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Posted By IIAW Staff,
Monday, November 15, 2021
Updated: Wednesday, December 1, 2021
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By: WAHVE Work at Home Vintage Experts Leaders often use the phrase, “This [insert project name] isn’t a sprint. It’s a marathon.” When applied to business strategy, the phrase means that change takes time. Be patient. Don’t rush. Prepare. Train. At the finish line, you’ll break through the tape victorious. While the phrase is intended to remind everyone that big changes don’t happen overnight, there’s a flaw in its wisdom for today’s leaders and employees – because it implies that there is a finish line. These days, it might be better to take a note from Nike’s 1977 print ad campaign that said, “There is No Finish Line.” Think about that for a minute. Do you approach strategic imperatives as if there’s a finish line? Or do you acknowledge that in an age of continuous disruption, there can be no finish line? Put another way, are you planning your future as if there’s going to be a return to status quo, or are you building a culture of adaptability? When leaders plan as if there’s a finish line, they tend to focus on tactics and rigid rules that will get everyone to a final destination. The problem is, by the time they reach the final destination, everything has shifted again, and the original solution doesn’t address the current problem. So, why do leaders often default to this type of thinking? For one thing, there’s pressure for leaders to have “the right answer” or the “final solution”. There’s comfort in driving toward a finish line. It’s the model we know. Surely, we all want to understand where we’re headed and feel a sense of accomplishment when we reach our destination. This isn’t to say that tactics and goals aren’t important. They are. But they are point-in-time solutions to situations that are temporary. In a recent McKinsey & Co. study, researchers refer to this type of short-term thinking as “the finish-line effect”. When leaders fail to build a culture of adaptability, it can increase attrition and dissatisfaction. Employees want to work for companies that can stay ahead of the curve rather than be drowned by the next rising tide. Many leaders today are grappling with how to address the changing work environment. A finish line approach is to launch a policy that defines specific days that employee must be in the physical office. An adaptable approach means meeting your workforce where they are today and leaving room for the policy to quickly adjust if you need to bring employees into the office daily or if you need to enable them to all work remotely again. You could even decentralize decision making and let teams decide how to best to accomplish their jobs as projects, people, and tasks change over time. Making adaptability part of your overall strategic mindset requires change and practice. If you want to build an adaptive culture but you (or your team) are resistant to change, it won’t work. What does an adaptable workplace look like? 1. They accept that uncertainty is here to stay. 2. They hire diverse team members. 3. They hire leaders who are adaptable. 4. They present several possible paths to a solution. 5. They are open to experimentation, interpretation, and failure. 6. They are not rule bound. There’s a navigational north star, but it doesn’t define the paths you take to reach and surpass it. 7. They think beyond near-term tactics to longer-term goals. 8. They encourage constant learning. Stop thinking about the sprint. Stop thinking about the marathon and finish line. Build a culture of adaptability. To quote another famous Nike ad campaign, “Just Do It.”
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Posted By IIAW Staff,
Friday, November 12, 2021
Updated: Wednesday, December 1, 2021
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By: Bill Wilson, Founder & CEO of InsuranceCommentary.com Your 20-year-old daughter is away at college. She does not have a car on campus, but her roommate does and she drives the auto occasionally. Would your unendorsed personal auto policy respond if she has an accident driving the car? If not, is there anything you can do about it? You might be surprised... Courts have generally held that students away at school are still considered to be “family members” under the PP 00 01 and, thus, are covered while operating autos at school. However, there is an important exclusion in the PAP that says [emphasis added]: B. We do not provide Liability Coverage for the ownership, maintenance or use of: 3. Any vehicle, other than “your covered auto”, which is: a. Owned by any “family member”; or b. Furnished or available for the regular use of any “family member”. However, this Exclusion (B.3.) does not apply to you while you are maintaining or “occupying” any vehicle which is: a. Owned by a “family member”; or b. Furnished or available for the regular use of a “family member”. As you can see, IF the vehicle is “furnished or available” for the “regular use” of a “family member,” there is no coverage under the parents’ policy while the student drives the car. Without debating the issues of “furnished or available” or “regular use,” let’s assume that the student does have regular, unrestricted access to her roommate’s car. In that case, she is at the mercy of the insurance on the vehicle, if any, since her parents’ policy will not provide any coverage. Is there anything her parents can do do extend coverage to her under their policy while driving her roommate’s car? Well, speaking of the word “extend”... ISO has an endorsement, the PP 03 06-Extended Non-Owned Coverage-Vehicles Furnished or Available For Regular Use that may provide coverage. If you’ll open this endorsement, you’ll see that it buys back several exclusions, including B.3. above. However, note the following wording from the endorsement [emphasis added]: I. Extended Non-owned Coverage
