The Anchor June 2012

THE MAGAZINE OF THE INDEPENDENT INSURANCE AGENTS OF RHODE ISLAND

The AnchorThe Anchor

IN THIS ISSUE

From the President .................... 5Convention Overview .............. 18Profile of an IIARI Member ...... 24Agents in Action ...................... 35

Second Quarter2012

SPECIAL ARTICLE

Five Sales Tips to Sell More & Build Better Relationships

More.

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table of contentsFive Sales Tips to Sell MorePage 11

2012 Partners ProgramPage 13

Annual Convention OverviewPage 18-19

Case Law NotePage 21

Ever Wonder? A Historical PerspectivePage 23

Advertisers13

36

4

8

6

22

31

15

21

29

10

2

25

34

2012 Partners Program

Clean Care of New England

EMC Insurance Companies

Enviro-Clean, Inc.

Hospitality Mutual

IIARI Retail Benefits

JH Communications

Partridge Snow & Hahn, LLP

Providence Fire Restoration

RLI Personal Umbrella

Servpro of Providence

Smoke Clean of New England

Trusted Choice Campaign

Trusted Insurance AllianceFrom the PresidentPage 5

Executive Vice President PerspectivePage 7

National Director’s ReportPage 9

Legal BriefsPage 14

HR CornerPage 20

Profile of an IIARI MemberPage 24

E&O CornerPage 26

Marketing Thought0

WC UpdatePage 32

features & articles

The quarterly magazine of the

2400 Post Rd., Warwick, RI 02886401-732-2400, Fax: 401-732-1708

Officers of the IIARIPresident Doug Mayhew, CICPresident Elect Howard Thorp, AAI, CICVice President Greg Troy, CIC, CLU, AAIState National Director Robert Slocum, CPCU, CICImmediate Past President Michael T. Dacey, CPIA

Board of DirectorsDistrict Vice PresidentsCentral Andrew PalazzoEast Bay Richard B. PaquinSouthern Tom Regan, AAINorthern David White, AAI

District Vice Presidents, At LargeRobert T. Hartnett Garry Mansfield, CICDavid Woodmansee, CIC

District RepresentativesCentral Edward F. Bishop, CIC Mark RotondoEast Bay Colette McKeon, CIC Ken Thompson, Jr.Northern Marc Nadeau, CPIA Denise SmithSouthern John Gates, CPIA Stan Tabak

STAFFState Account Manager Marcia L. Berthiaume, AAI, ACSR

E&O Administrator & Mbr Coordinator Helen Collins

SVP, State Account Executive Sean R. Donaghey, CPCU

Education & Events Planner Kathryn E. Griffiths

Executive Vice President Mark A. Male

AVP, Director of Education Jean E. Nagle, ACSR, AAI, AIS

Finance & HR Manager Maureen E. Sears

Membership & Administration Sarah Van Grootheest

The Anchor is the magazine of the Independent Insurance Agents of Rhode Island (IIARI).

Statement of fact and opinion is made based on the responsibility of the authors alone and does not imply an opinion on the part of IIARI, it’s of-ficers, directors or members.

Subscription rate for members is $15, which is included in dues. Subscription rates for non-members is $75 per year (single copies $10). Reprint requests should be referred to IIARI.

Copyright©2012, Independent Insurance Agents of Rhode Island.

iiariIndependent InsuranceAgents of Rhode Island

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fice to attend. Also, while on this topic, please be sure to contribute to InsurPac. This is just another way that we can be sure our voices are heard during the political process. After the day on the Hill, the focus turned back to the Big I Board meet-ing and specific break out sessions that dealt with ongoing issues. ProjectCAP was the big item on the agenda. There are now over 1,000 agencies signed up for the program in just the first 3 months and admittedly this has caused delays in getting new participants up and running. The process is improving and staffing needs have been addressed so this should run more smoothly going forward. As the rollout to the agent portal starts to take shape it is critical IIARI members reach out to their auto carriers to be sure they are engaged in the program. If you have an insurer that has asked for more information about this please be sure to refer them to Mark for assistance. Mark will be spearheading an effort to reach out to all of our RI auto insurers to gauge their interest in ProjectCAP and to make sure they have the details they need to get involved. If you have not yet signed up or have questions I would encourage you to get involved at the entry level so you will be able to participate in the portal once it becomes available. Additionally we have asked Rhode Island to be on the list of early rollout states of the program so it is important to engage in adopting the program and reaching out to your auto carriers to encourage their participation. Big I made ProjectCAP a top pri-ority and there are a number of very

from the president

Doug Mayhew, CICIIARI President

Second Quarter, 2012 The Anchor5

Winning Together

I recently returned from the Big I Legislative Conference in Washington D.C. Special thanks go out to the fol-lowing members who gave up valuable time in their agencies to attend: Mela-nie Flamand; Kim Raymond; Brian Hunter; David Bates; Ed Bishop; Bob Padula; Bob Slocum; and Mark Male. This was my first experience at the Legislative Conference and it was quite impressive to see the agents from all 50 states coming together to focus on the most pressing issues that face our industry. After our initial strategy meetings on Wednesday afternoon members from each state made the annual pilgrim-age to Capitol Hill to meet with their respective members of the House and Senate to discuss our position on flood insurance reform, licensing reform, health care reform and insurance regulatory reform. Nine of us spent valuable time with our State Represen-tatives and Senators and walked away with the feeling that our position on these issues was understood. In reality, since it is an election year, I’d predict that the NFIP gets extended till year end without any reform, agent licensing reform might finally have a chance now that the NAIC has shown it’s support, there won’t be any action on health care reform until the Supreme Court ruling due later this year, and we will continue to see the threat of federal insurance regulation going forward. If you have any interest in attending next year’s Legislative Conference I would encourage you to let Mark Male know. It is an eye-opening experience and well worth the time out of the of-

The Anchor Second Quarter, 20126

smart people involved that understand the urgency of winning back personal lines market share from the direct writ-ers. The power and success of this will be determined based on the excitement and participation we can generate at the grass roots level. If thousands of Trusted Choice agents throughout the country engage in this digital market-ing and branding effort it will surely help us turn around the loss of business to the direct writers. We all know that the Independent Agency system is the best for providing insurance solutions to our clients. Unfortunately, we have not done a very good job of working together to market ourselves over the years. On the other hand, the direct writers have done a very good job and have pumped millions of dollars into telling everyone how much they can

save on their insurance. Big I members must work better to-gether. We need to realize that we are not competing against each other. We are competing against very well funded marketing machines that will continue to take our business if we don’t change our approach. Personal lines as well as commercial lines agents (yes, BOP’s can certainly be commoditized like auto insurance by direct writers very easily) need to put aside that individuality that we have come to love as a benefit to being a small business owner and com-mit to this effort on a national level. In doing so we will level the playing field and guarantee the future of the Inde-pendent Agency system for generations to come. Working together = WINNING TO-GETHER

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executive vice president perspective

Mark A. MaleIIARI Executive Vice President


on this to purchase most of their goods and services, including insurance. I’ve read that some colleges and universities are no longer issuing student email addresses, as they are finding that social media seems to pro-vide a better, more direct and efficient way of delivering information to their students. As an association we work to keep pace and try to stay on the cut-ting edge of these changes. Probably surprising to some is that IIARI has a Facebook page, a LinkedIn page, and even a Twitter account (ri_agents). Un-fortunately the vast majority of those following us are NOT members but are instead other interested parties. We at the association recognize the need to learn how the game will be played in the future so that we can support and, therefore, remain relevant to you, our members. Not too dissimilar to the idea of em-bracing the fax machine in order to stay relevant in the 1990’s, so too is the idea of embracing digital marketing and social media in order to stay relevant in the future. We live in a changing world and the old ways of doing things are no longer going to work. To the younger generation it is all about the ease of doing business and if it cannot be done electronically, it won’t be done at all. Failure to embrace this philosophy and these new forms of communication will relegate all of us to the status of the written letter – a nice idea, but too cumbersome to accomplish and too time consuming. It is an entrepreneur’s responsibility to read the tea leafs and change accordingly. Failure to embrace

The Future is NowDo You Have What it Takes to Embrace it?

With four years under my belt at IIARI, I can’t help but reflect on my years as the Pennsylvania executive. There are many differences between then and now and besides age, the most pronounced change is not organization-al in nature, but rather operational. If you can believe it, email was a burgeoning new technology when I departed the Pennsylvania Association in 1999. The Internet was beginning to get some legs and the fax machine was the king of all communication. Many industry observers noted that agencies who failed to embrace fac-simile machines would contribute to their eventual demise. In terms of how we do business today as compared to just ten years ago, we are light years ahead. Faxes are no longer king of the information highway, and are about to go the way of the written letter. For many of us, this is hard to comprehend, but not so for the younger generation. To them, change is constant and rather than hide from new technology, they tend to embrace it. The fax machine was a great form of communication for many years, but now documents are imaged and e-mailed making the fax machine obsolete. E-mail has replaced faxes in terms of relevance and is still the most widely used form of commu-nication today. E-mail is also the basis for new forms of communication that are still in their infancy – social me-dia and digital marketing. Those who haven’t embraced e-mail at this point may find it difficult to embrace these new technologies and potentially lose the client who is increasingly relying


social media and digital marketing will enhance our irrelevance. Bob Slocum writes in this issue about Project CAP and digital market-ing. It’s a continuation of what Myron Mitchell began writing about during his tenure as our National Director. The progression continues and the constant march of change seems to now carry a sense of urgency relative to the new digital age. The speed of adoption and integration of digital marketing into the agency DNA is critical if we stand a fighting chance of halting the erosion of personal lines market share to alterna-tive distribution methods. I encourage you to read Bob’s column in this issue of The Anchor and be sure to get a grasp of the key concepts and impor-tance of digital marketing to protect and grow your future. Change is constant; that we can be sure of. The transition between the typewriter and the PC, took many

years, giving society time to get ac-climated to the new technology before throwing out the old. We will not have the same luxury going forward, how-ever, as things are changing much too quickly and what is popular today will just as quickly be irrelevant tomor-row. Information used to be station-ary, meaning that you sat at a desk and answered a phone that was connected to a wire that came out of the floor or responded to an e-mail on a desk top computer. Now, however, with cell phones and tablets, information is mobile. No longer is a desk or office required to conduct business. A poten-tial new client could be at a Starbucks on a Sunday morning and request a homeowner quote and expect an answer just as quickly. The independent agent of tomorrow will have to be able to re-spond to that request just as quickly and those who cannot will be left behind like the typewriter.

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national director’s report

It’s Time to Join the Cause!

Robert G. Slocum, CPCU, CICIIARI State National Director

Every year, the large direct writing companies have quietly stolen personal lines market share from the Indepen-dent Insurance Agents throughout this country. 1% here 2% there.. just a little at a time… right? NO! Did you know that 1% of the personal Lines Market is over 2 Billion dollars of premium? Me either. But don’t despair because your association is rising to the occasion and taking steps to help you compete! Proj-ect CAP’s mission is to regain personal lines market share for the Independent Agency system. CAP is not just a product, its a “cause.” Have you ever wondered how you were going to compete with the large Direct Writers for personal lines busi-ness in the future? Did you know that over 75% of insurance consumers are going online to research coverages and rates for their personal insurance needs? Consumers have changed. They want what they want when THEY want it… not when we are available. So it’s time for us to change so we can re-main viable in the future and continue to be seen as the agents of choice for personal lines consumers. That’s why IIABA has taken bold steps to help you utilize today’s technology along with the Trusted Choice brand to provide the kind of information and assistance that today’s consumers demand.

In reality, there are two major components to the Project CAP effort. The most talked about is the Consumer Agent Portal that will eventually in-clude the ability for consumers to get rates from several Independent Agency Companies and then find a local agent to write their policy and provide that level of local client service we pride ourselves on. The other major compo-nent deals with Digital Marketing to help you establish and maximize the consumer’s ability to find you on the web. These two strategies will work to-gether to help drive new clients to you! If a consumer is searching for insur-ance information using Google (or a similar search engine), do you know if your name comes up on that first page of results? Try it out and see. Being listed on the first page of search engine results is critical to your long term suc-cess with today’s insurance consumer. If you don’t show up on the first page, consumers will probably not see you (because almost none ever go past the first page of search results). But how do you get your agency to show up there? By utilizing something called search engine optimization (SEO). I know it sounds complicated and expen-sive, and I will admit that there is a lot to learn, but that’s why IIABA teamed up with some of the most dedicated Independent Agency insurance com-

you can take advantage of the oppor-tunity to make your agency “digitally visible” using the various tips, tricks and tools offered by the experts at CAP. I urge you to make the time to listen to the message, take action and join the cause to regain market share in personal lines! To learn more about what’s go-ing on and how you can leverage these powerful tools to help your agency grow in the future go to: https://pro-jectcapmarketing.com/


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panies to create project CAP to help! CAP stands for Consumer Agent Portal but in truth it is a comprehensive set of tools and educational materials de-signed specifically for you to help you establish and enhance your presence on the web and in social media such as Facebook. You MUST be there if you are going to meet the needs of consum-ers and remain relevant. Over the next few months you will be hearing more about CAP and how


facing upwards. A hand-on-top hand-shake is a show of dominance while a hand-on-bottom handshake is read as much more accommodating and agree-able.

