Primary Agent - October 2011 - PA Edition

PENNSYLVANIA

ALSO INTHISISSUE:_________________

New E&O and EthicsCourse On-Demand

G21881_DE-MD-PA_C1s_October2011Primary 9/19/11 2:09 PM Page 3

Workers’ compensation solutions for both loss control and claims control.(That’s using our head.)Reduce risk. Increase ROI. Keeping your clients’ employees healthy and on the jobtakes a lot of hard work. You need an experienced partner with a smart approach tocontrol and reduce workers’ compensation costs. With HM Workers’ Compensation,you get a dedicated, experienced service team focused on account management,loss control, aggressive claims management and return-to-work programs customizedto each client’s needs. We help you take better care of clients by identifying moreeffective ways to control and reduce workplace injuries. We also offer a uniquephysician-to-physician service that helps get people back to work faster – andhealthier. For more smart ideas, call 1-800-328-5433 or visit smarteranswersfaster.com.HM PRODUCT PORTFOLIO: STOP LOSS | WORKERS’ COMPENSATION | CRITICAL ILLNESS | ACCIDENT | DISABILITY INCOME | TERM LIFE | LIMITED BENEFIT MEDICALHM Workers' Compensation* 55%90%client retention99%technical & financialaccuracy in claims processingoverreduction in total claims cost

*Performance statistics based on Highmark Workers’ Compensation Operational Performance – 2010 Report, April 2011. Coverage is underwritten by Highmark Casualty Insurance Company, Pittsburgh, PA, or HM Casualty Insurance Company, Pittsburgh, PA. Highmark Casualty InsuranceCompany may provide certain administrative and customer support services. The coverage or service requested may not be available in all states.MTG-2197 7/11

Workers’ compensation solutions for both loss control and claims control.

(That’s using our head.)Reduce risk. Increase ROI. Keeping your clients’ employees healthy and on the job

takes a lot of hard work. You need an experienced partner with a smart approach to

control and reduce workers’ compensation costs. With HM Workers’ Compensation,

you get a dedicated, experienced service team focused on account management,

loss control, aggressive claims management and return-to-work programs customized

to each client’s needs. We help you take better care of clients by identifying more

effective ways to control and reduce workplace injuries. We also offer a unique

physician-to-physician service that helps get people back to work faster – and

healthier. For more smart ideas, call 1-800-328-5433 or visit smarteranswersfaster.com.

HM PRODUCT PORTFOLIO: STOP LOSS | WORKERS’ COMPENSATION | CRITICAL ILLNESS | ACCIDENT | DISABILITY INCOME | TERM LIFE | LIMITED BENEFIT MEDICAL

HM W

orkers' C

ompensation*

55%

90%

client retention99%

technical & financialaccuracy in claims processing

over

reduction in total claims cost

*Performance statistics based on Highmark Workers’ Compensation Operational Performance – 2010 Report, April 2011.

Coverage is underwritten by Highmark Casualty Insurance Company, Pittsburgh, PA, or HM Casualty Insurance Company, Pittsburgh, PA. Highmark Casualty InsuranceCompany may provide certain administrative and customer support services. The coverage or service requested may not be available in all states.

MTG-2197 7/11

G21383_12-17_September2011 8/16/11 7:24 PM Page 17

Valley Forge Service Branch: 800.333.3622 | Home Office: Des Moines, IA www.emcins.com© Copyright Employers Mutual Casualty Company 2011 All rights reserved

I’m celebrating our 100th year by planning for our next 100 years. Jason Bogart, CPCU, ARM, Vice President of Branch OperationsOur future will be marked by the relationships we forge with you—the independent insurance agents who represent us. You’re the reason we’ll continue to investigate new market opportunities. Why we’ll develop competitive products. Why we’ll maximize the use of new technologies. Why we’ll emphasize ongoing professional development for our staff. By helping you profitably and efficiently grow your agency, EMC Insurance Companies will continue to serve you and your customers today and well into the future.

Valley Forge Service Branch: 800.333.3622 | Home Office: Des Moines, IA www.emcins.com

© Copyright Employers Mutual Casualty Company 2011 All rights reserved

I’m celebrating our 100th year by planning for our next 100 years.

Jason Bogart, CPCU, ARM, Vice President of Branch Operations

Our future will be marked by the relationships we forge with you—the independent insurance agents who represent us. You’re the reason we’ll continue to investigate new market opportunities. Why we’ll develop competitive products. Why we’ll maximize the use of new technologies. Why we’ll emphasize ongoing professional development for our staff. By helping you profitably and efficiently grow your agency, EMC Insurance Companies will continue to serve you and your customers today and well into the future.

G21881_01-11_October2011 9/19/11 1:29 PM Page 1

Thwarting monsters and mayhem

What better way to usher in the Halloween season than to tell a few horror stories.The insurance tales of terror we tell in this issue could happen to anyone.Fortunately, members have resources that make these nightmare scenariosmanageable if not completely preventable. Read on…if you dare!

Page 12

New on-demand program with Jerry Milton

Jerry Milton, CIC, always draws a crowd to his seminars, and now you can drawhim right into your computer with a new on-demand program, “E&O and EthicalBehavior.” Approved for Utica loss-control and CE credit, this program is availableanytime, anywhere there’s a Web connection.

Page 20

12

20

ContentsP R I M A R Y A G E N T M A G A Z I N E

Copyright 2011. All rights reserved. No material may be reproduced in whole or in part without written consent of the publisher. The information in this publication is general in nature and is not intended to serve as legal, accounting, financial,insurance, investment advisory or other professional advice as to any reader’s particular situation. Users are encouraged to consult withcompetent legal, financial, insurance, investment advisory and or other professional advisors concerning specific matters before makingany decisions and we disclaim any responsibility for any decisions or actions by readers. Statements of fact and opinion in PrimaryAgent are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the IA&B.Participation in IA&B events, activities and/or publications is available on a non-discriminatory basis and does not reflect IA&Bendorsement of the products and/or services.

Subscriptions: Non-member price: $2.25 per copy or $15 per year.

All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two monthsprior to publication. Advertising rates furnished upon request.

Address inquiries to:Primary Agent EditorMechanicsburg, PA 17055-0763Phone (800) 998-9644 or (717) 795-9100 Fax (717) 795-8347

Periodical postage paid at Mechanicsburg, Pa. and additional entry post office.

Postmaster: Send address changes to above address.Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2011-10) is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

3 Glance at Events4 Chair of the Board’s Message5 Member FAQ6 State News8 Preventing Errors & Omissions

10 Coverage Corner23 IA&B Partners28 Advertisers Index28 Classified Ads28 Last & Least

In every issue

Mission StatementPrimary Agent delivers ideas to help InsuranceAgents & Brokers’ members negotiate their uniqueposition as guardians of trust between insuranceconsumers and companies while facing thechallenges of maintaining a small business. PrimaryAgent also supports IA&B’s mission to preserve andadvocate the American Agency System.

Get social with IA&B

G21881_01-11_October2011 9/19/11 1:30 PM Page 2

Date Topic Location

3-5 J.K. Ruble Graduate Seminar Ocean City, Md.

4-5 Executive Management Conference (EMC) Lancaster, Pa.

4-6 P&C Licensing Study Course Mechanicsburg, Pa.

5 CISR—Agency Operations Course Erie, Pa.

5-8 CIC—Agency Management Institute Cranberry Twp., Pa.

6 CISR—Agency Operations Course Pittsburgh, Pa.

Insuring Contractors Seminar Baltimore, Md.

