The Anchor

THE MAGAZINE OF THE INDEPENDENT INSURANCE AGENTS OF RHODE ISLAND

The AnchorThe Anchor

IN THIS ISSUE

From the President .................... 5Cat Modeling Crisis ................. 11Profile of an IIARI Member ...... 22Leveraging Trusted Choice ...... 34

First Quarter2010

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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

AVP, State Account ExecutiveSean R. Donaghey, CPCU

Finance & HR ManagerJanice D. Fregeolle

Executive Vice PresidentMark A. Male

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

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

The “Cat Modeling Crisis” 11

E&O Notes 14

2010 Partners Program 23

2009 PAC Honor Roll 24

Case Law Notes 27

Cash Management Services 28

Index to Advertisers 32

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

Marketing Thought 31

Young Agents 32

WC Update 36

Agents in Action 39

MARK YOUR CALENDARS

2010 Annual Summer OutingMonday, June 14

I used to think EMC was ju st for niche commercial programs. Then again, I used to think babies came from storks.

Providence Branch: 800.556.7010 | Home Office: Des Moines, IA www.emcinsurance.com

© Copyright Employers Mutual Casualty Company 2009 All rights reserved

MAKE EMC YOUR CHOICE FOR MAIN STREET BUSINESSWhen you think main street business, start thinking about the EMC Choice® Businessowners Program. Small and midsize businesses will enjoy the flexible coverage options designed to meet their specific insurance needs, the added value of free loss control services, plus the responsive service from an EMC branch office nearby. So if you still think EMC is just for niche programs, think again. Count on EMC ® for your main street commercial lines marketing, too. For more details, contact your local EMC branch office.

3431_RI IndAgnt_Stork_C_7.5x9.75clr.indd 1 3/11/09 3:33 PM

from the president

In the most recent issue of The An-chor magazine (Fourth Quarter/2009), I established, as my term of office mission statement, that ‘Together...We Can Do Better’. In that same issue, our Executive Vice President, Mark Male, provided IIARI members with an excellent overview of IIARI’s strategic plan, in conjunction with our national association, relating to advocacy, edu-cation and marketing support services available to IIARI members. I have always felt that the goal of quality leadership is to be certain that everyone in any social, religious or business organization, including gov-ernment entities, understands what the goals are and the strategy to achieve those goals. Effective and focused lead-ership delivers that understanding to its members or constituents. With that in mind, allow me to sug-gest how my mission statement can be achieved. I recently referenced the website of the great and retired UCLA coach, John Wooden. Anyone who successfully led his UCLA teams to ten (10) NCAA Men’s Basketball Champi-onships and who will, hopefully, reach 100 years of age this coming October, deserves not only our respect but our attention. Coach Wooden’s philosophy on winning basketball was based on what he termed to be his own ‘Pyramid of Success’. This pyramid, as part of its base, incorporates such characteristics as industriousness, skill and initia-tive as the building blocks upon which patience and confidence lead to suc-cess. If you go to his website, at www.coachwooden.com, it is a great primer on success and how to achieve it.

What is interesting about the ‘Pyra-mid of Success’, is that strong competi-tive forces are not in play as a negative factor in achieving one’s own success. It is assumed that competition exists but you can’t relay on their failures, just your own performance. I believe that the strategy suggests that IIARI members need to be focused on their own goals of achieving success by attracting a more diversified and loyal client base, through your commitment to competitive pricing and with the value added service that you provide to your clients. IIARI member agents already possess the building blocks that are required to achieve success.....your experience, your community involve-ment and your networking skills are second to none. You, as IIARI mem-bers, have a developing and strong brand....Trusted Choice. But, how does each IIARI member agency strengthen what you already do best? I suggest that it is to have access to new and more customer opportunities though new technology, to enhance you and your staff’s professionalism through a superb educational experience, and to complement or expand your existing market by having access to a broader range of insurance products. Large and small agencies alike can enhance their strengths through the various offerings of IIARI’s innovative marketing oppor-tunities; namely, 1-800–We-Insure and the soon to be Consumer Agent Portal programs, the superb IIARI educational programming, and by utilizing your ac-cess to the Big I Markets program. I’ll do my best to bring you the

Antonio PiresIIARI President

Pyramid of Success

First Quarter, 2010 The Anchor5

The Anchor First Quarter, 20106

information about these opportunities when I visit with you over the next year. But, don’t wait for me to ap-pear on your door step, just call IIARI today or go onto the IIARI’s website (IIARI.com ). You will be amazed at the additional education and marketing tools that are available at IIARI at your finger tips. As Coach Wooten says..... “Success is peace of mind, which is a direct result of self-satisfaction in knowing you did your best to become the best you are capable of becoming”. After all...no matter how success-ful you have been in developing your agency, ‘Together...We Can Do Better’!

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executive vice president perspective

When will the marketplace settle down and get back to doing routine business? What would be my guess? Never. I’ve been in the industry since 1985. There was a time when promotions to the highest level of management came from within. It wasn’t uncommon for someone with claims or underwriting experience to end up running the com-pany. Then, in the late 80’s and onward, company mergers and acquisitions became the norm and some household names of insurance companies were left in the wake. An evolution thrust companies to look for finance managers to assume leadership roles and sudden-ly the landscape began to change. More focus on the bottom line has shaken and, to a certain extent, marginalized the relationship side of insurance. Sud-denly traditional agency companies explored alternative forms of distribu-tion, much to the chagrin of indepen-dent agents. This phenomenon did not go unnoticed by the direct writers. Here’s the good news. While the experiment continues, it’s noteworthy that some of the largest direct writers have embraced our form of insurance distribution. Consider acquisitions made by Nationwide, Farmers, and Liberty Mutual. Even Allstate created Encompass to respond to independent agent produced business. Based on purely anecdotal information, I will tell you that direct writers find the busi-ness produced by independent agents is more profitable with higher retentions than their direct operations. Now that is something worth bragging about. It also should remind each and every agent

that the very core of our business is the relationships we maintain with our customers. As the executive for the Pennsylva-nia association, I once came across a communication that preached the doom and gloom of independent agents as a viable form of distribution. Not surpris-ing, as many pundits have questioned our ability to survive a changing mar-ketplace. The surprising part was the article was written in 1928. Even then the observers spoke of our demise. Many talk about it now with the on-slaught of multimillion dollar adver-tising campaigns. We do not have the resources to mount a successful battle against those ads. But, we have some tools that can keep them at bay. First, as I mentioned before, rela-tionships. Never minimize the value of service and optimizing the number of “touches” with your customers. Next, consider Trusted Choice. If you think it’s impossible to build a brand without millions in advertising, tell it to the folks at Del’s lemonade. They have achieved a state level of brand recogni-tion. Finally, consider the initiative be-ing waged by the national association, IIABA, by creating a Consumer Agent Portal (read more in Myron Mitchell’s column). With enough dedication, perseverance and foresight, the portal may be an important game changer for independent agents. As I wrote earlier, it’s unlikely we will return to the way business was done in the past. But our ability to cultivate and maintain customer rela-tionships will stand the test of time and deliver results.

