E&O Weekly Prevention
Strategies for the Professional Agent
February 28, 2013


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Letter from the Editor

Chapter 1, "Insurance Producer Licensing" from "Book One" is available for download                         
"Insurance Producer Licensing," written by Daniel B. Meyer, attorney at O'Hagan LLC. The first chapter begins as an insurance producer's profession begins: licensure. The authors compiled the licensing schemes from all fifty states and the District of Columbia and pulled from that compilation the common threads - the licensing requirements that are consistent across all jurisdictions of this country. They then highlight where the various jurisdictions differ, and how. The topics addressed range from age and education, pre-licensure coursework and testing, fees, and maintenance, suspension, revocation and non-renewal of producer licenses



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

"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. "Book One" is now available on Barnes & Noble and on Amazon



On Monday, February 18th AOA announced its plans for:
Written for today's insurance professional "Book Two" represent a collaborative effort from industry experts and lawyers, working together to address the cutting-edge issues in risk management, loss prevention and litigation relating to claims and potential claims against insurance agents. See "Table of Contents". 



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


Table of Contents   




A review of the top stories on World Risk & Insurance News at WRIN.tv
Here is your opportunity to see the online video news stories you may have missed on WRIN.tv: 

 As insurers were praised for handling claims from Hurricane Sandy, banks were blamed for holding up payments to victims

 U.S. employers are revealing strategies to avoid the increased costs of employee health insurance under Obamacare


Dr. MaryRose Reaston from Emerge Diagnostics discussed the consequences of the Mandatory Reporting Act on workers comp claims






And in WRIN.tv's People in the News, changes at Ageas, AIG, Aviva, CS Stars, the NAIC, RSA, Universal, WellPoint, Willis and Zurich


For more of the online video news affecting the world of risk and insurance, visit the World Risk and Insurance News website at www.WRIN.tv.    

Also listen to Insurance Expert George Nordhaus
"Monday Morning" on "Some "grabber" sales and marketing tips.



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


E&O Loss Prevention Tip


Description of Claim:


Underwriting and Binding Procedures


Allegations against the Agent: The carrier's underwriting guidelines required submission of a photograph of all rental properties included for coverage. The agent failed to obtain a photograph of the rental property for which a customer desired coverage; a binder was provided to the customer. A fire occurred and due to the issuance of the binder, the insurance company was required to pay the claim but later sought reimbursement from the agent. Had the agent visited the property to obtain a photograph, it would have been clear that the property was boarded up and vacant and therefore an unacceptable risk.


Damages: $150,000


Risk Management Tip: Always follow an insurance carrier's underwriting requirements for binding coverage.


Brought to you by:


CalSurance Associates - A Division of Brown & Brown Program Insurance Services, Inc.

Phone:  (800) 745-7189   or info@calsurance.com.




Mental Health in the Workplace  

By Deborah Dutton Lambert and Daina R. Dennis of Encompass Training Program



We recently saw the Steven Spielberg's film, Lincoln, and were struck by one scene in the movie where President Lincoln is discussing the vote for ratification of the 13th Amendment to abolish slavery with Thaddeus Stevens, a member of the House of Representatives.  President Lincoln likens the quest for ratification of the 13th amendment to the pursuit of true north.  Pat Fiorenza masterfully states the analogy between President Lincoln's statement of true north and a noble purpose in his blog dated November 27, 2012:  "Lincoln proceeds to give an eloquent analogy of true north and where your moral compass can steer you if you are not careful. Lincoln reminds Stevens that "true north" is a noble aim and essential, but in the end, going true north means that there are challenges along the way. The journey is not linear, the path is not clear and values will be challenged." 


The concept of true north is based on principles.  We equate this concept with the principle of providing equality for persons with mental health conditions in our society and in our workplaces.  In this case, the search for true north will include the essential activities of stigma removal, provision of resources for support and assistance, and workplace cultural transformation through mental health literacy training and education.


The challenges to reach this moral and noble aim include the fear that there will be an increase in disability claims by employees for mental health conditions; increased utilization of health care benefits; increased usage of FMLA benefits; and that employees will demand unreasonable and costly accommodations.  Yes, we know there will be short-term challenges along the way, but ignoring the path will lead to costly long-term consequences.  We believe that mental health literacy training is not just the right thing for a company, not just a moral compass, but also makes good business sense.


Research has clearly demonstrated that the costs for early identification and treatment for mental health conditions are about one-half of the costs associated with absenteeism and presenteeism resulting from untreated mental health conditions (http://www.jclinpsychiatry.com/issues/greenberg.pdf, Dec. 2003).  The National Council for Behavioral Healthcare (http://www.thenationalcouncil.org/cs/home) states that early treatment for mental health conditions is more effective than for other medical conditions such as asthma, cardiovascular, and heart disease.


When individuals with mental health conditions receive early and effective treatment, turnover costs are reduced and intellectual capital is retained.  In addition, as stigma is reduced and affected employees seek early and effective treatment, workplace morale is enhanced.

It is true that the request for accommodations may increase, however, the vast majority of accommodations for mental health conditions are both reasonable and affordable. In fact estimates indicate that most accommodations cost less than $500 http://www.bu.edu/cpr/jobschool/whatareRAs.html.


