The Underwriter's Insider 2012 Issue 2 by The Underwriter's Insider

INSURANCE • POLITICS • TECHNOLOGY • PEOPLE VOLUME 9 • 2012 • ISSUE 2

TABLE OF CONTENTS Cover Photo: R. Manera

Features News 5

Advertising

Kim Komando

18 20

Inside Track Marketplace

Non-Exclusive Agent is an Independent Contractor by Barry Zalma, Esq.

Louisianaâ&#x20AC;&#x2122;s Donelon Says Supreme Court Wrong...

The 2012 Doomsday - Will it Effect Your Loss Ratio?

AIA: Florida No-Fault Reform a Positive Step

Death of the Salesman? by Ronald J. Manera

N. Carolina Finance Co. Mgr. Accused of Insurance Fraud

Insider Advisor

Classifieds

Fastest Corvette Ever? Chevy Intros 505HP Monster

Say What?

Life Sales in the Business Marketplace by Matthew A. Treskovich

Back Issues

Table of Contents Continued...

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News 27

21st Century & Bristol West Join Gov’s Call to Halt Fraud

P&C Underwriting Results Deteriorate Due to Cat Losses in 2011

America: You are in Big, Big Trouble...

Barry Zalma’s Brief Reports on “Who Got Caught” is Online Now

Priceline Kills Off William Shatner - Or Did They?

Fountain of Youth? New Research Shows it May Be More Than a Fantasy...

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CONTENTS 2012 • Issue 2

A Publication of AdMax Media Corp Corporate Offices P.O. Box 31551 P. Beach Gardens, FL 33420

Ron Manera Editor/Publisher

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To best navigate The Insider, begin with the Table of Contents and select your topic. On the bottom of most pages is a Table of Contents link that will immediately return you for your next topic selection. EVERY SPONSOR AD LINKS DIRECTLY TO THE SPONSOR’S WEBSITE. CLICK ON ANY AD TO VISIT OUR FINE SPONSORS!

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HOLLYWOOD, FICTION AND TECHNOLOGY MYTHS

by Kim Komando

ou’re watching your favorite crime drama, and the heroine is looking at video from a store surveillance camera. It is dark, grainy and the people on the screen can barely be distinguished from the background. “Can you clean that up?” she asks. “Sure,” says the computer tech and, after a few keystrokes, the photo is clear as a bell. “Zoom in,” says the heroine. The tech zooms into the image and presto; we can all clearly read the suspect’s name stitched right on his shirt. Case closed. Could this happen in real life? Not even close. Try that enhance-andenlarge scenario in real life, and you’ll end up with an image that is nothing but a blocky

mess! Another Hollywood “favorite” of mine is when hackers break into government servers seemingly by magic. Sure it’s possible, but it takes unbelievable time, skill and effort – not a few minutes while a bomb timer is ticking away. Plus, most hackers would use a phishing attack instead of tackling a government firewall directly. You have no idea how laughable I find many “high-tech” scenes in TV shows and movies. Entertainment that incorporates real technology in the right way is so much more engaging. Of course, some seemingly improbable tech dangers are very real. A TV show or feature film can get it right, and the viewer might still think it’s made up. Some of the most popular movies of recent y e a r s have some o f

the most ridiculous tech scenarios. I won’t even address the obvious abusers, such as The Matrix and the Terminator series. But consider a few I find humorous: • Sneakers: Robert Redford’s team cracks any password with a gadget that looks like a 1990s answering machine. • Swordfish: Hugh Jackman hacks into a sophisticated government computer in seconds – while a gun is held to his head, among other distractions. • War Games: A very baby-faced Matthew Broderick hacks into a NORAD computer from his 1980s bedroom. • Independence Day: Jeff Goldblum and Will Smith successfully communicate with an alien computer and upload a virus to save the world – and they’re using a Mac. Right. The Macs in our office still can’t communicate with the printers half of the time. • 2001: A Space Odyssey: Dave is able to use voice commands to perfection, never repeating a word and with no misinterpretation. It’s 11 years past that science-fiction date, and the telephone company’s voice recognition software still can’t get me to a live rep. OK. Now it’s your turn. See if you can detect what’s wrong with the tech in this plot written recently: • A detective finds a sniffer attached to the back of his computer to track his movements, so he removes it and hands it over to the police.

See Kim Komando Pg 37 www.underwritersinsider.com

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NONEXCLUSIVE AGENT IS AN INDEPENDENT CONTRACTOR

New California Law Should Concern Insurers and Insurance Agents

ffective January 1, 2012, a new California law, adding Sections 226.8 and 2753 to the California Labor Code, creates large penalties for employers who “willfully” classify workers as independent contractors who are really employees. This law is especially important to insurers, insurance agents and brokers who often enter into nonexclusive agency agreements.

Mutual of Omaha (Mutual), sold Mutual products as a nonexclusive agent. Her agreement with Mutual allowed her to, and she also sold insurance products for other insurers. Arnold became unhappy

Code. Summary judgment was granted in favor of Mutual with the trial court finding that the undisputed facts established she was not an employee, but rather an independent contractor.

BACKGROUND

The complaint consisted of three causes of action. The first cause The new law arose because of a of action alleged Mutual failed to growing crackdown by the federal reimburse Arnold and class members government and various states fully for “necessary business-related concerned that employers were expenses and costs” to which they taking advantage of employees were entitled under the California to punish employers who treat Labor Code. The second cause of regular employees as independent action alleged Mutual had willfully failed to pay Arnold and members of the class she sought to represent, Barry Zalma, Esq., CFE is a California attorney Join Barry Zalma’s new Blog: specializing in insurance coverage, insurance for wages earned but unpaid http://www.zalma.com/blog claims handling and fraud who serves as prior to their being discharged a consultant and expert for insurers and from employment or prior to their policyholders. He founded Zalma Insurance quitting employment, for which Consultants in 2001 and serves as its senior contractors to avoid taxes and fail they were entitled to recover under consultant. He recently published an e-book, to fulfill various employment laws. multiple Labor Code sections. A third “Insurance Fraud,” which is available at his Web People who are compensated by site, www.zalma.com. Go to Zalma Books at cause of action alleged Mutual’s http://www.zalma.com/zalmabooks.htm. commission are often classified as conduct constituted an unlawful an independent contractor only to business practice in violation of the later claim the rights of an employee. Unfair Competition Law for which with the relationship with Mutual and Arnold and class members sought The California Court of Appeal, days terminated the contract. She then sued compensation and an injunction before the new Labor Code Sections in Kimbly Arnold v. Mutual of Omaha requiring Mutual to pay all outstanding were to come into effect was called Insurance Company, No. A131440 (Cal. wages and costs. upon to determine the status of a App. Dist.1 12/30/2011) for benefits licensed insurance agent and broker. The as if she was an employee that were Mutual filed a motion for summary insurer contended that the agent was an not provided to her as a non-exclusive, judgment contending Arnold was an independent contractor and the agent independent contractor, agent. independent contractor rather than a claimed she was an employee. Arnold’s suit claimed unpaid employee entitlements under the California Labor See Zalma Pg 33 Kimbly Arnold (Arnold), by contract with 10

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DONELON DISAGREES WITH SUPREME COURT JUDGMENT REGARDING LOUISIANA CITIZENS CASE

begin adjusting some n last Friday, 18,000 claims in a December 16, timely fashion after the Louisiana Hurricane Katrina. Supreme Court issued a judgment The penalties that reinstated the involved are not for $92,685,000 judgment, insufficient claim plus an estimated payment, but rather $11,007,046 in interest, as a penalty for in the class action law not initiating claim LA Insurance suit Oubre vs. Louisiana adjustment within 30 Comm. Donelon Citizens. The Supreme days from the most Court’s 4-3 opinion says 24th horrific storm to strike the state. Judicial District Court Judge Henry Citizens did send out advance Sullivan ruled correctly in 2009 Additional Living Expense checks that Louisiana Citizens Property to its policyholders within 30 days Insurance Corporation failed to to help them offset the expenses of evacuation, or finding other living accommodations, yet the court viewed this as not being enough to satisfy the requirement. “Ultimately, all property insurance policyholders in Louisiana will bear the cost of these class action lawsuits if Citizens has to implement an assessment to pay them or not,” Commissioner Donelon said. Citizens currently has $140 million cash on hand. In addition, Citizens has $70 million in excess assessments that can be used to offset the 2005 plan year deficit if approved by the board and access to a $50 million line of credit that was negotiated to fill any cash shortfalls from a major storm.

