wisconsin INDEPENDENT AGENT CONTENTS
Independent Insurance Agents of Wisconsin
4, 5, 6....The Value of an IIAW Membership As Told By Our Members 8, 9........Insurance Bartender A Look Back at This Year’s Highlights 12..........Risky Business Stepping Up To The Plate 14..........Agency Operations Top 3 Tools You Need to Manage Remote Workers 16,17.....Errors & Omissions And You Call Yourself an Expert! 19,20.....Marketing Implementing a Multi-Modality Marketing Approach for Commercial Lines 22..........Virtual University Property Damage: Is It “Property Damage” Just Because a Jurisdictional Order Uses the Term “Property Damage”? 25..........Government Affairs Wisconsin 2020 Partisan Elections Take Shape 27..........Commentary from Counsel Update: Wisconsin Supreme Court Affirms Agent E&O Win, Strengthens Future Defenses 28, 29.....Virtual University I Bet the Named Insured Doesn’t Own the Building! Have You Asked? 30...........Food for Thought
ADVERTISERS & INFORMATION 6...................AAA 18.................Acuity 32.................Ansay & Associates 26.................Arlington/Roe 30.................Badger Mutual 13.................Berkshire Hathaway GUARD 15.................DAIS 21.................IIAW CE Education Calendar 30.................IMT 21.................Integrity 20................ JM Wilson 10.................Keystone 11.................Penn National Mutual 17.................Robertson Ryan & Associates 24.................Secura 23.................West Bend Mutual 31.................Western National Wisconsin Independent Agent is the official magazine of the Independent Insurance Agents of Wisconsin (IIAW) and is published monthly by IIAW 725 John Nolen Drive, Madison WI 53713. Phone: 608.256-4429. IIAW does not necessarily endorse any of the companies advertising in publication or the views of the writers. IIAW reserves the right, in its sole discretion, to reject advertising that does not meet IIAW qualifications or which may detract from its business, professional or ethical standards. © 2020 For information on advertising, contact Kaylyn Zielinski, 608.210.2977 or kaylyn@iiaw.com.
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wisconsin INDEPENDENT AGENT
725 John Nolen Drive Madison, Wisconsin 53713 Phone: (608) 256-4429 Fax: (608) 256-0170 www.iiaw.com
2019-2020 EXECUTIVE COMMITTEE President: Chris Costakis Midwest Insurance Group LLC, Delafield President-Elect: Darrel Zaleski Spectrum Insurance Group, Eau Claire Secretary-Treasurer: Marc Petersen A merican Advantage - Petersen Group New Berlin
Chairman of the Board: Jason Bott Robertson-Ryan & Associates, Milwaukee State National Director: Steve Leitch Leitch Insurance, River Falls
2019-2020 BOARD OF DIRECTORS
Mike Ansay Ansay & Associates, Port Washington Nick Arnoldy Marshfield Insurance Agency, Inc., Marshfield Mike Harrison R&R Insurance Services, Inc., Waukesha Ryan Leitch Leitch Insurance, River Falls Aaron Marsh Marsh Insurance Services, Inc., Rice Lake Joanne Lukas Szymaszek Johnson Insurance Services, LLC, Racine Chad Tisonik HNI Risk Services, LLC, New Berlin Andrea Nelson Unisource Insurance Associates, LLC, Wauwatosa
IIAW STAFF
Matt Banaszynski Chief Executive Officer 608.256.4429 | matt@iiaw.com Mallory Cornell Vice President and Director of Risk Management 608.210.2975 | mallory@iiaw.com Kim Kramp Association and Agency Accounting Manager 608.210.2976 | kim@iiaw.com Trisha Ours Director of Insurance Services 608.210.2973 | trisha@iiaw.com Kaylyn Zielinski | Marketing Specialist 608.210.2977 | kaylyn@iiaw.com Evan Leitch Technology and Risk Advisor 608.210.2971 | evan@iiaw.com Diana Banaszynski Education Coordinator 608.256.4429 | diana@iiaw.com
On The Cover... Being part of the Independent Insurance Agents of Wisconsin is not only about being a member of an industry association. It’s about being a part of a family, it’s about tradition. These last few months have shown us the true meaning of coming together, working together and staying together. There is no greater compliment than to be trusted by your members. So many of our agents and supporting companies have reached out to us this past year. We’ve experienced strong collaboration that has moved the needle on important issues. We thank you all for your support and we promise to grow and change to meet your needs.
OUR VALUE IS FINDING YOUR SOLUTION! You’ve made the choice to build your agency on independence, but that doesn’t mean you’re alone. Membership in the Independent Insurance Agents of Wisconsin and the Independent Insurance Agents & Brokers of America allows you access to an exclusive network of more than a quarter million independent insurance professionals nationwide that receives advocacy, business solutions and technical expertise from the industry’s thought leader. As your agency seeks solutions to challenges and opportunities, turn to the IIAW. Our experience combined with our vast network of insurance professionals seeks to provide you with the optimal solutions. We do the work so you don’t have to!
ADVOCATE When independent agents need a voice on Capitol Hill and in the halls of the state capitol, legislators listen to the Big “I.” Our government affairs teams work around the clock in Washington D.C. and in Madison, WI to protect your clients and your livelihood. Our expertise, combined with a million dollar Political Action Committee (PAC) and our grass roots network, provides us with the ammunition to protect your independence. We will fight for you on flood insurance, health care, taxes, insurance regulation, and more, while you run your agency.
BUILD Our Agency Solutions offers trusted consulting built for the independent agent. Because we know how important it is for you to succeed in business, IIAW has created a portfolio of solutions built just for you, including free agency assessments that provide a customized action plan with resources.
TECHNOLOGY
STRATEGIC
Protect your investment We help you navigate and choose by reviewing business goals and strategies the best solutions to fit your needs
OPERATIONAL
FINANCIAL
MARKETING
Update and improve agency workflows and operating procedures
Review financial processes for accuracy and efficiency
Review your agency marketing efforts and discover helpful tools and resources
INSPIRE The IIAW is inspiring new and existing insurance professionals to become the Agency of the Future. Our Professional Development Program, educational course offerings, and industry-leading events are inspiring, educating and positioning our members to re-train their brains, re-tool their employees and re-shape their business to be responsive to today’s consumer. Harness your ability, unleash your potential and deliver solutions.
TRANSFORM
Traditional insurance agencies need to harness technology in order to compete and win in a bricks-and-clicks marketplace. The IIAW is assisting agents in their digital transformation by helping them rethink their business plan by connecting them with technology platforms and products that integrates with their agency and compliments their commitment to customer service. wisconsin INDEPENDENT AGENT
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The Value of an IIAW Membership: As Told By Our Members
“The partnership that the IIAW has formed with DAIS is really strategic because it helps augment the strategy and investment necessary for you to be digitized and in real-time. The thing that’s interesting is that the investment is at no expense to you. ”
“The IIAW is a great technological resource on emerging software and existing software. Do you have a human resources question or need a job description? The IIAW can help with that. Are you working on a merger or acquisition? Do you have a legal question that may need to be ran by an attorney? The IIAW can help with that too.” > Nick Arnoldy Marshfield Insurance Agency, Inc.
