Ask Regina

Q. How does an employer check to see if a potential employee has filed Workers’ reginaCompensation claims in the past?

A. According to the Texas Department of Insurance – Division of Workers’ Compensation website, the following applies:

If you have workers’ compensation insurance coverage, you can file a Prospective Employment Authorization and Certification (DWC Form-156) with TDI-DWC to obtain general information about previous work-related injuries. Information will only be provided if the applicant has had two or more general injuries in the preceding five years. To obtain this information, you must have written permission from the applicant prior to the request and if the employee is covered by the Americans With Disabilities Act, the employer must have made a conditional offer of employment.

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Which Commercial Clients Need Pollution Coverage?

We all know which clients need pollution coverage, right? They have smoke stacks puffing away all day. It’s the oil refineries and gas stations, the truckers who haul hazardous loads and the manufacturing plants. It’s the coal-powered electric plant and the pulp mill.

It’s true these businesses need pollution coverage. But other, less conspicuous commercial clients need it, too. Swiss Re Corporate Solutions has fielded several errors & omissions claims against agencies where a client’s commercial general liability carrier denied a claim based on the pollution exclusion.

One client installed spray foam insulation in a building while other people were present. Spray foam emits fumes during installation, which can allegedly cause long-term medical conditions.

Or consider a new medical condition called “popcorn lung,” associated with workers who are exposed to the powdered butter flavoring used in microwave popcorn. Injured workers at these packaging plants have received multimillion-dollar awards.

While Swiss Re’s insureds have yet to see a health-related herbicide claim, one claim involved a landscape company spraying the lawn of an apartment complex with herbicide instead of fertilizer, accidentally killing the lawn. The liability carrier denied the claim under the pollution exclusion on the landscape company’s policy, and the landscape company made a claim against their insurance agent.

As the population grows and urban sprawl picks up steam, more people are likely to complain about the business practices of their neighbors. In one case, a gun range was sued for noise pollution due to all of the shooting. In another, a rock quarry, which cut stone for commercial and residential use, faced a suit from angry neighbors complaining about the odor emitted during the process.

The pollution exclusion can even come into play during something as seemingly innocent as a barbeque picnic held for employees. In one instance, while cleaning up after the meal, employees hosed down the barbeque grill. The contents of the grill ended up in a stream, and the business was sued for contamination.

In all these scenarios, the insurance agent faced an E&O claim when the business in question had no pollution coverage.

Bottom line: Offer pollution coverage to every commercial client, and document the conversation. It’ll go a long way in defending your agency in a subsequent suit—and it will also qualify your agency for Westport’s deductible elimination in the event that your agency faces a claim for not placing pollution coverage.

Call IIAT’s Gunnar Kephart at 800-880-7428 to learn how IIAT Advantage E&O can help protect your business against E&O claims.

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FOX News Channel anchor will discuss current political landscape at Big “I” Legislative Conference.


FOX News Channel’s Bret Baier be will be a featured speaker at the annual Big “I” Legislative Conference.

On Friday, April 20, Big “I” President & CEO Bob Rusbuldt will sit down with FOX News Channel’s Bret Baier during the General Session Breakfast to discuss the current political landscape and how it affects issues important to independent agents and brokers. Baier is FOX News Channel’s chief political anchor and anchor of “Special Report with Bret Baier,” the top-rated cable news program in its timeslot and consistently one of the top five shows in cable news. Based in Washington, D.C., he joined the network in 1998 as the first reporter in the Atlanta bureau.

“With the current climate in Washington D.C. anything but politics as usual, Bret Baier will be able to offer insights on the inner workings of Washington,” says Bob Rusbuldt, Big “I” president & CEO. “I look forward to talking with him about issues such as health care, taxes, insurance regulation and of course major national policy and political issues of the day.”

The Big “I” Legislative Conference is the insurance industry’s best-attended, most effective legislative meeting. This year’s event will take place April 18-20 at the Grand Hyatt Washington in Washington, D.C.

The Legislative Conference is an opportunity for Big “I” members to discuss important issues with their congressional representatives. Top issues this year include the National Flood Insurance Program, health care, insurance regulatory reform and the Federal Crop Insurance Program.

Learn more.

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A Happy Distribution Force Equals Increased Carrier Profitability

According to an inaugural J.D. Power Independent Insurance Agents Satisfaction happy-emoji-smaller-300x300Study developed in alliance with the Big “I”, carriers with the highest satisfaction rate among agents are able to offer competitive agent commission while maintaining expense ratio discipline—and are ultimately more profitable.

A recent article in Independent Agent magazine explores the study findings and points out that, overall, property-casualty carriers are falling short of agent expectations. The new study shows that among agents, overall satisfaction with carriers is just 696 on a 1,000-point scale for personal lines and 686 for commercial lines—among the lowest scores for business-to-business relationships across all industries in J.D. Power satisfaction studies.