Mark A. MaleIIARI Executive Vice President

Differentiating Ourselves


Member Marketing Activity CenterMMACThe IIABA Member’s Soft Market Solution

Personal & Commercial Lines List ProspectingThis new prospecting tool enables you to identify both personal lines and commercial prospects. This tool offers thousands of criteria combinations and gives you the ability to get very specific results. The commercial search allows you to use SIC codes to pin-point the business sectors you would like to market to. When it comes to campaign marketing, ProspectNOW will save you time and money. Read on how you can use DirectMailNOW to send marketing materials to the prospects you find!

Online Insurance Leads GenerationLet’s face it. Do-Not-Call lists, expensive yellow page and newspaper ads and costly telemarketing makes it harder to market personal lines of insurance. With dozens of companies selling insurance leads, how can you tell which one is a good fit for you? With the help of LeadsNOW, you can now buy leads with confidence! The best leads available at an IIABA member discounted price! Be one of the first 1,000 to register for MMAC and receive $100 in free leads...no strings attached!

Consider Us Your Agency’s Print Marketing Team!Print marketing campaigns have never been easier! You have access to pre-designed, customizable marketing materials! Choose the product you would like to market and choose any or all of the items you would like to include in your campaign, add your agency’s contact information and you're done! With DirectMailNOW, you can send your postcard mailing with a touch of the mouse...it’s really that easy!

Cross-sell Your Current Book of Business with MMAC!It’s no secret that cross-selling is the easiest way to grow your business. It is easier and less costly to sell another line of business to an existing customer than it is to find and sell a new one. Plus the more lines of insurance a customer has with you the more likely you are to keep their business. CrossSellNOW can help you have a higher retention rate, and with that, comes more revenue to your agency!

Increase client retention with quick and easy newsletters!Everyone knows that improving an agencies retention ratio is the least expensive way to grow policy count and premium. The cost of retaining customers is less than the cost of finding and acquiring a new one. With the RetainNOW service, improving your retention has never been easier! MMAC newsletters are written and reviewed by insurance professionals and ready for you to download and send!

Better manage your agency with lessons from the pros!Managing an insurance agency is not easy. It’s hard enough attracting and retaining clients. Staying on top of agency management issues can be a daunting task. With the ManageNOW service, you can tap into a comprehensive online archive of webinars and audio/video presentations with top consultants and agents sharing their knowledge on “hot topics” designed to help you better manage your agency!

Prospect Leads Print/Mail Cross-sell Retain Manage

We are offering access to MMAC at an INTRODUCTORY ANNUAL FEE OF $18.96!Why $18.96? The Independent Insurance Agents & Brokers of America association was founded at the turn of the 20th century, (1896 to be exact) and we are celebrating how far we have come together by offering this great new service to our members at an incredible discount!

For more information on this exciting new member marketing service, please contact [email protected] or 800-221-7917 Ext. 5464.

Register for Big “I” Markets and MMAC at www.bigimarkets.com

BIGIMARKETS

The sign-up process is simple. You can pay for MMAC by credit card and begin taking advantage of the many agency marketing tools within minutes. To Register, visit www.bigimarkets.com and click the MMAC logo. However, you must

first be registered for Big “I” Markets. Register for Big "I" Markets for FREE in minutes at www.bigimarkets.com.

Don’t miss out on this introductory offer!The first 1,000 MMAC registrants receive $100 towards hot Insurance Leads!

Introductory member offer:

$18.96/year


Myron MitchellIIARI State National Director

CAP for DummiesThe Consumer Agent Portal Task Force

national director’s report

What it is: Consumer → Agent → Portal (architecture), a gate, door, or tunnel. That’s right, it is a device for delivering customers to doors. Wouldn’t we all like to have a few customers delivered to our door? No, they won’t be dropped off like a UPS package. They will be delivered via the internet directly to you, with their quote from one of your companies in their hand and ready to hear your story on why they should do business with an Independent Agent like you. Why we need it: Because we’re not tapping into the system that delivers insurance buyers to insurance sellers, i.e. the internet. In 2009, over 70% of customers said they went online to research and/or purchase insurance products. From 2004 to 2007, the Independent Agents market share has gone down 4.3%, which represents $8.6 billion in premium and $860 million in commission dollars. Direct writers are eating our lunch due to marketing supe-riority (big dollars) not due to the value they are delivering. We need a way to get those consumers, who are research-ing insurance, to give us a look. Once they do, they will realize we have more to offer than the other guys. Choice – the Trusted Choice. We live in their neighborhoods not in a cubicle some-where.

What we need to do to take advan-tage of CAP: Have you been keeping up with the INTERNET? Will you be ready when that customer gets dropped off at your door? Will you be able to respond – instantly? If we want to play in the big leagues, we’re going to have to up our game plan. We’re going to have to have a website where the customers can check us out and get a quote from all of our companies. We’re going to have to respond quickly when the customer comes calling. Think about how you’re going to respond, and start practicing. You can access your email anytime, you can have it page you when you get a customer deliv-ered, or notify someone in your office, so they can respond. You can set up your computer so you can chat with the new customer while he’s doing his research. You can probably do things I don’t even know you can do at this point, but I’m going to learn how so I can do business the way the customer wants, not the way I want, or the way it’s always been done. It’s time to start steering the market share back to the Independent Insur-ance Agency system. The goal of the Consumer Agent Portal is to get us back in front of the customers where they do their shopping – on the internet.

Editors Note: IIABA recently decided to fund the creation of a Consumer Agent Portal, an online tool for consumers to use when looking for auto insurance quotes.

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 $49 per person/session

You MUST register at least 48 hours in advance.

DATE COURSE OFFERINGSMarch 10 Certificates - How to Avoid Death by Certificates (2 P&C Credits)

March 17 &18 E&O - Better Customer Management (you must attend both days) (4 P&C Credits)

March 24 Your Insured on the Move - Homeowner’s Coverage Response (2 P&C Credits)

April 6 & 8 E&O - Better Customer Management (you must attend both days) (4 P&C Credits)

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

April 21 Builder’s Risk - Build the Right Insurance Coverage (2 P&C Credits)

April 22 Business Auto or Equipment Floater - What a Mess (2 P&C Credits)

May 5 The Personal Auto Policy: Who Knew it Covered that Loss? (2 P&C Credits)

May 12 Traps & Tricks of the CGL Policy (2 P&C Credits)

May 19 Construction Liability Coverage - What 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.

The “Cat Modeling Crisis”

special article

11First Quarter, 2010 The Anchor

Mark A. MaleIIARI Executive Vice President

A member recently remarked that we made a mistake by naming our-selves “The Ocean State”. From the looks of the state of our homeowners market, maybe he was right. Around the U.S., most states are exposed to and are impacted by natural catastrophes. The California insurance market is impacted by earthquakes, fires, and mudslides. In the Midwest, it’s hail, tornados and floods. In the Gulf States, it’s a high frequency of hurricanes. In each of these geographi-cal areas, the risk is real for insurance companies and their policyholders and is based on recent history. Rhode Island’s insurance market is also based on history – ancient history. Rather than judge the insurance market on events that took place within the last five or ten years, Rhode Island is judged on a single event that took place over seventy years ago. The mere fact we have experienced catastrophes war-rants concern. However, while Rhode Island rarely sees widespread damage from natural catastrophes, the lack of frequency does not insulate the state from its potential impact. Actuarial modeling is all about predicting when the next big hurricane will occur and because we haven’t had one in quite some time, the modeling suggests that we are “way over due”. Actuarial science is the bedrock on which our industry is built. You can’t overlook the insurance carrier’s obliga-tion to both policyholders and stock-holders alike to accurately predict the probability of loss. Eliminating or ig-noring the risk of loss in the rate mak-ing process has potential consequences

of placing every company in financial jeopardy and expose them to failure. There’s no upside for anyone, includ-ing the consumer, agent or company. The harsh reality is the industry could not operate without actuaries. Policy-holders pay premiums based upon rates built from loss triangles that estimate the probability of loss – they may just not know it. When you observe actuaries in gen-eral, you will find they are extremely conservative by nature. For example, an actuary might never argue whether a glass is half empty or half full. Instead, they assume the glass will likely fall over and spill. How frequently? They can’t be sure, but it will happen even-tually. That may be over simplifying the philosophy but it does capture a perspective that some actuaries might hold. After Hurricane Andrew in Florida,


the importance of Cat modeling became overly apparent. The massive hurricane cut from the Atlantic to the Gulf coast and left a swath of damage and destruc-tion that nearly put an insurance giant, Allstate, out of business. The long term impact is felt today as insurance com-panies use Cat modeling to assess the potential scope of insured losses based on their spread of risk. For Rhode Island, we need to rec-ognize the important characteristics of our state. We are the smallest state in square miles (1,044) with just over 1 million residents; there are 1,033 per-sons per square mile. We are 37 miles wide and 48 miles long and we boast over 400 miles of coastline. In 2008, there were approximately 451,000 housing units (and there are less than 15,000 flood policies in force!). Since 1872, Rhode Island has seen 24 storms (including tropical storms, hurricanes, etc.) in 139 years. Thankfully most of these storms have been brushes or from over land from the opposite coast. Don’t forget that much of our busi-ness is written with regional or super regional carriers. According to A.M. Best’s Data Services for calendar year 2008, over 23.5% of agency gener-ated homeowners multi-peril business was written through regional carriers (18.8% with national carriers, 57.7% with direct writers). The significance of this fact is the spread of risk. Na-tional companies, regardless of agency or direct writer generated), have the luxury of a countrywide footprint. Insuring across the U.S. enables them to blend their risk exposure and balance their writings by offsetting some of the catastrophic exposure. Cat modeling is our crisis. As Rhode Island is viewed as its’ own territory, it creates a crippling dynamic. We can’t possibly overcome the lack of land mass to balance any catastrophe expo-

sure. If companies were to look at all of New England as a rating territory, there would be less volatility in property in-surance. More unfortunate, the histori-cal profit earned over the years from excellent loss ratios is negated by Cat modeling and the perceived need for cat reinsurance cover. It’s the expense of reinsurance that now drives decisions to write property insurance in RI. That’s the bad news, but don’t despair. The good news is we live in a capitalistic society where companies will come and go based on opportunity. As one door closes, another opens. Who will look at our state and see the opportunity? Time will tell. The Asso-ciation is always prepared to assist any and all companies that would like to enter our property market. We’re fortu-nate to have an excellent producer base that can generate quality, profitable business. We’re ready when you are.

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.

Avoiding the E&O Pitfalls of Personal Auto

It’s no real surprise that E&O claims, arising from personal auto, continued to occur with some degree of frequency in 2009. However, it is interesting to note that the percentage of E&O claims resulting from this seg-ment has dropped over the last couple of years and is down to around 12%. This is no doubt due to the positive ac-tions that many agents are taking. Let’s examine this in greater detail. What could an agency do wrong that could result in an E&O claim? Overall, roughly 40% of the claims involve li-ability coverage, 40% involve physical damage and 20% are in the uninsured / underinsured motorist area. Failing to recommend the proper liability limits was the center of the allegations against an agency in this following claim example: Mr. Jones, somewhat wealthy, had purchased li-ability limits of only $25,000 on his automobile policy; then, after an ac-cident, claimed the agency should have made sure he had higher liability limits. The accident was severe involving the death of the driver of the other car (a 23 year-old married man with a child) and Jones was determined liable for his death, with a potential claim of in ex-cess of $1.5 million. The estate refused to accept the policy limit in settlement and decided to go after the assets of Mr. Jones. On its face, this appeared to be a defensible case. The agency argued that they told Mr. Jones to increase his limits. However, Mr. Jones, in addition to being wealthy, was a simpleton with a drinking problem. He indicated that he did not remember these discussions. The agent was aware of Mr. Jones’

shortcomings and financial position. The case was made that the agency, in view of his client’s considerable wealth, should have insisted he have higher limits. Due to the absence of a solid paper trail, the case against the agent settled for $325,000. One could only wonder what would have hap-pened with better documentation. Here are five of the more common mistakes that agencies are alleged to have made that caused an E&O claim in 2009. As you read them, ask your-self: What could the agency have done better? Could they happen in your agency?• Issuing an ID card or some type of

evidence of coverage for a can-celled risk

• Failing to adequately document dis-cussions regarding limits. Either the client alleged that they thought they secured the higher limits, or the agent had recommended that higher limits be secured.

• Failure to obtain proper waivers for UM/UIM

• Failure to identify all drivers in a household

• Failure to maintain limits that satisfy the minimum required by an umbrella carrier (thus causing a gap in coverage)

Some tips worth considering:Completion of the application Did you review each question with the customer and did you have them re-view the application completely before signing? Did you explain all of the cov-erages in detail? For you, personal auto is probably old hat; for your clients,

utica e&o notes


by Curtis M. PearsallCPCU, AIAF, CPIA

this may be more complex (see above story about Mr.Jones!). Educating your clients is a very positive way to reduce E&O claim activity.

Account review / analysis Ask the customer if they have a personal umbrella policy. If they do, it would be appropriate (if it is not through your agency) to get a copy to determine what underlying limits are needed. If they don’t have an umbrella, this presents a great sales opportunity.

Receipt of the policy Advise clients, verbally and in writing, that when they receive their policy, they need to review it to make sure that everything is in order. The agency should also review the policy to make sure that it matches what was requested.

Billing With the understanding that most personal auto is now done on a direct bill basis, advise the customer they will be getting premium notices di-rectly from the carrier and they need to respond to these, as the agency will not be reminding them of any pending cancellations. There have been situa-tions where the customer will stop in the agent’s office to pay the premium, typically around the due date. Many agencies simply advise the customer they cannot accept these premiums and provide the customer with a company envelope requesting that they send the premium in themselves. If you do want to accept these premium payments, suggest that you first check the pay-ment / account status to be certain that it has not already been cancelled for non-pay.