11 CISR—Personal Residential Course Wilkes-Barre, Pa.

12 CISR—Personal Residential Course Reading, Pa.

13 CISR—Personal Residential Course Frederick, Md.

18 William T. Hold Seminar Pittsburgh, Pa.

18-20 L&H Licensing Study Course Pittsburgh, Pa.

19 Dynamics of Service Pittsburgh, Pa.

20 CISR—Agency Operations Course Mechanicsburg, Pa.

25 CPIA—Module 1 Philadelphia, Pa.


CISR—Personal Residential Course York, Pa.


Glance at EventsO C T O B E R C A L E N D A R

[ 3 ]

E&O loss-control seminars coming next monthWhen it comes to E&O, there are at least ten ways to get sued. Fortunately, there are also best practices that canhelp mitigate exposure to claims. The IA&B E&O seminars held throughout the region next month may helpagencies avoid claims and can save them money on their E&O premiums as they are approved for Utica andWestport (Pa. and Del. only) loss-control credit.

Ten ways to get sued (sources of E&O claims)November 1 Mechanicsburg, Pa.November 8 Lehigh Valley, Pa.November 29 Baltimore, Md.November 30 Dover, Del.

Best practices in E&O loss controlNovember 16 Pittsburgh, Pa.

Read more and register at iabgroup.com/education/programs/e_o_seminars

G21881_01-11_October2011 9/19/11 1:30 PM Page 3

OfficersRobert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P

Chair of the BoardWest Chester, Pa.

Norman Basso, CPCUVice Chair of the BoardYork, Pa.

David Rosenkilde, CICImmediate Past Chair of the BoardReisterstown, Md.

MembersJoyce M. Bailey, CIC, CRM, CPIW

Newark, Del.

Henry “Butch” Bradley, Jr.Forest Hill, Md.

Timothy P. BurrisThompsontown, Pa.

N. Lee Dotson, CIC, AAIWilmington, Del.

John L. FrankenfieldTelford, Pa.

G. Greg Gunn, CICLemoyne, Pa.

Diana M. Hornung Hanby, ACSRWilmington, Del.

Jocelyn R. Howard-Sinopoli, CIC, CISRButler, Pa.

Robert S. Klinger, LUTCF, CPIAGermantown, Md.

Michael F. McGroarty Sr.Pittsburgh, Pa.

Ann Gallen Moll, CICReading, Pa.

Scott C. Rogers, CPIA*York, Pa.

David B. Wasson Sr., CICState College, Pa.

* IIABA National Director

Board of Directors

Trick or Treat

As independent agents, we are entrepreneurs. We have thecourage and commitment to make our own way in theinsurance world. We do so with the expectation to succeed,but with the knowledge that we may struggle at times. Somesituations are particularly difficult. This issue is devoted to afew that are downright daunting — even haunting.

I’d venture to guess that few amongst us have notexperienced a “day from hell.” You know exactly what I’mtalking about — the day that starts bad and ends worse. Ondays like that, it may seem like you don’t have a friend in theworld. The truth is that tomorrow’s another day, and there’salways help — if you know where to look.

One place (I’d suggest the first place) members should lookwhen needing help is iabgroup.com. It’s almost like trick ortreating in that upscale neighborhood — no matter whichdoor you knock on, you getting something good. The bag ofgoodies at iabgroup.com is overflowing (and no rocks,Charlie Brown).

If you’re lucky, you won’t be able to relate to the horrorstories on the following pages. My sense is that you willrecognize (or at least recognize that you need to recognize)some of the issues. Either way, know that IA&B is ready tohelp you find your way out of the dark.

Bob

[ 4 ]

Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P

Chair of the Board’sM E S S A G E

G21881_01-11_October2011 9/19/11 1:30 PM Page 4

Member FAQ

ANSWER:You should always stay away from personal guarantees orwarranties. Provisions such as these are occasionallyfound in wholesaler agreements, but rarely, if at all, incompany-agency agreements.

Clearly, what it is stating is that if anything happens, yourpersonal assets are on the line. Chances are one of themain reasons why you formed a corporation, LLC orpartnership was to avoid exactly that. Why relinquish theprotection by signing it away for a market access outfitthat you’ll probably need only once in a while? And quitefrankly, even if you access it frequently, is it worthhanding over your house, your car and everything elseyou own?

What to do?

You should go back to the wholesaler and ask to strike out the provision altogether, or replace it with something more palatable. Be sure that it won’t bethe first time the wholesaler gets some pushback onthis language.

While you’re at it, take a look at a checklist that IA&B made available on its website regarding frequentissues encountered in wholesaler agreements. Fromownership of expirations to a balanced indemnificationprovision, the checklist succinctly reviews provisions thatshould be there and those that shouldn’t. If you noticeanything else, let the wholesaler know, and try tonegotiate better conditions.

To access the checklist reviewing a number of items to be on the lookout for, visit www.iabgroup.com (go toIndustry & Legal, Industry, and view Wholesaleragreements (MGAs or E&S) under Other Resources). You can also call 800-998-9644, and select option 0.

Finally, this is a perfect reminder that producers MUSTread their agency agreements, whatever the market outletor the business partner, and question what they arereading. When in doubt, call IA&B for assistance.

DO YOU HAVE A QUESTION? E-mail it to us at [email protected]. Please use “PrimaryAgent FAQ” in the subject line of your message. You canalso fax your question to (717) 795-8347. We look forwardto answering your questions!

QUESTION: I’m completing a brokerage agreement for a carrier. I’m not comfortable with one of the provisions expecting me to provide a personal guarantee.What implications could this have?

G21881_01-11_October2011 9/19/11 1:30 PM Page 5

State NewsPrimary Agent | October 2011

New memberresource — Disaster CentralWith so many natural disasters impacting the mid-Atlantic region inrecent months, IA&B has compiled anumber of resources members may find useful for customer service and for their own business continuity.“Disaster Central” is a Web page where members will find information on topics such as:

� emergency planning

� client communication

� natural disasters

� proof of loss

� FEMA assistance

To access this resource, visitiabgroup.com/pa/coverages/disaster.

Extreme correction— First Lady bumpscentral Pa.makeover to Oct. 21Last month we told you about the IA&Bmember who helped his contractor clientcover some extreme exposures involving“Extreme Makeover: Home Edition.” But ifyou tuned in on Sept. 25 as wesuggested, you saw a different episode. Inearly Sept., ABC decided to shuffle the fallschedule to feature a project involvingFirst Lady Michelle Obama in the seasonpremiere. That bumped the episodeinvolving the Keefer family of York Countyto Friday, Oct. 21 — the debut of a newtimeslot for the hit show.

[ 6 ]

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[ 7 ]

New MembersW E L C O M E

Ronald S Hoffman Ins Agency IncBethlehem, Pa.

Pompei-Sciolla AgencyKing Of Prussia, Pa.

Goins & HewittPaoli, Pa.

Jacoby & Associates Agency LLCGibsonia, Pa.

The W F Hiller Agency IncTyrone, Pa.

A Agency Insurance IncAllentown, Pa.

Nicholas J FantanarosaThorndale, Pa.

Are you beinglocated byprospects? One of the immediate benefits of beinga Trusted Choice® agency is the abilityto be found by prospective clientssearching for an independent agentthrough the online Trusted Choice®agency locator. National TrustedChoice® advertising directs consumersto TrustedChoice.com where they canenter their zip code to find a localagent. Only Trusted Choice® agenciesare listed.