“Consumers tend to be fairly happy with their p-c carrier, and the fact that agents were not was the biggest surprise of the study,” says Greg Hoeg, vice president, insurance practice at J.D. Power. “Or maybe it’s not a not a surprise, because agents are responsible for their clients, and they expect carriers to honor their commitment. It’s a credit to agents that they are being vigilant and ultimately a good filter in improving the end client’s satisfaction with carriers.”

The study examined many topics from the agent perspective, including the quoting/underwriting process, claims process, policy servicing, communications, commissions management, product and service offerings, and insurer risk appetite.

Read the article in Independent Agent.


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Avoiding Operational Pitfalls: An ‘Every Day’ Plan

Running a successful insurance agency is akin to putting together a winning sports team. You want to get the best athletes available and ensure that those players perform at a high level by implementing a well-conceived regime of skill development. But athletic prowess, by itself, is not enough. Nothing is more frustrating than seeing an undisciplined player get penalized during a game for failing to follow an established rule. In the sports world, these errors routinely end up changing the outcome of the game.

Likewise, in the insurance arena an agency can have great producers and a solid marketing plan in place, but if key agency processes aren’t being followed, the resulting E&O claim can be quite painful.

Consider the following:

An agency has specific procedures in place for the issuance of Certificate of Insurances (“COI”). Its manual provides that, if a COI is given for an additional insured, the agency must make sure the carrier is notified and that an endorsement is issued for the certificate holder. A well respected CSR is faced with multiple COI requests and, due to a heavy workload, delays notifying the carrier of one of the issued COIs, then forgets to follow up. A lawsuit is filed against the certificate holder after an accident on a job site. The certificate holder demands a defense from the insured’s GL carrier, but the carrier declines to defend or indemnify because the certificate holder was not an insured. A claim is then made against the agency. Total Cost: $180,000

An agency is contacted by a customer for homeowners coverage. The agency’s manual requires that all files must have a completed application. The producer inputs information into the carrier’s web portal for a quote with a plan to update the inputted information as needed upon receipt of the application and the policy is bound. Several months later a fire occurs and the agency cannot locate the application. The carrier pays the claim but then sues the agency on the theory that the agency failed to follow its own guidelines by not getting an application, insisting that it never would have written the policy had the correct information been relayed. At deposition, the producer has no choice but to admit that the procedure was to get the completed application before binding coverage and has no explanation as to the whereabouts of the missing application. Total Cost: $500,000

A producer procures coverage on multiple commercial properties for a longtime client. Subsequently, at the client’s request, the producer asks the carrier to remove property coverage for one of the properties as it was to be leased to a tenant. The agency has a “best practices manual” which states there should be a deletion/reduction request in writing, but the producer did not get one (in fact, very rarely did this producer get anything in writing). A subsequent vandalism claim occurs on the property, which the carrier denies due to the lack of coverage. The client then brings suit against the agency for the uncovered vandalism loss and maintains that the property was supposed to have coverage. Total Cost: $470,000

An agency procures commercial auto coverage for a client whose principal is “John Doe, Sr.” The agency manual specifies that an insured’s complete legal name must be entered on all applications. The application has a list of individuals who would be covered by a Broad Form Drive Other Car Endorsement. The producer lists “John Doe” as a covered person. Subsequently, the principal’s son and former employee, John Doe, Jr., is involved in a car accident. He seeks coverage under the policy on the theory that he was covered as “John Doe,” The court ultimately agrees that, due to the “ambiguity” as to who the intended insured was, the carrier must cover John Doe, Jr. The carrier pays its limits and then seeks this sum from the agency for causing the ambiguity. The carrier asserts that the agency violated its own guidelines in not using the legal name of the insured. Total Cost: More Than $1 Million

While mistakes happen (after all that is what insurance is for), there are simple ways an agency can reduce claims arising from procedural errors.

  • The “Four eye” approach. Before any policy is issued, have another staff member do a review to make sure nothing was missed. Yes, this can be time consuming but the payoff can be substantial.
  • Random audits. Select a number of files to review on a periodic basis. Do not limit this audit to new or junior employees. We often see that the more senior staff members are the ones who forget to follow the rules.
  • Periodic refresher sessions for all staff members. While these can be dry and boring, try to make them more appealing. Try a “game show” type of approach in which “contestants” get prizes for answering questions correctly. This can be a great team building exercise as well.
  • Checklists. Have a checklist that is used every time, by every staff member – NO EXCEPTIONS. There is nothing more demoralizing for a staff member to find out that the rules only apply to certain people.
  • Workload management. Make sure that staff members are not overloaded. It is much harder to follow expected procedures when overburdened. That’s when all of us start cutting corners.
  • Audits. Retain an outside auditor to come and review the agency from top to bottom. While these do come with a price tag, pull out the Declarations Page of your E&O policy and compare the cost of an audit to having to pay your deductible on even a single E&O claim, not to mention the premium increase that could result from a serious claim and the loss of customer confidence.

