The Anchor

THE MAGAZINE OF THE INDEPENDENT INSURANCE AGENTS OF RHODE ISLAND

The AnchorThe Anchor

IN THIS ISSUE

From the President .................... 5Convention Overview .............. 20Profile of an IIARI Member ...... 22A New Look, A New Era ........... 25

Second Quarter2010

SPECIAL ARTICLE

Don’t Take Your Telephone for Granted!

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FIRE

WIND

The quarterly magazine of the

Independent Insurance Agentsof Rhode Island

2400 Post Rd., Warwick, RI 02886401-732-2400, Fax: 401-732-1708

OFFICERSPresident

Antonio Pires

President ElectMichael T. Dacey, CPIA

Vice PresidentHoward Thorp, AAI, CIC

State National DirectorMyron Mitchell

Immediate Past PresidentMelanie Loiselle-Mongeon, AAI, CIC

DISTRICT VICE PRESIDENTSEast Bay

Greg Troy, CIC, CLU, AAI

CentralAndrew Palazzo

NorthernDavid White, AAI

SouthernTom Regan, AAI

DISTRICT VICE PRESIDENTSAT-LARGE

Robert Hartnett

Garry Mansfield, CIC

Doug Mayhew

DISTRICT REPRESENTATIVESCentral

Edward F. Bishop, CICMark Rotondo

East BayDonald Curran

Colette McKeon

NorthernGregory Agnone, CPCU

Marc Nadeau

SouthernStan Tabak

David Woodmansee, CIC

STAFFState Account Manager

Marcia L. Berthiaume, AAI, ACSR

Executive Administrative AssistantKathryn E. Casale

E&O Administrator & Mbr CoordinatorHelen Collins, CPIA

SVP, State Account ExecutiveSean R. Donaghey, CPCU

Executive Vice PresidentMark A. Male

AVP, Director of EducationJean E. Nagle, ACSR, AAI, AIS

Finance & HR ManagerMaureen E. Sears

The Anchor is the magazine of the Independent Insurance Agents of Rhode Island (IIARI).

Statement of fact and opinion is made based on the responsibility of the authors alone and does not imply an opinion on the part of IIARI, it’s officers, directors or members.

Subscription rate for members is $10, which is included in dues. Subscription rates for non-members is $25 per year (single copies $10). Reprint requests should be referred to IIARI.

Copyright©2010, Independent Insurance Agents of Rhode Island.

table of contents

Don’t Take Your Telephone for Granted 11

E&O Notes 14

Annual Convention Overview 20-21

2010 Partners Program 23

A New Look, A New Era 25

Case Law Notes 27

Index to Advertisers 29

features & articles

From the President 5

Executive Vice President Perspective 7

National Director’s Report 9

HR Corner 16

Legal Briefs 18

Profile of an IIARI Member 22

Young Agents 26

Marketing Thought 31

WC Update 36

Agents in Action 39

110th Annual Convention

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from the president

When I assumed the office of President of the Independent Insur-ance Agent of Rhode Island (IIARI) in October of 2009, I promised IIARI members that I would focus on try-ing to build upon the good work that IIARI was already doing. I have made a number of field visits to IIARI member agents since my term of office began and would like to report back to you. I appreciate the opportunity to share with you what your IIARI member agents have been telling me. All of the agen-cies I visited, along with Mark Male our Executive Vice-President, com-mented how pleased they were that someone from IIARI would come to their office. One long time member recalls how, in the past, it was helpful and conve-nient to have active local district IIARI organizations throughout the state, where agents would meet quarterly or semi-annually to discuss mutual con-cerns amongst each other. Generally the local district meetings were held during breakfast or lunch times with the Executive Vice President and/or Board members of IIARI, who regularly at-tended the local meetings. Even though agents were often competing for some of the same business, there was a sense that members were all part of a team and what was good for one was good for all. That member suggests that these local meetings be reactivated. Another member agent expressed concern about the lack of leadership turnover in our organization. This agent felt that there wasn’t enough of an outreach to members to assume various leadership roles in IIARI management

and that IIARI was becoming too much like our government institutions...out of touch and not in tune with the needs of members. Although critical, the comments are a reminder that your involvement and input is necessary to IIARI’s success. Please let me make it very clear that this agent was mak-ing reference to IIARI leadership, not to the efforts being made every day by IIARI staff to keep member agents informed and on the cutting edge of issues and programs that are helpful to members. The agent was, in fact, very complimentary of the work that is done by IIARI staff. Another agent was complimentary about the work done by IIARI’s Gov-ernment Affairs Committee on state issues but felt disconnected with regard to national insurance issues handled by the national organization, IIABA. This particular meeting presented an opportunity to review many of the state and national legislative issues that are of concern to all of us and how IIARI and IIABA goes about addressing those issues. This meeting also presented an opportunity for Mark and I to talk about how aggressive IIARI is on legislative and regulatory issues in Rhode Island and the terrific work done by Ernie Shaghalian and his Government Affairs Committee during the General Assem-bly’s legislative session and beyond. I consider the work done on state legisla-tive and regulatory issues to be one of the best services provided on behalf of all of our IIARI members. During another agency visit with one of our smaller, Main Street type members, Mark and I had an opportu-

Antonio PiresIIARI President

Together...We Can Do Better (Part II)

Second Quarter, 2010 The Anchor5

tion. IIARI leadership will take the in-formation developed during these visits and will make every effort to be certain that what your association means and does is relevant and advances your opportunities as independent insurance agencies. One of our Board members had suggested an Ambassador Program to have volunteer, retired IIARI mem-bers in the field meeting with members. I think that this type of program is a great way of keeping a steady flow of information going back and forth be-tween our members and IIARI staff and leadership.

The Anchor Second Quarter, 20106

nity to hear just what IIARI’s education programs and other services meant to that member and others of a similar size. Those services mean a lot to that member and it reinforced the strength of what IIARI does for its members, regardless of their size or location. The visit also highlighted what IIARI mem-ber agencies do and how they go about servicing their clients each and every day and how busy each minute of the day is for them. In conclusion, the visits will con-tinue as they are very helpful to better understand what members need and what they expect of their state associa-

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executive vice president perspective

In my years of association experi-ence, I’ve had the distinct pleasure of being involved with and engaged in numerous initiatives and projects. Each project has had a specific goal; a pur-pose that ultimately adds to the value of the organization and of our members. The scope of the initiatives have in-cluded causes like improving financial strength or streamlining costs, work-ing to build a more robust membership base, investigating products and servic-es to enhance agent value, improving our advocacy with regulators, legisla-tors and companies, and countless other projects. Each effort has enabled the organization to advance itself a little bit further along toward our mission. One such IIARI endeavor is the formation of the Coastal Committee. Those of us in the insurance business in the Ocean State are well aware of the term “coastal” and its impact on our livelihood. In spite of its name, however, this committee is NOT solely focused on coastal issues as its name suggests. Rather, the committee’s purpose has always been to examine the variables that drive coastal market decisions as well as flood insurance. Within these two areas comes a range of sub-issues. For example, coastal issues include elements like reinsurance and its impact on underwriting deci-sions and pricing, market availability, deductibles, and wind mitigation. On flood insurance, we review the chang-ing flood maps, two types of grandfa-thering, and program premium increas-es. The committee, with the assistance of outside experts, researches these and other important issues in order to

enlighten you and share our perspective with you. After significant discussions and nu-merous meetings where we continuous-ly banged our collective heads against the wall, the committee realized that the hurricane issue and its’ impact on our ability to write and retain business was outside our control. Hurricane model-ing is the new underwriting standard which is a fact that we have to live with for now. All we can do at this time is to continue to provide advocacy and infor-mation to our members. For example, when the new hurricane deductibles were enacted, the committee worked with the Government Affairs Commit-tee to clarify these deductibles in order to prevent indiscriminate use of them by companies. The group even pulled DBR company filings to gather intel-ligence on how companies intended to apply these deductibles. This endeavor