The Extended Non-owned Coverage provided by this endorsement does not afford coverage under Part A and Part B of the Policy for any accident involving:
A. A vehicle owned by an individual named in the Schedule or in the Declarations;
B. A vehicle owned by a “family member” or
C. A temporary substitute vehicle for such owned vehicle described in A. or B. above. So, even though this endorsement provides coverage to family members for vehicles furnished or available for their regular use, it does not provide coverage IF the vehicle is owned “by a member of the same household.” Exclusion B.3. in the PAP applies to vehicles owned by family members but not scheduled on the parents’ policy and also to vehicles furnished or available for the regular use of family members (e.g., a company car). What Item I. in the endorsement means is that the coverage provided by the endorsement only buys back the “furnished or available” part of Exclusion B.3. and coverage still does not apply to vehicles owned by a member of the same household. How does this apply to the college roommate situation? On at least one occasion (and probably more), a claim involving a college student’s roommate’s car was denied under the PP 03 06. According to the insurer, the roommate was a “member of the same household.” But, is this true? Do two college student sharing a dorm room constitute a “household?” In deciding the coverage issue, we must examine what is meant by a “household.” According to Black’s Law Dictionary [emphasis added]: Household, n. A family living together. Those who dwell under the same roof and compose a family. Term is generally synonymous with “family” for insurance purposes, and includes those who dwell together as a family under the same roof. Generally, the term as used in automobile policies is synonymous with “home” and “family.” The Black’s Law discussion of “family” indicates that it is comprised of blood relatives or a close-knit social unit with a high degree or permanency, living under the control of one head of the household. I don’t think two people who possibly had never met before, spending a few months together as roommates, but otherwise being independent of each other, constitutes a family or household...i.e., just because two people share a room doesn’t make them a “household.” What if it’s not her roommate that makes the auto regularly available, but her best friend across the hallway? Clearly, in this case, coverage applies since they aren’t roommates...or does the entire dormitory constitute a “household?” What if we’re talking about a sorority or fraternity where there is (at least theoretically) more of a “family” than a dormitory setting? Clearly, there are no easy answers. So, the best thing to do is to discuss the situation with the company underwriter in advance. What do you think?
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Posted By IIAW Staff,
Wednesday, November 10, 2021
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Happy Wednesday! In this week's Big I Buzz we're discussing a new Trusted Choice campaign, what to expect when traveling this Thanksgiving and US consumer inflation. Choose Local Trusted Choice Campaign As you know, independent insurance agents not only serve their community and local businesses, but are local, small businesses themselves. Encourage your community to remember their local Trusted Choice Independent Insurance Agents when shopping local. Agents are encouraged to use this campaign year-round. You can visit the Trusted Choice website to request customized print ads and social media posts! Currently, agents can access ads and graphics and request a window cling on the Trusted Choice website here. What to Expect When Traveling This Thanksgiving A new report from AAA finds that 2021 Thanksgiving travel is expected to return to pre-pandemic levels despite high gas prices. More than 53.4 million people are expected to travel, 48.3 million of those traveling by automobile. However, if you're one of the 4.2 million Americans expected to take flight for the holiday, these are the Thanksgiving foods you can bring through TSA. According to Next Vacay, most food can be carried through a TSA checkpoint. These items are safe to bring in your carry-on to eat mid-flight or when you get where you're going: • baked goods • meats • stuffing • casseroles • mac & cheese • fresh veggies & fruit • candy • spices These foods will need to be checked and unpacked later upon arrival: • cranberry sauce • gravy • alcohol • canned fruit or veggies • preserves, jams and jellies • maple syrup. Additionally, you'll have to leave the turkey carving knives behind or other sharp tools, as those won't clear security. Instead, make room in your checked luggage for these serving items and your favorite gravy.Read the AAA travel predictions here. America's Prices Are Surging More Than They Have in 30 Years If you've been to the grocery store lately, you've probably noticed higher prices on everything from fresh herbs to meats. The Bureau of Labor Statistics reported that there is no end in sight for these higher prices, as the US consumer price inflation surged even higher again in October. According to WKOW, "Over the past 12 months, prices climbed 6.2% -- the biggest increase since November 1990. The overall price index rose 0.9% in October alone, adjusted for seasonal swings, significantly more than the 0.6% economists had predicted and overshadowing the somewhat more tepid 0.4% increase from September. Read more here. For more news, check out the Action news section of our weekly e-newsletter, Big I Buzz. If you aren’t subscribed, click here to add your email to our emailing list. We hope that everyone has a great rest of their week!