The prevalence of co-occurring conditions such as diabetes, cancer and heart disease will decrease through early and effective identification and treatment of mental health conditions. In addition, many FMLAs that are longer than customary for the original condition may be a result of the development of a co-occurring mental health condition.  In such cases, addressing the mental health condition will result in shortened FMLAs. To summarize, although companies may see a short-term increase in health care costs, in the long-run the overall costs will decrease. These findings and more are substantiated by a number of organizations that have successfully addressed mental health conditions in their workplace. Please visit the Partnership for Workplace Mental Health at http://www.workplacementalhealth.org/Pages/EmployerInnovations/Search.aspx to see the cost savings companies have achieved by addressing mental health conditions.

At Encompass we believe that education and training is never a liability, nor will it increase a company's liability or costs.  In fact, the opposite is true as both liability and cost will decrease.  The challenge we all face is to address this issue, head on, knowing that the path to true north will not come easy.  Mental health literacy training 'is not just a good business strategy, but also a moral and noble aim.


Tip of the Month:

How much is untreated depression costing your company?  To get an estimate of your company's cost of untreated depression, you can quickly find out through the depression calculator at http://www.depressioncalculator.com/Welcome.asp.


For additional information on the Encompass Program or to contact Deborah Dutton Lambert or Dr. Daina Dennis.




Insurance Coverage Tip 

By Alison Slezak of Martin & Company


Protect Your Roof Against Severe Weather


Managing roof-related Homeowners losses through a new Roof Value Scheduled Settlement-Windstorm or Hail Losses to Roof Surfacing Endorsement offers transparency to loss settlement practices and an insured's ability to knowingly make insurance decisions.


Hartford Insurance Group introduced a Roof Value Scheduled Settlement- Windstorm or Hail Losses to Roof Surfacing Endorsement. The cost of repairing and replacing roofs has significantly increased. Managing these costs is essential to providing long-term, more affordable options for insured's.  Actual Cash Value(ACV) settlement of roof losses is becoming more common across the industry to manage the cost of repairing or replacing roofs that are not new.  This new coverage option allows Hartford to provide greater clarity to their policyholders regarding exact amount of coverage at the time of the loss.


To view more "hot trends" in the Property & Casualty Insurance Marketplace, visit: Martin & Company's Market Trends & Updates.  For more information, contact Alison Slezak at

(610) 325-4455 or aslezak@martincompanyus.com 




Insurance Broker Can Be Liable to Insured Who Did Not Read the Insurance Policy      

Plaintiff insured had a building lease which required that a policy providing $5 million in coverage for bodily injury and property damage be procured. The insureds' existing policy did not contain this coverage.  


















Did You Really "Hire" the Hired Help?                                                                            


Key Points:

  • Two distinct legal tests determine whether a petitioner is eligible for compensation as an employee or ineligible as an independent contractor: (1) the "control test" and (2) the "relative nature of the work test."
  • Under the "control test," courts consider several factors in assessing the presence or absence of control, including right of termination, furnishing of equipment, evidence of the right to control and method of payment.
  • The right to control the work is more determinative than actual control.
Under the "relative nature of the work test," an employer-employee relationship exists if the evidence establishes an employee's substantial economic dependence upon the employer and a functional integration of the employer's and employee's respective operations.




Firebrand Social Media   












Avoiding Liability for Work-Related Injuries to Undocumented Workers                           

By Amy Peck, Esq. of Jackson Lewis, LLP

Employers are well aware that just one work-related accident or illness can result in medical expenses, rehabilitation services, and liability compensation. A recent Nebraska Supreme Court decision is a reminder that undocumented aliens, as well as legal workers, may bring workers' compensation claims. In Moyera v. Quality Pork Int'l, 284 Neb. 963 (Jan. 4, 2013), the Nebraska Supreme Court held that the Nebraska Workers' Compensation Act applies to undocumented aliens and these employees could be entitled to permanent total disability benefits ("PTD benefits") for work-related injuries. Courts in other states also have found that undocumented employees are covered by their state workers' compensation systems, including: (1) Florida, (2) Kansas, (3) Kentucky, (4) Maryland, (5) New Jersey, (6) North Carolina, (7) Ohio, (8) Oklahoma, and (9) Pennsylvania. Such liability can be avoided by carefully managing the hiring process to ensure that you do not employ aliens who are not authorized to work.




last"Un"- Employment Discrimination? New York City Employers May Soon Face New Discrimination Claims from Unemployed Applicants

By Keith J. Gutstein, Esq. & Angel R. Sevilla, Esq. of Kaufman Dolowich Voluck & Gonzo LLP 


Employers and business owners in New York City may soon face new claims of discrimination from out-of-work job applicants alleging they were denied jobs on the basis of their "unemployment status." The New York City Council recently passed Int. 814, a bill that would amend the New York City Administrative Code to prohibit businesses from using an applicant's unemployment status in any employment decision without a "substantially job related" reason. Businesses would also be prohibited from publishing job advertisements which require applicants to be presently employed.

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 2013