Mark A. MaleIIARI Executive Vice President

Your Committees: Serving a Purpose



turned out to be an exercise in reading futility as the group spent a significant amount of time reviewing these filings but were unable to decipher them to any useful level. The intent had been to disseminate the intelligence learned from this review with IIARI members. In spite of some frustration, the first deliverable from the committee came last year when three public service announcements (PSAs) began to air. The three PSAs highlighted the impact of a hurricane deductible, the need for mitigation, and the need for flood insur-ance. In addition, a dedicated consumer website (coastalinsuranceri.com) was launched to provide resource informa-tion to all association members and their clients. This year the flood PSA was updated in recognition of a height-ened awareness for the need for flood insurance. Given the economic and personal impact of flooding this year, the timing couldn’t have been better. One final piece of the overall strat-egy was the creation of a slide show for member use. The committee hoped to arm members with a useful slide show they could use to increase aware-ness of hurricane deductibles and flood insurance while also providing a subtle opportunity to promote the association and themselves. The exercise to create this slide pre-sentation was challenging. Preparing a

show was done with the underlying as-sumption that most people have little or no knowledge about insurance or how it works. It took the committee several rewrites to eliminate common insurance terminology and ensure an introduc-tory level presentation that would have an optimal impact for consumers. Any member may utilize the slide show pro-vided you attend an orientation meet-ing. While this deliverable appears relatively benign, in actuality, it can deliver a great message to consumers while promoting the agent who presents it, our association, and our industry. In the final analysis we haven’t set the world on fire, but we have set the stage to do something different. To sit back and let things happen to us is the wrong approach. Our job is to take what the market gives us and challenge it, dissect it, fight it and eventually communicate it. The Coastal Commit-tee was set up for that purpose. We are dealing with one of the biggest issues to impact our business in a generation. But like the automobile crisis of the 1980’s and the workers compensation crisis of the 1990’s, we will get through this. For the short term, the Coastal Committee will continue to advocate for you, and guide you through the tough road ahead and over time, this issue like others before us will become part of our past.


Myron MitchellIIARI State National Director

HAZELOCH HERB REMEDYHealthcare Then and Now: How you can inform your friends

& neighbors about the new healthcare bill

national director’s report

An Indian Chief gave a New York woman a wonderful remedy for disorders. The results were so remarkable that her grandson decided to market it, “to make it possible to have immediate relief from headache, dizziness, and nausea.” That’s healthcare in the 1930’s from THE HA-ZELOCH MEDICINE CO. on Rangeley Ave., Providence, RI. Let me introduce you to a professionally prepared slide show on the new healthcare reform you can use to inform your col-leagues, clients, neighbors and friends. The Big “I” staff prepared two presentations you may find useful and can be found on our website at www.iiari.com. The first presentation is a Timeline and Perspec-tive for Big “I” Members that provides an implementation timeline and some infor-mation on potential future challenges and opportunities. The second presentation is a Timeline and Perspective for clients that also provides a timeline and details some changes that small businesses and indi-viduals may experience in the health care marketplace. Here’s an important distinction: the new health care reform is a PASS THROUGH product all the costs will be passed to the end user. The end user needs to know, and wants to know, about the new healthcare bill and how it is going to affect them. You can use this slideshow to inform them - and to inform yourself - about health care re-form. It is not a commentary on the politics of the bill but what is incorporated in the legislation (who, what and when). I wouldn’t ask you to do something I wouldn’t do myself (well, maybe I would), so I presented the slideshow to my busi-ness leads club. People usually don’t thank me for talking about insurance…but in this case they did! They are now more informed and armed with facts instead of

fiction about healthcare reform. As I’ve stated before, these two Power Point pre-sentations can be downloaded by visiting the IIARI website member section (if you can’t remember your login and password, call the IIARI office). Again, one slide show is for agents and the other is for use with your clients. There’s not much differ-ence between them but it’s worth looking at both before you deliver the presentation. You don’t have to take a public speaking course because the slides speak for them-selves. Give it a try, and they’ll all want to have you as their agent. One of the benefits you get as a mem-ber of IIARI and IIABA is the numerous long hours spent preparing presentations for your use. The IIARI Coastal Commit-tee created a slide show to raise consumer awareness about hurricane deductibles, wind mitigation, and flood insurance. While you will need to attend an orienta-tion to use these slides, it will arm you with another way to present to groups of your choice (i.e., social, civic, fraternal, realtors, etc.). The original copper boiler used by my wife’s grandfather to make the “remedy” is in our possession. The recipe for Hazeloch is a trade secret, but I have access to the formula. Besides the herbs, the main ingredient for 1930’s healthcare was – GRAIN ALCOHOL.

WEBINAR WEDNESDAYSLunch Series

11:30 a.m. to 1:15 p.m.

IIARI Education is proud to announce a series of interactive webinars that can be taken from the comfort of your desk. These sessions include the ability to ask questions and seek clarification by “raising your hand” or putting your question in writing online. Participants are randomly called upon by the instructor to share comments or answer specific questions.

IIARI Member Pricing is $51 per person/session

You MUST register at least 48 hours in advance.

DATE COURSE OFFERINGSJune 8 Construction Liability Coverage - What Coverage? (2 P&C Credits)

June 9 & 10 E&O - Better Customer Management (you must attend both days) (4 P&C Credits)

June 16 Certificates - How to Avoid Death by Certificates (2 P&C Credits)

July 13 High Value Homeowners (2 P&C Credits)

July 14 & 15 Ethics in the Insurance Industry (you must attend both days) (4 Ethics Credits)

July 20 Your Insured on the Move - Homeowner’s Coverage Response (2 P&C Credits)

July 21 Traps & Tricks of Commercial Property (2 P&C Credits)

July 22 Lessons Learned from E&O Claims (2 P&C Credits)

August 10 Business Auto or Equipment Floater - What a Mess (2 P&C Credits)

August 11 Lessons Learned from E&O Claims (2 P&C Credits)

August 12 Traps & Tricks of Homeowner’s Insurance (2 P&C Credits)

August 18 Builder’s Risk - Build the Right Insurance Coverage (2 P&C Credits)

THE FINE PRINT

For participants using webinars to earn CE Credits, the following guidelines must be strictly adhered to or CE Credits will not be granted.

• Inattentive bar allows instructor to monitor active attendance. *Ifattendancedropsanddoesnotimmediatelyrecoverbytheparticipanttouchingtheir computerscreen,WebinarAdministratorwillsendoutnoticethroughtheplatformto attendeestomovetheirmouse.*AnyparticipantsnotrespondingimmediatelyarenotifiedbyemailthattheirCECredits willberemoved.• Show hands function allows the instructor to poll the participants at any time.*AnyparticipantnotrespondingimmediatelyisnotifiedbyemailthattheirCECreditwill beremoved.• Function notifies if participant is reading/writing email during presentation.*WebAdministratorsendschatdialoguetoparticipantandasksthemtorefrain;any continuationresultsindenialofCECredits.