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Expenses in Citizens’ 2012 budget include $70 million in reinsurance premiums, $20 million in operating expenses and $6.5 million in service provider fees. Because Citizens is domiciled in Louisiana and only writes insurance in Louisiana, they did not have access to the Federal Court system in New Orleans which has rejected the notion of class actions for these penalties resulting from failure to comply with the same statutory time limits to adjust claims from Hurricanes Katrina and Rita. The number of claimants currently is 18,573 but there is potential for much more. There is another pending class action lawsuit in Orleans Parish titled Orrill vs. Louisiana Citizens of similar nature. Citizens attempted to settle that lawsuit for $35 million and the money was placed in the registry of the court. The 4th Circuit ruled the settlement inadequate and the settlement reversed and the monies returned to Citizens. Last settlement demand from plaintiff attorneys was for $50 million.

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IS DOOMSDAY COMING IN DECEMBER OF 2012? WILL IT EFFECT YOUR LOSS RATIO?

ill it be Planet X colliding with the Earth? Or a planatary alignment causing massive tsunamis? Will the Earth’s magnetic poles shift or will solar flares zap us like a giant X-Ray machine? For decades, we’ve been hearng that soothsayers and ancient astronomers and the Mesoamerican Long Count calendar have oddly coincidental predictions: The world will end on December 21, 2012. Not sure how, but catasrophic, apopalyptic... Is the threat credible? Should you refrain from buying service warranties that go beyond a year? Should you switch your life insurance to term or cancel it altogether? Should you

pay your mortgage or car payment beyond, say, September of this year? And what would you do with the money you saved? And does it really matter who wins the next presidential election?

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David Morrison, a NASA space scientist tells you what you have to fear - if anything. Click on the video graphic above is proceeding with legislation to find out... which will curb escalating systemic fraud and abuse,” said Ray Farmer, AIA Southeast region vice president. “AIA supports the repeal of Florida’s broken PIP system. We commend members of the committee for taking action which will result in greater medical coverage for those injured in automobile mandatory no-fault automobile accidents.” insurance coverage with Emergency Care Coverage The Florida Legislature started its (ECC). AIA supports repealing 2012 Session on January 10 and PIP and views the creation of is scheduled to remain in session ECC coverage as a major step for 60 days. CS/HB 119 will now in eliminating fraud and abuse be referred by House leadership inherent in the current coverage. to subsequent committees of

AIA VIEWS FLORIDA NOFAULT BILL AS POSITIVE STEP TOWARD CURBING FRAUD AND ABUSE

ASHINGTON, DC, January 11, 2012 – The American Insurance Association (AIA) today applauded the Florida House Insurance Subcommittee’s passage of CS/HB 119,which replaces Florida’s current flawed Personal Injury Protection (PIP) www.underwritersinsider.com

“AIA is pleased that the House

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jurisdiction.

DEATH OF THE SALESMAN? A Sales Primer For P&C Insurance Agencies by Ron Manera, Editor Note: For purposes of readability, throughout this article I have referred to all sales people as “salesmen”, and using the pronouns “he” or “him” without intending to refer to actual gender. I am well aware that many or perhaps most of the agency sales force is populated by the better looking half of humanity.

in order to increase country would Many agents fail to see the grind to a halt revenues. The irony in the most common faster than these other dismissed the idea out of hand sign seen affixed to a typical too-professionalby warning his to-sell sophisticates agency’s entrance door: friend, “Remember, could ask for P&C insurance “whahappened?” you only need an advertisement — Many agents fail for life insurance you need a salesman...” to see the irony in the most common The first guy, never sensing the irony, sign seen affixed to a typical agency’s simply agreed as they went on to entrance door: “No Soliciting.” discuss other ideas - presumably those not requiring a salesman. SALESMEN

“No Soliciting.”

nlike the famous I walked away wondering Arthur Miller what ever happened to play chronicling the concept of selling the waning days of Willy in a P&C insurance Loman, an aging, on-theagency. Has it become road. product salesman, I’d unfashionable? like to address the general Do we believe it’s decline of salesmanship unprofessional? Do in an industry. Many of insurance personnel you know that I spent 16 feel it is unethical to be years as an owner/agent too convincing? Do we in the retail auto insurance believe that customer business - most of them Ron Manera, Editor service and selling are on the quote line or sales mutually exclusive? Are desk with a quote phone glued to my P&C agents so insecure with their role ear. I was a salesman and I was proud of as a counselor they believe they have it. Over the years, I worked hard on the no right to influence their customers in art form of selling auto insurance and their buying choices? we truly developed an agency sales force that could overcome almost any Sadly, the answer to all of those objection or any price differential. We questions is “yes”. Salesmen are not in didn’t sell everyone, but we didn’t lose vogue these days and it’s a darn shame. many either. I guess we are just too sophisticated to sell. But whether we are comfortable LOST ART? with it or not, nothing happens in this country until somebody sells Recently, I was listening to a couple of something. From a simple piece of P&C insurance agents discussing ways hard candy to the most complex to increase agency profitability. One space shuttle component, there was a was wondering if he should add some salesman, or a dozen of them, involved life insurance products to his portfolio in the process. Without salesmen, this

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ARE CRITICAL

A salesman earns a living by changing people’s minds, by causing people to buy where they would not have, by showing people a value-added that exceeds the cost of the product or service, by making it easier and more attractive for a customer to buy than not. A salesman is not merely a skilled talker, or a product expert, but a situational engineer - an expert at arranging an environment, of which he is the key component, in which customers will want to buy what is being sold. That which we all rely upon for our continued prosperity, capitalism and commerce, is directly dependent upon the continued success of those we seem so reluctant to admire: the salesman.

WHERE ARE THESE SALESMEN? The salesman is your gatekeeper to income - without argument the most important member of your team. Before that new computer system or that new copy machine or more advertising, every insurance agency needs a great The Underwriter’s Insider

THESE SKILLS!

salesman at the new business desk. Selling is a skill that must be learned and practiced and a talent that must be developed. Just as everyone cannot learn to be a great pianist, not everyone can be a great salesperson. People have the talent or they don’t.

WHAT MAKES A NATURAL SALESMAN? Empathy, ego, confidence, intelligence, ability to establish rapport with diverse types of people, a genuine affection for people, and last, a certain felicity with the language and a DESIRE FOR FINANCIAL SUCCESS. People can lack one or more of these ingredients and still sell, but they will never be great.

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Once you find a person with the natural resources, train them. Great selling technique is not an accident — it must be learned. If you are not a salesman yourself, I don’t recommend you try to train one. There are available any number of seminars and courses to train salespeople, many teaching how to sell in your exact industry. I used to do it “in house” with monthly black board and pizza meetings. Remember, selling is an art form, but you can break the sale into five broad, lineal categories for instruction: 1. 2. 3. 4. 5.

Establish rapport Determination of needs & wants Presentation Overcoming objections Close

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Even passive clerks generally move through step 2 and 3 without messing up too badly. It’s steps 1, 4 and 5 where they’ll end up losing the customer.

ESTABLISHING RAPPORT Establishing rapport is far more involved than, “Hi. How are ya?” To the great salesperson, it’s an almost effortless process of finding common ground — an intuitive reading of the customer for a thousand signals that will dictate the sales response. You can even watch a great salesman as he matches his breathing rate and conversational cadence to his customers. A great salesman will have an entirely different dialogue with a blue-collar worker prospect than with a young MBA, for See DEATH OF THE SALESMAN? PG 22

NORTH CAROLINA FINANCE COMPANY MANAGER ACCUSED OF INSURANCE FRAUD

ALEIGH -Insurance Commissioner Wayne Goodwin today announced the arrest of Gregory Steven Gurney, 49, of 5418 Park Ave., Wilmington. He is charged with six counts each of insurance fraud, obtaining property by false pretense and corporate malfeasance. He is charged with three counts of altering or forging certificates of title or applications, and one count each of possession of a stolen motor vehicle and transferring a stolen motor vehicle.

