E&O Weekly Prevention
Strategies for the Professional Agent
April 18, 2013


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Letter from the Editor


AgentsofAmerica.ORG Announces Plans to Offer Continuing Education

Curtis Pearsall, Executive Director of the AOA Learning Center, announced today that AOA has entered into an agreement with WebCE to develop in 18 states a continuing education program base upon the contents of "Book One" of, "A Comprehensive Guide to Avoiding E&O Claims". Complete details to follow in the next few months.



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   



The Affordable Care Act "Play or Pay" Requirements Take Effect January 1, 2014-Are You Ready?


Equitable Contribution and the Increased Burden of Proof for Non-Participating Insurers


Federal Paid Sick Time Law Re-Introduced in Congress


Indiana Appeals Court Finds Ambiguity in Umbrella Policy, Results in $2 Million in Coverage 


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:

       In the UK a new Consumer Insurance Act put the onus on carriers to collect customer information

       Reactions editor Michael Loney comments on Berkshire Hathaway "kicking it up a notch" and why       cyber insurance is not catching on in Europe

       Rick Betterley reported on the ability of cyber insurance to provide "Cloud Cover."

       Barry Zalma looked at "Crash for Cash" staged accidents

       Pamela Newman, President and CEO of the Newman Team at Aon discusses the changing role of the risk manager

       A.M. Best considered a world without TRIPRA and a federal backstop for terrorism coverage

       Renowned legal analyst Royal Oakes discussed expensive trends in "Institutional Discovery."

       We reviewed some of the ways professional sports teams and athletes insure BIG salaries in case of injury

       And Ty Sagalow looked ahead to hot new products at RIMS and a new Innovations in Insurance" series right here on WRIN.tv

Also listen to Insurance Marketing Expert George Nordhaus "Monday Morning" on The Ten most common mistakes producers made in 2012 & Do you know the difference between push and pull marketing? Also check out George new tip this month "Sometimes it's not WHAT you say; it's how you say it...a primer for agents below, Still Learning.


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


Financial Tip of the Month

By Mike Brady of the Brady Financial Group, LLC


Most agencies are benefiting from the recent firming up of the P&C market. Commercial lines increased pricing has led to a significant upward trend in agency organic growth. This has and will continue to have a positive impact on agency book values.

A few months back we spoke about learning from the financial difficulties the soft market highlighted for many agencies. Despite the positive trend in the P&C markets, take the time to ensure your agency income is diversified. Develop a strategic plan that helps your agency decrease vulnerability to P&C pricing. You might think about investing some of your new found profits in other lines of business such as personal lines or life and health. Now is the time to put your plan in action, this will help strengthen your agency and in the long run make you more attractive to potential suitors.

Contact Mike at mike@bradygrp.com or Visit Brady Financial Group. Phone (484) 653-6280.



The Value Of An Agent

By Mark H. Snow, CEO of SafelyFiled.com, LLC


"I loved your father.  I don't know what my family would have done is he hadn't made my husband buy that life insurance."


I heard that dozens of times at my father's wake and funeral.  He died in 2008, after well over 40 years as an independent insurance agent.  He had been retired for about 20 years when he died, but the families he helped still remembered him.


The phrase, "made my husband buy," struck me as a bit strange, especially since I heard it so many times at the funeral. Dad didn't hold a gun to anybody's head, but the phrase was somewhat accurate.  How did he actually "make them buy" the coverage they needed? 


He did two things that I think were critical to his success.  First, he was good and persistent salesman and he knew how to present the benefits of coverage and discover and address what he knew were the concerns of his clients.  He was also unquestionably honest, so he could look all his clients in the eyes and be proud of what he did and what he sold.


Second, he stayed close to his clients.  He knew them all by name, they knew him and they also knew that he would never try to sell something he didn't think was appropriate.  He also didn't just talk insurance with his clients.  Because he knew so many people, they often asked for his advice about unrelated matters, like who is a good lawyer, or what accountant can give the best advice about a tax problem.  He built up trust over the years.


I can remember going on calls with him.  His clients and prospects were genuinely happy to see him.  It was more like a social visit than a sales call.  (Maybe that's why he loved his work so much.)  But there were still times when his prospects couldn't seem to make up their minds.  In those circumstances, he would often look them in the eye and say, "Buy this.  Your family needs it."  Usually they signed the app. 


It's not so much that he "made them buy."  What he did was earn the trust of his clients and make the case for coverage so clear that it only made sense to buy the coverage.  His approach was to convince his clients that they would be making a big mistake by not buying.  Using his skills and talent, and by working hard and long hours, he saved families.  Selling insurance was the ideal career for him - helping friends and strangers, having fun, and making a decent living.


As a career, selling insurance is under attack.  First, there is the age-old salesman reputation problem.  Many clients don't like to think they are "being sold."  They don't mind being advised, but they don't like to think that they can be talked into buying something.  They are even reluctant to admit that they are influenced by advertisements and public relations campaigns.  But agents have lived with this for years and have done a good job of overcoming the problem.  My father was a master at that.


There is a new force, however, that is more ominous.  It is the intense, relentless and increasingly effective effort to take the agent out of the insurance distribution process.  To be fair, independent agents have competed against captive agency forces and direct writers for a long time, but what is now happening with the Internet takes this competition to a new level.  And the demographics are not in the agents' favor.  Young adults seem to prefer buying on line at 10 at night rather than dealing with an agent during working hours.


It would be a shame if Internet insurance purchases become the norm.  Who would tell a new father to buy life insurance, gently insist that he give it more than a casual thought and stay with him until he completes the application?  Who would advise a client to increase or decrease underlying liability limits to get the best deal on a combination of homeowner's and an umbrella?  Who would tell a business owner that he needs Employment Practices Liability Insurance, especially if the part-time female employees are reporting to an assistant manager that the agent knows is a bit creepy?