To take full advantage of this benefit,IA&B members are encouraged tocomplete their online profile by logginginto TrustedChoice.com/agents andupdating or adding information abouttheir agencies. Principals who have notreceived a “welcome” e-mail or alaunch kit in the mail should contactTrusted Choice® at (800) 221-7917 [email protected].

Find answers to FAQs atiabgroup.com/trustedchoice.

Gearing up for falllegislative sessionThe Pennsylvania General Assembly returned to Harrisburg inmid-September for what promises to be a busy fall legislative session. IA&B’sPublic Affairs Committee met recentlyto set priorities and discuss strategy sothat government affairs staff can hit theground running on a number of issuesimportant to Pennsylvania’s agents andbrokers including:

� Certificates of insurance – this is apriority issue, and IA&B is workingto have legislation introduced thisfall to address certificate ofinsurance abuse.

� State health exchange – thissummer, IA&B testified in personand in writing to the Pa. InsuranceDepartment on the important roleof agents and brokers in theexchange. IA&B will continue tomonitor this issue and prepare tooffer comments to the legislaturebased on the Department’srecommendations this fall.

� Surplus lines – IA&B is gatheringinput on how to best modernizethe diligent-search requirement.

AgentPAC needs youAgentPAC is your voice in Harrisburg,and your monetary support ofAgentPAC helps IA&B to educate andinfluence legislators on the issues mostimportant to you. We are still short ofour annual fundraising goal, so pleaseconsider making a contribution today.

To learn more and contribute, visitiabgroup.com/AgentPAC.

G21881_01-11_October2011 9/19/11 1:30 PM Page 7

[ 8 ]

CURTIS M. PEARSALLCPCU, AIAF, CPIA

Curtis M. Pearsall, CPCU, AIAF,

CPIA, president of Pearsall

Associates Inc. and special

consultant to the Utica

National Errors & Omissions

Program, supplied this article.

Primary Agent | October 2011

There is no doubt anagency’s activities can have atremendous impact onwhether it faces an Errors &Omissions (E&O) claim. Inaddition, if a claim develops,these activities can prove tobe quite beneficial in theagency’s defense.

Here are some E&O tips thatcould just help you avoid anE&O claim. As you will note,many can be easilyimplemented into youragency structure.

Tip #1 – Educate yourcustomers. The insurance industry hassome unique terminology, so the possibility exists thatsome customers don’t totallyunderstand their policies. It isundoubtedly better toeducate them before theyhave a claim rather than after.

Develop an educationcampaign to help yourcustomers better understandtheir insurance program. Youwill not only sell moreinsurance, the reputation yougain in your community willbe tremendous. There are

many approaches including:1) a newsletter, in paper orelectronic form, that could bemailed with the policies orsent via e-mail; 2) postinginformation on your website,which could includeinformation about variouscoverages as well as a sectiondedicated to FrequentlyAsked Questions; or 3)establishing a blog. For manyagencies, this has providedtremendous benefit as itshows your expertise andyour desire to help yourcustomers learn more abouttheir insurance coverages.

To develop material for yournewsletter, Web content orblog, start with the questionsyour staff is being asked byyour customers.

Tip # 2 – Holdperiodic staffmeetings and includesome discussion ofE&O. These meetings are a greatway to address currentissues, changes in companybinding levels, newcoverages, educationopportunities, etc. In

addition, ask each staffmember what they think they could do that mightresult in an E&O claim. Thendiscuss how to “fix it.” Youmay just be surprised at whatyou hear.

These staff meetings presentthe perfect opportunity tostress key agency practices,such as the importance ofthorough and timelydocumentation in the files.

Tip # 3 – Be honestwith your carriers. This may sound like commonsense and it probably is. A major element of therelationship between youragency and your carriers istrust. It is critical to provideyour carriers with completeand honest information. If they ask for furtherinformation, make sure it is truthful.

Tip # 4 – Theinsured’s signature isimportant. The insured’s signature couldmake all the difference in theworld. Oftentimes, disputesarise over the accuracy of the

TEN PRACTICAL TIPS TO AVOID ERRORS &OMISSIONS CLAIMS (LOOK FOR TEN MOREIN NOVEMBER)

PreventingE R R O R S A N D O M I S S I O N S

G21881_01-11_October2011 9/19/11 1:30 PM Page 8

[ 9 ]

information on an application. Inthese scenarios, a key element of thedefense could be the presence andauthenticity of the insured’s signature.

If the insured has signed theapplication, generally they will be held responsible for the content. Anunsigned application does not carrythe same weight. It is highlyrecommended that you never givethe insured a blank application to signand advise them you will fill it in later.Moreover, never – and I mean never!– sign the insured’s name eventhough you believe you have theauthority to do so.

Tip # 5 – The Mirror test.This speaks to the processyour agency shouldundertake when you movean account from onecompany to another. If you are considering moving theaccount to another carrier, identifyand bring to the customer’s attentionany coverages they will be giving upwith the new carrier. Always get theirapproval and written sign-off.

To perform this completely andaccurately, the coverages, limits,exclusions and other key issues of allof the companies you are consideringshould be noted on a spreadsheet.This spreadsheet should be sharedwith your customer.

Tip # 6 – The ClassificationLimitation Endorsement. There may be a need to use theExcess and Surplus Lines (E&S)marketplace to place some risks.While this segment of our industryserves a vital need, it also has somesignificant uniqueness that can spellE&O trouble if not properly handled.

Many general liability policies writtenin the E&S market will contain aform/endorsement called theClassification Limitation Endorsement.When this endorsement is on a policy,

coverage only applies for activitiesincluded under the listed classification.Be on the lookout for this form. If it is on the policy, bring it to theinsured’s attention and get theirapproval to proceed.

Tip # 7 – Identify anycoverage changes on yourE&S policy renewals.When a carrier reduces the coveragein the admitted marketplace, they arerequired to send out an advancenotice. However, in the E&S market,carriers are not required to provideadvance notice of pricing/coveragechanges they will be making on therenewal. Thus, when you receive therenewal terms from the wholesaler/E&S company, carefully review them to identify any changes. Any restrictions/reductions incoverage should be brought to yourinsured’s attention.

Tip # 8 – Your AgencyProcedures Manual – is itcurrent? Is everyonefollowing it? There are many benefits to an Agency Procedures Manual when the manual is current and effectivelyused. This manual can be a solid partof an agency’s defense in the event of an E&O claim, demonstrating thatall employees perform the statedprocedures.

However, the manual must be currentand consistently used by the staff.Having an outdated manual orinstances where not every staffmember follows the manual have thepotential to significantly hurt yourdefense of an E&O claim.

Tip # 9 – Include a coverletter with your policies. In most states, the insured has aresponsibility to read their policy andis bound by its terms. To reinforcethis, it is highly recommended thatyou include a cover letter when yousend the policy to the insured, urging

the insured to fully review the policy –including the declarations andendorsements – for accuracy. Includea statement noting that the insuredshould immediately contact youragency if they have any questionsabout the policy’s contents. If youdeliver the policy, it is still advisableto include this cover letter, makingsure you bring the letter to theinsured’s attention.

Keep the letter general and do notinclude a summarization of the coverages, as this could suggest tothe customer that they do not need toread the policy since the agency hastold them what’s in it.

Tip #10 – Your promotionalmaterial – could it get you in trouble?In the event of a claim against youragency, the plaintiff’s attorney willreview all of your promotionalmaterial to learn what words you useand what message you send tocustomers. They want to see whatthey can use against you. Bottom line,the content of this material and whatyou say can have an impact on howan E&O claim is resolved. Be carefulnot to use words such words as“expert” or phrases such as “we makesure you are properly covered.” Whilethese may be solid marketing phrases,they could be used against you shoulda claim arise.