Financing Service in Wilmington, was These charges, filed on Jan. 17, are involved with filing false or exaggerated the result of an ongoing two-year claims on repossessed vehicles, vehicle title irregularities and investigation by the possession of a the Department of stolen vehicle. Insurance, the N.C. Department of Motor Gurney was placed Vehicles License and under a $5,000 Theft Bureau, the N.C. unsecured bond and Banking Commission, released. His first the Brunswick County appearance in New Sheriff's Office and Hanover County the Wilmington Police District Court was Department. scheduled for 2 p.m. on Jan. 18. Investigators allege Investigators are that Gurney, while Landon working as branch N Carolina Ins Commissioner seeking Wayne Goodwin "Rocky" Mabe, the manager of Time 16

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assistant manager of Time Financing Service, who is wanted on one count each of alleged insurance fraud, obtaining property by false pretense and corporate malfeasance. Note: Insurance Commissioner Wayne Goodwin announced on January 19 the arrest of Landon Noah Anthony “Rocky” Mabe, 25, of 4150 Breezewood Drive, Apt. 104, Wilmington; he is charged with one count each of insurance fraud, obtaining property by false pretense and corporate malfeasance. Mabe surrendered at the New Hanover County Courthouse on Jan. 18 and was arrested by the Wilmington Police Department. He was placed under a $5,000 unsecured bond and released. The Underwriter’s Insider

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by Brown & Brown, Inc. of the parent company of Arrowhead General Insurance Agency, Inc. (“Arrowhead”).

arketscout - P&C rates rise in November and December. The average rise was only 1%, but is viewed by some analysts as a firm indication that the soft market has ended.

he FBI is warning against a new and powerful malware threat, a variant of the Zeus family of malware. The FBI says it is quite capable of defeating most methods of user authentication currently in use by financial institutions. From the FBI warning: “The malware is appropriately called “Gameover” because once it’s on your computer, it can steal usernames and passwords and defeat common methods of user authentication employed by financial institutions. And once the crooks get into your bank account, it’s definitely “game over.” Gameover is a newer variant of the Zeus malware, which was created several years ago and specifically targeted banking information.” The malware reportedly infects a computer via “phishing” attacks where a user is sent an email purportedly from their financial institute. Clicking on the email link brings the victim to a fake banking website which loads the phishing malware on their computer. The virus is then able to siphon banking logon information when the unknowing victim next visits their financial institution.

group of Applied Systems software, and represents 80,000 professionals in the insurance industry.

nsurance Commissioner Wayne Goodwin today announced that the Department of Insurance saved or recovered more than $42.2 million for North Carolinians in 2011. “I am very proud of the dedicated work of the Department of Insurance. Having recovered or saved more than $42 million in the last year alone shows that we are fighting fraud, holding our licensees to high standards, and helping people with their insurance questions or complaints,” Goodwin said. “We are committed to building on this success as we continue protecting consumers in 2012.”

rown & Brown, Inc. (NYSE: BRO) announced the completion of the previously-announced acquisition

he Florida Office of Insurance Regulation (Office) released to the Florida Legislature its 2011 Workers’ Compensation Annual Report on the state of the workers’ compensation insurance market in Florida. The report analyzed the availability and affordability of coverage for workers’ compensation insurance in Florida with data for the calendar year 2010 with the benefit of information available from 2011 and concluded that Florida’s market is competitive.

he Florida Office of Insurance Regulation (Office) signed a Consent Order that allows the eighteenth reinsurer, Platinum Underwriters Bermuda, Ltd. (“Platinum”), to post reduced collateral and operate in Florida as an eligible reinsurer. This Consent Order makes Platinum the sixteenth Bermuda reinsurer to operate in Florida with similar terms. The other two eligible reinsurers were from Germany and the United Kingdom.

hristopher Gory, president and owner of Toronto-based Insurance Portfolio Financial Services, and Alan Harkabus, manager at A.B. Gile in Hanover, N.H., will join the Applied Systems Client Network (ASCnet) board of directors on January 1, 2012. ASCnet is the international user

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niversal Insurance Holdings, Inc. (NYSE Amex: UVE), a vertically integrated insurance holding company, announced that its subsidiary, Universal Property & Casualty Insurance Company (UPCIC), received approval for premium rate increases for its homeowners and dwelling fire programs within the State of Florida. The premium rate increases, which will average approximately 14.9 percent statewide for its homeowners program and 8.8 percent statewide for its dwelling fire program, were approved by the Florida Office of Insurance Regulation (OIR). The effective dates for both of the premium

n a macabre lawsuit, an Illinois women is claiming that an 18-year-old boy’s flying body parts caused her grave injuries. The young man was running across the tracks, trying to catch a train when he was struck by another train traveling at 70 mph. So great was the force of the impact, his body was torn apart and the 58-year-old woman was struck by a sizable piece of the boy’s flying torso, knocking her to the ground and breaking her leg and her wrist. So far, the court has ruled that his death was “reasonably foreseeable” and, therefore, his estate can be sued for negligence.

/C insurers’ net income after taxes fell to $8 billion in ninemonths 2011 from $27.1 billion in nine-months 2010.

rown & Brown, Inc. (NYSE: BRO) announced that Anthony “Tony” Strianese, has been promoted to the position of Regional President. Mr. Strianese, who has www.underwritersinsider.com

served as one of the Company’s Regional Executive Vice Presidents since 2007, is responsible for the Company’s Wholesale Brokerage Division, including Decus Insurance Brokers Limited, which commenced operations in 2008 in London, England. Additionally, Mr. Strianese is responsible for certain of the Company’s public entity operations located in Georgia, Texas and Virginia.

pplied Systems today announced the appointment

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of software industry veterans David H. Whitley and Kristin L. Hackney to the insurance software company’s management team. Whitley, new senior vice president of Development, heads the company’s development and quality assurance teams, announced Reid French, Applied Systems CEO. Hackney, new senior vice president of Services, is responsible for the company’s enterprise, implementation, education and technical services teams, French said. Whitley and Hackney report to COO Mark Layden. 19

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ational Ins Underwriting - Limits $300K to $2M - Premiums starting at $1400 with low ded. Available most states. Discounts for loss-free experience and losscontrol efforst. Call Craig Calver - 800-3382680 X 507.

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ingsway/Amigo Competitve commercial auto program. Any size fleet, - all types of cars, light trucks and vans - specialty services, like landscaping, electrical, plumbing, lunch trucks and other various occupations. info@ kinswayamigo.com

ropane Dealers - PowerWrap is an endorsed insurance program offering specialized, full spectrum coverage. Contact Alteris: 877-590-0775 [12-1]

Condo Assoc Program

rident is offering tailored coverage designed for condominium town home and single-family community associations claiming competitive rates and terms. Coverages available include property, including flood, earthquake and coastal windstorm, general liability, D&O, umbrella, worker’s comp, auto, crime and property mgrs E&O. Trident Community Association Program - 5100 N. O’Connor Blvd, #200, Irving, Texas 75039 or email to csmktgprograms@argogroupus.com 877590-0775 [11-6]

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eavy construction risks including steel erection contractors, concrete contractors, roofing contractors, bridge, street & road contractors, etc. Norman Spencer - Contact Brian Harrold p: 937.432.1469 brianharrold@normanspencer.com [11-7]

Convenience Store

rgo Insurance announces expanded program and competitive rates for convenience store accounts. Company is looking for stores open until 11PM, fuel sales up to 90%, alcohol sales up to 30% with no fuel hauling exposure. Not available in Florida at this time. Email csmktgprograms@argogroupus.com 877590-0775 [11-6]

Design & Construction Industry

rchitects, engineers & surveyors, construction managers, contractors, environmental consultants, landscape architects, specialty construction consultants. Contact Jeff Grigsby -

Energy & Utility Risks

il & Gas Companies, pipeline operations, utilities, HVAC contractors and water & sewer contractors. Contact Victor O. Schinner & Co., Inc. Jeff Grigsby - 877-453-2071 or jeffg@ schinnerer.com [12-1]

Entertainment & Sports

&K Insurance claims “over 75 programs available on admitted paper with no prior approval or appointment needed to submit applications for quotation. “ The MGA can be reached at 800-637-4757 or www. kandkinsurance.com. [11-6]

adler Sports & Recreation Insurance specializes in ultra-fast time to quote, bind and issue. www.sadlersports. com. Sadler & Company, Inc. P.O. Box 5866 - Columbia, SC 29250-5866 - Phone: (800)622-7370 [11-6]

Hair & Beauty Insurance Program

ASS - Salon & Spa Specialty Insurance administered by Brownyard Group open to agents seeking access to program. 888-823-9380 or Email: sassi@brownyard. com [11-7]

Health & Human Services

FC Insurance - Package programs or ala carte. Contact: 877-456-5323 www.afcins.com submissions@afcins.com [12-2]

Homeowners

ational Ins Underwriting -Webbased quick quotes, most protection classes & zip-codes OK - $40K - $750K dwelling values with replacement cost

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available. No credit scoring. Renters policies available. Contact: Craig Calver - 800-338-2680 X 508.

