E&O Weekly Prevention
Strategies for the Professional Agent
January 3, 2012


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Letter from the Editor


"Insurance Agency Risk Management: A Comprehensive Guide to Avoiding E&O Claim - Book One" is now available!  


"A Comprehensive Guide to Avoiding E&O Claims" addresses issues that Insurance Agents & Brokers encounter every day. One of the most important assets an agent has is their reputation; it takes years to build a business and only one mistake to ruin it. "Book One" is a practicable guide and resource that every Insurance Agency should read and use as an effective risk management tool.


AgentsofAmerica.ORG forms a "Strategic Alliance with Agenciesonline.biz & George Nordhaus


Every week you will receive the three-minute, voice-over visual presentation, Monday Morning. Insurance marketing guru, George Nordhaus, compiles this short look at sales and marketing ideas...as well as what has happened the preceding week, that will affect our industry. He constantly reviews the trade press articles, on and off-line content that will be meaningful to anyone in insurance sales and service, and then presents it with visuals to make is easier and quicker to understand.


Chairman of AgenciesOnline, Mr. Nordhaus has had an illustrious career as EVP for two Big I associations, founder of Insurance Marketing and Management Systems, author of eight books on marketing, a speaker at every state agents' association's conventions, and largest publisher of newsletters for agencies for over 40 years. He was also one of the youngest members of Lloyds of London, and Chairman for the Lloyd's "Names" groups in three states.  In addition, each month, George will feature a column. "Still Learning" by George Nordhaus which will provide Insurance agencies' one-stop resource for Communication, Marketing and Technology



This week's edition of AOA E&O Prevention:


Table of Contents    




Check out this week's edition of World Risk & Insurance News at WRIN.tv . Also listen to Insurance Expert George Nordhaus Monday Call and this week's topic, "Things for you to worry about in 2013!".


AgentsofAmerica.ORG has partnered with WebCE, a leading nationwide provider of Continuing Education for insurance professionals, to provide you with state-approved self-study CE courses to satisfy your CE requirements online! Check out your  CE State Requirements.


Also available is our most recent edition of "AOA Tips, Views, News & More," including our new feature "Insurance Resources." & "Recommended Reading".  Remember that membership in AgentsofAmerica.ORG is FREE! Also if you have any thoughts, comments or suggestions, please email me at info@agentsofamerica.org.



"Bringing the Best Together"


Angelo J. Gioia




AOA Tips, Views, News & More


The Need to Educate the Customer When Moving Them From a Claims-Made to an Occurrence Form 

By Curtis M. Pearsall, CPCU, AIAF, CPIA of Pearsall Associates Inc.


While it may not happen often, from time to time, you may look to move your account from a claims made form to an occurrence form. There are some key issues for agents to be aware of that if not handled properly could definitely spell trouble for your customer and ultimately for your agency.


With a claims-made form, the policy in effect when the claim is brought is responsible for responding to the claim. Claims-made policies either contain a retro date or provide full prior acts coverage. For coverage to apply if the policy contains a retro date, the injury/error or omission, etc. must occur after the retro date. Thus, with a claims-made policy, the trigger is when the claim is made, not when the injury/error or omission occurred.


With an occurrence form, the policy in effect when the injury or damage occurs will respond to 
the claim. Provided the injury or damage occurred during the policy period, an occurrence form 
will respond regardless of when the claim is brought, subject to any applicable statute of limitations.

There is tremendous potential for a gap in liability coverage to occur when the insured's policy coverage goes from a claims-made to an occurrence form. Let's assume policy dates of 2011 for the claims-made policy and 2012 for the occurrence form. A common scenario is where the injury occurs during the claims-made policy period (2011), but the claim for the damages is made during the occurrence policy period (2012).


In this case, neither policy provides coverage since the occurrence form only pays if the injury occurs during the occurrence form's policy period. The injury/error or omission occurred in 2011, before the occurrence form went into effect. Because a claims-made form only responds to claims made during the policy period, neither policy's condition is met. The injury/error or omission occurred before the occurrence form existed - and the claim came after the claims-made form expired. This has the potential for your customer to have an uncovered loss.


The suggested course of action to avoid a gap in coverage when an account is moved from a claims-made form to an occurrence form is for the insured to purchase an Extended Reporting Period, a/k/a as a "tail", under his claims made policy. It is critical that customers/agents realize this tail option must be exercised within a set time period (typically 60 days). Essentially, the tail provides an additional time period to report a claim for any injury/error or omission that occurred during the claims-made policy period and after any applicable retro date.


