July 10, 2014

In this Issue ...

MAIA News: • We‘reLookingfora FewGreatAgents 1

projectcap News: •Lock-InYourAdvantage SubscriptionPriceNow 1

Comp. Corner: 1 •VikkiA.ThomasNamed OutstandingCSRoftheYear

Member Milestones: 2 •VermontMutual‘sJoyce McCutcheonNamedClaims ProfessionaloftheYear

Education News: • ProjectInVestUpdate2

State House News: • ProjectInVestUpdate 2

• E&O Update WhichPositionWould YouRatherTake? 3-4

Industry News • MCOwnerstoReceive RefundsfromCommerce4

DOI News • DOItoHoldHearingonCAR PerformanceStandards 5

Thanks Company 5 Partners

MAIA News:We‘re Looking for a Few Great Agents ...

MAIAislookingforagentsinterestedinjoiningtheAssociation‘sBoardof Directors.AcoupleofBoardvacanciesareexpectedthisfall.

Ifyouareinterested,pleaseforwardabriefresumeofyouraccomplishmentsforconsideration.FeelfreetocontactMAIAPresidentandCEOFrankMancinibyemailatfmancini@massagent.comorbyphoneat800.972.9312or508.634.2900ifyouhavequestionsaboutwhatbeingamemberoftheBoardentails.

News:

Lock-In Your Advantage Subscription Price Now ...

ThepriceoftheAdvantagesubscriptiontoTrustedChoice.comwillincreasefrom$39permonthto$49permonthonJuly18th.So,ifyou‘vebeenwaitingtosignup,now‘sthetimetodoit.Trafficisincreasingatanamazingrate:|

• TrustedChoice.comhasbrokenitsowntrafficrecordtenmonthsinarowwithover152,000consumersvisitinginMayalone.

• TrustedChoice.comgenerated3009exclusivesalesleadsinMay.Two-thirdsofthoseleads(2102)wenttoagenciesparticipatingintheAdvantageprogram.

Sign up todayandlockinthecurrentrateof$39permonthforthenextyear!

Contactprojectcap directlytolockinyourmonthlysubscriptionfeeforoneyearortakeadvantageofthemulti-locationdiscountbycalling855.372.0070.

Comp. Corner:

DIA Assessment Announced ...

TheDepartmentofIndustrialAccidents(DIA)hasreleasedaletteroutliningthe officialassessmentratestobeappliedtopolicieseffectiveJuly1,2014and thereafter.Hereisthetextoftheletter:

PursuanttoM.G.L.c.152,§65(4)&(5),theDepartmentofIndustrialAccidentshasestablishedtheinsuredassessmentratestobecalculatedforallpolicieseffectiveJuly1,2014.Theinsuredassessmentratesareasfollows:

Employer Insured Self-Insured Assessment Rate Assessment RatePrivate 0.058 0.058Privateopt-out N/A 0.017Public 0.000 0.000Publicopt-out N/A N/A

Theletteralsoincludedalistofbothpublicandprivateemployersthathaveexercisedtheirrighttoopt-outofTrustFundassessments.Toreviewtheopt-outlist,clickhere.

2 July 10, 2014

Member Milestones:Vermont Mutual‘s Joyce McCutcheon Named Claims Professional of the Year ...

VermontMutualInsuranceGrouphasannouncedthattheInternationalAssociationofInsuranceProfessionals(IAIP)hasnamedJoyceMcCutcheonClaimsProfessionaloftheYear.

Theawardrecognizestheclaimsprofessionalwhohasdemonstratedsuperiorknowledgeoftheclaimsfield,experiencedprofessionaladvancementthrougheducationalpursuits,demonstrated leadershipinthefield,andisanactiveparticipantinIAIPactivities.

Joyceisa25yearinsuranceprofessionalandholdsthefollowingdesignationsCCLA,ACLA,SCLA,CPIW,shehasbeenwithVermontMutualforfiveyears.

Pictured L - R: Daniel C. Bridge, Executive Vice President, David N. DeLuca, Vice President Claims, Joyce N. McCutcheon, Senior Claim Representative and William A. Catto, President & CEO

Education News:Project InVest Update ...

MAIA‘sVicePresidentofTraining,HeatherKramer,wasrecentlyinterviewedbyACORDregardingMAIA‘sProjectInVestatJosephP.KeefeRegionalTechnicalSchool.TohearabouttheProjectInVestProgram,ingeneral,andtheKeefeTechprogram,inparticular,clickhere.

