|Welcome to "@AAMGA"|
A Newsletter Exclusively for AAMGA Members
In This Issue
2013 Annual Meeting Update
Registration Now Open for AAMGA Automation Conference
New Classes Scheduled for University East
Hull & Co. Amicus Brief Update
"Faulty Workmanship" Law Held Unconstitutional in SC
Distinguished Chair Student Research Contest
AAMGA Thanks the Troops
Welcome to our New Members
AAMGA History Books Make a Great Holiday Gift
R. C. Chaffin
A big thank you to those of you who participated in our "Letters to the Troops" project this year. I am excited and proud to let you know that the AAMGA members sent 1,643 letters to our troops around the world. So many of you involved your staff, your family and friends and your communities in this worthwhile effort and I thank you very much!
Since my last message, many things have happened in our country. A Presidential election has come and gone and a late season storm named Sandy wreaked havoc in the Northeast, affecting many members of our AAMGA family. From all reports, all AAMGA members emerged safe, while a few had damage to their homes and all will be dealing with the aftermath of Sandy in the months ahead.
My International Seminar to the UK was a great success and the 12 couples who attended had a great time together in London and in the English countryside. A big thank you to Peter Barrett and Sue Kent of Bell+Clements for their gracious hospitality and help in planning our trip. Thanks also to Peter Montanaro, Head of Delegated Authorities at Lloyd's and Hank Watkins, President of Lloyd's America for setting up the meetings with Richard Ward, CEO of Lloyd's , Tom Bolt, Lloyd's Director of Performance Management, Phil Godwin, Lloyd's Claims, and Trevor Maynard, Head of Exposure Management for Lloyd's.
The AAMGA Board of Directors recently returned from the Fall Board Meeting in New Orleans and had the opportunity to tour the facilities of our 2013 Annual Meeting. Suzanne, Martha Heinze and I did the official "site visit" for next year's meeting. You will be receiving all the exciting details very soon so start making your plans now to attend. Please save the dates of May 19-22, 2013 for the 87th Annual AAMGA Meeting at the Marriott Hotel in New Orleans, LA.
This will be the last newsletter of 2012 so from the Chaffin Family to your family, we wish you all Happy Holidays and a very Happy, Healthy and Prosperous New Year!
AAMGA Annual Meeting Update
The AAMGA will be celebrating its 87th annual meeting May 19-22, 2013 at the Marriott Hotel in New Orleans, Louisiana. Registration materials will be mailed to all members after January 1, 2013.
The Association will be acknowledging the "Commitment to Service" of the men and women in our armed forces, as well as the contributions made by AAMGA members in service to their local communities and their nation, as well as in the services that are part of the delegated authorities entrusted to them. All will be honored as part of the AAMGA's ceremonies during the course of the meeting. If you or your company are engaged in any of these types of service activities, please provide the details and any photographs to AAMGA Headquarters by sending an e-mail to firstname.lastname@example.org
.Opening Reception to take Place at World War II Museum - Sunday, May 18, 2013
As a special treat for members and spouses, the AAMGA has arranged for the widely acclaimed Opening Reception of the Annual Meeting to take place at the new US Freedom Pavilion in the World War II Museum in New Orleans. The new Pavilion showcases many of the artifacts representing America's legendary production of airplanes, artillery, tanks and other equipment that helped fuel victory for the allies in World War II. Exhibited artifacts include a Boeing B-17 "Flying Fortress," an SBD Dauntless, a B-25 fuselage and the TBM Avenger. The expansive space also features elevated visitor "catwalks" for a dramatic view of the aircraft as well as LED screens, programmed with historical films and other presentations. For more details about the Museum, click here
.AAMGA University Golf Tournament Tees Off Sunday, May 18, 2013
Please also note in response to popular demand, and in order to allow more participants the opportunity to participate, the annual AAMGA University Golf Tournament has been moved to Sunday morning, May 18, 2013 at the TPC Louisiana Golf Course
This championship golf course, located just outside of New Orleans in Avondale, LA, opened in 2004, and was honored by Golf Digest magazine that year as the fourth-ranked best upscale public golf course. TPC Louisiana is a repeat honoree in GolfWeek magazine's list of "Best Courses You Can Play" (Golf Digest 2011 Top 100 public Golf Course). The golf course features a challenging landscape of lush wetlands and native cypress trees that lie just across the great Mississippi River. TPC Louisiana is part of the Audubon Golf Trail and a proud member of the Audubon Cooperative Sanctuary program.