Education and training Both your staff and your customers

can benefit. The goal is to be certain that the staff understands all of the cov-erages and how they apply. If they are asked by a customer how their personal auto policy responds when renting a car while on vacation, are you confident that the correct information is being communicated? Also, while personal auto may appear to be fairly standard, there are potential differences that you want to be sure to communicate. For example, if your insured has pets, does the auto insurance provide coverage if they are harmed in an accident? This distinction could be the reason why a customer would choose one company over another. Developing a newsletter that covers a multitude of topics is a great way to educate your customers. This can be sent in paper form or via e-mail blasts. In addition, a website that helps your customers understand what they have will pay tremendous dividends (protec-tion as well increased sales). Discuss E&O with your personal auto staff. Talk through the issues and what measures can be put into place to protect the agency. Develop procedures that are applied consistently. Thank you and good luck!


hr corner

ing your employees.• Are you current in your responsi-

bilities regarding Immigration and I9 forms?

• Are you compliant if you are conducting background screenings properly?

• Are you compliant if you are con-ducting drug testing properly?

• Are you compliant with the changes to COBRA during 2009?

• Are you managing the right details regarding your Human Resource function?

This is the time of the year as you execute your business plan for 2010 to take a close look at your Human Re-source responsibilities. These ques-tions are just the tip of the iceberg in validating how you are doing. Preven-tion is a lot better than running into a very expensive labor issue. If this is a concern, contact someone in the Human Resource field that can help you. Thanks for your time. See you next quarter.

Is My Business Compliant for 2010?

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 An-chor. My goal is to bring value to your organization in accomplishment of the Essentials of Human Resources. This article will deal with compliance ex-ecution for 2010. I had the opportunity to attend a labor compliance update recently. Consider answering the fol-lowing questions:• Are you familiar with the recent

changes to FMLA?• Do you have a good medical /

FMLA compliant process in place?• Do you have an effective policy in

place for harassment / sexual ha-rassment? Do you effectively com-municate the policy? Do you have a written process for investigations? Are your supervisors effectively educated and trained?

• Are you compliant with the Fair Labor Standards Act? Do you have effective job descriptions in place that determines exemption for overtime? Burden of proof is on the employer. You need to take a hard look at how you are classify-

AAI Helps You Succeed – in a recent survey of AAI designees, 82% reported greater job security during organizational transitions or consolidations.

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a contract or to terminate authority? The producer may demand a “refer-ence.” A producer receiving notice of cancellation, modification or expira-tion may make a written demand to the company for “reference” to three referees, who will determine whether or not the cancellation, modification or expiration will affect the renewal, con-tinuation or replacement of any policies placed with the company, through the efforts of the producer, and consider whether the services needed by any policyholder doing business with the company, as a result of the efforts of the producer, justify renewal or con-tinuation of any policies then in effect. The demand must be sent to the insur-ance company within 60 days of receipt of the company’s notice. What can a producer accomplish by demanding a “reference” to refer-ees? The producer may continue to renew or continue policies. Referees will review the termination, modifica-tion or expiration with regard to how this action may affect the right of a policyholder to continued insurance and the services of a producer of his or her own choosing. The referees will also review the producer’s right to compensation for the insurance placed with a company as a result of his or her efforts, giving consideration to the pos-sibility the producer has of obtaining similar coverage for policyholders from other companies at reasonable com-pensation. The referees may order that the producer be authorized to renew or continue existing policies expiring within 12 months from the date of the

Your Insurance Company Terminates YourContract - What Can You Do?

legal briefs

Jennifer R. Cervenka, Esq.Partner

Partridge Snow & Hahn, LLP

Melissa E. Darigan, Esq.Partner

Partridge Snow & Hahn, LLP

In today’s volatile marketplace, insurance companies are evaluating how and with whom they want to do business. This can result in decisions to cancel or modify an insurance pro-ducer’s authority to produce policies. As Rhode Island producers, you know this first-hand. This article outlines the protections afforded to producers under Rhode Island law in the event an insur-ance company seeks to cancel author-ity to produce policies in this state or modify producer contracts. What law governs? R.I. Gen. Laws § 27-2.4-20, part of the Producer Li-censing Act. Are there restrictions on cancel-ing or modifying contracts? Yes, the company must give the producer 180 days written notice. The statute re-quires an insurance company to provide written notice of its intent to cancel the authority of a producer, or to modify a producer’s contract at least 180 days before the proposed effective date of any cancellation, or at least 180 days before the proposed effective date of any modification. One hundred eighty (180) days written notice is also re-quired before a company may allow the license of a producer to expire. It should be noted that the Division of In-surance has interpreted the protections afforded by this statute as applicable to “sub-agents.” A producer that has organized a sub-agency network must also comply with the provisions of the statute and provide 180 days written notice of termination or modification. What can a producer do when an insurance company intends to modify


notice of cancellation or termination and that the producer’s compensation conform to the contract expiring or be-ing cancelled or modified by the insur-ance company. If a decision orders the renewal or continuance of any poli-cies, policyholders and the producer are entitled, in all respects, to the same services and practices as were in ef-fect prior to the reference insofar as amounts and types of coverage, credit terms, commissions paid and producer services are also continued. How is the referee panel ap-pointed? The producer and insurance company both select a referee and the Division of Insurance selects a neu-tral. • The producer’s demand for a refer-

ence must include the names and addresses of three suggested per-sons to represent the producer on the panel.

• Within 15 days of receiving the pro-ducer’s demand, the company must notify the producer of its choice of one of the producer’s designated referees, and at the same time, sub-mit the names and addresses of its three suggested referees.

• The producer must notify the com-pany within 15 days after receiving the company’s suggested referees of its choice of one of the persons to act as a second referee.

• At the same time, the producer must notify the Superintendent of Insurance, on a form proscribed by the Division of Insurance, that both the company and the producer have chosen referees.

• Within 10 days of the receipt of the producer’s notice concerning the referees, the Superintendent must appoint a person to serve as third referee. The Superintendent will notify its designated referee, the producer and the company in writ-

ing of this appointment. The third referee will serve as chairperson of the referee panel.

• Each person nominated or appoint-ed as a referee must be a disinter-ested person, a resident of the state and willing to act as a referee.

• The producer initiating the refer-ence and the company receiving written demand are responsible for payment of the reasonable charges and expenses of its nominee for referee and one-half (1/2) of the compensation for the reasonable charges and expenses of the third referee.

• In the event any company receiv-ing a written demand for a refer-ence fails to comply with the above requirements, then the producer has the authority to renew or con-tinue any policies placed with that company, through the efforts of the producer, expiring within a period of 13 months from the date of the notice of cancellation, modifica-tion or expiration of the agreement, at a rate of compensation to the producer equal to that set forth in the agreement expiring or being cancelled or modified, for one addi-tional policy period equal in length to the most recent policy period of the expiring policy, but in no event for more than one year.