2. Keep your chin down and your eyes up.

If you do the opposite of this, namely: chin up, eyes down, the other person may get the feeling that you are “look-ing down your nose at them”, not good. In addition to chin down and eyes up, it is a good idea to tilt your head slightly as this has been shown to be the most friendly and accommodating position

3. Never go toe-to-toe with the pros-pect or customer.

When you picture two people getting ready for a confrontation, what do you see? They are usually standing toe-to-toe, chest-to-chest, directly facing one another. Directly facing someone head-on can be subconsciously perceived as confrontational, even if you are several feet from them. As a result, it is best to stand at a slight angle to the person you are talking to. 4. Smile. Smiling is the one piece of body lan-guage that does have meaning all by itself. A smile says many positive things and sends a message of: warmth,

special article

Five Sales Tips to Sell More and Build BetterRelationships Through Better Body Language

While much has been written and said about how much you can read a person based upon body language, the reality is: body language does not typi-cally say much about a person unless it is extreme. Someone with crossed arms is not necessarily closed off to your communication, they may be cold, or that may be their “standard stance”, this is typically the case with electricians, plumbers, contractors and similar pro-fessions. That being said, the average person has heard the basics on body language and as a result, they will read what they can into your body language. Because of this, you want to make sure your body language is as agreeable as possible. Here are some ideas on how to do that. Five Body Language Keys 1. Don’t cross your arms. Okay, you saw that one coming right? The one tip about body language that almost everyone is aware of, states that a person with crossed arms is closed off to communication. As a result, keep your arms down by your side or oth-erwise uncrossed. The most agreeable position for the arms is open with the palms of the hands facing up or toward the other person. Note: When shaking hands, estab-lish a 45 degree angle with your palm

John ChapinComplete Selling, Inc.

John Chapin will be presenting a Sales Seminar at the 112th Annual Convention!


Likewise, your eyes tell others a lot about you. Make sure your eyes say you are alert, interested, and focused. Also, make sure you are making as much eye contact as possible. In conclusion, when body language is an issue, it’s easy to notice. If your prospect is completely reclined and relaxed when she should be on the edge of her chair, you have a prob-lem. If she is leaning back with her arms folded, and she really looks as though she couldn’t care less—once again, you have a problem. These are extreme examples and thus good signs as to how someone feels, at the same time, subtleties in body language are very rarely indicators of exactly how someone feels. Body language needs to be coupled with other items, such as what the eyes are telling you, before it has any real significance. That being said, you still want to ensure your body language sends all the right messages because over 90% of the people you run into on the street believe that body language is a big factor and they will make judgments about you based upon yours.

genuineness, self-confidence, and professionalism. A smile can do more to build rapport and bring down the de-fensive walls than almost anything else. In addition, if you are having a bad day, by smiling you send positive messages to the brain and you will actually feel better. 5. The eyes have it.Through Better Eye Contact, if you re-ally want to know where you stand with someone, or how they feel, focus on the eyes. The eyes are mirrors of what’s going on internally. They will let you know if someone is interested or disin-terested, if they truly care or couldn’t care less, and whether they’re paying attention or off in another world. Here are some things to look for:• Is the person looking around?• Are his eyes glazed over?• Ishefightingtostayawake?• Does he have a look of confusion?• Is he looking right through you?• Is he looking at his watch or other-

wise looking away from you?• Does he have an intense look?• Is he focused on and absorbed with

what you’re presenting? John Chapin is an award winning sales speaker,

trainer, coach, and co-author of the gold-medal winning “Sales Encyclopedia” a comprehensive how-to guide on selling. “Sales Encyclopedia” is written for sales professionals in all industries at any level of experience. Utilizing more than 21 years of sales experience and as a number one salesperson in three industries, John co-founded Complete Selling Incorporated, a company helping salespeople and sales teams significantly increase sales and find their motivation.

The Independent Insurance Agents of Rhode Island proudly introduces the 2012 Partners Program. The 2012 Partners Program is a mechanism to allow companies to demonstrate their support of the American Agency System and IIARI.

We thank all of our 2012 Partners Program sponsors. Diamond sponsor The Beacon Mutual Insurance Com-pany, Gold sponsors Progressive, and UPC Insurance Company, Silver sponsor Quincy Mutual Group, and Bronze sponsors American Commerce Insurance Co., The Andover Companies, EMC Insurance Companies, Peerless Insurance, and Phenix Mutual Fire Insurance Co.

Be sure to thank your companies for their unparalleled support of IIARI and all independent insurance agents. Look for all of our sponsors throughout the coming year as we acknowledge their commitment at all IIARI events and functions.

THANK YOU!

American Commerce Insurance Co.The Andover Companies

EMC Insurance CompaniesPeerless Insurance

Phenix Mutual Fire Insurance Co.

BRONZE SPONSORS

Quincy Mutual GroupSILVER SPONSORS

GOLD SPONSOR

Melissa E. Darigan, Esq.Partner



them with claims, provide relevant in-formation and make recommendations. To ready themselves for their cus-tomers’ inquiries and requests for as-sistance, agents should be familiar with R.I. General Laws § 27-5-3.7 (Hurri-cane Deductibles, Triggers and Policy-holder Notice) and the Department of Business Regulation’s Insurance Regu-lation 110 (Residential Property Insur-ance – Hurricanes), which implements that statute. Section § 27-5-3.7 requires that insurance companies electing to in-clude any deductible and/or mitigation measure related to such deductible for any type of personal lines residential property insurance on dwelling houses provide prominent and clear notice to insureds in the policy issuance or re-newal package. Such notice must fully disclose all details of the applicable deductible and/or mitigation measure. The statute caps the deductible at 5% of the property’s insured value and limits the application of the deductible to a declared “hurricane.” Insurance Regulation 110 expounds on the requirements of the statute and specifies that insurers that include a deductible for weather-related events:1. May not include a windstorm de-

ductible2. May only offer a deductible of 5%

of the insured value of the building3. May not offer optional hurricane

deductibles in excess of 5%4. May offer a flat dollar hurricane de-

ductible in place of or in addition to a percentage deductible but the total

It’s Hurricane Season Again;Help Your Customers Ready Themselves

legal briefs

Hurricane deductibles continue to confound and alarm residential con-sumers. Being on the front-line of the insurance distribution system, agents bear the brunt of questions, concerns and even anger from insureds who do not understand their coverages and how deductibles are applied. As we have discussed in prior Anchor articles, an independent agent simultaneously owes legal duties to both the insured and the insurer. The Rhode Island Supreme Court has held that an agent is the agent of the insured, not the insurer, in the procurement of the policy. Thus, the agent represents the insured’s interests exclusively in:1. Identifying insured risks2. Determining appropriate types of

coverage3. Determining appropriate amounts

of coverage4. Soliciting quotes

In carrying out these responsibili-ties, the agent must exercise reasonable care, diligence and judgment. Among other things, this means that the agent must assess the nature of the risks to be insured and identify coverage types and amounts appropriate to insure against those risks. As a result, educating insureds about hurricane deductibles is not simply a good business practice or customer service – it is an important part of the agent’s legal duties owed to the insured. Additionally, when faced with devastat-ing property damage and loss, insureds rely heavily upon their agents to help

Jennifer R. Cervenka, Esq.Partner


deductible may not exceed 5% of the insured value of the property

The most critical time to educate insureds about hurricane deductibles is at policy inception or renewal – it is at that point that the insured is making an informed decision, with the agent’s assistance, about the coverage, exclu-sions and deductibles in the policy. The disclosure requirements in Insurance Regulation 110 assist in this effort, by requiring insurers to fully and com-pletely disclose all details pertaining to hurricane deductibles and include two practical examples of how hurricane deductibles work in all policy issuance or renewal packages. The DBR also explains that a hur-ricane deductible may be applied only to losses occurring during the period commencing with the issuance of a hur-ricane warning by the National Weather Service and ending 24 hours after the last National Weather Service hurricane warning. Agents should note that Block Island risks are treated differently from

the rest of the state. A hurricane deduct-ible is triggered in Block Island only when hurricane force sustained winds are reported in Block Island by the National Weather Service. In the same vein, hurricane force winds reported in Block Island do not trigger hurricane deductibles in the remainder of the State, unless the National Weather Service reports this condition as being present in other parts of the State. Section 27-5-3.7 provides relief to in-sureds who undertake certain mitigation measures to protect against loss. Under the statute, hurricane deductibles shall not be applied to any insured that has installed approved mitigation measures to protect against windstorm damage and the insurer has either inspected the property or the insured has submitted satisfactory proof of installation of the approved mitigation measures. Insurance Regulation 110 specifies which mitigation measures are approved by the DBR, which include plywood shutters over all window and door open-


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“windstorm” was unambiguous and that it should be afforded its ordinary meaning, which it described as a storm with high levels of wind, irrespective of precipitation. The plaintiff argued that the term was ambiguous in that it was not defined by the policy and could be construed to mean a storm marked by high winds but with little to no precipi-tation, a common dictionary definition. Applying established rules of insurance policy construction, the Supreme Court agreed with the plaintiff that the policy was ambiguous in that the term was reasonably susceptible to more than one meaning. The Court further held that the ambiguity was to be construed strictly in favor of the plaintiff as the insured. Thus, the Court found that the term meant what the plaintiff argued it meant. Because the storm at issue was characterized by expert testimony at the trial as having a “considerable” amount of precipitation, the storm was not a windstorm within the meaning of the policy and, thus, the deductible did not apply. Hurricanes also can create flood conditions as a result of storm surges and torrential rains and many insureds do not understand that flooding is not covered in the standard homeowners or business insurance policies. Agents have a duty to seek forms and limits of coverage pursuant to an express re-quest by the insured for specific cover-age; however, Rhode Island law does not impose a general duty on agents to inform an insured as to every form or limit of coverage available. Thus, there is no legal duty to inform insureds about flood insurance. It is a best prac-tice however to address flood insurance issues with customers at policy incep-tion or renewal. Agents seeking to implement best practices, provide superior customer


ings, roof tie-downs and permanent storm shutters or hurricane glass. In some areas of the State, insurers may not require an insured to employ any mitigation measures, while in others they may. In those instances, Insurance Regulation 110 requires that the insurer provide written notice to the insured ex-plaining the mitigation measure that is required, describing the credit to be ap-plied to the premium upon installation, stating the length of time the credit for the mitigation measure will apply and that the insurer will not non-renew as a result of a risk of catastrophic loss. Section 27-5-3.7 and Insurance Regulation 110 are too new to have yet developed reported cases in Rhode Island. However, litigation on policy interpretations, exclusions and deduct-ibles related to hurricanes and other extreme weather events can be ex-pected. The last reported case dealing with windstorm deductibles was Bliss Mine Road Condominium Association v. Nationwide Property and Casualty Insurance Company; Rhode Island Supreme Court, 2010 LEXIS 105 (No-vember 1, 2010). This case concerned a 2005 loss and was decided under law pre-dating the implementation of § 27-5-3.7 and Regulation 110. There, the plaintiff condominium association made a claim on a policy after a storm with high winds, sleet, rain and snow and was awarded $26,977.77 after an appraisal process was completed. The defendant insurer refused to pay the award based upon a “windstorm” de-ductible contained in the policy. Plain-tiff disputed the applicability of the deductible and eventually filed a breach of contract suit in Rhode Island Supe-rior Court which found that the insurer had breached the insurance contract by applying the windstorm deductible. On appeal, the insurer argued that the term

each policy, including hard copy and electronic work papers and writ-ten communications for the current policy year plus four years. In an earlier Anchor article, we suggested that this minimum regulatory reten-tion requirement may not be suf-ficient to allow agents to effectively defend claims because many claims to which an agent may be subject have statutory limitation periods of up to 10 years. Agents should also be mindful of any contractual obliga-tions imposed by their E&O carriers for retaining documents. Failure to maintain or preserve records in ac-cordance with regulatory authority or pursuant to contract may relieve the E&O carrier from the duty to defend third party claims.

These practices and policies should be established and communicated to all agency employees and enforced by management. What is covered is one of the biggest sources of anxiety for an insured dur-ing an extreme weather event. Agents should reach out to their customers to fully explain the coverages and exclu-sions and assist them in selecting the best product for their unique circum-stances.

Melissa E. Darigan ([email protected]) and Jennifer R. Cervenka ([email protected]) are attorneys with Partridge Snow & Hahn LLP, a Providence based business law firm. Ms. Darigan is a partner with the firm and Chair of its Litigation group. Ms. Cervenka is a partner with the firm and Chair of its Insurance group.


service and limit their exposure to claims relating to extreme weather events should consider the following three easy-to implement steps:1. Communicate with the insured to

ensure informed decision making. When meeting with insureds to pre-pare an application for coverage (or for renewal coverage), specifically discuss hurricane deductibles and the availability of flood insurance. Do this with every insured every time, no matter how sophisticated the insured is in relation to insurance matters or how long you have acted as the insured’s agent.

2. Document communications relat-ing to hurricane damage coverage and deductibles and flood coverage. Make sure your file contains written documentation that you discussed hurricane deductibles and mitiga-tion measures, reviewed hurricane deductible examples and relevant flood maps, advised as to the scope of flood coverage and informed the insured about NFIP plans. Having the insured sign a declination form for flood is powerful evidence that the insured made an informed deci-sion about the availability of cover-age. Consider writing to the insured to confirm your discussions and the decisions made by the insured about coverage. At the very least, document the discussion and the decisions made by the insured in an internal memorandum to be main-tained in your file. Prepare this letter or memorandum reasonably contem-poraneously in time to the meeting.

3. Preserve your documentation. Keep these records documenting your communications on hurricane and flood issues in your files. Insur-ance Regulation 67 requires agents to maintain a policy record file for

Golf

Wanumetonomy Golf & Country Club in

Middletown is the location of this year’s golf out-

ing. Located on the east side of Rhode Island’s

Narragansett Bay, Wanumetonomy is an 18-hole,

challenging and picturesque par 70 layout done in

a classic links style.

Opening Night Reception The Opening Night Reception tentatively will be held in

the unique International Tennis Hall of Fame. Liba-

tions, hors d’oeuvres, music, raffle and more await all

who attend. The evening concludes at the Canfield

House with a casino, international coffees and deserts.

Monday The convention begins at the Newport Marriott with

CE and an opportunity to both network and relax!

An Exhibit Hall Continental Breakfast starts the day

followed by IIARI member favorite, Chris Amrhein

who will present Street Level Ethics (submitted for 3

credits). After lunch Chris will continue with a ses-

sion on Marketing to the New Generation (submitted

for 3 credits).

MARK YOUR CALENDARS!

Tuesday Afternoon

We invited Rhode Island General Treasurer Gina Raimondo

to join us for the Installation Luncheon. Following lunch,

Ms. Raimondo will update on the State of Rhode Island. Hear

how Treasurer Raimondo tackled the looming pension crisis

and positioned the State of Rhode Island to overcome an issue

that would have paralyzed, crippled or even sent the State into

bankruptcy. The afternoon will conclude with an opportunity to

network with peers, company representatives, and vendors.