Procedural errors have proven to be just as costly as substantive mistakes, particularly when the plaintiff is able to highlight the agency’s failure to follow its own rules. In each of the examples above the agency had good procedures in place and the agency principals were confident that those processes were being followed. It was only when a penalty flag was thrown, i.e., an E&O claim came to light, that the agency realized its rule book was being ignored.

Legendary wrestling coach and Olympic gold medalist Dan Gable once offered a simple path to success: “If it’s important, do it every day.” He’s right. The ramifications of failure underscore the importance of having your team in full compliance with established agency procedures. Every day.

Ellen McCarthy is a vice president and claim expert at Swiss Re Corporate Solutions and teleworks out of the Overland Park, Kansas office.

Call IIAT’s Gunnar Kephart at 800-880-7428 to learn how IIAT Advantage E&O can help protect your business against E&O claims.

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Ask Regina

Q. We have an insured whose house has been foreclosed and the mortgage company has requested policy cancellation and the returned premium. Can they do this?

A. Yes, in the event of a foreclosure under a deed of trust, the lender may cancel an reginainsurance policy covering the foreclosed property and is entitled to any unearned premiums from the policy if the lender:

  1. credits the amount of the unearned premiums against any deficiency owed by the borrower; and
  2. delivers to the borrower any excess unearned premiums not credited against a deficiency
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Could Private Flood be a Smart Alternative to NFIP?

The NFIP was extended last week as part of broader government funding legislation.  The U.S. Senate and House of Representatives were able to pass a continuing resolution to fund the government through March 23. The funding measure includes a temporary NFIP reauthorization also through March 23 as deliberations over a longer-term reauthorization and reforms continue.

The private flood market has grown an estimated 25-30% during the last year and continues to grow as more agents contract to write private policies in preparation short-term NFIP extensions and lapses. In the event of any future disruptions to the NFIP, you can continue to write new business in the private flood market.

IIAT Advantage partner Assurant has a suite of Assurant Private Flood products for residential, condo and commercial properties.

Assurant Primary flood insurance is a solution for agents who are looking for simplicityassurant-tmb-thumbnail and great value. Here are some considerations to help you determine whether Assurance Primary Flood insurance is the best coverage for your customer’s home:

  • Your customer is looking for additional coverages or an alternative to the NFIP product at a competitive price.
  • Your customer prefers replacement cost coverage for their primary and/or secondary home
  • Your customer owns a secondary home and would like to avoid paying a surcharge.
  • Building values up to $800,000, contents limits up to $250,000
  • Food spoilage – $500
  • Flood Expense coverage – $10,000
  • Only 20 questions on the application, in lieu of the more than 50 for NFIP
  • No surcharge

Assurant is one of the charter members of the NFIP Write-Your-Own program and one of the first Fortune 500 companies to bring private flood products to the market. Assurance understands the complexities of the flood space and can help you navigate the changing landscape.

For more information about this program contact Polly Middlebrook at 512.493.2425 or

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Introducing New Life & Health CE Classes

IIAT is excited to announce two new life and health insurance CE classes:

  • Life Insurance in the U.S., and
  • Health Insurance in the U.S.

Life Insurance in the

It’s been said:  “A life worth living is a life worth insuring.” Studies show, however, that many people in the United States lack their own personal life insurance policy. IIAT’s Life Insurance in the U.S. class reviews the statistics associated with the ownership of life insurance, as well as the average amount of insurance in force per person.

Topics covered in Life Insurance in the U.S. include:

  • History of life insurance
  • Policy provisions
  • Ownership rights
  • Beneficiary designations
  • Death benefit settlement options
  • Participating vs. non-participate companies
  • Conditional receipts and more

Click on a link below to register. Each class costs $165 for members and is approved for 6 CE credits.

Austin – March 7 | Dallas – May 9 | Corpus Christi – June 5 | Houston – June 26 | San Antonio – Aug. 29 | Tyler – Oct. 23

Health Insurance in the U.S. health-insurance-banner-01a653a92c13f86e8abf34ff000050eb61

As the saying goes, the only two things we can count on are death and taxes. When it comes to death, very few people simply keel over and die instantly. Generally, they get sick or hurt, linger for a period of time, receiving care, hoping to extend their life.  This class explores the types of care available in the United States when it comes to Health.

