September 2017 WI Independent Agent

wisconsin

INDEPENDENT AGENT SEPTEMBER 2017

AGENCY FUTURE OF THE

PREPARING YOUR AGENCY TO SUCCESSFULLY NAVIGATE THE TECHNOLOGY TIDAL WAVE

We know what it took to build this unique business.

And we know what it takes to protect it.

Underwriters who know and understand what coverages are necessary for each unique business.

Loss prevention professionals who use a hands-on approach to help develop programs tailored to each specialty business.

Claim reps with the expertise and technology to process claims quickly and efficiently.

As an Official Supplier of the Silver LiningÂŽ, you and West Bend will find a specialized insurance plan for your valued customers.

To find out more, talk to your West Bend underwriter.

wisconsin

INDEPENDENT AGENT SEPTEMBER 2017

Open Door Policy Insurance, It’s in Her DNA- Profile on Lise Meyer, 2017-18 IIAW President.. . . . . . . 5 Government Affairs NAIC Cybersecurity Model Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Technology How Artificial Intelligence Will Impact the Insurance Industry . . . . . . . . . . . . . . . . . 10 Technology Big, Bad Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Technology How Chatbots Can Be Used in Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Technology 73% Are Using Internet of Things Data to Improve Business. . . . . . . . . . . . . . . . . . 16 Employee Benefits How Advisers Can Beat the Competition Through Innovation. . . . . . . . . . . . . . . . . . 19 Virtual University “Leaseback” Of A Personally-Owned Auto Done Right. . . . . . . . . . . . . . . . . . . . . . . . 20 Errors & Omissions How to Avoid E&O Claims from New Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Sales 6 Reason Sales People Win or Lose a Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Agency Management 3 BOP Coverage Trends to Discuss with Small Businesses. . . . . . . . . . . . . . . . . . . . 27 Agency Management Attributes of Successful Independent Agencies of the Future . . . . . . . . . . . . . . . . . 28 Members in the News. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Commentary from Counsel The Four-Corners Rule is Mandatory in Analyzing an Insurer’s Duty to Defend.. . . . . 33 Independent Insurance Agents of Wisconsin 725 John Nolen Drive, Madison, Wisconsin 53713 Phone: (608) 256-4429 or (800) 362-7441 ■ Fax: (608) 256-0170 ■ Web: www.iiaw.com Executive Vice President - Matt Banaszynski 2016-2017 Executive Committee President............................................................ Lise Meyer Meyer Insurance - P.O. Box 633, Sauk City, WI 53583 President-Elect.................................................... Jason Bott Robertson-Ryan & Associates - 330 East Kilbourn Ave., Milwaukee, WI 53202 Secretary-Treasurer......................................Chris Costakis Avid Risk Solutions- 2501 Parmenter Street, Ste 200A Middleton, WI 53562 Chairman of the Board................................. Matt Weimer Diversified Insurance Solutions - 100 North Corporate Dr., #100, Brookfield, WI 53045 State National Director ................................Steve Leitch Leitch Insurance - P.O. Box 85, River Falls, WI 54022 2016-2017 Board of Directors Mike Ansay, Ansay & Associates 101 East Grand Ave. #11, Port Washington, WI 53704 Cindy Burns, Burns Insurance 500 South Central Ave., Marshfield, WI 54449 Chad Tisonik, HNI 16805 W Cleveland Ave, New Berlin, WI 53151 Ryan Waite, Neckerman Insurance Services 6200 Mineral Point Road Madison, Wisconsin 53705 Ryan McClone, McClone Agency 150 Main St. Suite 102, Menasha, WI 54952 Marc Petersen, American Advantage-Petersen Group 15171 W. National Ave., New Berlin, WI 53151 Jack Riesch, R&R Insurance Services P.O. Box 1610, Waukesha, WI 53187-1610 Pam Utpadel, Universal Insurance Advisors 100 West Lawrence St. Suite 313, Appleton, WI 54911

WISCONSIN INDEPENDENT AGENT

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

On The Cover…

Technology and how it will impact the insurance industry is top of mind for many in the independent agency channel.

A key strategic initiative and value proposition of the IIAW is to provide tools and resources to help its members successfully navigate the technology tidal wave. This issue focuses on providing insight into how independent agencies can utilize technology to increase efficiencies, improve the customer experience and become the independent insurance agency of the future that meets the evolving needs of the insurance consumer.

> A DVERTISERS & INFORMATION AAA Wisconsin................................................. 34 Acuity Insurance............................................. 35

2016-2017 Committee Chairs

Arlington Roe……………………………………………13

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

Badger Mutual................................................. 34

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

Berkshire Hathaway/Guard..............................18 Burns & Wilcox.................................................. 4

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

Erikson Larsen................................................. 17

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

IIAW Online CE................................................. 26

IIAW Prelicensing Classes................................ 22 JM Wilson........................................................ 25

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

Partners Mutual.............................................. 29

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

SECURA Insurance Companies........................... 8

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

Pekin Insurance............................................... 29 Society Insurance............................................. 9 The IMT Group....................................Back Cover West Bend......................................................... 2 Western National............................................... 6 SEPTEMBER 2017 | 3

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

Milwaukee, Wisconsin | 262.347.0266 toll free 800.544.5700 | fax 262.347.0440

burnsandwilcox.com

Minneapolis, Minnesota | 612.564.1880 toll free 800.328.1693 | fax 612.564.1881

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

42356 Burns Middle Name Ad RZ - Big "I" Wisconsin-Wisconsin IA APPROVED.indd 1

10/28/16 11:14 AM

OPEN DOOR POLICY

INSURANCE, IT’S IN HER DNA! “I literally grew up in the business”, said Lise Meyer- 3rd generation President of Meyer Insurance Agency and President of the IIAW for 2017-2018. The offices of Meyer Insurance were located in her childhood home. An office addition was added on to accommodate her parents and their staff.

“I grew up answering the phone after hours saying, ‘Meyer Insurance, how can I help you?’ My parents were active members in both the IIAW and PIA,” Lise recalls. “I have fond memories of attending Association conventions and meetings. My parents instilled into me that you just don’t pay your dues like you pay your light bill - you participate, engage and get involved. Cultivate that investment in your agency and it will yield unimaginable returns.

You get out of it what you put in,” she says.

Like many of the IIAW Presidents and agency owners before her, insurance is in Lise’s DNA. These life experiences helped shaped the foundation of what would become the building blocks of Lise’s civic philanthropy and industry involvement. In 1994, Lise began her career with Meyer Insurance Agency and immediately joined the Young Agents Committee. Her hard work and dedication to the IIAW was recognized in 1995-1996 when she received the Young Agent of the Year Award. Over the years, Lise has participated on the Small Agents Committee and, more recently, on the Agency Services Committee. Her involvement and love for the Association did not stop there. She is routinely seen at IIAW conferences, conventions, continuing education courses and other networking and industry events.

“I was looking for opportunities to learn, network and grow professionally in the insurance industry. One of my mottos is, if you aren’t going forward, then you’re going backwards. The IIAW provided the training, incentive and direction for me to move forward,” Lise stated.

During Lise’s tenure as President of the IIAW, she hopes to encourage more agency owners and their staff to get involved in the Association. Her overall objective is to increase participation at the Annual Convention and Leadership Conference, grow the number of committee volunteers, as well as find innovative ways to engage IIAW members remotely.

“The industry is rapidly evolving and it is difficult as an agency owner to stay on top of it all. The IIAW is an amazing resource,” says Lise. No matter the challenge facing her agency, she believes the IIAW can help. She strongly WISCONSIN INDEPENDENT AGENT

encourages agents to get involved, attend IIAW events, and engage IIAW staff for help.

“What will the agency of the future look like?

How should we prepare?” asks Lise. She continues, “The Association and its staff are constantly working to protect and promote the independent agent channel, while providing valuable resources to help your agency stay one step ahead. By standing united as independent agents, we can overcome the disrupters and technology, attract and retain talent, and keep the regulators and legislators at bay.”

Lise is also extremely passionate about wanting to see the IIAW and PIA work more closely together. “Cooperation and coordination between the IIAW and PIA is vital if we, as an independent agent channel, hope to work synergistically.” Lise continues, “I have a great deal of admiration and respect for both organizations. I have experience with both. Each has a storied legacy and valued membership base that could benefit from the two (organizations) working together. I think I speak for the majority of IIAW members as well as the IIAW Board of Directors that we would like to see the two organizations find ways to partner and work together more than we do today. We as an independent agency channel are better equipped to tackle the various challenges impacting our industry, if we stand united.”

Finally, Lise is ardent about meeting the challenge to attract and retain talent into the insurance industry. “We need to do a better job of telling our story- how this career and industry provides a great work-life balance while

providing a good living. I must admit, I had the opportunity to join the family business earlier in my career but it wasn’t all that attractive. It seemed boring and tedious. It wasn’t until my 30’s that I decided to give it a try and I loved it. Perhaps we, as an industry, should focus on recruiting those individuals that are looking for a change of pace later in life- in the form of a second career. Establishing a more coordinated recruiting and training effort with industry partners may hold the key to successfully addressing the lack of talent interested in working in the industry,” concluded Lise.

Her goal is to work with the various committees to facilitate a discussion with industry stakeholders regarding attracting and retaining talent into agencies and to explore what can be done collectively to help agencies.

Lise Meyer’s story and passion is very similar to many others in the industry and she hopes to use her position as President of the IIAW to address a few of the challenges and opportunities facing the independent agency channel. To learn more about her vision and how the IIAW is working hard on your behalf, contact her at LMK@ Meyeragency.com. > Matt Banaszynski is the Executive Vice President of the Independent Insurance Agents of Wisconsin.

Contact him at matt@iiaw.com.

SEPTEMBER 2017 | 5

GOVERNMENT AFFAIRS

NAIC CYBERSECURITY MODEL LAW The National Association of Insurance Commissioners (NAIC) recently concluded its Summer National Meeting, and I wanted to provide you with an update on the activity that occurred in connection with the regulatory organization’s Insurance Data Security Model Law. The NAIC began its development of the cybersecurity model law nearly two years ago, and a revised version of the proposal was brought to a vote and approved by the Cybersecurity Working Group last week. The working group’s parent task force took similar action, and the proposal is expected to be approved by the full membership of the NAIC during a conference call to be held in the near future.

The development of this model law has been the focus of considerable IIABA attention and a source of significant association concern, but I am pleased to report that the proposal has been significantly revised and improved over the last four months.

With these final revisions in place, IIABA did not oppose the adoption of the proposal by the NAIC committees.

The version of the model approved by the working group is considerably different than the iterations unveiled last year, and it is also more reasonable and less onerous than the cybersecurity regulation promulgated by the New York Department of Financial Services in February.

The progress that has been made since the start of this process is the direct result of the advocacy and grassroots work of our state associations, and our South Carolina organization played a particularly helpful role in securing the final amendments last week. I thank all of you for your help in this endeavor.