InVEST,aschool-to-workinsuranceprogram,teamswithhighschoolandcollege educatorstoprovideausefulinsurancecurriculumforstudents.WiththehelpofInVest

liaisons(insuranceprofessionals),studentscouldhavetheopportunityforjobshadowdays,internshipsorevencareersaftergraduatingfromInVEST.GuestspeakersduringanInVESTclassprovidefirsthandknowledgeofwhatit’sliketoworkintheinsurancefield,andstudentshaveanewappreciationfortheindustryafterahearingaprofessionalspeak.And,beforeyou’veevenenteredtheroomtheyalreadyareexcitedtohavesomeoneotherthantheirteacherspeakingtothem!What’smore?InVESTprovidesallthematerialsneededtospeakinaclassroomforyou.PowerPointpresentations,quizzes,discussionquestionsandmore!InVESTmakesiteasyandseamlesstoenteraclassroomand impactthenextgenerationofinsuranceprofessionals.Topicscanincluderating,claims,whattolookforinapolicy,howyouhavesucceededintheindustryorevenexplainingspecificinsuranceroles,likeinvestigationsandfraud.

State House News Service:“Baker:AfterSiteProblems,RMVShouldDelayFeeIncreasesAftertheRegistryofMotorVehiclestookdownitswebsiteforperiodsofthelastweekendinJune,preventing consumerfromconductingtransactionsonlineasfeeincreaseswereplannedtogointoeffect,Republican gubernatorialcandidateCharlieBakercalledontheRMVonMondaymorningtodelaythefeeincreasesuntiltheendoftheweek.ThoughRMVofficialssaidthenewfeesarealreadyinplaceandwouldnotbechanged,theagencyislookingtorefundasmallnumberofcustomerswhoweredetectedbythesystemtobeattemptingtoperforma transactionwhenthewebsitewasunavailable.AtthestartofthenewfiscalyearonJuly1,thepriceofvehicle registrationsrosefrom$50to$60,inspectionsjumpedfrom$29to$35anddrivingtestfeesroseby$15to$35. Drivershopingtorenewtheirregistrationsonlinebeforethefeeincreasewentintoeffecthadtroubleattimes accessingthesiteduetoscheduledmaintenance.SaraLavoie,thenewchiefofstaffattheRMV,saidthewebsitewastakendownforperiodsinthedaysbeforethefeeincreaseswentintoeffecttoinstallsecuritysoftwareandprogramthenewfeesandconducttests.“Wehaveheardfromsixcustomerswhoattemptedtoperformatransactionjustpriorto12amonTuesday,July1.TheRMVwillbereviewingtheindividualcustomercasestodetermineeligibilityfora refundbasedontheirtransactiontime,”Lavoiesaid.Bakersaiddriversshouldbegivenuntiltheendoftheweektotakeadvantageoflowerpricing."Delayingthefeeincreasesuntiltheendofthisweekisthefairthingtodobecausethestatescrewedup,“Bakersaidinastatement."ThepeopleofMassachusettsdeservewebsitesthatwork,arealsenseofcustomerservice,andastategovernmentthatownsitsmistakes,ratherthanpassingthemontoits constituents.WithglitchesanderrorsplaguingtheHealthConnectorsite,theunemploymentbenefitssystem,andnowtheRMVsite,itisnotfairforMassachusettsfamiliestopickupthetaborenduretheheadacheofessential servicesthatjustdon‘twork.“TheRMVsaid35,370customerswereabletomakeonlinetransactionstheweekendofJune28andJune29,anuptickof6,484fromthepreviousweekend.ThewebsitewasunavailableforscheduledupgradesonMonday,June30,thedaybeforethefeeincreasestookeffect,from11p.m.tomidnight,accordingtotheRMV,whiletheautomatedphonesystemwastakendownthatdayfrom6p.m.to7:45p.m.tochangethemessagecontentandfrom11p.m.throughTuesday,July1at6:48a.m.formaintenanceandtestingforself-servicetransactions.ThewebsitewasalsodownonthemorningofSaturday,June28fortheinstallationofanewfirewallandsecurity upgrades.“–M.Murphy/SHNS

3

E&O Update:Which Position Would You Rather Take?

byCurtisM.Pearsall,CPCU,AIAF,CPIAPresident–PearsallAssociates,Inc andSpecialConsultanttotheUtica NationalE&OProgram