Enhance the Errors & Omissionsculture at your agency byimplementing some or all of these tips into your day-to-day operations.This could help reduce the likelihoodof E&O claims against you and helpprovide effective defense if a claimdoes occur.

Next Issue: Ten more practical tips toavoiding Errors & Omissions claims –Part 2 of 2.

G21881_01-11_October2011 9/19/11 1:30 PM Page 9

CoverageC O R N E R

[ 10 ]

JERRY M. MILTON, CIC

Jerry M. Milton, CIC teaches

and consults on industry

issues. The legal profession

recognizes him as an

expert on insurance

coverages. He is also the

education consultant for

IA&B, working with CISR,

CIC and continuing

education programs.


The Employee RetirementIncome Security Act of 1974(ERISA) was passed byCongress to establishminimum standards for mostvoluntarily establishedemployee benefit plans inprivate industry. ERISA doesnot cover group health plansestablished and maintainedby governmental entities, by churches for theiremployees, or plansmaintained solely to complywith workers’ compensation,unemployment, ordisability laws.

ERISA requires plans toprovide participants withinformation concerning theplan features and funding;establishes fiduciaryresponsibilities for those whomanage or have anydiscretionary control over theplan assets; requires plans toprovide a grievance andappeals process for theparticipants; and givesparticipants the right to suefor breaches of duty by any fiduciary.

A fiduciary is defined as aperson or organization whomanages money or propertyfor another and who mustexercise a standard of care in such management activityas imposed by law orcontract. The status of beinga fiduciary gives rise tocertain legal exposures andobligations, including theprohibition against investingthe money or property ininvestments that arespeculative or otherwiseimprudent.

Section 412 of ERISA requiresthat every person whohandles or has any controlover the funds of the planmust be bonded to provideprotection to the plan for anyloss resulting from acts offraud or dishonesty. Section412 defines “fraud ordishonesty” as risks of lossthat might arise throughlarceny, theft, embezzlement,forgery, misappropriation,wrongful abstraction,wrongful conversion orwillful misapplication. Thebond amount must be atleast 10 percent of the plan

assets up to a maximum of$500,000. However, effectivefor plan years beginning onor after January 1, 2008 themaximum required bondlimit is $1 million for plansthat hold employer securities.Section 412 also requires thatthe bond insure the planfrom the first dollar.Therefore, a fiduciary bondcannot have a deductible.

If two or more plans areinsured under the samefiduciary bond, the bond limitmust be sufficient to providea limit at least equal to thatrequired if each plan wasseparately insured. Forexample, if Plan A’s requiredlimit is $200,000 and Plan B’srequired limit is $100,000,and they are jointly insuredunder the same bond, thebond’s minimum limit mustbe $300,000.

Whereas section 412 of ERISArequires a fiduciary bond forthe plan, fiduciary liabilityinsurance is neither requiredby nor subject to section 412.ERISA section 410 allows, butdoes not require, a plan to

FIDUCIARY BOND VERSUS FIDUCIARY LIABILITY

G21881_01-11_October2011 9/19/11 1:30 PM Page 10

[ 11 ]

purchase fiduciary liability insurance tocover losses resulting from the acts oromissions of a fiduciary. Any suchinsurance purchased and paid for bythe plan must permit recovery by theinsurer from the fiduciary in case of afiduciary breach.

Fiduciary liability insurance is a stand-alone policy and pays, on behalf of theinsured(s), the legal liability arisingfrom claims for the alleged imprudentactions, errors or omissions of theinsured. “Insured” is usually definedas a trust or employee benefit plan,any trustee, officer or employee of thetrust or employee benefit plan, theemployer who is the sponsor of theplan, and any other individual ororganization designated as a fiduciary.

Most, not all, fiduciary liabilityinsurance policies cover errors andomissions arising out of theadministration of the plan (employeebenefits liability). Employee benefitsliability (EBL), which does not coverimprudent investment of funds, isoften provided under an endorsementattached to the commercial generalliability (CGL) policy. Obviously, if afiduciary liability policy which alsoincludes EBL coverage is purchased,the EBL endorsement is no longerneeded on the CGL.

An owner or an officer of a companywho makes decisions regarding thecompany’s qualified employee benefitplan(s) could place their personalassets at risk. Under ERISA, fiduciariescan be held personally liable for lossesto an employee benefit plan incurredas a result of any errors, omissions, orbreach of duty by the fiduciary.

Fiduciary bond – “fraudulent ordishonest acts.” Fiduciary liability –“errors, omissions, or breach of duty.”Your client may need both!

Y’all take care!

Mettle you can count on.You don’t just wear it; you earn it.“In the 2010 Company Satisfaction Index Survey, agents listed us as the number one personal lines carrier they would recommend to a peer as a good company to work with. We work hard each day to earn your respect and your business with underwriting competency and responsiveness and technol-ogy initiatives that simplify your workload.”- Tracey Cook, Personal Lines Underwriting Supervisor Start with MBG, and you’ll fi nish with a winner.

MUTUAL BENEFIT GROUPHuntingdon, Pennsylvaniawww.mutualbenefitgroup.com

arn it.factionus as the carrierrpeer ash. Weyourwithd-

sr

Mettle you can count on.You don’t just wear it; you earn it.

“In the 2010 Company Satisfaction Index Survey, agents listed us as the number one personal lines carrier they would recommend to a peer as a good company to work with. We work hard each day to earn your respect and your business with underwriting competency and responsiveness and technol-ogy initiatives that simplify your workload.”

- Tracey Cook, Personal Lines Underwriting Supervisor

Start with MBG, and you’ll fi nish with a winner.

MUTUAL BENEFIT GROUPHuntingdon, Pennsylvania

www.mutualbenefitgroup.com

arn it.

factionus as the carrierrpeer ash. Weyour

withd-

sr

G21881_01-11_October2011 9/19/11 1:30 PM Page 11

AGENCY MANAGEMENT

Thwarting monstersand mayhemInsurance horror stories and how to avoid them

G21881_12-19_October2011 9/19/11 1:40 PM Page 12

[ 13 ]


Scared of being in the dark on regulations orlegislation? Afraid of what you’ll find (or won’t find)in that monster file cabinet? Trying to steer clear ofthat blood-sucking attorney? What better way to

usher in the Halloween season than to tell a few horrorstories. The following tales of terror could happen to anyone.Fortunately, members have resources that make thesenightmare scenarios manageable if not completelypreventable. Read on…if you dare!

Absconding producer sucks life out of agencyYour agency has decided it needs to hire a new producer tospark sales which have been exceptionally flat. You place an ad in the paper, and are contacted by Slick Willy, a self-proclaimed “super producer.” Mr. Willy promises to tripleyour agency’s business in one year. Despite his name, you’rewild for Willy and immediately hire him without performing anybackground or reference checks, and without executing aproducer agreement.

A year goes by and things aren’t what you’d hoped for. Infact, Willy has just resigned his position with your agencywithout writing a single new piece of business over thecourse of the year. Even worse, Willy has now started hisown agency and has your agency’s entire list of clients andpolicy expiration dates. He has been contacting all of your

customers andsystematically stealingthem, one-by-one.

A reference check wouldhave shown that Willy hasactually made aprofession out ofseducing unsuspectingagencies and thensucking them dry in this way. And becauseyour agency didn’t havea producer agreement in place with Willy,there isn’t a thing thatcan be done. Youragency cannot claimtrade secrets. It cannot rely upon ananti-piracy clause.There are noenforcement

provisions to put in place. In six months, the vast majority of your clients have left, and you’re forced toshut your doors for good.