Some of the most notable provisions and recent changes are outlined below: > The core elements of the model require licensees to establish an information security program that is commensurate with the size and complexity of the entity, the nature and scope of its activities, and the sensitivity of the information being guarded. The requirements are flexible and riskbased, and a licensee’s security program must respond to and mitigate the risks identified in the entity’s risk assessment. Earlier versions of the model would have required the adoption of certain identified practices by all licensees, but it now requires covered businesses to consider whether it is appropriate to implement a series of 11 specific security measures. As a result of some last-minute amendments included at the request of IIABA last week, the model no longer requires state-of-the-art protections to be implemented or specific actions to be taken. > Perhaps most notably, the data security WISCONSIN INDEPENDENT AGENT

requirements described above now only apply to licensees with ten or more employees. This means that most IIABA members would be exempt from the model’s data security requirements. The model also includes a safe harbor for entities that are compliant with the privacy requirements of the Health Insurance Portability and Accountability Act and submit a statement certifying compliance to regulators, and these provisions were also recently revised to address IIABA concerns and make it easier to take advantage of this provision. > The model’s data security requirements now apply to a more specific and much narrower universe of information than originally proposed. > One of IIABA’s biggest concerns has been the manner in which previous versions of the proposal imposed excessive burdens, strict liability, and unrealistic duties on licensees in relation to their engagement with third-party service providers.

These provisions were significantly modified late last week at the request of IIABA. The model now requires that licensees simply exercise due diligence and reasonableness in selecting thirdparty vendors that have access to a licensee’s sensitive information and require those entities to implement “appropriate” measures to protect and secure such data. As with the other data security mandates, these revised requirements only apply to licensees with at least ten employees. > The model requires insurers to annually certify to their domestic state regulators that they are in compliance with the information security requirements and have instituted an appropriate security program. This requirement does not apply to agents and brokers.

jurisdiction, then the licensee must also notify that state’s officials. Insurers that are the victim of a breach must also inform the agents of record for all of the affected consumers. > The model previously included a series of consumer notification requirements that would have applied in the event that a licensee suffers a data breach. The provisions were quite extensive and, among other things, would have required licensees to offer free identity theft protection services to consumers potentially affected by a data breach. All of the consumer disclosure requirements were deleted earlier this year, and licensees must comply with existing state law. > The model previously included a provision that would have given regulators the openended authority, in the event of a data breach, to “prescribe the appropriate level of consumer protection required … and for what period of time that protection will be provided.” That section was deleted. > The model initially created a private right of action that could have been used by consumers to bring litigation against licensees that fail to comply with the model’s requirements, but that provision was deleted last year. > The model’s effective date is one year after a state measure’s enactment, and this is double the amount of time originally proposed.

Although the model has been significantly improved and its most troubling provisions have been eliminated, the proposal is not perfect. There are several areas where further amendments and technical revisions may be helpful and provide further clarity, and we are prepared to assist state associations with these items if legislation based on the model law is pursued at the state level.

> Licensees that suffer data breaches (which are referred to as “cybersecurity events” in the model) must notify their home state regulators within 72 hours of discovering the event. If the breach affects > Wes Bisset, Senior Counsel, Government Affairs for the Independent Insurance Agents and Brokers of America. the records of 250 or more residents of any other

SEPTEMBER 2017 | 7

© 2017 Society Insurance

Business as usual even when it’s not.

Small detail. Big difference.

For franchise owners, someone else’s headache can quickly become their own. That contamination loss at the franchise across town? It affects other businesses, too. Society’s franchise endorsement covers lost income and extra expenses due to contamination loss at other franchise locations, which allows owners to focus on protecting their reputation. We’ll also cover updates to franchise standards after a covered loss. So let your customers focus on the things they can control, and we’ll help keep their credibility intact.

To discuss an agency appointment, give us a call at 888-5-SOCIETY or visit societyinsurance.com.

TECHNOLOGY

HOW ARTIFICIAL INTELLIGENCE WILL IMPACT THE INSURANCE INDUSTRY If you’re like most people, calling an insurance company isn’t among your favorite activities. That’s because the insurance industry is one of the least innovative areas for customer experience, meaning that customers typically come away from their interactions disappointed and dissatisfied. However, things are definitely changing, and artificial intelligence is playing a large role.

TECHNOLOGY

The fast-growing technology has the potential to disrupt the entire industry and greatly improve the insurance customer experience.

Artificial Intelligence In The Claims Process

intelligence and other technology to report the claim, capture damage, audit the system, and communicate with the customer. The potential here is huge, as the process could allow clients the chance to file claims without having to wade through red tape.

The insurance agency is notorious for its outdated processes. Filing a claim often looks the same today as it did decades ago because the industry isn’t consistently leveraging new technologies that are available to them. If an employee is busy or on vacation, a claims request could sit still until the right person is back. The outdated processes

Companies that have already automated some aspects of their claims process have seen a significant reduction in processing times and quality.AI-powered claims could also fight against one of the most costly elements of the insurance industry: fraudulent claims, which cost the industry more than $40 billion

make it harder for agents by increasing the workload and forcing them to work with antiquated systems and frustrated customers.

However, AI can be applied to improve the claims process. Claims currently are touched by multiple employees.

However, a new process of “touchless” claims doesn’t require any human intervention. This process uses artificial

10 | SEPTEMBER 2017

a year. Instead of relying on humans to manually comb through reports to catch inaccurate claims, AI algorithms can identify patterns in the data and recognize when something is fraudulent.

Future Of AI And Insurance The industry is definitely ripe for AI disruption. Customers expect to be able to interact with companies through modern technology; a recent survey found that 74% of consumers say

they would be happy to get computergenerated insurance advice.

Many insurance companies are already using artificial intelligence to some degree, and the number of companies following in their footsteps is sure to increase dramatically over the coming years. Artificial Intelligence has never been less expensive or more accessible, which means most companies don’t have a reason not to adopt it in at least some form.

Chatbots Chatbots work through messaging apps many customers already have on their phones, which makes them a natural next step in customer interaction. In order to truly be effective, chatbots must have natural language processing and sentiment analysis so they can understand what customers are really asking. Effective chatbots can process concerns that are either typed or spoken from customers and provide personalized service. In the insurance space, chatbots can be used to answer basic questions and resolve claims, as

WISCONSIN INDEPENDENT AGENT

TECHNOLOGY

well as sell products, address leads, or make sure customers are properly covered by their insurance.

Marketing And Underwriting Insurance is a competitive market, so a strong marketing strategy is vital. Traditionally, insurance companies used blanket methods like cold calling customers, but today’s customers expect personalized sales tactics.

AI can pull in customer data to create a full profile that can be used to offer only relevant insurance products and remember a customer’s preferences.

Instead of spending valuable time and money on the underwriting process, which typically includes invasive questions and surveys about to dictate premiums, Artificial Intelligence could automate the entire process. Bots could potentially scan a customer’s social

profile to gather information and find trends and patterns. For example, someone who has a healthy lifestyle and a steady job may be able to be connected to being a safer driver, which could lower insurance premiums. AI can analyze data better than humans to more accurately predict each customer’s risk, thereby providing customers with the right amount of insurance and companies with protection from risky customers.

Data

Telematics, or wireless communication of data back to an organization, is expected to be a huge area of growth for insurance. Many insurance companies already offer discounts to customers who transmit their driving data back to the company. Telematics and artificial intelligence can take this one step further by recognizing GPS patterns with the data, inferring road and traffic conditions, and even predicting and helping avoid accidents, which could potentially lead to fewer claims to process and safer and more satisfied customers.

Insurance is driven by data, and it has a huge effect on the company’s bottom line and the satisfaction of the customer. A recent study found that nearly 80% of insurance executives believe artificial intelligence will revolutionize the way insurers gain information from their customers, with more than half saying the biggest benefit is being able to leverage better data for improved insights into the customers.

The insurance industry has long been bogged down by outdated practices. However, the combination of a new wave of thinking and newly developed artificial intelligence technology has the potential to completely change the customer experience to provide great service in a way that resonates with modern customers.

> Blake Morgan is a keynote speaker, author of More Is More and customer experience futurist.

WISCONSIN INDEPENDENT AGENT

SEPTEMBER 2017 | 11

TECHNOLOGY

BIG, BAD DATA

Recently I wrote in a blog post about a startup called Aviva. My comments were based on an article I read. According to the CEO, “What’s our long-term goal? To go from Ask it Once to Ask it Never – so customers don’t have to answer any questions at all.” How can coverage be booked without asking ANY questions? Why, using big data, of course.

Wouldn’t a better goal be to ask the necessary questions to assist consumers in identifying their unique exposures to loss, then match those exposures where possible with the proper insurance package to minimize the likelihood that they will experience a serious or catastrophic financial loss?

At my semi-annual checkups, my doctor asks me a LOT of questions. Would it be an improvement if he didn’t ask me ANY questions? Maybe for his bottom line, but not for mine. Who can’t spare an hour once a year to prevent financial ruin?

In another blog post, I wrote about the startup, Slice, which apparently plans to write on-demand home sharing and ride sharing insurance without an application. How? Presumably using big data, of course. In still another blog post, I wrote about Lemonade which writes homeowners insurance using a phone app without a lot of pesky questions designed to identify exposure gaps of individuals and families. They too seem to be relying on black box algorithms and our friend “big data.”

Let’s take Slice for example. They claim:

TECHNOLOGY

“All the information that insurance carriers ask you is all publicly available. So instead of taking up your time to give us this info, we use our clever SliceBots to collect it.”

So, ALL of the information they need to properly insure all of your unique exposures to loss is publicly available? At one time, I saw a Zillow logo on one start-up’s web site. Is that where, for example, homeowners information might be obtained? Or might such a startup go directly to tax and other records where this information is obtained? How reliable is this “big data”? Is it vetted out all if customers are not asked any questions?

Still another startup, as discussed in this Forbes article, is Hippo.

Backed by a number of investors, including Trulia, this is how their big data approach works: “According to the company, with Hippo, consumers can go from quote to purchase in minutes, as quotes are delivered in 60 seconds after answering three simple questions. Customers can get a personalized Hippo quote online, by phone or even through Facebook Messenger. The company leverages technology and data from multiple sources (such as property records, permit filings and aerial photography of roof conditions) to streamline the application process and provide ongoing risk monitoring. By leveraging data, Hippo saves customers time, while also garnering

12 | SEPTEMBER 2017

more accurate information that cannot be provided from subjective human answers alone. By cutting out the middleman, more accurately assessing risk and increasing technology efficiencies, Hippo is able to pass savings on to consumers.”

There happens to be a home for sale in my neighborhood. Out of curiosity, I checked it out at Zillow and Trulia. Zillow says it’s a 1-story home, Trulia says 2 stories. Zillow says 2 ½ baths, Trulia says 3 ¼ baths. Zillow says the lot is 1.6 acres, Trulia says 0.48 acres. Zillow says the home is 2,968 sq. ft., Trulia says it’s 3,891 sq. ft. Just in the replacement cost valuation of the home alone, think these discrepancies might make a difference in coverage limits?

In my own case, I owned a home that was 1,000 sq. ft. larger than the country tax records showed. Over the course of 30+ years, attic space had been converted to living space, but the records from which “big data” might be drawn were never updated. When discussing this issue in an online forum, one of the participants said that Zillow showed his home being 2,400 sq. ft. (the same size in the tax rolls), whereas it’s actually 4,683 sq. ft.

