but low emotional intelligence.

The question, then, is why companies are putting such a high premium on emotional intelligence. Here are seven of the top reasons why highly emotionally intelligent candidates are so valuable.

1. They can handle pressure healthily Dealing with workplace pressures and functioning well under stress demands an ability to manage our emotions. People with higher levels of emotional intelligence are more aware of their internal thermometer and therefore better able to manage their stress levels. They tend to have better-developed coping mechanisms and healthy support systems that keep working effectively even in tough situations. The increasing rate of change in the workplace is likely to increase workrelated stress and boost the value of those who can manage it.

2. They understand and cooperate with others People with highly developed emotional intelligence are less defensive and more open to feedback, especially when it involves areas of improvement.

As teamwork becomes increasingly important in the workplace, people who are able to understand and get along with others will

38 | OCTOBER 2017

become ever more sought after. Highly emotionally intelligent people have welldeveloped people skills that let them build relationships with a diverse range of people across many cultures and backgrounds. That’s an asset in an increasingly globalized workplace.

3. They’re good listeners Everyone wants to be heard and understood.

The ability to listen well and respond to others is crucial for developing strong working relationships. Many of us, though, aren’t as good as we could be at really listening to what others are saying. Because of their ability to understand others, highly emotionally intelligent people are in a better position to put their own emotions and desires aside and take others into account. Their ability to pick up on people’s emotions, through tone of voice and body language, come in handy in team settings.

4. They’re more open to feedback Open, timely, and honest feedback is essential to job performance–especially at a time when annual performance reviews are in decline.

People with highly developed emotional intelligence are less defensive and more open to feedback, especially when it involves areas of improvement. Their high level of self-regard lets them look positively at areas where they can do better, rather than taking feedback personally.

5. They’re empathetic Highly emotionally intelligent people are in a better position to put their own emotions and desires aside and take others’ into account.

Collaboration doesn’t just present logistical issues–it also comes down to responding to teammates’ feelings. People with high emotional intelligence are able to use their sensitivity to where others are coming from to build trust and cohesiveness. This allows teams

to focus on the task at hand rather than become embroiled in internal bickering and politics.

Their sensitivity to the needs of others acts as a lubricant that helps team members work together.

6. They set an example for others to follow Highly emotionally intelligent people don’t get easily flustered when things don’t go according to plan. And their knack for getting along with others makes it more likely that others will take note and try to emulate them. That’s why high emotional intelligence is a key to influencing people in an organization regardless of official title. An ability to rise above daily irritations earns people with high emotional intelligence the respect from those above them as well as from their colleagues.

7. They make more thoughtful and thorough decisions Because of their ability to see things clearly from another’s point of view, highly emotionally intelligent people are able to make better judgements about how their decisions will impact others. Not only does this result in better decision making overall, but it also helps manage damage control when certain decisions lead to negative consequences. Being able to judge the outcomes of their choices lets highly emotionally intelligent people behave more proactively.

People who show an enhanced ability to adapt to change, manage their emotions, and work well with a diverse range of people are already valuable in most workplaces. But with the rates of change and pressures in the workplace rising, they’ll become even more sought after than ever. > Harvey Deutschendorf is an emotional intelligence expert, author and speaker. To take the EI Quiz go to theotherkindofsmart.com.

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GOVERNMENT AFFAIRS

STATE ADVISORY PANEL RECOMMENDS FEE SCHEDULE TO

CONTAIN MEDICAL COSTS

The Worker’s Compensation Advisory Council (WCAC), a statutory panel comprised of an equal number of management and labor representatives, is again recommending legislation as part of the 2017-18 Agreed Upon bill to get worker’s compensation medical costs under control.

The package of recommendations from the council is expected to be forwarded to the legislature in the coming weeks for consideration.

As a product of the WCAC negotiations, the plan has the support of many employers and organized labor. A key component to the package is the implementation of a medical fee schedule to bring worker’s compensation costs in line with group health costs. Beyond dealing with medical costs, the Agreed Upon bill also recommends benefit increases for injured workers aligned with wage growth, as well as reforms aimed at stemming opioid addiction by injured workers. A broad coalition of more than 20 organizations, led by Wisconsin Manufacturers and Commerce (WMC), is supporting efforts to enact a fee schedule.