The Toll Is On Us!We Hope You Can Join Us

Tuesday Morning After breakfast and annual meeting, don’t miss the chance to at-

tend a session to learn more about sales with the award winning

speaker, author, trainer, and coach – John Chapin. As the need

to focus on sales becomes paramount for ALL independent

agencies - this session will help arm you with some additional

tools to succeed!

MARK YOUR CALENDARS!


ANSWER THESE QUESTIONS• Do I currently have a policy hand-

book?• Has it been over a year since I re-

viewed it?• With regulatory changes in 2011-2012,

am I currently compliant?• Have I used a third party (lawyer or

Human Resource Professional) in ren-dering a compliant opinion?

This is the time of the year that you want to make sure you are 2012 compli-ant in taking a closer look at your Human Resource responsibilities. These questions are just the tip of the iceberg in validat-ing how you are doing. Prevention is a lot better than running into a very expensive labor issue. If this is a concern contact someone in the Human Resource field that can help you. Thanks for your time. See you next quarter.

Dave Nichols Quality Transitions, Inc.

hr corner

Dave Nichols is the principal of a human resource management business, Quality Transitions, Inc., located in Charlestown, RI. He has 25 years of experienceinthefieldandisalsoretiredfromthe US Army as a Lieutenant Colonel. If you are interested in learning more please visit his website at www.qualitytransitions.net.

Do You Have a Current 2012Compliant Policy Handbook?

This is a continuation in the series of human resource articles for “The Anchor.” My goal is to bring value to your organiza-tion in accomplishment of the Essentials of Human Resources. This article will deal with 2012 compliance. Did you know that a seemingly in-nocent policy statement can cost you $1,000,000—or more? Or if you don’t have any written policies, you could be in double jeopardy? Sound unbelievable? Listen to this:

• A pharmaceutical firm felt safe when it fired a senior employee for subpar per-formance. But the employee used the company’s routine discipline policies to accuse it of unfair treatment. Cost: $8.4 million.

• A West Coast manufacturer fired two employees for dating. Problem: It didn’t have a no-dating policy. Cost: $6.3 million.

In today’s legal combat zone, costly di-sasters like these can be prevented. Exam-ple: An East Coast transportation organiza-tion had such a strong and well-publicized policy against sexual harassment (as the Supreme Court has “recommended”), that it was judged not liable despite a manag-er’s clearly illegal harassment of a subor-dinate. Now, take a major step in policy protection and lawsuit prevention.


Excess automobile liability insurer entitled to reimbursement of defense costs: Empire Fire and Marine Insurance Com-panies v. Citizens Insurance Company of America/Hanover Insurance, Rhode Island Supreme Court, 2012 WL 1592963 (R.I. 2012) (Suttell, J.) (May 7, 2012).

Summary: This case arose out of a 2003 accident in which a pedestrian was struck and seriously injured by a driver operat-ing a BMW automobile while under the influence of alcohol. At the time of the accident, the BMW was owed by BMW Financial Services, NA, LLC (BMW Financial) and leased by Inskip Autocenter (Inskip) to MCB Productions LTD (MCB). The lawsuit triggered coverage under multiple policies. One of those policies was issued by Citizens Insurance Company of America/Hanover Insurance (Citizens) to MCB, the lessee of the BMW. The Citizens policy named Marilyn Brownell, the owner and agent of MCB, and her husband as insureds and, by endorsement, named BMW Financial as an additional insured lessor and loss payee. The Citizens policy expressly provided that any liability afforded by the policy for the leased auto would also apply to the lessor named in the endorsement. The policy also included a provision entitled “OTHER INSURANCE”, indicating that in the event of other applicable insurance, Citizens would only pay its proportionate share of the loss and that any insurance provided by Citizens for a vehicle not owned by the insured would be excess over any other collectible insurance. A separate business automobile insurance policy was issued by Empire Fire and Marine Insurance Companies (Empire) to BMW Financial. The Empire policy provided contingent, excess, and interim liability coverage to BMW Financial for vehicles that BMW Financial had leased to others, including the vehicle at issue. The policy also had an “other insurance provision”, which stated that coverage under the Empire policy was excess to any other collectible insurance unless such insurance was specifically written to apply in excess of the Empire policy.

The limits of both policies were tendered in an eventual settlement of the pedestrian lawsuit. In defending the law-suit, Empire had paid $98,955.92 in legal expenses, only $23,060.62 of which was reimbursed by Citizens. Relying on the “other insurance” provision of its policy, Citizens refused to reimburse Empire for the remaining defense costs. Empire filed a declaratory judgment suit seeking a determination that Citizens was liable for reimbursement of the full amount of de-fense costs Empire had paid in the underlying action. Citizens filed a counterclaim against Empire seeking reimbursement of the $23,060.62 it had paid Empire, asserting that Empire was singularly responsible for BMW Financial’s defense costs. Cross-motions for summary judgment were filed, with each insurer arguing that the other was the primary insurer who had the primary duty to defend and the sole responsibility for pay-ment of defense cots. The Superior Court granted summary judgment in favor of Empire and against Citizens, holding that the Empire policy provided excess coverage to Citizens’ primary insurance coverage and, therefore, Empire was due $75,895.30 from Citizens. On appeal, the Rhode Island Supreme Court affirmed the Superior Court’s decision in favor of Empire. The Supreme Court refused to read the “other insurance” provision of the Citizens policy in isolation, as had been urged by Citizens, and, instead, held that the policy would be interpreted as a whole consistent with established principals of contract inter-pretation. To determine coverage by reading the “other insur-ance” provision only, held the Court, would render coverage as to BMW Financial “illusory” and the additional insured lessor endorsement meaningless. Indeed that endorsement, stated the Court, would lead an ordinary reader and purchaser of the Citi-zens policy to believe that the Citizens policy provided BMW Financial with primary, not excess, coverage for the underly-ing action. Accordingly, Citizens was under a primary duty to defend the action and was responsible for all the defense costs expended by Empire in defending BMW Financial in the underlying suit on Citizens’ behalf.

CASE LAW NOTEA Review of Case Law of Interest to IIARI Members

This feature of The Anchor reviews recent case law involving the insurance industry. Please contact the authors for more information: Jennifer R. Cervenka, Esq. ( [email protected] or 401-861-8228) and Melissa E. Darigan, Esq. ([email protected] or 401-861-8250), Partridge Snow & Hahn LLP.

EmergencyBoard UpServices


Ever

Won

der?

Today, our Association occupies a very nice building at 2400 Post Road in Warwick. For many years, we oc-cupied small quarters in downtown Providence, which was hard to get to and harder to find a parking place. Over the years, every president and the board of directors spent much of their time discussing buying a build-ing. We went to see many at many locations, but we could never agree on location or if the location was okay, the building was not suitable. On November 16, 1981, the then current President J. William Corr ap-pointed Roger L. Messier, Chairman, William Warburton and Donald Kaul a committee of three to locate land or a building. The committee met and the first thing decided was that the location had to be central and decided that it must be in Warwick, and near 95 and the airport. Once that was agreed to, Bill Warburton’s real estate division found our present location, which was a piece of land containing 88,000 square feet or just over 2 acres. We negotiated a price of $150,000, which was quickly ap-proved by the board of directors.

The committee then got some rough drawings showing the building pretty much as it looks today. With architec-tural changes, we then went out to bid. On April 27, 1982, we received 15 bids and finally gave the contract to the F.H. French Company for $182,035 with a side agreement not to exceed $195,000. Groundbreaking took place on May 21, 1982, and we had a big open house celebration on September 30, 1982 when we moved into the com-pleted building. The final cost was $192,888.37, and the furniture cost was $31,500. The building has allowed us to have our own classroom and meeting room and, certainly, has given us outstanding office accommodations.

Roger L. Messier, CPCU


PROFILE of an IIARI Member

ANCHOR: What are your greatest opportunities?

I’ve been a member of IIARI for about 15 years.

I enjoy consulting with my customers and educating them about insurance. I feel when they have a better understanding about insurance, they appreciate it that much more.

The greatest challenges are trying to con-sult and educate customers who think they know everything there is to know about insurance and the constant changes in underwriting and guidelines with some of the markets.

My greatest opportunity is talking to peo-ple and getting in front of them. Everyone can be a customer of yours, so the more people you talk to the more opportunities you have.

I would tell them to learn as much about the business as possible. Ideally, try to get in with a company first and learn the coverages. I think a good agent is one that knows they are always learning them-selves.

My biggest struggle is direct writers who do no consulting or educating and are just trying to sell price.

ANCHOR: How long have you been a member of IIARI?

ANCHOR: What do you like most about your business?

ANCHOR: What are your greatest challenges?

ANCHOR: What advice would you give to someone interested in becoming an independent agent today?

ANCHOR: What is your biggest struggle?

Kraunelis Insurance AgencyJohn Kraunelis185 Washington RoadBarrington, RI 02806

2012 RI Trusted Choice Branding Campaign IIARI expresses Special Thanks to the following companies for participating

in the 2012 Branding Campaign!

A.N. Nunes AgencyApple Valley InsuranceBlackman Insurance AgencyBentson-CombiesBessette Insurance AgencyBalis Insurance AgencyButler & MessierCapital City Insurance AgencyChatterton InsuranceChristopher & Regan InsuranceFarmington Insurance AgencyHunter InsuranceiConnexionJohn Andrade Insurance

2012 PARTICIPATING IIARI MEMBERSJohn J. Clarke InsuranceJohnston InsuranceLapointe InsuranceLoiselle Insurance AgencyMaggiacomo Insurance AgencyOceanPoint InsuranceO’Rourke Insurance AgencyPaquin Insurance AgencyPearson, Cronin & JacobsenSoucy Insurance AgencySchonning Insurance AgencyThe Slocum AgencyThorp & TrainerWoodmansee Insurance

Watch for Trusted Choice Television Ads on Local Broadcast News, Red Sox Games, and Cable Stations.

This summer, listen for ads on local radio as well!

e&o corner

James C. Keidel, Esq. Partner

Keidel, Weldon & Cunningham, LLP

Christopher B. Weldon, Esq. Partner

Keidel, Weldon & Cunningham, LLP


collect information from their custom-ers and/or prospects, the customers and prospects want to know what will happen to the personal information that they provide. An interactive website helps personalize the insurance trans-action experience, improves customer service; allows the agency/brokerage to process transactions and to send email notifications of other products if the customer/prospect opts-in. In collect-ing customer information, an agency or brokerage should have a privacy policy outlining what the agency or broker-age may do with the personal informa-tion they collect. A customer/prospect should be informed as to what informa-tion the agency/brokerage collects and intends to retain and how the informa-tion will be used (e.g., for quotation purposes). The customer/prospect should also be advised as to how the information they provide is protected and that it will not be shared with any third-parties without their consent. These are just some of the points that should be addressed in any well-crafted privacy policy. The last issue to be addressed with any privacy statement is where it should be placed in your social media website, such as Facebook and Linke-din, or even on the company’s website. Like any disclaimer, a privacy state-ment should be placed in an open and conspicuous place on the social media and/or company website. An agency or brokerage may want to consider the use of hyper-links to provide access to the privacy statement. If a hyper-link is used, it should be easily identified.

Some Social Media Concernsfor an Agency or Brokerage to Consider

Over the past year, Keidel, Weldon & Cunningham, LLP has presented a number of seminars to insurance agents and brokers on the subject of social and digital media and what potential issues arise when agents and brokers venture into this area. This article will focus on several issues agents and brokers should consider in connection with the use of social and digital media. Specifically, we will discuss privacy concerns when using social media, the elements you should consider in any social media disclaimer, what may constitute advertising in social media, and how non-compete agreements are affected by social media.

I. Privacy Concerns with Social Media As more and more insurance agen-cies and brokerages dive into social media, they need to be cognizant of the privacy issues raised by social media and the concerns their customers may have in communicating through social media. While social media is good for group discussion on issues important to the group it should not be used to carry-on a conversation with a client who has a particular issue or concern. At the point where a social media communi-cation with a client turns to a personal issue, this must be the time that your agency or brokerages realizes the conversation must be taken out of the social media arena and placed into the agency environment either in person, by telephone or through email. For those agencies and brokerages that utilize an interactive website to

brokerage may do for them, it is impor-tant to understand that such a post may possibly be considered an advertise-ment and require the agency or broker-age to comply with all state laws and regulations governing advertising. For example, in a recent insurance agent post, the agency stated the following: “We just saved John Smith $200.00 on his auto insurance policy and we can help you experience a similar savings.” After finding that the post constituted an advertisement, one state regulatory body questioned how the agency saved the insured $200. It was learned during the investigation that the savings arose from John Smith not only procuring an auto policy from the agency but also purchasing his homeowners which provided a package discount. The state investigating this post believed that the post may be considered misleading as it seems to indicate that the insured saved money just by purchasing his auto policy through the agency. The con-cern here, and with any similar posting, is that it may be considered to be in violation of the state’s unfair trade and/or unfair competition laws which spe-cifically outline the fact that publishing content that misleads the public will be considered a violation of those laws. Interestingly, there is one state that looked at these types of testimonials on social media posts and found that they are advertisements which must comply with all state advertisement laws and regulations, including the listing of the insurance carrier’s full name and the city and state of its principal of-fice. Thus, if your agency or brokerage decides to use these types of testimoni-als to describe its successes, the agency or brokerage must ensure that such testimonials comply with state laws and regulations on advertisements in those states where your agency or brokerage is licensed and in each state where the

II. Some Elements to Consider in any Social Media Disclaimer With respect to disclaimers and social media websites, your agency or brokerage should make sure that the following key elements are included in any disclaimer utilized:

1. The social media website is subject to change and/or amendment with-out notice;

2. The agency or brokerage makes no representation of any kind, express or implied, as to the completeness, accuracy, reliability, suitability or availability of the information pro-vided via the social media website;

3. The agency or brokerage assumes no liability for loss or damage, including without limitation to in-direct consequential loss or damage arising from utilizing the informa-tion provided on the social media website;

4. The agency or brokerage assumes no liability for loss or damage for temporary or permanent unavail-ability of the social website;

The above is not intended to be an exhaustive list of what should be in-cluded in a disclaimer when developing an agency or brokerage’s social media website. Please note that, even with the appropriate disclaimers, there is no guarantee that an agency and/or broker-age can avoid all potential claims when utilizing social media as a means of communication.

III. Can a Post on a Social Media Website Constitute an Advertise-ment, and Other Issues Raised by Such a Post? While agencies and brokerages want to publish their successes on their social media pages to let customers and prospects know what the agency or



age’s customers, prospects or vendors with whom the employee had material contact during the last two years of his employment with the agency or broker-age.” Tying the social media limitation into your non-compete agreement will help protect the agency or brokerage from former employees utilizing social media to solicit clients and prospects once they leave the agency. As you can see from above, social media has raised some new issues and concerns for agencies and brokerages. If social media is utilized correctly it can become an asset to develop and grow your agency or brokerage busi-ness. However, if utilized incorrectly and without adequate safeguards, social media can create potential problems for an agency or brokerage. The prudent insurance agency or brokerage should be sure to consider the issues we have raised in this edition of the E&O Cor-ner when venturing into the social me-dia arena. Doing so will help protect the agency or brokerage from a poten-tial claim, lawsuit or regulatory issue.

post may appear on your social media website.

IV. What Should be Considered with Non-Compete Agreements and Social Media Social media has raised a unique issue with Non-Compete Agreements. Specifically, producers are creating client lists on their social media pages. For example, Linkedin and Facebook are a connection between a person and all the people that person wants to be connected to on those websites. Nor-mally, when social media websites are used for work, those connections are the person’s client list and are used as a means to advise that client list of changes with the person making the post. Thus, a concern has arisen with employers on the way to fashion non-compete agreements so as to protect the agency/brokerage from an employee using his or her social media client list to take agency or brokerage customers following the termination or separa-tion of employment. The simple fix here is to make sure that your agency and/or brokerage’s non-compete agree-ment addresses social media concerns. For example, an easy way to obtain protection from an employee solicit-ing business through their social media outlets is to add language similar to the following: “the employee covenants and agrees that during the employment and for a period of three years after the employment ends, regardless of the reason for separation, the employee will not, directly or indirectly, includ-ing but not limited to social media, contact, solicit or attempt to solicit any business of the agency or broker-

The law firm of Keidel, Weldon & Cunningham, LLP concentrates its practice in handling errors and omissions claims, litigation and loss control for insurance agents and brokers. Please direct any comments or questions to either James C. Keidel or Christopher B. Weldon either by mail at the firm’s Rhode Island office located at 303 Jef-ferson Boulevard, Warwick, RI 02888, or by email at [email protected] or [email protected] or by telephone at 401-773-7730. The firm also maintains offices in White Plains, NY; Syracuse, NY; New York, NY; Wilton, CT; Philadelphia, PA and Bayonne, NJ.

RLI’s Personal Umbrella Policy is now accepting many new exposures for new and renewal business. There’s something for almost everyone in our new underwriting box!

Now eligible for the RLI Personal Umbrella Policy:

• Excess UM/UIM available in all states.

• Drivers of any age

• 20–21 year old drivers can have up to 1 incident

• Drivers with an international license

• Up to 1 DWI/DUI per household

• Up to 6 moving violations and 3 at fault accidents per household

• Up to 10 autos (+25 antique autos) per household

• Up to 10 properties per household (5 can be rentals)

• Up to 5 non-U.S. properties per household

PERSONALUMBRELLAPOLICY

®

For more information, go towww.rlipersonalumbrella.com

Your customers will love our new underwriting boxYou asked us to find ways to make our standalone, A+ rated personal

umbrella policy available to more of your customers.

And we listened.

PUP-MK 509 (05/11)

April ShrewsburyAAS, Inc. (IIABA)127 S. Peyton St.

Alexandria, VA 22314

[email protected] (800) 221-7917F (703) 995-4406

These commercials connect with us. They stir up emotions of pride for our country and remembrance of our fathers. Many of us can relate to having taken a chance in life and not having always agreed with our parents. There’s also nothing more American than: “Dream big, set your own course and shoot for the stars,” as explained in Chrysler’s ad description for “My Son Steven” on YouTube. Evoking an emotional response, striking that “responsive chord” in advertising can make the difference in how successfully you sell your product or service. It’s simply sales, but where the average salesperson can poten-tially reach hundreds in a day, strong advertising reaches tens of thousands locally and millions nationally. Just as your best salesperson connects with his or her customers, so too should your advertising. Your best salesperson does not ramble off a bunch of features when selling your product, but instead explains why your product makes life better. The Chrysler ads do not tell us that the car has a 3.6 liter V6 engine, gets 28 miles to the gallon, or has Bluetooth connectivity. Instead it tells us that the car is designed for that young man or woman who’s taken a chance in life, that works hard and has achieved, and wants to drive a car that reflects his or her status. It makes us feel good about who we are and that America is back on top again when it comes to manufactur-ing cars.

John HouleJH Communications

marketing thought


Striking that ‘Responsive Chord’in your Advertising

I was watching my favorite TV show on DVR, when I was captivated by a commercial, which struck me even more than the fantastical melodrama about the world of advertising I’m so drawn to. Instead of fast forwarding, I actually kept rewinding the spot. What ad could garner such strong emotions in me, not only preventing me from fast forwarding but actually inspiring me to pen an article? It’s called “My son Steven,” for the Chrysler 300, and these lines brought up emotions of my own father:“…Whenhestartedhisownfirmpeople thought he took a gamble, but it isn’t that way when you know what you’re doing. I don’t always agree with him. But he’s making the game follow him and that makes him his father’s son.” The ad ends with, “The world will hear the roar of our engines.” And there’s no doubt that Chrysler has roared back. Chrysler brand sales are up 56% and the 300 has had triple-digit year over year sales gains. Not bad for a company that almost was on the trash heap of history. Whether it’s their new innovative models, or their inspiring advertising, the company is doing something right. This same company also has brought us “Halftime in America” with Clint Eastwood giving that gritty “All American” pitch and rapper Eminem’s personal appeal for Detroit’s Renais-sance. So, what can we learn from their advertising?

his wing. I run my own shop now, and raised my family from my hard work. I dream today about how I can make things better, and I know my job helps people. I’m like so many other small business owners working to make a liv-ing. That’s why it’s so important to me to help people right here in our commu-nity. I’m a Trusted Choice agent, and I’m here to help you with your insur-ance.”


As insurance agents and small busi-nesses, we don’t have the luxury of multi-million dollar creative budgets and advertising buys. So how can you compete, especially against the likes of the direct-writers who have ads that are quirky and make us laugh? How about an ad like this:“I wanted to be a professional ball player, or an actor, but when I gradu-ated from college, I needed a job. I was fortunate that the owner took me under


wc update

Michael LynchVice President, Legal

Beacon Mutual

to bring about the injury or death of himself or herself or another, where it is proved that his or her injury or death was occasioned by that conduct, or that the injury or death resulted from his or her intoxication or unlawful use of con-trolledsubstancesasdefinedinchapter28 of title 21.” R.I.G.L. §28-33-2.

The first scenario considered by the statute is “willful intention to bring about the injury or death of himself or herself or another.” While rare, this circumstance does occur. When con-fronted with this scenario, the impor-tance of a thorough initial investigation cannot be stressed enough. An example of this type of case is Davis v. State of Rhode Island, W.C.C. 86-7932. In Davis, the employee lost his temper at work, hit a wall and broke his hand. After trial and appeal, the Appellate Division of the Court affirmed that such behavior was fairly described as “self-inflicted injury” and deemed non-compensable. Intoxication is the next scenario. While one can argue that intoxication is a form of self-inflicted injury, the facts and a good investigation are again critical as the case law requires evi-dence that the intoxication caused the injury, not simply that the worker was intoxicated at the time of the injury. A post-accident positive blood test will not suffice as an absolute defense. You need facts to show that the intoxication caused the injury. Here is an example. In the case of Collins v. Cole, 40 RI 66. 99 A. 830 (1917), Collins was in the employ of the respondent as a

In determining whether an employee is entitled to workers’ compensation benefits, with the exception of unique factual situations, the analysis and answer is not usually that complicated. This article will address a few of those unique factual situations. Unlike with civil liability, in the world of workers’ compensation, the employee’s fault is seldom subject to inquiry. It is a no-fault system. How-ever in some cases, the employee’s actions should be examined. What if your customer’s employee purposely hurts herself at work? What if she was intoxicated at the time of injury? What if she was fooling around in the work-place and injury resulted? All of these scenarios occur every day. The question is, are they compensable claims?

The analysis begins with the law: “If an employee … receives a personal injury arising out of and in the course of his or her employment, connected and referable to the employment, he or she shall be paid compensation… by an employer subject to the provisions of chapters 29 – 38 of this title.” R.I.G.L. §28-33-1.

On the issue of employee conduct, do the injuries that result from self-in-fliction, intoxication or horseplay arise out of or occur during the course of employment? Not always. The Rhode Island Workers’ Compensation Act provides further, in pertinent part, as follows:“No compensation shall be allowed for the injury or death of an employee oc-casioned by his or her willful intention

Workers’ Compensation - What is Going On?


other men were drowned. Mr. Collins’ widow petitioned the Court for workers’ compensation death benefits. The petition was denied at trial. On appeal, the widow Collins argued that the employer must prove that the intoxication was solely and exclusively the cause of the death. The Supreme Court disagreed, finding as follows:“If the petitioner means by that that the respondent must exclude every pos-sibility that death might have resulted otherwise than from intoxication, we cannot agree with her. If Collins was in an intoxicated condition, that is, a condition in which he would be unable to look out for his own safety with that degree of care which a person would otherwise naturally exercise, and that, whilesoinfluenced,hedidsomethingwhich a person in a normal condi-tion would not be likely to attempt and which brought about the accident, the trialcourtwouldbewarrantedinfind-ing that the accident resulted from the condition into which he had voluntarily brought himself. We do not think that the statute requires that every pos-sibility should be excluded before the evidencebecomessufficienttosupportthefindingthattheresultwasduetointoxication.”

Despite its age, this case is still good law. Any employer who has reason to believe that an injury was caused by intoxication (to include drugs) needs to immediately see that its carrier conducts a complete investigation as was done in the Collins case, and deny the claim. Force the injured worker to pursue the claim at the Workers’ Com-pensation Court. The final circumstance is horseplay. Simply stated, the perpetrator’s injuries in this scenario are not compensable but the injured innocent bystander may

night watchman and deck hand on a dredge which was being operated in the harbor at Block Island. It was a part of his duty to take members of the crew to and from the shore during the evening, and for this purpose a yawl belonging to the dredge was used. During the day of July 7, 1914, the dredge was not at work on account of rough weather out-side of the harbor. In the afternoon of that day, Collins, with some of the deck hands, went ashore, where he drank whisky and other liquors to such an ex-tent that when he returned to the dredge at about 5 o’clock he was intoxicated. At 6 o’clock when he went on duty he asked a co-worker to do part of his job as he was “in bad condition.” In the early evening, Collins made two or three trips to and from the shore in the large row boat belonging to the dredge taking ashore and bringing back mem-bers of the crew. On one of the return trips Collins was in such condition that, instead of rowing toward the dredge, he rowed out toward the open sea, where-upon one of the men in the boat took the oars and rowed to the dredge. There was also evidence that one of the men in the boat, upon this trip, brought with him a quart bottle of whisky belonging to the cook who had been left on shore and that upon reaching the dredge Col-lins and some of the deck hands opened this bottle and proceeded to imbibe its contents. Afterwards one of the deck hands heard Collins and the cook, who had then come from the shore, talk-ing about going back again for more whisky. Almost immediately there was a yell, and three co-workers found the cook struggling in the water and Col-lins standing up in a very small skiff, which did not belong to the dredge. Almost immediately the small boat tipped over and Collins fell into the water. Efforts to rescue Collins and the cook were unavailing. Collins and two


Accordingly, benefits were awarded. What is the lesson to an employer? Put a stop to horseplay. Your customer will assume the risk of any and all injuries arising from this activity being deemed compensable. In summary, self-inflicted injury, intoxication and horseplay claims are very real possibilities in the workplace every day. To avoid workers’ com-pensation liability for these claims, every agent should encourage his or her customer to prohibit such behavior and work closely with the carrier in conducting a thorough investigation. Otherwise, it is very possible that the injuries that arise will be deemed work related.

very well have a compensable claim. In the case of Carvahlo v. Decora-tive Fabrics, Inc., 117 R.I. 231(1976), Carvahlo suffered a perforated rectum as a result of co-workers fooling around with an air hose while cleaning work material off of each other. Denied at trial, Carvahlo appealed and the Su-preme Court reversed holding that:“Where the use of an air hose to clean off clothes is a daily practice, play with the hose is a risk of the employment and part and parcel of the working environment. Such activity should be regarded as part of the course of em-ployment, particularly where, as in the instant case, the employer places in the hands of the employee the instrumental-ity which was used in the ‘horseplay’ and caused the injury.”

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Certificate Presented to RIAIA Matt Clarke, of OceanPoint Insurance, presents the framed original Stock Certificate Number 1 issued on November 12, 1948 by the Rhode Island Association of Insurance Agents, Inc. to Meredith & Clarke, Inc. to Mark Male, executive vice president. Matt sold the agency to OceanPoint Insurance and returned the stock certificate as required by the corporation. Given it was the first certificate issued, the Association will display the framed certificate in the Associa-tion offices for posterity sake.

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IIARI Calls on Congress A contingent of nine IIARI representatives visited Washington, D.C., in April to call on Senators Reed and Whitehouse, and Representa-tives Langevin and Cicilline. Issues raised in those meetings included the reauthorization of the National Flood Insurance Program, NARAB II (a national mechanism to streamline agent licensing in multiple states), the Medical Loss Ratio inclusion of agent commissions and other federal matters of interest to independent insur-ance agents.

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The Anchor June 2012

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Transcript of The Anchor June 2012