The golf course, stretches over 250 acres of wetlands across along the Mississippi River delta. True to Pete Dye's style, the golf course features over 100 bunkers. TPC Louisiana boasts a series of short and compelling par-4 holes to balance. The five sets of tees, ranging from a fair 5,121 yard from the women's tees all the way back to the 7,400 PGA TOUR tees, offers golfers of all skill levels a great blend of challenge and playability.
More details about the golf tournament, as well as sponsorship opportunities, will be provided in the immediate future.AAMGA Annual Meeting Sponsorships are now available!
Click here to learn more.
Registration Now Open for AAMGA Automation Conference
The 2013 AAMGA Automation & Technology Conference "Bringing IT Together" moves to its West Coast venue at the Scottsdale Plaza Resort in Scottsdale, Arizona on March 2-5, 2013. Registration is now open. Please visit the landing page of the Conference by clicking here, to retrieve all of the details and additional information for attendees and vendors.
This year's Conference will include sessions focusing on:
Register today for this valuable Convention that will allow you to learn new solutions for everyday challenges, take advantage of new opportunities, meet with service providers and vendors who know and understand the wholesale insurance industry, as well as enjoying the chance to network with your colleagues.
- E&S Joint Working Group
- Disaster Recovery
- User Centric Cyber Security
- BYOD Implementation Strategy, and
- Various Panel Discussions
New Classes Scheduled for University East
The AAMGA's University East will be taking place March 14 & 15, 2013 on the campus of Georgia State University in Atlanta, GA. In conjunction with the AAMGA Distinguished Chair in Risk Management & Insurance, the AAMGA University will continue its charge of bringing relevant and important education and professional relevant classes to its members and, for the first time, will also allow members to invite their retail agents to accompany them to each of the sessions.
Classes will include:
- Introduction to the E & S Marketplace
- Coastal Underwriting
- Cyber Liability
- Introduction to Property Insurance
- The Effect of Catastrophes and Business Income & Ordinance or Law Claims
- Special Event & Event Cancellation Insurance
- Introduction to General Liability Insurance
- Intermediate Property Insurance: Specific Class Underwriting
- Program Business: Keys to Developing, Marketing & Managing
- Executive Panel
- Senior Leader Certificate Program: Strategic Imperatives for the Insurance Industry
- UFO Leadership Institute: Leading Your Enterprise Through Change
Determine which members of your staff and retail agents would best benefit from a networking with their respective colleagues and in elevating their competencies and skills in these important educational classes. Click here to register today.
Hull & Co. Amicus Brief Update
In a case that may have broad ranging implications for the industry, the law in California now has been established that a surplus lines wholesale insurance agent or broker - that did not have binding authority - may still have a duty to the insured policyholder, notwithstanding the fact that it had no contact, contract or ability to change the terms and conditions of the transaction.
The facts in the underlying claim involve a plaintiff who was the subject of a shooting at a bar that initially sued the facility and its security guard company, claiming that they should have prevented the shooting. After settling the claims with the security guard company pursuant to an assignment of rights and a covenant not to execute, the underlying plaintiff brought a lawsuit against the Burlington Insurance Company, claiming that the insurer had committed bad faith by denying coverage for the underlying lawsuit against the security guard company based on an assault and battery exclusion in the policy. The trial court, however, found the exclusion to be conspicuous and enforceable and granted summary judgment in favor of Burlington Insurance Company.
Another defendant in that lawsuit was Hull & Company, the surplus lines wholesale broker. The plaintiff brought suit against the broker claiming to have standing based upon the same assignment of rights. Plaintiff argued that the wholesale broker owed a duty of care to the security guard company to ensure that the insurance policy covered the underlying lawsuit against the security guard company, and claimed the wholesale broker breached its duty of care to the security guard company and, by extension to the plaintiff. While finding the insurance policy exclusion to be enforceable, the trial court, in response to the broker's summary judgment action, held that there was a triable issue of fact as to the duty of care of the wholesale broker, thus warranting a jury trial.