Don’t Take Your Telephone for Granted

special article

11Second Quarter, 2010 The Anchor

Ask your customers to talk about a critical component, any critical com-ponent, of their CGL package and they probably won’t be able to answer you. Why is that? Isn’t the product impor-tant? Sure it is. But it’s not the most important “brand touch-point” for your agency. Ask your customers to talk about what they perceive to be a critical component of your agency, and they’ll mention your people. And if you were to probe further, they’ll probably start with your receptionist.

The receptionist? You bet!

This individual is on the phone all day with your customers, your very best customers as well as your not-so-best customers. Don’t take that key position, the phone warrior, for granted. In his excellent book, The 33 Ruth-less Rules of Local Advertising, author Michael Corbett says, “Too many companies never put themselves in the consumer’s shoes. If they did, they wouldn’t allow their phone receptionist to make it so difficult for consumers to do business with them.” It’s about a commitment to the cus-tomer. All employees need to share that vision. Corbett discusses what must happen around your advertising for your firm to be successful. Before you cut a check to the local cable TV operator or direct-mail printer to drum up new business, Corbett offers some questions that are appropriate for agency owners:

• Can the person answering your phone make a compelling response to the caller’s requests?

• Have you told your phone recep-tionist, or anyone who answers your phone, that 83% of effective phone communications occurs in the tone of voice?

• Does he or she answer your phone no later than the third ring?

• How much training has the person(s) answering your phone had in taking care of people who call your business?

• Do they like talking to people? Are they smiling when they communi-cate on the phone?

• Do they consider people who phone with questions or complaints a bother, an interruption, a pain?

• How is your receptionist perceived by your customers?

Don’t take for granted that you already know the answer to these ques-tions, Corbett advises. Investigate. If you find that you have people who

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can’t be superb on the phone, don’t let them answer it. They’re doing seri-ous damage to your business and your brand image, and you may not even be aware of it. Harry Beckwith, author of Selling the Invisible, says “Every employee should know that every act is a mar-keting act upon which your success depends. Review every step, from how your receptionists answer to the mes-sage on the bottom of your invoices, and ask what you could do differently to attract and keep customers. Make every employee a marketing person.” Maybe it’s time for your agency ownership to assess the receptionist

position. This doesn’t mean buying an automated voice system, in fact, that’s often a bad move from the customer’s point of view. But it could mean raising the salary and perks of the receptionist job (how about the best parking spot?) so you attract high-level people. In some agen-cies, it might mean hiring a second re-ceptionist. And it could mean you stop using that position as a “safe haven” for people who can’t cut it as a CSR. If they don’t like to deal with the public, don’t put them at the front desk. Trusted Choice® agencies know that in branding, every brand touch-point matters.

With challenging times comes opportunity. That’s why IIARI recognizes the need to assist members in saving time and money – especially with the current economy. To meet your changing needs, IIARI now provides 6 Ways to Access Education. The 6 ways include: Traditional Classes @ IIARI in Warwick IIARI will continue to conduct and present various classes and programs from our classroom in Warwick. Full-day classes typically include lunch to save participants time and expense. In-Agency Classes @ Your Office IIARI can design and/or schedule classes at your request – from arranging for the instructor and materials to CE processing – and we can save you money in the process. From designation programs to specialized classes, IIARI is prepared to make the logistics easy. To schedule a tailored program for your agency or a group of agencies or to learn more, contact Jean Nagle at 732-2400. Regional Classes @ Remote Locations Classes are now being offered in Westerly, Lincoln and Newport to deliver education at a convenient location for members in the Southern, Northern and East Bay Districts. Virtual Classes @ Home or Office IIARI, through an exclusive special arrangement with 360Training.com, offers online education. This new service is available for immediate use by IIARI members and offers various topics approved for RI continuing education credits. Self Study Courses @ Your Convenience IIARI offers a number of Self Study books that can be done at your pace and schedule. All books qualify for RI continuing education credits. To secure a list of available courses contact Jean Nagle at 732-2400. Webinars @ Locations of Your Choice IIARI offers a variety of property and casualty topics which have been approved for Rhode Island continuing education credits.

utica e&o notes


by Curtis M. PearsallCPCU, AIAF, CPIA

What is the Right Property Limit?Not an Easy Question to Answer, is it?

• Usingthelimitonthecurrentpolicy. The problem with this ap-proach is that it assumes the correct calculation was done by the prior agent.

• Askingthecustomerwhatlimittheywant. While there are some scenarios where this is not advis-able, I believe commercial clients are more sophisticated regarding rebuilding costs than homeown-ers clients. Thus, this approach has a degree of merit. Assist them in understanding the terms unique to property coverage like co-insur-ance, Actual Cash Value, Replace-ment Cost, Agreed Amount, etc. Are there some agents/CSRs on your team that might struggle with explaining what these terms mean and what the impact could be in the event of a claim? It’s not a bad idea to include examples in your proposal on how these terms work. Relying on the customer to provide a limit seems like the agent may be shirking their responsibilities. At the time of the claim, if the custom-er does not receive full compensa-tion, my guess is that they will not be very happy. Whether this results in a claim against you is difficult to say, but losing the customer is prob-ably a given.

• Requestingthatthecustomersecuresaprofessionalappraisal. This is probably the best overall ap-proach. These cost money, but there is no doubt that they are worth it.

• PullingtheinformationfromvariousWebsites. I do not suggest

As I travel around the country and talk to agents at conferences and seminars, resolving the “right” property limit appears to be one of the top 5 is-sues agents face today. Whether for the building or contents coverage, it seems to be more challenging than one may think. The focus of this article is the commercial property exposure, and the problem is that the limit on the policy is not an area of concern until there is a claim – but by then, it’s too late to do anything about it.

Many ApproachesThere are many approaches to securing a property limit. In no particular order:• Usingthecompanyapproxima-

tortool. This could be one they designed themselves or one of the more common industry tools such as MSB. Using one of these is a good starting point and proper use should result in a quality output. However, incorrect inputs will result in questionable outputs. Ensuring that you have full and correct information is key. Without this, errors could occur. Whether it’s inputting an inaccurate square footage, picking potentially incor-rect construction components or assessing the “quality” of the con-struction, this can lead to an output drastically off the “correct mark.” Just because you used a company “approximator” does not guarantee the carrier will honor that number. Will they turn their back on you? It’s happened before!

this approach as there is no guar-antee that these sites reflect current and accurate information.

• Usingwhatyouthinkisaccurate,withthepresumptionthatthecarrierwillinspectitandcatchyour“errors.” This is not a recom-mended approach. Every carrier has its own guidelines on what they will inspect and there are very few carriers that inspect every loca-tion. In the event of a claim against your agency due to an error in the property limit, a defense used by most E&O carriers would involve bringing the carrier in and stating that they had either inspected the location or had a chance to inspect it, and that they should have ad-vised your agency of a problem. This does have some merit, but a stronger focus on trying to calcu-late the “right number” upfront is preferred.