> Michael Ansay Ansay & Associates LLC
“Being a part of the IIAW and the professional network has been a great benefit to me in my career. It’s given me the ability to see my agency operation from a 30,000-point-view instead of being stuck in the day-to-day.” > J ason Bott Robertson Ryan & Associates, Inc
“I have been part of IIAW for over 25 years. During this time, I have seen the strength in membership communication... Matt and his team have led us on a daily basis with company news, industry news, government notices and how to run our agency on a day-to-day basis with remote teleworkers.” >C hris Costakis Midwest Insurance Group
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“If you’re a large agency or a small agency, you might not have the resources that you need to do financial analysis, technology, operational, marketing, strategic - the Big I can provide all that for your agency. You can get free quotes and you can decide what you want and what you don’t want. ” >M ike Harrison R&R Insurance Services, Inc
“Education and training is important to the Big I, and they do a great job of providing services and resources to help agents from the beginning of their career on down to retirement. ” >R yan Leitch Leitch Insurance Agency, Inc
“Every year at the annual convention, the trade fair is one of the best networking opportunities for agents, company partners and industry-related businesses. My dad once told me, ‘It’s not always about what you know, sometimes it’s about who you know.’ This event gives you the perfect opportunity to build important industry relationships.” >A aron Marsh Marsh Insurance Services, Inc.
“The Big I has been a cornerstone piece of our agency. We look to them as a resource for all things insurance - whether it’s E&O, consulting, risk management, help with an attorney. They really have put together a good package of resources that the average agency can use. ” >M arc Petersen American Advantage - Petersen Group
“Is this concierge service, white glove service, whatever you call it, it’s great service. Within our agency we try to give our clients peace of mind and that’s exactly what the Big I does with the insurance offerings it provides for its member agencies, and that’s what’s important.” > Steve Leitch Leitch Insurance Agency, Inc.
“We’re a mid-size agency so we don’t have a lot of staff dedicated to certain operational disciplines. We’ve found the agency assessment tools on the IIAW website have been extremely valuable.” >A ndrea Nelson Unisource Insurance Associates
“Today and over the years Johnson Insurance has had a great partnership with the IIAW. We feel very strongly the value the independent agency brings to our customers and our communities. The IIAW is an organization that really helps us thrive. ” > J oanne Lukas Szymaszek Johnson Insurance Services LLC
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“Independent Insurance Agents of Wisconsin is a force with industry and regulatory matters. Matt and his team work tirelessly to act on multiple issues that affect each and every agency in Wisconsin” >C had Tisonik HNI Risk Services LLC
“We have used the Errors & Omissions program offered by IIAW since the inception of Spectrum back in 2007. I find that the premiums are very competitive, the renewal process is very easy and the coverages are better than what we could obtain in the open market from other commercial carriers.” > Darrel Zaleski Spectrum Insurance Group
Renew your membership today!
Don’t just join a company, join a club. AAA is a membership-based organization; we’re a club, not just a company. This means we have an entirely different level of commitment to customers. All with an unbeatable combination of savings and security for customers. And the potential for success for you.
Learn more, contact me. Leo Plese (630) 328-7076 lmplese@autoclubgroup.aaa.com Insurance • Membership • Travel • Banking AAA Independent Agents are not employees of AAA The Auto Club Group; but, rather are independent contractors. Insurance underwritten by one of the following companies: Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Group Insurance Company, Auto Club Property-Casualty Insurance Company, Auto Club South Insurance Company, Auto Club Insurance Company of Florida, or non-affiliated insurance companies. ©2019 The Auto Club Group. All rights reserved. 19-IN-0147
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BOUTIQUE. INTENTIONAL. RELATIONSHIPS. It’s the meaningful relationships and investment in innovative solutions that make it easy for agents to do business with us.
Come grow with us: Contact Sales Director Cathy Colón at 920.968.9326 or ccolon@imico.com
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INSURANCE BARTENDER
A Look Back at This Year’s Highlights Membership in the IIAW is an investment in your agency, your career and your industry. At the IIAW, we are proud of all we have accomplished this past membership year on behalf of our members and how each and every day, we all get to do something we love - helping independent agencies succeed. It is hard to quantify and illustrate the value of a membership so we put together a few chronological highlights:
September
Leadership Awards The IIAW Emerging Leaders accept the Outstanding Young Agents Meeting Award at the Big I National Fall Leadership event in Savannah, GA for their Capstone Innovation Conference. This was made possible thanks to our supporting company members.
October
Workers’ Compensation
Cybersecurity
IIAW launches its opposition to carriers workers’ compensation scheduled rating proposal.
IIAW runs a month-long social media campaign on cybersecurity reaching over 10,000 people.
January
January
Illuminate
December
DAIS
New Website
IIAW and DAIS hold month-long sprint to make enhancements to the Internet of Insurance, to be rolled out in 2020.
New IIAW website launches with a resource-focused Agency Solutions section that includes access to over 100 agency-specific resources.
Donations
Big I Associations look to the IIAW for thought leadership on emerging technology and invite IIAW’s CEO, Matt Banaszynski, to present at conventions across the US. Over 600 attend Matt’s speeches.
IIAW creates a joint venture November with agency technology expert, Steve Anderson.
December
Emerging Technology
WAHVE
October
Our Emerging Leaders Committee donates over 100 items to the American Family Children’s Hospital.
IIAW announces strategic partnership with WAHVE to offer members new staffing solutions. February
January
February
E&O Website Review
Digital Storefront
Strategic Planning Session
Cybersecurity Regulations
IIAW launches new virtual E&O website review to protect agencies from expanding litigation. Over 50 agencies take advantage of the new service within the 1st six months.
The Internet of Insurance launches their Digital Storefront providing Big I members a complimentary solution for selling products online. Over 100 agencies sign up to create their Digital Storefronts.
IIAW Strategic Planning Session held with 25 Board Members and Exclusive Company Members.
IIAW is the only agent trade association to help draft and testify in support of ADA 819/ SB784 relating to establishing WI cybersecurity regulation.
March
March
March
April
Webinar
Defeat Damaging Legislation
IIAW hosts webinar to help agencies “Learn How to Become a Digital Agency.”
IIAW successfully and quietly defeats damaging draft business interruption legislation.
Essential Business IIAW successfully lobbies for insurance agents to be listed as an essential business.
April April
Insuring Wisconsin’s Success IIAW publishes a video, “Insuring Wisconsin’s Success”which garners more than 11,000 views. The video outlines how the insurance
industry is coming together during COVID-19.