Wisconsin Worker’s Compensation medical costs are uncompetitive and in need of reform. According to a Workers Compensation Research Institute (WCRI) study, medical costs in Wisconsin for worker’s compensation are higher than in most other states. In the most recent year they studied, WCRI found costs in Wisconsin to be 47% higher than the national median. Looking only at serious injuries that required a week off of work, medical costs were 60% higher than the median. Adding fuel to the fire, WCRI finds that medical costs increase faster year over year in Wisconsin than in other states. Compared to group health, identical procedures often cost two to three times more if paid under worker’s compensation.

What does this mean for your business clients? If an employer is self-insured, it means they see the difference when they pay medical bills for injured workers. For employers that WISCONSIN INDEPENDENT AGENT

carry worker’s compensation insurance, 2.5% but no higher than 10%. 5) The fee the high prices are rolled into worker’s schedule shall be in place by January 1, 2019. compensation insurance rates, keeping IIAW supports the WCAC Agreed Upon bill those rates higher than they otherwise recommendations, including the fee schedule should be. Despite declining worker’s provision, because it is a tested reform that compensation rates over the past few years, almost every other state effectively uses to keep employers are paying inflated prices primarily costs in check. If enacted by lawmakers, the due to high medical costs. fee schedule will help reduce medical costs and What can be done about these high costs? give Wisconsin one more area where we can Employers, working in conjunction with the be competitive for employers. The issue isn’t insurance industry, have been attempting going to be an easy one for lawmakers, but to control costs by reducing injuries for the you can help by contacting your state senator last several decades. Investments into risk and state representative to voice your support. management, safety programs and procedures To find your legislators, go to http://legis. have been successful. Injuries have fallen wisconsin.gov and enter in your address. statewide from 219,975 in 1994 to 93,228 in It’s time for Wisconsin to stop leading the 2014. Still, overall costs have gone up because nation as one of the most expensive states for of exorbitant medical prices. And those costs worker’s compensation medical costs. in Wisconsin are higher primarily because we don’t have a meaningful cost control Wisconsin Worker’s Compensation mechanism. Forty-four states control costs with Medical Costs At A Glance a medical fee schedule that has proven to be an > Wisconsin is the most expensive state for effective way to hold down costs. The WCAC worker’s compensation medical payments proposed fee schedule that would 1) Require DWD to develop a medical fee schedule that a 60% above median for 2014/15 for injuries with at approximates the average negotiated price of least 7 days lost time group health in Wisconsin. 2) In developing the fee schedule, the Department of Workforce a 47% above median for 2014/15 for all injuries Development (DWD) shall utilize available data sources, including surveying self-insured a 39% above median for injuries with at least 7 days employers to request price data by CMS CPT lost time codes. 3) Annually thereafter, the fee schedule shall be adjusted by an amount equal to > Wisconsin has the highest hospital and nonmedical inflation. The department shall repeat hospital outpatient payments per claim the data collection and analysis in order to reset the medical fee schedule rates every ten > Wisconsin has the most expensive nonyears. 4) The fee schedule shall include a 2.5% hospital prices increase above the DWD-determined average negotiated group health price to reimburse > Wisconsin has the most expensive outpatient medical providers for administrative expenses claim payments associated with worker’s compensation claims, unless providers bring data forward to DWD CONTINUED ON PAGE 45 that proves the amount of uncompensated administrative expenses associated with > Wes Bisset, Senior Counsel, Government Affairs for the Independent Insurance Agents and Brokers of America. worker’s compensation claims is higher than

OCTOBER 2017 | 41

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COMMENTARY FROM COUNSEL

SEVENTH CIRCUIT ISSUES DECISION ON THE SCOPE OF THE INTEGRATED-SYSTEM RULE IN INSURANCE COVERAGE On August 8, 2017 the Seventh Circuit Court of Appeals issued a decision clarifying the scope of the integrated-system rule in the insurance coverage context. The integrated-system rule is a component of the economic loss doctrine—a legal principle that limits a contracting party’s damages stemming from product failure to those provided for under the parties’ agreement.