A “Moving Target” For business new to your agency, take the time to secure the necessary data to perform the calculation. This should involve a visit to the location by the producer/agency loss control specialist to help secure the correct in-formation. Take measurements and ask the necessary questions regarding con-struction. This will enable you to more accurately determine the Insurance to Value. DO NOT simply pull up the key input information from the current policy as this might not be accurate and will probably result in a questionable output due to less-than-quality inputs. As you can imagine, there have been a significant number of E&O claims dealing with the policy property limits. For example: The client owned a bowling alley that burned to the ground and claimed the agent procured insufficient limits, resulting in a short-

fall of $3 million. The agent stated that the client provided the figures for the building, and further said the client was advised they should consider using an appraisal service. The client said the agent affirmed the coverage amount was the proper coverage. The agent denied this. In that particular state, there is no duty to inform a client how much coverage they should have. The client made the argument that the agent assumed a duty (regarding limits) when he told the client the coverage was sufficient. This was a classic “word vs. word” scenario, with nothing in writ-ing to back-up either side. The dam-ages were also in dispute, as the client was claiming replacement cost value (RCV), even though the vacant lot was for sale. The claim eventually settled for $1 million.Lessontobelearned: Be careful how you respond if the customer asks you if their property limit is sufficient. In the event of an underlying claim where it is resolved that the limits were inadequate, the client will allege they relied on your advice to their detriment. Calculating the right property amount is somewhat of a “moving target.” Secure as much of the correct information as possible. The time you spend up front may just save you time later if you are hit with an E&O claim.


hr corner

Step 4 - Review resumes for qualifica-tions. Insure your process is consistent.Step 5- Qualify candidates on paper.Step 6 - For qualified candidates on paper, set up interviews.Step 7 - Conduct interviews…have can-didates complete employment applica-tion, background release form, obtain current resume, etc.Step 8 - Make decision (s) on interview (s) using an evaluation criteria. Docu-ment.Step 9 - Conduct additional interviews as required.Step 10 - Present offer, conduct back-ground check, drug testing, check out references.

It is important to have a hiring pro-cess. The employment process starts with making the right hire. You want to be objective not emotional. Do you have a process? If not, you need one. If this is a concern, contact someone in the Human Resource field that can help you. Thanks for your time. See you next quarter.

Do I Have a Good Compliant Hiring Process?

Dave Nichols Quality Transitions, Inc.


Dave Nichols is the principal of a human resource management business, Quality Transitions, Inc., located in Charlestown, RI. He has 25 years of experience in the field and is also retired from the US Army as a Lieutenant Colonel. If you are interested in learning more please visit his website at www.qualitytransitions.net.

This is a continuation in the series of human resource articles for the The An-chor. My goal is to bring value to your organization in accomplishment of the Essentials of Human Resources. This article will deal with the hiring compli-ance execution for 2010. As the economy begins to pick up so does opportunities to hire and recruit new candidates. The Recruitment Process can sometimes be daunting from writing position descriptions to the interview process. Here is a step by step process to help you and your organization.

Step 1 - Complete your requirements for the position and a job description. You might want to consider a hiring requisition. Is your job description compliant?Step 2 - Complete necessary cost effec-tive advertising. Are you involved with all of the social networks? Step 3 - Finalize all of the forms you will be using for this process…screen-ing forms, interview questions, inter-view evaluation form, etc.

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insured suffering from flood damage. However, we recommend that agents not rely on this principle exclusively. To minimize the likelihood that a claim will be made by an insured and to rein-force your defenses if a claim is made, we recommend that agencies establish policies and procedures for squarely addressing flood insurance issues with clients at policy inception or renewal. Consider the following three easy to implement steps:

• Communication is key. When meeting with clients to prepare an application for coverage (or for renewal coverage), specifically discuss the fact that flooding is not covered in standard homeowners, renters and business insurance poli-cies. Review flood maps affecting your clients’ properties and inform clients about the availability of cov-erage through the National Flood Insurance Program (NFIP). Do this with every client every time, no matter how sophisticated the client is in relation to insurance matters or how long you have acted as the cli-ent’s agent. (NOTE: see Insurance Bulletin 2006-7 for flood insurance training required under the NFIP.)

• Document these communications. Make sure your file contains a written document that reflects you reviewed the relevant flood maps, advised as to the scope of flood coverage afforded by the policies the client has elected to purchase and informed the client about

Flood Insurance - Protect Yourself From Errors & Omissions Claims

legal briefs

Jennifer R. Cervenka, Esq.Partner

Partridge Snow & Hahn, LLP

Melissa E. Darigan, Esq.Partner

Partridge Snow & Hahn, LLP

This spring Rhode Island businesses and homeowners experienced flooding first-hand. Many of these businesses and homeowners also learned the hard way that flooding is not covered in the standard homeowners or business insurance policies. Policyholders with uncovered flood-related losses may point the finger at their independent in-surance agents for the absence of flood insurance. The fact that this coverage simply is not part of the basic policy is cold comfort to those with substantial damages and some may try to hold agents responsible for their losses. Although you cannot prevent your clients from filing a claim, you can protect your agency from liability and help your E&O carrier defend a claim through diligence and proper documen-tation. You will recall from our earlier ar-ticles in The Anchor that under Rhode Island law an independent agent is the agent of the insured, not the insurer, when placing a policy. Agents repre-sent the interests of the insured in the selection of the carrier, distribution of risk and determination of amounts and types of coverage. In carrying out these duties, agents must exercise rea-sonable care, diligence and judgment. Agents have a duty to seek forms and limits of coverage pursuant to an ex-press request by the insured for specific coverage; however, Rhode Island law does not impose a general duty on agents to inform an insured as to every form or limit of coverage available. As a matter of law, this limitation sup-ports defenses to a claim made by an


NFIP plans. Acord Form 60 (Flood Insurance Selection/Rejection) is signed by the client and agent and records a client’s decision to reject or accept flood insurance coverage. Having your client execute this form is powerful evidence that the client made an informed decision about the availability of coverage. In the absence of a signed declina-tion form, write a letter to the client confirming your discussions and the decisions made by the client with respect to flood coverage. At the very least, document the discussion and the decisions made by the client in an internal memorandum to be maintained in your file. Prepare this letter or memorandum reasonably contemporaneously in time to the client meeting.

• Preserve your documentation. Keep these records documenting your communications with clients on flood issues in your files. Regu-lation 67 requires agents to main-tain a policy record file for each policy, including hard copy and electronic work papers and written communications for the current pol-icy year plus four years. In a prior article, we suggested that this mini-

mum regulatory retention require-ment may not be sufficient to allow agents to effectively defend claims because many claims to which an agent may be subject have statutory limitation periods of up to 10 years. Agents should also be mindful of any contractual obligations imposed by their E&O carriers for retaining documents. Failure to maintain or preserve records in accordance with regulatory authority or pursuant to contract may relieve the E&O car-rier from the duty to defend third party claims.

These policies should be established and communicated to all agency em-ployees and enforced by management. In so doing, they will become part of the agency’s standard business prac-tices. Despite following best practices such as these, however, it may be in-evitable that a disgruntled policyholder will file a claim. In that event, be sure to notify your E&O carrier promptly and remember that agencies have an affirmative duty to institute a “litiga-tion hold” on all documents relative to the dispute until resolution, irrespective of regulatory or contractual retention requirements.


Jennifer R. Cervenka ([email protected]) and Melissa E. Darigan ([email protected]) are attorneys with Partridge Snow & Hahn LLP, a Providence based business law firm. Ms. Darigan is a partner with the firm and Co-Chair of its Litigation group. Ms. Cervenka is a partner with the firm and Chair of its Insurance group.

Survive & ReviveTentative Schedule

Thursday, October 7

On Thursday, if you’re interested in Continuing Education credits, you can participate in a CE Session with instructor Dave Sanborn. Dave has a solid reputation of delivering education training in a way that keeps you engaged and interested. This will be worth the time and expense - AND deliver the impor-tant credits you need to keep your license current.