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Posted By IIAW Staff,
Monday, November 8, 2021
Updated: Wednesday, December 1, 2021
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By: Matt Banaszynski, IIAW CEO This month’s magazine highlights the incredible dedication and work of our Board of Directors. These esteemed men and women are very accomplished business leaders of whom I have the pleasure to work with and learn from each day. They inspire their employees and create cultures of success within their respective organizations. I’m always trying to gleam successful qualities, characteristics and initiatives of which I can replicate and instill into the IIAW. This month I thought it would be fitting to write about a topic I have long contemplated and discussed with many individuals from board members to a plethora of professionals from other industries. The topic: turning values into vision. If you surveyed your employees, they would likely have a variety of responses when asked why they do what they do. Do they universally understand your company’s core values? How do they contribute to the overall vision that drives their success and that of their employer? Once values are determined, it is important to make sure all employees are part of the conversation, and they embrace those values; not just at work but out in your community as well. Values can be easily stated, but difficult to live out. That’s why it’s important to identify values that your employees try to live by day-in and day-out to incorporate them into the culture of your business. As I converse with our Board of Directors, they all share similar principles, characteristics and ideals that contribute to their vision of how they accomplish success. Many of them hold strategic planning sessions or roundtables to discuss and set company values. Strategic planning sessions and roundtables aren’t just for large companies. Some of the smallest companies I know are very successful in hosting such events to keep the pulse on their office and to set the direction for the future. Far too often as a society we fail to live up to our expectations and stay true to our values. Let’s be honest, we’re human and can slip up. The question is are you accountable for your actions? Do you understand what causes you to stray from your principles? According to author Lee Colan, in his article titled “How to Turn Your Values into Action”, “The most valuable type of knowledge is self-knowledge. Knowing your tendencies, preferences, values, personal limits, natural gifts and weaknesses helps you make the right commitments and keep them.” Aside from personal introspection, a good way to learn about yourself is to capture data on how others perceive you. For example, regularly ask your team what you can “Start, Stop and Keep” doing to be a better leader and support their success. You can have a “Start, Stop and Keep” discussion after finishing a project, wrapping up a meeting or during a scheduled review. Another important aspect of self-knowledge is to have a clearly thought out set of personal values, a few things that are vital to you and reflect your uniqueness.” For example, my personal values are to respect, serve, motivate, advocate and empower others. For each of these values, I have specific behaviors that I strive to demonstrate each day. Your values should dictate your decisions and behavior, not your circumstances or fleeting feelings. Being a reliable and reputable person not only means doing what you say, it also means doing what is right. These are just a few of the values that been ingrained into our organization by the fine men and women who serve and have served on our Board of Directors and by our staff who live by them as they seek to provide you with the best possible member experience.
Why Values Matter As I wrote the previous paragraphs, I found myself searching for an example to reference in which people make decisions that seem to go against their values. Not on purpose, but on accident and without them ever knowing it or the damage it could cause. This time of the year brings about a lot of change. Whether its mergers and acquisitions, adding or losing personnel or perhaps new technological initiatives, changes tend to occur at the end or beginning of the year for a myriad of reasons. I like to think a new year motivates individuals to make a positive change. I bring this topic up because (like death and taxes), rumors are certain to rear their ugly head this time of year. Over my last eleven plus years at the Association, I have heard from many agency owners and principals who have asked me to let them know if I hear others talking about their agency, and what types of things they might be saying. As we all know, it’s easy to forget our values and spread (potentially) negative information causing adverse consequences. Our industry is especially susceptible to this type of activity because it is a close-knit group of competitors and acquaintances. Being in a sales-driven industry makes us good “talkers”. Wisconsin has many strong professionals who share education and information with the many families and businesses they insure. As professionals, we are held to high ethical standards and even have mandatory courses to complete every two years. These courses remind us to focus on the values and principles of our business, yet some individuals can lose sight of this. My message here is to remind yourself and your colleagues to discuss your personal and professional values and how you can use them to drive success. Spending time on these discussions will translate into a more positive culture and will leave a positive impression on employees. Individuals should be encouraged to emulate positive behavior inside and outside of the office and look for truth before passing along information about their competitors in the industry. As we reflect on the past year and set the course for a bright and prosperous new year, there is no better time to engage in these ethical conversations. I will leave you with this: To live a life of integrity, stay true to your values. We are limited not by our abilities but by our lack values that defines our vision, our missions, our passion.