The economic loss doctrine operates to bar most tort claims (like negligence and strict liability claims) when breach of an agreement results in damage or harm to a product which was purchased pursuant to the terms of the agreement but does not otherwise cause personal injury or damage to other property.

When a defective product is part of an integrated system and the product’s failure causes damage to the rest of the system, the

relevant recent decisions that led up to the Kolbe decision, and summarizes the decision and its implications.

damage is considered damage to the product itself (not damage to other property) and the economic loss doctrine applies to limit recovery to the remedies provided for in the contract. Because the standard definition of “property damage” in a commercial general liability (CGL) policy excludes damage to other property caused by a defect in the insured’s product, the Wisconsin Supreme Court has applied the integrated-system rule to find no coverage for damage to an integrated system caused by damage to the product itself.

Haley et al. v. Kolbe & Kolbe Millwork Co. et al. is a class action lawsuit brought in federal court in Wisconsin by several homeowners against a window manufacturer for losses sustained when the windows they purchased failed and caused damage to their homes. The insurers of the window manufacturer denied coverage for the lawsuit, asserting that the damage to the homes was damage to the insureds’ own property, which was excluded from coverage, because the windows and the homes formed an integrated system. The district court agreed with the insurers and dismissed them from the case but, on appeal, the Seventh Circuit reversed the decision and questioned the application of the integrated-system rule in the insurance context. This article explains the basic framework of the economic loss doctrine and its integrated-system rule, discusses the

designed to preserve the traditional distinction between contract and tort claims by allowing contracting parties to recover only those remedies provided in the contract in the event that one party breaches the agreement.

The purpose of the doctrine is simple: the law presumes that contracting parties bargained for the terms in their agreement and, if one party breaches the agreement, the party damaged by the breach is entitled to recover the amount of their economic losses— typically their actual damages. The doctrine protects against the possibility that one party will secure a windfall solely because another party breached an agreement and the contract/ tort distinction incentivizes commercial purchasers to analyze (and bargain for) the risk of economic loss by assuming it, allocating it elsewhere, or insuring against it.

WISCONSIN INDEPENDENT AGENT

The Economic Loss Doctrine The economic loss doctrine is a common law rule developed and adopted by the majority of states which bars recovery in tort for strictly economic losses arising out of or related to the breach of a contract. The doctrine is

The Integrated-System Rule and the Pharmacal Decision The integrated-system rule extends the economic loss doctrine’s protection against tort claims to circumstances where a defective product causes injury to the system in which it is integrated. The Wisconsin Supreme Court has ruled that, when the product or system is deemed to be an “integrated whole,” courts treat damage to the system as harm to the product itself—and not to “other property”—

such that the economic loss doctrine bars tort recovery for the damage to the rest of the system.

The Wisconsin Supreme Court recently extended the integrated-system rule to the insurance coverage context with its 2016 decision in Wisconsin Pharmacal Co., LLC v. Nebraska Cultures of California, Inc., et al.

In Wisconsin Pharmacal, an insured was sued after it supplied a faulty ingredient which was incorporated into probiotic supplements, causing the supplements to be deemed defective. The retail supplier of the supplements sought to recover damages arising from the recall of the supplements.

The insured filed a claim with its insurers who denied coverage because the CGL policies at issue exclude coverage for damage to “property other than to the product or completed work itself.” The insurers asserted that the supplements were an integrated system and, therefore, the damage to the faulty ingredient was damage to the product itself (not damage to other property). The Court sided with the insurers, ruling that the damage to the supplements was damage to the faulty ingredient itself because the supplements were an integrated system.

Haley, et al. v. Kolbe & Kolbe Millwork Co., et al.

Several homeowners filed a federal class action lawsuit against window manufacturer Kolbe & Kolbe Millwork Co. (and its insurers) alleging that defects in the windows purchased from the company resulted in property damage to their homes. Two general categories of damages were asserted—direct losses suffered as a result of CONTINUED ON PAGE 45

> CJosh Johanningmeier is the IIAW’s General Counsel.