Send your press release or one-paragraph announcement to ron@insurmedia.com

Kidnap & Ransom

cademic institutions, energy companies, engineering firms, hospitals and healthcare, houses of worship, manufacturing firms, etc. Contact Victor O. Schinner & Co., Inc. Jeff Grigsby - 877-453-2071 or jeffg@ schinnerer.com [12-1]

Have a P&C Product Announcement?

Landscaper Risks

rogram Brokerage Corporation (PBC) is a full-service brokerage that specializes in programs for the green industry including lawn care operators, commercial and residential construction, tree trimming /pruning and other landscape exposures. Jonah Aaron Lipin | Phone: 212-338-2983 jlipin@programbrokerage.com [11-7]

Marine Risks Worker’s Comp & Longshore & Harbor Workers’ Comp

eaBright Insurance Company offers high quality workers’ compensation coverage for your clients who are small maritime employers and other marine-related businesses. SeaBright provides seamless cov All Risks, LTD 410-828-5810 rlang@allrisks. com or Appalachian Underwriters, Inc. – Oak Ridge, TN 865-425-1051 warren. palmer@appund.com or Peachtree Special Risk Brokers – Metairie, LA 504830-7347 jlasseigne@psrllc.co [11-7]

Martial Arts

&K Insurance announces expanded coverage & lower minimum premiums on martial arts coverage. General Aggregate Limit increased to $5M - Participants Med Pay to $150K. The MGA can be reached at 800-637-4757 or www.kandkinsurance. com. [11-6]

Ocean & Inland Marine

prdwode Facilties, Inc. Contractors doing: piers, docks, wharfs, bridges, breakwaters, cranes, dredging, etc. 6455 East Johns Crossing, Suite 115 Johns Creek, GA 30097 (678) 736-6720 • Facsimile: (678) 736-6726 - Carter, Kimberly - 678 7366720, Ext. 1000 - kcarter@wwfi.com [11-7]

Professional Liability

echnology & Cyber, Architects & Engineers, RE Agents, Insurance Agents E&O, Misc. Pro Liability - and more: Contact Atlantic Specialty Lines lorie@atlanticspecial.com 877-5459100 [12-1]

ictor O. Schinnerer - A-rated carriers -Real Estate Agents, Healthcare Consultants, General & Artisan Contractors, Architects, engineers & consultants, public entities such as school leaders and public officiials. Contact: 877-4532071 www.schinnerer.com jeffg@ schinnerer.com

Real Estate E&O

overage for open houses, mold, network risks and privacy claims are now part of Victor O. Schinnerer & Company’s Real Estate E&O policy. Schinnerer includes the three new coverages at no additional premium. Call to ck on your state: Starr Crusenberry Starr.N.Crusenberry@ Schinnerer.com - 301-951-6904 [116]

Restaurant

rgo Insurance announces lower rates filed on restaurant coverage including food spoilage coverage. Full commission and no agency appointment necessary. Company is looking for family style, family grills, casual style, fine dining and limited cooking restaurants such as pizza and sub shops. Email csmktgprograms@ argogroupus.com 877-590-0775 [11-6]

orman Spencer’s Real Estate Program - “one of the most comprehensive policies in the market with highly competitive pricing” Coverage is available to risks whose services include Residential and Commercial Sales, Leasing, Property Management, Real Estate Consulting, Auctioneering, Mortgage Brokering, BPO’s and Appraisal, and Escrow Services - Michael Ryder michaelryder@

norman-spencer.com x204 [11-7]

800.477.9192

Social Services

rwin Siegel Agency claims to be a partner who can provide Insurance Solutions for the Social Services field. Contact: 800-622-8272 siegel@ siegelagency.com. [11-6]

Security Guard & Investigative

echanic Group announces coverage for security guards, private investigators, alarm contractors, electronic security and private security consultants. The Mechanic Group - One Blue Hill Plaza, Suite 530, Pearl River, NY 10965 - (800)214-0207 - or www. mechanicgroup.com [11-7]

Tech Consultants E&O

odern Insurance Consultants - website design, software development, database admin, web hosting, software/hardware sales - and more. IT consultants up to $15M in annual sales. Contact Andrew Lawrie - 305-248-9495 X 9108 - alawrie@ modernins.com [12-2]

Welding Supply &

Industrial Gas Distributors

he WDPG Program is dedicated to this class of business and has been a leading choice of agents and welding supply distributors since 1987. Quick Turn around Quotes: Jeannie Coda: kentidwell@wdpginsurance.com [11-6]

Privacy/Data Breach Coverage

irst party expense and third party liability coverage available for many E-Threats and E-Exposures. Contact RPS, Inc. at 800-336-5659 or techcyber@rpsins.com. 11-7]

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Continued From Page 15

DEATH OF THE SALESMAN? example. Non-selling clerks, on the other hand, have a different approach to establishing rapport. Here is an almost exact transcript from an actual call (for a real quote!) made from our office to a local auto insurance office: My Secretary: “Hi. I’m calling for my son. He’s 21 and needs car insurance. He has one speeding ticket, had an at-fault accident and received a ticket for careless driving and failure to have insurance in force.” Agency: “What? Is he on drugs or something?” My Secretary: “Drugs? No. He was only 19 at the time. Had a minor fenderbender and found his insurance had lapsed. And kids get speeding tickets.” Agency: “The little jerk. And all those tickets? His parents should pull his license and his car. Well, I’ll look to see if we can find something for him, but it’s gonna be expensive. How come he let his insurance lapse and then had an accident? Where is his brain? My Secretary: “Actually, he’s a pretty good kid. Just had some bad luck and never remembered getting a renewal notice from the insurance company. Sorry to bother you with this...: Agency: “Well, if I have time today, I’ll try to call you back with a quote. But I’m pretty busy right now, and I haven’t 22

had lunch yet. It’s his own fault anyway ... I’ll bet he’s on drugs.” That crabby woman may have been a genius at filing or record keeping but she should have been kept as far away as possible (at gun point if necessary!) from the sales desk. To a non-salesperson, establishing rapport is immeasurably difficult. If they are dealing with a customer “just like them,” they may have some success; otherwise they will be hopelessly out of synch.

OBJECTIONS While at the first objection, a clerk “gives up,” a great salesman loves objections. He’ll actually ask for them. Why? It’s a clear window into the customer’s mind. It’s the customer saying, “here’s what’s bothering me. Answer this to my satisfaction and I’ll buy...” That’s precisely the type of information a salesman needs to succeed.

THE CLOSE Closing the sale is the Holy Grail. It’s money in the bank. If you can succeed here, you win. Paradoxically, closing is one of the easiest things to do and one of the hardest things to teach. Essentially, a closing question is any question asked of a customer to which any of the anticipated responses confirms the sale. For example, you’ve just given an exhaustive presentation of the rates and benefits of your insurance contracts. You’ve overcome several objections and answered several questions. Your customer is just sitting there indecisively. A clerk is going to

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eventually say: “Well, what do you want to do? Do you want to buy the insurance?” That’s a real big decision for that customer. He thinks he’ll go home and think about it for awhile. Maybe call a few more agencies. A salesman will quite naturally ask, “So did you want to do the monthly payment program or do you prefer to handle it all at once?” Just a simple closing question. Just a simple decision for the customer for which either response tends to confirm the sale. Don’t give your prospects difficult “yes or no” choices. Ask them to make minor decisions, all of which tend to confirm the sale. Eventually, you just hand them the pen and show them where to sign. While the care and feeding of successful salesmen is a topic for a future article, remember this: If you don’t challenge and reward great salesmen you’ll lose them. Keep them motivated with financial incentives. However much you pay a great salesman, he’ll never cost you as much as that passive clerk!