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February
wisconsin INDEPENDENT AGENT
Start of COVID-19 On March 12th, as the COVID-19 pandemic hits Wisconsin, Governor Evers declares a State of Emergency, and IIAW launches its COVID-19 Resource Page, free for all agents.
April
May
May
PPP Loan
COVID-19 Support
Cover Your Agency
IIAW provides guidance on applying for PPP loans and individually assists over 50 agencies with the application process.
IIAW places personalized check-in calls to every IIAW agency member to provide support during the COVID-19 pandemic.
IIAW hosts “Cover Your Agency” webinar to answer agency’s questions on Operations, Legal/HR, Government Relations and Technology.
y
May
May
June
June
We’re All In Grant
Reopening Your Business
Disaster Relief Fund
IIAW publishes “Guide to Reopening Your Agency” to help insurance agents plan for a safe and successful reopening.
IIAW/IIABA Disaster Relief Fund distributes more than $10,000 to agencies adversely impacted by COVID-19.
Commercial Deregulation Legislation
IIAW provides step-by-step guidance and letters of acknowledgment to over 220 qualifying agencies to provide assistance in applying for the WEDC “We’re All In” grant.
IIAW negotiates compromise with the Wisconsin Insurance Alliance on commercial deregulation legislation.
June June
July
July
Digital Storefront Assistance
Prelicensing Classes
Virtual Selling
IIAW to offer one-on-one support workshops for agencies to assist in setting up their complimentary Internet of Insurance Digital Storefront to increase utilization.
Prelicensing classes reopen for in-person attendance and offer a new, live, virtual option as well.
IIAW Emerging Leaders Committee hosts “Virtual Selling: A Panel Discussion” to provide advice and counsel to other member agencies. (Sponsored by affiliate, partners and exclusive company members.)
a look forward
Data Privacy & Security Framework IIAW joins Wisconsin Insurance Alliance to ask Data Privacy & Security Advisory Committee to develop effective data privacy and security framework for Wisconsin residents and businesses that address the industry’s concerns.
Online Community
Virtual Events
Illuminate
DAIS/Internet of Insurance
The IIAW will be offering a new, curated online platform for members to collaborate and post about industry happenings.
The IIAW will design and offer events tailored for in-person and virtual spaces.
The IIAW has launched a new, joint-venture company with technology expert, Steve Anderson, to create a platform for agents to learn about new technology, read reviews, collaborate, consult and more to assist with their digital transformation.
The Internet of Insurance, free for IIAW members, integrates with an agency AMS to improve the marketing and communication process for both agents and carriers to write more profitable business in a bricks-and-clicks marketplace.
This is a small snapshot of how our association, thanks to your support, is working hard on your behalf. As always, please don’t hesitate to contact us if we can be of any assistance. We want to ensure you receive a return on your membership! Thank you.
> Matt Banaszynski CEO of IIAW
Matt’s Mixology
Fourth of July Cocktail Recipe courtesy of Guy Fieri
Ingredients
• 1 oz. watermelon Schnapps • 1 slice lime • 1 big splash of cranberry juice • 1 1/2 oz. tequila • 1 very thin slice of jalapeno or • 1/4 oz. blue Curacao serrano pepper • 1/2 oz. simple syrup • 1 slice lemon • Watermelon wedge, for garnish (Optional)
Directions
1. Mix the Schnapps and cranberry juice in shaker; pour into an ice-filled glass. 2. Muddle the jalapeno pepper, lemon and lime slices, tequila, blue Curacao and simple syrup (to make a batch, dissolve sugar in equal parts hot water and chill) in the shaker. Slowly strain into the glass over the red layer. Garnish with watermelon, if desired.
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Recruiting new talent. Target marketing. Competing for new business. Perpetuation planning.
As an independent agent, the path forward isn’t always clear. With Keystone, the best resources are at your fingertips to help you carve out clarity from our industry’s complexities. We connect you to a community of like-minded independent agents, provide access to relationships that extend beyond your geographic reach, and employ the expertise that expands opportunities for you and your clients.
Success is a journey. Let us be your guide.
Because independence works better together. ©2018 Keystone Insurers Group ®. All rights reserved. This does not constitute an offer to sell a franchise in any state in which the Keystone Insurers Group franchise is not registered.
Contact JoAnn Hartung: 570-473-4340 jhartung@keystoneinsgrp.com keystoneinsgrp.com
In 1919, A group of Pennsylvania farmers founded Penn National Insurance to provide affordable workers’ compensation insurance. Today, Penn National Insurance sells property-casualty insurance in 11 states by partnering with more than 1,200 independent agency operations. In 2012, we affiliated with Wisconsin-based, Partners Mutual Insurance Company. As one company, we bring the personal attention and local focus of a regional carrier, along with the quality of products and services of national carriers. Interested in partnering with a thriving insurance carrier with superior customer experience? We are looking for select commercial lines-oriented agencies in Wisconsin. Contact: Vicki Lentz 262-432-3420 vlentz@pnat.com
Clayton Zogata 262.432-3422 czogata@pnat.com
• Strong financial performance and A.M. Best Financial Strength Rating of A• Expanded Commercial Lines product and services with competitive pricing and comprehensive coverages to help our agents grow profitably. • Comprehensive Personal Lines product offerings, including Homeowners Equipment Breakdown and additional protection plans. • State-of-the-art quoting, processing and self-service tools, making is easier and faster to meet your customers’ needs. • Local experienced underwriting, claims and management staff
An Equal Employment Opportunity/Affirmative Action Employer ©2020 Penn National Insurance
Policies issued for domiciled businesses and individuals in Wisconsin and Iowa are underwritten under our affiliate, Partners Mutual Insurance Company.
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RISKY BUSINESS
STEPPING UP TO THE PLATE As I sat tasked with the responsibility to write an article for our Membership Edition of the Wisconsin Independent Agent, I was trying to determine how I wanted to portray an IIAW membership. Like any mediocre writer, I started with what I know. I know that I love my job and the support we provide our members. I know that there are members who we need to connect with more. And I know there are independent agents who would find value in our organization and we have yet to connect with. And I know baseball. Across the nation, people young and old are stepping back up to the plate. Not just the actual home plate on the baseball field, but the metaphoric plate of life. The Independent Insurance Agents of Wisconsin resembles a baseball team - a really strong one that has been around for a long time. We have the front office. A team of dedicated professionals who are on the clock 24/7 making sure that the Association is up-to-date on the latest news, changes and information. That we are making the trip to the capital building when there needs to be a voice on the floor. That we are showing up to the games and practices and listening to what the players want. And that we never leave someone behind or feeling like they don’t have somewhere to turn for help.
When crisis hit, agents came together to learn from one another and show support. I see this continuing in the future so that everyone can grow and experience success. The IIAW may have created the club, but it is the players who have made it great. Utilizing the tools and resources made available to them has allowed agencies to focus on their business and show the value of an independent agent.
