CalSurance Associates Blog

CalSurance Associates Blog

Thursday, September 1, 2016

Understanding the Difference Between a Broker, Third-Party Administrator (TPA) and Managing General Agency (MGA)

In the professional liability insurance realm, there are a lot of nuances in terminology that you need to be aware of. Understanding the difference between the various parties that work in insurance can help you in choosing who to work with and what is best for you. Here, we'll explain the difference between brokers, TPAs and MGAs, and what each can do for your insurance business.

Insurance Brokers

An insurance broker acts as an intermediary between the client and the insurance company. In this role, the broker serves as an advocate for the client in contracting with a particular professional liability insurance company. A broker may maintain relationships with a variety of insurance companies but is not employed by any of them. In dealing with insurance companies, the broker keeps the client's interests top of mind, making the process as streamlined as possible for the client. The broker advocates on behalf of the client to help them achieve the appropriate coverage for their needs and within their budget. Some brokers assist clients with filing claims as well.

Third-Party Administrators (TPAs)

A TPA is employed by an insurance company, typically to assist with risk management and the handling of claims. In the wake of the recession, many insurance companies were forced to cut back on their staff levels, and claims and risk management were some of the hardest hit. Rather than employing more staffers, many insurance companies turned to TPAs to help expedite their claims processing efforts. TPAs usually have expertise in one or more areas, like professional liability insurance, enabling them to process claims in an efficient and expedient manner, freeing up the insurance company to focus its efforts in other areas, rather than on claims.

Managing General Agencies (MGAs)

An MGA is similar to an insurance broker but is a bit more specialized. The MGA is granted underwriting power by an insurance company, whereas regular brokers do not have this privilege. Thus, an MGA has more power than a broker and can even assign new agents or brokers in retail insurance offices.
MGAs typically specialize in particular areas of insurance, like professional liability insurance. This takes the pressure off the insurance company to need to have on staff an expert in each type of insurance they offer or to have to spend time and money to train someone new. Instead, they contract with an MGA to handle more obscure areas of insurance.

Benefits of These Roles

Some companies are able to act in all of these roles in different scenarios. For your insurance business, it can be a great help to employ these services. Insurance is a somewhat complex topic with a lot of nuance and detail, so it helps to have people who understand these nuances and specialize in certain areas. Rather than having to learn every little detail yourself, you can free yourself up to focus on other areas of running your business, leaving it to the experts to handle more detailed tasks.

It is important to understand exactly what each of these entities offers before getting into a contract with one or all of them. Ask plenty of questions to get a better understanding of what they can and cannot offer you and your business. Make sure that you fully understand what the scope and limits of their responsibilities will be, as this can vary from case to case. It is important to do ample research in advance to ensure that you have the full picture. This will better enable you to make an educated decision about what is right for your business and your needs.

All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.

Monday, August 1, 2016

Minimizing E&O Risk for Insurance Agents

As an insurance agent, you spend much of your work day putting together insurance plans for your clients to make sure that they have the proper coverage to protect them in the event of any incidents. However, you need to ensure that you have ample coverage for yourself as well to protect you and your company from any errors and omissions claims, which can result in debilitating costs for your company if not covered under your regular insurance policy.
Having professional liability insurance to cover E&O claims provides an extra layer of protection for you and your organization. In addition to having this additional coverage, there are a number of practices you should employ to help minimize the risk of incurring such claims in the first place:

Follow Correct Procedures

First of all, make sure that you fully understand the intricate details of all of the insurance options your company offers and the extents and limitations of each policy. You need to know exactly what you are providing to your clients so that you can make the best possible recommendations for their individual needs.
Be sure to follow all applicable regulations, and always employ ethical business practices. If you are unsure whether a particular action is ethical, it is usually best to err on the side of caution until you can be completely sure. When completing application forms for your clients, always make sure that each question is answered fully and accurately to prevent future complications due to misrepresented information.

