E&O Weekly Prevention
Strategies for the Professional Agent
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August 9, 2012


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Letter from the Editor
This week edition of AOA E&O Prevention:  


Table of Contents     


Claims Leakage - Plugging the Hole with Predictive Modeling

By Ronald T. Kuehn FCAS, MAAA, CPCU, ARM, FCA, Kim Piersol FCAS, MAAA, & Todd Dashoff ACAS, MAAA, ARM


Excess Insurer Is Not Precluded From Recovering Defense Costs From Primary Insurers Under Subrogation Clause

By Kathryn A. Formeller, Esq.


Proof? You Can't Handle the "Proof"!

By Angela DeMary, Esq 


Not Whistling Dixie: Texas Court Says Whistleblower Statute Does Not Reach Overseas

By Ivan Dolowich Esq., Kevin Mattessich Esq, and Todd Kremin Esq.



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AOA News, Views, Tips and More



E&O Tip

By Curtis Pearsall, CPCU, AIAF, CPIA of Pearsall Associates


Is $1,000,000 enough coverage? The issue of "the proper limit" is a common question asked by agents. Unfortunately, this is not an easy question to answer as there is no magical formula to determine the proper limit. A philosophy that has been voiced over the years speaks to "the more E&O limits you have, the more that you can be sued for". In other words, if the plaintiff's attorney discovers that you only have a $1,000,000 E&O limit, they will limit the amount of the suit against your agency to only $1,000,000. Bottom line, I don't buy it. Actually, over the years, there have no doubt been many E&O claims where the amount of the suit was more than the limit on the Agents E&O policy. Even if those claims were settled within the E&O limit, for the owners of those agencies, this still had to be a very scaring experience. Not only did they have to secure their own attorney for the "excess demand" aspect of the litigation but they also were potentially facing the loss of their agency if their E&O limits were not sufficient. Why would an agent only buy $1,000,000 limit? Possibly they thought that this limit would be sufficient considering the size of their agency or the type of business they wrote. There is actually no correlation between the size of the agency and the potential size of an E&O claim. This is primarily due to the fact that the # 1 cause of agents E&O claims is "what you failed to provide", not what you did provide. One other issue on the matter of E&O limits. Actually with E&O policies, there are two limits; the first is the "per claim" limit; the second is the "aggregate" limit. If an agency has limits of $1mil / $3mil, they have a max of $1mil of coverage for an individual claim and a max of $3mil for all claims made against them during that policy period. What if the limits were $1mil / $1mil, in other words, the "per claim" and the "aggregate" were both $1mil? The downside of this is that if the agency gets hit with an E&O judgment of $1mil, they have exhausted their limits. ALWAYS look to have the "aggregate" limit be a multiple of the "per claim" limit. The additional premium is much less than you may think. Also, have more than a $1,000,000 E&O limit because $1,000,000 is not enough!


For additional information, contact Curtis at curtis@pearsallassociates.com or visit Pearsall Associates.



Speed Dating with Your Prospects

By Mark Hunter, "The Sales Hunter"


If you're like me, your day is broken up into too many different pieces. It's simply the way life is, and if we don't know how to use it to our advantage, then we'll never be able to achieve the results we know we're capable of. Most salespeople - and I'll put myself in this group - set aside time during the week to make prospecting calls, including following up on leads, etc. Problem is the time we set aside is never enough, but trying to find more time can be next to impossible due to everything going on. Key is in knowing how to take advantage of those times when you find yourself waiting for a meeting to start, or sitting in an airport, etc. To use these small windows of time to your advantage, do what I refer to as "speed dating with your prospects." Rather than merely using the time to check email or some other activity that really is not of high value, take the time to call a prospect. To do this effectively and quickly, what you need is either a note on your smart phone with the name and follow-up point you want to leverage or a piece of paper you carry with the same information written on it. For me it's a notepad I carry where I keep the name and follow-up point clearly written out. By having this information easily available, I'm able to use that open moment to go get more business. Yes, it does mean I will have to then later add my notes to my CRM system, but even having to do that, I'm still ahead of the game. Try this technique with your prospects. Some of you might argue that making a prospecting call on the fly isn't good because you're not fully prepared. I'll agree for some very high level calls this can be true, but for the vast majority of prospecting calls, being able to make the call now versus not being able to make the call will outweigh any downside. Mark Hunter, "The Sales Hunter," is a sales expert who speaks to thousands each year on how to increase their sales profitability.


