THE MASSACHUSETTS AGENT

Transcription

1 THE MASSACHUSETTS AGENT The Massachusetts Agent September 2, 2010 Page 1 OFFICIAL NEWSLETTER OF THE MASSACHUSETTS ASSOCIATION OF INSURANCE AGENTS September 2, 2010 Circulate to: Management Personal Commercial Claims Other In this issue: Page 1 Comp. Corner DIA Promulgates Form for Verification of O-O-S Comp. Coverage MAIA News Member Milestones Page 2 MAIA News cont d from page 1 E&O Update... Writing Commercial Auto? When an E&O claim happens, it can be huge! Page 3 E&O Update... cont d from page 2 Page 4 5 MEMA Offers Tips... for Hurricane Preparedness Do YOU know the answer to the Comp. Corner: DIA Promulgates Form for Verification of Out-of-State Workers Compensation Coverage... The Department of Industrial Accidents (DIA) has promulgated a new form to be utilized by businesses domiciled in other states but operating in Massachusetts. Form 154 Verification of Massachusetts Workers Compensation Coverage for Out of State Employers Operating in Massachusetts will be submitted to any licensing and/or permitting authority when out-of-state businesses seek permission to conduct work requiring a license or permit. This form shall be in addition to the Workers Compensation Insurance Affidavit already in use by these authorities. Further, this form should be completed by out-of-state sub-contractors and submitted to the general contractor prior to commencement of any work on a job-site. The DIA s Office of Investigation may also require an out-of-state business to complete this form at any time. Clerk here for a copy of the DIA s Circular Letter #335 and the new form. MAIA News: Member Milestones: MAIA Instructor Honored for His Work with JFSAP Youth Saves Program This summer, MAIA instructor Marshall Katz was involved with the Youth Saves program held at five locations across the state. The program was sponsored by the Massachusetts Joint Family Support Assistance Program (JFSAP) in partnership with the Massachusetts National Guard. According to Jonathan Harrington of the JFSAP, the intent of the program is to increase the financial literacy of the children of service members. The Youth Saves Program, which encourages children and teens to develop good savings habits at a young age, was attended by 60 teenagers aged from Marine, Coast Guard, Army and Air Force families. Marshall was awarded a coin by JFSAP in recognition of the knowledge and experience he brought to the teens that he instructed at locations in Milford and Camp Edwards. Congratulations, Marshall! You ve done us proud. Vermont Mutual Makes Marketing Changes Vermont Mutual Insurance Group recently announced several changes to their marketing staff in Massachusetts aimed at providing additional support to their more than 200 agent partnerships throughout the state. Anthony Corvelo has been hired as the Marketing Representative, assisting agents in central and eastern MA. Tony has more than 25 years of insurance experience in Massachusetts, successfully holding positions in underwriting, field marketing and home office marketing management. Prior to joining Vermont Mutual, Tony was a PL Sales Executive with a large MA insurance company. (continued on page 2) Massachusetts Association of Insurance Agents massagent.com Professionalism through Independence 91 Cedar Street Milford, MA Francis A. Mancini, Esq. Donna M. McKenna President & CEO V.P. of Communications & Editor

2 The Massachusetts Agent September 2, 2010 Page 2 Member Milestones continued from page 1 John Altieri has assumed Marketing Representative responsibilities in eastern MA. John also has more than 25 years of insurance experience across several disciplines including, underwriting, marketing with a number of MA insurers, sales management with a local independent agency, and insurance technology experience with a leading agency management systems company. John held a Business Development Manager position in the MA marketplace immediately prior to joining the Vermont Mutual team. Diane Hanson has been hired as a Marketing Representative to support agents in eastern and southeastern MA. Diane s 25+ year career with a national insurer progressed from Personal Lines processing to underwriting and supervisory roles, then to field marketing where she excelled as a PL Sales Executive for the past 16 years. Diane is also an active member in a number of local insurance associations. Dan Bridge has assumed Marketing Vice President responsibilities across all Vermont Mutual territories. In addition to his role as Massachusetts Resident Vice President, Dan will manage growth and profit initiatives throughout the seven northeast markets. E&O Update: by Curtis M. Pearsall, CPCU, AIAF, CPIA Special Consultant to the Utica National E&O Program Writing Commercial Auto? When an E&O claim happens, it can be huge! If your agency writes commercial business, there is a good chance you write Commercial Auto for many of those customers. For some of those risks the vehicles may be more private passenger autos, while for others the exposure may include vans and trucks of various sizes. Bottom line, while errors or omissions when writing Commercial Auto only amount to around 6 percent of all E&O claims, when the claims happen they tend to be much larger than other coverages. While writing Commercial Auto for your customers is not overly complex, it certainly does require knowledge not only of the coverages, but also of your customer, what the vehicles are used for and who is using them. Effective use of an Exposure Analysis Checklist is strongly recommended. One of the main issues with a Commercial Auto policy is the symbols used to indicate what vehicles are included in the coverage. The applicable symbols are expressed in numbers, ranging from 1 to 9. Symbol 1 is the broadest providing coverage for any auto. Thus, if your customer were to lease a vehicle for a particular job, symbol 1 would provide coverage. On the other hand, symbol 7 is only for vehicles listed on the policy. There would not be coverage for leased or non-owned vehicles with this symbol. Thus, having a discussion with your customer and getting answers to these questions will be beneficial when requesting that coverage be structured appropriately. Symbol 9 is only for non-owned vehicles. Other Commercial Auto issues Drive Other Car coverage/the Named Insured. Offer the owners of the business (where the business is the named insured) additional Named Insured status or "Drive Other Car" coverage. Should a businessowner be injured while as a pedestrian or as a passenger in another vehicle, this coverage would be needed to collect Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage from the Commercial Auto policy. Limits issues. Because of the size of commercial vehicles, especially trucks, the damages can be significant when a claim occurs. While limits of $1,000,000 may sound like a lot, claims involving bodily injuries can certainly be more than that amount. Thus, offering an umbrella policy is highly recommended. Should the insured want lower limits, obtain a sign-off. This sign-off will be a solid defense should a major claim occur and the insured alleges you had not provided the proper coverage. When providing an umbrella, be sure to satisfy the underlying limit requirements. (continued on page 3)

