E&O Weekly Prevention
Strategies for the Professional Agent
  
April 4, 2013

 

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Letter from the Editor

 

Insurance Expert Curtis M. Pearsall to head up the AgentsofAmerica.ORG Learning Center

Nationally renowned Insurance Agents E&O Expert, Curt Pearsall to become Executive Director of the AOA Learning Center. The AOA Learning Center will be converting their existing education material into a variety of media to help agents manage their E&O exposure.

 

Insurance Agents Claims on the Rise

See Dan Meyer video on Wrin.tv, also download Dan's Chapter 1 "Insurance Producer Licensing" below

 

 

Defense attorney Dan Meyer with the O'Hagan law firm, discussed the growing trend in insurance agents professional liability, and the chapter he wrote on  licensing for a new eBook on how  to avoid E&O claims

 

 

 
 
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

 

 

 

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

 

Table of Contents   

 

 

Illinois Appellate Court Declines to Extend Primary Carrier's Duty of Good Faith Owed to Excess Carrier Beyond Duty to Settle

 

Would You Like to Register to Vote? Should This Question Appear on ACA's New Federal Health Insurance Application?

 

Michigan Bars Employers from Demanding Private Social Media Information from Applicants, Employees

 

Illinois Appellate Court Endorses All Sums Allocation Rule for Asbestos Bodily Injury Losses under Excess and Umbrella Insurers

  

 

 

 

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:
 
       

  

o   The IUMI reported on the impact of Sandy and the Costa Concordia on the marine market.

o   The National Academy of Sciences suggested the NFIP adopt a modern, risk-based approach to flood exposure analysis and risk management.

o   With Iranian sanctions in place, India considered its own reinsurance fund to cover refiners using Iranian oil.

o   The European Parliament suggested the EU help reduce poverty by supporting social insurance systems in developing nations.

o   And EIOPA's Board of Supervisors met to review Solvency II guidelines

  

 

Click on the link above to watch the fully edited program from our On Demand Library.

 

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 Marketing Expert George Nordhaus "Monday Morning" on Are Laptops Dying?...Some Folks Think so...Also, Check out George's article below on "Can Independent Agencies Win the Quoting Game?"
 

 

 

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

Publisher

 

Insurance Expert Curtis M. Pearsall to head up the AgentsofAmerica.ORG Learning Center

 

Nationally renowned Insurance Agents E&O Expert, Curt Pearsall to become Executive Director of the AOA Learning Center. The AOA Learning Center will be converting their existing education material into a variety of media to help agents manage their E&O exposure.

 

  

Insurance Agents Claims on the Rise

See Dan Meyer video on Wrin.tv, also download Dan's Chapter 1 "Insurance Producer Licensing" below

 

 

Defense attorney Dan Meyer with the O'Hagan law firm, discussed the growing trend in insurance agents professional liability, and the chapter he wrote on  licensing for a new eBook on how  to avoid E&O claims

 

 

 
 
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

 

 

 

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

 

Table of Contents   

 

 

Illinois Appellate Court Declines to Extend Primary Carrier's Duty of Good Faith Owed to Excess Carrier Beyond Duty to Settle

 

Would You Like to Register to Vote? Should This Question Appear on ACA's New Federal Health Insurance Application?

 

Michigan Bars Employers from Demanding Private Social Media Information from Applicants, Employees

 

Illinois Appellate Court Endorses All Sums Allocation Rule for Asbestos Bodily Injury Losses under Excess and Umbrella Insurers

  

 

 

 

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:
 
       

  

o   The IUMI reported on the impact of Sandy and the Costa Concordia on the marine market.

o   The National Academy of Sciences suggested the NFIP adopt a modern, risk-based approach to flood exposure analysis and risk management.

o   With Iranian sanctions in place, India considered its own reinsurance fund to cover refiners using Iranian oil.

o   The European Parliament suggested the EU help reduce poverty by supporting social insurance systems in developing nations.

o   And EIOPA's Board of Supervisors met to review Solvency II guidelines

       

  

 

       CVS Caremark asked employees to provide health information as part of a wellness program or pay more for coverage.  Aon Hewitt says consumers would prefer Cash or a Gift Care as incentive for joining a Health and Wellness Program.  And while Towers Watson said most employers do plan to Financial rewards for participation a growing number are considering penalties for not participating. 