Moving an account from "claims-made" to "occurrence" or vice versa is a serious issue. It is extremely important for the agent to provide full and open disclosure to the customer to make sure that they are aware of any potential issues involving the two forms with all discussions well documented not only in the agency system but also with written communication back to the customer.


Curt regularly provides free E&O tips for agents on his blog www.agentseotips.com. Contact at curtis@pearsallassociates.com or 315-768-1534




Executive Success: Dealing with Difficult People

By Michael Beck of Michael Beck International, Inc.


There's no avoiding it.  You're bound to come across someone who's difficult to deal with.  It's inevitable as soon as you add different personalities, experiences, and backgrounds to the mix.  They may be someone we report to or someone who reports to us.  Or they may be a peer, a vendor, or a client.  The bottom line is that it's going to happen and generally can't be avoided.  If we are to be effective as a leader, we must become good at dealing with those difficult people.


Whoever they are, they usually cause anxiety, frustration, concern, and/or anger in us.  The irony is that when we become anxious, frustrated, concerned or angry, we ourselves, can become difficult to deal with.  Consequently, it is imperative that we become adept at dealing with them.  Occasionally we can avoid the person altogether, but more often than not, it's a relationship we have to address.


One course of action is simply to tolerate the other person.  This course of action (or more accurately, inaction) is one which avoids confrontation and maintains the status quo.  Productivity remains consistent and there's no risk of workplace "drama".  Unfortunately, by not dealing with the situation, you end up perpetuating a number of counterproductive dynamics.  You end up expending valuable energy by "tolerating" an unsatisfactory situation.  It affects your attitude, your thoughts, and your productivity.  Additionally, in your attempt to shield or isolate yourself from this person, they end up feeling neglected and unappreciated.  When that happens, they tend to "check out", becoming complacent and apathetic - simply going through the motions at work.  It's not a very fruitful course of action.


There's one other negative dynamic that exists when we tolerate a difficult person.  Although it may feel like the issue is between the two of you, in fact, a difficult person affects your entire team.  When you allow a difficult person to persist, it reflects on your leadership style and your values.  This, in turn, negatively impacts your ability to lead effectively.  Additionally, the age-old adage holds true, "One bad apple spoils the barrel," as will be evidenced by the people who'll come forth voicing their relief once the difficult person is gone.


Another course of action might be to reflect on our own behaviors and attitudes, and decide to change ourselves.  While this occasionally may be appropriate, generally it's not.  (A good test is to observe whether there are many "difficult" people on your team.)  In fact, our initial reaction to this course of action might be, "Why should I be the one to change?  It's clear the other person is the one with the problem."  Not only would that be valid, but it sheds some light on how to handle the situation, because if our thought is to ask the other person to change, their reaction would most likely be the same.  "Why should I be the one to change?"  This of course poses a problem because in fact, that person generally IS the problem.


The answer to this dilemma is to have an honest and transparent conversation with the person.  As a leader, we have the opportunity and an obligation to develop people and help them grow.  We need to be compassionate, yet strong.  We need to be empathetic, yet work change their perspective.  We accomplish this by acknowledging the situation and by asking good questions.  This course of action helps us understand their perspectives and motivations.  By doing this, not only can you positively impact their enjoyment of and satisfaction with their work, but you'll help them to be more effective and productive.  If nothing else, you'll help them gain clarity about themselves and then help them (in a positive way) move on to another opportunity which better suits their skills and their perspectives.


Mastering the ability to effectively deal with difficult people will enhance your leadership effectiveness and enrich the lives of the people around you.


Michael Beck is an Executive Strategist and specializes in business strategy, executive development, and leadership effectiveness.  Connect on LinkedIn: www.linkedin.com/in/mjbeck  and visit www.michaeljbeck.com to learn more.  Permission to reprint with full attribution.  2012 Michael Beck International, Inc.



A Perfect Storm: The Failure to Address Workplace Mental Health

By Deborah Dutton Lambert and Dr. Daina Dennis


A perfect storm is brewing that not only costs organizations billions of dollars in lost productivity and millions of lost workdays, but is a "rising tide of liability for employers" ( Psychology Today, September 26, 2012).  What are the contributing elements to this 'Perfect Storm?"