Call the Legal Services Hotline at (877) 236-1669.

OCTOBER 2017 | 43

News Members in the

Genuine motivation leads “World’s Greatest!” to feature SECURA Insurance

SECURA Insurance was featured on the television show “World’s Greatest!...” recognizing the company for its workplace culture. The segment premiered Monday, Sept. 18, 2017 on DIRECTV channel 305 and Dish Network channel 250.

How2Media, the producers of the “World’s Greatest!” series, produces informative and educational 30-minute TV shows for cable television focusing on businesses that have a “story behind the story.” Each episode highlights the world’s greatest companies, products, places, and people.

The media company chose SECURA after extensive research of workplace cultures in many companies from a variety of industries.

Producers of the show shared they were inspired by the company’s commitment to the employee motto—“Be real. Earn it. Have fun.”—as well as many of its unique benefits and services available to employees.

This is the first time this show has highlighted a business for its workplace culture.

Coined by President & CEO Dave Gross a few years ago, this motto still resonates with employees today. He said, “In a world in which so many decisions are driven by profit margins and stock earnings, it’s important to carve your own path to success. Our challenge is to be authentic, work hard to win and retain business, and enjoy the time we spend together as we exceed our agents’ and policyholders’ expectations.”

The company was founded as a mutual insurance company in 1900.

Gross said, “Mutuality means that we’re all in this together. It’s what motivates us at SECURA. We still hold true to that philosophy today, and it makes us inherently different from a stock company because we measure success by our ability to serve and protect our policyholders.

We don’t have stockholders to impress with quarterly earnings. Instead, we have stakeholders – our employees, policyholders, independent agency partners, and community – and we make decisions that are in their best interest.”

Employees at all levels of the company share in this vision of mutual success. Commercial Lines Underwriting Supervisor Betsy VanZeeland took part in the World’s Greatest segment saying, “SECURA is so unique and amazing as an insurance company, and it’s really based on the dynamic work environment we have here. We treat each other as we want to be treated. It keeps us engaged and inspired to do the best we can for our agents and policyholders.”

The company’s 2017 Workplace Strength Survey reported an overall employee satisfaction rating of 97 percent. One hundred percent of participating employees agreed with the statement, “I feel my core values align with SECURA’s mission, vision, culture, and the work I do.”

SECURA is certified by Great Place to Work® and was ranked on three of Fortune’s lists including 100 Best Medium Workplaces, 100 Best Workplaces for Women, and 30 Best Workplaces for Financial

44 | OCTOBER 2017

Services and Insurance. It also was awarded The Wellness Council of America (WELCOA) highest level Platinum Well Workplace Award, ranking it as one of America’s healthiest companies.

A strong employee culture has led to financial success for SECURA. The company is in Ward’s 50 top-performing property and casualty insurers, and has earned an A (Excellent) financial strength rating from A.M. Best.

Ansay & Associates Names New Chief Operating Officer Ansay & Associates, a leading regional insurance and benefits solutions agency, announced it will hire Tim Nelligan as its Chief Operating Officer, effective Sept. 1. Nelligan has over 30 years of insurance industry experience, most recently as Central Division Executive at The Hartford Insurance Group.

“With Tim’s leadership and our strong team of associates, we will continue to distinguish ourselves in the marketplace,” said Ansay & Associates Chairman & CEO Mike Ansay. “Our mission hasn’t changed: We’ll continue to provide exceptional service and innovative solutions to our carriers and clients.”

Nelligan’s expertise is in developing carrier partnerships and customer service solutions. That’s expected to continue in his new role with Ansay & Associates.

“I’m excited to get to know the associates who make Ansay & Associates a best-in-class agency,” Nelligan said. “We’ll continue to develop our people and our processes, with our goal to provide great value and peerless customer service.”

Nelligan replaces outgoing COO Tom Schaetz, who is resigning to pursue other opportunities. He had been in the position since 2005. Schaetz will remain on the executive team to ensure a successful transition leading up to his last day on Aug. 31.

