January/February 2018 From the Independent Insurance Agents and Brokers of Arizona, Inc. © Copyright iiabaz Your Source for Arizona Insurance Inside this “Winter” season issue Industry News The State of Painkillers An In-Depth Look at Renter’s Insurance and in Work Comp Cases Cybersecurity Why You Should Sell It Page 9 Page 10 Page 24 Chapter Events & News January 26, 2018 IIABAZ Board Meeting Making investments in the business is crucial for any insurance IIABAZ Office—Phoenix agency, but what’s the best way to secure financing? January 31, 2018 Insuring Commercial Casualty II Banks and other institutions that provide financing to the insurance industry plan Farm Bureau Classroom—Gilbert an integral role in enabling agencies to expand their books of business. In the February 7-9, 2018 current insurance landscape, standing still is akin to going backwards, and any CIC Commercial Casualty Institute Embassy Suites by Hilton—Tempe agency that isn’t continuously looking for ways to grow by making investments in its business could face a battle to survive. February 20, 2018 ITEC E&O Roadmap to Policy Analysis ITEC Classroom—Phoenix The vast majority of insureds value having an agent at the end of a phone, but in March 15-16, 2018 reality, that value proposition may not be enough for an agency to maintain its CIC James K. Ruble Graduate Seminar business going forward. Money talks, and a lot of it is being spent right now on Embassy Suites by Hilton—Tempe trying to encourage clients to transition their business to low cost alternatives. “Everybody is going after the agency clients: Close to $2 billion a year is being spent by the investment community on trying to work out how to disintermediate agents from their clients,” says Robert J. Pettinicchi, Executive Vice President of InsurBanc. “Money is being spent trying to get access to the consumer that the agents controls, so savvy agents need to make investments in their business, technology, and people.” Growth mindset Investing in the future is a core driver of success in today’s market. While implementing strategies that enable organic growth should be a top priority, creating growth through acquisitions should also be a key consideration for ambitious agencies. An acquisition has the potential to add strength to the agency by obtaining multiple growth drives in one fell swoop, including qualified people, specialty business lines, and access to new markets and geographies. “Some of those new staff members could also be future owners of the business,” Pettinicchi says. “An acquisition helps to grow your business and make it more valuable, but you could also create an embedded population of people who may be able and willing to buy it at some point.” While borrowing funds to invest is a sensible option for most modern agencies, some owners seem to have an unhealthy approach to debt. Debt is not necessarily the enemy it is often painted out to be, and allocating funds for payments to former owners and outstanding loans is not uncommon. However, Pettinicchi has noticed a worrying and growing trend among agency owners, who often focus on securing funds for the longest possible loan term, which is often not the most advisable strategy. Before securing financing, agency owners should think about whether they are borrowing for the right purposes. In most cases, they should also attempt to borrow the money for the shortest reasonable timeframe. Continued on “By repaying it on a faster basis, an agency effectively gives itself the ability to Page 6 © Copyright Independent Insurance Agents and Brokers of Arizona, Inc.’s News & Views January/February 2018 Edition 333 East Flower Street—Phoenix, Arizona 85012—PhonePage 602.956.1851 —Fax 602.468.1392—Web: www.iiabaz.com January 22 In New York City, excavation began for the Empire State Building—1930 Securing the Proper Financing to Best Fit Your Agency Cover Fidel Castro was ejected from a Winter League Virtual University ASK AN EXPERT—Two Hot Topics Page 4 Game after hitting a batter with a pitch, and later Common Exposures for Insuring Food Trucks Page 8 left baseball for politics—1951 Work Comp and the Rise of the Use of Painkillers Page 9 Clarity Regarding Your Agency and Three Areas of Cybersecurity Page 10 Agency Owner Profile—Serving High Net Worth Personal Lines Clients Page 16 January 24 How to Find Success in Selling Liquor Liability Coverage Page 18 Examining the Entrustment Exclusion—A Court Case Briefing Page 20 The Russian city of St. Petersburg was renamed Leningrad, but in New Series of Webinars from ABEN and VU’s Chris Boggs CE Update Page 20 1991 it was later changed back to St. Petersburg—1924 Congressional Tax Reform Passed Page 21 Actress Sharon Tate was born in Dallas, Texas—1943 Our Industry’s War of Growth & Profitability—Who’s Really Winning? Page 22 If You Won’t Sell Renter’s Insurance, Your Competitor Certainly Will! Page 24 Japan launched the first probe to be sent to the Moon Award-Winning Education for 2018 and How to Register Page 30 since 1976 when a small satellite was placed in lunar Flood Claim Denial and Why Reading the Policy is Critical Page 32 orbit—1990 Got Alexa? - The Amazon Echo Quick Review Page 33 Bloopers are Usually Hilarious—Except When It Comes to Insurance Page 34 Tax Reform and How it May Impact You Page 36 January 29 The Top 10 Social Media Mistakes Page 38 An Adequately Insured Contractor—What Does it Take? Page 39 Edgar Allan Poe's "The Raven" was published for Misheard Lyrics Are Always Good for a Laugh Page 40 the first time in the "New York Evening Mirror"— 1845 Singer Smokey Robinson left The Miracles —1972 ACUITY Insurance Page 28 January 31 AmShield Insurance Page 6 The trademark "Coca-Cola" was first registered in the United Berkshire Hathaway Guard Insurance Companies Page 37 The Big “I” Advantage Page 14 States Patent Office—1893 The E&O Department Page 17 Telephone service between East and West Berlin was Markel Specialty Insurance Page 13 re-established after 19 years—1971 Nationwide Mutual Insurance Company Page 26 Preferred Property Program Page 25 SECURA Insurance Companies Page 3 February 1 The Virtual University Page 27 Grand Central Station opened in New York City and was the largest train station in the world—1913 NOTE: This feature below is merely for information, trivial Joni Mitchell makes her Carnegie Hall debut—1969 entertainment, or to spotlight various historical factoids for random dates NASA's space shuttle Columbia exploded while throughout the months of January and February. It is not our intent to re-entering the Earth's atmosphere, killing all deliberately ignore any particular national or religious holiday, or historical day of remembrance. seven astronauts on board—2003 February 5 The city of Phoenix, Arizona was incorporated—1881 At the age of 34, guitarist Tim Kelly of the band Slaughter died after a being injured in an auto accident near the town of Bagdad in Western Arizona—1998 January 16 February 7 Ivan the Terrible was crowned the Czar Writer and social critic Charles Dickens was born of Russia—1547 in Landport, Hampshire, England—1812 Singer Sade Adu was born in Ibadan, The last bareknuckle fight for the heavyweight boxing Nigeria—1959 championship took place in Mississippi City—1882 "Playboy" magazine announced its 30-year tradition of The Clash kick off their first American tour at the Berkeley stapling centerfold models in the bellybutton and Community Theatre in Berkeley, California—1979 elsewhere would come to an immediate end—1985 February 12 January 18 The city of Santiago, Chile was founded—1541 The X-Ray machine was exhibited for Savannah, Georgia was founded by English colonist the first time—1896 James Oglethorpe—1733 Louis Armstrong and his orchestra After meeting on the set of their first television recorded “Jeepers Creepers”—1939 commercial together in 1961, Mattel announced The 10 day Rock In Rio II Festival opened in Brazil—1991 that "Barbie" and "Ken" were breaking up—2004 © Copyright Independent Insurance Agents and Brokers of Arizona, Inc.’s News & Views January/February 2018 Edition Page 2 © Copyright Independent Insurance Agents and Brokers of Arizona, Inc.’s News & Views January/February 2018 Edition Page 3 There's EPL coverage for sexual misconduct or molestation, corporal punishment or physical or mental abuse. sexual harassment in the workplace, but is there any coverage for personal sexual misconduct or Sexual molestation is not a Personal Injury offense either. harassment? I'm not aware of any personal lines coverage for this exposure. What if a teenage child or adults outside of the work environment claim sexual misconduct, can homeowners' ========================================= insurance or a personal umbrella address this? None that I know of. ========================================= FACULTY RESPONSES: A few high end personal policies address the issue. Most likely only if exclusionary wording is poorly drafted. Policies generally exclude intentional losses and courts have ========================================= generally found that sexual harassment and molestation are Probably not. Sexual misconduct with a minor is an intentional intentional losses. If the person against whom the claim is act that is never an insured against loss since it is not fortuitous. made is not the harasser or molester (and there's a Separation ========================================= of Insureds clause), it's possible that they could have coverage if the policy provides BI and/or PI coverage, though (again, in The ISO homeowners' policy excludes: general) policies often have wording like this to extend the exclusion to all insureds if any insured engages in an "Bodily injury" or "property damage" arising out of sexual intentional act: molestation, corporal punishment or physical or mental abuse; Expected Or Intended Injury A personal umbrella may have a broader coverage grant, but "Bodily injury" or "property damage" which is expected or most umbrellas today are “following form" (which means the intended by an "insured", even if the resulting "bodily injury" exclusions in the underlying policy apply to the umbrella or "property damage": also).