     Profoundly underestimating the prevalence of mental health conditions in the workplace

    Not understanding that early treatment costs less than the accruing presenteeism and absenteeism resulting from untreated mental health conditions

   Lack of training of supervisors and managers to identify and address mental health conditions of employees

     Failure to develop a risk management plan that addresses mental health issues

       Disregarding mental health and it effects as a critical element of workplace safety

   Stigmatization of workers who want to report and seek treatment for mental health conditions

     Lack of confidential support and readily available resources for an employee who wishes to seek early and effective treatment


This perfect storm has already been felt in Canada.  A 2009 report, "Stress at Work", by the Mental Health Commission of Canada states that financial rewards for damages related to mental health issues against employers have increased by as much as 700 percent in the past five years. Canadians are beginning to recognize that ignoring the impact of mental health conditions in the workplace is a very costly option. Instead, they are attacking the storm head-on by creating workplaces that are informed and stigma free with regard to mental health conditions. Canadians are finding that the ability to demonstrate the existence of a positive and supportive work environment reduces an organization's risk and liability.


During extensive research of workplace mental health, we found that most of the U.S. employers we interviewed feared that by addressing mental health in the workplace they would be increasing their exposure to litigation by "opening Pandora's Box".  The stark reality is that Pandora's Box is already open. The costs of not addressing mental health in the workplace are alarming:


   Nearly $200 billion in lost earnings per year (American Journal of Psychiatry, Vol. 165, No. 5)

   $105 billion in lost productivity each year associated with absenteeism and presenteeism (According to a U.S.A. Today report (Harmour,2006) based on research by Harvard University Medical School)

 An indeterminate amount resulting from a decrease in morale and an increase in resentment created by the employer's lack of action to address mental health conditions in the workplace


Unfortunately the fear of potential litigation has created a barrier to effectively addressing the huge costs associated with untreated mental health issues in the workplace. A positive and supportive environment (what we call a mental health receptive workplace) will not only reduce costs but has been shown to reduce an organizations risk and liability.

What does a mental health receptive workplace look like? It is a workplace that is stigma free and where employees are not afraid to seek early and effective treatment. Supervisors are trained to address the behaviors associated with mental health conditions and are knowledgeable about internal and external resources that employees can turn to for help. It is a workplace where all employees know that mental health conditions are neurobiological conditions that are highly treatable.  


The creation of a mental health receptive workplace must begin with the education of U.S. businesses on workplace mental health.  Mental health literacy training educates all levels of an organization on the prevalence and cost of mental health conditions, provides specific training on the most common types of mental health conditions in the workplace, i.e. depression and anxiety, and provides practical and affordable solutions to create a mental health receptive workplace.


Through years of research and product development we have created a comprehensive education program called Encompass Workplace Mental Health. This program is designed to assist employers to recognize and reduce the high costs of untreated mental health conditions in the workplace.  At Encompass we view mental health literacy training as following the same path as diversity training in the 1970's.  What organization today would not embrace diversity training as a fundamental component of their cultural competency and risk management efforts?   In a 2009 Harvard Business Review article, Stew Freedman states that business leaders have a moral and practical imperative to address the issue of mental health in their workplace.


For additional information on the Encompass Program,

contact Deborah Dutton Lambert or Dr. Daina Dennis



stilllearningStill Learning                                                                                                        

By George Nordhaus ~ Chairman of Agenciesonline.biz.


Does X dating still work?

The direct writers discovered the concept that people are more apt to change their insurance coverage when it renews, than at any other time during the year.

But...the present emphasis on buying personal insurance on the Internet has removed some of the value of X-dating? Or has it?


Not exactly!


I still encourage agents to ALWAYS ask contacts, friends, whomever, (especially commercial lines prospects) these two questions:


1.      When does your insurance expire?

2.     What is your e-mail address?


Here are some X-dating ideas that have worked over the years:


Rule of 500:

Each Producer/CSR gets 2 personal lines X dates each day (ten a week, 500 a year).  Statistics show that the results can average six interviews and three sales for every ten calls made on those expiration dates.

Pay for X-dates?

Pay your staff for x-dates. Why not pay $5.00 for every x-date...and even give them a flat fee ($25-50) for every x-date they obtained that turns into a sale?


Commercial lines x-dating

Commercial lines x-dating still works. Agents tell me that, on average, for every ten commercial lines x-dates they garner, three interviews will take place, one sale will be made.


X-dating at renewal time

Even if you can't turn the one or two-policy customer into a full-service client at renewal time, you CAN and should to get his/her x-dates for all the coverage's you don't write. Make this standard procedure in your office.


The magic rule of thumb for selling insurance is when the client tells you "The more you know about me (and my business) the better your chances to sell me",  having the x-date is the first step towards success.