Character isn’t defined by the moments when you’re up 3-0, but instead by how you battle when you’re down 0-2. The IIAW battled and will continue to battle no matter what pitch is thrown to us. At the end of the day, our passion and dedication for the independent agency channel drives everything we do. We promise to continue to find new ways to support the independent agent. We will work with our supporting company members to drive innovative solutions and offer them at little-to-no-cost to our members. Thank you for believing in us and being part of the team. Let’s root for each other and see how we all grow.
“Surround yourself with people who will leap out of the dugout should you ever charge the mound.” We have dedicated companies, brokers and vendors. The non-agency members who show their support for the independent agencies channel do so by being part of our committees, by attending our events and by financially supporting the IIAW. We would not be as strong as we are today without those vital organizations.
“The way a team plays as a whole determines its success. You may have the greatest bunch of individual starts in the world, but if they don’t play together the club won’t be worth a dime.” - Babe Ruth The team of independent insurance agents who represent the IIAW is a team I couldn’t be prouder of.
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> Mallory Cornell,
IIAW Vice President and Director of Risk Management
AmGUARD • EastGUARD • NorGUARD • WestGUARD
We’re here to help Agents, during this uncertain time, let us help you write new and renewal business. As part of the Berkshire Hathaway group, we’re financially strong and ready to help. WE OFFER: Payment flexibility Responsive claims handling Quality customer service
Commercial & Personal Lines • Apply to be an agent: www.guard.com/apply/
AGENCY OPERATIONS
TOP 3 TOOLS YOU NEED TO MANAGE REMOTE WORKERS Today’s employees Zoom, Skype, Jabber, FaceTime, GoToMeetings and chat in Google Hangouts and Webexes. When they’re not videoconferencing, they’re emailing, collaborating in Microsoft Teams, and instant chatting on Slack. They’ve already got the tech tools they need to make it easy and more convenient to work remotely, but do you have the right management tools in place to keep your remote employees engaged? There’s no doubt that hiring remote employees can benefit your insurance business by bringing in critical skills that you don’t have or can’t easily find. Remote workers can be a boon to recruiting, productivity, business continuity, and improved customer service. But relying on a traditional management style to keep a dispersed workforce motivated and moving forward won’t cut it. So, what are the best ways to keep employees you rarely see motivated? Build a Virtual Water Cooler The cornerstone to keeping remote employees engaged is proactive communication. When you can’t simply stop by an employee’s desk to chat, grab a cup of coffee, or physically sit with them in a conference room, it’s important to make a concentrated effort to make time for casual conversation. It’s not enough to schedule a few one-hour meetings per week. Communication with remote employees should be fluid, spontaneous and regular. Create a virtual water cooler by continually chatting with people to find out what they did during the weekend, how their family is doing, and what their plans are for time away from work. Establish Some “WAHVY Gravy” When employees are out of sight, it can be easy to unintentionally exclude them, making them feel isolated. And when people feel isolated and not a part of the work community, productivity suffers. Go beyond relying on virtual meetings to establish 14
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community. If you have an intranet, create a space where people can share news, tips, or pictures of their pets. Many companies dedicate specific Slack channels to support socializing. Others use virtual coffee breaks, book clubs, TED talks, or online learning courses that everyone participates in to encourage a deeper sense of community. C
Another strategy is to incorporate a few minutes for team members to share something personal at the end of meetings. At WAHVE, we call this “WAHVY gravy.” We ask people to share something that’s important to them – whether it be pictures of their artwork, hobbies, or stories about recent vacations. Another idea is to ask employees to share an “ah ha” or an “appreciation” – something they recently learned or someone they’d like to acknowledge. The important thing is to make it fun and personal. This changes how people interact with each other at a human level and builds interest and empathy for one another. Don’t Forget Face Time Despite all of the fancy tech tools, there’s still no substitute for face time. When you’re managing a remote team, no matter the size, it’s important to bring the entire team together when you can. Doing this shows on site and remote workers how much you appreciate them, and it builds connection. At WAHVE, we bring our staff together bi-annually, and we find that these events are invaluable to help the team bond, strengthen our culture, and share goals and future direction with everyone physically present. According to an analysis by FlexJobs and Global Workplace Analytics, remote work has grown 44% over the last five years and 91% over the past 10 years. It’s a trend that will likely continue to rise, so there’s no time like the present to adapt your management style to support remote workers, and in turn, the success of your business.
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Become a Digital Agency Deploy a digital storefront to start accessing online growth and keep up with rapidly-changing customer expectations. An agency-centric customer experience that doesn't obscure your brand or your customer data.
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Learn more and get started today: www.internetofinsurance.org
ERRORS & OMISSIONS
AND YOU CALL YOURSELF AN EXPERT! An insuretech firm I prefer not to name, other than to say they think they are geniuses when it comes to policies, was founded by two people who believed purchasing insurance was too frustrating. In fact, their website specifically states, “Navigating the world of insurance is confusing, stressful and a step backward in time....” Because the founders were “consultants to the top insurance companies,” they knew there had to be a better way for consumers to purchase insurance. Their stated mission is help consumers get the insurance they need and feel good about what they got. Sort of sounds like something an agent does, but that’s not the point of this article. Towards this goal, the firm publishes consumer-facing articles. I recently read through several of the articles and felt they were relatively well written for consumer consumption and largely correct. What disappointed me was the “level” of credit they gave the writers; each writer was listed as, “Insurance Expert.” The title “insurance expert” caught my eye - in a big way. It stands to reason that obviously these writers have many years of insurance experience since they are “experts” Uh, they didn’t. Here are partial bios as examples: • [Author’s name redacted[ is an Insurance Editor at [Insuretech name removed] in New York City and an expert in homeowners insurance. Previously, he was working as a freelance writer for the New York State Nurses Association and wrote for the Michigan Information Research Service. [Writer] has a B.A. in journalism from [University Name Redacted.] • [Author’s name redacted] is the Associate Director of SEO Content at [Insuretech] in New York City. His writing on insurance and personal finance has appeared on Betterment, Inc, Credit Sesame, and the Council for Disability Awareness. [Writer] has a degree in English from the [University name removed]. • [Author’s name redacted[ is the co-founder of [Website name removed], a groundbreaking personal finance site for millennials that was named one of Time’s 25 Best Blogs of 2012. [Author’s] work has been published in New York Magazine, Glamour, The Guardian, BuzzFeed and more. Am I missing something? Would the background of ANY of these writers qualify them to be considered an “insurance expert”? I don’t think it does, but the public doesn’t know any better. Calling yourself an expert doesn’t make it so. Unfortunately, the combination of missing or incorrect policy information and the misappropriation of the title “insurance expert” pushed me to send a rather “snotty” email to this group. As of this writing, I have not received a response. Would you like to see what I wrote? Before you read it, remember, I’ve already acknowledged I 16
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was a bit pompous. With that as prologue, what follows is a slightly edited version of my email. I was reading through several of your homeowners’ and personal auto insurance coverage articles today and wanted to get in touch with you. Yes, insurance can be confusing to those not in the business, but there is a way to explain it so the uninitiated can easily and quickly grasp its concepts and realities. Secondly, I would be very careful calling anyone an “insurance expert” unless he/she has many years of experience in the insurance business - and is well-versed in insurance coverages and concepts. Writing ABOUT insurance in newspapers and blogs doesn’t make someone an insurance expert; neither does being in the financial and investment business. Property and casualty insurance is far more complicated than can be known just writing about insurance. You have to be “covered in the mud of an insurance policy,” you have to have actually read the policy from cover to cover, several times, and you have to know how deep the depths of insurance really are before you can begin to be considered an expert. Further, a true expert doesn’t consider himself or herself an expert. In fact, those who truly do qualify as experts quickly shy away from being called experts; the reason, because they are so well versed in insurance, they know there is far more to know than they already do. Any person who calls or truly believes he or she is an expert doesn’t know what he/she doesn’t know. Someone holding himself or herself out as an “expert” without the credentials to back it up is dishonest and harmful to those depending on the information the so-called “expert” has provided. So, my recommendations are: correct the incorrect information; and don’t refer to anyone as an insurance expert who doesn’t have the necessary time and training to qualify as one. Just my personal recommendations to you; take them or leave them as you so desire. OK, I realize I let my emotions get the best of me. I also realize nothing I said will change their attitude or actions. And lastly, I know that “insurance expert” is just their way to market their “brilliance.” But it needed to be said. But this is what I find truly interesting, they note on their site that the information they provide should not be relied upon; in fact, they intimate that agents are the better source of information.