Whenanerrors-and-omissionsclaimagainstaninsuranceagencydevelops,anobjectiveoftheE&Ocarrierandtheattorneyitassignstohandlethematteristoreviewthefileinquestionanddeterminethedegreeofliability,ifany. Numerousdefensescanbeappliedbasedonthefactsofthespecificcase.Defensesinclude,butarenotlimitedto:

• plaintifffailedtogiveaccurateinformationtotheagent

• plaintiffmisrepresentedcertainfactstoagent• plaintifffailedtoreadhisorherpolicy• plaintiffsignedapolicyapplicationcontaining

incorrectinformation• lackofduty

Iftheagency’scustomerhadbeenmadeawareofaspecificcoveragebutrejectedit,generally,onewouldhopethiswouldpositiontheagencyinapositivelight.Butwhatiftheagency’scustomerwasnotmadeawareof,say,umbrellacoverage,includingwhatitdoesandhowitworks?Towhatdegreewouldthishurttheagency’sdefense?

Some Positive E&O InitiativesLet’stakethefollowingscenarioandlookatthevariouspositions.Imagineyouarethejuryandwillbeaskedto renderaverdict.Theagencywritesahomeownerspolicyforacustomerin2000.Theagencyincludesacoverletterwiththepolicyrequestingthatthecustomerreadthe policyandcontacttheagencyifthereareanyquestions.Thecoverletterincludesastatementnotingthatthe agencyisafull-serviceagencyandencouragesthe customertocontacttheagencyifthereisanychangeinthecustomer’sexposure.

ThesearesomepositiveE&Oinitiativesfromtheagency,sofar.However,forthenext10years,theagencysimplysendsthepolicywithnocoverletter.Inessence,theagencyhasacustomerforwhomitwritesonelineofbusiness,homeowners.Theagencyneverreachedouttothe customerinquiringaboutwherethecustomer’sautoinsuranceisplaced,whetherthecustomerhasanumbrellapolicy,anynewexposures,etc.

Inthat10-yearperiod,thecustomerpurchasesadogforhisorherkids.Thedoglaterbitestheneighbor’schild,resultinginalawsuitrequestingdamagesinexcessoftheliabilityportionofthehomeownerspolicy.Theagencyissuedduetothelackofsufficientcoverage.

WhileE&Ocaseswilltypicallybevery“factsensitive”andnottotally“cutanddry,”considerthefollowingdefensepositions.

In the Agency’s FavorInmost,butnotall,states,theagentisoftenreferredtoas“anordertaker.”Inotherwords,itisuptothecustomertospecificallyrequestcoverage.Generally,aninsuredmustmakeaspecificrequestforaparticulartypeofinsurancecoveragetoimposeadutyontheagenttoprocurethatparticularcoverage.Inaddition,aninsuranceagentisnotrequiredto:

• provideaninsurancepolicythatwouldcoverall possiblecontingencies

• adviseaninsuredwithrespecttocoverageoptions• advisetheinsuredastoeveryexclusioncontainedin

thepolicy

Indefenseoftheagency,itsecuredthecoveragetheclientrequested.Thecustomernevercontactedtheagencyforadditionalcoveragesortolettheagencyknowaboutthe“changeintheexposure.”Bottomline,theagencyfulfilleditsduty.A“specialrelationship”willbedifficulttoprovebecausetheagencyonlywroteonelineofbusiness. Therefore,isthereagoodchancetheagencywillprevailonthislegalmatter?Theoddsareintheagency’sfavor.

Not in the Agency’s FavorThecustomerprobablywillcontendthatheorsheisnotinsurancesavvyandreliedontheagency’sknowledgeandexpertise.Thecustomerwasnotawareofumbrellacoverage,butbecauseofthepurchaseofthedog,hadanumbrellabeensuggested,thecustomerwoulddefinitelyhavepurchasedit.(Thisisalwayswhatthecustomerwillsayaftertheloss.)

Inaddition,thattheagencysimplyrenewedtheaccount“asis,”withaslightincreaseinCoverageAfortenyears,andnevercontactedthecustomertodiscussothercoverageoptionsorchangesinexposure,doesnotpositiontheagencywell.