S Non-producingproducers also scary

Almost as troubling as an agent who takes off with your clients is anagent who hangs around for thehandsome pay, but can’t (or won’t)produce. Principals attending IA&B’s third annual ExecutiveManagement Conference (EMC),Oct. 4-5, at the Lancaster EdenResort, will hear spooky storiesabout well-compensated producers who don’t earn their keep.Nationally recognized agencyconsultant Al Diamond will discusstopics such as self-terminatingcontracts and various compensationmodels that reward good producers while protecting agencies from saleszombies. IA&B also provides anumber of employee managementresources online.

Visit iabgroup.com, click onAgency Operations, thenEmployee Management.

G21881_12-19_October2011 9/19/11 1:40 PM Page 13

To avoid this horror story

Had you consulted with IA&B’sProducer Agreement Toolkit, thiscould have been avoided. Anagreement could have been inplace with Willy protecting yourbook of business. Trade secretprotections could have beeninvoked. More importantly, ananti-piracy provision would havebeen executed, preventing Willyfrom contacting any of yourclients. Enforcement provisionsin the agreement would haveeasily allowed the agency topursue litigation and toeffectively take the bite out ofthis evil non-producer.

To learn more visitiabgroup.com/patoolkit. Vanishing driver and his MVR

A couple of months ago, one ofyour large commercial clientsasked you to pull motor vehiclereports (MVRs) for his drivers sothat he could check their drivingrecord and decide whether to keepthem or not. Since it was animportant client, you obliged. He subsequently fired a driverbased on the MVR, and thismorning, you were served withlawsuit papers.

It is very common forcommercial clients to ask theirinsurance agencies to share MVR information (verbally or inwriting) for the purpose ofmaking employment decisions.Accessing or sharing MVRs with the insured for this purposeis not an insuranceunderwriting function.

MVRs trigger both the FederalDriver’s Privacy Protection Act

(FDPPA), and, because they are

also considered “consumerreports,” the Fair CreditReporting Act (FCRA). As a rule,you should not pull MVRs for anyuse other than underwriting.When your client is doing areview of driver performance, itis not underwriting.

Why underwriting only?

An insurance agent’s access toMVR information generallyhinges on an “affidavit ofintended use” or similardocument that formalizes thereason why the MVR isrequested. Only certain personsare entitled to the information,and only for specific uses. In the case of agents, insuranceunderwriting is a proper reasonfor pulling an MVR, andinsurance agents are only given the information for thepurpose indicated.

AGENCY MANAGEMENT

[ 14 ]

Continued on page 16

G21881_12-19_October2011 9/19/11 1:40 PM Page 14

TRUST.

For All That Matters

TRUST.

For All That Matters

G21881_12-19_October2011 9/19/11 1:40 PM Page 15

Aren’t employers entitled to theinformation on their employees?

Yes, they are. However, they alsomust comply with specificprovisions of the FDPPA andFCRA, which are different fromthe requirements that apply toinsurance agents. In addition, thefact that they are entitled to itdoesn’t mean you are permittedto provide it to them.

I thought I was okay since theemployer gave me a consentform signed by the employee.

An authorization form to pull an MVR signed by yourclient’s employee may hold the employer harmless but willnot exonerate you for disclosingthe information.

In addition:

� Your contract with the MVRvendor likely prohibits youfrom using reports for anypurpose other thanunderwriting (that meansyou’re in breach of contractas well).

� Providing MVRs to acommercial insured foremployment purposes isoutside the scope of youragency’s E&O policy. Whenyour agency is sued becauseof an improper use of MVRs,the policy will not cover forthe loss.

� In the eyes of the feds, you are now considered aConsumer Reporting Agency, subject to additionalcompliance requirements of which you are surely not aware.


Don’t share MVR informationwith anyone other than theindividual subject of the MVR!When a commercial client asksyou to provide MVR informationabout their drivers:

� Explain that as an insuranceagent, you are not permittedto share that information.

� Tell the client that, as anemployer, the company may be entitled to MVRinformation about itsemployees through thestate’s department of motorvehicles, but not throughyou.

� If/when the insurer wants to exclude a driver based on a MVR you have alreadypulled, simply tell the client that the driver is“ineligible for coverage” or“does not meet companyunderwriting criteria,” andleave it at that.

� To make your refusal more palatable, provide a“cheat-sheet” from theFederal Trade Commission.The document summarizes an employer’s rights andobligations under the FCRA.The information will helpyour client remain compliantand avoid a lawsuit.

To access more information on MVRcompliance and other privacyissues, consult IA&B’s privacyresources at iabgroup.com/privacy.

Recovery from a flaming disasterThe phone rings during the middleof the night. That’s never good. It’sthe security company reporting afire alarm is going off at youragency. You’re informed the firedepartment has been dispatched.You dress quickly and race to theoffice to find your worst fears areconfirmed. It’s gone. The buildingwhich stood for years and was afixture along Main Street is nomore. Everything is lost. Files,records, computers and desks arenow reduced to ashes or charredbeyond recognition.

Once the initial shock wears off,you start to stress about all thatwill need to be done to get yourbusiness back up and running.

AGENCY MANAGEMENT

[ 16 ]

Continued from page 14

G21881_12-19_October2011 9/19/11 1:40 PM Page 16

Then you pull it together and justthink about what needs to bedone first. But where to start? If only you had a plan —something to walk you throughthe steps to begin recovering.

You’d been meaning to do that.Several years ago you evenreviewed IA&B’s Emergency andBusiness Continuity PlanningManual. You remember thinkingit looked fairly easy to follow.Sure, there would be some workinvolved in getting it done, but inthe end, you’d have apersonalized plan for theagency…so you thought.

But, as it turned out, later thatday your largest client calledwith a serious problem thatneeded your immediateattention. You spent the next twodays servicing that account andyour regular workload started toback up. You worked a few extralong days to get caught up.

Over the next few days yourlongest tenured personal linesCSR and mentor to the rest ofyour staff announced she wasgoing to retire; one of yourleading carriers called to requesta meeting to talk about your“lackluster” production numbers;and “Joe, the average customer”called to say the folks atMarshall & Swift were out oftheir minds. In other words, itwas just another week at theoffice. It was also another weekthat you didn’t plan for anemergency such as this.


IA&B knows how hectic it is torun a small business. There’s no“normal” day anymore and thedemands on your time areforever increasing. IA&B heard

from our Member Agent Panelsthat they needed assistance increating a plan any agency coulduse to maintain businesscontinuity in the event of anemergency — something thatcould be a template for all


ENTHUSIASMIT’S CONTAGIOUS

“My hobby as a fi tness instructor allows me to help people—similar to my position at J.M. Wilson. I love being able to assist our agents and our companies in fi nding a solution when a loss occurs.”Jessica Garcia, CISRClaims Supervisor —and fi tness fanaticConnect with Jessica on LinkedIn!

800.666.5692 jmwilson.com

Managing General Agency Since 1920Property/Casualty Professional Liability Surety Commercial Transportation Personal Lines Premium Finance

ENTHUSIASMIT’S CONTAGIOUS

“My hobby as a fi tness instructor allows me to help people—similar to my position at J.M. Wilson. I love being able to assist our agents and our companies in fi nding a solution when a loss occurs.”

Jessica Garcia, CISRClaims Supervisor —and fi tness fanatic

Connect with Jessica on LinkedIn!