Best Place to Work 2017!

The Milwaukee Business Journal held a luncheon on August 18, celebrating the nominees and recipients of their “Best Places To Work” awards. The event was held in the Chrome Room at the Harley Davidson Museum in Downtown Milwaukee. Festivities began at 11:30 with networking and lunch was served promptly at Noon with a Welcome from the Publisher. The Starr Group, along with nearly 200 others were there to celebrate being named one of the Best Places To Work. This year, The Starr Group was ranked highest in the Microsmall category (10-24 employees) with an overall score of 95.97.

2017 marks the third year in a row that The Starr Group has applied for this award. In 2015, the agency placed 5th in their category with a score of 95.71.

Last year, they placed First in their category and second overall with a score of 96.86. This year, the agency tied for the top spot overall with Titus Talent Strategies.

New Retail Specialist Brings Extensive Experience to Acuity Aaron Stamm joins Acuity Insurance as Mercantile Business Segment Specialist. He brings almost 30 years of retail experience to Acuity in diverse areas including loss control, sales, training and operations. Aaron has held various positions in management as well as working the sales floor.

“Aaron is an experienced, knowledgeable resource for our retail customers and independent agents who focus on the mercantile sector,” said Ben Salzmann, Acuity President and CEO. “Hiring a dedicated Mercantile Business Segment Specialist also reflects Acuity’s commitment to meeting the insurance and risk management needs of retailers throughout our operating territory.”

A resident of Franklin, Wisconsin, Aaron earned a bachelor’s degree in organizational communications from UW-Eau Claire.

WISCONSIN INDEPENDENT AGENT

Three insurance executives to launch new employee benefits firm The owners of Delafield-based Midwest Insurance Group are partnering with longtime insurance industry executive Jim Mueller to create a new employee benefits firm, Midwest Insurance Benefits LLC. Jeremy Cardenas and Troy Peterson, principals of Midwest Insurance Group, are launching the new company with Mueller, president and chief executive officer of Waukesha-based employee benefits consulting firm mueller QAAS LLC and former president of Zywave and Frank F. Haack and Associates.

The new firm will allow Midwest Insurance Group, a property and casualty brokerage, to expand its services to its approximately 800 clients throughout the Midwest.

“Their expertise is in property-casualty; my 35 years are in the benefits arena,” Mueller said. “…So I’m coming in as a partner to help expand their portfolio in the benefits area and they will be using our staff here at mueller QAAS to service the clients and give them the most objective

advice in the community. It’s a natural fit.”

Jon Krawczyk has joined Midwest Insurance Benefits as vice president of employee benefits after 15 years as a consultant with Marsh & McLennan Agency of Wisconsin.

“We are excited to be able to offer expanded and more comprehensive benefits solutions through the combined leadership of two longtime industry leaders like Jon and Jim,” Cardenas said. “It’s rare to have two guys with this much experience in the benefits industry to come together and form a company that can offer the kind of employee benefits solutions to employers who have been underserved and presented the same solutions repackaged and relabeled for so long.”

The new firm is the seventh company Mueller has been involved with owning. Collectively, Mueller said, those ventures have created 1,000 jobs.

“I think this is going to be another platform to create a number of jobs,” Mueller said. “My next goal is 1,500.”

STATE ADVISORY PANEL RECOMMENDS FEE SCHEDULE TO CONTAIN MEDICAL COSTS CONTINUED FROM PAGE 41

> Wisconsin has the fastest growth of medical costs in the nation

> 44 states have a medical fee schedule for worker’s compensation

> Medical payments are the key driver of overall Wisconsin cost growth 2009-2015

> Wisconsin has a significant difference between group health prices and worker’s compensation prices, even for identical procedures: a Knee Arthroscopy costs 237% more under worker’s compensation

> States without a fee schedule typically are the most expensive states

> On a per claim basis, medical costs have gone up 450% since 1994

> Workplace injuries have fallen dramatically in Wisconsin from 219,975 claims in 1994 to 93,228 claims in 2014