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Posted By IIAW Staff,
Monday, November 8, 2021
Updated: Wednesday, December 1, 2021
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By: Mallory Cornell, IIAW Vice President How an agency operates, should never feel like a guessing game for anyone. Too often we see owners assuming workflows exist, staff finding workarounds for cumbersome tasks or inconsistent methods of completing operational processes. Whatever the obstacle, there is a fun and helpful navigation tool to create smooth and efficient workflows. Workflow Mapping is an exercise that provides a visual representation that can be used to drive consistency, identify areas to add technology, pinpoint inefficiencies and even improve customer service. By providing a top-down view of the agency, decision making is easier than ever due to the clarity provided an ease of creating a targeted approach to operational change. The exercise of workflow mapping can be as high level or in-depth as you choose. It can be done internally or with an outside consultant. There are a few important points to be mindful of when it comes to successfully mapping your agency workflows: 1. This is NOT a process to create a procedure manual 2. The workflow must have a defined scope (rabbit holes are everywhere!) 3. The end goal should be defined prior to starting the exercise 4. Everyone must be given an opportunity to provide feedback 5. Have fun! Workflow mapping may seem challenging or time-consuming, but it is a great way to build collaboration, invoke positive change and redefine the work of the agency. An agency’s operations have likely been challenged and will continue to be. For this reason, it is essential to check and adjust and make sure everyone involved in the operations has a voice in the adjustments. If you would like more information on Workflow Mapping, please feel free to reach out with questions, mallory@iiaw.com!
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Posted By Kaylyn Staudt,
Friday, November 5, 2021
Updated: Wednesday, December 1, 2021
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Brad Reitzner, M3 Insurance - Q. What do you hope to accomplish while on the IIAW Board of Directors? A. I will be an advocate for the independent agent model and grow the industry with the next generation. Q. What do you currently see as the biggest challenge and opportunity facing the IA channel currently or in the future? A. Consolidation in the IA channel along with clients post-COVID looking for advisors and more data-driven solutions is a challenge, but also one of the greatest opportunities. Q. Any life advice or favorite quote? A. Work hard, play hard. Q. A book you recommend people read? A. “Outliers: A Story of Success” by Malcolm Gladwell Q. A non-insurance prediction for 2021-2022? A. People will start traveling internationally again. ----------------------------------- Matt Frank, Robertson Ryan & Associates - Q. Tell us a little about yourself A. I’m coming up on my 10th year in the industry. Time flies! For the past five years, I have worked as an insurance advisor at Robertson Ryan & Associates. Prior to that, I was a commercial underwriter at Liberty Mutual. When I’m not thinking about insurance, I enjoy spending time with my wife, Susie.
Q. What do you hope to accomplish while on the IIAW Board of Directors? A. I’m excited about the opportunity to continue to network with my peers along with growing as a professional. Being a part of the Big I has already been extremely beneficial towards my development. It really is a great place to meet peers and to learn what’s going on throughout the industry. Q. What do you currently see as the biggest challenge and opportunity facing the IA channel currently or in the future? A. In my opinion, the biggest opportunity for the IA channel involves the implementation of technology and digitalization. To be specific, how do we evolve as an industry so that we can stay connected with our clients especially future generations. Q. Any life advice or favorite quote? A. Never get too high or too low. This is especially important for those in sales. Q. A book you recommend people read? A. If you are interested in Milwaukee and its history, “The Making of Milwaukee” by John Gurda is great. Q. A non-insurance prediction for 2021-2022? A. Bucks will win another championship - back to back! Welcome to the IIAW board! We are excited for the year ahead.
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Posted By Kaylyn Staudt,
Friday, November 5, 2021
Updated: Wednesday, December 1, 2021
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By: Misha Lee, IIAW Lobbyist Former Lieutenant Governor Rebecca Kleefisch officially launched her anticipated gubernatorial campaign setting in motion a high stake, competitive race for Wisconsin Governor next year. Kleefisch, 46, is the first known Republican candidate to join the race in a challenge to first term incumbent Democratic Governor Tony Evers, who announced that he’s running for re-election. Kleefisch served as Lieutenant Governor under former Governor Scott Walker from 2011 to 2019. The only other announced GOP candidate so far is businessman Jonathan Wichmann, a relatively unknown name in the race. Other names mentioned as possible Republican primary contenders are State Senator Chris Kapenga of Delafield, State Representative John Macco of Green Bay and 2018 U.S. Senate candidate Kevin Nicholson. But Kleefisch is clearly the heavy favorite among Republicans where she has a strong statewide name ID and has been traveling the state for the past year talking about her policy priorities.