Here is the disclaimer: [Insuretech’s name withheld] editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you. I take certain satisfaction in this disclaimer. Evidently, their “insurance experts” are not as valuable as insurance agents. Here are some thoughts about being an “expert” of any kind. • True experts worry more about what they don’t know than what they do know, continually looking for ways to fill their knowledge gap. Self-proclaimed experts ignore the breadth of what they don’t know and are satisfied (mainly because they don’t know what they don’t know). • True experts are rarely absolutely certain. Self-proclaimed experts are rarely in doubt. • True experts admire other experts and desire to learn from them. Self-proclaimed experts don’t see anyone else as an expert, feeling others have nothing to offer. • True experts listen to and value the opinions and advice of others. Self-proclaimed experts think theirs is the only opinion that matters. • True experts openly admit when they don’t know the answers. Self-proclaimed experts ALWAYS know the answer - even when they don’t.. • True experts apply the experience learned from past accomplishments to accomplish more. Self-proclaimed experts rest on past accomplishments.
• True experts don’t really like being referred to as experts. Self-proclaimed experts revel in such an introduction. • True experts desire to give all their knowledge away so others can be better. Self-proclaimed experts hold on to their knowledge so others have to come to them. • True experts do not proclaim themselves experts - others do. Self-proclaimed experts use the term as a marketing ploy. • Be wary of anyone who eagerly takes on the mantle of “expert,” they probably aren’t. If you call yourself an “expert,” you probably aren’t. One last thought, if the word “expert” is used anywhere on your website or in your marketing, you better be one because that is the standard/expectation that you have set. Afterall, who do you expect more from, the apprentice of journeyman electrician or the master electrician? The best course of action is to take the term “expert” off all websites and marketing materials. When you are an expert, you won’t feel like one. If you feel like one, you aren’t one. The more you know, the more you realize you don’t know. And people who don’t know, aren’t experts - at least in their minds.
> Chris Boggs
Big “I” Virtual University Executive Director
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MARKETING
IMPLEMENTING A MULTI-MODALITY MARKETING APPROACH FOR COMMERCIAL LINES
As an agent, right now could be the best time ever to begin a marketing effort to organically grow your commercial lines book of business. We are just coming out of two to three months of the most monumental government shutdown of commerce in history. There are still disagreements over whether the recovery will be V, U, or L-shaped but early indicators from the airline and hospitality industries coupled with the most recent jobless-rate drop and payroll gains are encouraging. Additionally, businesses receiving renewal notices are experiencing some of the biggest premium increases they have seen in years. The market is continuing to harden with a generation of producers who has never experienced this cycle before. They are going through the renewal process with a business-as-usual approach, not realizing these premium increases should be viewed as an invitation to ask prospects to seek an alternative. How do we know? For one thing, we are seeing among our own agency clients a considerable uptick in lead conversions as a result of today’s market. Many agents, however, are wary of getting started too soon and have more of a “let’s wait and see what happens” point of view, regardless of the hard market opportunity. But while those agents wait, the larger brokers are moving to get started with their marketing plans that include a multi-prong strategy.
Upping the Marketing Game Multi-modality marketing encompasses digital marketing, demand-generation marketing, and social media. It all begins with your brand and website, which should be carefully analyzed to determine if the site is doing what you need it to do:
• Does your website truly reflect your brand, tell your story – what distinguishes you in the marketplace, why and how can you make a difference in a client’s insurance protection? • Is your website optimized properly so that you can be found by people who don’t necessarily know your name? • Is your site properly programmed/coded to provide an enriched user experience across all devices, particularly because mobile devices now account for nearly 57% of Internet traffic? • Is your site ADA-compliant? • Are your social media channels set up to thematically align with your website and brand? • Do you have an organized purposeful content and link-building plan in place? Are you regularly blogging, producing white papers (on why the hard market exists and what it means to business owners, for example), case studies (successful placement of tough accounts), and other content to establish and share your expertise and thought leadership, especially salient in challenging times? Once your website and social media platforms are thoroughly reviewed and you have made the necessary changes, which may involve anything from implementing minor adjustments to a total site revamp, the next step is to leverage available data. Identify your prospect base by class of business, minimum employee size and geographic boundaries. Append as much data as you can, including multiple C-suite contacts with emails, phone numbers, and workers compensation X-dates if they are available in your state, to begin prospecting. Set up a demand-generation email program. wisconsin INDEPENDENT AGENT
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This involves creating an email-funnel strategy to attract, engage and convert prospects to customers. An email funnel will help you get your potential customers from point A to B, step-by-step, and influence them along the way toward your conversion goal. One you have your strategy in place, design, write and launch the campaign. Boost your campaign with outbound calling. Using a demand-generation marketing platform that utilizes content and reciprocity to create a funnel in conjunction with outbound calling is a way to increase the likelihood of connecting with prospects and obtaining greater conversions. A good demand-generation software program uses touch points to score leads as they move through the top of the sales funnel from list to leads, qualified leads, and closes. Leads that score over a certain number can be contacted by phone to set up an appointment either virtually or face-to-face. Knowing who to call reduces cold call labor considerably and improves lead quality. Simultaneously, a beacon (which provides on-demand FAQs, chat, and an email contact rolled into one helpful widget) on your website tracks visitors, and banner ads
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JM Wilson 100th-WI-Indep-Agent CMYK Outlines.indd 1 wisconsin JULY 2020 INDEPENDENT AGENT
can be used to target them on LinkedIn. Some of the top software provides include HubSpot, Pardot, SharpSpring, Marketo, and Act-On. During this hard market it’s important to get ahead of renewals well in advance for an opportunity to provide potential clients with options in terms of pricing, coverage terms, and capacity. The combination of a well-optimized website, consistent content (blogs and social media posts), a demand-generation email effort and telemarketing outreach will help you build your brand and develop a consistent lead flow to gain new customers in this market cycle. Larry Neilson is CEO, Neilson Marketing Services, an insurance marketing firm founded in 1988, and provide more than 5,000 professionals with data, outbound, digital, SEO, content, social media and email services.