3 The Massachusetts Agent September 2, 2010 Page 3 E&O Update continued from page 2 Adding or deleting the wrong vehicles from a policy. If the Commercial Auto fleet is sizeable, maintaining an accurate list can be challenging. When the customer requests a modification to the policy whether they are adding or deleting a vehicle get the request in writing. This not only includes the vehicles in question, but the coverage specific to those vehicles. Request that the customer provide the VIN # for the vehicles being modified. It is also heavily recommended that when mailing the policy to your customer, advise them in writing to read their policy/ endorsement to ensure there are no mistakes. As stated previously, if you have symbol 7 coverage and accidentally deleted the wrong vehicle, there is sure to be a problem should that vehicle be involved in a claim. Replacement of coverage. If a customer presents an unwanted exposure (such as claims activity, problem drivers, etc.), it may be necessary for you to replace that account. If the account presents some challenges, aggressively pursue a replacement policy as soon as you know the carrier is going to get off that account. If it appears that finding replacement coverage may not be possible, promptly advise your customer. As you will note in the claim discussed below, not keeping the customer informed can result in a significant E&O claim against the agency. Issuing certificates/evidence of coverage for vehicles that are not covered. If requested to provide proof of coverage by issuing a certificate or ID card, pull the file to make sure the vehicle is still on the policy and that the policy is still active. Remember, too, that the certificate is not a policy and should only reflect the coverages actually on the policy. In this E&O claim, the client's Commercial Auto policy was going to be non-renewed, and the agency told the client it was going to be difficult to place them with a new carrier. They could not find a new carrier, and told the client the day before the coverage was to expire they could not find replacement coverage. The client had to take their vehicles off the road for two weeks until they could secure coverage from another agent. The customer was essentially out of business. The client sued the agent, stating the agency did not keep them properly informed of the situation, and claimed $679,000 in lost revenue. Although it was believed this was a defensible case, the case went to trial. The jury awarded $500,000 in damages, offset by 40% negligence on the client, bringing the award down to $300,000 plus interest. In addition, the jury awarded $500,000 for a violation of business law based on alleged misrepresentation. Counsel did not believe the judge would allow the $500,000 award for a business law violation to stand, and a hearing on that issue was set for two weeks after the verdict. The plaintiffs approached counsel right after the verdict and said they were willing to negotiate before the Court ruled on the business law violation. The case settled for $350,000. When writing commercial lines, you will be asked to provide Commercial Auto coverage for the majority of your customers. Take the time to educate your staff and your customers on Commercial Auto. This will go a long way toward ensuring you do the proper job each and every time.

4 The Massachusetts Agent September 2, 2010 Page 4 MEMA Offers Hurricane Preparedness Tips Family Hurricane Preparedness Tips As we enter the 2010 Hurricane Season, which experts are predicting to be very active, the Massachusetts Emergency Management Agency (MEMA) is offering personal preparedness tips for the all of the citizens of the Commonwealth. Every home and business should have a stocked basic emergency supply kit that could be used for any emergency, regardless of the time of year, states MEMA Acting Director Kurt Schwartz. Everyone should keep certain items around the house and workplace in the event you are isolated for three to five days without power Each kit will be unique to each family, but should include a portable radio, flashlight, extra batteries, a supply of non-perishable foods, along with bottled water, a first aid kit, extra prescription medication, and extra food and supplies for infants and pets. All families should develop a Family Emergency Communication Plan to help ensure everyone is safe. You should contact your local authorities to learn about your community s potential evacuation routes and the location of emergency shelters, said Schwartz. It is important to familiarize yourself with your Community s Emergency Plans before an emergency situation occurs. Develop a Disaster Supply Kit Go Bag, with essentials in case you must evacuate quickly. 1. HURRICANE DISASTER SUPPLY KIT Canned goods and nonperishable foods that do not need cooking: Canned meats and fish Canned fruits and vegetables Canned soups and puddings Canned fruit juices Dried fruit and nuts Bread, cookies and crackers Peanut butter and jelly Coffee and tea Manual can opener Bottled water (1 gallon per person/per day) Prescription medication (2 week supply) Extra eyeglasses Pet food/supplies Water purification tablets (halazone) Disposable plates, cups, and utensils Infant care items: Disposable diapers Baby wipes Baby food Formula First aid supplies Masking and duct tape Flashlight or lantern, with extra batteries Battery operated radio, with extra batteries Watch or battery operated clock Ice chest Matches Canned heat (sterno) Portable outdoor camping stove or grill with fuel supply A certain amount of cash Important documents (Such as wills, deeds, prescriptions, passports, birth certificates, health record, proof of address, Social Security number) Plastic trash bags Plastic sheeting or tarp Chlorinated bleach Personal hygiene items Other useful items: Work gloves Sun lotion Insect repellent Hammer Screwdriver Pliers Wrenches Handsaw Razor knife Ax or chainsaw Rope caulking Nails and screws Rope and wire Broom, mop and bucket All-purpose cleaner Ladder Sandbags Portable generator Tree pruner Shovel, rake and wheelbarrow Sheets of plywood (continued on page 5)

5 The Massachusetts Agent September 2, 2010 Page 5 MEMA Offers Hurricane Preparedness Tips continued from page 4 2. FAMILY EMERGENCY COMMUNICATIONS PLAN Develop a Family Emergency Communications Plan in case family members are separated from one another during an emergency (a real possibility during the day when adults are at work and children are at school, camp or at a friend s house). This plan should also address reunification after the immediate crisis passes. Ask an out-of-state relative or friend to serve as the Family Emergency Communications Plan contact person. During and immediately after a disaster occurs, it is often easier to access a long distance telephone number than a local one. Also, calling outside a disaster area is usually easier than calling into the same area. Make sure everyone knows the name, address and telephone number of the Family Emergency Communications Plan contact person. Designate two meeting areas for family members one within your community (your primary location), and one outside of your community (your alternate location). Sometimes an emergency could impact your neighborhood or small section of the community, so a second location outside of your community would be more accessible to all family members. A Family Emergency Communications Plan can help reassure everyone s safety and minimize the stress associated with emergencies 3. STAY INFORMED Educate yourself and family about emergency plans for your community, place of business, your child s school and camp. Know what potential risks your community and neighborhood are susceptible to in a hurricane, such as storm surge, flooding, etc. Carefully monitor the Media and follow instructions from Public Safety officials as hurricane approaches. MEMA s Hurricane Tips for Business Owners The business community should be aware of the potential of hurricane damage in the Commonwealth. Each business owner should prepare or review their own Preparedness and Recovery Plan. Business as usual will not happen without good planning. Review your property insurance with your insurance agent. Take photographs or make a video of your business establishment, both inside and outside. Determine and establish a written Hurricane Preparedness Plan for your business and its contents. Coordinate this plan with local and state officials. Specify the conditions under which the plan will be implemented. Test your plan, reviewing it annually. Establish an employee-training program on your Hurricane Plan. Make plans for protection of your computer files, including an off-site back-up system to secure and safely store data. Protect corporate records, keeping duplicates at an alternate location. Well in advance, acquire emergency protective equipment and supplies. Heavy plastic sheeting, duct tape, sandbags, emergency generator, chain saw and large pieces of plywood will help protect your property. Bring in display racks and other objects, such as trashcans that might cause damage if airborne. Remove outdoor signs, especially those that swing or are portable. Move merchandise, equipment or furniture away from windows or skylights. Elevate boxes or equipment, if possible. Turn off electricity and disconnect all electrical appliances and equipment (except for refrigeration equipment), in case there is a power outage. An ensuing power surge could be damaging to connected equipment. Inform all employees on when and how you will notify them to report back to work. Develop an employee identification system, such as picture ID badges. This may help employees gain access to the area after a hurricane. If possible, make arrangements to pay employees in cash. It may be several days before banking institutions are operational.