Items of Interest From the IIAG Commercial Lines Committee

I hope all my readers had a safe and enjoyable Memorial Day weekend.  The weather in the Atlanta area was perfect, until late Monday afternoon when it started to rain.  By that time, I was ready to relax in front of the TV, so it was no problem for me.

Prior to the weekend, I attended the quarterly meeting of IIAG’s Commercial Lines committee.  One of the agenda items concerned whether the committee should create a forms and data bank to which IIAG members could look for general information about subjects that every agency has to deal with; privacy rules, electronic delivery of policies and notices, prevention of E&O claims, etc.

During the discussion of this agenda item, it was pointed out that IIABA has a website devoted to issues involving E&O claims.  That website has links to sample disclaimers for voice mail, telefax, e-mail, websites, social media sites, and proposals, sample checklists for commercial and personal lines customers, among others, and over 20 sample letters to customers about audits, claims, carrier downgrades and insolvency, and other subjects.  It also has information on best practices for the retention of records and the documentation of communications with customers and sample procedures for dealing with cancellations, claims, audits, and renewals, among others.

Unfortunately, while anyone can visit the above website, the information and sample documents described above are only available to IIABA members.  A similar restriction exists for the forms I have developed for use by IIAG members.  Those forms include obtaining consent for the electronic delivery of policies and a suggested letter for use when a person has requested the issuance of an insurance certificate in violation of Georgia law.

On another subject, one of the committee members brought up a situation they were dealing with that could lead to problems for customers with both a general liability and umbrella policy, as well as the agent who is handling a claim under them.  The same insurance company issued both policies, but the language in them regarding when notice of a claim to the company must be given to avoid a denial of coverage was different.  The notice given to the company met the requirements of the general liability policy, but the company contended it did not meet the requirements of the umbrella policy, as under that policy the notice should have been given earlier.   This type of problem could apply to any two insurance policies that may provide coverage for the same risk and is yet another reason that the customer and the agent should carefully read both policies and make a note of any differences in them on this or any other subject.  The failure to do so could result in an uninsured loss by the customer and potentially, an E&O claim against the agent.

ISO’s New Ride Sharing Endorsements

In a post about a month ago, I summarized the new law passed by the Georgia legislature earlier this year that, as of January 1, 2016, will require Uber, Lyft, and other Transportation Network Companies to maintain specified levels of insurance on their drivers from the time they are logged onto the company’s network and available to accept passengers until the driver is logged off that network.  The new law imposes the insurance requirement on the Transportation Network Companies, but permits those requirements to be satisfied by either the company through a commercial lines insurance policy or their drivers through an endorsement or rider to the drivers’ personal lines motor vehicle policy, or a combination of the two.

I mentioned in my earlier post that the Insurance Services Office would be issuing a new motor vehicle policy form that covers the services provided by drivers for Transportation Network Companies.  A series of forms were issued by ISO on May 1, 2015, to be effective on October 1, 2015, subject to their adoption by each state’s insurance regulatory body.  In a well written article in the May 1, 2015 issue of the newsletter from IIABA’s Virtual University, Bill Wilson explained in detail what the new forms do and more importantly, don’t do.

Four new endorsements were issued by ISO, three for its personal auto policy and one for its personal umbrella policy.  The one for the personal umbrella policy is merely a modification of the existing exclusion for the use of a personal motor vehicle for carrying paying passengers.  The new language refers specifically to any period of time that the insured is logged into a “transportation network platform”, as a driver, whether or not there is a passenger in the vehicle.  Thus, there is no coverage under the ISO personal umbrella policy for the use of a motor vehicle to carry paying passengers or even for the time when no passengers are in the vehicle, but the insured is available to carry such passengers.

One of the endorsements for the personal auto policy has the same exclusion language as for the personal umbrella policy.  It applies to Part B medical coverage and Part D damage to motor vehicle coverage, as well as Part A liability coverage.  The other two endorsements offer coverage for the insured while he or she is logged onto a “transportation network platform”, but does not have a passenger in their motor vehicle.  One endorsement provides coverage up to the time a passenger enters the vehicle, while the other stops coverage when the insured accepts a request to carry a passenger.

Given the narrowness of the ISO endorsements, my earlier prediction that “there will most probably be personal lines insurance companies that begin to offer the type of coverage required by” Georgia’s new law doesn’t appear to have been a good one.  Instead, it looks like those who want to carry passengers for a Transportation Network Company will have to rely on the company to provide the required insurance coverage or buy their own commercial lines coverage, if the company does not do so.


Are Your Agency’s Employees Engaged? Part 2

A few weeks ago, I wrote a blog post about the importance of having engaged employees.  I recently came across an article in a magazine devoted to human resource issues in the workplace that provided some important caveats to what I said in my blog post.  The title of the article is “8 Common Misperceptions About Employee Engagement That Can Seriously Harm Your Company.”

A couple of the misperceptions discussed in the article were already addressed in my blog post, the most important being the belief that it’s all about money.  The article listed five things that are most valued by employees, with flexible work arrangements and opportunities for training and other skill enhancement activities being two of the more important ones.  Three of the more interesting misperceptions to me were the belief that it is important to engage everyone, employees know what will engage them, and satisfied employees are engaged employees.

The article makes the common sense point that it is impossible to get some employees who are disengaged to be engaged no matter how hard you try.  The employer’s efforts to engage employees should be mainly directed at those employees who are satisfactory or above average performers.  The article advises not to waste much time on the poor performers.  Instead, look to replace them with people who are more like your satisfactory or preferably, your above average performers.  Similarly, while you need to ask everyone what would make for a better work experience, you should pay closer attention to the responses of your satisfactory and above average performers than those of the poor performers.

However, the article advises not to accept at face value responses of employees to the question of what would make for a better work experience, especially if those responses are focused on perks.  Regardless of what employees may say, research has shown that the work itself must be meaningful and well-managed for employees to be truly engaged.  One strategy for handling requests for perks is to ask your employees what they would be willing to do to get them.  By doing so, there is no sense of entitlement to the perk.  Instead, the employees make a commitment to improve the business in some way for an improvement in the work experience.  This is one way to foster employee engagement.

But according to the article, the most important way to foster employee engagement is to have good managers and supervisors, which point was also made in the article that was referenced in my earlier blog post.  Having a good relationship with their supervisor was the single most important factor for engaged employees.  To create a good relationship, the supervisor must have a sincere interest in the personal well-being of the employees under their supervision.  Unless that interest exists and is apparent to those employees, nothing else the supervisor may do will create the same level of engagement that would otherwise exist.

The article ends with some suggestions for how to achieve an engaged workforce, which should be of interest to any employer.

What is a Covered Entity and Why Should You Care?

The term “Covered Entity” refers to those organizations that are subject to the information privacy provisions contained the Health Insurance Accountability and Portability Act (“HIPAA”) and its companion the Health Information Technology for Economic and Clinical Health Act (“HITECH”).  HIPAA was enacted by Congress in 1996 and among other things, imposed requirements for how Protected Health Information (“PHI”) is to be handled by Covered Entities.  HITECH was enacted in 2009 and formally extended those requirements to “Business Associates” of a Covered Entity.

A Covered Entity is (i) a health plan, (ii) a health care information clearinghouse, or (iii)  a health care provider that transmits certain health related information electronically.  A “health plan” includes any insurance company, as well as a group health plan that has 50 or more participants or that is administered by someone other than the employer who established and maintains the plan.  A Business Associate includes anyone who ‘creates, receives, maintains, or transmits” PHI for “claims processing or administration”, among other reasons.  PHI is information about a person’s past or present mental or physical health, treatment provided to that person, or payments made for such treatment, which information reveals the identity of that person.

An independent insurance agency that sells individual or group health insurance is a Business Associate of the insurance company that issues the policy and probably has already seen agreements from those companies that it represents that are intended to comply with the privacy requirements imposed by HIPAA and HITECH.  What such an agency may not have realized is that it is also a Business Associate of each customer to whom it sold a group health insurance plan that falls within the definition of health plan set forth above.  HIPAA and HITECH require that each Covered Entity have a written agreement with each of its Business Associates that satisfies the requirements of those laws.  The penalties for the failure to have such agreements in place can be significant and the Department of Health and Human Services (“HHS”) is focusing on this area in its enforcement efforts.  Both the Covered Entity and the Business Associate can be held liable for the failure to have the required written agreement in place.

The Agents Council for Technology has held a webinar on what HIPAA and HITECH mean for independent insurance agents, which goes into greater detail about the requirements imposed by those laws and the penalties for not satisfying those requirements.  HHS has a website devoted to HIPAA and HITECH, which has a sample Business Associates agreement that could be useful for those insurance agencies that do not yet have such agreements in place with their group health plan customers that meet the above criteria for coverage by those laws.

Here is yet another area where independent insurance agents can provide added value to their customers and at the same time protect themselves.  While they are at it, such agents should also determine if they need to have Business Associate agreements with other parties with which they do business, e,g,, companies that provide IT services to the agent the provision of which services would give them access to PHI stored on the agent’s computer system.