Big data is one thing. Big, BAD data is another. Who is vetting this information, bots and algorithms? Certainly not regulators given the open-arms welcome one startup got from a state insurance department. Is anyone listening? Does anyone care?

> Bill Wilson of InsuranceCommentary.com and former Vice President of the Independent Insurance Agents and Brokers of America.

WISCONSIN INDEPENDENT AGENT

Doing The Right Thing Since 1964 Standing Tall

Mark Maucere, Andy Roe, Jim Roe, Chad Trainor, Janet Phillips and Jim Eades

Ready to stand out?

We’ll stand with you.

To keep your agency relevant, you need the right products, partners and people. Our team of dedicated and responsive professionals can help you fill the gaps in your insurance offerings, providing more unique opportunities for you to meet the needs of your clients. The more you get to know us, the more you’ll see the possibilities.

Let us help you find the right solutions. ®

800.878.9891 ArlingtonRoe.com Aviation | Bonds | Brokerage | Commercial Lines | Farm | Medical Professional Personal Lines | Professional Liability | Transportation | Workers’ Compensation

TECHNOLOGY

HOW CHATBOTS CAN BE USED IN BUSINESS

Chatbots — not robots at all, but software that you communicate with to get answers or things done — can help businesses of all sizes enhance their customer experience, but that’s not all they can do.

TECHNOLOGY

Small and medium-sized businesses are now tapping into the power of Artificial Intelligence-enabled chatbots to improve operations and marketing, increase sales and build better relationships and internal communication.

and even help manage your calendar.

Let’s face it, just scheduling a single meeting can take 15 minutes or more and when you add up how many meetings you schedule, it’s a significant time commitment for a small business.

Although a form of chatbots has been around since the 1960s, Amazon’s Alexa, Google Home, Microsoft’s Cortana and

Just ask Alexa to set up meetings and send you a reminder when you need to hit the road. She will even alert you to traffic concerns if you ask her. Chatbots

Apple’s Siri are ushering in a new era of possibilities for how chatbots can be used in business. Here I want to look at some ways chatbots are changing the way we do business and why it’s time for all SMEs to consider adopting chatbots.

can read emails out to you or send them out and help you spell better. And who couldn’t use help managing their to-do list? Chatbots can take over the tedious tasks so you can focus on what’s most important to drive your business.

1. STREAMLINE OFFICE MANAGEMENT AND TASKS Today’s chatbots are powerful personal assistants. They can call an Uber, place a lunch order, make a hotel reservation, order office supplies when you get low

2. ENHANCE THE CUSTOMER EXPERIENCE You want guests who enter your office to be comfortable. When you put Amazon’s Echo or Apple’s HomePod on the job, you can pipe music from

14 | SEPTEMBER 2017

Spotify, Pandora or Apple Music into your waiting area that will help your customers enjoy their time as they wait for you. You can also automate your office by connecting devices to smart office gadgets, which means you can control the lighting and temperature in your office space to optimize comfort through smart devices so the humans you employ don’t have to.

3. AUTOMATE CUSTOMER SERVICE One critical component to being successful in business is prompt attention and communication with customers, especially when they contact you for support. Chatbots can respond to multiple people simultaneously, so they can be your first line of communication with your customers.

Most businesses get inundated with similar questions such as hours of operation, address, return policies, etc. that AI chatbots can automatically

WISCONSIN INDEPENDENT AGENT

TECHNOLOGY

answer or learn to answer. Similarly, when a customer calls to get product or service advice, chatbots can easily handle the majority of calls or escalate them to human support when necessary. They can even help process payments.

4. CONVERSATIONAL COMMERCE The easier you make it for consumers to purchase your product, the more sales you will make. In conversational commerce, customers can purchase an item by having a conversation with a chatbot. Since the chatbot stores information and any changes to orders, it can learn over time the preferences of individual customers and will be able to follow-up to make subsequent sales.

5. ADVERTISING VIA CHATBOT Advertising-focused chatbots are a great way for small business owners to diversify their promotional efforts. They can share news about specials or coupons to keep their business top of mind via direct messaging.

WISCONSIN INDEPENDENT AGENT

6. IT’S TIME TO ADOPT CHATBOTS FOR YOUR BUSINESS Clearly, there are many ways chatbots can be used in business and since we’re only at the initial stages of adoption, it won’t be long before that list grows. As well as the practical tasks that chatbots can assist with, there are also other reasons why your business should seriously consider adopting chatbot services.

preferred contact methods are more likely to get their business.

First, when you are an early adopter of new technology it sets you apart from the competition and allows your customers to see you as a leader, and customers like to associate themselves with industry leaders.

Even though a direct correlation between your adoption of chatbots and increased sales might not be possible, it will definitely have impact.

7. CHATBOTS AREN’T JUST FOR FORTUNE 500 COMPANIES When you’re ready to expand beyond the Echo and Google Home solutions, there are companies that provide solutions for small businesses without any technical expertise to build custom bots. Solutions from Chatfuel, Converse and Zendesk are quite popular with smaller businesses because they will integrate across a variety of platforms and don’t require customized coding. These solutions are being used by businesses in all industries from healthcare to law offices to consulting firms.

Every business needs to appeal to millennial as they become more important consumers.

In general, this segment of our population loves self-serve options and are very comfortable chatting and using text to get answers. Businesses who offer millennial their

Keeping customers engaged, something chatbots can do extremely well especially on social media, also leads to more business.

Why not employ a chatbot to do some of the heavy lifting for your organization to keep customers engaged?

> Bernard Marr is a best-selling business author, keynote speaker and consultant in big data, analytics and enterprise performance. As the founder and CEO of the Advanced Performance Institute he is one of the world’s most highly respected thought leaders anywhere when it comes to data in business. Bernard Marr can be contacted via e-mail at: bernard.marr@ap-institute.com.

SEPTEMBER 2017 | 15

TECHNOLOGY

73% ARE USING INTERNET OF T TO IMPROVE THEIR BUSINESS According to the Cisco Visual Networking Index, M2M connections will represent 46% of connected devices by 2020.

95% of execs surveyed plan to launch an IoT business within three years.

These and many other insights are from the recently published Cisco Internet of Things (IoT) study, The Journey to IoT Value: Challenges, Breakthroughs, and Best Practices published on SlideShare last month. The study is based on a survey of 1,845 IT and business decision-makers in the United States, UK, and India. Industries included in the analysis include manufacturing, local government, retail/hospitality/sports, energy (utilities/oil & gas/mining), transportation, and health care. All respondents worked for organizations that are implementing or have completed IoT initiatives. 56% of all respondents are from enterprises.

IT executives often see IoT initiatives as more successful (35%) than their line-of-business counterparts (15%). With IT concentrating on technologies and line-of-business users focused on strategy and business cases, the potential exists for differences of opinion regarding IoT initiatives’ value. The following graphic provides an overview of how stark these differences are.

Key takeaways from the study include the following:

TECHNOLOGY

73% Are Using Internet Of Things Data To Improve Their Business. The data and insights gained from IoT are most often used for improving product quality or performance (47%), improving decision-making (46%) and lowering operational costs (45%). Improving or creating new customer relationships (44%) and reducing maintenance or downtime (42%) are also strategic areas where IoT is making a contribution today according to the Cisco study.

Engaging with the IoT partner ecosystem in every phase of a project or initiative improves the probability of success. The most valuable phases to engage with ecosystem partners include strategic planning (60%), implementation and deployment (58%) and technical consulting or support (58%). The following graphic provides an overview of most and less successful organizations by their level of involvement in the IoT partner ecosystem.

> Louis Columbus, Director, Global Cloud Product Management at Ingram Cloud. Forbes Magazine Contributor

16 | SEPTEMBER 2017

WISCONSIN INDEPENDENT AGENT

TECHNOLOGY

THINGS DATA Only 26% of all companies are successful with their IoT initiatives. The three best practices that lead to a successful IoT implementations include collaboration between IT and business, the availability of internal and external partnerships to gain IoT expertise; and a strong technologyfocused culture.

60% of companies believe IoT projects look good on paper but prove more complex that expected. This finding underscores how critical it is for IT and line-of-business executives to have the same goals and objectives going into an IoT project. Being selective about which integration, technology, and professional services partners are chosen needs to be a shared priority between both IT and line-ofbusiness executives.

Engaging with the IoT partner ecosystem in every phase of a project or initiative improves the probability of success.

Come Grow with Us!

25% Avg Annual Rate of Direct Written Premium Growth (2010 - 2015)

You don’t triple in size in five years without satisfied agents!

We now feature more lines of business in most states (including a One-Stop Insurance Shopping solution via BizGUARD Plus).

Workers’ Compensation • Property/Liability (via our Businessowner’s Policy) • Commercial Auto • Commercial Umbrella/Excess • Professional Liability • Disability

We are a stable open market for your commercial Property & Casualty accounts that provides the qualities you seek: Competitive Pricing • Unique Coverage Extensions • Excellent Commission Potential • Broad Underwriting Appetite • Easy Submission Process • Superior Customer Service Visit www.guard.com for product availability in specific states.

Berkshire Hathaway

GUARD

Insurance Companies

We’re the quote you could come up against, so why not join us? Go to www.guard.com/apply

EMPLOYEE BENEFITS

HOW ADVISERS CAN BEAT THE COMPETITION

THROUGH INNOVATION

“I’m making you the agent of record on all 11, starting now,” the CFO told Derek Rine, referring to a package of benefit polices that several brokerage firms had been managing for the 3,000-employee company.

With that, local independent agency David Rine Insurance won this large account over the national house incumbent and the huge regional agency that recently had received a verbal commitment for the AOR. How this undersized David slays industry Goliaths to win a giant account is a case study in how small but smart independents are beating the big brokerages.

A fixture in the Akron, Ohio, area for more than 25 years, Rine Insurance has been focused primarily on groups of 50-200 lives. So how did this pint-sized David rip a 3,000-life account away from two powerhouse benefit firms? The story begins with benefit practice leader Derek Rine’s decision in January 2016 to attend a new, break-the-mold conference for benefit agency leaders called ASCEND – The Agency Growth & Leadership Summit.

At ASCEND, Rine discovered innovative benefit strategies, unique employee engagement resources and powerful cost-containment tools.

More important, he learned that he had to have a better conversation with prospects than his competition if he wanted a chance to beat the larger benefit firms.

In his better conversation with that 3,000-life WISCONSIN INDEPENDENT AGENT

group, Rine introduced creative engagement and cost-containment solutions that neither the incumbent nor the regional agency had ever shown the client.

Game-changing solutions For employees, Rine Insurance offered a mobile benefit portal for their phone, providing 24/7 access to health and benefit concierge services, plus a telemedicine doctor with $0 copay.

Employees also could get zero-copay specialty drugs.

For the company, Rine provided several costcontainment solutions, including a proven pharmacy cost-mitigation program that slashes the high cost of specialty drugs.

Most important, however, Rine quantified potential savings, showing the CFO more than $1 million in total savings in year one alone.

To a CFO, that savings translates into EBITDA that he can show his CEO and board.

And to emphasize to the CFO the greater value that Rine Insurance was bringing, Rine charged double the fees that the incumbent was charging.