For additional information, contact George at X210 or george@agenciesonline.biz or (888)985-3331 X210 - www.agenciesonline.biz.



By Cynthia Cavoto of Firebrand Social Media


How Is Online Copywriting Different From Offline Copywriting?


To become an effective copywriter for the Web, the first thing you need to learn are the major differences between online and offline copywriting.


Who Reads It?


Offline copies are printed on various materials, and they"re something that some people may read just to pass the time. With no expectations, offline readers can afford to be more patient and forgiving.


Online copies, however, don't have that luxury. More often than not, Internet users have a reason for visiting a website and they definitely have expectations when it comes to reading any online copy. And since they know what they want and what to look for, they"re more inclined to be impatient and wouldn't hesitate to switch to another article if what they"re currently reading proves to be unsuitable.


One Chance from Start to Finish


Again, certain situations in the offline world give readers no chance to be choosy. Reading from a single magazine limits them to the contents of the magazine. If there are no other magazines available and they need to acquire certain information or, once again, they"re desperate to pass the time, they have no other recourse but to read the magazine from start to finish.


Second chances are rare for online copies and as such, you need to make every word powerful and significant from start to finish, beginning with your headline and until you finish your call to action.


Switching from one copy to another is also easier for online readers. With search engines more than ready to supply them with the next best link if your copy proves to be inadequate, the only way to keep their attention is by making every sentence worth their time.




Offline copywriters may occasionally have to worry about the costs of printing their works in a certain format. Too many paragraphs as well as larger fonts could make the cost of publishing escalate in an alarming rate, and for this reason, they"re forced to make adjustments, which are not always favorable to readers, to their works.


Online copywriters, in this case, stand to gain more from their line of work. Since text weighs little in terms of bytes, formatting rarely make a substantial difference to their work. As a result, they can afford to make more paragraphs and keep it short - exactly the way their online readers like it. Having large fonts aren't a problem either. Indeed, they can change the color of the text and suffer from no additional cost.




Online readers have a habit of skimming, and they do it more frequently than their offline counterparts. Web copywriters will, of course, have to adjust their work accordingly.


Skimming makes optional formatting techniques in offline writing necessary in online copywriting. Subheadings are one of them. Their presence ensures that online readers are still able to comprehend the gist of the copy even if they"re skimming. If you can supply one subheading for every paragraph, that can only work to your favor!


Now that you"re aware of the differences between online and offline copywriting, you can apply what you've learned the next time you write an online copy. These newfound tips may make writing more difficult at the start, but rest assured they come with greater rewards!


Remember to double-check for errors before uploading your work. Good luck on keeping the attention of your readers!


This month's EBook is entitled, "57 Email Link Building Tips Part 2"   


Each month, we will feature a brand new Social Media EBook that contains valuable information on how you can harness the power of social media. Each featured EBook will contain a wealth of information that will include such topics as Facebook, LinkedIn, Twitter, Email and Blogging to name a few. Contact Cynthia at cynthia@agentsofamerica.org. or cynthia@firebrandsocialmedia.com.


Results of Last Poll Question


As the insurance market hardens, carriers will typically modify / restrict therir underwriting guidelines. Please note which of the following is more applicable:


Within the last 6 months:


34%    a) At least 2 of your personal lines carriers have issued a modification / restriction of their underwriting guidelines.

27%    b) At least 2 of your commercial lines carriers have issued a modification / restriction of their underwriting guidelines.

37%    c) At least 2 of your personal lines and commercial lines carriers have issued a modification / restriction of their underwriting guidelines.

1%      d) Your agency has not seen any modifications / restrictions of the underwriting guidelines of either your personal or commercial lines carriers






E&O Policy Precludes Coverage for Antitrust Claims and Common Law Tort Claims Arising From Alleged Anti-Competitive Scheme




















Firebrand Social Media   











article3Court Orders Monitoring to Ensure Employee Does Not Breach Non-Compete

By Tal Kadar, Esq. of Jackson Lewis LLP


A U.S. District Judge in Connecticut recently issued an injunction against a former employee of Amphenol Corp and his new employer, TE Connectivity, Ltd, despite the lack of any evidence of competition in breach of his non-compete agreement. The decision in Amphenol v Paul, Civ. No. 3:12cv543 (D. Conn. Nov. 9, 2012), involved a former business unit director of Amphenol who had been responsible for product development, marketing and sales of Amphenol's electronic and fiber optic connectors. He signed a non-compete agreement which prohibited work on any competitive product that was in development during the 12 months preceding his termination of employment or about which he had received confidential information.





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