The Exhibit Show opens mid-day and everyone is encouraged to visit. The companies and purveyors of products and services designed to assist you, your agency, and your clients will be there to answer your questions about how to improve relation-ships and profitability. If you’re a golfer, you can head over to the Warwick Country Club in Warwick Neck for 18 holes at one of the more pictur-esque clubs in the state. Your registration fee includes lunch, 18 holes and a shotgun start. As there will be a limit to the num-ber of golfers - be sure to look for registration details when they come out.

An Exhibit Reception will precede the Golf Reception where prizes will be awarded. Immediately thereafter, the Hawaiian Luau & YA Silent Auction will be held under the tent to kick the convention off officially.

Independent Insurance Agents of Rhode Island110th Annual ConventionCrowne Plaza ● Warwick, RI

THURSDAY, OCT 7TH - FRIDAY, OCT 8TH

Survive & ReviveTentative Schedule

Friday, October 8

After a Continental Breakfast, Friday starts with another oppor-tunity to hear Dave Sanborn present a CE Session. Promptly at 11:30 a.m., the Annual Membership Meeting will be held imme-diately followed by the Installation Luncheon.

If you’re an Agency Principal, the afternoon will include various topics and a presentation by the Insurance Superintendent Joe Torti. THIS IS AN AGENCY PRINCIPAL SESSION ONLY.

A second CE Session will follow the Installation Luncheon. As the day wraps up, the IIARI Past Presidents will have a private re-ception prior to an evening that includes a reception, some brief comments and entertainment that will help you dance the night away.

At the end of the evening - if you’re too tired to drive - take advantage of the special IIARI room rates at the Crowne Plaza and pretend you’re on a mini vacation.

ConclusionAfter some difficult and challenging times as independent agents, don’t you deserve indulging yourself with some cama-raderie, conversation and networking while learning something new and celebrating the future?

See you in October!

Independent Insurance Agents of Rhode Island110th Annual ConventionCrowne Plaza ● Warwick, RI

THURSDAY, OCT 7TH - FRIDAY, OCT 8TH

I have been an independent insurance agent for 22 years. I started working at the agency with my father and became the agency owner 10 years ago.

Commercial Insurance Exchange has been a member for 22 years.

The thing I like most about this business is the people. I have great insureds, compa-ny underwriters, and brokers. I also enjoy working with new prospects and learning about their business and developing their insurance program.

The greatest challenge is obtaining new business. We’ve been through a few chal-lenging years with businesses closing, mov-ing, and cutting overhead, but I’m starting to see a light at the end of the tunnel.

As a commercial lines agency, we are able to develop insurance programs for busi-nesses with unique insurance needs and customize an insurance package for them.

I would tell them to focus on the special coverages such as pollution, environmen-tal, ocean cargo, and surety. This will give them an edge in the insurance market place.

My biggest struggle is keeping work and home in balance. All women can relate to that!

PROFILECommercial Insurance ExchangeKathleen Bruno2155 Diamond Hill RoadCumberland, RI 02864

of an IIARI Member


Employees of Commercial Insurance Exchange include(left to right) Kathy Bruno and Lisa Hanson

ANCHOR: How long have you been an independent insurance agent?

ANCHOR: How long have you been a member of IIARI?

ANCHOR: What do you like most about your business?

ANCHOR: What are your greatest challenges?

ANCHOR: What advice would you give to someone interested in becoming an independent agent today?

ANCHOR: What is your biggest struggle?

ANCHOR: What are your greatest opportunities?


With this issue, the Independent Insurance Agents of Rhode Island proudly introduces the 2010 Partners Program. The 2010 Partners Program is a mechanism to allow companies to demonstrate their support of the American Agency System and IIARI.

We thank all of our 2010 Partners Program sponsors. Diamond sponsor includes The Beacon Mutual Insurance Company, Gold sponsor includes Progressive, Silver sponsors includes Arbella Insurance Group, and Quincy Mutual Group, and Bronze sponsors includes Andover Companies,

EMC Insurance Companies, and Narragansett Bay Insurance Company.

Be sure to thank your companies for their unparalleled support of IIARI and all independent insurance agents. Look for all of our sponsors throughout the coming year as we acknowledge their commitment at all IIARI events and functions.

THANK YOU!

The Andover CompaniesEMC Insurance Companies

Narragansett Bay Insurance Company

BRONZE SPONSORS

Arbella Insurance GroupQuincy Mutual Group

SILVER SPONSORS

DIAMOND SPONSORS

GOLD SPONSORS

How can Big “I” Markets help you please your most discriminating clients?

With the latest addition to our Affluent Program, the Prestige® Portfolio from Fireman’s Fund.

Big “I” Markets is proud to announce that our newest partner in our Big “I” Affluent Program is Fireman’s Fund Insurance Company. Fireman’s Fund has recently launched Prestige Portfolio, a broadened product offering designed to meet the needs of the high net worth and affluent customer. In addition to providing the top-notch coverage and claims service people expect from Fireman’s Fund, Prestige Portfolio includes expanded portfolio credits for multiple lines, renewal and loyalty credits, and more flexible and competitive auto rates that reward low-risk drivers. Whether your discriminating client already has monoline home from Fireman’s Fund and is looking for additional coverage, or is not yet a Fireman’s Fund policyholder, total account coverage through Prestige Portfolio will provide just what they’re looking for.

Homes | Scheduled Valuable Possessions | Personal UmbrellasAutos | Watercraft | Classic Car | Private Event Insurance

Login and request a quote today at www.bigimarkets.com.


A New Look, A New Era

eagle in flight above the Big “I”. An important reason for the change to the logo is to have it align more closely with our Trusted Choice logo. The Trusted Choice consumer brand has the same eagle swoosh, with the words “Trusted Choice” in the middle, and a newly added tagline “Indepen-dent Insurance Agent” underneath the swoosh. So now, both our consumer brand logo and our association logo have a similar look, and they both por-tray our identity and our value to con-sumers. This is a proven formula used in logos in the industry and beyond. And our logos now do it effectively, showing both our identity as indepen-dent insurance agents, plus our value proposition to consumers-what sets us apart from the competition. We are the Trusted Choice; the consumers’ trusted insurance advisors, offering custom-ers choice of carriers, customization of policies and advocacy, which all add value to the insurance transaction. A look at the history of corporate logos shows that most companies logos change with time, to update, modern-ize and better present their image. The changes to the Big “I” logo have done that well over the years, and this latest version is particularly exciting because it tells our story so very well, and we have a wonderful story to tell.