Key to Rine’s success was its entry point to the company. Rine avoided the operational HR department that doesn’t own the P&L

statement and resists change. Instead, confident in the tremendous value he was bringing, he secured an introduction from a mutual friend to the company’s CFO for a better, strategic conversation.

After Rine provided insights into what was possible beyond the status quo, the CFO recognized that Rine Insurance — not the big national or regional agency — was bringing the innovative solutions that provided better benefits for the employees and created EBITDA from the benefit spend. Another big win for David. Another stunning loss for Goliath.

David Rine Insurance is just one of many examples I have of small but nimble independent benefit firms across the country moving into the C-suite and leveraging better solutions and better conversations to become fearsome giant killers. Goliaths beware.

> Nelson Griswold is an agency growth consultant and author of DO or DIE: Reinventing Your Benefits Agency for Post-Reform Success. His Agency Growth Mastermind Network helps agency leaders reformproof their firm.

SEPTEMBER 2017 | 19

VIRTUAL UNIVERSITY

“LEASEBACK” OF A PERSONALLY-OWNED AUTO

DONE RIGHT

Rounding a curve, the driver crosses the center line and hits a 70-year-old motorcyclist. Amazingly the biker isn’t killed, but unsurprisingly he does suffer severe bodily injury. During the claim investigation, the business auto carrier discovers that the vehicle was not owned by its insured (the corporation), it was owned individually by the driver, the corporate president’s wife.

Although the car was scheduled on the business auto policy (BAP), the carrier rightfully denied the suit/claim filed against the driver. (More detail is provided later in this article.)

An insurance agent leased his personally-owned vehicle to the corporation. After his 19-year-old daughter rear-ended a BMW, the truth of the arrangement was discovered; the agent gave the now-corporatelyinsured vehicle to his daughter to drive while away at college. The business auto carrier had no choice but pay the claim, though this coverage extension was improper.

Personally-owned autos belong on a personal auto policy (PAP), but occasionally a commercial insured intentionally or unintentionally includes one or several personally-owned auto(s) on its business auto policy (BAP). Commercial clients may do this for one of many reasons.

When a commercial client intentionally or unintentionally includes a personally-owned auto on the BAP, the agent must ascertain the legitimacy of the vehicle’s inclusion on the BAP - sometimes its inclusion is improper (or just plain fraud). The primary goal of this article is to allow agents to answer the question, “When is the inclusion of a personally-owned auto on the BAP legitimate and proper?” Secondarily, this article addresses the steps required to properly add a personally-owned auto to the BAP.

(Im)Proper Assumption Before addressing legitimacy, one dangerous assumption must be tackled: ownership. Never assume that every vehicle listed on the auto schedule is owned by the insured. Further, don’t assume that any auto the insured attempts to add during the policy period is owned by or properly leased to the named insured.

Never include a vehicle on the auto schedule or add any vehicle without asking one simple question, “Who owns the vehicle?” The answer may reveal one or a few personally-owned vehicle(s); if so, the agent must either remove them from the BAP or take steps to properly extend protection from the BAP to the auto(s) and their owners.

Once ownership is established, the agent can decide if the inclusion of a personally-owned auto on the BAP is legitimate and proper.

Legitimacy of Adding a Personally-Owned Vehicle to the BAP How does the agent establish legitimacy? Ask questions!

Do NOT add a personally-owned auto to the BAP without asking five key exposure questions: 1. Is the vehicle owned by an employee? If “no,” do not add the auto to the BAP. If “yes,” proceed - cautiously.

2. Is the vehicle owner the listed vehicle’s only driver? If “no,” list the other driver(s). If there are multiple drivers, those drivers must somehow relate to the business for inclusion of the vehicle on the BAP to be acceptable.

3. What are the employee’s duties? If his/her duties require regular use of a vehicle – more than 50 percent of the time - adding the vehicle may be legitimate. If this is not the case, the personally-owned auto probably should not be added to the BAP. 4. What is the percentage of personal versus commercial use? If there is a majority of personal use, the vehicle’s addition to the BAP is improper and should not occur. (This question should be

20 | SEPTEMBER 2017

used when a corporate officer is adding a personally-owned auto to the BAP.) 5. Is the employee closely related to any owner or executive officer? A “yes” response does not make the vehicle’s inclusion improper; all other facts previously gathered must be considered before making the final decision.

If, based on the answers to these five questions, addition of the personallyowned auto to BAP is deemed legitimate and proper, two steps must be taken to confer coverage to the vehicle and the owner: 1. Require the creation and execution of a formal lease agreement; and 2. Attach the CA 99 47 - Employee as Lessor endorsement.

A Formal Lease Agreement Two or three sentences stating that “Employee” owns “Vehicle” and is leasing said vehicle to “Company” does not constitute a formal lease.

Because a lease agreement is a legal document subject to contract law and creates dual ownership of the subject automobile, specific information should be addressed or provided in the agreement: 1. A description of the vehicle; 2. A description of the individual leasing the car to the company (name, position in the company, and business purpose for adding the vehicle); 3. Agreement by the corporation to provide insurance protection and to what extent (i.e. “full coverage” or liability only) and to indemnify the vehicle owner; 4. Responsibility for loan payments (if any); 5. Clarification regarding who is responsible for maintenance and upkeep; 6. Responsibility for paying the property taxes; 7. Non-permitted use of the vehicle (including permitted and nonpermitted drivers – remember, the BAP carrier is providing 24/7 coverage on the vehicle); 8. The period of the lease agreement (can be indefinite); 9. Whether financial consideration is required during the lessee (mileage, fuel, monthly fee, etc.); 10. Who is responsible for paying traffic fines; 11. The requirement that the lessor have a PAP for any other vehicles owned. If no other autos owned by the person, a named, non-owner policy is necessary to confirm the CA 99 47 is not being used to avoid a PAP. (The auto being added to the CA 99 47 would NOT be on the PAP); and 12. Properly notarized signatures. (If the contract is not notarized, it is acceptable to have the signatures attested to and dated by a third-party witness.)

“Acceptable” lease agreements contain information addressing points 1, 2, 3, 8, 9, 11 and 12. If any of this information is missing, the lease is not acceptable and the personally-owned auto should not be scheduled on the policy. “Above Average” leases are those that contain everything found in an “Acceptable” lease plus answer “7.” above. A “Superior” lease addresses all 12 points.

This recommendation/requirement is not intended to put you “at odds with” your insured. If the carrier doesn’t ask for it, the requirement of a formal lease becomes and agency decision. However, remember the WISCONSIN INDEPENDENT AGENT

VIRTUAL UNIVERSITY The CA 99 47 – Employee as Lessor Endorsement

exposure now being placed on the BAP carrier. As an agent for the carrier, you are fulfilling your duties to your carrier. You are also helping your insured by explaining the ramifications of their decision and are trying to help them avoid potential legal problems.

[Errors and omissions word of caution. The agent should not write or “approve” any legal document. Give the insured a checklist of what needs to be included in the lease agreement and advise them to have an attorney draw up the lease. They may choose to write it themselves, but don’t make it the agency’s problem or responsibility.]

An Increased Exposure to Consider Remember, “leaseback” agreements create dual ownership of the vehicle but makes the named insured solely responsible for providing insurance protection. Ultimately, the named insured business is providing coverage to the “leased” auto on a primary basis, 24/7 regardless how it is being used. This fact places the carrier on the hook for any loss caused by the listed vehicle. Such increased exposure requires a detailed lease; and the BAP carrier is fully within its rights to ask for such a lease.

With the lease agreement in place, the vehicle owner is contractually protected, but depending solely on the contract to protect the driver leaves potential legal issues if the contract’s indemnification wording is unclear. To assure there are no gaps in protection for the vehicle’s owner, the CA 99 47 must be attached.

A Coverage Gap to Consider Remember the auto vs. motorcycle accident highlighted at the beginning of the article? The vehicle’s owner/driver was arguably using the vehicle for the benefit of the company when the accident occurred. Although it was a listed vehicle, the carrier denied the claim against the

driver (the driver was sued, not the corporation). Following is a paraphrased excerpt from the deposition explaining why the claim denial was/is correct.

(As a side note, coverage was provided under Symbol 1.)

Lawyer: “So, you are telling me that a listed auto is not a covered auto?”

Expert witness: “No, I’m telling you the person driving the vehicle is not a covered driver. If the company (the named insured) was sued, the policy would provide coverage. However, it’s not the company being sued, it’s the driver/owner of the vehicle – and she has NO coverage under the corporation’s business auto policy.”

Does the unendorsed BAP support this denial?

Yes, exclusionary wording found in subparagraph b. of Who Is An Insured, reads in part: Who Is An Insured The following are “insureds”: b. Anyone else while using with your permission a covered “auto” you own, hire or borrow except: (1) The owner or anyone else from whom you hire or borrow a covered “auto”.

(2) Your “employee” if the covered “auto” is owned by that “employee” or a member of his or her household.

Regardless of the owner’s/driver’s employment status, exceptions b.(1) and b.(2) excluded her from coverage. By asking the right question, this coverage gap could have been avoided.

Knowing to whom a vehicle is titled allows the agent to make necessary recommendations or arrangements.

Could the owner/driver of the vehicle have been protected by the policy? Yes, if: 1) the facts indicated that addition of her personally-owned auto was legitimate; 2) a formal lease agreement was in place; and 3) the CA 99 47 – Employee as Lessorendorsement had been attached.

Personal auto policies (PAPs) are designed to provide primary protection for the vehicle’s owner and anyone responsible for the actions of the owner – up to and including his employer.

To maintain the primacy of the PAP, the BAP specifically excludes from insured status any employees using his or her personallyowned vehicle on behalf of the business [II.A.1.b.(2)]. However, use of a formal lease and attachment of the CA 99 47 – Employee as Lessor endorsement fully and unconditionally eliminates the PAP’s primacy.

Part A in the CA 99 47 removes any question of ownership or “title.” The auto scheduled on the endorsement becomes and an owned vehicle under the policy as follows: A. Any “auto” described in the Schedule will be considered a covered “auto” you own and not a covered “auto” you hire, borrow or lease.

Part B specifically extends insured status to the employee who leases the auto to the employer even though the endorsement does not require the employee’s/owner’s name be provided, nor is there a place to provide the information: B. While any covered “auto” described in the Schedule is leased to you by one of your “employees”, the Who Is An Insured provision under Covered Autos Liability Coverage is changed to include that “employee” as an “insured” Although the owner’s name is not required for the endorsement, the underwriter still requires an MVR. This owner/driver is underwritten like any other driver, and possibly more stringently since the carrier is now providing 24/7/365 coverage for the driver while using the scheduled auto.

Personally-Owned Autos on the BAP Personally-owned autos belong on a PAP. Thus, to avoid the improper or illegitimate addition of a personally-owned auto on the BAP, the agent must: • Confirm the owner of every vehicle (not just those being leased back) – don’t assume; • Confirm any request or need to add a personally-owned auto to the BAP is legitimate by asking the key exposure questions; • Require and closely review the formal lease agreement; and • Attach the CA 99 47. > Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS is the Executive Director of the Independent Insurance Agents and Brokers of America (Big “I”) Virtual University. His duties are researching, writing, and teaching property and casualty insurance coverages and concepts to Big “I” members and others in the insurance industry.