That advice is not going to come from the Internet.  The Internet doesn't care if a client buys or not.  It doesn't take the time to make sure the client understands the impact of a decision not to buy the insurance.  The Internet will never go to a funeral, look at the deceased and think, "I'm glad I got him to buy more coverage."  Only an insurance agent can do that.


It would be a loss for everyone, including clients and society in general, if agents, especially independent agents, let themselves be pushed aside by websites and software applications.  The question is not whether the agent will be replaced.  That probably won't happen.  But what might happen is worse - the agent being eliminated, and as a consequence, all the services and value he or she provides to clients could disappear.


This won't happen all at once.  It doesn't even have to happen at all.  But if agents stand by and do nothing, and more and more people accept buying (or not buying) insurance without an agent's advice and salesmanship, those potential clients might forget or never even realize how much a good agent can do for them.   They'll never appreciate the value of an agent.


So, how do you keep this from happening?  What can you do to compete against the Internet?  We'll discuss specifics in future articles.  (A quick peek into those future articles - use the Internet to your advantage.)  But for now, perhaps the first step is helping your staff appreciate that what they do is not just about commissions and quotas, but about helping families and businesses.  Help them understand that if they put together the proper insurance plan at a fair price, "making the client buy" by using their sales skills is something to be proud of.


You know what can happen if a client doesn't insure his risks.  You do what you can to protect your clients.  No website or computer program will to that.


You understand and you care. That's your value as an agent. 


For additional information, contact Mark at mark.snow@staff.safelyfiled.com or 888.686.3111. Or visit www.safelyfiled.com



stillStill Learning

By George Nordhaus ~ Chairman of Agenciesonline.biz


Sometimes it's not WHAT you say; it's how you say it...a primer for agents.


Having written and read, read and written, for lo, these many years, I have learned that the simpler the copy, the better it is read.


Two tips


1.The Twelve magic words.

The psychology department at Yale University has found the twelve most persuasive words in the English language: words which are simple, familiar and dramatic.

Use these words with prospects and you'll find yourself saving time and making money:


You                           Discovery

Money                       Results

Save                         Health

New                          Proven

Easy                         Guarantee

Love                         Free


2.The Flesch Reading Ease Formula

Ever think your writing might be difficult for your readers to understand? Here's how to measure it.The "Flesch test" is over 60 years old, but it is still valid.Dr. Rudolph Flesch developed this simple approach to assess the level of the reader. It is a standard reliability formula for assessing the difficulty of a reading written in English.Don't let the formula scare you...it just takes a few minutes to set into motion:


RE = 206.835 - (1.015 x ASL) - (84.6 x ASW.)


RE:  Readability Ease

ASL: = Average sentence length (i.e. the number of words divided by the number of sentences.)

ASW: = Average number of syllables per word (i.e. the number of syllables divided by the number of words.

The output is RE, a number ranging from 0 to 100.

A fifth grader can easily understand text that scores between 90.0 and 100.00. Scores between, say, 60 .0 and 70.0 are easily understood by 8th graders.  But scores from 30.0 down to 0.0 take a college graduate to "get the gist"


Here's your challenge

Check out the last letter, last article, yes, even your longer e-mails. Run the Flesch test. In fact, Microsoft will do it for you. Go to tools, options, spelling (spelling and auto correction).  Select the "check grammar with spelling...then "show readability statistics."If you are working in Word, click the Microsoft Office Button, then "Word options" Next steps are the same.

The obvious conclusion is that the best text should contain shorter sentences and words. (The score of 60-70 is considered acceptable). Of course, if all your readers are college level, you needn't worry.

But in reading for and about insurance in ads, marketing letters, your e-mails....etc., they're not.


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



By Rhonda D. Orin, Esq. & Daniel J. Healy, Esq. of Anderson Kill & Olick, P.C.

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Equitable contribution and the increased burden of proof for non-participating insurers

By Marc J. Zimet, Esq. of Jampol Zimet LLP


In St. Paul Mercury Insurance Co. v. Mountain West Farm Bureau Mutual Insurance Co. (2012) 210 Cal.App.4th 645, a California Appellate Court reaffirmed that in equitable contribution actions, once the plaintiff establishes the "potential for coverage," the defendant carries the burden to prove no actual coverage existed. While the case merely applies precedent, it presents a good opportunity to revisit the equitable contribution concept and the burden of proof in such an action.

Firebrand Social Media 




Gary Hammerstone et al. v. Indiana Insurance Co., (06A04-1211-PL-595 Court of Appeals of Indiana)


In 2009, plaintiff Gary Hammerstone injured his right hand and arm while trying to clear a clog in a Trac-Vac lawn and leaf vacuum he purchased in 2004. Mr. Hammerstone brought a lawsuit against the vacuum's manufacturer, Palmor Products Inc. (Palmor), and Palmor's distributors Northampton Farm Bureau Cooperative Association, and Canns-Bilco Distribution Inc. claiming that they negligently designed, manufactured, marketed, and distributed the vacuum.


Palmor provided notice of the underlying claim to its insurers, Consolidated Insurance Company (consolidated) who covered Palmor under a CGL policy, and to Indiana Insurance Company (Indiana Insurance) who covered Palmor under an umbrella policy. Consolidated accepted the defense, but Indiana Insurance reserved its right to disclaim coverage under the umbrella policy based upon the products completed operations hazard contained in the umbrella policy. Consolidated and Indiana Insurance commenced a declaratory judgment action, and subsequently moved for summary judgment against Palmor, Northampton and Canns-Bilco Distribution, which was granted by the trial court.

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