In Washington, D.C. in March, the national Board of Directors of the Inde-pendent Insurance Agents and Brokers of America voted overwhelmingly to update the Big “I” Logo. Replacing the current oval and eagle perched atop the Big “I”, the new logo is a dynamic swoosh depicting an eagle depict-ing an eagle in motion as it swoops around and over the words “Indepen-dent Insurance Agent”, with the tagline “The Trusted Choice” underneath the swoosh. The new logo is the 10th since the association began in 1896 as the Na-tional Association of Local Fire Insur-ance Agents. The first logo was created soon after the association was formed, and consisted of a circle with the letters “NALFIA” in the middle. In 1903, the first eagle with wings spread appeared in our logo, and it has been there ever since. As the association evolved into the National Association of Insurance Agents, and later in the Independent Insurance Agents of America, and finally into the Independent Insurance Agents & Brokers of America, our logo evolved as well. In 1956, the first Big “I” logo was created with an eagle perched atop a Big “I” with the words “Your Indepen-dent Insurance Agent” and the tagline “Serves You First” surrounding the eagle atop the Big “I”. Interestingly, that logo was used for only one year, however the eagle has remained over the Big “I” in every logo revision since that time. I consider this is a crucial part of our modern day identity and it is consistent with how well known we are in the insurance industry and legislative community as the Big “I”. In keeping with that important traditional identity, the newly updated logo includes the

David DanielIIABA Chairman


2010 YA SPONSORS

GOLDThe Beacon Mutual Insurance Company

ProgressiveClean Care of New England

SILVERQuincy Mutual Insurance Company

PuroClean Disaster Restoration

BRONZEThe Preston Agency

NLC Insurance CompaniesBruce Thomas

EMC Insurance CompaniesMark Male

Fidelity National Property & CasualtySERVPRO of Washington County

We would like to give a heartfelt thanks to our current 2010 Young Agents Sponsors especially in these tough economic times we sincerely appreci-ate your support. With the generosity of our sponsors we are able to provide our young agents with some educational & networking events and hope to expand in 2011 & beyond. It’s not too late to become a sponsor, if you are interested please contact Marcia Berthiaume at [email protected] or (401) 732-2400.

YoungAgentsSilentAuction

The Young Agents Group will hold its second annual Silent Auction event in conjunction with our 110th Annual Convention on Thursday, October 7th at the Crowne Plaza, Warwick, RI. If you are interested in donating an item for our silent auction please contact Marcia Berthiaume at [email protected] or (401) 732-2400. It was a huge success last year as we raised $9,035 to benefit the Tomorrow Fund. We hope to set a new record this year.

Interested in joining the Young Agents Committee?

Please contact Marcia Berthiaume at [email protected] or (401) 732-2400.

CASE LAW NOTEA Review of Case Law of Interest to IIARI Members


This feature of The Anchor reviews recent case law involving the insurance industry. Please contact the authors for more information: Jennifer R. Cervenka, Esq. and Melissa E. Darigan, Esq., Partridge Snow & Hahn LLP, 401-861-8200, www.psh.com.

UIM Exclusion Triggered by Facts: Pennsylvania General Ins. Co. v. Taliercio; Rhode Island Superior Court; 2010 R.I. Super. LEXIS 67 (April 19, 2010).

Summary: Pennsylvania General Insurance Com-pany sought a declaration of “no coverage” for Mat-thew Taliercio’s claim for uninsured motorist (UIM) coverage benefits arising from an automobile acci-dent where Taliercio was a passenger. The company claimed that Taliercio was not covered by the UIM provision of the policy because Taliercio allegedly used the vehicle knowing that it was stolen, thus falling within an exclusion to the policy. Taliercio defended the suit alleging that simply riding as a passenger is not “using” the vehicle as intended by the UIM provision’s exclusion. He also asserted that he was not aware at the time of the accident

that the vehicle was stolen. Applying the rules of construction for interpreting insurance policies, the Superior Court concluded that riding in a vehicle as a passenger constitutes “use” under the UIM exclusion. However, the court found that whether Taliercio had a reasonable belief that he was entitled to use the vehicle is a factual determination reserved for the jury and denied Pennsylvania General’s motion for summary judgment. In its decision, the court noted with approval the public policy pur-poses supporting the exclusionary language of UIM provisions.

LEGAL EXPERTISE

FROM A FIRM THAT KNOWS

INSURANCE

• Regulatory compliance and licensing

• Enforcement

• Corporate governance

• Acquisitions, sales and mergers

• Policy interpretation

• Loss coverage

• Litigation/dispute resolution

Closer to the issueswww.psh.com | 401 861-8200

INSURANCE PRACTICE GROUP MEMBERSJennifer R. Cervenka, Chair • Christopher C. Cassara

Melissa E. Darigan • Howard Merten John J. Partridge • Steven E. Snow • Paul M. Kessimian

The Rhode Island Supreme Court licenses all lawyers in the general practice of law.The court does not license or certify any lawyer as an expert or specialist in any field of practice.

iiari 09.qxp 9/29/2009 3:45 PM Page 1

Nine million. That’s how many Americans have their identities stolen each year, estimates the Federal Trade Commission. From January 2005 until October 2007, a staggering 215 million per-sonal records were breached, reported the Privacy Rights Clearinghouse. The FTC noted that, in half of the criminal incidents in 2005, thieves obtained goods or services worth $500 or less. In 10 percent of cases, thieves stole at least $6,000. ID theft has only been a crime since 1998, when Congress passed the Iden-tity Theft and Assumption Deterrence Act, but it’s escalated as a problem. Not only do criminals use identitytheft to steal assets, they also commit crimes in the name and character of the victim. The FTC urges a “deter-detect-de-fend” approach to battle ID theft, which costs consumers and businesses plenty of money and time. Deterring means safeguarding personal data to make itharder to steal and misuse. Detecting means monitoring and becoming aware of irregularities that indicate data has been stolen. Defending means reporting the crime and then taking steps to re-gain data security, recover stolen assets and fix misused information. Identity theft criminals commonly use six methods to steal consumer and business information:

1. “Dumpster diving” for papers with personal information

2. “Skimming”—stealing credit/debit card numbers when a card is pro-cessed

3. “Phishing”—pretending to be a financial institution or company and

sending spam e-mail messages to get people to reveal personal infor-mation

4. Changing an address by completing a change of address form to divert bills to a criminal’s location

5. Stealing wallets, mail, checks, em-ployer personnel records and other paperwork—through breaking-and-entering physically or electronically or bribing employees who have access to information

6. “Pretexting”—using false pretenses or tricks of social engineering to obtain personal information from consumers, financial institutions, telephone companies and other sources.

Identity theft robs a victim of time that must be urgently spent to alert police, credit bureaus, financial institu-tions, medical providers and others. A victim has to prove an identity loss or financial loss; close accounts; write letters to government entities; and even work with a legal advocate to recover and rebuild a stolen identity. Likewise, the costs for legal fees can quickly add up and overwhelm a stressed victim. The loss of work time also can be costly, at the very time when financial resources are under at-tack by a criminal. Personal and business insurance can play a key role in the “defend” stage of the identity theft battle. Insurers offer services to help consumers and busi-nesses report identity theft and recover from it. Sometimes these services are included as part of a homeowners insurance package or even a business insurance package; the cost may be included or additional.

Who Wants to Be You?Identity Theft a Common Risk for Consumers


Provided by TrustedChoice.com

An identity recovery package may include reimbursement of legal fees related to identity theft, as well as costs of credit reports and postage, phone, shipping fees, lost wages and child/el-der care for those forced to spend time away from family to resolve the situa-tion. The ID package also might in-clude a limited benefit for mental health counseling for crime victims. The first step in checking on wheth-er you’re covered for identity theft? Contact your Trusted Choice® insur-ance agent. You can find an insurance professional at TrustedChoice.com.


The Trusted Insurance Alliance is a group of various size agencies that have a proven track-record of success and performance.

Agencies that participate in TIA benefit from:• Aggregation of Premiums and Loss Results• Growth Incentive Opportunities• Partnering with Quality Markets and Agencies

Agencies that participate in TIA maintain:• 100% Independent Ownership• Individual Agency Identity• Insurance Company Contracts

For a confidential discussion on how your agency would benefit from participating in TIA, call Bob Loiselle at (401) 723-8510 or Brian Hunter at (401) 769-9500.

Are you looking to strengthen your agency?