The 2022 midterm elections are traditionally a challenge for the political party in the White House and Wisconsin’s race for Governor will be one to watch closely considering those headwinds will be strong.
The partisan primary election is on Tuesday, August 9, 2022 and the general election is on Tuesday, November 8, 2022.
Gov. Evers Signs Bill Freezing UI Tax Rates Through 2023 As employers continue to deal with challenges brought about by the COVID-19 pandemic, the Wisconsin Republican-controlled state legislature and Democratic governor have found some common ground this legislative session to help try and ease the burden on businesses. Governor Tony Evers signed legislation this past summer that prevents an increase in Unemployment Insurance (UI) contribution rates on employers through 2023.
This is a positive development for businesses all throughout Wisconsin.
Assembly Bill 406, now known as 2021 Wisconsin Act 59, passed both houses of the state legislature unanimously with no opposition. The newly enacted legislation:
• Prevents the increase of unemployment insurance tax rates on employers by ensuring the state remains in Schedule D for tax years 2022 and 2023; and • Requires $60 million of General Purpose Revenues (GPR) to be transferred into the UI trust fund in each fiscal year of the 2021-23 biennium to offset any lost revenue
By way of a little background, under state law most private employers are required to make regular payments to the Unemployment Insurance (UI) program at a rate determined by state statute. State law requires two types of payments - contribution payments and solvency payments. Both types of payments are tied to one of four schedules (A-D) with Schedule A containing the highest rates for employers to pay and Schedule D containing the lowest rates. The balance of the Unemployment Reserve Fund on June 30th of each year determines which schedule will be in effect for the next calendar year. State law specifies that Schedule D is in effect for any calendar year whenever, as of the preceding June 30th, the fund has a cash balance of at least $1,200,000,000. Schedule D is in effect for calendar year 2021. See new employer Schedule D Unemployment Insurance tax rates for 2021 at https://bit.ly/Oct21GovAffairs.
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Posted By IIAW Staff,
Wednesday, November 3, 2021
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Happy Wednesday! In this week's Big I Buzz, we are discussing this month's featured member benefit, new insurance technology you should know about and the future of the construction industry. Spotlight on Member Benefits: WI P&C Marketplace Report We're jumping into a new month, which means we are spotlighting a new member benefit. This month's benefit is our WI P&C Marketplace Report. In addition to the annual report we send out highlighting the top lines of business, agent penetrations, loss ratios, percentage of surplus lines and the biggest writing insurers, we will be sharing quarterly updates as well. This data is a deep-dive into the insurer industry data for the state of WI from an independent agent's point-of-view. The goal is to provide a baseline of our state's marketplace that can be very useful in your agency for planning purposes. Agents can see the large writers overall, those insurers using agents and writing as surplus lines, and premium & loss ratio trends. Information from this report is compiled by Paul A. Buse from Real Insurance Solutions Consulting. This report is free for IIAW members. Nonmembers can access this report for $99. Head to our website here to see the data from Q2. Insurance Technology: Catalyit; CyberCube; Tremor; TransUnion and e2Value Insurance Journal recently released a list of new technology solutions that you should know about. First named, Catalyit. Catalyit is a new technology resource for independent insurance agents. The Catalyit platform brings consulting, training, tools, reviews and community all in one place. In addition to the wide catalogue of resources, there's live coaching, product demos, on-demand classes and a video vault. Don't just take it from us, head to Catalyit.com to learn more. Catalyit is accepting new agency subscribers through December 15, 2021, when the open enrollment period expires until 2022. Other tech companies Insurance Journal named include CyberCube, TransUnion and e2Value and Tremor. Read more about these companies here. Construction Industry Set for Huge Growth But Labor Challenges Remain According to a new report from Marsh, Guy Carpenter and Oxford Economics, the global construction industry is set to be a global engine for economic growth and recovery following COVID-19. Insurance Business Mag wrote, "The report, entitled 'Future of Construction: A Global Forecast for Construction to 2030,' predicts that global construction output will grow by 42%, or $4.5 trillion, between 2020 and 2030, driven largely by government stimuli and the demand for residential construction. In 2020, the output was 410.7 trillion, and the report's authors expect output to grow approximately $13.3 trillion by 2025 and $15.2 trillion by 2030. Average growth in construction output is predicted to hit 3.6% per annum over the decade to 2030, which is faster than either the manufacturing or services sectors." However, there are some worries in this growth as labor and supply chains challenges continue to arise. Read more here. For more news, check out the Action news section of our weekly e-newsletter, Big I Buzz. If you aren’t subscribed, click here to add your email to our emailing list. We hope that everyone has a great rest of their week!