 

       The Insurance Research Council says a surprising number of Americans think it's ok to inflate insurance claim and doing so hurts no one

 

       Rick Betterley comments on cyber-insurance policy what's covered and what's not.  

 

       

  

 

       The Ethisphere Institute named its list of the World's Most Ethical Companies 10 are insurance companies

 

  

 

Click on the link above to watch the fully edited program from our On Demand Library.

 

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 Marketing Expert George Nordhaus "Monday Morning" on Are Laptops Dying?...Some Folks Think so...Also, Check out George's article below on "Can Independent Agencies Win the Quoting Game?"
 

 

 

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

Publisher


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AOA Tips, Views, News & More

 

The Do's and Don'ts of Representing Insurance Brokers and Agents

By Marc J. Zimet of Jampol Zimet LLP

 

Insurance brokers and agents are at the center of a tripartite relationship and thus owe legal duties in two "directions" - to their client (the insured) and to the underwriter (the insurer.) When the interests of the insured and insurer conflict, either or both of them may blame the broker. [1] A broker may be sued by the insurer as the agent of the insured, or by the insured as the agent of the insurer, or as both by a third party. Generally, a broker's defense strategy is to promote the idea that the broker's role in the conflict was peripheral, keeping responsibility focused on the principals.

Cooperating with the Insured

In California, the broker is usually considered the agent of the insured. Thus, the broker's interest is aligned with the insured's and a united front is beneficial, in which both broker and insured argue that the broker gave the insurer all material information necessary to secure the desired coverage. This strategy is particularly prudent for the broker in coverage disputes, since most juries are more sympathetic to insured's than to insurers. Even if the insured alleges that the broker failed to procure the coverage requested by the insured, the insured and broker may strategically align against the insurer, in some situations, to file a cause of action for reformation of the insurance policy based on mistake of fact. Furthermore, it is generally in the broker's best interests to agree to a tolling agreement with the insured in exchange for cooperation in discovery.

Defending Against Actions by the Insurer

Brokers must frequently contend with indemnity and other actions brought by insurers. The first line of defense against such claims is to show that the broker did not have an agency agreement with the insurer and, thus, did not have authority to bind the insurer. Without a specific contract, the agency relationship extends only to collecting the premium and delivering the policy.

If an insurer alleges that the broker failed to supply correct and complete information on the risk, the broker may counter by alleging that even if it did not supply correct and complete information, the insurer still would have agreed to underwrite the risk. If the broker has had a long course of dealing with the insurer, the broker could allege that the insurer over the years had been willing to allow the broker to supply required additional information even after coverage had been provided, thus forming the basis of an estoppel argument. Further, when the broker can show that the insurer had a practice of issuing policies with incomplete information supplied by the broker, the broker may be able to establish that the insurer ratified the broker's actions, adopting them as the insurer's own.

An attorney's tools in defending insurance brokers and agents are:

  • Recognizing the economic realities and incentives of the situation from the perspective of each player and mapping out a litigation strategy accordingly.
  • Attempting to induce the principals to settle, for example by an offer that reduces the difference between their demands and offers.
  • Contributing to a settlement package offered by the insurer to the insured, if the broker faces liability exposure to the insured. Such a contribution will nearly always be easier and cheaper for the broker than defending against the insured's claims.
  • Entering into a tolling agreement with the insured, when it is to the broker's advantage to completely align with the insured's interests.
  • Entering into a "side agreement" with the insurer as to apportionment of any settlement or adverse judgment.
  • Tendering the defense to the insurer if the broker has an agency agreement with that insurer.

In any event, when an insurance broker is named as a defendant in litigation, the experience can be very difficult, both financially and emotionally. Even if the broker carries his or her own E&O insurance coverage, most policies have relatively high deductibles and consent clauses. As defense attorneys, we must be aware of the difficulties our clients face and be prepared to help them to the full extent of our abilities.


[1] Hereafter, for ease of reading, brokers and agents will be referred to jointly by the word "broker".

For additional information, contact Marc at mzimet@jampolzimet.com or (213) 689-8500


 

Still Learning

By George Nordhaus ~ Chairman of Agenciesonline.biz

 

Can independent agencies win the quoting game?

 

...that is the question every agency must face, because of the "GEICO Effect"

  

As independent agents we always touted the fact that while we were not necessarily the least expensive purveyors of insurance, we did bring more than enough additional services (including total account selling) to the table to make up for a few bucks of premium one way or the other.

For decades (certainly prior to the Internet's effectiveness) we survived by the "we do it better" principle.

  

Many agents I know still won't quote prices or coverage unless they are face-to- face with the prospect. They feel that quoting is degrading, reflects on their agency's integrity, and brings them down to the level of selling commodities.

 

                                    And yet...and yet...

 

Like it or not, the GEICO's, Progressives and many other "direct" sellers have changed the rules of the game by spending billions of dollars on the "we can save you money" concept.

  

And many, indeed most agencies have caved in and have entered the quoting fray. Those agency principals feel, probably rightly, that "if we can't beat them we must join them"...at least for personal lines coverages such as auto and home insurance.

  

All sorts of quoting mechanisms are appearing for online use. Automatic comparative rating is probably the most direct of the systems...but the vast majority of agencies seem to use the "give us your basic information and we'll call you back" procedure.

An ideal system gives the prospect various options:

 

1.      The prospect fills in all the required information, and clicks on "submit". The agency gets the request and immediately sets the quoting procedure into action.

       NOTE:  Here's where the old "double-entry" bugaboo rears its ugly head. But rest assured that new programs now under development will allow this information to be entered, automatically, into your agency management system.

 

2.     The prospect indicates he/she wants help in filling out the quote forms, and the CSR/producer or whoeverin the agency is responsible for the sale gets on the phone and fills in the information.

It is constantly being proven that having the prospect SEE the questions (via the Internet) while providing the answers is more effective, efficient and quicker than doing it 'blindly"

3.     Or perhaps the prospect doesn't have Internet access...but still wants a quote. The CSR, et al, will use the same "smart form" questionnaire, automatically building the basic information that will allow for a variety of quotes on various coverage's.

 

                         The medium is the message - ACTION

If you do have to quote in order to compete with the Geckos (if you can't join 'em, beat 'em) of the world, there are two cardinal rules to follow:

  

1.      Tell the world that you can quote with the best of them.

This communications activity begins with your employees. They have to understand how vital you have decided quoting is to your future, that quoting is a part of your marketing efforts, and that quoting CAN help the agency grow if done correctly the first time.

2.     Start thinking of a request for quote as an invitation for you to sell the entire account. Use the quoting request as an opportunity to tell the full story of your agency services.

Instill in your staff that a request for quote is the best thing that can happen to total-account selling. Even a quote request for only one policy (auto insurance, for example) opens the door for a full account quote...saving the customer money in the long run and becoming a profitable, long-term client for the agency. Oh yes, and don't forget to use this:  "Mr. Prospect, unlike the insurers you see advertising on the Internet, TV, et al, we assign real live, local customer service representatives to your account, and automatically review your needs each year."

 

                    Is quoting here to stay?

 

Probably!

But it could be the best thing that has happened to your agency...especially letting the Internet marketers pay for advertising the insurance concepts.

And that's not all bad.

 

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

 

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The Social Connection Social Media Tricks & Tips

By Cynthia Cavoto of Firebrand Social Media

 

Promoting Your Business On Myspace

 

The question of whether or not MySpace can be used to promote a business is certainly debatable. MySpace is intended to be a non-commercial website by nature but there is a different between blatant commercialization and mentioning a product or service you offer and providing a link as a useful resource to visitors of your website. This article will take a look at the opportunities to promote a business on MySpace by providing information on determining whether or not your method of business promotion is permitted on MySpace and information on how to promote your business without being accused of spamming MySpace.

 

Review the Terms of Service Carefully

 

The terms of service provided by MySpace can provide the greatest insight into whether or not there are ways to promote your business through MySpace. Members of MySpace are asked to review the terms of service before becoming a member. Each member should carefully read through this entire agreement to come to a better understanding of which types of activities are allowed on MySpace as well as which types of activities are prohibited.

 

One of the stipulations of the MySpace reads as follows, "Non-commercial Use by Members. The MySpace Services are for the personal use of Members only and may not be used in connection with any commercial endeavors except those that are specifically endorsed or approved by MySpace.com. Illegal and/or unauthorized use of the MySpace Services, including collecting usernames and/or email addresses of Members by electronic or other means for the purpose of sending unsolicited email or unauthorized framing of or linking to the MySpace Website is prohibited. Commercial advertisements, affiliate links, and other forms of solicitation may be removed from Member profiles without notice and may result in termination of Membership privileges. Appropriate legal action will be taken for any illegal or unauthorized use of the MySpace Services."

 

This section of the terms of service stipulates that MySpace is created for non-commercial use unless Myspace.com has approved the use of a member's website for commercial purposes. Therefore care should be taken when designing a MySpace website to ensure the website will not be deemed to be a commercial website by MySpace administrators.

 

When In Doubt, Ask Questions

 

Those who are unsure of whether or not their MySpace website, as they have designed it, will be considered a commercial website should consult with MySpace administrators. This step is not necessary unless the member is concerned their content will be perceived as being commercial. Reviewing the terms of use agreement can provide a great deal of information but some users may still be concerned with the possibility that their website will be penalized if the administrators deem it to be commercial in nature.

 

Contacting MySpace is a fairly simple process. Members can use the, "Contact MySpace" link from the MySpace.com homepage. The contact page enables members to select a subject and a subtopic and submit this information. Once this is done MySpace provides some preliminary information which may be relevant. If this information is not useful to the member they can email a detailed request to MySpace.

 

Avoid Spamming at All Costs

 

If you determine there is an opportunity for you to promote your business through MySpace, care should be taken to ensure the promotion does not cross the line into spam. Spamming is taken very seriously by the MySpace administrators and it may result in links or content being deleted or the privileges of membership may be revoked when a member is found to be guilty of spamming.

 

Links to your ecommerce website integrated into your MySpace website isn't considered spamming. Depending on how it is used it may not even be considered advertising, and therefore prohibited, by MySpace administrators. However, visiting other MySpace websites and placing a link to your ecommerce website on each website you visit would be considered spam. These individuals may or may not be interested in the website you provide but even if they are interested sending these links to numerous websites unsolicited is often considered to be spam.

 

This month's EBook is entitled, "57 Email List Building Tips Part 20"

 

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.

For more information, contact Cynthia at 

 

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Articles 

A1

Illinois Appellate Court Declines to Extend Primary Carrier's Duty of Good Faith Owed to Excess Carrier Beyond Duty to Settle

  

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                                                         Firebrand Social Media   

             

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a3

 


 
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a4

Illinois Appellate Court Endorses All Sums Allocation Rule for Asbestos Bodily Injury Losses under Excess and Umbrella Insurers

By Carl Pernicone, Esq., Loren Cohen, Esq. & Jacob Graham, Esq. of Wilson Elser Moskowitz Edelman & Dicker LLP

 

093240-B that excess and umbrella insurers covering asbestos-related injury claims are jointly and severally liable under an "all sums" allocation method, refusing to adopt the insurers' argument that a prot rata time-on-the-risk approach applies. 

 

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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