Strength Through Performancewww.TIAlliance.com

1-800 Water Damage ..............................................................................19 1-800-We-Insure......................................................................................352010 Partners Program ............................................................................23Big “I” Advantage ....................................................................................38Big “I” Affluent Program ..........................................................................24Big “I” Professional Liability .....................................................................30Clean Care of NE ............................................................ Inside Front CoverCRIS Certification Program ......................................................................33DeCotis Insurance ....................................................................................12 EMC Insurance Companies ........................................................................4Insurance Reconstruction Services ............................................................6InsurBanc .................................................................................................32Partridge Snow & Hahn, LLP ....................................................................27Providence Fire Restoration ....................................................................11 Servpro of Metro RI .................................................................................17Servpro of Washington County .................................................................7Smoke Clean of NE ....................................................................Back CoverTrusted Insurance Alliance ......................................................................29 Webinar Wednesdays ..............................................................................10

INDEX TO ADVERTISERS

You’re an independent agent.

Do you trust

your pit crew?

Protect.Our superior coverage and

expert claims teams are in your

corner in the event of a claim.

Prevent.Our risk management

resources keep your agency

from making common

preventable mistakes.

Prosper.When you know you have the

best E&O protection, you can

focus on growing your most

important asset–your business.

The Big “I” Professional Liability Program

www.independentagent.com/EO

The Big “I” and Swiss Re are jointly committed to providing IIABA members with leading

edge agency E&O products and services. The IIABA and its federation of 51 state

associations endorse Swiss Re’s comprehensive professional liability program.

Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas.

Westport is a member of the Swiss Re group of companies and is licensed in all 50 states and the District of Columbia. ©2008 Swiss Re

To Tweet, or Not to TweetThat Really is the Question, Today

marketing thought

thing, out there each day, most likely your followers will simply start tuning you out. Instead, when you have something really important to say, say it.

Use as the Vehicle to Drive People Back to Your Web Site The best place for customers to learn about you, research your products, and ultimately buy something from you is your website. One way to drive more people to this central repository about everything you do is through social media. In your 140 character Tweets, on your Facebook wall, and through your Linked-in messages, try to bring them back to your website, where you could actually sell them something. In your messages, post a piece of an article, or give them some details about a promotion, and bring them home. Of course, your website should be designed and developed with sales in mind, but that is a whole other discussion; the days of the online bro-chures are long gone.

Keep your Web Site Fresh with a Blog One easy way to keep your website interactive and updated with important information is to post a blog within it. This is relatively simple to do, and often times free. A blog enables you to post infor-mation quickly on your website; so, no waiting two weeks for your web master to change “a” to “the” in the fifth paragraph on the “About Us” page. I suggest you put out messages through social media an-nouncing why a new article that you posted on your blog can help your followers. They hopefully will in turn visit your blog and web site and learn more about what you do, and hopefully buy something. A blog is also a great way to improve your rank-ing in search engines; because you will be posting articles about what your customers


By now you have probably read in a trade publication or heard in a seminar about why you should be more engaged in social media. I’m going to assume that you already see the merits – further mak-ing connections with your customers, strengthening your existing relationships, disseminating information quickly and eas-ily, and utilizing one of the lowest costs for lead generation – so I’m going to offer you my thoughts from a marketing perspective on how best to Tweet, Facebook, blog and stay Linked-in. Then, I will provide you several options on how you can actually implement a social media program. First, it is important to understand a phenomenon that was once relegated to college students and people who had way to much time on their hands, but now has become so main stream that “Tweeting” and becoming a “Fan” have taken on a new meaning in our vocabulary. Social media outlets like Facebook, Twitter and Linked-in have become a major way people stay in touch and maintain relationships. You can easily inform people about what you are doing, display your pictures from your va-cation, and show the world how your child or grandchild is in fact the most beautiful in the world. Understanding why and how people are using social media is instrumen-tal to how you ultimately communicate your business message to them.

Don’t become background noise Those of you already engaged in social media know what I’m talking about. Don’t Tweet or post a message on your wall for the sake of saying something. Only post important, relative information. Therefore, you do not have to worry about what to post, or whether you are posting something everyday. If you follow the “shot-gun” approach and just blast something, any-

John HouleJH Communications


are looking for, your website will come up higher in Internet searches. Search engines also rank websites based on the extensiveness of their content. With a blog, your website could be rich with important articles.

The New Form of Communications is Already Here Many of you already send out news-letters, both printed and electronic, but more and more people are utilizing social networking over email and printed pieces to stay in contact. Other companies already have successfully capitalized on social me-dia to stay in touch with their customers. A major coffee and donut shop Tweets fol-lowers with specials, often right at the time when they are driving into work. My wife is a shopper at a certain children’s store, and she received a message that she would get free shipping for being a Facebook fan. She downloaded the coupon, went to their website, and the sale was made. What could you send out to your customers?

Who should be Running Your Social Media Campaign? You should. You’re the expert about your business. Social media is being so readily utilized because ANYONE can do it. If you do not have the time to engage in social media, then the best person to do it after you is someone who really under-stands marketing, and specifically messag-ing. You, someone in your office, or an individual you contract, can work with you to develop a list of articles and messages you would like to put out to your custom-ers. The articles and 140 character Tweets could be pre-written, approved by you, and then pushed out daily, weekly, or monthly.

Just like so much in marketing, it really comes down to doing, not waiting. No one has the “perfect” social media campaign, but there are many that are “good.” Just do it, but in doing it, please put out good information.

John Houle is the president of JH Commu-nications, a regional public relations and advertising agency.

Construction Risk & Insurance Specialist

The insurance needs of contractors are complex and insurance generalists frequently makeerrors in designing programs for their clients. Completing the CRIS curriculum will assure the agent understands the most important insurance needs of contractors.

Contractors know that individuals who hold the CRIS certification possess an understand-ing of construction exposures, insurance, and risk management techniques. It makes themconfident to know they are working with someone who stays on top of insurance industry changes and trends affecting contractors.

To obtain the CRIS certification, you must complete five specialized courses on construction risks and insurance and then pass the corresponding on-line examination.

• COMMERCIAL LIABILITY INSURANCE FOR CONTRACTORS

• CONTRACTUAL RISK TRANSFER IN CONSTRUCTION

• PROPERTY INSURANCE FOR CONTRACTORS

• WORKERS COMPENSATION FOR CONTRACTORS

• COMMERCIAL AUTO, SURETY, CIPS & MISCELLANEOUS LINES

To maintain the CRIS certification, you obtain only 7 hours of approved construction risk and insurance continuing education credit during the initial 24 months and every 12 months thereafter.

Retail insurance agents and brokers may elect to have their name, firm, and phone number included in the directory of CRIS construction insurance agents and brokers. This is a free listing in a directory being promoted to contractors as a source for insurance professionals who are focused on the construction industry.

Visit www.iiari.com for more information and to register.


their Trusted Choice agent. It is important to note that each of our Gold level Trusted Choice agents have their own clients in their ads, and other sponsors have paid the small at-cost fee to feature themselves and their own customers as well. The intention of this year’s campaign was to continue the momentum from past years. We lead the country in having one of the most effective Trusted Choice campaigns, and in my opinion, we keep getting better each year. We have regular people from every community and every walk of life telling others why they choose us, as agents. People will ask them why they were on TV, and they will explain; they will tell others and so on. This fac-tor, backed by the frequency and reach of our TV and radio campaign, puts us on the same playing field as the direct writers who aggressively advertise. But, we’re not only in the game, we’re going to make a run at the title. I’ll put our campaign up against any other in Rhode Island. I thank the members of the Com-munications Committee who helped make this happen and all the agents who have showed their support.