> Larry Neilson, CEO
Neilson Marketing Services
4/3/20 9:31 AM
CONTINUING
EDUCATION IIAW ONLINE EDUCATION & CE CLASSES 2020 DATE
TIME
COURSE
JULY 13 14 15 16 20 21 22 23 27 28 29 30
12PM-3PM Insuring Technology Exposures - Products, Property & Professional Liability 12PM-3PM Life Insurance... Benefits for the Living 12PM-3PM Insuring Hobby and Small Farms 12PM-3PM E&O: Roadmap to Homeowners Insurance 12PM-3PM Take Charge of Emerging Personal Automobile Trends 12PM-3PM Cyber Liability 12PM-3PM E&O: Commercial Liability Coverage Gaps & How To Fill Them 12PM-3PM Ethics - Walking a Straight Line 12PM-3PM Business Auto Coverages 12PM-3PM Commercial General Liability Coverages 12PM-3PM Personal Lines Checkup - What’s New and What’s Changed... What It All Means 12PM-3PM 10 Things Every Commercial Lines Agent Ought To Know
AUGUST 06 10 11 12 13 17 19 20 24 25 25 26 27
12PM-3PM Protecting Your Most Valuable Asset 12PM-3PM Dispelling the Myths of Workers’ Compensation 12PM-3PM Personal Auto Policy 12PM-3PM Homeowners Hot Topics...What You Need To Know 12PM-3PM E&O: Commercial Property Coverage Gaps & How To Fill Them 12PM-3PM Condominiums 12PM-3PM Additional Insureds and Certificates of Insurance 12PM-3PM Ethical Dilemmas... Making the Right Choices 12PM-3PM The Dirty Dozen 8AM-11AM E&O: Roadmap to Personal Auto and Umbrella Insurance 12PM-3PM Workers’ Compensation 12PM-3PM Insuring Trusts - Protecting Your Client’s Wishes 12PM-3PM Farm Property Coverages
For more information and to register for these classes, visit https://bit.ly/IIAWContinuingEducation.
QUESTIONS? CONTACT IIAW AT 608-256-4429 OR AT DIANA@IIAW.COM wisconsin INDEPENDENT AGENT
JULY 2020
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VIRTUAL UNIVERSITY
PROPERTY DAMAGE: IS IT “PROPERTY DAMAGE” JUST BECAUSE A JURISDICTIONAL ORDER USES THE TERM “PROPERTY DAMAGE”? Some plaintiff attorneys are almost giddy over the fact that several jurisdictions used the term “property damage” in their respective emergency declarations to justify closing “non-essential” businesses. These attorneys are hopeful that such wording gives them the ability to trigger a business income claim. Given the facts as that have developed since the situation began and those that are continuing to develop, pinning any hopes on such wording appears futile (but it’s entertaining to watch).
A University of Alabama study published in the New England Journal of Medicine stated that the maximum amount of time the virus can live on certain surfaces is up to three days. Further, the CDC states that property to person infection is not a primary cause of infection.
Insurance Journal’s article “Business Interruption Claimants Like How Some Localities Worded Emergency Orders,” introduced this discussion, but it doesn’t address the question, does the government calling the presence of a virus on a surface “property damage” factually make it property damage? Does stating something is blue in an emergency declaration make it blue?
Second, the more disappointing for plaintiff attorneys, simply saying something causes property damage does not change the requirements of physical science. “Damage” is generally understood to mean a physical change in condition such that repair is required. In the case of the presence of a virus, what repair is required? The only possible type of required “repair” is cleaning the surface or the loss of the virus’ viability.
Neither local, municipal nor executive orders appear to carry the force of a law, nor is it likely such orders change the facts of physical science. Property damage and what constitutes property damage is not dependent on terms used in an order intended to close businesses not seen as essential to the public good (other than the “public” who happens to own the shuttered businesses). Examples of these orders appear to be limited to counties or local orders rather than statewide orders. Orders applying “property damage” wording often read similar to this from New Orleans’ second order: • Whereas, there is reason to believe that COVID-19 may be spread amongst the population by various means of exposure, including the propensity to spread person to person and the propensity to attach to surfaces for prolonged periods of time, thereby spreading from surface to person and causing property loss and damage in certain circumstances..... Obviously, certain assumptions were made in the crafting of these declarations. The first is that the virus has a “propensity to attach to surfaces for prolonged periods of time.” This has since proven to be incorrect. 22 22
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Given this, the first presumption appears to be incorrect - lessening the effect of this hoped-for lifeline towards providing property damage.
Additionally, the business income form requires more than just “damage” to trigger coverage, there must be “direct physical loss of or damage to property.” This is more than simply saying, “hey, there is damage.” The Big I through its Virtual University has penned several articles detailing the specifics of business income and what is required to trigger coverage. Lastly, the jurisdictional authorities seem to have hedged their bets with the closing phrase, “in certain circumstances.” Simply, such wording in these executive orders does not appear to provide any benefit to the plaintiff attorneys. Improper assumptions and declaring a “fact” without evidence or the support of physical science does not change the reality. After all, if the executive order said the sky was green, that would not make it green.
> Chris Boggs Big “I” Virtual University Executive Director
11 Years and Counting Unlike many other carriers, West Bend believes in the value of long-term relationships. That’s why many of our personal lines underwriters, like Nick, have worked with their agents for so long. Nick puts a high value on West Bend’s continuing education program, in part, because he learns alongside his agents and gets their perspectives. And that makes the relationships that much stronger.
wisconsin INDEPENDENT AGENT
JULY 2020
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© SECURA Insurance
TRICIA • Says SECURA feels like home • Earns your trust every day with creative problem solving • Two decades of insurance experience
A true people person Meet Tricia, one of our Personal Lines experts. She’s a natural when it comes to connecting with agents and insuring your bundled home and auto business, just like the others on her team. It’s the genuine kind of expertise we look for at SECURA. And they’re supported by our caring claims group who will treat your clients like family.