800.666.5692 jmwilson.com

Managing General Agency Since 1920

Property/Casualty Professional Liability Surety Commercial Transportation Personal Lines Premium Finance

[ 17 ]

G21881_12-19_October2011 9/19/11 1:40 PM Page 17

members to use but flexibleenough to be customized for any operation.

The Emergency Planning Manual(EPM) IA&B developed for theunique needs of independentagencies is Web-based and givesprincipals 24/7 access — aunique feature that otherplanning manuals don’t offer.Users can retrieve their plan anytime, any place — even if theagency is totally destroyed

The EPM is an online resourcethat enables agencies tocustomize information critical to

restoring their businessoperation in an emergency:

� steps of action to take forrecovery

� complete contact informationfor service providers,companies and vendors

� inventory of software,hardware and officeequipment

� pre-planned staff roles andcontact information

� a plan for possible alternatelocations, if needed

Creating a comprehensiveemergency plan is a monumentalbut critical task. IA&B resourceshelp you break this activity downinto manageable steps to assistyou in utilizing its online tool.

To learn more about emergencyand business continuity planning,visit iabgroup.com/epm. Or, put itoff at your own risk.

Scary spirit in the state houseState Senator Scary receives a call from one of his closestconstituents, Ima Pain. Mrs. Pain recently had a situation with aninsurance agent that has her fired

AGENCY MANAGEMENT

[ 18 ]

G21881_12-19_October2011 9/19/11 1:40 PM Page 18

up. Mrs. Pain, just the day before,had water in her basement due toheavy rain and a clogged gutterthat her husband, Major Pain, neglected to fix. The water causeda total loss of Mrs. Pain’scollection of antique postcards.

The Pains are claiming that theday before it started raining, theywent into their independentinsurance agent’s office andasked for flood insurance. Mrs.Pain insists that the agent toldher she would have floodinsurance added to her policywithin the hour. Needless to say,the insurance agent denies thisassertion. He states that when he told the Pains that there is a 30-day waiting period for flood insurance, she left hisoffice in a huff dragging Mr. Painbehind her.

Senator Scary, believing hisconstituent (and being an oldarmy buddy of Mr. Pain), decidesto change the law — he is, after

all, a man of the people, andacting in the spirit ofconsumer protection. Hedrafts a bill that would requireall agents to record everyconversation they have withclients, have the recordingtranscribed, and then havethe client sign thetranscription as accurate.Because Senator Scary is apowerful member of thelegislature, he quicklygarners support for this bill.

Enter AgentPAC!AgentPAC, your state-

based political action committeeof Insurance Agents & Brokers(and the Delaware Association ofInsurance Agents & Brokers),has been working tirelessly toadvocate on behalf ofindependent agents. AgentPAC isconstantly monitoring legislativeactivity (like Senator Scary’s bill)and using member-agentcontributions to support agent-friendly legislators who canshape the debate on issuesaffecting your livelihood.

Thankfully, last session,AgentPAC contributed to severalpowerful, insurance-savvylegislators in the state House.Through campaign support andeducation on this importantissue, these Representatives are now educating theircolleagues on the administrativeburden this requirement wouldcreate for agents. They are also reminding fellow lawmakersthat the good agents alreadyprotect their clients (andthemselves) by adequatelydocumenting all business

interaction. These lawmakerssuccessfully derail SenatorScary’s efforts and protect agentsfrom a paperwork nightmare.


By contributing to AgentPAC, youtoo can combat the SenatorScary in your state legislature.AgentPAC channels contributionsto legislators and candidatesacross the political spectrum inan effort to promote a betterunderstanding of the vital roleagents play as experts in theinsurance marketplace.AgentPAC contributions andother IA&B government affairsinitiatives in Harrisburg,Annapolis and Dover give agentsa stronger voice in the debate on many issues affectingagencies and other smallbusinesses like theirs.

To learn more and to help AgentPAC maintain a strong voice in your state house, visitiabgroup.com/AgentPAC.

[ 19 ]


G21881_12-19_October2011 9/19/11 1:40 PM Page 19

EDUCATION

E&O and Ethics programwith Jerry Milton now

available on demand

G21881_20-28_October2011 9/19/11 1:51 PM Page 20

[ 21 ]


Agents can now learn ethics and the implications for professional liability from coverages expertJerry Milton, CIC, anytime, anywhere there’s a Webconnection. IA&B’s newest on-demand offering is

“E&O and Ethical Behavior,” a loss-control seminar led byMilton and approved for Utica loss-control credit.

According to Milton, “E&O claims all come from the ‘L’syndrome’: Lack of knowledge, Lack of consistency, Lack of communication or Lack of documentation.” In thisprogram, Milton dives into the sometimes murky waters of ethical behavior to help agents avoid getting soaked in anE&O lawsuit.

With full video presentation and supporting materials, Milton discusses:

� usual allegations

� agent authority

� agent’s duties

� failure to provide standard of care

� breach of contract

� binders

� certificates of insurance

� claims scenarios

As appealing as learning from a guru like Milton, is that factthat agents can do it on their own schedule, at their ownpace and anywhere they connect to the Internet. Thisseminar gives users the ability to stop and resume theprogram whenever and wherever they like.

Also appealing for Utica E&O policyholders is the fact thatthey can earn approved loss-control credit (as well as CEcredit) and potentially save money on their professionalliability policy by taking this course. The fact that they cantake it right at their desks can also save agencies on travelexpenses and lost productivity.

Milton’s ability to make concepts come to life by sharingreal-world stories and colorful hypothetical scenarios is adraw for anyone attending his classroom presentations.IA&B On-Demand preserves much of that same experiencethrough use of video—not a static slide presentation or largevolumes of text to read.

Learn more and register at iabgroup.com/on-demand or call (800) 998-9644.

A On-demand is ontarget for manyThe ability to take continuing education(CE) courses at the time and place ofone’s choosing is appealing to manybusy professionals. IA&B is respondingby developing on-demandprogramming that meets the needs ofindependent agents, including the highstandard of quality they have come toexpect.

IA&B On-Demand offers:

� unmatched convenience

� expert instructors

� dynamic multimedia

� affordable fees

� approved CE and/orloss-control credit

Earlier this year, IA&B launched its on-demand platform with“Understanding the National FloodInsurance Program,” a program withrenowned flood expert Rita Hollada,CPCU, CIC, CPIA. The newest addition,“E&O and Ethical Behavior” (see fullstory at left), will be followed later thisfall by a Maryland-specific programentitled, “Compliance Pitfalls andEthical Responsibilities.”

Learn more about programscurrently available on demand atiabgroup.com/on-demand.

G21881_20-28_October2011 9/19/11 1:51 PM Page 21

We have been providing qualityproperty and casualtyinsurance protection since

Donegal Mutual Insurance Companybegan doing business in 1889. Overthe years, the Donegal InsuranceGroup has grown significantly to nowinclude eight property and casualtyinsurance companies.

As our operations have grown, wehave expanded our ability to provideour independent insurance agentswith a comprehensive suite ofproducts. In addition to providing afull line of personal insuranceproducts, we have developedcompetitive commercial products thatallow our agents to serve a broadspectrum of small, mid-market andlarger commercial accounts. We workvery hard to provide exceptionalproducts and service in lines ofbusiness and markets that we knowand understand well.

The Donegal Insurance Group enjoysan A (Excellent) rating by the A.M.Best Company. Our commitment tosafety, consistency, and strongfinancial performance is furtherreflected by Donegal InsuranceGroup’s inclusion in the Ward’s 50Benchmark Group for property andcasualty insurance companies in six ofthe past seven years.