TAKE CHARGE OF YOUR DESTINY If you believe you have extraordinary luck, you may want to sit back and hope that all the right customers come along and beg your sales clerk to sell them all the profitable stuff you have to sell. If you’d like a little more control over your businesse’s future, you may be better advised to halt the demise of the salesman in your insurance agency. The salesman is just as important to your business as it is to Bristol-Meyers See DEATH OF THE SALESMAN? PG 38

The Underwriter’s Insider

FASTEST CORVETTE EVER? Chevrolet To Introduce 505HP 427CI (7.0 Liter) C6 Corvette Convertible - The Fastest Ever

ixty years from the date of the first Corvette in 1953, those crazy Chevy engineers running the performance division of Corvette seem completely unaware of $4.00 per gallon gas prices, over-crowded highways and insane insurance rates. Thank God.

model go out with a bang, rather than a whimper. Combining the legendary Chevy small-block 427 LS7 505HP (470 foot-pounds of torque), a six-speed manual transmission and lots of carbon fiber to reduce weight - including the Vette is a stunner, with estimates of 0-60 in 3.8 seconds, 1/4 mile in 11.8 seconds and a top speed around 190 mph. That will get you to work on time.

In 2013, the last year of the C6 Corvette Convertible is scheduled for production, they thought theyâ&#x20AC;&#x2122;d let the

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hood, fenders and floor panels - ending with a power-to- weight ratio of one horsepower to every 6.64 lbs. of weight. The anticipated performance of the

The 60th anniversary model is expected to be a sell-out and an immediate collectorâ&#x20AC;&#x2122;s item with every car holding a unique VIN, much like the ZR-1 Corvette.

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LIFE SALES IN THE BUSINESS MARKETPLACE John A. Creekmore, CFPÂŽ, CLU, ChFC, CEBS Matthew A. Treskovich, MBA, CMA, CLU, ChFC, FLMI

he biggest problem faced by successful businesses is attracting and retaining the key employees required for the continued success and growth of the business. Business-owner clients often try to use qualified plans like a 401(k) or defined benefit pension plan to reward valuable employees. However, these plans come with serious limitations on contributions, and the key employees will suffer tax penalties if they try to access the funds before retirement. Fortunately, there are other options, many of which involve the use life insurance. Executive bonus plans and deferred

compensation are both very viable alternatives if the business owner's goal is to attract and retain key employees.

The executive bonus or Section 162 bonus plan Matthew A. Treskovich The employer pays a bonus to an employee in an amount equal to the annual premium on the life insurance policy for that person. The employee becomes the owner of the policy and has the right to name a beneficiary

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on the policy. The employee can access the cash value for supplemental retirement income. Distributions from the policy are taxdeferred and if done correctly could be entirely tax-free.

The Restrictive Endorsement Bonus Arrangement (REBA)

See LIFE SALES Page 24 The Underwriterâ&#x20AC;&#x2122;s Insider

The INSIDER’S

“The Final Authority on Everything!” Occupy Reality

have to pass Woodruff Park in downtown Atlanta on my way into the office most days. The Occupy Atlanta crowd is still active, bedraggled and annoying. Just what is it they think they are accomplishing? And exactly what are they protesting? They’ve slowed traffic and polluted our park long enough. Let ‘em go home! - A.S. Atlanta, GA It is difficult to find a focused purpose to any of the “Occupy” movements that have sprung up around the country - and even more difficult to find anything they’ve accomplished. As a result, it’s hard to take them seriously. They seem a rag-tag collection of misfits, ne’er-do-wells, social parasites, opportunistic criminals, Marxists, socialists, anti-capitalists, attentiongrabbers, and countless homeless folks looking for a free meal and a little attention.

ADVISOR

and the thuggish labor unions. Here’s Obama’s quote:

“The most important thing we can do right now is those of us in leadership letting people know that we understand their struggles and we are on their side...” We are on their side, Mr. President? Really? While they disrupt civil society demanding more and more for the takers by confiscating more and more from the makers, we are on their side? The organizers and the easily -persuaded focused their presumed upset over the moribund Obama economy initially on Wall Street as

Have a question for The Advisor?

Click HERE! a symbol of corporate America. The most popular protest sign? “END CORPORATE GREED!” The irony, of course, of that slogan is completely lost on the Occupiers. While they demand free education, free health care, free housing, free food as well as free use of prime space for their protests, they are complaining of corporate profits earned by working people trading goods and services people want for a price people are willing to pay. As any rational person can readily see: It is the Occupiers, not the corporations, that epitomize greed!

Like leftists everywhere, the Occupiers prefer slogans over reality, shouting over rational discussion and chaos over order. The movement began in New York as “Occupy Wall Street,” supported by labor unions, socialists, the Communist Party and President Obama himself expressing solidarity with the Communists

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CLASSIFIEDS

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All Lines Agent Wanted Dawsonville GA

Personal lines agent needed for growing Independent Agency on Hwy 400. We are looking for a friendly, personable individual to offer home, auto, small business. Life & Health also available. Over 30 markets. Looking for long term Agent with equity share potential for the right person. Very generous new and renewal commissions paid. Full time or part time. You earn what you sell. 50k potential 1st year. Hours and work location flexible. email resume to greatagent4u@gmail.com 8-5

Coral Springs, FL Experienced 2-20 Agents Experienced P & C Agents required for a Coral Springs office. Good commission and renewal offered. Contact: tamiller91@yahoo.com 9-1

CSR Wanted Memphis, TN area P&C CSR to produce quotes for progressive agency. Need commercial P&C experience.

Contact: jake1934@msn.com

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220 and Life Agents Wanted - Coral Springs Area Licensed 220 and life Agents wanted for P & C Agency Leads available. Daily commission paid to Life Agents. Email: tamiller91@yahoo.com 8-7 "Socialism is the philosophy of failure, the creed of ignorance and the gospel of envy. Its only inherent virtue is the equal sharing of misery." - Winston Churchill

- Independent Agency for Sale or Merger Location is in North Florida area. $150,000 Firm. Email For More Info:

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CSR/Agent Medley/Doral Area

P & C PRODUCER WANTED - SARASOTA 2-20 Licensed Outside producer for Sarasota Agency. Have multiple markets. Send resume to northwick@mindspring.com

Doral/Medley Ins Agency seeks sales producer/CSR. Must have previous ins exp & knowledge of Auto & Home ins. Commercial exp a plus. A min of a 4-40 ins lic. Applicant must possess excellent communication skills in Eng & Span. Respond to this at:

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info@jmendezandassociates.com

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21ST CENTURY AND BRISTOL WEST JOIN SCOTT'S CALL TO HALT AUTO ACCIDENT FRAUD IN THE FLA.

he Farmers Ins. Companies' 21st Century and Bristol West applaud and support the initiatives outlined by Florida Governor Rick Scott in today's press conference calling for a halt to auto accident fraud in the state. "We join with Insurance Fraud Coalition members, partners, and business leaders to 'Gear Up Florida'

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to put the brakes on insurance fraud," stated Doug Ashbridge, Farmers Director of Special Investigations. Members of the insurance companies' Special Investigations Unit were in attendance at the press conference rally. "We specifically support the Governor and Chief Financial Officer Jeff Atwater's efforts and initiatives around the four identified pillars to rein in auto insurance fraud in the state of Florida," Ashbridge continued.

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"Fraud Prevention, Litigation Reform, Utilization and Provider Reform, and Accountability will be key in fighting and winning this battle on behalf of the honest auto insurance policyholders and citizens in Florida. Our insurance and special investigations' professionals actively support the efforts of Florida officials and will continue to work with the Governor and his staff to stop insurance fraud in Florida," Ashbridge said. 27

have no respect for the status quo. ... They push the human race forward, and while some may see them as the crazy ones, we see genius, because the people who are crazy enough to think that they can change the world are the ones who do.” - From Steve Job’s “1997 Think Different Campaign” he initiated shortly after returning to Apple as the CEO.

“In my professional career I have been to hundreds of health

policy conferences, discussions, get-togethers, etc., where it seemed as though people were completely failing to connect with each other. One day it dawned on me that we were having two different conversations. Some people were engaged in Monday morning thinking, while everyone else was engaged in Sunday morning thinking. Here’s the problem. Whether the beliefs are true or false, if people didn’t come to their religious convictions by means of reason, then reason isn’t going to convince them to change their minds. This same principle applies to collectivism [liberalism] and health care. If people didn’t come to the false religion of collectivism by means of reason, you are not going to talk them out of it by means of reason. If you remember this principle, you will save yourself the agony of many, many pointless conversations. - From a recent article by columnist John C. Goodman entitled “Is Liberalism a Religion?”