For more information, visit www.TheSalesHunter.com. You can also follow him on Twitter, on LinkedIn, and on his Facebook Fan Page, or call 402.45.2110. - 

Copyright 2012, Mark Hunter "The Sales Hunter." Sales Motivation Blog. 



Results of Last Week's Poll Question


What is your agency doing to improve its loss prevention? 


Nothing. 0% 

Conducting an internal review of procedures. 20% 

Attending a loss prevention/E&O seminar 77%. 

Contracting with an outside risk analysis/management consultant 3%    


This Week's Poll Question

Is providing your sales and service staff (producers / CSR's) with quality sales training over the next year a "top 3" priority? 
a) Definitely
b) Yes but don't where to go to find this type of training

c) Yes but good sales training is too expensive
d) No, I have other priorities     

A1Claims Leakage - Plugging the Hole with Predictive Modeling - Part 1 of 2

By Ronald T. Kuehn FCAS, MAAA, CPCU, ARM, FCA,  Kim Piersol FCAS, MAAA, & Todd Dashoff ACAS, MAAA, ARM of Huggins Actuarial Services, Inc.


Advanced use of predictive modeling has altered the traditional approach as to when and how claim leakage is measured. One of the main benefits of relying on these models is earlier recognition of potential adverse/favorable development in the expected cost of claims. Earlier recognition can result in loss mitigation processes applied to claims with potential claim leakage before that leakage occurs. Early application of mitigation strategies could reasonably allow for capture and recovery of 25%-50% of adverse development that would have occurred without the use of predictive modeling techniques.   












A2 Excess Insurer Is Not Precluded From Recovering Defense Costs From Primary Insurers Under Subrogation Clause 

By Kathryn A. Formeller, Esq.of Tressler LLP


Where an insured has assigned its rights to recover available insurance, the insured's "empty shoes" do not necessarily prevent an excess carrier, which pays defense costs owed by primary carriers, from pursuing the primary carriers based upon a contractual subrogation theory. Continental Casualty Co. v. North American Capacity Insurance Co., No. 10-20262 2012 U.S. App. LEXIS 10877 (5th Cir. May 30, 2012).  






Firebrand Social Media   





A3Proof? You Can't Handle the "Proof"!

By Angela DeMary, Esq. of Marshall Warner Coleman & Goggin, P.C.Dennehey    


Key Points:

"It doesn't really matter how much the petitioner subjectively complains if it is not corroborated by objective proofs. 

* A treating physician's opinion is entitled to be accorded more weight than a physician conducting a one-time evaluation.  



A4Not Whistling Dixie: Texas Court Says Whistlerblower Statute Des Not Reach Overseas   
By Ivan Dolowich Esq.,  Kevin Mattessich Esq,  and Todd Kremin Esq. of KDVG LLP
On June 28, 2012, the United States District Court for the Southern District of Texas dismissed a lawsuit filed by a former General Electric Co. employee holding that the Dodd-Frank Wall Street Reform and Consumer Protection Act's (the "Dodd-Frank Act") anti-retaliation provision did not apply to a U.S. employee's foreign whistleblower activity. The Court in Asadi v. G.E. Energy (USA), LLC, 2012 U.S. Dist. Lexis 89746 (S.D. Tex. June 28, 2012) held that reporting a potential Foreign Corrupt Practices Act ("FCPA") violation while abroad was not protected under the Dodd-Frank Act's anti-retaliation provision. 


This newsletter is produced in conjunction with Agents of America, www.agentsofamerica.org. The contents of which may not be reproduced without the express written permission of Agents of America. Copyright 2012