Hull & Company's writ of appeal of the trial court's ruling to the Superior Court of California was denied. It then petitioned the Court of Appeal of California, Second Appellate District, to consider the appeal, which was also rejected. A writ of appeal was then taken to the California Supreme Court. The AAMGA, along with the California Insurance Wholesalers Association, California Surplus Lines Association, Council of Insurance Agents & Brokers, and NAPSLO, joined together to support the petition the Supreme Court of California to hear the appeal. In order to support the cause, the AAMGA invited each of its California members to also send a letter to the Supreme Court. Over a dozen letters were sent.
The briefs submitted to the court on behalf of the industry noted, among other things, that the imposition of the tort duty on the wholesale insurance broker by the trial court conflicts with the vast majority of state jurisdictions that have considered the issue and improperly expands the scope of tort liability under California law. By increasing the risks wholesale insurance brokers face in serving California customers, the tort duty by the trial court will have the practical effect of limiting the availability and increasing the cost of insurance for California businesses. Moreover, this conflict subjects wholesale insurance brokers like Hull, a wholesale broker headquartered in Florida, to potentially unlimited liability whenever the wholesale broker acts on the instructions of a California retail insurance broker. The result also impedes the operation of a national wholesale insurance market to the detriment of California consumers and underscored the need for immediate review by the Court. Unfortunately, the court denied the petitions seeking the appeal thereby leaving the ruling of the trial court and duty imposed on surplus lines wholesale brokers in place for now.
The matter now reverts back for a full trial on the merits of the claim. AAMGA and its industry colleagues will continue to remain engaged by offering assistance to trial counsel in developing the Record to ensure all of the facts, customs and practices of the industry are properly submitted to the jury for consideration. Should efforts in the trial and appellate courts prove unsuccessful, the effort will then move to the state Legislature. We will continue to keep our members advised of further developments as they materialize.
The Winter Meeting of the National Association of Insurance Commissioners (NAIC) took place in National Harbor, Maryland, November 28-December 2, 2012. AAMGA Executive Director Bernie Heinze was in attendance at all meetings pertaining to the Wholesale Insurance Industry.
The representative professional trade associations met to discuss the current State of the marketplace. It was agreed that we are all settling into the post-Dodd/Frank era but uniformity issues and eligibility standards remain a primary issue. The long awaited report on insurance modernization is expected to be received from the Federal Insurance Office by the end of March, 2013. It is expected that the report will be critical of the State-based regulatory system of insurance. We expect 3 to 5 main points will form the crux of the report, and that Commissioner Michael McRaith will testify before the US House of Representatives on the points comprising the report after it has been issued.
One of the main issues for opportunity will include the Market Security risk, where one or more nonadmitted insurers or offshore entities seek to slip through the cracks of the NRRA's surplus lines insurer eligibility standards. For surplus lines insurers domiciled in the United States, the insured's Home State regulator must look to the insurer's domiciliary regulator for solvency regulation. For alien nonadmitted insurers, the Home State must rely on the NAIC's International Insurance Department (IID) regarding alien insurer eligibility to ensure Home State consumers.
Prior to enactment of the NRRA, the major surplus lines states separately reviewed the surplus lines insurer's financial condition and reputation to protect their consumers from the risk of unscrupulous nonadmitted insurers. Industry trade associations and state stamping offices as well as individual industry leaders also served as an informal, but real-time network to flag potential market problems for regulators.
The group agreed surplus lines market security under the NRRA needs to be raised with the NAIC and State regulators to develop a consensus as to the appropriate market surveillance standards and procedures to protect the surplus lines market consistent with the provisions of the NRRA. Discussions will take place with appropriate NAIC staff to clarify the specific IID process, how staff members are working with representatives in the US Territories and, particularly, whether there are concerns regarding possible regulatory gaps allowing unscrupulous insurers into the market from offshore locations, and to establish uniformity/eligibility and market security protocols.
The NAIC has already established a Working Group to liaise with industry in regard to better understanding the current state of eligibility standards, and the manner in which the individual states are implementing them. There appears to be a disparity among the various states compared to the manner in which the NRRA envisioned these standards to be uniformly applied. The Working Group has sent out a survey to the states, and we will look forward to working with them further after the responses have been received.