Communicate with Your Clients

Throughout the entire process of developing an insurance coverage plan for a client, take the time to explain everything to the client in detail. You want to ensure that your client fully understands the products that they are getting and the scope of coverage. If a client chooses to decline a particular aspect of coverage, impress upon them the potential risks of not obtaining that coverage and what it could mean for them in the future. The last thing you want is for a client to file an E&O claim against you simply because you did not make them aware of potential complications with their policies. In the event that you must switch your client over to a different insurance carrier for a particular policy, be sure to alert him or her to any changes in levels of coverage, deductibles, or other pertinent information.

Document Everything

As you work with your clients, both during the application process and in subsequent conversations regarding policy changes or claims, keep a record of everything that was discussed and the results of those conversations. Any time a client elects to make a change to a policy or remove certain coverage options, get it in writing with the client's signature. Having this paper trail can greatly reduce your liability in E&O claims because you will be able to prove that you provided the client with all of the information needed for them to make an educated decision and that the changes you made to the policy were at the client's direction. While it is unlikely that you will ever need most of this documentation in the future, it is best to keep track of everything just in case there is ever an issue.
By following these tips, you can greatly reduce your risk of E&O claims in your insurance practice. However, it is important to remember that we are all human, and even with the most careful application of these practices, mistakes can still happen. Any time there is a discrepancy, report it to your E&O insurance provider immediately. The faster you take action, the better your insurance company will be able to help you weather the storm.

All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.

Friday, July 1, 2016

Understanding Professional Liability Insurance for Insurance Agents

As an insurance professional, you understand the critical importance of comprehensive coverage. After all, it’s your job to showcase the importance of coverage for the insurance you offer to your clients and customers.

Why wouldn’t you apply this same principle to your own business?

Professional liability insurance is a critical element to every agent's ongoing practice. Without a solid liability plan in place, you risk significant damages in the event of a negligence claim or civil lawsuit award from a client. Accordingly, it is critically important to understand all the aspects of professional liability insurance for insurance agents – and get yourself sufficiently covered.

The Nuts-and-Bolts of Professional Liability

At its heart, professional liability insurance is a service for the protection of agents and brokers. This protection helps keep you from being responsible for all costs and damages from defending yourself from a negligence claim or bearing all the costs of a civil lawsuit award.
This type of coverage primarily protects you when it comes to allegations or lawsuits about your failure to perform a duty or service for policyholders working through you. These include any of the following areas:
  • Not Performing (or Improperly Performing) a Service for a Client
  • Financial Losses Caused by a Product/Service Sold to a Client
  • Errors or Omissions in a Policy, Product, or Service Sold to a Client
These elements are potential areas for legal recourse from a client. If you’re not protected, you could face dire financial consequences and even the loss of your business.

Is General Liability Okay?

For the most part, professional liability insurance is required by law to operate as an agent or broker. However, this may not always be the case – and you may not realize the importance of having it.
If you think you only need general liability insurance, then you need to understand the distinction. General liability insurance policies typically will not cover the specific elements faced by brokers or agents. Getting a specific professional liability plan will ensure coverage for these more direct elements of harm.

What’s Covered in Professional Liability Insurance?

  • Wrongful Acts: A broad-scope definition of this term includes any type of act, error, or omission as well as personal injury.
  • Claim: Claims also include everything up to disciplinary actions and proceedings (with specific limits based on your coverage).
  • Professional Services: This specifically covers your insurance service given for a fee – including agents, brokers, consultants, managers, financiers, administrators, adjusters, handlers, and notary publics.
  • Loss: A loss specifically covers you for punitive damages which are insurable by the law, including interest for pre and post-judgments.