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

WISCONSIN INDEPENDENT AGENT

SEPTEMBER 2017 | 21

2017 PRELICENSING CLASS SCHEDULE

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

REGISTER AT IIAW.COM 2017 CLASS DATES

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

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

registrations.

NON-MEMBER PRICING: $355

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

P ROPERTY & C ASUALTY February 20-23

March 6-9

March 27-30

April 3-6

April 17-20

May 15-18

May 22-25

June 5-8

June 19-22

July 10-13

July 24-27

August 7-10

August 21-24

September 11-14

September 25-28

October 9-12

October 23-26

November 6-9

November 13-16

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

December 4-7

December 11-14

Property & Casualty

You may also take individual classes.

DAILY SCHEDULE

Life & Accident/Health

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

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

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

This provides all the necessary information to obtain a license.

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

ERRORS & OMISSIONS

HOW TO AVOID E&O CLAIMS FROM NEW PRODUCTS

An ancient proverb would have us believe that, “There’s nothing new under the sun.” That may have been true once upon a time, but beyond question, the speaker was not referring to modern insurance markets. As new risks emerge at a dizzying pace, new insurance products are being developed to respond and protect insureds from these new - and some old - exposures.

It goes without saying that even a good insurance agent can get into trouble placing these new coverages, which begs the question: how can an insurance agent dealing with these new products protect themselves from an unwanted E&O claim?

1. Understand the Changing Needs of Your Client This means asking the right questions, listening to the answers and following up appropriately.

For example, an association filed a construction defect lawsuit against a client roofing company. The lawsuit alleged that the client was hired to provide roof and structural engineering consulting, assist in preparing bid documents, selecting contractors, selecting types of products and selecting the installation process for the new roof. A few years after the work was completed, numerous defects appeared in the work and materials used. A claim was submitted to the client’s general liability carrier, which denied the claim on the basis that there was no coverage for breach of contract, breach of express warranty, and professional malpractice, as they were not caused by an “occurrence” as defined by the general liability policy.

The client proceeded to bring a claim against the agent for failure to recommend and procure a professional liability policy. The client’s claim was defeated by evidence from the agent’s files, which reflected that on numerous occasions the agent, aware that its client had begun doing consulting work, offered professional liability coverage to the client -- which was rejected every time.

To stop an E&O claim from developing, an agent should be sure to document each time a new insurance coverage/limit is recommended to a client along with the client’s response.

Follow up appropriately. Questions left hanging

are often used to hang E&O claims on agents.

2. Understand How the Insured’s Business is impacted by the Policy’s Terms and Conditions In jurisdictions and situations

going concern? A new policy or a replacement?

If the latter, thought should be given to how the new policy will address old business. In order to avoid an E&O claim the agent should review the differences in coverage between the expiring and new policies looking for gaps and changes, then communicate and document that these differences were discussed with, and selected by, the client.

With respect to claims made and reported professional liability policies, in particular, it is imperative that an agent encourage clients to list all incidents on its application. That way, if an incident needs to be reported to an expiring carrier, as discussed above, such notice is timely provided. Additionally, in order to keep the lines of communication open with clients, the agent should be responsive and helpful to all client inquiries.

where a duty to advise exists, the agent-insured relationship cannot operate in a vacuum. There has to be two-way communication.

For example, an insured’s client - an architect designed a truck terminal for its owner. During the construction of the project the owner alleged the architect’s design contained mistakes that resulted in construction delays and additional costs for its customer.

After some time had passed, the architect came into his agent’s office to procure a claims made and reported professional liability policy.

The agent and architect agreed to move the coverage to a new carrier, for which the client completed a new application. The architect failed to disclose, however, that a potential 3. Report Claims to All Carriers What if ‘negligent design’ claim by the truck terminal’s you and your client only have a ‘meeting of the owner was in the wind. minds’ concerning a new risk after a loss already The new carrier bound and issued a claims has occurred? All is not lost. Existing coverages made and reported professional liability policy. and policy forms can be slow to adapt to new A few months later the owner made a demand exposures. Consequently, even after a loss has on the architect, who at that time reported a occurred it can be hard to determine which claim to his new professional liability carrier. will cover it and which will not. The smart The new carrier promptly denied coverage for agent does not try to answer those questions, the claim on the basis of prior knowledge. The rather they simply direct the insured to submit architect knew about the possibility of a claim the claim to every carrier that might provide by the truck terminal owner prior to the new coverage. carrier’s policy inception, and therefore, the A company that designs and builds industrial claim was denied. production facilities submitted a bid for a The architect then brought an E&O claim redesign of a cement facility. The bid was against the agent for negligent procurement and accepted and the facility built. After completion, breach of contract claiming that the agent failed the property owner alleged significant to provide him with matching and continuous CONTINUED ON PAGE 32 coverage, and further failed to advise him that > Barbara Rocco and Kristina Miller are Assistant Vice Presidents and the new policy did not contain first dollar Claims Specialists with Swiss Re Corporate Solutions and work out of the Chicago office. Insurance products underwritten by Westport defense.

Insurance Corporation, Overland Park, Kansas, a member of Swiss Re Context is key here. Is this a new business or a Corporate Solutions.

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders. Copyright 2010 Swiss Re America Holding Corporation WISCONSIN INDEPENDENT AGENT

SEPTEMBER 2017 | 23

SALES

6 REASONS SALESPEOPLE WIN OR LOSE A SALE Why does a salesperson lose a sale?

It’s a question I’ve studied for years, as part of the win-loss analysis research I conduct.

There’s a tendency to assume that the salesperson lost because their product was inferior in some way. However, in the majority of interviews buyers rank all the feature sets of the competing products as being roughly equal.

This suggests that other factors separate the winner from the losers.

In order to identify these hidden decisionmaking factors, more than 230 buyers completed a 76-part survey. The research project goals were to understand how customers perceive the salespeople they meet with, explore the circumstances that determine which vendor is selected, and learn how different company departments and vertical industries make buying decisions. We had six key research findings: #1: Some Customers Want to be Challenged What selling style do prospective buyers prefer?

The survey shows 40% of study participants prefer a salesperson who listens, understands, and then matches their solution to solve a specific problem. Another 30% prefer a salesperson who earns their trust by making them feel comfortable, because they will take care of the customer’s long-term needs. Another 30% want a salesperson who challenges their thoughts and perceptions and then prescribes a solution that they may not have known about.

From a departmental perspective, under 20% of accounting and IT staffers want to be challenged, while 43% of the engineering department does. Over 50% of marketing and IT prefer a salesperson who will listen and match a solution to solve their specific needs.

The sales department equally preferred having a salesperson listen and solve their needs and being challenged; HR was equally split across all three selling styles.

There’s an interesting explanation for selling styles preferences, which is based on whether the buyer is comfortable with conflict. Seventyeight percent of participants who preferred a

24 | SEPTEMBER 2017

salesperson who would listen and solve their specific needs agreed with the statement: “I try to avoid conflict as much as I can.” Conversely, 64% of participants who preferred a salesperson who challenges their thoughts disagreed with the statement and are comfortable with conflict. #2: It’s Really a Committee of One Whenever a company makes a purchase decision that involves a team of people, factors including self-interests, politics, and group dynamics will influence the final decision.

Tension, drama, and conflict are normal parts of group dynamics, because purchase decisions typically are not made unanimously.

One critical research finding is that 90% of study participants confirmed that there is always or usually one member of the evaluation committee who tries to influence and bully the decision their way. Moreover, this person is successful in getting the vendor they want selected 89% of the time. In practicality, it can be said that a salesperson doesn’t have to win over the entire selection committee, only the individual who dominates it. #3: Market Leaders Have an Edge In most industries a single company controls the market. Compared with their competitors, they have a much larger market share, top-of-the-line products, greater marketing budget and reach, and more company cachet. For salespeople who have to compete against these industry giants, life can be very intimidating indeed.

However, the study results provide some good news in this regard. Buyers aren’t necessarily fixated on the market leader and are more than willing to select second-tier competitors than one might expect. In fact, only 33% of participants indicated they prefer the most prestigious, best-known brand with the highest functionality and cost. Conversely, 63% said they would select a fairly well-known brand with 85% of the functionality at 80% of the cost. However, only 5% would select a relatively

unknown brand with 75% of the functionality at 60% of the cost of the best-known brand.

Not surprisingly, the answer to this question differed by industry. The fashion and finance verticals had the highest propensity to select the best-known, top-of-the-line product, while manufacturing and health care had the lowest. #4: Some Buyers Are “Price Immune” Price plays an important role in every sales cycle. Since it is a frequent topic during buyer conversations, salespeople can become fixated on the price of their product and believe they have to be lowest. However, decision makers have different propensities to buy, and the importance of price falls into three categories.

For “price conscious” buyers, product price is a top decision-making factor. For “price sensitive” buyers, product price is secondary to other decision-making factors such as functionality and vendor capability. For “price immune” buyers, price becomes an issue only when the solution they want is priced far more than the others being considered.

Study participants were asked to respond to different pricing scenarios, and their responses were analyzed to categorize their pricing tendency. From a departmental perspective, engineering would be classified as price immune; marketing and sales as price sensitive; and manufacturing, information technology, human resources, and accounting as price conscious. From an industry perspective, only the government sector would be classified as price immune. Banking, technology, and consulting would be price sensitive, while manufacturing, health care, real estate, and fashion are price conscious. #5: It’s Possible to Cut Through Bureaucracy The most feared enemy of salespeople today isn’t solely their archrivals; it’s buyers’ failure to make any decision. This is because every initiative and its associated expenditure is WISCONSIN INDEPENDENT AGENT

SALES

competing against all the other projects that are requesting funds. Do the departments have different abilities to push through their purchases and defeat their company’s bureaucratic tendency not to buy?

The answer is yes. Based on the research results, sales, IT, and engineering have more internal clout to push through their projects as opposed to accounting, human resources, and marketing. Therefore they’re better departments to sell into from the salesperson’s perspective. #6: Charisma Sells in Certain Industries Imagine three salespeople who’ve pitched products that are very similar in functionality and price. Which would you rather do business with: A A professional salesperson who knows their product inside and out but is not necessarily someone you would consider befriending B A friendly salesperson who is likable and proficient in explaining their product C A charismatic salesperson who you truly enjoyed being with but is not the most knowledgeable about their product

While top selection in every industry was the friendly salesperson, the media and fashion industries selected “charismatic salesperson” more than most, and the manufacturing and health care industries had the highest percentage of “professional salesperson” responses.

Many salespeople behave as if buyers are rational decision makers. In reality, human nature is complicated, and a mix of factors — some rational, some not — determine how buyers evaluate sales reps and who they select. Ultimately, it is the mastery of the intangible, intuitive human > Steve W. Martin teaches sales strategy at the University of Southern California Marshall School of Business. His new book is titled Heavy element of the sales process that Hitter I.T. Sales Strategy: Competitive Insights from Interviews with separates the winner from losers.

1,000+ Key Information Technology Decision Makers.