The Buzz Effect of This Year’s Trusted Choice Campaign

When people see a Trusted Choice ban-ner flying along the beach this Summer, or see their neighbor on TV, our goal is that those who do not know will ask the ques-tion: What is a Trusted Choice agent? The Trusted Choice banner that will fly 6 times this Summer – from Westerly, along the RI coast, up to Bonnet Shores, across to Newport, and back the same way again – we intrigue people and prompt them to visit TrustedChoice.com or call 1-800-We-Insure. We have good reason to suspect this banner will generate buzz this summer; a similar banner was flown last summer – an idea that was first suggested by Mark Male and “borrowed” by New Jersey – and it generated the most hits to TrustedChoice.com in a single day. We again have embarked on an ag-gressive television campaign that will see more than 500 TV and 500 radio ads run from May through November. The differ-ence this year is that not only will many of our RI agents be featured in the ad, but our own customers will also be helping us communicate our message. From contrac-tors to school teachers, barbers to business people, real Rhode Islanders are inter-viewed on why they continue to choose

Look for the Trusted Choice Banner this Summer on a beach near you!

Howard Thorp, AAI, CICChairman

Communications Committee

This column has traditionally focused on legislative and practical issues arising from changes to the Workers’ Compen-sation Act and workers’ compensation system. I’ve also explained some of the fundamental underpinnings of our sys-tem. This column will focus on the role of “medical benefits”. Medical benefits are one of three prongs of benefit entitlement to injured work-ers. The other two are indemnity (wage replacement) and specific compensation (scarring and loss of use). Under law, the employer, through its carrier or its own if self-insured, is obligated to pay for neces-sary treatment required to cure, rehabilitate or relieve the injured worker from the effects of a work-related injury. This treat-ment includes “medical, surgical, dental, optical, or other attendance or treatment, nurse and hospital service, medicines, and apparatus including, but not limited to, the following: ambulance and nursing service, eyeglasses, dentures, braces and supports, artificial limbs, crutches and other similar appliances”. This obligation exists whether the employee loses time from work or not. Of interest, the employer is not liable for hearing aids. This raises the questions: what is the cost, how is it paid, and how does the employee choose a doctor? An injured employee has freedom of choice to obtain health care, diagnosis, and treatment from any qualified health care provider initially. The initial health care provider of record may then, without prior approval, refer the injured employee to any qualified special-ist for independent consultation or assess-ment, or specified treatment. However, if the insurer or self-insured employer has a Preferred Provider Network (“PPN”) ap-proved and kept on record by the Workers’ Compensation Court’s Medical Advisory Board, any change by the employee from

the initial health care provider of record shall only be to a health care provider listed in the approved PPN. If the employ-ee seeks to change to a health care provider not in the PPN, the employee must obtain the approval of the insurer or self-insured employer. This restriction was enacted by the General Assembly in 1992. Nothing prevents the treatment of an employee by more than one physician, den-tist or hospital and the employee’s first visit to any facility providing emergency care. What is the health care provider’s obli-gation in this scenario? Within three days of an initial visit, the health care provider must provide the employer, the employee and his or her attorney with a Notification of Compensable Injury form. Likewise, within three days of the injured employee’s release or discharge, return to work, and/or recovery from an injury, the health care provider must provide a Notice of Re-lease to return to work. A $20 fee may be charged by the health care provider for the Notification of Compensable Injury forms or Notice of Release forms. The employee is statutorily protected and not person-ally liable to pay any physician, dentist, or hospital bills in cases where the provider has forfeited the right to be paid because of noncompliance with this section. There is also an obligation to submit a copy of the medical report to the employee, his attorney (if any) and the employer (or its carrier) within ten days of the examina-tion date. In fact, the statute is clear there shall be no charge for a health record when that record is necessary to support any ap-peal or claim under the Workers’ Compen-sation Act. When does the bill for treatment have to be paid? The bills are due and payable within twenty-one days from the date a request is made for payment. In the event payment is not made within twenty-one

Workers’ Compensation – What Is Going On?

wc update

Michael LynchVice President, Legal

Beacon Mutual



days from the date of the request, interest accrues and the employee or medical provider may file a petition for payment with the Administrator of the Workers’ Com-pensation Court. What are doctors, hospitals and other providers paid? The Director of the Department of Labor and Training, in consultation with the Workers’ Compensation Court, has established a fee schedule of rates of reimburse-ment for those medical and dental services, excluding non-physician hospital charges, which are most often provided to employees receiving workers’ compensation. The Director updates this schedule regularly and in set-ting the rate of reimbursement, the Director determines, based upon available data, the 90th percentile of the usual and customary fee charged by health care provid-ers in Rhode Island and immediate surrounding area. In no case may the rate of reimbursement exceed that amount. The liability of the employer or insurer for any charges and/or payment is limited to the rates of reim-bursement set forth in this schedule. Hospitals are paid a separate statutory scheduled amount. Petitions may be filed in cases where the reasonable-ness of a particular rate is questioned. Any dispute as to the reasonableness of the amount of any charge and/or payment for medical, dental, or hospital services or for medicines or appliances is determined by the Workers’ Compensation Court and these disputes are determined in accordance with the guidelines and protocols estab-lished by the Medical Advisory Board. Finally, what is rehabilitation in workers’ compensa-tion and is this compensable? The short answer is yes. Rehabilitation in Rhode Island is defined as the prompt provision of appropriate services necessary to restore an employee who is occupationally injured or diseased to his/her optimum physical, mental, vocational, and economic usefulness. This may require medical, vo-cational, and/or re-employment services to restore an employee who is occupationally disabled as nearly as possible to his or her pre-injury status. As a procedure, rehabilitation in Rhode Island includes medical treat-ment, vocational services or reemployment services, or services used to return the employee who is occupation-ally disabled to suitable, remunerative employment as adjudged by his or her functional and vocational ability at that time. Who is entitled to this? Any injured employee with total disability or permanent partial disability to whom the insurance carrier or self-insured employer has paid compensation for a period of three months or more, and to whom compensation is still being paid, or his or her employer or insurer may file a petition with the Workers’ Compensation Court requesting approval of a reha-

bilitation program or the parties may mutual agree to a rehabilitation program. What is the injured worker’s obligation? In the event of the refusal of the employee to accept treatment reasonably required to lessen or terminate his or her incapacity, the Court, upon petition, may bar the em-ployee from receiving compensation during the period of refusal. In regards to rehabilitation, although compen-sation payments shall not be diminished or terminated while the employee is participating in a rehabilitation program approved by the Workers’ Compensation Court or agreed to by the parties, compensation payments shall be suspended while an injured employee willfully re-fuses to participate in a rehabilitation program approved by the Workers’ Compensation Court or agreed to by the parties. Finally, when the employee has completed an approved rehabilitation program, the rehabilitation provider shall recommend an earnings capacity, or in the instance of physical rehabilitation provided or prescribed by a physician, a degree of functional impairment, and the employee shall be referred to the court for an earn-ings capacity adjustment to benefits, unless the employee has returned to gainful employment. In summary, the medical benefit component of work-ers’ compensation entitlement is rich and designed to allow the employee to regain his or her earning capacity. With changes to our health care system occurring every day, the implications for workers’ compensation are end-less. This includes cost of service and pharmaceuticals and ever improving methods of health care delivery. Do not lose sight of this when considering the cost and benefits of a workers’ compensation policy to both the employee and the employer.

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