Group-Sponsored Errors & Omissions Insurance Programs

Another important component of your liability insurance should also include coverage for errors and omissions (E&O). Group-sponsored E&O coverage keeps you protected in all of the following areas:
  • Negligence in your actions, errors, or omissions in any of your professional services as an agent or broker. This also includes negligence for registered principals or registered representatives such as notary publics.
  • Any type of personal injuries which are specifically defined in your particular E&O policy. These will likely vary depending on your specific coverage, so ensure that you review what it covers and what it doesn't.
  • If you're a district manager, this also includes any additional negligence, omissions, and related errors you may cause while training, supervising, and even recruiting other individuals.
Group policies often come when you’re an agent or a broker through a specific insurance firm. As mentioned, specifics will vary depending on which insurance firm you work with or which coverage you choose.

Keeping Yourself Covered At All Times

While agents likely already have professional liability insurance, make it a point to learn all the components of this essential element to your job. And make sure that your policy includes all the coverage you’ll need to remain fully protected throughout your business operations.

If you are interested in a group sponsored E&O program for your insurance entity, please contact CalSurance Associates at: (800) 745-7189.


All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.

Wednesday, June 1, 2016

The Department of Labor's Fiduciary Rule

The Department of Labor ("DOL") recently issued its long-anticipated rule amending the regulatory definition of fiduciary investment advice. The Rule replaces the previous five-part test used to determine whether an individual is rendering investment advice for a fee with a new definition of "fiduciary" that, according to the DOL, better comports with the statutory language in the Employee Retirement Income Security Act of 1974 ("ERISA") and the IRS Code.  The DOL promulgated the Rule due to its perception that the market for retirement advice has changed dramatically since ERISA was enacted. According to the DOL, individual advisers, rather than large employers and professional managers, have become increasingly responsible for managing retirement assets as IRAs; and participant-directed plans, such as 401(k) plans, have supplanted defined benefit pensions.  

At the heart of the change is the DOL's belief that financial products have become too complex for individuals managing retirement assets, and that retirement advice is potentially conflicted due to various compensation structures. The DOL believed advisors have been recommending investments based on their own self-interest (e.g., products that generate higher fees for the adviser even if there are identical lower-fee products available), giving imprudent advice and engaging in transactions that otherwise would be prohibited by ERISA and the IRS Code.  The DOL attributes the advisers' conduct, in part, to the outdated definition of fiduciary.

In contrast to the multipart test set forth in the 1975 regulation, the Rule now explicitly describes the kinds of communications and the types of relationships that constitute investment advice that give rise to fiduciary responsibilities. The DOL's stated goals are to guarantee that investment advice be in the consumers' best interest, and eliminate excessive fees and substandard performance.   

This white paper outlines the new definition of fiduciary; explains what types of communications are considered recommendations covered by the Rule; addresses the effect of the fiduciary duty standard; and summarizes the various exemptions promulgated by the DOL, including the Best Interest Contract Exemption ("BICE").  The paper is meant to assist broker-dealers, registered investment advisers and their insurers better understand the Rule and its implementation. Continue reading

By: Winget Spadafora & Schwartzberg, LLP


All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.

Thursday, April 16, 2015

Labels Matter when it comes to Liability

Take care when using terms like “specialist” or “expert” when describing your business or job title to a customer. In some cases, agents who hold themselves out as “specialists” may be held to a higher standard than those who are simply advertising services as an “insurance agent.” The logic behind this is that experts provide advice and are therefore more likely to follow a standard of care that is expected of an advisor, while agents typically procure insurance coverage the customer is asking for. For instance, a property and casualty insurance “expert” may be expected to provide advice or make assessments regarding all of the customer’s insurance needs including but not limited to pointing out potential coverage gaps the customer may not be aware of, exploring and explaining available limits and policy exclusions which should be tailored to that client’s needs. In a case like this, the customer may hold the agent responsible for not identifying and providing coverage for exposures the agent should be aware of as an “expert” in the field.

Although insurance professionals may often view themselves as experts, consider using the term in marketing and promotional materials only if you’re sure this term accurately describes your knowledge level and the level of care you believe is expected of you by your customers. Consider usage of terms like “expert” or “specialist” carefully especially when it comes to marketing collateral and websites. Although there are advantages to promoting yourself or your business as an industry “expert” or “specialist,” these terms can also leave you vulnerable to E&O claims. To help avoid E&O claims, consider taking the time to determine what standard of care you will be providing and how this impacts your customers’ expectations before titling yourself an “expert” in the field.