Finally, the Surplus Lines Task Force of the NAIC conducted a brief hearing during the NAIC conference. Among other things, the Task Force also considered a letter from the Securities & Insurance Licensing Association (SILA) with recommendations in regard to a proposal that would seek to reopen various provisions of the Nonadmitted Insurance Multistate Agreement (NIMA), including, developing a uniform definition of "principal place of business"; developing a model allocation arrangement that could be adopted by states that both do and do not participate in a compact; developing a standard schedule for tax reporting and payments; including the definition of exempt commercial purchasers that would, if adopted, replace rather than preempt alternative state definitions; develop a model export list for states to adopt and include a model law and eligibility requirements as established by the NRRA. We will be engaging with SILA to discuss the various issues and opportunities that are part of their proposal.
Finally, Louisiana Insurance Commissioner Jim Donelon was elected as 2013 President of the NAIC at the conclusion of its 2012 Fall National Meeting. Commissioner Donelon succeeds Florida Insurance Commissioner Kevin McCarty, who served as 2012 NAIC President. Click here for an audio interview with Commissioner Donelon, in which he outlines his priorities for the coming year.
The other 2013 NAIC officers are:
- President: Louisiana Insurance Commissioner Jim Donelon
- President-Elect: North Dakota Insurance Commissioner Adam Hamm
- Vice President: Montana State Auditor and Commissioner of Securities and Insurance Monica J. Lindeen
- Secretary-Treasurer: Pennsylvania Insurance Commissioner Michael F. Consedine
The newly elected officers will assume their duties on January 1, 2013.
"Faulty Workmanship" Law Held Unconstitutional in SC
The AAMGA Governmental Affairs Committee has been following developments over the last several years in regard to various state courts and legislatures interpreting Commercial General Liability insurance policies as including property damage resulting from "faulty workmanship" as an insured peril. The argument advanced has been that the faulty workmanship of a contractor will constitute an "occurrence" that is usually defined in the policy as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
In the case of Crossmann Communities of North Carolina, Inc., Beazer Homes Investment Corp., and Daniel Rogers v. Harleysville Mutual Insurance Company, Cincinnati Insurance Company, and Associated Insurors, Inc., of Myrtle Beach, decided by the Supreme Court of South Carolina on January 7, 2011, the Court held that the facts of the case showed "that a CGL policy was not intended to provide coverage under these circumstances. To provide coverage under these circumstances would transform the CGL policy into a performance bond."
The South Carolina the Legislature acted to reverse this ruling by introducing legislation 9 days after the Supreme Court released its ruling in the form of Senate Bill 431. Hearings were held in front of the State Senate, at which AAMGA Past President, Francis Johnson of Johnson & Johnson in Charleston, South Carolina testified on behalf of the industry. The testimony advanced various arguments against the proposed legislation, including the fact that the retroactive provision would be unconstitutional, since underwriters would have been evaluating a risk according to the law in existence at the time that the contract was formed, and would have reasonably interpreted the CGL policy exclusion for faulty workmanship and not pricing a risk in accordance with the proposed new exposure based upon the Legislature's interpretation of the contract.
Notwithstanding the foregoing, the Legislature went forward and passed an interpretation of the CGL policy that would include faulty workmanship as an insured peril. It also went one step further by holding that this interpretation would be retroactive to policies in force for claims that would be arising even before the law was enacted.
On November 21, 2012, the Supreme Court of South Carolina ruled that the retroactivity portion of the new law was, in fact, unconstitutional. The court held:"[w]hile we hold that it is within the legislature's power to statutorily define the meaning of "occurrence," it violates the
Contract Clause to apply this new definition retroactively as it substantially impairs pre-existing contracts by materially changing their terms."
The full version of the court's ruling can be viewed by going to the AAMGA Governmental Affairs web page. The Committee will continue to track the developments in regard to this issue as well as the activities of other state legislatures and courts as they arise in order to keep our members informed appropriately.
AAMGA Distinguished Chair Student Research Contest
Recently, over 300 professors throughout the country were notified of the AAMGA's Student Research Contest. Each year, the AAMGA University seeks research papers on property and casualty industry-related topics focused on the issues and dilemmas faced by organizations and individuals in the Wholesale or Excess and Surplus and/or Surplus Lines industry, specifically where the industry is headed in the future. Undergraduate Risk and Insurance Juniors, Seniors and Graduate Students are eligible to enter the call.