> Higher medical payments are offset by lower indemnity payments and expenses a Medical 39% above average

a S houlder Arthroscopy costs 221% more under worker’s compensation a R otator Cuff repair costs 180% more under worker’s compensation

> Medical costs in Wisconsin for worker’s compensation have risen from $314 million annually to $648 million annually from 1994 to 2014 despite significant reduction in claims

a Indemnity 35% below average a Overall cost per claim 3% below average

SEVENTH CIRCUIT ISSUES DECISION ON THE SCOPE OF THE INTEGRATED-SYSTEM RULE IN INSURANCE COVERAGE CONTINUED FROM PAGE 43

defects in the window products and indirect losses from damage to the plaintiff’s homes (like stained walls and buckled plaster). The manufacturer tendered the defense of the defective-product claims to several insurance companies, two of which obtained permission to intervene in the case. The intervening insurers argued that the policies did not cover the direct cost of replacing any faulty windows because the policies did not cover damage to the manufacturer’s own product when the source of the damage was a problem with the product itself. Further, the insurers argued that the policies did not apply to any indirect or consequential injuries to the plaintiffs’ homes because the windows formed an integrated system with the houses and, therefore, the entire house should be treated as the manufacturer’s product for insurance coverage purposes. Ultimately, the district court agreed WISCONSIN INDEPENDENT AGENT

that the policies did not provide coverage for either the direct or the indirect damages alleged in the complaint.

The Seventh Circuit rejected the notion that the windows and the homes in which they were installed formed an integrated system. The Court noted that, unlike in Pharmacal where the Plaintiff sought reimbursement for the loss of the entire supplements, the homeowners were requesting compensation for the repair or replacement of individual components of their homes. The homeowners’ more specific demands, in the Court’s view, mandated a different result. The Seventh Circuit further ruled that the policies’ definition of “your product” was ambiguous and construed the definition in favor of coverage such that the “your product” exclusion did not eliminate coverage for the plaintiffs’ claims.

Conclusion The Seventh Circuit’s decision in Haley, et al. v. Kolbe & Kolbe Millwork Co., et al. suggests that the federal appellate court is highly skeptical of the notion that the integrated system analysis is required in every case in which a defective product causes damage to something other than itself. The ruling emphasized that the question of whether an insurance policy covers a particular claim depends on the nature of the plaintiff’s alleged loss. The Haley decision serves as an important reminder of the need to understand the businesses of your insureds, including whether they sell products which are incorporated with other products.

The scope of the integrated-system rule is likely to remain an issue in insurance coverage cases in the future. Stay tuned for future updates.

OCTOBER 2017 | 45

FOOD FOR THOUGHT

SECURITY COMPANY IS REPLACING A MALL ROBOT THAT FELL INTO A FOUNTAIN, TO THE INTERNET’S DELIGHT

This is probably not the security droid we’re looking for.

The egg-shaped robot, known as the K5 Autonomous Data Machine, drew sympathy and jeers on Monday after it stumbled down a set of steps and into a fountain at Washington Harbour, an office and retail complex in the Georgetown neighborhood of D.C. The photos were widely shared.

William Santana Li, the company’s chief executive, said in an email Tuesday that what happened was under investigation and that a new robot would be delivered free this week to Washington Harbour.

While some Twitter users theorized that the K5 committed roboticide, a simpler explanation was provided by Michael Bailey-Van Kuren, the C. Michael Armstrong professor of engineering and interactive media at Miami University in Oxford, Ohio.

46 | OCTOBER 2017

“Like with any technology, you can have a fault condition and an error can occur,” he said on Tuesday.

In the movie “RoboCop” — which opened in theaters 30 years ago on Monday — an enforcement droid known as the ED-209 falls down a flight of stairs and struggles like a turtle on its back.

This is not the K5’s first brush with media notoriety. It made headlines in April in Mountain View, Calif., when a man who was drunk knocked down a model, scratching it. Last year, another one ran over a 16-month-old boy at a Palo Alto, Calif., shopping center, causing minor injuries, according to television.

It appears Paul Blart still has job security.

Source: New York Times

WISCONSIN INDEPENDENT AGENT

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