All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.


Wednesday, March 11, 2015

Financial Advisors Using Yelp for More than Just Restaurant Recommendations?

A new SEC guideline now allows investment advisors to publish public reviews on third-party websites, possibly giving advisors the opportunity to leverage this new freedom as a marketing opportunity to build business.

The new SEC guideline to rule 206(4)-(a)(1) of the Investment Advisors Act of 1949 essentially states that advisors may publish unaltered public comments about their services that are posted on third-party websites, provided that they include all comments, both positive and negative, and that the advisor has no connection to the third-party site or influence on the comments. Additionally, advisors may post a mathematical average of comments from third-party review sites.

Ultimately, this new guideline allows investment advisors to participate in a PR/marketing channel from which they have been previously excluded, due to SEC regulation. Multiple industries, including restaurants, hotels, spas, and so many more have relied on endorsements, reviews, and recommendations from happy customers on websites such as Yelp or Angie’s List as a form of promotion. Although this provides a new opportunity for advisors, they must carefully measure the pros and cons of publishing reviews as this decision affects both PR/marketing efforts as well as regulatory compliance.

For investment advisors, it’s important to keep in mind that the world of free, open-forum reviews is a double edged sword. The SEC guideline clearly states that both positive and negative reviews must be published as they are, unedited. Although positive feedback can give your advisory business a boost, it’s important to maintain compliance with the SEC and any other applicable regulations, as well as be prepared to counteract potential negative feedback. Although no professional desires negative feedback, not all negative reviews are bad. Sometimes, this is an opportunity to find out where you fall short, and show customers that you have taken action to remedy any previous challenges. In some cases, the story of turning an unhappy customer into a happy customer makes the best review.

All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.

Thursday, February 12, 2015

Free Tools to Assess Your Competitor’s Marketing & Advertising Efforts

Although the term “you get what you paid for” usually holds true, there are some ways to access free tools in business that can be quite valuable when properly implemented. For instance, before committing to a paid service, subscription, or other vendor, look for companies that offer free trials prior to purchase. Companies that are confident in the effectiveness of their products or services rely on free trials knowing the product will sell itself.

Across most industries, companies are relying more heavily on software tools that not only help track and analyze their own website performance, but also analyze competitor performance. Below are just a few of the services currently available to help you start thinking about what options you may look into to improve your marketing and advertising efforts, or simply to get a better idea of the competitive landscape.

SEMRush.com
Although this is a paid service, you can get free sample reports from competitor websites. Reports contain various tracking metrics such as organic and paid keyword data, ad content, website traffic, and more.

Wordstream.com
Word Stream provides pay per click (PPC) software to help companies optimize their online advertising campaigns. Although services and pricing vary, Word Stream offers a number of free offers including: AdWords Landing Page Grader, PPC Advisor free trial, PPC Optimized Landing Pages & Leads free trial, and a number of other free reports. Try downloading a report to assess whether or not the data you receive is useful to your marketing needs.

Moz.com
Moz offers website analytics to help track and improve search engine optimization (SEO), social media, branding, link building, and content marketing efforts. Moz offers subscription based services at various price points and currently offers a free 30 day trial.


All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.

Friday, October 10, 2014

Product Understanding is Essential

Selling a product without product understanding misses the mark and often causes losses for Broker/Dealers and their Registered Representatives. Read below to see how a simple lack of product understanding led to large losses:

Wednesday, September 10, 2014

If it was not Documented, it Didn’t Happen!

For Registered Representatives, documentation is key to loss prevention. Read on to find out why:

Monday, August 11, 2014

Ensure Funds Are Invested as Requested

Registered Representatives can help themselves avoid loss and reduce exposures using a few simple tips. Try using the below loss prevention tip to improve your risk management strategy: