The Tennessee Insuror Mar/Apr 15

8INSURORTHE TENNESSEE

March/April 2015 Vol. 26 No. 2 10

Surviving the Switch:

Your AMS

48The Interest Rate Watch

Supreme Court Decision Could

Turn Healthcare Upside Down

www.insurors.org

Making Policy & Selling Policies

Having Insurance Agents in the Legislature Helps Us Access The Hill

2 The Tennessee Insuror

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contents

INSURORS OF TENNESSEE2500 21st Avenue South, Suite 200

Nashville, TN 37212-0539www.insurors.org

THE TENNESSEE

INSURORVol. XXVI, Number 2

March/April 2015

Phone (615) 385-1898Toll Free: 1-800-264-1898Email: [email protected]

Editor: Charles T. Bidek, CPCUPublisher: Daniel D. Smith Jr.

INSURORS OFFICERSPresident ......................................................... Cindi Gresham, CICImmediate Past President ..................................... Lou Moran IIIIIABA National Director ................................................ Brad SmithVice President, Region I ..................................... Chris Allison, CIC VP, Region II and Pres. Elect .... Christie Reeves, CIC, CPCU, CPIW Vice President, Region III ................................. John McInturff IIITreasurer .............................................. Battle Bagley III, CIC, CPASecretary ...................................................................... Rush PowersDirector, Region I ....................................................... Portis TannerDirector, Region I ...................................................... Edward KaiserDirector, Region I .......................................................... Tim RobertsDirector, Region II ....................................................... Chip FridrichDirector, Region II .................................................... Joe Lester, CICDirector, Region II ................................................. Steve CopelandDirector, Region III ..................................................... Kevin OwnbyDirector, Region III ............................................ Josh Gibbons, AAIDirector, Region III .................................................... Eric CampbellYoung Agents Chairperson .................................... Stuart Oakes

ADVERTISINGDisplay advertising rates, deadlines and specifi-cations may be obtained by writing to Insurors of Tennessee, 2500 21st Avenue South, Suite 200, Nashville, TN 37212, calling 615.515.2601, e-mailing [email protected] or online at

www.insurors.org

The Tennessee Insuror is provided to all Insurors of Tennessee members and associate members

as a member service.

3

features

departments

8 Surviving the Switch: Your Agency Management System

10 The Interest Rate Watch America’s Addiction to Housing

12 Prepare to Master Customer Service

14 Daniel Learns About Insurance: Google Compare...

48 Supreme Court Decision Could Turn Healthcare Upside Down

21 From Your President April Showers May Bring Laws?

23 From Your IIABA National Director Local Ads From the Global Internet?

25 From Your CEO We Have Met the Enemy and He is Us

29 Education Calendar

31 Government and Legal Affairs

37 Broker Spotlight RT Specialty

39 Company Spotlight Agility Recovery

41 Company Briefs

51 Meetings

53 Member Tips MR=MC or How Much to Pay for A Warm Lead

4 Making Policy & Selling Policies Having Insurance Agents in the Legislature Helps Us Access the Hill

Applied UnderwritersTennessee Insuror Back Page Ad

Live 8” x 10.5”Trim 8.5” x 11”

Bleed 8.75”x 11.25”

AU N Central Park TI C4

Contact: Sheila Gallagher P: 707-395-0645 Email: [email protected]

Applied Underwriters

©2015 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best. Insurance plans protected U.S. Patent No. 7,908,157.

Expect big things in workers’ compensation. Expect to save a third of your clients 30% or more. Most classes approved, nationwide.

For information call (877) 234-4450 or visit auw.com/us.


Who better to understand the day-to-day trials of an insurance agent, than another insurance agent? Many times, the lawmak-ers we work with on issues facing our industry need to under-stand the business ramifications of proposed legislation to have an informed opinion. When those elected officials are also insurance agents, it can make the job of our government affairs team that much easier. There are currently eleven members of the Tennessee House of Representatives, and three members of the State Senate, that are also licensed insurance agents:

Tennessee House of Representatives Members

Rep. Joe ArmstrongDemocrat - Knoxville District 15 - Part of Knox CountyCommittees: Member of Finance, Ways and Means Committee; Sub-committee of Finance, Ways and Means, TransportationRep. Armstrong is beginning his twenty seventh year in office, and is the Demo-cratic Leader Pro-Tempore and formerly served as the Vice-Chairman of the

Democratic Caucus. His has worked as an Insurance Manager for a Knoxville company and he formerly served on the Knox County Commission as both Vice-Chair and Commissioner. He was previously on the Joint TennCare Oversight Commit-tee and was the Chair of the Health Equity Commission.

Making Policy & Selling Policies

Having Insurance Agents in the Legislature Helps Us Access the Hill

Rep. Jimmy EldridgeRepublican - JacksonDistrict 73 - Part of Madison CountyCommittees: Chair of the Consumer & Human Resources Committee; Member of Local Government Committee; Calendar and Rules Committee; General Sub-com-mittee of Consumer & Human Resources; Rep. Eldridge is beginning his thirteenth year in office and is a former partner of

The Allison-Eldridge Insurance Group in Jackson, which is a member of Insurors. He had previously served as the Assis-tant Minority Floor Leader for the 103rd General Assembly, the Republican Caucus Vice Chair for the 104th through 105th General Assemblies, and on the Madison County Commission from 2002 to the present.

Rep. Ryan HaynesRepublican - KnoxvilleDistrict 14 - Part of Knox CountyCommittees: Member of State Govern-ment Committee; Ethics Committee; Fi-nance, Ways and Means Committee; Fi-nance, Ways and Means subcommittee and the Advisory Committee on Open Gov-ernmentRep. Haynes is beginning his seventh

Representative Ryan Haynes (R-Knoxville) meets with Insurors Past President Lou Moran III and

Young Agent Chairman Stuart Oakes

5The Tennessee Insuror

year in office and works as an insurance broker for WMG Ben-efits in Knoxville. He formerly served as Assistant Republican Party Caucus Chair.

Rep. Roger KaneRepublican - KnoxvilleDistrict 89 - Part of Knox CountyCommittees: Member of Education Com-mittee; Insurance & Banking Committee and Education Sub-committeeRep. Kane is beginning his third year in office, and operates a Farmers Insurance office in the Knoxville area. He is also an educator with Kaplan Financial on

Agent Licensing and has been active in the Knoxville Cham-ber of Commerce.

Rep. Kelly KeislingRepublican - ByrdstownDistrict 38 - Clay, Jackson, Pickett, Scott & Part of Anderson CountiesCommittees: Chair of Insurance and Banking subcommittee; Member of Trans-portation Committee; Member of Insur-ance and Banking CommitteeRep. Keisling is beginning his fifth year in office. He owns Keisling Insurance

Agency in Byrdstown, a member of Insurors, which he found-ed in 1985. He previously served as a Pickett County Executive from 1994-1998.

Rep. Steve McManusRepublican - CordovaDistrict 96 - Part of Shelby CountyCommittees: Chair of Insurance and Banking Committee; Member of Finance, Ways and Means Committee; Calendar and Rules Committee; Insurance and Banking SubcommitteeRep. McManus is beginning his fifth year in office. He is a licensed life insurance

agent and works in benefits and investments for First Tennes-see Brokerage in Memphis. He is also a former Regional Busi-ness Commentator for the Fox News channel. He currently serves as the Finance Chairman of the Shelby County Repub-lican Party and on their Executive Committee.

Rep. Bo MitchellDemocrat - NashvilleDistrict 50 - Part of Davidson CountyCommittees: Member of Consumer and Human Resources Committee; Finance, Ways and Means Committee and Con-sumer and Human Resources subcommit-teeRep. Mitchell is beginning his third year in office. He works as a Director of Sales

and Employee Benefits in Nashville. He is a former member of

the Nashville Metro Council Representing District 35.

Rep. Mark PodyRepublican - Lebanon District 46 - Cannon, Trousdale and Part of Wilson CountiesCommittees: Vice-Chair of Consumer and Human Resources Committee; Member of Insurance and Banking Committee; Con-sumer and Human Resources Subcommit-teeRep. Pody is beginning his fifth year in

office. He currently owns and operates a Nationwide insur-ance agency in Murfreesboro and is active in several Cham-bers of Commerce.

Rep. Dennis PowersRepublican - JacksboroDistrict 36 - Campbell and Union Coun-tiesCommittees: Member of Agriculture and Natural Resources Committee; Insurance and Banking Committee; Insurance and Banking SubcommitteeRep. Powers is beginning his fifth year in office. He formerly owned an Allstate In-

surance agency in Jacksboro for several years and now oper-ates a Nationwide agency in La Follette. He also serves as the Majority Caucus Vice Chairman.

Rep. Charles SargentRepublican - Franklin District 61 - Part of Williamson CountyCommittees: Chairman of the Finance, Ways & Means Committee; Member of In-surance and Banking Committee; Calen-dar and Rules Committee; Finance, Ways and Means Subcommittee; Joint Fiscal Re-view Committee and Joint Pensions and Insurance Committee

Rep. Sargent is beginning his nineteenth year in office. He is a State Farm insurance agent in Nashville. He formerly served on the Williamson County Commission from 1990-1996 and the Planning Commission from 1989-1997.

Rep. Ron TravisRepublican - DaytonDistrict 31 — Bledsoe, Roane, Sequatchie and Rhea CountiesCommittees: Vice-chair of Insurance and Banking Committee; Member of Consum-er and Human Resources Committee; In-surance and Banking Subcommittee and Joint Fiscal Review CommitteeRep. Travis is beginning his third year in

office and is a Nationwide Insurance Agent who has earned his LUTCF designation. He also serves on the Executive Board of the Southeast Tennessee Rural Planning Organization.


Tennessee Senate Members

Sen. Jack JohnsonRepublican - FranklinDistrict 23 - Williamson CountyCommittees: Chair of the Commerce and Labor Committee; Member of the State and Local Government Committee and Joint Government Operations Judiciary and Government SubcommitteeSen. Johnson is beginning his ninth year in office. He is a Senior Vice Presi-

dent and financial advisor for Pinnacle Financial Partners in Franklin and is a licensed life insurance agent. He serves on the State Capitol Commission and is a former Chairman of the Senate Commerce, Labor and Agricultural Committee. He is active in the Brentwood-Cool Springs, Spring Hill and Williamson-Franklin Chambers of Commerce.

Sen. Bill KetronRepublican - MurfreesboroDistrict 13 - Part of Rutherford CountyCommittees: 1st Vice-chair of the Ethics Committee; Member of Finance, Ways & Means Committee; State and Local Gov-ernment Committee and Joint Fiscal Re-view CommitteeSen. Ketron is beginning his thirteenth year in office and is the Republican

Caucus Chair. He owns Universal International Insurance in Murfreesboro, a member of Insurors. He is a former recipient of our Association’s Insuror of the Year award, receiving the honor in 2007. He is also a former Commissioner for Ruther-ford County.

Sen. Jim TracyRepublican - ShelbyvilleDistrict 14 - Bedford, Lincoln, Marshall, Moore and parts of Rutherford Coun-tiesCommittees: Chair of the Senate Trans-portation and Safety Committee; 2nd Vice -chair of Commerce and Labor Commit-tee; Member of Education Committee and Joint Committee, Council for Pensions and

InsuranceSen. Tracy is beginning his eleventh year in office. He is a for-mer Nationwide agent and operated Jim Tracy Insurance in Shelbyville and Murfreesboro for over 25 years. He also works as a college basketball official for the NCAA and is a member of the Governor’s Council on Physical Fitness.

Why it is So Important

Having insurance agents in the General Assembly, especially some of our own members, has a very positive impact for our Association. These legislators have a first-hand understand-ing of industry issues, and representation like that is crucial. We rely on our relationships with these industry veterans. u

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Directionthere when it ma�ers most there when it ma�ers mostthere when it ma�ers most

Donegal remains committed to our chosen direction for distribution — the independent agency system.

Unlike many others in the industry, Donegal has no interest in any other distribution channel. Instead, we focus our energy on consistently delivering greater value to our agents.

Staying true to our chosen course of supporting the independent agency system… another way Donegal is “There When It Matters Most.”

To learn more visit www.donegalgroup.com or call Bill Anderson at 800-277-7442 ext. 3418.


This article first appeared on the IA magazine Technology web-site section

Must a switch of agency management systems be a Pyrrhic victory, conquering some inefficiency but exacting a toll that negates any gains?

The assertion of a range of independent agents, system ven-dors and industry consultants is a resounding “no”—but sur-viving the switch is tough. It requires five key essentials:

Perform a solid cost-benefit analysis.1. Involve a swath of staff and producers in deciding wheth-2. er to switch, what to change and how to transition.Realize where and what the pain points are and prepare 3. for them.Clean up data in the current system prior to porting it to 4. a new one, recognizing that processes often require updating for a new platform.Expect ramping up the new system to take 5. time and effort.

Time to Change?

What might indicate it’s time for your agency to make the switch? System fees are creeping—or leaping—up. Or the existing system is aging and lacks updated capabilities. Or it might be facing its end of life, mak-ing a change inevitable.

“Agents want to change because they are frustrated that something does not work or is not available how they want it,” says Michael Foy of Foy Insurance, a board member of Network of Vertafore Users (NetVU). “Others have not implemented version updates or stayed on legacy products, and they become forced to change. Most will find their issues can be addressed with training or ver-sion upgrades.”

Steve Anderson, an agency

Surviving the Switch: Your Agency Management System by Rick Morgan, Aartijk Senior VP

technology consultant who tracks 40 agency management systems available from 25 different vendors, says many agen-cies may go through a sales demo but conclude that they don’t see enough advantage over their current system: “Some decide it’s not worth it (because it seems like they’re) not get-ting enough to make the pain of switching worthwhile.”

Many times, users are better served learning to use the cur-rent system more efficiently rather than switching. Kris Hack-ney, executive vice president of customer experience at Ap-plied Systems, says it’s a must for agencies to have, “systems that are advanced and flexible enough to respond quickly to new market opportunities.”

But many agents reach a point where the existing system just doesn’t offer what they need. For Sherry Burrell of Grimes In-surance, a 10-employee agency in Duluth, Georgia, it was a risk management issue. “I think the E&O control was probably

the biggest thing that convinced me,” she says of moving from Applied Systems’ TAM platform to Applied Epic

four years ago. “In TAM, there is no tracking as far as changes to policies. In Epic, you see the date,

time, who made changes and what changes were made to the policy or application.”

Vertafore’s Bruce Winterburn, vice presi-dent of industry relations, cautions agen-

cy principals against waiting until what he calls a “watershed moment”—a

system or business crisis when it’s “almost too late,” he says.

“It’s not any one time or event, but kind of a

movement I think agents can

sense.”

B u y i n g the Switch

C o m p l a i n i n g about the flaws of a

management system might come easy. But

getting users who might fear the pain of switching to

buy in? Not so much.


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That’s because the agency management system is, “the heart of your company,” says Jaideep Jayaram, vice president of sales and marketing for EZLynx—and “asking people to do a heart transplant is always scary. It all depends on which clinic you go to.”

Michelle Somberg, marketing/commercial lines manager at Collinsworth, Alter, Fowler & French, a division of Nielson, Hoover & Company that employs more than 90 staff mem-bers throughout the country, says the crux of the problem is fear of the unknown. “Have you ever read a book called ‘Who Moved My Cheese?’ Cheese is very important,” she says. “No one likes change. I don’t like change either, but unfortunately change is the future.”

That’s why clear communication is so important in a success-ful process. “Clearly communicating why change is needed and the benefits of implementing a new agency management system across an agency to all stakeholders in the transition helps to build buy-in from the start,” Hackney explains.

Anderson, who helps agencies evaluate and select manage-ments systems, understands that changing systems is a very big deal. “Most agencies do not give it the consideration it deserves. Then they make a move, didn’t research it well enough, didn’t know what they were getting into and then all of a sudden have major productivity issues,” he says. “So they’re not getting the benefit they expected or thought they should. Certainly sometimes that’s a vendor issue, but a lot of times it’s just unrealistic expectations.”

After deciding a change is necessary, Anderson says employ-ee buy-in is critical—it shouldn’t be the agency owner mak-ing a solo decision about the new system. Rather, the agency should engage a group of employees representing all agency functions. That’s exactly the approach Somberg used when her agency combined three operating systems in Epic, con-verting branches that used AMS360, TAM and AfW. “We draft-ed people from various departments and said, ‘We want you on the team,’” she explains. That included producers, account managers, service and marketing reps and accounting. “By doing that, they all had input.”

Managing the Migration

But getting your team on board is only half the battle—they then have to take the time to implement the change in a thoughtful way. “We’re all creatures of habit,” Winterburn says. “No one is sitting around at their desks looking for something to do. Everyone is very busy.”

The migration typically involves not only funneling data from one system to another, but also improving or updating work-flows within the agency and with carriers. Experts are unani-mous: No matter why or how an agency chooses to switch, the process will disrupt everyone in the office. From training to new processes and procedures to other shifts, it’s essential

continued on page 41


It seems like - forever. That is, the amount of time that has passed as many interested parties have been waiting to see if the Federal Reserve will raise interest rates. Like the proverbi-al “watched pot that never boils,” the Fed’s rate (rate charged on overnight funds between banks) has been sitting at near zero percent for the last six years.

Certainly most economists agree that the zero rate policy was effective in combating the economic crisis of 2008, reducing the cost of borrowing for everyone - businesses, consumers, and the government. In addition to the Fed’s action to keep overnight/short rates low, they also embarked on massive gov-ernment securities purchases in order to reduce interest rates at all points on the yield curve. During this period of time the Fed’s U.S. Treasury holdings increased from roughly $500 bil-lion to nearly $2.5 trillion. This latter action ensured that the 10-year U.S. Treasury was persistently at historically low levels, ensuring that homeowners and homebuyers could benefit from very low interest rates too. A little more than a year ago, the Fed began to taper their securities purchases. Its demand, however, was replaced by money center banks and foreign purchasers as the economies of Europe and other developed nations demonstrated continued weakness, on a relative basis.

When is Enough... Enough?

For millions of senior citizens, the last six years has been any-thing but a party. Living on fixed incomes and historically supplementing their pension and social security income with interest on bonds and CDs, the zero interest rate policy has been punitive for this segment of our population, which has limited options for producing income from wages. Anecdotal-ly, for roughly the last three years seniors have been patiently waiting for a lift from the Fed. This is evidenced by the rela-tively short-term duration of banks’ CD portfolios. As of De-cember of 2014, banks in the state of Tennessee maintained average liabilities (most of which are deposits) over one year in duration of just 11%, and were only paying an average of 0.61% for all interest-bearing deposits. The options for savers are not much better elsewhere as the 10-year U.S. Treasury is yielding less than 2%.

But against the backdrop of these protracted low rates, the economy has been steadily improving. Despite evidence that a number of people have permanently left the workforce, un-employment has steadily recovered over the past few years as measured by the Bureau of Labor Statistics (see chart).

While the economy has not seen a robust recovery, measures of GDP growth indicate that it is, indeed, recovering - albeit

at a slower rate than some prior recoveries. Within the U.S. regional economic realities vary, and will continue to do so as states and municipalities compete for businesses and job creation. But on average moderate economic growth is hap-pening in aggregate nationwide.

Feeding the Addiction to Housing

So with evidence of recovery well established, why has the Fed chosen to sit on zero rates? To this observer the clear answer is fear amongst Fed policymakers that any pullback in the hous-ing sector will reverse the course of economic growth. While the Fed Funds rate is a short-term interest rate, any increase is likely to see a shift in the total interest rate curve, affecting yields at various maturities and resulting mortgage rates. The U.S. Bureau of Economic Analysis estimated that 17.6% of total GDP was attributable to housing and housing services in the first quarter of 2014. That compares to a record high of 20.6% back in 2005. When one considers the level of economic strife in the post 2008 crisis in the context of the 3.0% variance be-tween current housing-related GDP and the record high in 2005, the margin for error appears to be slim. Given this reality, Fed fears of a reversal of housing fortune are understandable. For policymakers, however, it should be a wake-up call to the fact that our economy may, in fact, be too heavily dependent on housing, and consideration should be given to reduce the dependence on it, or consider ways to reduce volatility. So, my fellow Americans, to steal a line from Robert Palmer’s 1985 hit song, “Might as well face it, you’re addicted to… housing.”

About the Author

Jim Rieniets serves as President and CEO of INSBANK, which requires him to manage the day to day activi-ties of the bank. He also serves as a director of INS-BANK and on the Loan and Investment Committees, as well as being the Chief Manager of the bank’s

subsidiary, Finworth Mortgage, LLC. Jim has an extensive bank-ing career and leadership background and formerly served on the Credit Committee of the Tennessee Bankers Association. u

The Interest Rate Watch America’s Addiction to Housing by Jim Rieniets, President & CEO of INSBANK

Unemployment Rate (seasonally adjusted)

Note: Cross-hatched area represents recession.month

perc

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Your independent agency today has more opportunities to prosper than ever before in the history of the insurance indus-try. The complexion of today’s marketplace allows your agen-cy to be the hub of its own community as well as a member of many other communities – all populated by consumers. Some of these consumers are your customers, and you want to make sure they stay with you. Others are prospective cus-tomers who need to be convinced to do business with you. The long-term success of your business depends on custom-ers, so you cannot overstate the importance of customer service. So before you try to sell another policy, you should consider two key questions: Who is today’s consumer? What should “customer service” mean in today’s marketplace?

Consumers Are Connected, So How Do You Interact?

The American economy is driven by consumers who want and expect to help and serve themselves. Social networking sites such as Facebook, consumer review portals such as Yelp, e-commerce sites such as eBay and Amazon, and community sites such as CraigsList and Wikipedia are the go-to tools for finding information and answers, shopping and buying, and getting things done. Researchers have dubbed this trend “the groundswell.”

“The groundswell is: A social trend in which people use technologies to get what they need from each other, rath-er than from traditional institutions like corporations.” - Groundswell: Winning In A World Transformed by Social Tech-nologies, by Charlene Li & Josh Bernoff

Today’s empowered consumers are taking different routes to get where they want to go. Researchers at Forrester have seg-mented U.S. adult consumers by social technographic:

Prepare to Master Customer Service

Social Technographic

Group

% of U.S.

Population

What They Do

Creators 24 Write blogs, maintain a

website or upload audio/

video

Critics 37 React to others’ content,

post comments, post rat-

ings/reviews, edit wikis

Collectors 21 Save & tag articles, use

newsfeeds, organize

content

Joiners 51 Set up and maintain so-

cial networking profiles

Spectators 73 Read, listen, watch what

others produce & publish

Inactives 18 None of the aboveSources: Groundswell: Winning In A World Transformed by Social Technologies, by Charlene Li & Josh Bernoff, Forrester Research Inc. (2008); Forrester Empowered Tool

Today, most personal insurance consumers begin their search for new coverage online. In fact, nearly 80% of auto insurance shoppers use some form of online research. Only 20% depend on an agent alone to do their research, according to the 2012 McKinsey Auto Insurance Consumer Insights Research.

Professional Service Remains Vital

Yet, at the same time, consumers want to interact with prod-uct and service providers in ins urance and financial services. For example, research and consumer behavior shows they still need and want what independent insurance agents provide: The overwhelming majority turns to a live person – in person or on the phone – to make an auto insurance purchase.


how you acquired the majority of your customers and use that information to start locating more of them!

Work with your ideal customers to gain insight into why they chose your agency over others. Pick up the phone or send a personal e-mail and ask them to let you know what made them buy from you, why they continue renewing their busi-ness and what you offer than others didn’t. Take to social me-dia and solicit feedback, get customer to provide feedback on sites that gather customer reviews.

Survey your new customers to learn why they choose you, what you offered that was attractive to them, even ask what you could improve upon to help hone your customer image.Remember, the right metrics will help you analyze every in-teraction and begin to learn more about your customer base, especially as their needs change or their methods of commu-nication evolve.

Finally, it is important to know that consumers today will come to you from a number of acquisition points, come more prepared than in the past, come with many questions and with reams of research that they have gathered online. They will have collected information about you and your agency and will have likely formed an expectation of the advice and service they will receive. Be up to the challenge!

Reprinted from the Big “I” Best Practices Series on Customer Service Experience available at iiaba.net u

For a generation, marketers followed a mass-market, mega-phone approach. Today’s marketing environment is inter-active and consumer-driven. Now that you’ve recognized changes in the environment, it’s time to adapt and work pro-actively and interactively with today’s connected consumers.

Better Understand Your Customers

Creating customer connections means gathering what you know about your existing customer base and using that in-sight to create long lasting customer engagement. Find out how to create a process that starts with the first contact and continues throughout the customer lifecycle.

There some simple steps that you can take to learn more about the customers you already have, and then find ways to leverage that knowledge to attract more just like them.

Determine your ideal customer, melding together a group-ing and finding what makes them all similar. Use things like their age, gender, income, along with their personality traits and buying preferences, then consider their hobbies, their community affiliations, their families, their employment, and other traits that could help define their buying behaviors.

Locate where you most often find your customers. Word of mouth, community involvement, online, via printed market-ing materials or ads in the newspaper? Take time to analyze

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Who’s afraid

of the big, bad Google?

Daniel Learns About Insurance: Google Compare - Be Afraid? Should You Be Worried? It’s More Complicated Than You Think written by Daniel Smith

Insurors Director of Communications Daniel Smith is far from an insurance expert, but he is trying to learn! In this new series he will look into insurance and coverage questions he has about popular trends in day-to-day life.

There is a lot of buzz in the Nashville area over Google Fiber. The technology giant is bringing its ultra high-speed internet service to the city in the next few years, offering users speeds of more than 1,000 megabits per second. I still remember when the internet first got going, and you would wait a couple of min-utes for a page to load. But that is all in the past now, as compa-nies like Google have streamlined our online experience.

Now Google is trying to bring a streamlined expe-rience to private passenger auto insurance. Working through an online agency, the com-pany has launched Google Compare in Cali-fornia, with plans to expand into more states later this year. Should that worry agents and insurers? In this article I’ll look at two sides of the argument, but my answer would be, “at least a little - just look at the data.” The com-pany has some of the largest networks of data in the world. Its Google Maps program has built street-view networks across the country, and it is working on self-driving vehicles that hold data on road con-ditions, driving rules, speed limits and more. Not to mention, they do have a pretty good grasp on the popular topic of SEO (search engine optimization).

In fact, you may not have been aware, but they just changed some of the SEO rules. Beginning April 21st, websites which are not mobile friendly (not adaptable to viewing on mobile devices) will be demoted in their search rankings. That could be a big deal for those not paying attention. (Not sure? Visit https://www.google.com/webmasters/tools/mobile-friendly/)

So we know Google has the data and the means, but do they have the insurance chops to make agents and insurers stay awake at night?

Don’t Worry Too Much - This Isn’t a True Comparison

The site itself is called Google Compare, with the hook being that consumers get a quick and easy way to compare rates from several companies fighting for their auto insurance

business. But is this a true “comparison” of similar policies and coverages, or is this simply another way to commoditize personal auto? Bill Wilson, Director of the Big “I” Virtual Uni-versity, investigated some of Google’s claims about their new offering, and says this isn’t an “apples to apples” comparison, it’s just an illusion.

“Nothing on this website enables consumers to “understand” or compare the product they think they’re buying,” Bill states. “The site tells you absolutely nothing of substance about any individual insurance policy, let alone the claims or service practices of the insurer. It simply gives you the price of an un-known product.”

Bill continues, “How could a driver possibly think they’d get a ‘better policy’ when the only real comparative information they’re given is a price? I asked for a quote on the website using a hypo-thetical 60-year-old single California man with a four-year old Honda Civic. The premiums I was quoted for $50/$100/$50 liability and UM (the lat-ter without PD), $5,000 medical payments and comprehensive and collision, each with a $500 deductible, ranged from $569 with ‘one of Amer-ica’s Most Trustworthy Companies’ to $1,407 with

a carrier boasting ‘A Great, Low Rate With Flexible Payments To Fit Any Budget.’ How is that comparing providers by any measure other than price?”3

Be Worried - This is Only the Beginning

While I agree with Bill on the facts he presents, the reality is that many consumers just don’t care. There are plenty of con-sumers that never read their auto policy, and only shop based on price. And that is Google Compare’s target market. Is that a good thing? Probably not, but it is the way of the world.

When discussing Google’s entry into the market at an event in Texas in January, W.R. Berkley Corp. CEO William R. Berk-ley shared some strong opinions on the industry impact. He agrees with the argument that many customers will con-tinue to pay more for the service an agent provides, he also cautioned that other steps need to be taken, “But we need to start by asking, ‘what do our customers want, how do we serve them, what are we going to do to make money and see that that they are happy?’”

Who’s afraid

of the big, bad Google


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He continued with some words of warning to those that feel the industry won’t need to adapt. “We are a bunch of cheap son of a guns. We don’t spend on anything. We’re just bums, companies and agents both. We don’t invest in the future... We have these meetings and talk about what to do. It’s always in response to what’s going on around us instead of sitting here and saying, ‘Where is the world going to go? What kinds of things should we be doing? How to make it better?’”2

So What’s the Answer?

As with many things, the answer probably lies somewhere in the middle. Google Compare will get business, but the major-ity of the business it draws may syphon more away from the GEICOs and esurances of the world than from independent agents. But that doesn’t mean agents and insurers shouldn’t be more proactive. Consumers want multiple ways to interact and do business, and that’s a fact. If your agency doesn’t have an online presence, a social media presence, and provide a high level of personal interaction service, it will eventually catch up to you.

Google doesn’t have the industry knowledge to immediately step in and dominate the market, but that won’t stop them from trying to build up to that point. They already have the backing of some major carriers, even if it does trend towards the sub-standard category at this point.

If your answer is, “We don’t what that type of business any-way,” then maybe you’re safe for now. But if Google and other players develop this technology and mine this data to a point where they can apply it to other lines of business, then you will have to take notice. Will that happen? Probably not for quite a while, but we cannot sit idly by and wait for that day to come.

So what should you do? Encourage technology growth at your agency and from your carriers. Develop new ways to in-teract with your clients. Try new things that may have more long term implications. Utilize resources like TrustedChoice.com. Do they take time out of your day and you employees’ day? Absolutely, but they may make a difference in your busi-ness in a year, or five years, or ten.

Google Compare isn’t a death stroke for agents, but it should serve as a wake up call.

1-Per “‘Apples to Apples’: The Google Compare Illusion” via NAIC at http://www.iamagazine.com/viewpoints/read/2015/03/09/apples-to-apples-the-google-compare-illusion2-Per Insurance Journal reporting on the meeting at http://www.insurance-journal.com/news/national/2015/02/24/358522.htm

About the Author

Daniel Smith serves as the Director of Communica-tions for Insurors of Tennessee. He has a Bachelors degree in Marketing with a minor in Graphic Design from the University of Tennessee at Chattanooga. He may be contacted at [email protected]. u

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David Allen is a principal agent and co-owner of RSS Insurance in Chattanooga. An Athens, Georgia native who did the “unthinkable” and went across state lines to college at UTK, he worked as an insurance broker for eight years and helped found a tech company in 2011. He has now made Chattanooga his home and has been with RSS since the beginning of 2013. David is also a member

of Insurors Young Agents Committee, representing Region III in East Tennessee.

The Insuror: Can you tell us a little about your current job title and responsibilities?

David: Production and service is where the majority of my time is spent at RSS Insurance, however every day is different and I try to fill in where my team needs me. So, at the end of the day, my duties have a wide range.

I am fortunate to have a great team of people around me. We are a relatively small company, and when you operate with around 25 staff members, you learn to fill in wherever it is needed.

The Insuror: What can you tell us about your educational background?

David: I am a proud graduate of the University of Tennessee at Knoxville, although I was born and raised in Athens, Georgia. My undergraduate degree was a Bachelor of Business Administration in Finance and Spanish. For graduate studies, I was fortunate to attend Florida State University and complete their Master of Science in Risk Management and Insurance program, which has been really interesting, informative and fun.

The Insuror: How and why did you get started in insurance?

David: A dear friend and family member convinced me to

give the industry a try. After just six months, I fell in love with the business, and I have been trying to grow and learn the business ever since.

The Insuror: Do you have any influences/role models in the industry?

David: Absolutely. I have been extremely fortunate to meet so many great leaders in this industry from all over. From each of them I have obtained advice, guidance and support. At RSS, I am also really fortunate to have good partners, and our senior partners really offer tremendous help and support. During the work week, I keep a list of agents that I look up to in my pocket, and I frequently look at it and use it as motivation to get better.

This industry is like a sport, there are always agents that are better than you so you to keep training hard to improve and get better.

The Insuror: Is there any advice you could offer Young Agents or others in the industry to achieve success?

David: Do the right thing, always, no matter the cost. Work hard and persevere. Take risks.

The Insuror: As an independent agent, you have many partners in this industry, including carriers, MGAs and many more. How do you determine which ones are the right relationships?

David: At RSS, our people come first, then our carrier partners. Without these two assets we cannot deliver the level of service we strive to achieve. This industry is so much fun because every day is different, which makes every relationship with carriers and MGAs unique to the time and situation.

For us, the right partnership is with people who do what they say they are going to do and who mirror our long term outlook on where we want to be. We are very fortunate to have partners that do this every day.

The Insuror: Thank you for giving us your time David, we appreciate it and wish you continued success in your career. David: Thank you. I hope to make it a great one and I appreciate the opportunity to discuss it. u

Future Leaders Spotlight presented by

David Allen • RSS Insurance - Chattanooga

David Allen of RSS Insurance on a recent Heli-skiing trip


Below are some updates on the events scheduled for Young Agents in 2015, and more will be announced soon. Please mark your calendar and join us for these opportunities to network.

April 16 - Young Agents ReceptionThe Sutler • 5-7 pm CST • Nashville

April 30 - Young Agents ReceptionLocal on the Square • 5-7 pm CST • Memphis

May 7 - Young Agents ReceptionCarolina Ale House • 5-7 pm EST • Knoxville

October 10 - Young Agents Sponsored Coat DriveWorld’s Fair Park • UT vs. UGA Tailgate • Knoxville

October 12 - Young Agents Reception at Annual ConventionLocation TBD • Knoxville

Young Agents Committee

Stuart Oakes - ChairProducer/Construction DivisionTIS Insurance [email protected]

Paul Steele, CIC, CRM - Immediate Past ChairProducer/AgentMartin & Zerfoss, [email protected]

Tim Treadwell V - Region IAccount ExecutiveBoyle Insurance [email protected]

Brent Chance - Region IIPrincipal Agent/OwnerIvy [email protected]

David Allen - Region IIIPrincipal AgentRSS [email protected]

For more information, please e-mail [email protected]. u

Aaron Jensen Shafer Insurance Agency, KnoxvilleAdam Reeves Union City Insurance Agency, Union CityAndrew Powers Burke, Powers, and Harty Insurance, BristolBlake Dickens Harris, Madden and Powell, MemphisBrandon Patterson Ownby Insurance Services, SeviervilleChad Richardson Swallows-Newman Insurance, CookevilleChad Snider Westan Insurance Group, MartinCharlie Taylor Burke, Powers, and Harty Insurance, BristolClement Ledbetter Battle Page Insurance, FranklinDavid Evans The Insurance Group, Inc., KnoxvilleGarrett Flannery Carroll Insurance Agency McKenzieJamie Williams Hardin County Bank Ins. Agcy., SavannahJared Smith TIS Insurance Services, KnoxvilleJason Stiltner Heritage Insurance, KingsportJason Teague Watauga Insurance, Johnson CityJeremy Stiltner Heritage Insurance, KingsportJohn Brock Brock Insurance, ChattanoogaJohn Fritts TIS Insurance Services, KnoxvilleJosh Witt The Insurance Group, Inc., KnoxvilleKevin Ownby Ownby Insurance Services, SeviervilleLeslie Frazier Shafer Insurance Agency, KnoxvilleMatt Spellings Consolidated Insurance Agency, ParisMichael Novarese McDaniel-Whitley, Inc., MemphisMike Thomas Insurance, Inc., NashvillePatrick Sala Harris, Madden and Powell, MemphisRamsey Brock Brock Insurance, ChattanoogaRobert Harris Tigrett & Pennington, NashvilleStacy Woodard Shafer Insurance Agency, KnoxvilleStuart Oakes TIS Insurance Services, KnoxvilleTim Treadwell Boyle Insurance, MemphisWill Webb Battle Page Insurance, Franklin

Congratulations Exceptional Agents 2015

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From Your President


How quickly my year as President of the Insu-rors of Tennessee is passing. It is hard to believe that we are almost through the first quarter of the year. We have all had to deal with the ice and snow of the winter of 2015 and looking for-ward to spring. This, of course, is the time that our state legislators are in session. Chuck and Ashley are busy examining each bill that has been filed, insuring that the content is favor-able to our members. They are meeting with various State Senators and Representatives, providing our elected officials with their insight to the wording and effectiveness of each bill.

They are currently working on an amendment to the sinkhole bill that was passed last year. The bill that was passed defined that the applicable coverage responded only to the dwelling and not to any appurtenant structures. Many of our customers have free standing garages, barns, pool houses and other buildings. Redefining the structures covered will help to eliminate a potential E&O exposure and avoid legal action by disgruntled insureds. We are supporting a bill that broadens the definition of covered building to fix an unintended consequence in last year’s sinkhole bill. It is currently making its way through the various committees.

Under much discussion this year is the uninsured motorist bill. Higher limits and penalties for un-insured motorists in Tennessee are proposed. The bill would also authorize the Department of Revenue to create an online auto verification database for personal vehicles that revokes reg-istration, after a time, of uninsured vehicles. This bill has the backing of several high profile Sena-tors and well as local news reporters and public figures. Some form of the bill is likely to pass. You can rest assured that our lobbyists, Chuck and Ashley will be monitoring the progress as it con-tinues to work through the committees.

Of course, the ACA Health Care Reform law is under much discussion at the State level as well as on the National front. We expect to see changes in the program and various bills will be up for debate throughout the year in Washing-ton, D.C.

The Workers’ Compensation Opt Out plan is a widely debated bill that is ongoing this year. If passed it would make Tennessee the third state to implement a program with an option in lieu of a workers’ compensation system. At this time, the bill has received a negative implica-tion from the Workers’ Compensation Advisory Committee. The bill has been discussed in the Senate Commerce Committee, but no action was officially taken and it has been rolled to 2016 in the House. We will continue to monitor it, and expect the bill to be amended, but we cannot support it in its current form.

The involvement of our Association in pending legislative bills does not come without a cost. Our State and National PAC provides the funds our staff needs to be beneficial and effectively provide our message to our elected officials. It is imperative that we donate to funds neces-sary to continue the success that we have had and to be sure our voice is heard in congress. Our State and National PAC is strong and effi-cient. We need your help to continue to pursue our goals. Please be sure to make your dona-tion to InsurPACTN and InsurPac National. Find more information on both PACs on our website at http://www.insurors.org/what-we-do/gov-ernment-affairs/

I am looking forward to Spring and attending the events of our various local Associations. I cannot express how honored I am to be in this position. Thank you for your continued support to the Insurors of Tennessee. u

April Showers May Bring Laws?

“ T h e involvement o f o u r Association in pending l e g i s l a t i v e bills does not come without a c o s t .”

Cindi Gresham, CIC

22 The Tennessee InsurorFor All That Matters

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W W W . A C U I T Y U . C O M


It’s probably happened to you before. You’re on-line shopping for something, and you decide to just look around some more and buy “it” later. Then your surfing the web looking at something else, and an ad for “it” pops up on your screen.

It’s amazing (and maybe sometimes a little scary) what they’re able to do with ad track-ing these days. What if you could use this same technology to promote your agency? With the Trusted Choice Local Advertising program, now you can.

This program will allow you to target your ads to a specific market segment. You can set up your ads to focus on age, gender, location, time of day, web behavior or matching content. If you are looking to focus your sales on boat in-surance, maybe you target users who frequent the Boating Magazine and Bass Pro Shop web-sites. Maybe you are looking to add high value homeowners, so you target certain age groups and their content interests. All these things are now possible, and can be accurately measured and tracked.

How Would I Know if it Was Working?

Online advertising success can be tracked through impressions (number of times viewed), geographical location, length of time spent on the site, references to the site, click-throughs and many more metrics. Not only that, but if

you see a spike in your own web traffic, call-ins or online quotes, you can bet your receiving the benefit of the ads.

Doesn’t That Cost a Ton of Money?

One of the great things about online advertis-ing is the low entry cost. You can reach a lot of people, still target your ads, and not have to pay an arm and a leg. Plus, with all the tracking methods, you can actually determine a realistic return on your investment. Even better, as part of Trusted Choice’s new Marketing Reimburse-ment Program, you can receive up to $750 on your local online advertising package as a member of Insurors.

And these ads won’t end up on sites where no one is ever visiting. Your package can include popular sites like YouTube, Yahoo!, Trulia, Face-book, AutoTrader and more.

How Do I Get Started?

The third “flight” of advertising is scheduled to run from September 1-November 30 of this year. You must purchase these ads by August 1st to be included. You can get more details and in-formation on the program by viewing the on-line presentation at https://cobrand.iiaba.net/uploads/files/x/000/0b5/545/Local%20Ad%20Webinar%20-%20March%202015.pdf or contact Keischa Cherry at [email protected]. u

From Your IIABA National Director

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We Have Met the Enemy and He is Us?

“We certainly can develop a s o l u t i o n without our clients having to rely on third party arranged coverage. . .”

Since the beginning of legislative session I have heard, ad nauseum, about ride sharing compa-nies such as Lyft and Uber. I personally never cared for the name ridesharing, because there is no “ride sharing” going on here. If you are old enough to remember ride share boards in your college dorm there are no similarities.

The ride share boards I remember consisted of a piece of paper stapled to bulletin board an-nouncing that someone was going home for the weekend—leaving on Friday afternoon and returning Sunday—to a city where you were often dropped off and someone else, like your parents, picked you up. Today’s rideshare folks insist they are not taxis, in that all riders are picked up by individuals who accept or reject business on their own. There seems to be no dispatching, but rather individual car owners responding to a request. Not being a taxi makes life because they do not have to comply with lo-cal ordinances, licenses and taxes. They are ac-tive at passing laws limiting government from regulating them. However, they want parity with taxis regarding such rules as airport pickup points through legislation they are sponsoring.

One Man’s Experience

I learned about this new phenomenon via by millennial daughter. Late last summer I was go-ing on a business trip to Dallas and decided to use their services as a I made my way to three separate meetings.

Transportation Network Companies (TNCs as they are correctly called) use a sophisticated app on your smart phone that finds your pickup point, and then you provide your destination

address. Just by opening the app and selecting a pickup, a car was on the way and I could watch the screen to see where my driver was located. I was also shown a photo of my driver and an estimate of the cost of my trip before I entered the car. The cars were newer models and clean vehicles. No receipt was required as my phone received one as we arrived at the destination. The fares charged seem very reasonable and overall, it was a great experience. I understand why so many have chosen to shun traditional public transportation. I began to wonder how long would it take for the more traditional com-panies to embrace the technology founded by these TNCs and change their own business models.

Thoughts From an Insurance Guy

As we rode the streets of Dallas, I began to think about the insurance implications. Who is pro-viding the coverage for liability/med pay and physical damage to the vehicle? All of this came out in testimony during Capitol Hill debates this winter. Basically, the driver is required to have a liability policy with physical damage at their own discretion. However, none of that would be available while that car is hauling me. The livery exclusion or using the vehicle for hire would apply. The exclusion is found in most (not all) personal lines policies.

The TNCs address this by saying they provide liability coverage and physical damage if the driver has it on the car. The coverage turns out to be surplus lines from out of state (or country) and somewhat protected from state regulation. Their speakers are eloquent, using the phrases like “they will pay,” and hinting at a self man-

The Uber app in action, setting a pickup location


aged insurance program. They have also suggested that they would not get in-volved until after a declination from the personal lines carrier. That thought has largely been dispelled through negotia-tions.

App On/App Off

Another major question has been, “When does the personal lines policy end and the TNC policy take over?” The TNC providers themselves have always wanted it to be when the passenger ac-tually gets into the vehicle (hauling for hire). Insurance carriers have insisted coverage ends when the driver has his “App On” actively seeking customers (commercial enterprise). We have had a similar situation with pizza delivery go-ing on for years. But this issue could be much bigger.

Agent Issues

Before you say to yourself, “This doesn’t apply to me since my town will never

have TNCs running around the streets.” Don’t be so sure. Signing up as a driver is simple and there is virtually no cost to the drivers in entering the business. TNCs have nothing to lose by signing up every one who meets their rather mini-mal requirements.

Moreover, consider a parent sending a child to college with their vehicle. A new way to earn spending money appears. Do you think the child will call express-ing their concern about invoking the livery exclusion of your personal auto policy before signing the driver agree-ment? What reaction will your carriers take to individuals who have accidents or traffic violations while using the ve-hicle in business? If claims are denied, for whatever reason, what effect will that have on the relationship with your client? What do you tell your client when they freely admit using their (or Dad’s)car in the business and want a discount on their personal policy since you’re only covering them part time? These is-sues are far from settled.

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How Do We Move Forward?

Legislation will help by setting standards for all those in the current market and all those that will come after them. The taxi business will either change or may face extinction. Insurance carriers must adapt in a similar way. We should not rely on an exclusion to wash our hands of the issue. Our clients deserve more.

The industry has lived through muscle cars, replacement cost contents, all risks policies and even sinkholes. We cer-tainly can develop a solution without our clients having to rely on third party arranged coverage though off shore sur-plus lines carriers.

I am pleased to see some carriers have already developed part time commer-cial endorsements to charge a rate com-mensurate with the exposure or using commercial forms.

I hope we as an industry will continue to create solutions, and not barriers. u


Education CalendarThe Insurors of Tennessee offers education opportunities to member agents across a wide range of insurance specialities that satisfy individuals at many different experience levels. If you are looking to further your career, seeking a professional designation, or need to satisfy continuing education requirements, check out the variety of courses available.

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Government and Legal AffairsThe Interview: How to Hire While Avoiding a LawsuitWritten by Ashley N. Gold, JD, Insurors General Counsel

Opening Scene: A conference room in an agency somewhere in Tennessee. An owner or manager is sitting patiently wait-ing for the job applicant, who has applied for a job as insur-ance producer. In walks the applicant…

Owner: “Good morning, let’s get right to it. I have read your resume and it is clear that you have several years of experi-ence selling the exact type of insurance we sell. I also see you are currently employed by our competitor across the street. Do you have a non-compete agreement we need to be con-cerned about?”

As the owner of an agency, and if you follow our seminars and articles, you probably know the benefits of having a good non-compete or non-piracy agreement to keep your top producers from taking your top clients and leaving. However, you may not be as familiar with the risks associated in hiring someone who is subject to an employment contract. So, let’s review.

If you, as the employer, hire someone who has an existing employment contract, you too can be sued. In fact, Tennes-see has a specific law regarding the procurement of breach of contracts. The law is Tenn. Code Ann. §47-50-109 which reads:

“It is unlawful for any person, by inducement, persuasion, mis-representation, or other means, to induce or procure the breach or violation, refusal or failure to perform any lawful contract by any party thereto.”

There are six elements to this law that must be met in order to find a violation:

1. There must be a legal contract.

2. The wrongdoer (hiring party) must know of the contract

3. The wrongdoer (hiring party) must have intended to in-duce the breach

4. The wrongdoer (hiring party) must have acted maliciously

5. The contract must have been breached

6. The breach causes harm

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form Trade Secrets Act. Under this act, trade secrets are protected by statute. The law states:

“A trade secret may consist of any formula, process, pattern, device or compilation of information that is used in one’s business and which gives him an opportunity to ob-tain an advantage over competitors who do not use it.”

Hickory Specialties v. BNL Laboratories, 592 S.W.2d 583 (Tenn. Ct. App. 1979).

So, if you are in the market to hire a new producer and are looking at someone with experience working for a competi-tor, be aware of the potential pitfalls and ask the hard questions during the inter-view. It could save you a lot of legal fees later.

About the Author

Ashley N. Gold has served as General Counsel of Insurors of Tennessee since 2007, and previously consulted for the Association on legal and gov-

ernment affairs matters. She received her undergrad degree from the University of Kentucky and her Juris Doctor from Sam-ford University. She may be contacted at [email protected] or by calling her at 615.515.2606. u

Commercial Computer Act which reads:

“It is unlawful to make or cause to be made an unauthorized copy, in any form, includ-ing but not limited to, any printed or elec-tronic form of computer data, computer programs, or computer software residing in, communicated by, or produced by a computer or computer network.”

Tenn. Code Ann. § 39-14-602(b)(5).

Historically when disgruntled employ-ees left, they took paper files with them, which was not illegal. Today, since most all records are digital, it is as simple as downloading an entire database onto a thumb drive and walking out the door. Under the Private and Commercial Computer Act it is illegal to take an un-authorized copy of computer data. The act establishes not only civil but criminal penalties.

Additionally, the penalties apply not only to the person who took the files, but also to the new employer who uses the unauthorized files. So, if you have a new employee who shows up to work with files from a prior employer, confirm that the information was obtained with permission, or require it to be destroyed or returned.

Last but certainly not least is the Uni-

If you are hiring someone with an ex-isting employment contract, first you should determine whether it is a lawful contract. Does it meet the Tennessee common law rules of being reasonable in scope, time and territory? Does it pro-tect a legitimate business interest of the employer or trade secrets? If not, then the initial contract may not be a legally enforceable contract, thereby losing on the first element of the law.

The second element of the law is did you as the hiring employer know of the con-tract? While not stated directly, courts tend to use a common sense approach to this and a policy of “don’t ask, don’t tell” is not going to win for the employer on this one. The better idea is to ask, and if you suspect that there could be an un-disclosed employment contract, have the employee sign a disclosure affirming there is not an existing contract. It may even be advisable after making a con-tingent offer of employment to have the employee go back to the old employer and ask if there are any contracts in his file.

Three, five and six are straightforward, but four requires that the hiring party act maliciously. This is not the traditional malice that indicates ill will, but is a willful violation of the employment contract, or willful violation of a known right.

Does this mean that you may never hire anyone again that has a non-compete contract? No. It merely means that if the contract is reasonable in scope then it will not be violated. For example: the producer may not call on any existing clients of the old agency for a year. As long as the producer calls on new cli-ents, or existing clients of the new agen-cy, then there is no violation of the law. However, if a condition of employment for the new agency is that their newly hired producer call on the clients from the old list, the agency is opening itself up to a lawsuit.

Other Laws to Know About

There are two other laws that as an em-ployer you need to be aware of for your own protection and to avoid potential liability. First is Tennessee’s Private and

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Association UpdateTwo Insurors Members Named to Accident Fund President’s Club

Accident Fund has announced that two Insurors members have been named to the company’s 2015 President’s Club. The award is presented each year to a select number of independent insurance agencies who met specific criteria for written premium and sustained profitability. Agencies included exceeded $1.5 million in written premium, carried a cumulative loss ratio of 50 percent or less and achieved a premium retention of 80 percent or higher.

For 2015, Cate-Russell Insurance of Maryville and Wyatt Insurance Services of Knoxville were the only Tennessee agencies to earn the distinction.

Owen Joins Fridrich, Pinson & Rothberg

Fridrich, Pinson & Rothberg Insurance Agency in Nashville recently announced the addition of Parkes Owen as a Producer. Parkes will focus on all lines of commercial and personal insurance. He is a graduate of Montgomery Bell Academy and The University of Mississippi.

Parkes has 12 year of experience in the industry, and was formerly with The Crichton Group.

Shafer Insurance Agents Named Berkley Southeast Award Winners for 2014

Berkley Southeast Insurance Group recently announced its 2014 award winners for Agency and Young Agent of the year, and Shafer Insurance in Knoxville was the proud winner recognized for these achievements.

First, Berkley Southeast recognized Shafer Insurance as the Tennessee Agency of the Year winner for 2014. Shafer principal agent Andy Shafer accepted the award on the agency’s behalf from Berkley Southeast Regional Vice President Bill Emerick. The award recognizes the top Tennessee Independent Agent in the areas of profitability and growth.

Berkley Southeast also awarded their 2014 Young Agent of the Year Championship Belt to Shafer Insurance producer Aaron Jensen.

The award recognizes the top Tennessee Young Agent in profit and production.

Aaron will be the proud new owner of this year’s Young Agent belt and receive his registration for the Insurors of Tennessee 2015 Convention in Knoxville paid for by Berkley Southeast, a proud supporter of the Insurors of Tennessee and its members.

Arthur J. Gallagher Acquires Aviation Broker NationAir

Illinois-based international brokerage Arthur J. Gallagher recently announced the acquisition of NationAir Aviation Insurance (NationAir) based in West Chicago, Illinois. Terms of the transaction were not disclosed.

Founded in 1978, NationAir is a retail insurance broker offering commercial property/casualty and risk management insurance services specifically for the aviation industry. They provide insurance for the entire spectrum of aircraft owners and operations worldwide and specialize in corporate, commercial, private and public entity coverages. Jeffrey Bauer and his associates will continue to operate in West Chicago under the direction of Michael Pesch, head of Gallagher’s Midwest region retail property/casualty brokerage operation.

“NationAir is highly-regarded for its level of aviation experience, quality client service, and outstanding market relationships,” said J. Patrick Gallagher, Jr., Chairman, President and CEO. “NationAir’s aviation expertise and international reach will help expand our global client capabilities. They will be a terrific addition to our Midwest Region and aviation group, and we are extremely pleased to welcome Jeff and his colleagues to our growing Gallagher family of professionals.”

Big “I” CEO Rusbuldt Named to Hot 100 List

Big “I” CEO Bob Rusbuldt continues to receive distinctions for his work with the Association. Rusbuldt was recently named to the “Hot 100” by Insurance Business America. In their feature, “Who Made the Biggest Waves in the Insurance Industry This Year?” Rusbuldt was featured for his work in guiding the National IIABA as well

as leading its industry lobbying efforts. u

Aaron Jensen receives his belt from Andy Wilder

Andy Shafer receives his award for Agent of the Year from Bill Emerick

36 The Tennessee InsurorA.M. Best rating of “A”(Excellent) FSC “XII”

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Broker Spotlight

Tennessee Underwriters, Inc. (“TUI”) became part of R-T Spe-cialty, LLC (“RT”) in November 2014. RT is an independent wholesale brokerage focusing on tough, high-hazard risks, including property, casualty, transportation, workers’ com-pensation, professional and management liability. Known for its strong customer service and relationships with respected carriers, TUI is a perfect addition to the growing RT Binding Authority division. RT Binding Authority continues to be a valuable asset for Tennessee agents and brokers, delivering a greater spectrum of insurance solutions than before, and capable of accommodating risks both large and small.

Stronger Together

RT Binding Authority - Tennessee can quickly review and place binding authority risks even as the marketplace changes at an incredible rate. RT Binding Authority – Tennessee benefits from a symbiotic relationship with carriers and understands carriers’ current appetites. The combined capabilities of TUI and RT enable them to offer broad and effective solutions to customers in a timely manner.

Most Common Classes

General Liability: Property/Inland Marine:

• Contractors • Vacant• Manufacturing/Distributors • Subsidized/Student housing• OL&T/Habitational • Habitational• Special Events • CAT Driven Properties

Umbrella/ Excess: Liquor Liability:

• Binding Authority $1-10M limits • Restaurant • Brokerage $200,000M Plus • Bar

Garage:

• Dealers & Non-Dealers

The above is just a sample of risks RT currently places in the market. Agents and brokers are invited to contact their lo-cal RT underwriter in Tennessee or visit the website at http://www.rtspecialty.com to acquaint yourself with RT’s full spec-trum of insurance solutions. u

RT Binding Authority


Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Home Office: Columbus, OH 43215. Subject to underwriting guidelines, review, and approval. Products and discounts not available to all persons in all states. Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Nationwide, the Nationwide N and Eagle and Nationwide is on your side are services marks of Nationwide Mutual Insurance Company. © 2015 NationwideNPO-0605AO (03/15)

We get you.We understand what independent agents want and we’re committed to giving you the tools you need to grow your independent agency.

Look into a partnership with usby calling today.

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Disaster has no schedule. Nothing tests an insurance agent’s ability to meet a cli-ent’s needs like an unforeseen disaster, occurring without warning and creating unpredictable damage. Insurance agen-cies, more than any other business, have an obligation to their clients to be avail-able when disaster strikes.

There’s no such thing as a minor disrup-tion. Any event that prevents work from happening can be catastrophic for an insurance agency. The reality is disas-ters happen every day. In fact, over the past two years Agility has responded to over 560 disaster events. Whether it’s a broken water pipe, a building fire, or hurricane; rest assured that they’ll help rescue your agency.

Agility Recovery began over 25 years ago as part of General Electric. They saw a need for businesses to have plans and resources to recover from disasters, nat-ural or man-made. In the beginning, this service was only available to the largest corporations. It remained focused on the needs of the Fortune 500. Unfortunately, this model was simply too expensive for the vast majority of small and medium-sized businesses.

But in 2004, Agility Recovery developed an efficient, effective recovery solution that any organization can afford: Ready-Suite. Over the past 25 years, they’ve re-covered thousands of businesses from every possible type of disaster, and have never failed. For a small monthly fee, your agency will have a detailed disaster recovery plan, executed by Agility. In the event of a disaster, they will provide four critical needs: office space, power, com-munication and computer systems.

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Company SpotlightAgility Recovery

your business and your clients always thrive. You have made a promise to those clients and our primary goal is to enable you to keep that promise even during the most difficult of times.

Maybe that’s why over 1,500 indepen-dent insurance agents have become members of Agility, with many of those also referring Agility to their own clients. Your success as an agent is directly tied to their success, and here are some more reasons why:

THE AGENCY BENEFIT: In the days after a disaster, your agency must be up and running. Your clients demand it. Agility delivers it.

THE PRODUCER BENEFIT: Your produc-ers must bring a certain value to their cli-ents and prospects that is competitively unique, in order to differentiate them-selves during these difficult times.

THE CLIENT BENEFIT: Your clients will have access to a simple, cost effective solution that will rescue their business in days. Not weeks.

THE COMPANY BENEFIT: Agility truly mit-igates the loss. A complicated business interruption claim becomes a more sim-ple, inexpensive extra expense claim.

With an Agility ReadySuite solution in place, your agency will have an efficient, real-time disaster recovery solution ready for when you need it most. En-abling you to keep the promises you’ve made to your clients, employees and community. Contact them today to get more information.

Getting Started

To become a member, contact an Agility representative at 1.866.364.9696 or visit them online at www.agilityrecovery.com. u

Contact Information

Call 1.866.364.9696Visit agilityrecovery.comE-mail [email protected]

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Leadership Team

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Agility Recovery, a former division of General Electric, is a leading provider of disaster recovery solutions to orga-nizations of all types. Agility provides robust, easy-to-implement recovery solutions for an affordable monthly membership fee, including access to temporary power, office space, com-munications equipment and computer systems.

For more than 25 years, Agility has res-cued thousands of organizations with a 100% success rate.

Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Home Office: Columbus, OH 43215. Subject to underwriting guidelines, review, and approval. Products and discounts not available to all persons in all states. Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Nationwide, the Nationwide N and Eagle and Nationwide is on your side are services marks of Nationwide Mutual Insurance Company. © 2015 NationwideNPO-0605AO (03/15)

We get you.We understand what independent agents want and we’re committed to giving you the tools you need to grow your independent agency.

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Surviving the Switch, continued from page 9

“I am passionate about underwriting Personal Lines. That enthusiasm

gives me the ability to brighten a customer’s day and let the agent

know that I really do care about the account they are sending me.

They know I will get the job done for them.”

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to input data properly in the outgoing system, manage the change efficiently and get proper training.

According to Hackney, Applied Systems encourages clients to identify “champions” early in the transition process and involve them in every step along the way. Agencies “should identify key business areas where they can streamline work-flows and reduce duplicate administrative tasks,” she says.

Benefits can include optimizing business operations and ser-vice practices, Hackney says, as well as adding capabilities for the agency to meet the expectations of personal and com-mercial lines clients for online account access, never-ending customer service and self-service tools. Unfortunately, most agencies rely on vendors for implementation—and “there are pretty significant considerations to setting up the system properly that the vendor isn’t going to handle for you,” Ander-son says, citing accounting, document and data conversion as three top issues for agencies to consider prior to switching systems.

Hackney likens the switch to moving to a new home. “You take the time when moving to consider what to move into your new home and what you no longer need,” she says. “You don’t simply move everything from your existing home to the new one. When making the transition to a new agency management system, data quality is critical to your success.”

Somberg agrees: “If the system isn’t cleaned up prior to the conversion, the conversion can be very challenging.”

Foy says agents shouldn’t forget to account for the downtime associated with a switch. “You’ve got conversion time,” he says. “When you move systems, you’ve certainly got training issues and then that ramp up time. It takes three months for everybody to get proficient in the system if they were profi-cient in their system before.” Somberg remembers that adjust-ment period well—but notes you can come out the other side with fewer scars if you get in the trenches with the employees you’re asking to make the change.

“As a manager in the agency, I actually worked the workflow and I created cheat sheets in Epic for every workflow in the organization,” Somberg says. “I created picture books for us-ers to refer to when they felt frustrated. I had an open-door policy and literally at one point had six people standing out-side my office. I felt like I was at Publix: ‘I’m now serving cus-tomer number 101.’ But that’s OK. You need to make sure you have someone that is very, very good [in the new system] to answer.”

About the Author

Rick Morgan is a Senior Vice President for Aartirjk, an insurance focused brand consulting firm. Morgan was proclaimed by pro-grambusiness.com as one of the 100 Most Powerful People in In-surance in North America. Contact him at [email protected] u


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EMC can get you the reports you need to close more sales. As a leader in real-time/download technology, EMC provides you with time-and money-saving agency connectivity services. It’s just one of the many reasons policyholders Count on EMC.®

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Company BriefsSciortino to Retire from Consumers; Gregoire Expected to Lead Company

David Sciortino, president of Consumers Insurance USA, Inc. (CIUSA) has announced his retirement, effective June 1, 2015. Shaun Gregoire, CPCU, AIC, senior vice president, sales and underwriting for the company, is expected to become the president at that time.

Sciortino has worked closely with Insurors for years, includ-ing as a partner in the Titans Radio program. Sciortino was one of the company’s original founders and board members before taking the reigns as president in 2012. He will remain a board member, providing his expertise to Consumers Insur-ance. Gregoire has been with Consumers Insurance since The Motorists Insurance Group announced the acquisition in May 2014. Before joining Consumers Insurance, Gregoire was vice president, Sales, for Motorists Mutual Insurance Co.

“Consumers Insurance was created by independent insur-ance agents and remains dedicated to serving the indepen-dent agency system. We’re excited about the opportunity to provide a broader spectrum of high-quality solutions for the agents who represent us...” Gregoire said. “I’m excited to be a part of their continuing success, and I’m deeply appreciative of the time and trust David has given during the transition.”

Largent Named As New Westfield CEO

On January 20, 2015, the Ohio Farmers Insurance Company Board of Directors elected Ed Largent to succeed Jim Clay as Westfield Group leader, president and CEO, effective July 1, 2015. Jim will remain chairman of the OFIC Board until his retirement April 1, 2016. Employees were informed of this change on January 27, 2015.

Jim became CEO in January 2011, when Bob Joyce retired. At the time he was selected, Jim informed the Board of his plans to retire in 2016. This provided ample opportunity to carefully plan a leadership change and make sure the next succession would proceed smoothly. Board members are confident that the transition will be seamless.

Central Appoints White to Board of Directors

The Central Insurance Companies has an-nounced the appointment of John E. White to the Board of Directors for Central Mutual Insurance and All America Insurance Com-panies, and the Central Insurex Agency ef-fective February 27, 2015. White has also been appointed to the Executive Commit-tee of the Central Insurance Companies.

As Senior Vice President of Information Technology, White has accountability for all Information Technology at Central in-cluding software development, hardware infrastructure and procurement, disaster recovery, and I.T. Operations. White began his career with Central in 1979 as a Programmer and was steadily promoted to various positions in the department including leading the first agency/company interface efforts before being named Vice President of Information Technol-ogy in 1999.

TrustedChoice.com Welcomes W. R. Berkley Corporation as an Investor

TrustedChoice.com recently announced that W. R. Berkley Corporation has joined the industry initiative as an investor and commercial lines participant.

W. R. Berkley now joins seven other major carriers in working with the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) and its state associations, and other indus-try leaders on the TrustedChoice.com initiative. Founded in 1967, W. R. Berkley Corporation is a Fortune 500 insurance hold-ing company. Among the W.R. Berkley companies in Tennessee are Berkley Southeast, Berkley Fire & Marine and Key Risk.

“Increasingly, businesses are researching their commercial in-surance needs online,” says Bill Berkley, W. R. Berkley Corpora-tion chairman and CEO. “In response, the new TrustedChoice.com allows business owners, office managers, CFOs and risk managers to research their commercial insurance needs, coverages, and likely price ranges online. The site also assists business owners and managers to identify markets with an underwriting appetite for commercial risks in their industry. Most importantly, TrustedChoice.com helps companies find the right independent insurance agent or broker - one that specializes in serving businesses like theirs. W. R. Berkley is pleased to be an investor and commercial lines participant on TrustedChoice.com.”

Builders Mutual Distributes $1.525M Dividend

Builders Mutual Insurance Company is distributing a $1.525 million dividend to eligible policyholders in Tennessee, as well as Georgia, Maryland, Mississippi, North Carolina, South Carolina, Virginia and Washington, DC.

This year, as Builders Mutual continues to focus on jobsite safe-ty and risk management, we are proud to return a dividend to nearly 8,600 eligible workers’ compensation policyholders. Throughout our history, Builders Mutual has consistently re-turned more than $50 million dollars in dividends in 26 out of 30 eligible years. Builders Mutual continues to provide finan-cial stability to our policyholders and show steady, controlled


growth as a company. We are positioned as a leading carrier of workers’ compensation in the Southeast and this dividend return is one way to recognize the strong results of both our policyholders and our company.

“Our ability to return $1.525 million in dividends is directly related to the importance our policyholders place on jobsite safety and our continued financial stability as a company,” stated John Boggs, President/CEO. “This year, to encourage policyholders continued focus on safety, Builders Mutual cre-ated a new training program called WorkSafe 101. It is our intention that the use of this program will provide policy-holders with new resources to use in employee training and education. Proactively working to prevent injuries through education helps employees stay safe, reduces the employer’s expenses for temporary employees and increases policyhold-ers’ opportunity to receive future dividend distributions.”

Harford Mutual Announces Promotions

Bel Air, MD-based Harford Mutual Insur-ance recently announced an addition and several promotions for the company. First, the Board of Directors’ approval of Karen Mashinski, CPA, CPCU, who joins the com-pany as Vice President and Chief Financial Officer. Mashinski will assume a strategic role in the overall management of the

company and will have primary day-to-day responsibility for planning, implementing, managing, and controlling all finan-cial-related activities of the company.

Harford Mutual also announced the pro-motion of Robert F. Ohler to Executive Vice President. Ohler joined the company 24 years ago leading the Claims Division until 2003 when he became the head of Com-mercial Business Services.

In addition to Ohler, the company promot-ed John D. Goodin to Vice President – Un-derwriting and Jeffrey S. Rink to Vice Presi-dent – Marketing & Business Development. Both Goodin and Rink joined the company over five years ago bringing national car-rier experience to their roles at Harford Mutual.

Under the leadership of Ohler, Goodin and Rink, Harford Mutual has succeeded in increasing direct written premium by $50 million to $156 million in four years, and driving a $122 million increase in poli-cyholders’ surplus since 2004. They are committed to establishing Harford Mutual as the carrier of choice for independent

agency partners.


With customized coverages, local industry knowledge and the strength and stability of an “A” rating by A.M. Best, when you’re looking for a carrier that can help you play an instrumental role in your customers’ business success … we can show you more.®

For more information about our coverages, products and services, contact our local Nashville Branch at 615-886-3300, or visit www.cna.com.

CNA is a registered trademark of CNA Financial Corporation. Copyright © 2015 CNA. All rights reserved.

CNA IS PROUD TO SUPPORT THE INDEPENDENT INSURANCE AGENTS AND BROKERS OF TENNESSEE.

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codes, has already been successful in Indiana and Missouri.

Sagamore underwrites accounts up to hazard grade G and in-cludes all states endorsements on every policy. We offer com-petitive commission rates and an agent contingency plan. We are looking for a limited number of agents in protected ter-ritories.

Agents who are interested in learning more or partnering with Sagamore can contact Vice President of Sales Jack McKinney at [email protected] or 1.800.644.5501 x7481.

ACUITY Promotes Paltzer to Vice President

ACUITY recently announced that Shane Paltzer is promoted to Vice President - Mar-keting and Personal Lines. In his new ca-pacity, he will direct and oversee product and customer development efforts, regu-latory compliance, market intelligence, and all line underwriting functions in per-sonal lines.

Paltzer began his career at ACUITY in June 1992 as a Personal Lines Underwriter. From 1994 to 1995, he served as a Com-mercial Lines Underwriter. In 1995, he was promoted to Area Sales Manager for northeast Wisconsin. In January 2002, he was promoted to General Manager in Sales. In that capacity,

Vertafore Users Name 2015 Quantum Award Finalists

The Network of Vertafore Users has announced the finalists for its 2015 Quantum Award, with the winner to be announced at the 2015 NetVU Conference, March 26-28 in Indianapolis, Ind.

The Quantum Award recognizes an insurer’s achievements in working agency-company technology providing superior workflow productivity and profitability for member insurance agencies. Nominations are solicited from members, Vertafore employees, insurer employees, and others.

The 2015 National finalists are The Hanover Insurance Group, Liberty Mutual Insurance and Progressive Casualty Insurance Co. The Regional finalists are Central Insurance Companies, The Cincinnati Insurance Company and Selective Insurance Company of America.

Sagamore Expands Work Comp Program Into Tennessee

Sagamore Insurance Company, a subsidiary of Baldwin & Ly-ons, Inc., is expanding its mono-line Workers’ Compensation program into Tennessee and five other new states: Kentucky, Oklahoma, Mississippi, Kansas and Arkansas. The program, which offers workers’ compensation for a wide variety of class

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casualty, specialty and workers’ compensation business.

Total for the transaction was $218 million, and Enstar will now operate the busi-ness as part of its property and casualty legacy business. Some portions of the Companion business will be renewed through Enstar subsidiary Torus National Insurance Company.

ALTRU Introduces Miscellaneous Professional Liability in TN

ALTRU, LLC has announced the introduction of a new Miscellaneous Professional Liability Insurance facility. Expanding the partnership it began with Chicago Un-derwriting Group and Old Republic Insurance Company in 2010 with Non-profit Management Liability, ALTRU, LLC now makes available coverage in 9 states in the Midwest and South with filings in 2 other states awaiting approval.

The commercial insurance product is available to a wide range of service busi-nesses through independent insurance agencies and wholesale brokers. The coverage is now approved by Tennessee as well as the following states: Ohio, Kentucky, Indiana, Wisconsin, Michigan, Iowa, North Carolina, and Pennsylva-nia.

J.M. Wilson Adds to Trucking Account Offerings

J.M. Wilson recently announced they now have multiple ‘A+’ rated carriers to quote 1-2 unit trucking accounts in business for 1+ years. J.M. Wilson underwrit-ers are happy to quote trucking risks for independent insurance agents writing in Tennessee, as well as the states of: Illinois, Indiana, Kansas, Kentucky, Michi-gan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, West Virginia and Wisconsin. u

Shane managed ACUITY’s sales efforts across much of the company’s geographic foot-print and led numerous strategic initiatives, including new state and agency expansion and ACUITY’s customer segment marketing program.

A graduate of the University of Wisconsin-Oshkosh with a bachelor’s degree in finance, Paltzer holds the Chartered Property & Ca-sualty Underwriter (CPCU) and Associate in Underwriting (AU) designations. He has also completed the Advanced Management and Leadership program at the University of Wis-consin FLUNO center and the Insurance Ex-ecutive Development Program at the Whar-ton School of the University of Pennsylvania.

Chubb Wins PAM High Net Worth Insurer Award The Chubb Group of Insurance Companies has been recognized as the Best High-Net-Worth Insurance Company by Private Asset Management, a leading publication that re-ports on the wealth management and family office industry.

The Private Asset Management (PAM) Awards recognize organizations that have “success-fully serviced high-net-worth individuals in an increasingly complex economic environ-ment.” The awards also “celebrate those that have provided exceptional client service to the private asset management industry over the past 12 months.” According to the publi-cation, the judging process is rigorous, and the judges are carefully selected based on their wealth management experience and expertise.

Kathleen Tierney, chief operating officer of Chubb Personal Insurance, said that Chubb took several measures over the past year to further enhance the services it provides to high-net-worth clients. Chubb significantly upgraded their Signature Suite of services, and also created a Fine Art Practice.

Enstar Completes Its Companion Acqusition

A subsidiary of the Enstar Group has com-pleted its acquisition of South Carolina-based Companion P&C. BlueCross BlueShield of South Carolina was the former owner of the insurance group, which writes property,

Partners.

Explore P&C insuranceopportunities atHarfordMutual.com

You and your clients. You and Harford Mutual. We’re committedto protecting their business and building yours. That’s what mutual success is all about.


This article originally appeared in The Tennessean and is re-printed with the author’s permission.

The Supreme Court of the United States is now hearing the case of King v. Burwell. The facts of the case are largely irrele-vant. The basic issue is whether or not the federal government can give subsidies to citizens who purchase health insurance policies on a federal, rather than a state, health insurance ex-change. If you’re a healthcare consumer receiving a subsidy right now, the outcome of this case could mean you’ll lose that aid. If you’re an employer facing a big penalty, the out-come could spare you from that fine. Let’s review the Court’s options, and what it could mean to you.

Option #1: Yes, Subsidies Are Available on Federal Exchanges

This would be a really awkward finding because the law quite literally doesn’t say that. If the Court goes this way, it would most likely do so claiming that it is clear that the legislation intended that, and so the Court is choosing to interpret it that way.

But interpreting it that way is really awkward, too. Why? Be-cause it violates expressio unius est exclusio alterius.What’s that? It’s what judges call a “canon of construction,” which are guidelines for how judges are supposed to interpret laws. This particular guideline comes up when a law addresses multiple things that are similar enough to be “classed” together. For ex-ample, a state exchange and a federal exchange — they’re both exchanges and so it makes sense to “class” them togeth-er. When things belong to the same “class,” if the law has provi-sions that in its plain language only apply to one of the things, then those provisions should be interpreted not to apply to the other. For instance, if there are provisions specifically writ-ten about state exchanges that are not written about federal exchanges, then it should be interpreted that those provi-sions do not apply to federal exchanges.

And that is exactly the case here. In the section of the law that allows for the establishment of state exchanges, the law very specifically delineates that subsidies are to be available to citizens who purchase policies on a state exchange. In the analogous section of the law that allows for the establish-ment of federal exchanges in states that do not set up a state exchange, the law says nothing about the availability of any subsidies. Expressio unius est exclusio alterius— if subsidies are specifically provided for state exchanges and not men-tioned for federal exchanges, then it should be interpreted that

Supreme Court Decision Could Turn Healthcare Upside Down by Alex Tolbert, Bernard Health

subsidies were meant to be excluded from federal exchanges.

Many for a long time have understood this issue. Indeed, Pro-fessor James Blumstein from Vanderbilt University Law School testified to Congress about it on September 12, 2012.

Option #1: No, Subsidies Are Not Available on Federal Exchanges

Then, the Supreme Court’s other option is to rule that subsidies are not available to citizens who buy policies on the federal ex-change. Insiders estimate that this would mean nearly eight mil-lion Americans would lose subsidy dollars, which would make them unable to afford their health insurance. It also brings up a series of questions. Do citizens who are currently getting subsi-dies lose them the next month, or at the next open enrollment? Do citizens who got subsidies in 2014 have to pay them back? The majority of states did not set up a state exchange — would many of them re-visit this decision? How long would it take them to set up a state exchange, and at what expense?

Of course, while healthcare consumers would lose subsidies under this decision, their employers would win. Why? Because the big penalties that employers are subject to under reform are triggered when their employees get federal subsidies. Even just one employee getting a federal subsidy has the potential to trigger massive penalties on the employer. If employees can-not get subsidies, then their employers cannot be penalized. This consideration was weighed by at least some of the states that originally decided not to set up a state exchange in the first place. After all, some states do things all the time to make themselves more business-friendly versus other states.

Secret Option #3: Who Knows?

Back in 2012, the Supreme Court upheld the individual man-date of healthcare reform by ruling that the “penalty” for not buying health insurance was actually a “tax.” No one had ar-gued it was a tax, and so classifying it that way caught every-one by surprise. Perhaps the Court will surprise us again this time, coming up with a ruling or rationale that no one has predicted.

About the Author

Alex Tolbert is the founder of Bernard Health, a “trusted advisor” for individuals on their healthcare planning needs. He completed his JD/MBA at Vanderbilt University. u


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MeetingsSpring is Here, So Get Out There and Meet!Big “I” Legislative Conference April 22-24

The 2015 Big “I” Legislative Conference and Convention will be held April 22-24 at the Hyatt Regency on Capitol Hill in Washington, D.C. Attend this one-of-a-kind legislative event for the independent agency system and educate members of Congress on issues important to you and your clients. Registration includes an in-depth issues briefing, legislative breakfast with high-profile Congressional speakers, a general session and networking opportunities.

Top insurance CEOs, including David H. Long, Liberty Mutual Insurance chairman, president & CEO; Christopher J. Swift, The Hartford chairman & CEO; Thomas F. Motamed, CNA chairman & CEO and David L. Kaufman, The Motorists Mutual Insurance Group president & CEO will be featured on a panel discussion. Agents will also visit over 400 Congressional offices during this important opportunity for our industry. Get more information or register now at http://www.independentagent.com/Events/LegislativeConference/home.aspx.

Insurors of Nashville Golf Tourney May 4th

The Nashville Local Board will hold their Spring Golf Tournament and Social on Monday, May 4th at the beautiful Old Natchez Country Club in Franklin. All players will be treated to an arrival gift, 18 holes of championship golf, on course beverages and snacks, and an outstanding Luau-themed dinner with drinks and music.

For more information, please contact Tournament Chairman John Ridenour at [email protected] or visit http://www.insurorsofnashville.com/site/event/golf-tournament/?instance_id=135

Memphis Local Board Picnic & Golf May 12th

The Insurors of Memphis will host their annual picnic and golf tournament on Tuesday, May 12th at Windyke Country Club in Memphis. The event will feature two flights of golf, a picnic lunch and dinner, and a special Casino Night with games and prizes. Proceeds from the event will help support Make-A-Wish Foundation of the Mid-South.

For more information, please contact Bryan Wimberly at [email protected] or download the forms at http://www.insurors.org/media/22591/InsurorsPicnic2015.pdf u

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{$850}

Recently I was discussing with some of the staff of Trusted Choice the concept of a seller of goods incurring added costs to make one more sale. Based on long accepted micro-economic theory, a seller with some fixed costs will continue to incur costs to sell more until the marginal revenue equals the marginal cost (below at MR=MC). “Marginal” in this context does not mean substandard or “edgy” but rather the cost associated only with that sale and the revenue at that sale “added at the margin.”

So with this theory, and applied to a personal auto insurance policy, I had the opportunity to revisit my microeconomics lessons compliments of YouTube and Khan Academy (you can view their videos at https://www.youtube.com/channel/UC4a-Gbdw7vOaccHmFo40b9g or https://www.khanacademy.org/youcanlearnanything).

My re-education applied to insurance went like this: At an average premium of $850 for a personal auto policy and assuming a commission of 15%, an agent’s marginal revenue on the sale is $127.50 (15% times $850). One would assume, then, that if an agent typically has a quote to bind ratio of 25% that the most the agent would pay for a quoting opportunity is $32 (that is, $127.50 ÷ 4). Note this assumes the only variable cost in the sale is the cost of the lead. For example, in this case there is no producer commission sharing or other costs incurred solely because of an added sale. If there are producer commissions, under this MR=MC theory, the amount an agent would pay for a lead would be reduced by that amount.

So, here’s the question for students of insurance out there. Why might leads for “auto insurance” on Google regularly cost substantially more per quoting opportunity than the first year commissions would seem to justify? We’ve seen analysis per “warm lead” of well over $250 per lead. Have a theory? E-mail [email protected]. u

MR=MC or How Much to Pay for A Warm LeadBy Paul Buse, President of Big I Advantage

Member Tips

Specialty insurance for bicycles

Cycling means different things to different people. That is why, Markel

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cycle, and doesn’t provide one-size-fits-all coverage.

Policies are as low as $100 per year.

Coverage Highlights:

Bicycle Physical Damage: primary coverage for the cost to repair or

replace the cycle (including fixed accessories and components) up to the

policy limit, due to sudden, accidental direct physical loss or damage to the

cycle. This coverage would apply if insured bicycle were to be involved in a

collision, fire, theft, vandalism, or in the hitting of another object.

Coverage also includes protection while the bicycle is in transit (land or air)

to & from any location in the United States or Canada, and protection when

competing in triathlon or bicycle races.

INCLUDED COVERAGES AT NO EXTRA COST:

Bicycle Liability: primary coverage for the injuries or property damage

(caused by the insured bicycle) for which the insured is held legally

responsible. Coverage is offered at combined single limits of: $25,000,

$50,000 and $100,000.

Medical Payments: covers medical expenses of the insured cyclist if they

are injured while on the insured bicycle, regardless of fault. The following

per person limits are available: $1,000, $2,500, $5,000, $7,500, $10,000.

Vehicle Contact Protection: covers injuries if, while on the insured bicycle,

combined single limits of $10,000 or $25,000.

Roadside Assistance:

Service will be provided (up to 35 miles per tow, 5 tows per year).

See how an average Homeowner’s Policy measures up to Markel

Date of the event** Date of purchase thru event date

* Homeowner’s coverage is typically limited Actual Cash Value (ACV) of the bike, not replacement value.

Reduce the device shape to the required size, then make a new clipping mask

We know bicycles.

Policy CoverageAverage

Homeowner’s PolicyMarkel

Bicycle Policy

Not Likely Yes

Crash Damage No Yes

Theft Coverage Limited Yes

Limited Yes

No Yes

Yes Yes

No Yes

No Yes

Not Likely Yes

Not Likely Yes

No Yes

Not Likely Yes

Covered in Transit Not Likely Yes

Not Likely Yes

Not Likely Yes



















$50,000 and $100,000.












We know bicycles.



Bicycle Policy

Not Likely Yes

Crash Damage No Yes


Limited Yes

No Yes

Yes Yes

No Yes

No Yes

Not Likely Yes

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No Yes

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Not Likely Yes

Not Likely Yes



















$50,000 and $100,000.












We know bicycles.



Bicycle Policy

Not Likely Yes

Crash Damage No Yes


Limited Yes

No Yes

Yes Yes

No Yes

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No Yes

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Visit www.BigIMarkets.com for more information on Markel Bicycle Coverage

MR=MC15%

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$127.50/4_+/-

ACUITY (800) 242 - 7666 www.acuity.com 22Amerisafe (800) 897 - 9719 www.amerisafe.com 17AmTrust North America (877) 528 - 7878 www.amtrustnorthamerica.com 36Applied Underwriters (877) 234 - 4450 www.auw.com/us 2Arlington/Roe & Co. (800) 878 - 9891 www.arlingtonroe.com 15Auto-Owners Insurance (615) 373 - 5200 www.auto-owners.com 55Bailey Special Risks, Inc. (800) 768 - 7475 www.bsrins.com 13Berkley Southeast Insurance Group (615) 932 - 5508 www.berkleysig.com 9,19Berkshire Hathaway Guard Insurance Cos. (800) 673 - 2465 x4567 www.guard.com/apply 17BITCO Insurance Companies (615) 871 - 9042 www.bitco.com 49Brentwood Services Administrators (800) 524 - 0604 www.bwood.com 31Builders Mutual (800) 809 - 4859 www.buildersmutual.com 26Burns & Wilcox (800) 341 - 4844 www.burnsandwilcox.com 30CNA Insurance (800) 251 - 5852 www.cna.com 45Consumers Insurance (615) 896 - 6133 www.ciusa.com 52Donegal Insurance Group (770) 232 - 2272 x1370 www.donegalgroup.com 7EMC Insurance (800) 239 - 2005 www.emcins.com 42FCCI Insurance Group (800) 226 - 3224 www.fcci-group.com 6Harford Mutual (800) 638 - 3669 www.harfordmutual.com 47Heartland Ovation Payroll (901) 598 - 4829 www.ovationpayroll.com 20INSBANK (866) 866 - 4268 www.insbanktn.com 11J.M. Wilson (800) 595 - 0063 www.jmwilson.com 41Johnson & Johnson (931) 704 - 0810 www.jjins.com 28-29Keystone Insurers Group (800) 416 - 5498 www.keystoneinsgrp.com 40National Security Group (800) 239 - 2358 x267 www.nationalsecuritygroup.com 46Nationwide (614) 948 - 4107 www.nationwide.com 38North Alabama Insurance (800) 824 - 1740 www.nai1982.com 32Penn National Insurance (800) 395 - 0518 www.pennnationalinsurance.com 56Preferred Comp/Meadowbrook (800) 755 - 8090 www.meadowbrook.com 51 Preferred Property Programs (888) 549 - 2465 www.umbrellaprogram.com 24Risk Innovations (800) 913 - 6696 www.riskinnovations.com/tni 16RT Specialty (615) 791 - 1400 x205 www.rtspecialty.com 37Securerisk (770) 723 - 8096 www.securerisk.com 34South & Western (800) 492 - 5351 www.southandwestern.com 33Southern Cross Underwriters (800) 682 - 5263 www.scui.com 24Summit Holdings (800) 971 - 2667 www.summitholdings.com 44WAHVE (646) 807 - 4372 x506 www.wahve.com 38

Directory of Advertisers Advertiser Phone Website Page

register now at www.iiaba.net

BIG ”I” LEGISLATIVE CONFERENCEAPRIL 22-24 | WASHINGTON, D.C.

Thank you, agents.

Auto-Owners has always been

dedicated to the independent agency

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the agents who represent us. We

would like to thank you for your

continued loyalty, which has helped

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register now at www.iiaba.net

2500 21st Avenue South Suite 200Nashville, TN 37212

We look for the best independent

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Business Surety Auto Home

PRSRT STDU.S. Postage

PAIDNashville, TN

Permit No. 380

Documents

The Tennessee Insuror Mar/Apr 15