“ The December composite rate increase further supports our finds that the soft market cycle has ended. There will continue to be micro markets where rates decline, however, on a composite basis, the trend is clearly towards rate increases.” - Richard Kerr, Chief Executive Officer of Marketscout in a recent statement that should signal good news for brokers.

“With an historical supermajority in the House and the Senate,

Team Obama and Democrats pushed their pet, progressive ideas with a vengeance, spending and borrowing. Yet despite full political power and despite the trillions of dollars thrown into the maw of the Obama/Reid/Pelosi vision of utopia, our nation is left with the nastiest of all financial hangovers as a result of queasy, Democrat-initiated, shameful indulgences. Of course too, the bills, some $16 trillion dollars of them, are coming due as well.” - Columnist Lorita Doan in a recent, dead-on article entitled ‘Democrats Embrace Voter Fraud.’

““It’s a pathetic apology. He [Guevara] was a cold-blooded

killing machine who talked about using an atomic bomb to kill all capitalists. Obviously the creators of this ad have the wrong image of Che Guevara. El Che was a corrupt, bloodthirsty coward who killed countless innocent Cubans at the beginning of the Castro regime. Reports from people who knew him recount tales of an especially brutal person who would not think twice about killing a father in front of his son or ignoring the pleas of a mother to not send her son before the firing squad. That was the true Che Guevara, the odious gangster unleashed against the Cuban people by the just as odious Castro brothers. I am glad that they have done the right thing and apologized for it.” Florida Rep. Mario DiazBalart, a Republican, in response to Daimler AG, the German company that manufactures Mercedes-Benz luxury cars using the image of Che Guevara in a promotional video - and subsequently apologizing.

“[Blocking the oil pipeline from Canada] is a major setback for

the American economy, American workers, and America’s energy independence. As our country has a continued need for oil, it only makes sense to me that we would buy it from our friends in Canada, rather than continuing to buy it from countries around the world that seek to do us harm. Why make a decision that could push Canada to build a pipeline to the West Coast of North America that would benefit countries such as China, not the United States? I truly believe any issues surrounding the pipeline could have been resolved if we had chosen to work together, but instead, the Administration has taken a different path.” - Sen. Joe Manchin, Democrat-W.Va., obviously disgusted with the president’s decision to block the oil pipeline - a bow to his radical environmental political base and a slap in the face to every other American.

If Obama really wanted, as he says, a society in which “I could end the deficit in 5 minutes. You just pass a law that ““everybody gets a fair shot,” he would work to shrink government says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.” - Warren Buffett, legendary investor, in a recent interview with CNBC.

“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes, the ones who see things differently. They’re not fond of rules, and they 28

so that the sphere of freedom could expand. Instead, he expands government and raises taxes on wealthier people, as though giving politicians more money were a way to make society better. Instead, the interventionist state rigs the game on behalf of special interests.” - Columnist and political analyst John Stossel commenting on President Obama’s State of the Union speech given on Jan 24.

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P/C INSURERS’ UNDERWRITING AND OVERALL FINANCIAL RESULTS FOR NINEMONTHS 2011 SHOW DETERIORATION DRIVEN BY SPIKE IN CATASTROPHE LOSSES

ERSEY CITY, N.J. – Private U.S. property/casualty insurers’ net income after taxes fell to $8 billion in nine-months 2011 from $27.1 billion in nine-months 2010, with insurers’ overall profitability as measured by their annualized rate of return on average policyholders’ surplus dropping to 1.9 percent from 6.8 percent. Driving the declines in insurers’ net income and overall rate of return, net losses on underwriting grew to $34.9 billion in nine-months 2011 from $6.3 billion in nine-months 2010. The combined ratio — a key measure of losses and other underwriting expenses per dollar of premium — deteriorated to 109.9 percent for nine-months 2011 from 101.2 percent for ninemonths 2010, according to ISO and the Property Casualty Insurers Association of America (PCI). The deterioration in underwriting results is largely attributable to a spike in net losses and loss adjustment expenses (LLAE) from catastrophes. ISO estimates that insurers’ net LLAE from catastrophes rose to $33.2 billion in nine-months 2011 from $10.8 billion in nine-months 2010. These amounts exclude LLAE that emerged after insurers closed their books for each period but do include late-emerging LLAE from events in prior periods. Partially offsetting the deterioration in underwriting results, net investment gains — the sum of net investment income and net realized capital gains

(or losses) on investments — grew $2.1 billion to $42 billion in nine-months 2011 from $39.8 billion in nine-months 2010. Insurers’ miscellaneous other income rose $1.3 billion to $1.7 billion in ninemonths 2011 from $0.4 billion in ninemonths 2010, while federal and foreign income taxes dropped $6.1 billion to $0.8 billion from $6.9 billion.

from nine-months 2011 strong, wellcapitalized, and capable of paying future claims,” said Robert Gordon, PCI’s senior vice president for policy development and research. “As of September 30, 2011, insurers had $538.6 billion in policyholders’ surplus to cover new claims and meet other contingencies — 125 times all the direct insured losses to U.S. property from Hurricane Irene.”

Policyholders’ surplus — insurers’ net worth measured according to Statutory Accounting Principles — fell $20.6 billion to $538.6 billion at September 30, 2011, from $559.2 billion at year-end 2010.

“The 109.9 percent combined ratio for nine-months 2011 is the worst ninemonth underwriting result since the 114.4 percent combined ratio for ninemonths 2001. Even after adjusting for catastrophe losses, the latest data indicates that insurers continued to Insurers’ 1.9 percent annualized rate face headwinds in their core business of return on average surplus for nine- — underwriting,” said Michael R. months 2011 was the lowest nine- Murray, ISO’s assistant vice president month rate of return since the 1.2 for financial analysis. “ISO estimates that percent for nine-months 2008 and insurers’ combined ratio would have the third lowest nine-month rate of risen 1.7 percentage points to 102.9 return since the start of ISO’s quarterly percent in nine-months 2011 if net records in 1986. At 1.9 percent, insurers’ LLAE from catastrophes had remained annualized rate of return for nine- the same as they were in nine-months months 2011 was 6.7 percentage 2010. points below the 8.6 percent average nine-month rate of return for the 25 The deterioration in adjusted years from 1986 to 2010. underwriting results is cause for concern, because today’s low interest The figures are consolidated estimates rates severely limit insurers’ ability to for all private property/casualty insurers generate incremental investment based on reports accounting for at least income. The monthly average yield on 96 percent of all business written by ten-year Treasury notes fell to a recordprivate U.S. property/casualty insurers. “Despite massive net losses on underwriting, insurers emerged

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See P/C Results Deteriorate Pg 39 The Underwriter’s Insider

Continued from Page 10

ZALMA former employee under the common law test, and hence, she was not entitled to any relief under her first or second causes of action. Because Arnold’s third cause of action under the UCL was derivative of her first cause of action, it similarly afforded her no relief as a matter of law.

THE TEST OF EMPLOYMENT In California the principal test of an employment relationship under common law is whether the person to whom service is rendered has:

The individual factors must not be applied mechanically as separate tests, but are intertwined, and often given weight depending on the particular combination of factors.

EVIDENCE AT MOTION FOR SUMMARY JUDGMENT The evidence presented in the motion for summary judgment showed that Arnold was licensed by the Department of Insurance as an independent agent or broker and was authorized to offer products to prospective clients from different companies. When she first contracted with Mutual, in November 2006, she was under appointment with another insurance company to offer its products, and while under that appointment had acted on behalf of a third insurance company. At both of these

applications for Mutual’s products, the time, place, and manner in which she would solicit, and the amount of time she spent soliciting for Mutual’s products. Her appointment with Mutual was nonexclusive, and she in fact solicited for other insurance companies during her appointment with Mutual. Training offered by Mutual was voluntary for agents, except as required for compliance with state law. Under the principal test for employment under common law principles, Mutual had no significant right to control the manner and means by which Arnold accomplished the results of the services she performed as one of Mutual’s soliciting agents.