PLACED

PROFESSIONAL LIABILITY BROKERAGE PROPERTY & CASUALTY GARAGE LIABILITY TRANSPORTATION SURETY PERSONAL LINES

(800) 666-5692 | JMWILSON.COM WISCONSIN INDEPENDENT AGENT

SEPTEMBER 2017 | 25

CONTINUING EDUCATION IIAW IN-PERSON CLASSES

IIAW ONLINE CE CLASSES

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

6 CE Credits Approved Date: October 4, 2017 Location: IIAW State Headquarters Time: 9:00 AM – 3:00 PM

Farm Liability Coverages 3 CE Credits Approved Date: September 19, 2017 Location: IIAW Webinar – iiaw.com/events Time: 8:00 AM – 11:00 AM

ABEN ONLINE CE CLASSES Ethics in Today’s Changing Times 4 CE Credits Approved Date: September 20, 2017 Location: ABEN Online – iiaw.aben.tv Time: 2:00 PM – 6:00 PM Premium Financing 2 CE Credits Approved Date: September 21, 2017 Location: ABEN Online – iiaw.aben.tv Time: 10:00 AM – 12:00 PM CDT Long Term Care 2 CE Credits Approved Date: September 21, 2017 Location: ABEN Online – iiaw.aben.tv Time: 8:00 AM – 10:00 AM Commercial Lines Claims that Cause Problems 2 CE Credits Approved Date: September 21, 2017 Location: ABEN Online – iiaw.aben.tv Time: 8:00 AM – 10:00 AM E&O Risk Management: Meeting the Challenge of Change 6 CE Credits Approved Date: September 21, 2017 Location: ABEN Online – iiaw.aben.tv Time: 9:00 AM – 3:45 PM Data Privacy Insurance 2 CE Credits Approved Date: October 3, 2017 Location: ABEN Online – iiaw.aben.tv Time: 9:00 AM – 11:00 AM

E&O: Roadmap to Policy Analysis, Part 1 3 CE Credits Approved Date: September 20, 2017 Location: IIAW Webinar – iiaw.com/events Time: 8:00 AM – 11:00 AM E&O: Roadmap to Policy Analysis, Part 2 3 CE Credits Approved Date: September 20, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM Protecting Your Most Valuable Asset 3 CE Credits Approved Date: September 21, 2017 Location: IIAW Webinar – iiaw.com/events Time: 8:00 AM – 11:00 AM The Dirty Dozen 3 CE Credits Approved Date: September 21, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM Personal Auto Policy 3 CE Credits Approved Date: September 25, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM Ethics & Agent Liability 3 CE Credits Approved Date: September 27, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM Dispelling the Myths of Workers Compensation 3 CE Credits Approved Date: September 28, 2017 Location: IIAW Webinar – iiaw.com/events Time: 12:00 PM – 3:00 PM

FFO AW W..CCO OR RM MO OR REE C CLLAASSSSEESS AAN ND D TTO OR REEGGIISSTTEERR P PLLEEAASSEE G GO O TTO O IIIIA OM M

AGENCY MANAGEMENT

3 BOP COVERAGE TRENDS TO DISCUSS WITH SMALL BUSINESSES It’s an uncertain time for your small commercial clients as important issues like health care and tax reform continue to be shifting targets.

But if the economy continues to improve and U.S. businesses eventually face lower health care costs and tax cuts, “I think you’ll see small commercial business thrive and new ventures emerge,” says Dan Gaynor, senior vice president, chief underwriting officer at The Main Street America Group. “That will be good for the insurance industry and the BOP market.”

BOP insurance doesn’t usually see much action year over year. Brian Kearney, chief underwriting officer, select accounts at Travelers, calls the current market “relatively profitable and competitive.”

“The market’s healthy, and as a result, pricing has been stable,” Kearney says. “Barring any unforeseen circumstances, the marketplace appears relatively stable throughout 2017.”

Gaynor points out that because the first quarter of 2017 marked above-average catastrophe losses, “you might see a little tightening in cat areas. But I doubt it will have an impact because of continued lower reinsurance costs. Until they get higher reinsurance costs on those cat treaties, you’re probably not going to see much change.

Moving forward, I think you’ll continue to see flat pricing for the good risks.”

In this stable setting, Lynn LaGram, assistant vice president of small commercial product at The Hartford, says BOP coverages are “everevolving.” From tech startups to drones, “there are a lot of exposures that are changing and new exposures that are emerging,” she explains. “It’s very important for the industry to stay current in those trends and for carriers to continue to develop products and solutions WISCONSIN INDEPENDENT AGENT

to meet the changing needs of small business owners.”

Here are three BOP coverage trends to consider highlighting with your small commercial clients this year.

Bells and whistles. Most insurers follow the standard BOP, but today, more and more are starting to “add their own extension endorsement” to that baseline, Gaynor says. Endorsements may include additional coverages and accounts receivable, systems coverages and other enhancements. “Most of the extensions are focused on your traditional coverages and just trying to fill any gaps you might see,” Gaynor explains.

Cyber developments. As more small businesses become comfortable with the idea that cyber insurance is necessary, make sure you read all cyber forms carefully. Agents must help translate policy language for clients so they understand exactly what kind of coverage they’re purchasing.

“Cyber coverage means different things to different people,” Gaynor points out. “You really need to make sure you understand the coverage and what is being offered—since it’s still such a new coverage, terminology is not universal across the industry. What one company means by using a term might mean something different compared to another carrier.”

Insureds that use the cloud, for example, may require an extra endorsement in order to secure coverage for exposures like lost income or extra expenses resulting from a cloud service

interruption. “A lot of small business owners use the cloud to run the day-to-day operations of their business—think about running a website, think about a point of sale system,” LaGram points out. “Any kind of interruption to that cloud service provider could be quite costly to a business.”

Business continuity planning. On that note, many small businesses don’t realize what they may have at stake if they’re unable to operate their business for an extended time period.

“The beginning of this year was another tough quarter in terms of bad weather,” Kearney says. “We see that with disasters like large storms, hailstorms, tornados—anything that can impact a small business with that level of damage—oftentimes they’re not able to go back into business, especially if they don’t have the right coverage.”

Make sure your clients have the right business income coverage and limits to sustain them while they get back up and running, Kearney advises. “It used to be that all BOPs just provided actual loss sustained business income, but because of the prevalence of new and different types of exposures and businesses, not every small commercial policy would provide that coverage now,” he explains.

Beyond securing the proper insurance, it’s also your job to help your small business clients “understand business practices around their supply chain and make sure they’ve got the right contracts and suppliers in place in the event that something happens,” Kearney adds. > Jacquelyn Connelly is IIABA’s IA senior editor.

SEPTEMBER 2017 | 27

ATTRIBUTES OF SUCCESSFUL INDEPENDENT AGENCIES OF THE FUTURE Here are the thirteen attributes of the successful agency of the future: 1. Leadership Skills A smooth running agency easily identifies market trends, niche opportunities and develops its employees, at the right levels, and allows them ability to grow. An agency with a strong leadership ethos is a strong employer, a place insurance professionals desire to work, and that has strong involvement in the industry as well as the community. Good leaders also have effective listening and communications skills.

A large part of good leadership also depends on another of the attributes mentioned, people management skills. Leadership, in this context includes the ability to inspire staff to work as a team toward a common goal and for the team to take its own initiative to accomplish the goal without management’s help.

2. Strategic Thinking The ability to clearly visualize and prepare for changes that will impact the manner in which the agency should best conduct future business.

These agencies will consistently commit time to think strategically, and have the ability to plan for technology changes, the changing diversity of their communities and expectations of their customer base. They will more quickly adapt to the changing environment around their agency.

These agencies will leverage their strategic thinking to identify key personnel to plan and execute, and prepare and educate their agency workforce. This will result in transitions that are more seamless for the agency and a better experience for their customers.

pushing the boundaries of best practices to a better and higher level.

5. Anticipatory We need to be able to anticipate or foresee changes that are coming, and be pro-active if possible to make changes in marketing plans and agency operations, where needed. Changes are coming so fast, that it is becoming harder to recognize changes that need to be made.

9. Agility 6. People Management Skills An agency of the future will easily accomplish/ achieve its defined mission while at the same time ensuring its employees are “taken care of” in the sense that they are comfortable and motivated when it comes time to carry out the daily work of the agency. They are also prepared and confident professionally to handle the work they do. Agency management is clear on the expectations, and holds employees to these expectations in a fair and consistent manner. In conjunction with good leadership skills, people management entails identifying talented employees – or rather the strengths and skills of each – so that they can be assisted in their professional development, as well as personal lives.

7. Financial Management

360-degree understanding among all stakeholders (owners, employees, customers, prospects, business partners & opinion leaders) of the agency’s brand.

An agency that focuses on their financial results regularly in an effort to proactively make changes and adjustments to improve the financial results in the future. The agency benchmarks against industry Best Practices standards, reviewing expense areas where the agency is too high, but also where it is too low. Identifying expense areas that are too low may help you zero in on areas you can make stronger, as well as to avoid areas where you might incur emergency expenses in the future, if you do not address.

4. Knowledge

8. Strong Sales Skills

A highly “in-touch” team that has the best insurance knowledge, and a team of professionals that has achieved appropriate designations and/or degrees. Additionally, this agency will be continually investigating technical and web presence trends both within the insurance industry and in the bigger business world. Knowledgeable leaders are

Adoption of a “sales culture” at each level of the agency will result in increased agency profitability through both new business development and improved retention. Particular attention to organic growth opportunities utilizing technology, and training of service personnel to recognize account development opportunities, will lead to success.

3. Clear Brand Positioning

28 | SEPTEMBER 2017

Agile is defined as the ready ability to move with quick easy grace. The agency of the future must be in tune with both opportunities and changes in the market. This includes, but is not limited to, the economy, insurance carrier appetites, needs of their clients and prospects.

The agency must be able to “turn-on-a-dime” while not disturbing exceptional client service or the well-oiled processes already in place.

Agile means never assuming things should continue to be the same and always looking for new ways of handling old problems on a day to day process.

10. Know Your Customer Agents who “Know Their Consumer” will be in a position to brand and market their agencies efficiently and cost effectively, resulting in increased sales and improved profits.

They understand that attracting new customers to the agency involves more than “one-size-fits-all” generic advertising, such as the yellow page advertising or “Dear Resident” direct mail. They will implement systems to identify those prospects most likely to buy from their agency and will develop targeted messaging that assures improved conversion and ROI. An agency who knows their customer will embrace niche marketing, even in personal lines, and then will look for ways to “round out” that niche client with the offer of other agency products and services. These agencies will be recognized as “experts” in their areas of focus, which will attract a higher volume of quality referrals from similar consumers or businesses. Close ratios will be above average because internal sales and operational systems can be tailored to the areas of focus.

WISCONSIN INDEPENDENT AGENT

11. Social Agency is fully engaged in on-line and social networking activity. Social is not just an isolated “project” or marketing initiative. Rather, it is an integrated “personality” trait of the agency. Social activity and engagement is how the agency communicates and engages with their customers and prospects. Social is how the agency sees itself and how is operates.

12. Efficient Processes An integral part of a successful agency of the future will be its ability to create, implement, audit, and improve (when appropriate) its processes.

These processes must be efficient, scalable, and fully support the agency’s mission and strategic direction. Successful agencies will have a full suite of documented workflows (processes); staff that is trained on them; and more importantly, staff who are always looking for additional ways to improve or make these processes more efficient.