What does the referee panel do? The panel hears evidence and renders a written decision on the cancellation, modification or expiration. Within 10 working days of the appointment of the third referee, the three referees are required to meet and hear evidence from both sides as to whether the cancellation, modification or expiration will affect the renewal, continuation or replacement of any policies placed with the company through the efforts of the



producer or as to the services needed by any policyholders doing business with the company as a result of the efforts of the producer. The referees will render a written decision with their findings and deliver the decision to the producer, to the company and to the Superintendent. The decision is bind-ing upon the company and producer. The referees may order the producer be authorized to renew or continue exist-ing policies expiring within 12 months from the date of the notice of cancella-tion or termination and that the pro-ducer’s compensation equal that agreed to in the contract expiring or being cancelled or modified by the insurance company. Are there exceptions to continued authorization to bind the company? Yes, in cases of dishonesty, license revocation or surrender, or termina-tion of lines of insurance. The statute provides that the referees may not order continuance or renewal of any policies if they find that the reason for the can-

cellation or expiration of the agreement by the company was legitimately based upon one of the following grounds: (1) the producer was convicted of a dishonest act related to his or her oc-cupation as an insurance agent; (2) the producer’s license was revoked; or (3) the insurance company surrendered its license to do business in the state. Also, an insurance company that decides to terminate a particular line of insurance within the state can immediately termi-nate the producer’s ability to write such insurance, provided the termination is in accordance with the producer’s con-tract with the company and the policies written by the company. Can the referee process set out in the statute be altered by the insurance company’s agreement with the pro-ducer? Yes, subject to the Superinten-dent’s review and approval. Any insur-ance company and any producer may by written contract, agree to modify the requirements of the statute – except as to the 180 day notice requirement – so

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

the petition, the Superintendent will notify the interested parties of the date established for a hearing on the petition and, after the hearing, may approve or disapprove the charges in whole or in part. The Superintendent’s findings and decisions as to the third referee’s charges are final and conclusive. Many producers are not aware of the protections afforded to them under Rhode Island law in the event of a ter-mination or modification of the produc-er’s authority. If you receive a notice of termination, review your contract with the company and R.I. Gen. Laws § 27-2.4-20 to ensure compliance with the requirements of Rhode Island law. Keep in mind that the records retention requirements set forth in Regulation 67 continue beyond termination. A pro-ducer must keep records for the current policy year, plus 4 years.

long as the proposed modifications are presented to and approved by the Superintendent, who will review the proposed modifications to determine whether they adequately protect both the right of the policyholder to a con-tinuance of insurance and the services of any producer of his or her own choosing and the right of the producer to fair compensation for the insurance placed with a company as a result of the producer’s efforts. Can a producer appeal the findings of the referee panel? No, the findings of the panel are binding. The only limited exception is that a producer or insurance company may petition the Superintendent for review of the fees charged by the Superintendent’s se-lected third referee. The petition must detail the specific item or charges in dispute. Within 10 days of receipt of


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.

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

I have been an independent Agent for fifteen years.

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

I’ve been a member for fifteen years and a Trusted Choice member from their begin-ning.

ANCHOR: What do you like most about your business?

The ability to help people and enable them to have a positive experience, while meeting their insurance needs. I like the relationships that we are able to build.

ANCHOR: What are your greatest challenges?

Our greatest challenges are dealing with the changing economy and some of the uncertainty among customers and compa-nies. The soft market and customers want-ing to shop and save is also challenging.

ANCHOR: What are your greatest opportunities?

The soft market actually provides some real growth opportunities with people looking for savings.

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

The insurance business is a challenging but rewarding industry. Everyone needs some type of insurance and you can help cus-tomers by being honest, trustworthy and professional.

ANCHOR: What is your biggest struggle?

We are always looking to grow our busi-ness, which takes time and hard work.

PROFILESarah Insurance Services, Inc.John Sarah1026 Mineral Spring AvenueNorth Providence, RI 02904

of an IIARI Member


Employees of Sarah Insurance include (left to right) Daniel Salvatore, Barbara Sarah and John Sarah.


Companies and vendors are cordially invited to become a “Partner” of the Indepen-dent Insurance Agents of Rhode Island. We created this program for insurance com-panies, wholesalers, and vendors who support IIARI on an on-going basis. Becoming an IIARI Partner guarantees you high-profile, year-long exposure to members of the Independent Insurance Agents of Rhode Island. Four levels of participation are avail-able: Diamond, Gold, Silver and Bronze.

This is a win-win situation for both IIARI and its Partners. By providing a “one-stop” approach to supporting IIARI and its members, it saves you from repeated solicita-tions throughout the calendar year and saves IIARI time and resources.

PARTNER BENEFITS Support the Agency Distribution System: Your backing makes it possible for IIARI to develop afford able, quality programs that enhance the professionalism of Rhode Island’s independent insurance agents.

Significant Savings: The value of the various benefits you receive as an IIARI Partner far exceeds the individual costs!

Unique Perks: Many of the perks you receive as an IIARI Partner are not available to other companies—at any cost!

First Pick: Diamond, Gold, and Silver Partners are guaranteed first pick of sponsorships and exhibit space at the Annual Convention.

Don’t Miss This Great Marketing OpportunityOnline pledge and payment available at www.iiari.com.

Phone: 401-732-2400 • Fax: 401-732-1708 • Email: [email protected]


2009 PAC Honor Roll

John EdgeDavid GatesRobert HartnettBrian M. HunterKatherine KelleyBill LapointeMelanie Loiselle-MongeonRobert Loiselle

David E. BatesMark A. MaleTerry MartiesianRoger L. MessierMyron Mitchell

Richard S. BlackmanEdward BlaisAllen Chatterton, IIIMatthew F. ClarkeJohn ContiMichael T. DaceyJohn J. DalyWilliam M. Darcey

Scott CookeCharles S. BalfourKathy ChristopherA. Alan Oliver

Independent Insurance Agents of Rhode Island PAC

Gold

Silver Thomas ReganRichard RheinbergerErnest Shaghalian, Jr.David WhiteDavid Woodmansee

Antonio PiresTed RayFrank RichardDavid SoucyHoward Thorp

Bronze Richard SacchettiStan TabakJean VientRobert Whiteley

Edward F. BishopMark A. MaleNancy MendizabalMyron Mitchell

David E. BatesRobert LoiselleRoger L. MessierJay Murphy

John J. DalyJohn EdgeBrian M. HunterBrenda Loiselle-DuClosMelanie Loiselle-Mongeon

C. Michael BlaisCharles S. BalfourRichard S. BlackmanKathy ChristopherMatthew F. ClarkeJohn ContiDonald CurranDavid GatesDonna GelsominoKatherine Kelley

INSURPAC

GoldClub

Robert PadulaTed RayFrank Richard

PioneerClub

Founders Club

Mark W. MatroneDoug MayhewAntonio PiresRichard RheinbergerMark Rotondo

General Contributors

Linda Lunghi-PrizitoGarry MansfieldRichard MansfieldTerry MartiesianColette McKeonMarc NadeauLawrence A. NataleA. Alan OliverGregory PaquinWilliam Preston

Kimberly RaymondThomas ReganRichard SacchettiVirgil Sales, Jr.Ernest Shaghalian, Jr.Stan TabakJean VientDavid WhiteRobert WhiteleyDavid Woodmansee

Thanks to all IIARI Members who support the PACS!

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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.

Arbitration Provisions in Insurance Contract Control: Progressive Northern Insurance Company v. Dennis Lyden; Rhode Island Supreme Court; 2010 R.I. LEXIS 6 (January 8, 2010).