At Donegal, we focus on providingsuperior technology and outstandingservice to our agents and customers.We know that “ease of doingbusiness” has become increasinglyimportant to independent agents.Donegal has invested millions ofdollars developing advancedtechnology that greatly enhances ouragents’ and policyholders’ experiencein doing business with us.

Donegal has long recognized thevalue of an independent agent inassisting individual and business

consumers navigate the insurance-buying process. We prove ourcommitment to the independentagency system every day bydistributing our products exclusivelythrough independent agents. We areconstantly looking for ways to deliverincreased value to our agents andsolidify company-agency relationships.We have benefited greatly from thefeedback we receive in our regionalagency forums, which helps usimprove our products and operations.

Much has changed since we started in the insurance business over 120years ago, but one thing remains thesame — Donegal remains firmlycommitted to delivering a better valueto our agents and policyholders. Welook forward to our prospects formutual success as we work togetherwith our independent insuranceagents in serving the insurance needsof our customers.

FEATURED PARTNERDonegal Insurance Group, Inc.

CHIEF EXECUTIVE OFFICERDonald H. NikolausPresident and CEO

CORPORATE HEADQUARTERSMarietta, Pennsylvania

SUBSIDIARY COMPANIESAtlantic States Insurance Company,

Southern Insurance Company of Virginia,Le Mars Insurance Company,

Peninsula Insurance Group, Sheboygan Falls Insurance Company,

Michigan Insurance Company

A.M. BEST RATINGA (Excellent)

WEBSITEwww.donegalgroup.com

Platinum ProfileInsurance Agents & Brokers proudly recognizes

Donegal Insurance Group, Inc. as one of its Platinum Partners. IA&B Platinum Partners dedicate

the highest level of sponsorship to our organization.

G21881_20-28_October2011 9/19/11 1:51 PM Page 22

WHAT IS IA&BPARTNERS?The IA&B Partners

program gives company

and allied businesses

the opportunity to

demonstrate their

commitment of support

to independent agents

and receive maximum

market exposure. As an

IA&B Partner, you will

also realize the benefits

of IA&B membership to

help you succeed in

the insurance industry.

DO YOU SEEYOUR NAME?To become an IA&B Partner,

choose the sponsorship

package that matches your

commitment of support.

Contact the Member Sales

Center at (800) 998-9644,

(717) 795-9100 or visit us

online at www.iabgroup.com

to get started.

Listed below are those companies that strongly support the independent agencysystem and Insurance Agents & Brokers.

Thank you for your continued sponsorship.

PLATINUM LEVELACUITYBerkley Mid-Atlantic GroupDonegal Insurance GroupErie Insurance GroupHarleysville InsuranceHighmark Casualty Insurance CoInsurance Agents & BrokersService Group Inc

MMG Insurance CompanyMillers Mutual GroupMillville Mutual Insurance CoMutual Benefit GroupOhio CasualtyPenn National InsuranceSelective Swiss ReThe Main Street America GroupUtica National Insurance Group

GOLD LEVELProgressive

SILVER LEVELAccess Insurance Company Allied InsuranceAmerican Mining Insurance CoCumberland Insurance GroupFrederick Mutual Insurance CoJuniata Mutual Insurance CoPSBA Insurance TrustThe Philadelphia ContributionshipWestfield Insurance

BRONZE LEVELAegis Security Insurance Co

Agency Insurance Company

AmWINS Program Underwriters Inc

Auto-Owners Insurance Company

Briar Creek Mutual Insurance Company

Builders Insurance Group

Chubb Group of Insurance Companies

Countryway Insurance Company

Encompass Insurance

First General Services

Foremost Insurance Group

Goodville Mutual Casualty Company

Guard Insurance Group

Harford Mutual Insurance Co

Hanover Fire & Casualty Insurance Company

Insurance Alliance of Central PA Inc

Insurance Placement Facility of PA

Keystone Insurers Group Inc

Lebanon Valley Insurance Company

Mercer Insurance Group

Merchants Insurance Group

Mercury Casualty

Penn PRIME Municipal Insurance

Reamstown Mutual Insurance Company

Rockwood Casualty Insurance

State Auto Mutual Insurance Company

TAPCO Underwriters Inc

The Brethren Mutual Insurance Company

The Motorists Insurance Group

The Mutual Service Office Inc

Travelers

Tuscarora Wayne Insurance Company

Zenith Insurance

Primary Agent October 2011

G21881_20-28_October2011 9/19/11 1:51 PM Page 23

H.R.H E A D Q U A R T E R S

[ 24 ]

JEFFREY W GERHART,CEBS, MBA

Jeffrey W. Gerhart, CEBS, MBA,

provided this article on behalf of

Mosteller & Associates, IA&B’s

contracted human resources

consulting firm.

IA&B members have access to

HR Solution©, a compilation of

products and services to help

them establish or improve their

human resources program.

Included are base-level

consultation services and

discounted professional services

from Mosteller & Associates. As we approach the end ofthe calendar year, it’s a goodtime to take stock ofpreparing your payroll foryear-end processing and toconsider how your employeebenefit plans enter the mix.How many times do we pushto provide good customerservice and facilitate ourclients who are changing theiremployee insurance policiesor other employee benefitprograms, then forget to bringthat same level of service toour own?

Most employers offer openenrollment for benefitprograms to employees at thistime of year. This electionperiod for the new calendaryear may create unrest amongemployees as they strugglewith increased premium costsor reduced benefit coverage.Good, timely employeecommunications goes a longway toward a successfultransition.

While there are a number ofyear-end checklists available

on the internet to helpbookkeepers and accountantsperform their financialclosings and year-endreporting, as agency owners,you also have responsibilitythat your employee benefitsprocessing functionsaccurately and is incompliance with legal andregulatory requirements.Whether you run your ownpayroll or use an outsideprocessor, you need to workin tandem with payroll toinsure that your systemoperation and reporting are incompliance and designed todo what your benefitprograms say they do.

Based on human resourceinformation systems audits I have conducted over theyears, the following benefitrelated items can help your review:

� Have employeesexceeded the maximumdeferral amounts allowedthis year in their 401(k),Flexible Spending Account (FSA) or otherqualified deferredaccounts?

YEAR END PROCESSING…IT’S NOT JUSTABOUT PAYROLL.


Continued on page 26

G21881_20-28_October2011 9/19/11 1:52 PM Page 24

[ 25 ]

HANOVER FIRE & CASUALTY serves the working families of our region by offering the insurance they need. No games. No tricks. Just good, solid insurance available to those who really need it. We settle claims promptly and fairly, and we manage to hold our rates. And the fact is, for nearly 100 years, our customers return and renew with us; well, that just drives the point home, doesn’t it?

Would you like to be a Hanover agent? For more information call 800-919-FIRE or visit www.hanoverfire.com. Learn more about our portfolio of products, our easy-to-use agent portal, and our com-petitive commission structure. Call today!

The Secret Is Out!Hanover Agents Love To Tell Their Customers

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2-4-AstrongWorkers’Compleadline

SpecialBOPStretchendorsements

5-6- Easeofdoingbusiness

Competitiveprice

Uniqueproduct

��PLUS

3-targeting

small-tomid-sizedrisksthatpromotescustomerretention

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Alimitednumberofappointmentsareavailable.Contactustolearnmore:www.guard.com/apply

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Metropolitan areas don’t scare us.

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Contact us to learn more: www.guard.com/apply

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[ 26 ]

� Does my payroll system have in place the new limitation amounts for qualified plans for the nextcalendar year?