The profitability, productivity, and levels of service that agencies can achieve through the adherence to standardized processes will ensure their continued success.

13. Effective Business Intelligence Don’t rely on your gut as to how you are performing. Keep the results in front of you as your driver.

Wisconsin STRONG Since 1931 Partners Mutual Insurance Company has built lasting relationships with independent agents across the state. We are committed to the independent agency system as the only means to deliver our products and work hand-in-hand to help our agencies grow profitably.

For information about becoming a Partners Mutual Insurance Agent please contact Brian Martin at 262.432.3439; Martin.Brian@PartnersMutual.com; Mike Ottman at 262.432.3418; Ottman.Michael@PartnersMutual.com; or Charles Becker at Becker.Charles@PartnersMutual.com or 262.432.3484.

For Additional information and insight on how your agency can achieve these 13 attributes and position your agency for future success visit: http:// www.independentagent.com/Resources/AgencyManagement/ACT/Pages/ planning/Trends/ACT_attributes-successful-agent.aspx

Sometimes things are just clearly

PMIC_3-75x4-875_WIA_FINAL.indd 1

BEYOND THE EXPECTED

12/13/2016 12:42:46 PM

®

.

FIND AN AGENT

BUSINESS BLOG

INDIVIDUAL BLOG

Like the advice you’ll get from our insurance gurus.

AUTO HOME LIFE BUSINESS

2505 Court Street • Pekin, Illinois • 61558 • 800-322-0160, Extension 2394 • www.pekininsurance.com

WISCONSIN INDEPENDENT AGENT

SEPTEMBER 2017 | 29

News Members in the

Progressive Launches Paths to Partnership Program

Progressive continues significant investment in IA channel; announces new program offering higher commissions, performance bonuses MAYFIELD VILLAGE, Ohio — Building upon its $1 billion acquisition of home carrier American Strategic Insurance (ASI), Progressive today announced additional compensation opportunities for independent agents through Paths to Partnership, featuring a new national auto commission schedule and performance bonuses to reward agents who build larger personal auto books, and place longerretaining personal auto business, with Progressive.

Under the program Progressive will continue to welcome inconsistently insured and simpler needs customers, and the tiered commission structure rewards auto policy growth regardless of customer segment. New incentives for preferred business, however, reflect the company’s efforts to become a go-to carrier for households with more complex needs as well, and complement the 2015 launch of Platinum, a preferred home and auto incentive program that continues to roll out across the country.

“Paths to Partnership provides more choice for independent agents,” said Karen Bailo, Progressive’s Agency Sales & Distribution General Manager. “The national auto commission schedule brings greater consistency, stability and transparency to our compensation programs across states, and provides the platform for extending an annual performance bonus and other exclusive benefits to qualifying agents who choose to place more, and more preferred, personal auto business with Progressive. Offering multiple paths ensures Progressive can help agents achieve their goals, no matter how they chose to partner with us.”

Progressive will start rolling out the new national auto commission schedule in phases, beginning with 12 states in July of this year, and another 32 in January 2018, when the new partner program and performance bonus will launch nationally. Full details are available to appointed agents on ForAgentsOnly.com.

The company also plans to roll out comprehensive enhancements to its commercial and personal lines quoting and servicing platforms over the next 18 months to further extend ease of doing business with Progressive and continue bringing to market smart, simple ways for agents to better serve their customers.

“Our Agency business has never been bigger, and our commitment to our independent agents has never been stronger,” added Bailo.

“Paths to Partnership is one of several significant investments we’re making to continue delivering products, programs and technology that meet the changing needs of the independent agents who represent Progressive in their communities. We’re proud to be the market leader in personal auto through independent agents, and we hope to earn that designation for all products and customer profiles in the years to come.”

30 | SEPTEMBER 2017

Robertson Ryan & Associates Hires CEO Robertson Ryan & Associates is pleased to announce Christopher A. Illman has joined the firm as Chief Executive Officer. “As a top 100 US insurance agency, Robertson Ryan continues to grow in Wisconsin and beyond with six offices serving the US. As CEO, Chris will focus on leading our company into the future,” said Tony Von Rueden, Robertson Ryan’s President and Chairman of the Board.

“This is the perfect time for Chris to become Robertson Ryan’s CEO. We selected a strong leader to continue leading our growth and forward moving momentum,” said Von Rueden. “Today’s pace of change is exponential. Companies are becoming digital, navigating disruptive markets and our continued drive to be the best for our clients has not wavered. Chris has a proven record of translating vision and strategy into world-class execution, bringing together teams and systems to drive results.”

Most recently Chris served as CEO of OneTouchPoint, an 800 employee marketing communications company headquartered in Hartland, WI. Chris managed all sales, operations, HR, finance and administration for the $150M company operating in five states where he helped double their size in five years. Previous to this position, Chris was Managing Director of Sales for Gartner eMetrix. He was responsible for worldwide revenue and business development for direct sales, alliances and channels for a software startup venture of publicly held Gartner, Inc. focused on business performance measurement. Chris led the creation of the division’s core offering and built the company’s professional, customer focused and consistently high performing sales organization within Gartner. Prior to that, he spent 15 years at Xerox Corporation where he rose through the ranks to become GM, Upper Midwest Operations for Xerox Business Services, responsible for sales, operations, finance and administration of a $200M and 250 employee business.

Chris earned a Bachelor of Science degree from the University of Illinois at Champaign-Urbana. He resides in Delafield, WI with his wife Cathy and three daughters, Sydney, Madeline, and Sophie.

“I joined Robertson Ryan because I wanted to be part of a company where I believed the possibilities were limitless. part of a company where I believed the possibilities were limitless. The business model of each agent owning their book of business has provided the foundation for Robertson Ryan to capture the revered position of largest independent agency in Wisconsin year after year. RRA makes a meaningful difference for our people, our clients and the world around us while creating shared success that benefits everyone,” said Chris Illman.

Back In Action: Former Ozaukee County Administrator To Lead Newly-Formed Ansay Holdings LLC Following an illustrious 17-year career as Ozaukee County Administrator, Tom Meaux is starting a new chapter in his professional life, one he expects will hold new opportunities and challenges. Meaux, recent recipient of the Lifetime Achievement Award from the Public Policy Forum, has been named the President & Chief Operating Officer of the newly-formed Ansay Holdings LLC, which is comprised of the Ansay & Associates LLC insurance agency, Ansay Development Corporation real estate company, and the Ansay International LLC import and export business.

Meaux will be heavily involved with all aspects of the real estate and importing businesses, while providing consultative services for the entire Ansay team. In addition to charting a course for the future, managing finances and balancing budgets, Meaux sees his role as one of a mentor to the next generation of leadership.

“I’m helping steer the ship, with an eye on the horizon,” Meaux said.

WISCONSIN INDEPENDENT AGENT

“We have dynamic young management in place right now. It’s my hope that my experience, along with my familiarity with the region, can aid in the development of our leaders and the growth of our businesses.”

In his previous role as county administrator, Meaux gained notoriety for his keen ability to streamline operations by managing the county like a business, with the elected members of the County Board serving as a board of directors for the vision and budget. He expects to transfer that prowess to his new position, while learning new skills along the way.

“There are a lot of responsibilities in this job that are similar to my past experiences,” Meaux said. “At the same time, I’ve always been invigorated by the idea of change and solving problems. Page | 2 Both the real estate and import/export businesses are relatively new, so we are managing through the growth stages. The insurance business is more mature, but we’re also trying to stay on the cutting edge of innovation. That lends itself to a lot of experimentation and implementing new ideas. That’s something I’ve always enjoyed and am looking forward to continuing.”

Mike Ansay, Chairman & CEO of Ansay and Associates LLC, added: “We are delighted that Tom Meaux has joined our team. Tom will help guide our dynamic young leaders and prepare the assets perpetuation strategy for the next generation.”

Meaux began his new position in May of 2017, working out of the shared Ansay International LLC and Ansay Development Corporation headquarters in downtown Port Washington.

Acuity Health Challenge Raises $10k to Expand Health Care Acuity Insurance announced that the 2017 Acuity Health Challenge raised $10,000 to help expand access to quality health care in the Sheboygan County Area through efforts of the Aurora Health Care Foundation.

In its sixth year, the Acuity Health Challenge featured a 5k or 2-mile run/walk. Nearly 600 participants took part in this year’s event. Proceeds will support the creation of a new Aurora Health Care medical center in Sheboygan County. The facility will include a hospital, ambulatory surgery center, and medical office building to meet the future health care needs of Sheboygan County and surrounding communities.

“We are proud to sponsor the Acuity Health Challenge,” said Ben Salzmann, President and CEO, Acuity. “This event reflects our commitment to wellness and our support for the well-being of the entire community.”

“This project will further improve access to health care services, and it will ensure that care is delivered in the most efficient and patient-centered manner,” said Sara M. Alger, Director, Foundation Development for Aurora Health Care Foundation’s north and central regions. “In addition to this capital project, Aurora will continue to build and enhance programs and services for both patients and community members.”

Ian La Mere took first place in the men’s division, and Holly Nearman captured the top spot in the women’s division. The Health Challenge also included the Acuity Health Village, which featured vendors who volunteered their time to promote various aspects of health, wellness, and safety. Participants received a well-stocked goodie bag and a custom drywick T-shirt.

Acuity Recognized for Outstanding Operational Performance Acuity earned a 2017 Stakeholder Team Accomplishment Recognition™ (STAR) Award from independent financial analysis firm Demotech, Inc., putting the company among the top 1 percent of insurers nationwide.

The Demotech STAR Award recognizes insurers whose performance benefits all stakeholders, including agents, customers, employees, consumers, regulators, and reinsurers. Acuity was honored with a STAR WISCONSIN INDEPENDENT AGENT

Award for exceeding performance criteria and maintaining outstanding financial strength and stability, profitability, claim handling, and compensation to employees and agents. Nationwide, just 25 of nearly 3,000 property-casualty carriers evaluated qualified for a STAR Award.

Demotech, Inc. is an independent financial analysis firm located in Columbus, Ohio. Since 1985, Demotech, Inc. has been serving the insurance industry by providing consulting services as well as accurate and proven Financial Stability Ratings® (FSRs) for property and casualty insurance companies of all sizes.

Acuity, headquartered in Sheboygan, Wisconsin, is a property and casualty insurer that operates in 25 states, generates nearly $1.4 billion in revenue through 1,000 independent agencies, and manages over $4 billion in assets. Named one of the top 10 large companies to work for in America, Acuity employs over 1,200 people.

H.W. Kaufman Promotes Kaufman to Senior Vice President in Michigan H.W. Kaufman Financial Group announced that Daniel J. Kaufman will assume a broader leadership role as senior vice president of corporate growth at the company headquarters in Detroit, Mich.

Kaufman will continue to serve as managing director and lead the Chicago, Milwaukee, Pittsburgh and Minneapolis offices.

He will lead the sales and marketing function and work with the information technology team on initiatives related to corporate growth and development.

He returns to the company’s Detroit headquarters after spending 10 years in Chicago, where he led the Burns & Wilcox Chicago office. Burns & Wilcox is a wholesale brokerage and member of H.W. Kaufman Financial Group.