Summary: Dennis Lyden was injured in a motor vehicle accident. He collected the policy limit of $25,000 under the responsible tortfeasor’s policy but claimed that his damages exceeded the limit. As a result, Lyden brought an underinsured motorist claim against his own carrier, Progressive Northern Insurance Company, and demanded arbitration under the provisions of Progressive’s policy. The arbitrator determined that the $25,000 payment Lyden received was sufficient to compensate his dam-ages. Under Progressive’s insurance policy, the decision of the arbitrator is binding unless within 60 days of the arbitrator’s decision either party to the arbitration re-serves its right to a jury trial by giving notice of its intent to sue by certified mail to the other party and the arbitra-tor. Lyden did not give notice of his election to proceed with a lawsuit within 60 days of the arbitrator’s decision. After the 60-day notice period elapsed, Progressive filed

this action seeking an order confirming the arbitrator’s award. Lyden objected to Progressive’s petition on grounds that his failure to timely reject the arbitration award was due to his counsel’s “excusable neglect,” entitling him to relief under the Rhode Island Rules of Civil Procedure. The Superior Court rejected Lyden’s arguments and confirmed the arbitration award. Lyden appealed this decision to the Rhode Island Supreme Court. On appeal, Progressive asserted that the arbitra-tion with Lyden was outside the purview of the judicial system and strictly governed by the arbitration provision of the insurance contract. Progressive therefore main-tained that Lyden could not rely on relief afforded by the Rules of Civil Procedure for “excusable neglect.” The Supreme Court agreed that the arbitration resulted from a contractual requirement that exclusively dictated the notice limitations period and ruled that Lyden was bound by the arbitration provision’s 60-day notice requirement. Because Lyden failed to provide Progressive with notice of intent to sue within 60 days of the arbitrator’s deci-sion, he was barred from objecting to the confirmation of the arbitrator’s award in Progressive’s favor.

NBIC has received an “A Exceptional” Financial Stability Rating (FSR) by Demotech, Inc., an independent financial analysis and actuarial services firm for property and casualty insurers.

With an experienced management team backed by significant capital partners, NBIC has the capacity to provide more competitively priced homeowner’s insurance. With the support of our independent agents, we have become part of the solution for affordable homeowner’s coverage in out state.

We thank our agency partners for helping make us who we are today.

The #1 Choice for Responsible Homeowners.

Like the Bay that inspired our name,

NBIC shelters thousands of homeowners.

(401) 725-5600www.nbic.com

During this economic downturn, independent agencies are rightfully focused on client service, operations and technology as key factors in their competitiveness in 2009. Every inde-pendent agency has a secret weapon to heighten profitability---its banking relationship. Independent agencies can and should expect their banking relation-ship to help them reduce costs, enhance revenues and improve efficiencies. Agencies have a significant opportunity to use their banking relationship to their advantage. All banks offer deposit products such as checking and savings accounts, but independent agencies are not like many other businesses. They have unique cash management opportuni-ties by virtue of monthly fluctuations in premium payment volume. A bank that recognizes this difference will offer a variety of specialized, competitively priced deposit products, to help agents facilitate cash management and maxi-mize value.

Here is what agencies should be look-ing for in a banking relationship: Optimize the earnings credit on your bank accounts. Through the earnings credit applied to its bank ac-count, an agency can offset the cost of services provided in conjunction with the account. Charges such as monthly service fees, checks paid and fees for items deposited can pile up, but an agency can reduce the impact of these expenses by optimizing its earnings credit. Earnings credit rates and funds availability vary by bank, so be sure your bank is competitive and that there is no minimum balance to apply the earnings credit.

A good banker will help the agency set a target balance at the right level, considering the agency’s cash-flow pat-terns over the course of a year, greatly minimizing fees and adding to the bot-tom line. Review bank investments to opti-mize the rate of return. It’s important to make sure your bank offers a variety of investment products with flexible terms to accommodate your unique cash flow needs. You need the flex-ibility to access your money on your schedule, so finding the right mix of investments is essential. Cash management tools that provide the liquidity and high investment re-turns desired by agencies are matching maturity CDs (certificates of deposit) and CD ladders. Matching maturity CDs allow you to match the maturity dates to financial priorities. CD ladders allow you to distribute money over dif-ferent maturities and receive a higher, blended rate of return on investments. You may want to consider a sweep account to take advantage of float in your operating account. The excess cash is automatically transferred into an investment account. By doing so, the agency puts money to work when it would otherwise sit idle. Look for opportunities to use technology. Your bank might offer online banking and remote deposit. However, it is important to read the fine print. Ask your banker about monthly fees and whether there’s an option to run them through your account analy-sis. Carefully check out the product features offered and see how they fit in with your operations. Does your bank provide client support, appropri-ate levels of security and controls and reliable equipment? Inadequacies in

Cash Management Services: What DifferenceCan They Make to an Independent Agency?

by Mary GrazenExecutive Vice PresidentChief Operations Officer

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any of these areas can be costly to your agency in the long run. In addition, with remote deposit there can be the purchase or rental fee of the equipment to consider. These opportunities are there for agencies and have been for many years. But many bankers simply do not realize an agency’s unique needs. If they do, they may not take the initiative to dis-cuss them with agency owners. It’s up to the agency leader to take the initia-tive and ask about banking services. Agency owners have a lot of priori-ties, but if they take the time to view and understand banking services as an opportunity to improve their bottom line, they’ll make their agency more competitive by reducing costs and in-creasing revenues.

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stimulate discussion about Trusted Choice. When you take real people and showcase Rhode Island’s landmarks – both which make us truly unique – we will be able to rise above the other clutter in the media. If this creative approach is not enough to convince you, then look at the raw numbers. As a Gold Level sponsor of Trusted Choice with an annual investment of $5000, you receive 91 ads, including spots on NBC-10, CBS-12, Fox-64, CNN, MSNBC, Fox-News, RI News, WPRO, Lite 105, and WEEI. You also receive a 30-second TV ad and radio ad that includes your own 12-second appearance. With the Trusted Choice grant, IIARI contribution, and the support of your company partners, you receive a value of over $11,000 worth of advertising. If you were to produce your own ad and place the same number of spots on the aforementioned media outlets, it would cost you over $15,000. In addi-tion to the $5000 Gold sponsorship level, there are other sponsorship levels for your agencies with investments of $2500 and $1250 that also provide a similar return on investment. You can compete in an air war with the direct writers when you join a cam-paign that will run 2000 ads promoting the Trusted Choice message in a 9-month period. But, if recent military strategy has taught us anything it is that you cannot win solely with an air campaign. You need boots on the ground. The combination of ads on Rhode Island air waves coupled with agents and customers talking up the Trusted Choice brand is a winning cam-paign for your agency.


If you’re planning to spend any money on marketing in 2010, there is no better investment you can make than the Trusted Choice campaign. On January 26, 2010, the IIARI Com-munications Committee unveiled its latest plan to disseminate the Trusted Choice message to Rhode Island consumers. Whether you are currently a sponsor, have been a sponsor in the past, or are wonder-ing if you should participate this year, let me tell you why it’s the best marketing value for your agency. First, for full disclosure, the firm I work for, JH Communications, has been the con-sultant to the communications committee for the past 4 years of this campaign, so it could be argued that I am biased. But, my argument for your agency to participate is based solely on the overwhelming benefits. With GEICO spending an estimated half a billion dollars per year on adver-tising, you may think that it’s not worth even trying to compete. With other direct insurance companies spending their fair share, it’s difficult to turn on your radio or TV and NOT be bombarded by an insur-ance ad. But does that mean you should run in retreat and not try to compete? No, it means that you need to try a more local-ized, targeted approach. We know Rhode Island. We are Rhode Islanders. And as such, we know what works here. We understand that our paro-chial nature can be used to our benefit. By having real people – agents like yourselves, not slick actors or cartoon figures – speak directly to thousands of people, you are lit-erally standing out from your competition. Your customers will answer the question, “Why choose a Trusted Choice agent?” In doing so, real people will be promoting the brand for you. They will be seen on TV by their friends and family, and this will help

John HouleJH Communications

John Houle is the president of JH Com-munications, LLC and can be reached at 401.831.6123 or at [email protected].