The goal with this project is to generate interest in the undergraduate and graduate levels of universities and share fresh insights, thereby improving the collective knowledge and success of the industry. A group of AAMGA members reviews all submissions and evaluate each on a numeric scale based on:
- Soundness of industry knowledge
- Usefulness to other members of our industry
- Innovation and creativity (as appropriate)
Two winning papers are selected from the submissions and the authors receive $1000 and all expenses paid to attend, with their professors, AAMGA Annual Meeting in May. While there, they are invited to discuss their findings during the Trade Convention. In addition, White Papers are released to numerous trade publications including Wholesale Insurance News.
AAMGA Thanks the Troops
In keeping with the 87th Annual Meeting theme of "A Commitment to Service," and last years' effort of sending letters of thanks to troops serving overseas during the Thanksgiving Holiday, the AAMGA Community came together again this year in collecting 1,643 letters that were sent to US troops serving overseas in order to be received at the time of the Thanksgiving holiday season.
In addition to AAMGA members sending letters from their employees, many also went out into the community to collect letters of thanks at local high school sporting events, and from elementary schools, and their network of vendors and retail producers. We read through each and every letter here at AAMGA Headquarters and found each of them to be extremely compelling and heartfelt. Nautilus Insurance Company even sent over 100 Patriotic Word Search games which were also included in the letters that were sent from their employees. One letter from a child of an AAMGA member employee wrote: "I hope you will come back home soon to your children, just like my Dad came home to me 3 weeks ago."
The letters were received from the following entities:
Thanks to Dianne Shelton, Corporate Trainer for Risk Placement Services/Corporate IT, in Atlanta, GA, for coordinating this effort on behalf of all of us at the AAMGA.
- SeaCoast Underwriters
- LoVullo Associates
- Genesee General Agency
- Tony Markel
- Forest Insurance Facilities
- E.A. Kelley Company
- Chalmers Insurance Group
- Allan M. Walker Insurance Agency
- Markel Southeast Region
- Mathison Insurance Partners
- MUSIC Insurance Company
- Arlington Roe & Co.
- AAMGA Headquarters Staff
- Specialty Insurance Managers
- Coastal Brokers Insurance Services
- Nautilus Insurance Company
- MacNeill Group
- Jackson Sumner & Associates
- Scottsdale Insurance Company
- Southerm Cross Underwrieters
- J.M. Wilson
- Evergreen Insurance managers
- AmWINS Transportation
- Westchester Insurance Associates, Inc.
- U.S. Risk Underwriters, Inc.
- Western World Insurance Group
- Markel Corporation
Welcome to our New Members!
The AAMGA Board of Directors has approved the membership applications of the following entities, whom we welcome into the AAMGA community:
Regional Insurance Services Company, LLC (RISCOM) of Shreveport, Louisiana
Michael P. Dugan, President (email@example.com)
Lauri B. Dugan, Executive Vice President
Business Services Members
Oak Street Funding of Carmel, Indiana
Rick Dennen (CEO)
Todd Gray (CFO)
Carissa Newton (CMO):firstname.lastname@example.org
Tharpe & Howell, LLP of Santa Barbara, California
Debby Murray: email@example.com
AAMGA History Books Make a Great Holiday Gift!
Every AAMGA member principal has received a free, hard bound copy of the Association's "Proud History-Bright Future: 1996-2012," history book earlier this year. We continue to receive requests for additional copies which can be ordered from AAMGA headquarters for $20 per book. Given this time of the holidays, sending a copy of the AAMGA's History Book would make a great gift. Consider sending the book as a present to a member of your staff, customers and others who will be interested in reading about the Association's rich history.
Please click here for the form to order additional copies in order to receive them before the holidays!
The AAMGA Wants to Hear From You!
You've heard from us - now it's your turn. We love feedback, so please let us know your thoughts on this issue of @AAMGA. Did you like it? Were the articles of interest and value to you? Is the newsletter too long, too short, or just about right? Do you have any suggestions on articles or issues you'd like to hear more about? We're already planning the next issues, so please let us incorporate your ideas. Just like the AAMGA and its members, @AAMGA is getting better all the time. Direct your comments or questions to Bernie Heinze, AAMGA Executive Director at firstname.lastname@example.org.
Happy Holidays from all of us at