Whiletheagencymayprevail,theseareexactlythe typesofsituationsE&Ocarriersareseeingwithsignificantfrequency.Arecentindustrystudyindicatedtheaveragenumberofpoliciesanagencyhasforeachpersonallinescustomerisinthe1.6area.Whenconsideringallpotential“sellingopportunities,”itcertainlyseemslikesomemissedopportunitiesexist.So,eveniftheagencydoesprevail,thisscenarioisresultinginsignificantdefensedollarstodefendtheagency,whichareobviouslyfactoredintothepriceoftheE&Oproduct.

What to Do DifferentlyWhatcouldorshouldtheagencyhavedonedifferently?OneinitiativethatcouldhaveeasilyhelpedavoidthetypeofE&Oclaimaboveinvolvestheagencyactively undertakingacross-sellingcampaign.Someapproachestoconsider:

• Useyouragencymanagementsystemtoidentifyscenariosliketheoneabove–withhomeowners,butnoauto(orviceversa)oryouhavetheautoandhomeowners,butnoumbrella.Developaletter

4

Industry News: Motorcycle Owners to Receive $14.6 Million in Refunds Through Settlement with Commerce Insurance ...

Total of $57.4 Million Recovered for Massachusetts Motorcycle Owners to Date; Commerce is Largest Settling Carrier in AG Coakley’s Industry-wide Investigation

TheofficeofAttorneyGeneralMarthaCoakleyreleasedthefollowingpressreleaseonJuly7,2014:

ThousandsofMassachusettsmotorcycleownerswillreceiveatotalof$14.6millionininsurancerefundsasaresultofasettlementwithCommerceInsuranceCompanyafterallegedlybeingoverchargedontheirpolicies,AttorneyGeneralMarthaCoakleyannouncedtoday.

TheAG’sOfficehasnowobtainedatotalof$57.4millionforconsumersasaresultofitsfour-yearmotorcycle insuranceinvestigation.Theinvestigation,whichbeganwithasingleconsumercomplaint,hasledtosettlementswith19 insurance companiessince2010,andgeneratedrefundsonmorethan150,000Massachusettspolicies.Today’ssettlementwithCommerceisthelargestmotorcyclesettlementreachedbytheAG’sOfficeandwillproviderefundstomorethan40,000policyholders.Commerce,whichwasacquiredbyMAPFREin2008,ispresentlythelargestwriterofautomobileinsuranceinMassachusetts.

“OurextensiveinvestigationintotheseinsurancecompanieshasresultedinthereturnofmillionsofdollarstothousandsofMassachusettsmotorcycleowners,”AGCoakleysaid.“Identifyingthesetroublingovercharges continuestounderscoretheneedfortransparencyinautoinsuranceratingpractices,andwearepleasedtohave facilitatedrefundsforconsumersstatewide.”

UnderthetermsofthesettlementwithCommerce,whichwasfiledtodayinSuffolkSuperiorCourt,Commercewillpay$14.6millioninrefundsonover40,000insurancepolicies,and$325,000totheCommonwealth.Laterthismonth,Commercewillbeginsendingoutrefundchecksrangingfromlessthan$50tomorethan$12,000per consumer,withanaveragecheckaround$360.

Accordingtothesettlement,Commerceallegedlyoverchargedcertaincustomersbetween2002and2011byusinginflatedandun-depreciatedmotorcyclevaluestocalculateinsurancepremiums.AlthoughCommercechangeditsbusinesspracticesin2005,inanefforttocomplywithrequiredratingprocedures,theAG’sinvestigationfoundthatsomeoverchargesoccurredevenafter2006.

All19motorcyclesettlementsstemfromaconsumercomplaintthattheAG’sOfficereceivedfromtheownerofa1999Harley-DavidsonRoadKingClassic.Ineachyearbetween2003and2008,theconsumer’sinsurancecompanyhadcalculatedpremiumsforhismotorcycleasifitwerebrandnew,resultinginmorethan$1,500inovercharges.Afteridentifyingthisproblematoneinsurancecompany,theAG’sOfficebeganinvestigatingmotorcycleratingpracticesacrosstheMassachusettsautoinsuranceindustry,andfoundtheunlawfulratingpracticetobewidespread.

InordertobeeligibleforarefundunderoneormoreofAGCoakley’ssettlements,consumersmusthavepurchasedComprehensive,Collision,and/orLimitedCollisioncoverageforamotorcycleduringcertaintimeperiods(typicallybetween2002and2010),andtheirmotorcyclemusthavebeenovervaluedbytheirinsurancecompany.Commercepolicyholderswillbeabletodeterminetheirrefundeligibilityusingthe Attorney General’s Motorcycle Refund Lookup Applicationlaterthismonth.

• bringingthespecificsubject/issuetothecustomer’sattention.Thelettershouldbeeducationalandincludeinformationonwhysecuringtheadditionalcoverageisimportant.Claimexamplesareagreatwaytomakethepoint.

• Whenacustomercallsin,makeiteasyfortheCSRtoidentifywhatcoveragesthecustomerdoesanddoesn’thave.Thisisagreattimetobringtheseadditi-onalcoveragestothecustomer’sattention.

• Inbothofthesescenarios,ifacustomerrejectsthecoverageyouarediscussing,youmustdocument,documentanddocument.Thisdocumentationshouldnotonlybeinthefile/system,butalsoinane-mailbackthecustomerofficiallynotinghisorherdecision.

• Makeitapointtotouchbasewithyourcustomertodeterminewhethertherehasbeenanychangein

hisorherexposures,andthenactonwhatyouareadvised.

Now,taketheE&Oclaimscenarioaboveandaddthefol-lowingtothelettertheagencysent:askthecustomerforanupdateonhisorherexposuresand/orbringumbrellacoverage(whatitdoesandhowitworks)tothecustomer’sattention.Now,imagineifthiscommunicationwasignoredbythecustomer.ThereisthestrongpossibilitytheE&Oclaimwouldhaveneverevendeveloped.

Anotherbenefitoftheseadditional“touches”involvesthechancethatyoumayjustsellsomeinsurancealongtheway.So,ifyouwanttogrowyouragency,enhanceyourE&Ocommitment.Doingthiswilltrulygiveyourbusinessthe“bestofbothworlds.”

E&O Upate ... continued from page 3

5

Industry News ... continued from page 4

ConsumerswhohavequestionsaboutthesettlementsortheirrefundsmayvisittheAttorney General’s Motorcycle Insurance Settlements FAQorcalltheAttorneyGeneral’sInsurance&FinancialServicesDivisionat1-888-830-6277.

ThismatterwashandledbyMathematicianBurtFeinberg,InvestigationsSupervisorArwenThoman,andGlennKaplan,ChiefoftheInsurance&FinancialServicesDivision.

DOI News:DOI to Hold Hearing on Proposed Changed to CAR Performance Standards ...

TheDivisionofInsurancehasannouncedthatitwillholdapublichearingonproposedamendmentstotheCAR PerformanceStandardsfortheHandlingandPaymentofPrivatePassengerMotorVehicleInsuranceClaimsby AssignedRiskCompaniesandtoPerformanceStandardsfortheHandlingandPaymentofCommercialMotorVehicleInsuranceClaimsByServicingCarriers.ThehearingwillbeheldonAugust7,2014,at10a.m.attheofficesofthe DivisionofInsurance,1000WashingtonStreet,Boston,MA.

Thepurposeofthehearingsistoaffordallinterestedpersonsanopportunitytoprovideoraland/orwrittencommentregardingproposedamendmentstothePerformanceStandardsfortheHandlingandPaymentofPrivatePassengerClaimsbyAssignedRiskCompaniesandtoPerformanceStandardsfortheHandlingandPaymentofCommercialClaimsbyServicingCarriers(collectively,“PerformanceStandards”)adoptedbyCommonwealthAutomobileReinsurers(“CAR”).OnJune18,2014,theCARGoverningCommitteevotedtoamendthePerformanceStandards.PursuanttoG.L.c.175,§113H,theCommissionermustreview,andapproveormodify,theproposedamendmentstothe PerformanceStandards.TheproposedamendmentstothePerformanceStandardsmaybeexaminedattheofficesoftheDivisionofInsuranceduringregularbusinesshours.

ThisproceedinghasbeendesignatedasDocketNo.C2014-01.Anypersonwhowishestoprovideoralcomment concerningtheproposedamendmentstothePerformanceStandardsisrequestedtosubmittotheDivisionof InsuranceaNoticeofIntenttoCommentnolaterthanAugust5,2014.AllotherinterestedpersonswillbeheardafterthosewhonotifytheDivisioninadvanceofthehearing.AllnoticesandsubmissionsmustbesenttotheDocketClerk,HearingsandAppeals,DivisionofInsurance,1000 WashingtonStreet,Suite810,Boston,Massachusetts02118-6200,doidocket@state.ma.usandrefertoDocketNo.C2014-01.