Tentative 2010 Calendar

DATE EVENT

March 11 Dave & Buster’s/IMAX EventApril 9 Casino Night at Mohegan SunMay 20 Newport NightJune 12 Polo Match with Tailgate EventJuly TBD TBDAugust 18 Mulligan’s IslandSeptember TBD Education DayOctober 23 Wine Tour of RI VineyardsNovember TBD Interdisciplinary Network EventDecember 8 Holiday Party

1-800-We-Insure............................................................................302010 Partners Program ..................................................................23AAI Certification Program ..............................................................17Big “I” Advantage ..........................................................................25Big “I” Markets MMAC ....................................................................8Clean Care of NE ...................................................Inside Front CoverCRIS Certification Program ............................................................33EMC Insurance Companies ..............................................................4Insurance Reconstruction Services ................................................29Narragansett Bay Insurance...........................................................27Partridge Snow & Hahn, LLP ..........................................................20Restaurant Insurance .....................................................................26ServPro of Metro RI .........................................................................6ServPro of Washington County .....................................................11Smoke Clean of NE .......................................................... Back CoverUtica Mutual ..................................................................................38Webinar Wednesdays ....................................................................10

INDEX TO ADVERTISERS

MARK YOUR CALENDARS

2010 Annual Summer OutingMonday, June 14

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.


What’s the key aspect to building a brand over the long term? Advertising, you might say? Well, that is an important brand “touch-point.” But in any serious brand-building campaign, which takes place over multiple years—even decades—how the customer actually interacts with the product or service is most important. In insurance, these brand touch-points involve your staff working with customers and prospects. Advertising messages can set the stage for those interactions, but how your staff serves customers and prospects is the true test of your brand. That’s why Trusted Choice® has put in place a dynamic brand-ing program allowing for flexibility at the local level. How is this achieved? Remem-ber that Trusted Choice® does not replace your agency’s brand—it adds value to your agency’s brand. Thus, if you already have a solid agency brand, you can position Trusted Choice® as adding further value to the services you already offer. (By way of example, think of “Intel Inside” or the “Good Housekeeping Seal of Approval.”) Here are some impactful ways agents and brokers are leveraging Trusted Choice®:

Pledge of Performance Trusted Choice® provides a road map for agents to offer a consistently posi-tive customer experience—it’s called the Pledge of Performance. The 10-point Pledge responds to consumer demands for professionalism, choice, customization, 24/7 service and advocacy. In thinking of how to best serve your customers, you don’t have to reinvent the wheel! With language from the Pledge, partici-pating agents are writing open letters to cli-ents, highlighting the benefits for custom-ers of using their Trusted Choice® agency. Agent and broker Web sites proudly highlight an overview of the Pledge, with the full Pledge just a click away.

Here are some other ways agents are using the Pledge of Performance:• Running ads in their local paper stating

the Pledge. • Having the Pledge made into a framed

wall hanging in the reception area—and in every office or cubicle—as a visual reminder for employees and customers of the firm’s commitment.

• Discussing a different bullet from the Pledge during weekly or monthly staff meetings so employees will be fully invested in these performance criteria.

• Using the Pledge as the basis for cus-tomer survey questionnaires.

• Mailing the Pledge to customers with a letter from the agency owner.

• Incorporating language from the Pledge in their telephone on-hold mes-sage.

Are you and your staff embracing the Pledge and living up to its promises? Are you maximizing the Pledge’s power as a marketing tool?

Logo, Marketing Materials and Stationery Thousands of participating agents and brokers are proudly displaying the Trusted Choice® brand name and logo. (Remem-ber that the logo has been tested, and consumers respond positively to it.) Agents have reprinted their marketing materials and stationery around the Trusted Choice® logo guidelines. Examples include:• Complete proposal kit (sales presenta-

tions, proposals, and materials) • Letterhead, envelopes and business

cards • New-client welcome packages • Client bills and newsletters • Building signage • Logo apparel • Bumper stickers and license plate

frames • Client gifts (calendars and other logo

items) • E-mail signatures • Web site templates • Coffee cups used in your office


How Agents Are Leveraging Trusted Choice

Important note: Every Trusted Choice® agency must adhere to the logo usage rules. Random variations in colors, fonts, logo designs, and messaging are not permit-ted for legal reasons and for consistency in presentation to consumers, just as is the case with any national brand. Visit the Agents/Brokers area of www.Trusted-Choice.com to download the logo rules and stationery guidelines.

Trusted Choice® Web Site Besides refreshing their own Web sites with the Trusted Choice® logo and other materials, agents and brokers also are tying into the Trusted Choice® Web site (www.TrustedChoice.com), which links consum-ers with local participating members and provides helpful information on a number of personal and business insurance topics. The Trusted Choice® Web site plays a vital role in the program’s outreach to both agents and consumers. The site hosts an Agency Locator through which consumers can find the agency that is right for them based on location, line of business and even languages spoken by agency staff. Member agencies are benefiting from this lead-generation tool by completing an agency profile in the Agents/Brokers area of the site. Agents also are keeping their agency profiles updated—for example, if they add new office locations, they are up-dating their profiles at the Trusted Choice® Web site.

Advertising All Trusted Choice® agencies benefit from the program’s national advertising. But they also can capitalize on profession-ally developed tag-able TV, radio and print ads that educate consumers on the value of doing business with their Trusted Choice® agency. These TV, radio and print ads direct consumers to look for their Trusted Choice® agency for choice of companies, customized policies and advocacy support. Savvy agents have learned that running their own tagged advertising (tagged with their name and contact information) in conjunction with the national ad buys gives their agencies the appearance of running a

much bigger campaign than they actually pay for. Example: One agency is tag-ging the Trusted Choice® TV spots—then bought local time on the same programs Trusted Choice® chose for its media buy. This agency also tagged a Trusted Choice® radio spot and ran that through the follow-ing month on two local radio stations that match its target demographic. The result: everyone thinks the agency made the entire ad buy, even though it spent only about $2,500. To preview and download these custom-izable ads, visit the Agents/Brokers area of www.TrustedChoice.com.

Public Relations Trusted Choice® members are ben-efiting from a national public relations program that drives consumers to www.TrustedChoice.com, where they can find a local agent or broker. The PR campaign is focused largely on major consumer and business media. Trusted Choice® agents can use those same PR messages on the local level. And it doesn’t cost them any-thing. For example, agents are building a complete calendar of media releases that are timed to seasonal events (e.g. holiday safety or flood season). The releases can be downloaded from www.TrustedChoice.com and used locally with your agency’s letterhead. A list of PR ideas is available in Zoom in on Branding and in the Agents/Brokers area of the Web site.