Topics covered in Health Insurance in the U.S. include:

  • The roots of health insurance coverage
  • How medical Insurance evolved from its predecessor, work-related insurance
  • Types of insurance lines of coverage that fall under the Umbrella of Health Insurance (Disability, Long Term Care, Vision, Dental, Supplemental plans, Travel and Accident, Medicare Supplements, Medicare Advantage, Drug/Pharmacy plans, EAP’s and Mental Health programs)
  • Individual health policies comparing vs. group policies
  • FSA’s, HRA’s, and HSA’s
  • PPO’s, HMO’s and POS plans
  • Tax benefits associated with each type of policy
  • ACA,  its impact and its future

Click on a link below to register. Each class costs $165 for members and is approved for 6 CE credits.

Austin – March 8 | Dallas – May 10 | Corpus Christi – June 6 | Houston – June 27 | San Antonio – Aug. 30 | Tyler – Oct. 24

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Custom On-Hold Messages and Music for Independent Agents

An often-overlooked aspect of a busy insurance agency is what callers hear when theycoh-iiat-banner-180x150 are placed on hold on the phone system. Although it happens hidden from view, in a busy office ‘hold time’ is front-and-center and it directly impacts the customer experience.

Since 1982, Commercials On Hold has helped thousands of companies communicate valuable information to callers placed on hold (since 1994 for IIAT).  What makes Commercials on Hold’s form of marketing unique is they reach callers who already interested, are listening, and are about to speak to a staff member… so it’s a very effective way to show appreciation, define the business, raise awareness, and spark additional business and referrals.

Most insurance companies update their messages regularly with messages that cross-promote various insurance products and are written with a seasonal flair. Commercial on Hold’s copywriters are terrific resources for ideas and they will propose scripts that are written to help your customers and your business.

Service starts at just $29 per month with no long-term commitment, plus, receive a 20% IIAT first year discount as an incentive to try Commercials On Hold.  After the first year of service, receive a 10% IIAT discount, ongoing.

Please visit the Commercial on Hold IIAT member webpage to listen to examples, print order paperwork, request a free demo, or contact us now at 800-832-4653

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Agency M&A Pace Smashes More Records in 2017


As reported in Independent Agent magazine, insurance agency mergers & acquisitions broke all records last year, according to a new report from OPTIS Partners, an investment banking and financial firm that specializes in the insurance industry.

OPTIS reports a 31% increase in deal volume between 2016 and 2017, recording 461 transactions in 2016 compared to a whopping 604 last year. And the actual number of sales may be even greater, since many buyers and sellers do not report transactions, and some acquirers do not report small transactions.

The record-breaking numbers exceeded expectations, says Tim Cunningham, managing director of OPTIS. “It’s the perfect storm,” he says. “With all the boomers retiring, you’ve got a robust inventory—they’re thinking, ‘Valuations are never going to get higher.’ And you’ve got a very well-capitalized buy side group, which is being driven by the private equity-backed firms.”

Based on those numbers, if you’re a retirement-age principal looking to “get out” in three to five years, “I’d consider doing it today,” Cunningham suggests. On the other hand, “if your timeline is beyond five to seven years—you don’t need to sell, you’re not ready to sell and the agency is doing well—keep it.”

Why? It’s simple—if your agency is growing even a little bit year over year, “your top line and bottom line, in five to seven years, is going to be larger,” Cunningham points out. “Even if valuations pull back a little bit, and I think they will, you’re still better off.”

The top five buyers in 2017 were Acrisure (92 acquisitions), Hub International (49), Alera Group (38), Broadstreet Partners (32) and Gallagher (30)—all of which fall into OPTIS’s private equity/hybrid category except Gallagher, which is publicly owned.

And hungry names like those are willing to pay big sums for well-run firms, which creates a unique challenge for smaller independent agencies that are looking to grow through acquisition. “Unless you see a real strategic value to an acquisition, it’s very difficult to compete in the marketplace,” Cunningham cautions. “These larger firms have a lot more risk tolerance—if they muck up a deal, it doesn’t hurt them.”

On the seller side, privately owned brokerages completed 128 transactions from 105 unique buyers in 2017, up slightly from 114 acquisitions and 87 unique buyers the previous year. The OPTIS report tracks agencies that sell primarily property-casualty insurance; agencies that sell both p-c and employee benefits; and agencies that sell primarily employee benefits. But p-c agencies dominated the seller list in 2017, accounting for nearly half of total deals.

Moving forward, is the staggering pace of M&As likely to continue? In the short term, “I don’t think we’re going to see as many this year,” Cunningham predicts. “We’re going to see a lot—it’s a pretty frothy climate—but I think there will be a tiny pullback.”

And in the long term? “I don’t have a 10- or 12-year crystal ball, but I think the only thing that would slow it down would be some external catastrophe—a global event or a crash like we saw in ’08-09,” Cunningham says. “Capital markets like our business because the cash flow is reasonably predictable. It’s a pretty simple business, it’s a business they can understand and, truth be known, it’s a fairly forgiving business as well.”

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