THE CONTRACT WITH MUTUAL

Under Arnold’s contract with Mutual, the latter appointed her as a nonexclusive the right to control the manner and “agent”to solicit and procure applications means of accomplishing the result for Mutual’s products. Arnold had desired; whether the principal the responsibility to maintain has the right to discharge at the proper licenses required to will, without cause; whether perform this service. Her chief the one performing services duties were to procure and is engaged in a distinct submit applications for Mutual’s occupation or business; the kind products, collect moneys, and of occupation, with reference service clients. Compensation to whether, in the locality, the was by commission for products work is usually done under the sold, with a chargeback on direction of the principal or by any commission paid when a specialist without supervision; moneys for sale of a product http://www.zalma.com/zalmabooks.htm the skill required in the particular were uncollected or refunded. occupation; whether the Either party could terminate principal or the worker supplies the instrumentalities, tools, and the place of insurance companies she performed as the contract with or without cause an independent contractor, receiving through written notice to the other, work for the person doing the work; the length of time for which the services commissions and 1099 tax forms were with automatic termination in the event are to be performed; the method of produced by the insurers reporting that Arnold failed to submit an application for one of Mutual’s products for a period of payment, whether by the time or by the income. 180 days. job; whether or not the work is a part of the regular business of the principal; and, The evidence presented at the motion whether or not the parties believe they for summary judgment established One clause of the contract stated that are creating the relationship of employer- that Arnold used her own judgment in determining whom she would solicit for See Zalma Pg 34 employee. www.underwritersinsider.com

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Continued From Page 24

LIFE SALES IN THE BUSINESS MARKETPLACE This is a different form of the executive bonus plan. A vesting schedule is attached and the employee’s access to the cash value is restricted until he/she is fully vested. If employee remains with the company until fully vested or at retirement, the restricted endorsement is removed and the cash value can provide supplemental retirement income. REBAs give the employer more control and leverage over the key employees. Typically, executive bonus plans work best for clients who don’t care much about “golden handcuffs”. REBAs allow business owners to “lock in” a key employee so he/she stays with the company. When am employer pays an employee a bonus that covers the life insurance premiums, the employer receives a tax deduction for compensation paid and the employee receives taxable income. The employer may elect to “gross up” the bonus to offset the employee's taxes. Certain types of life insurance policies have features that can be used to provide cash to pay the taxes instead of “grossing up” the bonus, while still allowing the employee to have growth potential on the entire bonus amount.

that can partially offset surrender penalties, if necessary. Both traditional current-assumption products with declared interest rates, and indexed universal life products, can be used in these types of plans.

amount of underwriting required.

Executive bonus plans and REBAs can provide unique solutions for the most difficult challenge faced by small business owners. These plans are typically much simpler than Several insurers have “simplified issue” their qualified-plan cousins, and and “guaranteed issue” programs don't require the business to jump for business cases with a sufficient through hoops to qualify for a “safe number of lives. These special harbor”. Life insurance products are underwriting programs can make excellent vehicles for funding these it much easier to write and place an arrangements. executive bonus case by reducing the Creekmore Insurance Group is a life insurance brokerage general agency built for independent agents and advisors. Specializing in impaired risk and complex life insurance cases, we offer complete back-room support, cutting-edge technology, and the best service in the business. We serve a network of independent agents, attorneys, CPAs, and financial professionals nationwide. Continued From Page 33

ZALMA

Life product selection

Arnold was “an independent contractor and not an employee,” that no terms of the contract “shall be construed as creating an employer-employee relationship,” and that Arnold was“free to exercise [her] own judgment as to the persons from whom [she] will solicit and the time, place and manner, and amount of such solicitation.”

A wide variety of life insurance products are available for Section 162 bonus plans and REBAs. High early cash value riders are available

Arnold testified that she had read the contract, and understood when she signed it that her appointment with Mutual was as an independent

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The Underwriter’s Insider

contractor. She agreed she used her own judgment in tending to her business, and more particularly in determining who she would solicit for applications for Mutual’s products, when and where she would do so, and the amount of time she spent engaging in such solicitations. Arnold exercised her contractual right to terminate her appointment with Mutual by a letter dated March 24, 2008, which advised Mutual that she had entered into a contract to represent another insurance company exclusively, and was prohibited from maintaining her appointment with Mutual.

THE COMMON LAW TEST FOR EMPLOYMENT In California a statute is construed in light of the common law unless the Legislature clearly and unequivocally indicates otherwise. Thus, when a statute refers to an “employee” without defining the term, courts have generally applied the common law test of employment to that statute. The Court of Appeal found that: Arnold was engaged in a distinct occupation requiring a license from the Department of Insurance.

and Mutual believed, at the time of her appointment, they were creating an independent contractor relationship and not an employee relationship. In California, the existence and degree of each factor of the common law test for employment is a question of fact, while the legal conclusion to be drawn from those facts is considered a question of law. Even if one or two of the individual factors might suggest an employment relationship, summary judgment is nevertheless proper when all the factors weighed and considered as a whole establish that Arnold was an independent contractor and not an employee for purposes of Labor Code sections 202 and 2802. The Summary Judgment, therefore, was affirmed by the Court of Appeal.

ZALMA OPINION Insurance agents and brokers who enter into contracts with insurers to sell insurance products to the public can be classified as independent contractors or as employees depending on whether they fall, or do not fall, within the common law definition of who is an employee.

It is imperative that the agent or broker entering into a contract with an insurer be certain of the relationship before The She was responsible for her own signing such an agreement. instrumentalities or tools with the contract signed by Ms. Arnold clearly and exception of limited resources offered unambiguously set forth the relationship by Mutual to enhance their agents’ between Mutual and Arnold was not successful solicitation of Mutual’s employment. Arnold, and any agent products. Arnold was required to pay a entering into such a contract that wants fee for the use of Mutual’s office space to be considered an employee should and telephone service. Although Mutual seek the advice of counsel. Independent paid its agents in a systematic way every contractor classification is often a two weeks, Arnold’s payment itself – nuanced legal question. In this case the chiefly commissions – was based on her common law and the written contract results and not the amount of time she eliminated the nuance. spent working on Mutual’s behalf. Arnold The new penalties accentuate the www.underwritersinsider.com

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importance for both the insurer and the agent to receive sound legal advice. Employees, by statute in California and most states have rights that are not available to an independent contractor. Insurers appointing agents must be careful to avoid claims of employment if they wish the agent to be an independent contractor not subject to labor laws and employee benefits and should carefully consider the common law elements of employment. Arnold entered into an agreement with Mutual that clearly stated she was not an employee but that the relationship established was that of an independent contractor. The facts of the relationship and how it functioned clearly established that Arnold was not an employee. She attempted to gain benefits to which she, and the class she claimed to represent, were not entitled to receive because they were not employees. Based on her own testimony it is difficult to understand why she brought the action and why, after losing at trial, she decided to take the case up on appeal. However, by doing so Arnold unwittingly did a service to Mutual and all other insurers who use nonexclusive independent agents who will be able to defend against punishment from the new law. © 2012 – Barry Zalma Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud. Mr. Zalma serves as a consultant and expert, almost equally, for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. He recently published the e-books, “Zalma on Insurance,” “Heads I Win, Tails You Lose — 2011,” “Zalma on Rescission in California,” “Zalma on Diminution in Value Damages,” “Arson for Profit,” “Insurance Fraud,” and others that are available at www.zalma. com/zalmabooks.htm. 35

Experts and Consultants for Insurance Disputes 4441 Sepulveda Boulevard Culver City, California 90230 310-390-4455 zalma@zalma.com http://www.zalma.com

Consultation from Zalma Insurance Consultants (ZIC) can save you or your client thousands of dollars in the defense or prosecution of an insurance dispute. ZIC provides expert advice and counsel insurers and plaintiffs’ counsel find indispensable. Consultation from ZIC can save you, your counsel or client hundreds of hours of investigative and legal work. ZALMA INSURANCE CONSULTANTS is a service of Barry Zalma, Inc. a California professional corporation. Barry Zalma is an internationally recognized expert on insurance coverage, insurance claims handling, insurance bad faith, insurance fraud detection, the defeat of false and fraudulent claims, Barry Zalma, Esq. insurance claims handling, and the resolution of insurance disputes. As a consultant, expert witness, lawyer, author, mediator or arbitrator he serves all parties who need consultation or expert testimony on matters relating to insurance coverage, insurance claims handling, insurance fraud and the tort of bad faith. Barry Zalma founded Zalma Insurance Consultants to help resolve any insurance claim problem faced by you or your clients that do not need Mr. Zalma’s services as a lawyer. His experience and skill as a consultant and expert witness can make the difference before a jury or other trier of fact. For more than 44 years as a claims person and insurance coverage attorney, Barry Zalma has represented insurers, advised insurers on claims handling, interpreted coverages and testified as an insurance coverage, insurance bad faith, insurance claims handling and insurance fraud expert on behalf of insurers and policyholders in state and federal courts.