Collaborative culture drives West Bend Mutual Kevin Steiner’s favorite musician is Bruce Springsteen.

Why? Because The Boss makes everyone in the house — including his band members and the audience — feel like they’re part of something bigger than themselves.

“That’s what it’s about,” said Steiner, the president and chief executive officer of West Bend Mutual Insurance Co. Steiner attributes his company’s remarkable growth to the concept of active mutual support.

“Active mutual support is an organizational model that engages a group of people to work toward a shared vision and strategy that spurs growth and development within the organization,” Steiner said. “It requires one to be externally focused and truly passionate about helping others.”

Steiner learned about the concept while attending a leadership conference at the University of Virginia Executive Education program in 2006.

Two years later, he was promoted to CEO of West Bend Mutual, and he delegated other members of his team to participate in the Virginia program. As they embraced the concept, it became the internal mission of the firm.

It took the company, which was founded in 1884, until 2002 to pass the $500 million mark in insurance premiums in force. By 2015, that number had doubled to more than $1 billion.

And Steiner believes his firm is on pace to double again, to $2 billion, by 2025.

“We have to work together, and if we work together, we’re going to be successful,” Steiner said. “You have to have a shared vision.”

Perhaps the most remarkable aspect of West Bend Mutual’s growth has been that it has been completely organic. The company did not grow by CONTINUED ON NEXT PAGE

SEPTEMBER 2017 | 31

News Members in the

CONTINUED FROM PREVIOUS PAGE

acquiring competitors.

Steiner describes two kinds of extreme internal corporate organizational structures: “Warfare — it’s every person for himself or herself, creating a brutal cutthroat environment.”

“Peaceful coexistence — you stay out of my business, I’ll stay out of your business, which negates any sharing of ideas or collaboration to move forward as a whole.”

Steiner said his preferred model of active mutual support falls between those two extremes.

“It means incorporating a shared vision. It creates a healthy, positive culture that has allowed us to grow by executing strategy, serving our customers and building lasting relationships,” Steiner said.

“At West Bend Mutual, we want to create an environment of active mutual support, in which we all need to be externally focused,” Steiner said. “There needs to be passion for others, respect, trust, straight talk, commitment to the vision, collaboration, alignment, enthusiasm, etc.”

Management’s embracement of the vision is important, Steiner said.

“It then takes great people to execute the strategy. That’s the hard part,” he said. “It’s not flipping a switch. It takes time. But when it happens, it’s fun. There has to be fun in the work environment. It only works if you have the right people.”

Steiner said his company’s sprawling corporate campus on the lush, rolling prairies west of West Bend, has been a great calling card for talent recruitment and retention. The complex sits on 160 acres of land and includes a modern cafeteria, a wellness center, walking paths and plenty of windows for natural light.

The campus is adorned with hundreds of pieces of art created by Wisconsin artists.

“We’ve had a lot of success hiring millennials,” he said. “We’ve been able to find a lot of bright, intelligent, young men and women in Wisconsin.”

54 Wisconsin firms on new Inc. 5000 listMilwaukee area well-represented Inc. magazine today released its annual Inc. 5000 list of the fastest-growing private companies in America, and 54 Wisconsin firms made the list.

That’s up from last year, when Wisconsin had 52 firms on the list. The list measures companies’ three-year growth rate.

There are 29 firms based in southeastern Wisconsin on the list.

The top five fastest-growing firms in Wisconsin are: No. 55: Madison-based logistics software company ClearView Audit LLC, which experienced 5,779 percent three-year growth and reported revenue of $8.4 million.

32 | SEPTEMBER 2017

No. 184: Madison-based IT consultancy Farwell Project Advisors LLC, which experienced 2,347 percent three-year growth and had $2.7 million in revenue.

No. 223: Milwaukee-based subscription e-retailer Wantable Inc., which reported 1,929 percent three-year growth and $14.1 million in revenue.

No. 442: Milwaukee-based Salesforce.com software consulting agency Penrod Software LLC, which had 990 percent three-year growth and $5 million in revenue.

No. 563: Pewaukee-based AV software developer Intelligent Video Solutions LLC, which had 798 percent three-year growth and $3.4 million in revenue.

Midwest Insurance Group based out of Delafield was the only insurance organization to make the Inc. 5000 List from Wisconsin.

ERRORS & OMISSIONS

HOW TO AVOID E&O CLAIMS FROM NEW PRODUCTS CONTINUED FROM PAGE 23

movement and deformation of certain tunnels. The owner alleging construction and design defects filed a lawsuit.

The agency had procured Commercial General Liability (CGL) and Professional Liability policies for this new client. Although well versed with general liability policies, the agency had just begun to procure professional liability policies. When the claim was first reported to the agency, their natural inclination was to report the claim to the CGL carrier. The CGL carrier provided coverage under a reservation of rights and filed a separate lawsuit against the client to determine coverage. A few months later, the agency reported the claim to the Professional Liability carrier who declined coverage as the claim was not reported within the effective dates of the policy period or within 60 days of the expiration of the policy. Ultimately, the coverage lawsuit was decided in favor of the CGL carrier and the client was left without coverage. The client then filed a lawsuit against the agency alleging a failure to report the claim to the Professional Liability carrier when they were first notified.

Always remember that it is the carrier’s duty to determine the availability of coverage for their policyholder. If the Professional Liability carrier had been put on notice of the lawsuit when the agency was first notified, the client would have had coverage for the claim and litigation against the agency would have been avoided.

Professional liability insurance policies have many similarities, but do evolve over time as new products enter the market. Take time to learn the needs of your clients and educate yourself about the policies in the marketplace and their impact on your clients and you.

WISCONSIN INDEPENDENT AGENT

COMMENTARY FROM COUNSEL

THE FOUR-CORNERS RULE IS MANDATORY IN ANALYZING AN INSURER’S DUTY TO DEFEND

The Wisconsin Supreme Court recently dismissed an appeal of an insurance coverage decision, citing the parties’ failure to follow the four-corners rule in analyzing whether the insurer was required to defend its insured in connection with a claim brought against it.

With its decision in Smith v. Anderson et al., the Court reaffirmed the four-corners rule and emphasized the need to conduct a complete four-corners analysis when assessing whether the duty to defend has been triggered by a specific claim.

The duty to defend

examination and interpretation of the entire policy in light of the allegations against the insured. The policy’s coverage-granting clauses, exclusions, and any exceptions to the applicable exclusions must all be carefully analyzed before a determination can be made as to whether the insurer must pay for the defense of its insured.

Under Wisconsin law, an insurer’s duty to defend an insured is determined by the four-

Smith case

corners rule and its two-step analysis. First, one must look to the insuring agreement to determine if there is an initial grant of coverage based on the facts alleged within the “four corners” of the complaint against the insured. If no initial coverage grant exists then there is no duty to defend and the analysis stops there. But, if there is an initial coverage grant, the policy’s exclusions (and any exceptions to those exclusions) must be scrutinized to determine whether the alleged injury is covered by the policy.

If the policy’s exclusions do not preclude coverage, the insurer must defend its insured.

Previous decisions In 2004, the Wisconsin Supreme Court’s ruling in American Family v. American Girl reiterated the proper procedure for analyzing an insurer’s duty to defend. The American Girl decision reminded litigants of the need to analyze whether an initial coverage grant exists and whether any exclusions act to bar coverage when assessing an insurer’s defense obligations. More recently, in June 2016, the Wisconsin Supreme Court issued another decision addressing the duty to defend. In Water Well v. Consolidated, the Court held that, when a claim for defense is made, the four-corners rule requires WISCONSIN INDEPENDENT AGENT

In the Smith case, the circuit court determined that no initial grant of coverage existed but, even if there were an initial grant of coverage, the policy’s exclusions barred coverage. Accordingly, the court ruled that the insurer had no duty to defend and granted summary judgment in its favor, dismissing the company from the lawsuit. The insured appealed and the court of appeals upheld the circuit court’s ruling based on its determination that there was no initial grant of coverage for the alleged injury and, therefore, no duty to defend.

On appeal, the insurer argued that, even if the court concluded that there was an initial grant of coverage, the policy exclusions precluded coverage. But the Court of Appeals declined to analyze whether the policy exclusions did indeed bar coverage and rested its decision solely on its ruling that no initial grant of coverage existed.

The insured then appealed to the Wisconsin Supreme Court. Even though the case was the subject of extensive briefing (three amicus curiae or “friend of the court” briefs were filed) and oral arguments were held, no party challenged the circuit court’s conclusion that the policy exclusions barred coverage. The majority of the Wisconsin Supreme Court concluded that it had no option but to dismiss the case because the

parties had only presented the first half of the four-corners analysis on appeal—the issue of whether an initial coverage grant exists—without analyzing the applicability of the policy’s exclusions. The Court ruled that its previous decision in Water Well required it to conduct a complete fourcorners analysis when deciding whether the insurer had a duty to defend based on the allegations of the complaint—a task it was unable to perform because the parties had not addressed the second prong of the rule.

Further, the Court noted that deciding the case without addressing the applicability of the policy exclusions would “create confusion” because the circuit court’s ruling that the policy’s “Your Work” exclusion precluded coverage was not disturbed by the ruling from the Court of Appeals.

Chief Justice Roggensack wrote a separate concurrence to emphasize the “significant risk” parties face in failing to present a complete four-corners analysis of the duty to defend.

Conclusion The Smith decision serves as an important reminder of the need to conduct a full four-corners analysis of the allegations in a complaint against an insured when determining whether the duty to defend has been triggered. The four-corners rule requires parties to address the existence (or non-existence) of an initial coverage grant for the alleged injury and whether any exclusions and exceptions to exclusions apply to preclude coverage.

> CJosh Johanningmeier is the IIAW’s General Counsel.

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

SEPTEMBER 2017 | 33

FOOD FOR THOUGHT

Since 1887, Badger Mutual has been the insurance company independent agents and policyholders can trust. Now, with our new TRUST Auto and Home plans, policyholders are receiving contemporary, broad coverages at our best rates.

Visit our website to quote your customer in the TRUST program today!

badgermutual.com 800/837-7833

Crash course in service excellence.

ÂŽ

Help clients through the stress of an accident with AAA Accident Assist .

One call brings AAA roadside assistance to their crash site, sets the stage for hassle-free repairs, and reserves a rental car for their immediate use.

And you made it happen.

Contact Heidi Nienow today to learn more.

(608) 828-2614

hqnienow@AAAwisconsin.com

It’s just one of the powerful tools AAA Independent Insurance Agents enjoy.

IE-0011

34 | SEPTEMBER 2017

Insurance underwritten by Auto Club Insurance Association or Auto Club Group Insurance Company.

WISCONSIN INDEPENDENT AGENT

ACUITY

Join Wally Waldhart in this wacky CE video! Acuity U films are available 24/7 and ABSOLUTELY FREE! With a multitude of course titles, we cover all your CE needs! Visit acuityu.com!

Trusted Choice

PRSRT STD US POSTAGE

PAID

®

MADISON WI PERMIT NO. 2506

Independent Insurance Agents of Wisconsin

725 JOHN NOLEN DRIVE MADISON, WI 53713

BE WORRY FREE WITH IMT

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

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

imtins.com | west des moines, iowa