� If any employees have a group lifeinsurance benefit in excess of$50,000, have I calculated theimputed value of their excess fortax purposes (IRS Section 79 table)?

� If I changed benefit providers forthe new year, what plan design orprocedural changes should Icommunicate to employees?

� Will new enrollment cards be issued?

� Will the employee premiums forhealth plans be contributed on apre-tax basis (IRC Section 125)?

� Do any of my plan documents orsummary plan descriptions need tobe modified based on regulatoryor procedural changes?

� If I offer a flexible spendingaccount, should I introduce the useof debit cards to employees, orcurtail their use if already issued?

� Should I have employees updatetheir beneficiary information forretirement or life insuranceprograms currently in place?

� Is my payroll system updated with new federal, state and local tax ratechanges for next year? What doemployees need to know about the changes?

� Should I conduct an audit ofdependent eligibility in ourmedical/dental/vision plans?

� What steps do I need to take withmy time-off programs if employeesare at risk of losing unused

vacation/holiday/personal days or other accrued paid time offprograms?

� Will I be able to provide timely W-2s to employees?

It won’t take you long to think throughthese questions, but doing so shouldgive you clear indication of what to do and, hopefully, the time to do it.See you in 2012!

H.R. HEADQUARTERS

Why our contracting coverages are built better than the rest:

We offer protection others don’t.

We’ve custom-built special liability coverages that meet the unique

needs of the contracting industry.� Blanket Additional Insured for Written Contract coverage� Blanket Waiver of Subrogation protection� Consolidated Insurance (Wrap-up) Program — limited exclusion� Electronic Data — $10,000 each occurrence/$10,000 aggregate� Limited Pollution Liability expanded limits up to

$1 million each occurrence with legal costs included� Voluntary Property Damage —

$5,000 limit per occurrence/$10,000 aggregate � Limited mold and bacteria coverage with limits of $10,000 and

$25,000 available. Legal expenses are included, subject to limits. (Not available in NJ)

Automatic endorsement protects against damage to your work.We clarified the policy to state that property damage to a contractor’s work performed on a contractor’s behalf by subcontractors, within the products-completed operation hazard, is an occurrence. Subject to all other general liability terms and conditions.This summary does not constitute a part of the insurance policy. See policy for complete terms and conditions.

Visit us at www.PennNationalInsurance.com to find out how you can become an agent with big opportunities for growth.

Continued from page 24

G21881_20-28_October2011 9/19/11 1:52 PM Page 26

[ 27 ]

Our ApartmentProgram offers a great combination of competitive pricingand coverage for your customers!Five or more units are eligible for this great program. An optional Apartmentizer Coverage Endorsement isalso available which includes 34 additional coveragessuch as: Landlord/Owner FurnishingsLoss of EarningsLock ReplacementUtility InterruptionWater Back-Up of Sewers & Drainsand much more!Apartment program available in DE, MD, NJ and PA

Contact: Dennis Marsaglia, Ext. [email protected] Frisch, Ext. [email protected]

Brokers Surplus Agency, P.O. Box 2849, Warminster, PA 18974 � Call (215) 443-9900

Our ApartmentProgram offers a great combination of competitive pricingand coverage for your customers!

Five or more units are eligible for this great program. An optional Apartmentizer Coverage Endorsement isalso available which includes 34 additional coveragessuch as: Landlord/Owner Furnishings

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Apartment program available in DE, MD, NJ and PA



• Top 5 in Nation for Ease of Doing Business Deep Customer Connections• #1 Performing Company in Pennsylvania Insurance Agents & Brokers of PA• #1 Performing Company in New Hampshire Professional Insurance Agents of NH• Company of the Year in Maine Maine Insurance Agents Association

We’re honored that our Independent Agents have recognized our team’s exceptional customer service and ease of doing business:

hard work and a commitment to excellence.

To learn more about MMG,visit mmgins.com orcall us at 800-343-0533.

• Top 5 in Nation for Ease of Doing Business

Deep Customer Connections

• #1 Performing Company in Pennsylvania

Insurance Agents & Brokers of PA

• #1 Performing Company in New Hampshire

Professional Insurance Agents of NH

• Company of the Year in Maine

Maine Insurance Agents Association

We’re honored that our Independent Agents have recognized our team’s exceptional customer service and ease of doing business:

hard work and a commitment to excellence.

To learn more about MMG,

visit mmgins.com or

call us at 800-343-0533.

3 1/18/11 11:29:18 AM

G21881_20-28_October2011 9/19/11 6:37 PM Page 27

ACUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Atlantic Specialty Lines Inc . . . . . . . . . . . . . . . .27

Brokers Surplus Agency . . . . . . . . . . . . . .27, IBC

EMC Insurance Companies . . . . . . . . . . . . . . . .1

Guard Insurance Group . . . . . . . . . . . . . . . . . .25

Hanover Fire & Casualty . . . . . . . . . . . . . . . . . .25

Highmark Casualty . . . . . . . . . . . . . . . . . . . . . .IFC

Harford Mutual Insurance Co . . . . . . . . . . . . . .11

IA&B On-Demand . . . . . . . . . . . . . . . . . . . . . .IBC

IA&B Partners Program . . . . . . . . . . . . . . . . . . .23

Interstate Insurance Mngmnt. . . . . . . . . . . . .OBC

JM Wilson . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

MMG Insurance Company . . . . . . . . . . . . . . . .27

Penn National Insurance . . . . . . . . . . . . . . . . .26

Preferred Property Program . . . . . . . . . . . . . . .18

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Professional agency since 1926 locatedin Feasterville, Bucks County, Pa. Call for confidential information and a review of our services. Contact Ray Reinard at (215) 375-8600, Ext. 119.

If you would like to place a

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fax your ad on company letterhead

to (717) 795-8347, and we will take

care of the rest.

[ 28 ]

There was Nicholas Di Puma, minding his own businessand cooking a steak … on four pans. Suddenly, there wasa grease fire.

He tried to douse it with a dishtowel, but that also caughtfire. So he threw a pan out his front door, where it landedin his convertible and sparked a car fire. While attemptingto throw a second pan, he tripped. The pan landed on aleather couch and started a house fire.

He then made insurance claims on the fire-ravaged carand home. The unbelievable chain of events turned outto be just that — unbelievable.

“I can’t imagine this playing out in real life,” said a county judge.

What did play out in real life was Di Puma’s sentence: five years’ probation for insurance fraud.

Sources: 11 dumbest insurance fraud cases, InsuranceNetworking News; Cooking up a scheme, Coalition AgainstInsurance Fraud

----------------------------------------------------------------———————-------The Last & Least column is dedicated to the industry’s oddities —from creative claims and kooky coverages, to (tasteful) jokes andstrange stories. Submit yours to [email protected], subject line: Last & Least. The editor will happily protect sources’ anonymityupon request.

The worst-laid plans oft go astray

G21881_20-28_October2011 9/19/11 1:52 PM Page 28

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IF YOU HAVE THE TOOLS,WE HAVE THE INSURANCE.

Residential Contractors with up to five employees canfind great deals on liability and tools insurance atBrokers Surplus Agency! We represent UTICAFirst Insurance, one of the largest writers of small contracting firms in the Northeast!

Blanket Additional Insured coverage and UTICA’sown “Toolbox Endorsement” which includes 7 bundledadditional coverages saves your customers hundredsof dollars! Call or e-mail us today for a quick quote.Artisan program available in DE, MD, NJ & PA



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G21881_C2-C3-C4_Layout 1 9/19/11 1:58 PM Page 3

Documents

Primary Agent - October 2011 - PA Edition