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Government Affairs
WISCONSIN 2020 PARTISAN ELECTIONS TAKE SHAPE
Despite unique challenges for candidates brought on by Coronavirus, the 2020 Wisconsin partisan elections, both primary (Tuesday, August 11th) and general (Tuesday, November 3rd), are beginning to take shape. June 1st was the deadline for all candidates to file nomination papers in order to get on the ballot. Depending on the level of office, the minimum number of signatures required varies from 200 to 2,000. Those candidates who filed nomination papers will appear on the ballot unless they did not turn in sufficient signatures to qualify or if some of their signatures are challenged and dismissed leaving them with inadequate signatures to obtain ballot access. The Wisconsin Elections Commission (WEC) meets on June 10th to certify candidates and will also review information on any ballot access issues or challenges of certain candidates. In summary of the 2020 electoral landscape, there are a total of 21 open seats (10 Republicans, 11 Democrats) where incumbents have either announced they are not running for re-election or are running for a different office. Of those, one-third of them are current members of the 33-member State Senate. The Senate will be a much different looking body next year. Spring 2020 brought about the unexpected announcement from State Sen. Fred Risser (D-Madison), America’s longest serving state lawmaker in history, that he will retire after an historic 64-year run serving in the legislature.
Six other members of the State Senate will be leaving at year’s end, including State Sen. Dave Craig (R-Big Bend, chairman of the Senate Insurance Committee, Republican Senate Majority Leader Scott Fitzgerald who is running for Congress, and longtime insurance industry ally, State Sen. Luther Olsen (R-Ripon). Eighteen incumbent lawmakers have no opponent in their re-elections (11 Republicans, 7 Democrat); 4 legislators will only have a primary election (2 Republican, 2 Democrat); 68 legislators have a general election only; 33 districts have both a primary and a general election and 10 seats have a 3rd party candidate also running. See an unofficial list of all candidates at https://bit.ly/JulyGovAffairs. The 2020 elections are sure to be historic with a hotly contested Presidential election between Donald Trump and Joe Biden setting the stage at the top of the ticket. Even more unprecedented for candidates and voters alike will be the unique nature of these elections in particular amid concerns over COVID-19. Already, many events around the state have been cancelled and customary campaign tactics and strategies put on hold which pose challenges for candidates to be able to effectively reach voters. National and state polls this early are likely to be inaccurate indicators of what will happen on election day. But what does remain to be seen is what will the mood of the electorate be come August and November and how will it impact challenger candidates versus incumbents.
>M isha Lee IIAW Lobbyist
wisconsin wisconsin INDEPENDENT AGENT INDEPENDENT AGENT
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Helping you take care of clients isn’t just business. It’s personal. With access to more than 200 markets, our collaborative teams know how to provide the right solutions with a personal touch. Located in nine states, licensed in all 50, and independently family-owned, we can connect you with insurance specifically tailored to your clients’ needs. Our commitment to your success is the reason for ours. Get to know the people of Arlington/Roe. We’ve been doing the right thing since 1964.
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COMMENTARY FROM COUNSEL
UPDATE: WISCONSIN SUPREME COURT AFFIRMS AGENT E&O WIN, STRENGTHENS FUTURE DEFENSES On May 21, 2020, in Emer’s Camper Corral v. Alderman, the Wisconsin Supreme Court issued a 6-1 majority opinion confirming a rigorous causation standard for negligent procurement E&O claims. The Court ultimately found that, in order to prevail on a claim for negligent procurement of an insurance policy, an insured must show that the promised policy was commercially available to them. While this decision is undoubtedly a win for agents, it is critical that you take care when communicating with clients.
The Emer’s Camper Corral Case and Decision Since 2004, Rhonda Emer and her husband have sold new and used camper trailers under the trade name Camper Corral. Not long after founding the business, the Emers began purchasing Camper Corral’s insurance through the defendant insurance agency. Starting in 2007, General Casualty Company of Wisconsin insured Camper Corral. However, before the commencement of the 2012-13 policy year, General Casualty sent Camper Corral a nonrenewal notice after two consecutive years with at least $100,000 in hail damage claims. Following the nonrenewal, the Emers worked with their agent to obtain insurance through Western Heritage Insurance Company. The 2012-13 policy had a $5,000 deductible for hail damage per camper. However, the agent told the Emers that, if they could go claim free for two years, he may be able to negotiate the hail damage deductible down to $1,000 per camper. After two claim free years, the agent contacted the Emers with the news that he had obtained a policy from Western Heritage with a $1,000 deductible per camper for hail damage and a $5,000 aggregate deductible limit. In reality, the Western Heritage policy the Emers ultimately purchased had a $5,000 deductible per camper for hail damage with no aggregate deductible limit. In September of 2014, another hail storm swept over the Camper Corral lot. This storm damaged 25 of the campers in the Emers’ inventory. Because of the actual terms of the Western Heritage policy, the Emers’ deductible amounted to $125,000. As a result, the Emers sued the agent for negligence, suggesting he had breached his duty to them by failing to adequately describe the terms of the Western Heritage policy. For damages, the Emers asked for $120,000, i.e., the difference between their deductible and the $5,000 aggregate deductible they were promised. The case ultimately went to trial. However, before the jury could deliberate, the agent moved for a directed verdict, arguing the Emers had not satisfied their evidentiary burden. The trial court agreed, ruling that, without evidence that the policy promised to the Emers was commercially available to them (and not just generally available in the marketplace), they could not prevail on their negligence claim. The Wisconsin Court of Appeals affirmed the trial court, and the Emers appealed the case to the Wisconsin Supreme Court. According to the State Supreme Court, to prevail on their negligence claim against the agent, the Emers needed to prove four well-settled elements: “(1) [the agent’s] duty of care to
Camper Corral; (2) [the agent’s] breach of that duty; (3) injury caused by [the agent’s] breach; and (4) actual loss or damage resulting from the injury.” However, the only issue left for the Supreme Court to decide was the third: causation. The Wisconsin Supreme Court ultimately held that the Emers had not provided sufficient evidence to satisfy the causation standard. In their arguments before the Wisconsin Supreme Court, the Emers suggested they only needed to prove that a policy like the one they were promised was commercially available. The Supreme Court, though, found that was one step short. Not only did the Emers have to prove that the relevant policy was available in the marketplace, but they also had to show that the policy was commercially available to their business. Put differently, “[w]hether the unavailability is general, or instead particular to Camper Corral, the policy’s unavailability exists independently of any negligence on behalf of the broker.” Thus, as the Emers did not show that the policy promised to them by the agent was commercially available to their business, the Supreme Court affirmed the trial court’s directed verdict in the agent’s favor.
Now What? This decision is a big win for both insurance agents and E&O carriers defending claims under Wisconsin law. With the additional burden of having to prove specific availability in negligent procurement cases, agents will see fewer judgments against them and, as a result, fewer lawsuits brought in the first place. Further, only one Justice dissented in the Camper Corral case. Thus, even as the makeup of the Court shifts slightly over the next few months, this decision is likely to remain binding precedent well into the future. With this in mind, you should still see this case as a cautionary tale. Sure, the case ended with a positive result for both the defendant agent, the E&O carrier and insurance agencies around Wisconsin. But, it took a full trial and appeals all the way to Wisconsin’s highest court to achieve that result. It is essential that you take great care when marketing policies to your clients. Doing so will likely save you the hassle of expensive litigation.