Expert Testimony

Zalma Insurance Consultants serves insurers, policyholders, underwriters, brokers, agents, adjusters, public insurance adjusters, lawyers and any person involved in an insurance dispute. Because he is an attorney licensed to practice law in the state of California M r. Zalma may be prohibited by California case law from acting as a consultant or expert witness and, therefore, refuses to serve in any situation where a past client of his law firm, Barry Zalma, Inc. is adverse to anyone seeking his services.

Y ou can obtain M r. Zalma’s C.V . at http://www.zalma.com and his e-book publications http://www.zalma.com/zalmabooks.htm and blogs daily at Zalma on Insurance, http://zalma.com/blog.

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The Underwriter’s Insider

Continued From Page 9

KIM KOMANDO Could this happen? - No. A sniffer can be either hardware (a highly specialized computer) or software (a program installed on a regular computer). It’s the nickname for a packet– or network– analyzer. It monitors traffic on a network and can be used by hackers. But it’s not something you remove and hold in your hand once finding it stealthily attached to the back of your computer.

AMERICA: YOU ARE IN BIG, BIG TROUBLE...

Valencia College professor of economics, Jack Chambliss, assigned an essay to his students to determine what they considered the American Dream. The results may shock you - and do not bode well for the future of this country. Click on Video Image:

What should it have been? If it were my book, I’d make it a hardware keylogger. If you unplug the computer’s keyboard and stick the keylogger into the keyboard’s port, you can then plug the keyboard into the keylogger. It would be very hard to spot, because they’re very small. Plus, the keyboard usually plugs in at the back of the computer. It can be physically removed, and could be turned over to the police. Plot problem solved. So, next time you watch a crime drama, be a tech detective yourself, and see if they get it right. The more you read my daily newsletters, the more likely that you’ll be able to help keep Hollywood honest. Copyright 2012, WestStar TalkRadio Network. All rights reserved. Kim Komando hosts the nation’s largest talk radio show about consumer electronics, computers and the Internet. To get the podcast, watch the show or find the station nearest you, visit: http://www. komando.com/listen. To subscribe to Kim’s free email newsletters, sign-up at: http://www.komando.com/newsletters. www.underwritersinsider.com

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Continued From Page 22

DEATH OF THE SALESMAN? or Boeing or Coca-Cola or General Mills. There is no inconsistency between professionalism and selling - just ask your successful life insurance associates. That person I referred to in the beginning of this article was wrong P&C insurance requires more than an advertisement. A good advertisement simply delivers raw prospects to your door where you now have the opportunity to rise to one of the highest callings in free market capitalism: the salesman! ______

FREE! free insider subscription! sign up yourself or any associate at this link

HERE

BARRY ZALMA'S BRIEF REPORTS ON “WHO GOT CAUGHT” IS ON LINE NOW

appropriate punishment in workers compensation fraud. Mr. Zalma, an internationally recognized insurance lawyer, consultant and expert witness, will narrate the new WRIN.tv series, Who Got Caught? Barry Zalma, will focus on the apprehension of perpetrators of all types of insurance fraud…from healthcare and workers comp fraud, to murder for life insurance, arson for profit, and more…

World Risk and Insurance News is broadcasting its video news network for the global risk, insurance and financial services industry with the launch of World Risk and Insurance News (WRIN.tv), available online at www.WorldRiskandInsuranceNews.tv (also www.WRIN.tv).

Barry Zalma has recently joined World Risk and Insurance News with his first program, Who Got Caught? In the first programs of Who Got Caught?, Barry Zalma comments on crime and

For sponsorship opportunities and to become an industry alliance partner with WRIN.tv contact Sandra L. Masters at Sandra.Masters@WRIN.tv

RIN.tv is an online video network that ushers in a new era in news, communication and education for the global risk and insurance industry.

WILLIAM SHATNER’S LAST ROLE AS PRICELINE’S NEGOTIATOR?

he Negotiator is dead. Long live the Negotiator! This may be the chant in the board rooms of Priceline as their latest ad has the iconic pitchman saving a group of bus passengers as the crashed vehicle teeters on the edge of a bridge over a deep gorge - but he cannot save himself as the bus crashes in burns.

It is widely assumed that the 80-yearold Shatner is far from gone for good as the face of Priceline.. He has a year left in his contract and seems to enjoy the

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role - and the payday. Shatner’s role as the Negotiator for Priceline has earned him more than $600 million in fees. His original deal with the fast-growing company included warrants and stock options which turned out to be a very lucrative arrangement. The Underwriter’s Insider

Continued from Page 32 NEW RESEARCH P/C FINANCIAL YIELDS REAL RESULTS PROMISE DETERIORATE low 1.98 percent in September 2011 OF THE on data extending back to April FOUNTAIN based 1953 — down from 2.65 percent in 2010 and a record-high OF YOUTH September 15.32 percent in September 1981.”

Have Scientists Finally Isolated “Factor X?”

The property/casualty industry’s 1.9 percent annualized rate of return for nine-months 2011 was the net result of negative rates of return for mortgage niversity of Pittsburg Medical and financial guaranty insurers and School claims to have single-digit rates of return for other made tremendous recent insurers. ISO estimates that mortgage breakthroughs in reversing the aging and financial guaranty insurers’ process. The research, involving the annualized rate of return on average injection of stem cells into an aged surplus deteriorated to negative subject, seems to indicate a “Factor X” 48.8 percent for nine-months 2011 substance secreted by the stem cells from negative 35.7 percent for ninethat reverse signs of ageing and age months 2010. Excluding mortgage related conditions. and financial guaranty insurers, the industry’s annualized rate of return fell to 3 percent in nine-months 2011 from 7.8 percent in nine-months 2010.

Underwriting Results

Will 100 be the the new ‘Middle Age?” Scientists are working to identify and isolate that substance, and it is possible one day Factor X will be available in pill form to take along with your morning vitamins.

Click on the video image above to see the clip. www.underwritersinsider.com

Underwriting gains (or losses) equal earned premiums minus LLAE, other underwriting expenses, and dividends to policyholders. Net losses on underwriting grew $28.6 billion to $34.9 billion in nine-months 2011 from $6.3 billion in nine-months 2010, as growth in LLAE and other underwriting expenses outpaced growth in premiums earned. Net written premiums rose $10.1 billion, or 3.1 percent, to $334.5 billion for nine-months 2011 from $324.5 billion for nine-months 2010. Net earned

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premiums rose $8.1 billion, or 2.6 percent, to $323.8 billion from $315.7 billion. Net LLAE (after reinsurance recoveries) rose $33.6 billion, or 14.6 percent, to $264 billion in nine-months 2011 from $230.4 billion in nine-months 2010. Other underwriting expenses — primarily acquisition expenses; expenses associated with underwriting, pricing, and servicing insurance policies; and premium taxes — rose $3.1 billion, or 3.4 percent, to $93.6 billion in ninemonths 2011 from $90.5 billion in ninemonths 2010. Dividends to policyholders totaled $1.1 billion in nine-months 2011, essentially unchanged from dividends to policyholders in nine-months 2010. Though the increase in overall LLAE is primarily a result of losses from catastrophes, other losses also rose. ISO estimates that private insurers’ net LLAE from catastrophes jumped $22.4 billion to $33.2 billion in nine-months 2011 from $10.8 billion in nine-months 2010. Other net LLAE rose $11.2 billion, or 5.1 percent, to $230.8 billion through nine-months 2011 from $219.6 billion through nine-months 2010. According to ISO’s Property Claim Services (PCS) unit, catastrophes striking the United States in nine-months 2011 caused $32.6 billion in direct insured losses (before reinsurance recoveries) for all insurers (including residualmarket insurers and foreign insurers and reinsurers), up $21.6 billion compared with the direct insured losses caused by catastrophes striking the United States in nine-months 2010 and $13.9 billion more than the $18.6 billion average for nine-months direct catastrophe losses during the past ten years. 39