For more information or to sign up for Trusted Choice®, call (800) 221-7917 or visit www.TrustedChoice.com.


In my continuing efforts to keep you informed on all things workers’ compen-sation, it is difficult, sometimes, to avoid redundancy. While workers’ compensation, in theory, is not a difficult concept, like so much in insurance, the devil is in the details—and it is a lack of attention to the little things that will cause hardship to your customers and their employees. In this col-umn, I discuss three separate issues that I have addressed in the past but with updates to help you as agents do a better job for your customer.

Misclassfication of Employees and the Underground Economy Recall that last year a commission was created by the General Assembly to study the “Underground Economy and Employee Misclassification”. Its purpose was to study both concepts as they relate to work-ers’ compensation, taxation and unemploy-ment, and to propose possible solutions to a developing problem thereby lessening the impact on government and law abid-ing businesses and workers. Legislation was introduced to implement the recom-mendations of the Commission to include a new definition and process relating to the concept of the “independent contractor” and to heighten communication between state agencies to help filter out the scoff-laws. While the original bill did not pass the 2009 session, new bills mirroring the Commission’s proposals have been intro-duced for consideration again this year. It is important to remind your customers that the General Assembly’s intent is to weed out those “independent contractors” who are really employees. The proper classification of independent contractors is a perennial challenge for any company. Employer misclassification can come from intentional evasion but can also be a matter of genuine confusion about

how to classify a particular worker. This classification takes on new importance be-cause new state statutes will be focusing on misclassification issues and enforcement will be aggressive. Also keep in mind that there are numerous federal laws address-ing misclassification and that better coor-dination and communication now exists among the federal and state agencies that deal with independent contractor issues and enforcement of wage, labor, and tax laws. Also remember that misclassification enforcement is a great way to recoup lost revenue, certainly advantageous to the state in this time of economic hardship. Just be aware that when consulted by customers on this issue, always take the conservative approach. If you don’t, at some point, a state or federal agency may find otherwise —and the penalties for making the wrong decision are substantial.

Medicare Last spring I wrote on the Medicare, Medicaid and SCHIP Extension Act (MM-SEA) and how it would affect workers’ compensation. Recall that for open claims as of July 1, 2009, all liability (including Self-Insurance), no fault, and workers’ compensation entities are required to re-port all bodily injury and medical pay-ment claims involving Medicare-eligible claimants (regardless of determination or acceptance of liability) to Medicare as of April 1, 2010. The claims information that has to be reported is mandatory and com-prehensive. Your claims professional will be asking you and your customer for more detail than ever to meet these mandatory reporting requirements. Not only will more information be sought—it has to be correct. This is especially true for the claimant’s date of birth, full name as it appears on the employee’s social security card and the correct social security number. The penalty

Workers’ Compensation – What Is Going On?

wc update

Michael LynchVice President, Legal

Beacon Mutual



imposed on an insurer which fails to prop-erly notify Medicare is $1,000 per day; so you can fully expect a responsible insur-ance carrier will be expecting and demand-ing complete and accurate information.

Changes in Exposure Under Rhode Island Law Finally, I have written before on the “going and coming rule”. An employee who suffers an injury, which arises out of and in the course of his or her employ-ment, is entitled to workers compensation benefits. Generally, this rule is that an employee is not entitled to benefits for an injury that occurs while either going to or coming from work. Over time, our Su-preme Court has created exceptions to this rule and broadened compensability. Those exceptions have included someone drop-ping his lunch off at a workstation twenty minutes prior to punching in, an employee who slipped and fell on an icy step as she entered her employer’s place of business and finally, an employee who was hit by a car crossing a busy street from a company owned parking lot that the employer in-structed the employee to park in. We now have another exception. In the case of McGloin v. Trammelcrow Services, Inc., No. 2007-63-M.P. (05-652), the Court was confronted with a scenario where McGloin was a road technician for Trammelcrow and “on call” twenty-four hours per day, seven days a week. While departing his apartment complex in a company owned service van for a central location in the state (to better respond to anticipated calls for service), McGloin helped a stranded motorist move their car out of the way so that he could be on his way. In so doing, he hurt his back and sought workers’ compensation benefits. Trammelcrow claimed there was no entitle-ment to benefits under the “going and com-ing” rule, and denied the claim. McGloin filed a petition for benefits at the Workers’ Compensation Court. The petition was denied after trial and on appeal, the Appel-late Division affirmed. The Supreme Court agreed to review the matter and recently overturned the lower court, finding that “…

under the facts of this case and in light of the nature of Mr. McGloin’s employment, the circumstances of employee’s injury must be considered incidental to his job duties.” The Court went on to find that it “share[s] [an]…aversion to the adoption of a “portal-to-portal’ rule of compensation … [and]…our opinion is predicated upon the unique circumstances of Mr. McGloin’s employment in this case. Mr. McGloin didn’t so much commute to work as he traveled with his office, parking it at his apartment complex so that he could better respond to emergencies twenty-four hours a day”. The Court then ordered the pay-ment of statutory workers’ compensation benefits to McGloin. How does this affect your customers? While the Court took great pains to limit the increased exposure to the facts and cir-cumstances of this claim, if your customer has employee’s on call at home, there is a probability that injuries either on the way to or from work will be deemed work related. Employers and the prudent agent should consider this fact when so labeling an employee. As always, I conclude with the admoni-tion to stay involved, ask questions and pay attention to workers’ compensation and the issues arising therefrom. The moment we lose focus, we risk a return to the out of control system our state had in the 1970’s and 1980’s. Finally, don’t be afraid to reach out, call or write with questions and thoughts on workers’ compensation.

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know.rhode islandassociationof insuranceagents 2400 Post Road Warwick, RI 02886 Phone: 401-732-2400 Contact: Helen Collins

Peter Plumb has been appointed Presi-dent of RISCO, Inc., a full service excess and surplus lines whole-sale insurance broker located in East Provi-dence, Rhode Island. Plumb will be responsible for growing the wholesale brokerage business, new program development and geographic expansion for the organization.

Congratulations to all students whosuccessfully completed the recent Pre-Licens-ing school held at IIARI offices in Warwick. Special congratulations to the class valedic-torian Lauren Hobin from Podmaska Insur-ance Agency. The next pre-licensing school is scheduled for May 3-7. Register online at www.iiari.com.

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Have an announcement or news you’d like to share? Let us know!

CALL US @ 401-732-2400 or EMAIL US @ [email protected]

Congratulations Pre-Licensing Grads

Among the new officers named to the Board of Directors of the Kent Center for Human and Organi-zational Development is Chad Bjorkland, Account Executive at Gencorp Insurance Group located in East Greenwich, RI. Chad will be the new Treasurer and Chair of the Kent’s Finance Committee. Bjorklund joined the Kent Center Board in 2005, and has served on several additional com-mittees including pension and strategic planning. Chad stated that he “hopes to be an important part of helping the Kent Center in these challenging times. It is organizations like this Center that brings hope to people who are strug-gling. I am proud to be a part of that mission.”

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