Conclusion Ultimately, the Wisconsin Supreme Court’s decision in Emer’s Camper Corral v. Alderman is a huge win for insurance agents and E&O carriers around the state. This will undoubtedly result in fewer negligent procurement cases brought against agents and stronger defenses in some of the cases and claims that are brought by disappointed insureds. We will keep an eye on the application of this stringent causation standard—it may well cross Wisconsin’s borders into other states.
>J osh Johanningmeier IIAW General Counsel wisconsin wisconsin INDEPENDENT INDEPENDENTAGENT AGENT
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VIRTUAL UNIVERSITY
I BET THE NAMED INSURED DOESN’T OWN THE BUILDING! HAVE YOU ASKED? “Who owns the building?” Asking this rather basic, four-word question can save your insured, you, and your errors and omissions carrier a major heartache and undue costs following a building damage claim. Never assume a small, closely-held corporation is as simple as it appears on the surface. Exposure and legal realities often exist, the importance of which are not fully understood by the “business owner.” Consider the following example, George Bailey owns Widgets, Inc., a manufacturer of widgets (who would have guessed?). The manufacturing operation is conducted in a building that, according to Mr. Bailey, is “owned by the insured.” However, Mr. Bailey owns the building individually. Understand, Mr. Bailey is not attempting to mislead the insurance carrier or misrepresent the facts. In his mind, there is no distinction between the operations of Widgets, Inc. and the ownership of the building. To Mr. Bailey, it’s all the same because he owns both. Such belief is more common than many agents realize. But within the realities of insurance and law, two separate “persons” are involved in this all-too-common situation. Potential insurance coverage gaps arise from the existence and participation of two separate “persons.” Each natural person and legal person must be accounted for and managed separately within the insurance policy. (Natural persons are flesh and blood individuals. Legal persons are created by the filing of specific legal documents such as articles of incorporation or articles of organization.) Natural persons and legal persons have the same rights; the right to sue, to be sued, to own property, etc. Therefore, each “person” presents his/her/its individual risk exposure that must be analyzed and specifically insured. 28 28
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Unless each person’s exposure is properly addressed, the property policy may not respond to a property claim for one of two reasons: 1. Lack of insurable interest; or 2. Lack of insurance protection. Property insurance policies do NOT respond to a claim if insurable interest does not exist at the time of the loss. Likewise, if the party with insurable interest is not an insured, the policy does NOT pay. Insurable interest, in a property insurance context, exists when a “person” suffers direct financial loss as a result of damage to or destruction of the specified property. If the “person” with insurable interest is not covered by a property policy, the loss must be paid out of that “person’s” resources. Insurable interest in real and personal property is created in one of three ways: 1. Ownership; 2. Legal liability: Responsible for someone else’s property – like a dry cleaner is responsible for its customer’s clothes; or 3. Contract: A lease agreement making another party responsible for insuring the property. Returning to the initial scenario: George Bailey owns the building individually, but Widgets, Inc. is the policy’s only named insured. If the building is damaged or destroyed by any covered cause of loss, the property policy covering the building owes – nothing. The legal person listed on the policy as the named insured, Widgets, Inc., did not have insurable interest; and the natural person with insurable interest, George Bailey, is not covered in the policy as an insured. Beyond the individual (natural person) ownership of a building, one of several possible ownership scenarios could exist that must be considered, anticipated and/or
researched, including: 1. The building is owned individually by the “owner” of the business operation (as in our example above); 2. The building is owned by several individuals; 3. The building is owned by a separate legal person; or 4. The building is owned by any combination of natural and legal persons. Attorneys often recommend such separation for various reasons. But sometimes, the building is not owned by the named business entity because it was purchased first, willed to the individual, or any number of reasons. Again, never assume ownership. How is building ownership confirmed? The simplest way is to ask the question; specifically, “who or what entity owns the building.” Even Mr. Bailey in our example knows he owns the building individually, he just didn’t see or understand the need to tell the agent. Explain the need. A second method requires individual effort, but it’s quick and painless in most circumstances. Research the county’s online tax, GIS, or other public record system. Most counties offer access to at least one public record. Once the proper site is located, an address search can be done. Depending on the county, massive amounts of building information can be found when such an online search is done: • Year built; • Square footage; • Construction (sometimes); • A photo or footprint drawing; and • Who owns the building. Once you become familiar with a particular county’s website, these searches can be conducted in a matter of minutes. A few minutes of work to save thousands of dollars in uncovered claims, E&O deductibles, and court time seems like a fair trade. Managing and insuring the separate ownership exposure is the delicate and tricky part. Since the same “person” or groups of persons who/that own the operation also own the building, it is unlikely they will want to purchase a separate Lessors Risk Only (LRO) policy, which is an option. In most “common ownership” situations presented previously, the owner(s) want the building insured on the same policy as the operation. Two main methods to accomplish this are: 1. Name the building owner as a named insured; or 2. Legally lease the building to the business.
Naming the building owner as a named insured. As simple as this seems, this is often an improper or unavailable option – especially if that person (natural or legal) is involved in other ventures or activities. Remember, the specific operation was underwritten and adding named insureds has the possibility of extended protection to unintended or unexpected exposures. Many underwriters are unwilling to extended what is essentially LRO coverage in a package policy because of the uncertainty surrounding the breadth of the building owner’s operations. Underwriters may also be unwilling to add the additional named insured because it may own several building or be involved in other operations. Legally lease the building to the business (named insured operation). This is the most proper way to manage and cover the building owner’s exposure. Remember, insurable interest can be created by contract. The lease agreement can and should be used to create insurable interest by making the tenant operation responsible for insuring the building. Once the tenant has insurable interest by legal contract, the building is properly covered and the building owner’s exposure can be protected by attaching specific endorsements: • CP 12 19 Additional Insured – Building Owner: This is a property endorsement extending property coverage to the named building owner; and • CG 20 11 Additional Insured – Managers or Lessors of Premises: A general liability endorsement extending additional insured status to the building lessor/owner. Creating a proper lease and attaching the proper endorsements extends the necessary protection to the building owner without the need of a separate policy. This is also the best option because many underwriters are unwilling to add the building owner as a named insured on the operation’s (Widgets, Inc.) policy. To end, never assume building ownership. Always ask what seems like a “duh” question. If the question isn’t asked, research ownership through the county’s website. Once ownership is known, insure the exposure.
> Chris Boggs Big “I” Virtual University Executive Director > Chris Boggs Big “I” Virtual University Executive Director wisconsin wisconsin INDEPENDENT AGENT INDEPENDENT AGENT
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