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Posted By IIAW Staff,
Tuesday, November 2, 2021
Updated: Wednesday, December 1, 2021
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By: Josh Johanningmeier, IIAW General Counsel This month, I thought I would take a break from Covid-19 updates (fatigue, anyone?), employment issues, legislative prognostication and even insurance regulatory concerns, and highlight some issues you may encounter on the commercial lines side of your agency with clients who experience product recall, retrofit and field campaign situations. As many of you know from our discussions over the years, a substantial portion of my practice is devoted to product safety and product liability issues, including both counseling and litigation. On the counseling side, we regularly assist with hazard communications (e.g., warnings, manuals, instructions and advertising), regulatory scenarios (e.g., consumer products and automotive) and post-sale remedies, such as recalls.
One of our initial questions when it comes to recalls is whether the company has recall insurance. I am sure you are aware that recall insurance is not as common as product liability insurance, and the terms of recall policies vary greatly. I will save commentary on recall insurance for another day. Even where there is no recall insurance (or in the quest to find out if there is), as a trusted advisor, the insurance agent or broker with whom the company works will often be a first contact when a potential recall scenario pops up. In this column, I am going to provide some general overview of concerns and issues you may hear and spot that should ordinarily send the client to experienced recall counsel.
Reporting Obligations—A Potential Pitfall
As a threshold matter, many regulated products (i.e., products where one or more government agencies have jurisdiction over their safe use, like consumer products with the U.S. Consumer Product Safety Commission (CPSC), or automotive products, including vehicle accessories, with the National Highway Traffic Safety Administration (NHTSA), to name a few) are subject to strict reporting obligations when manufacturers, distributors or retailers learn of potential product safety issues. Note that I said potential safety issues—the final conclusion on the issue may be in doubt, but a reporting obligation may already be triggered.
The reporting regimes are too lengthy to be summarized in this column, but be aware that time is of the essence, and many companies have incurred substantial fines for late reporting. It is also important to understand that not every report leads to a recall, as the agencies will work with the company to determine whether corrective action is needed and, if so, what the scope of the corrective action needs to be.
When Recalls May Be Necessary—If It Looks Like a Duck
Regulated products, as discussed above, have statutory and regulatory thresholds, definitions and agencies devoted to determining whether a company needs to take action with products already in the field. Again, entire seminars are devoted to these thresholds and requirements, but for purposes of spotting the issue when a client calls, if there are reports from end-users (or warranty or service data) that product problems may be leading to safety risks, then it is time to promptly investigate and get legal advice. Early-stage companies may not fully appreciate where the line is in terms of regulated products and which agency they may be dealing with, which can lead to the kind of reporting delay and penalties discussed above.
Outside regulated products, the same triggering facts, data and reports from the field should lead to a similar investigation, but that investigation will be driven more by industry standards, expertise and outside consultants, all of which will be used to inform the judgment of the company and its counsel on taking action. Regardless of industry, field campaigns and recalls take on a number of common characteristics: a public notification to product users that explains the problem and the solution; a means to implement the solution (return product, repair, replace, refund, etc.); and tracking the success of the corrective action to ensure that the campaign is successful in reaching as many users as possible.
In addition to lawyers, there are a number of consulting firms that assist with recall logistics, which can greatly benefit smaller companies whose internal resources may be stretched thin.
But Can It Be Used Against Us Later?
Another common question from companies considering a recall is whether the recall will hurt them in future litigation over the product. The first response to this question is simple: it does not matter, because the first priority is to ensure your product is being used safely. The second (more reassuring) response is that generally a recall cannot be used against a company in product liability litigation involving incidents that occurred before the recall. Sparing you too much legalese, the recall is considered a “subsequent remedial measure” which, under most jurisdictions’ rules of evidence, is not admissible in court.
Conclusion
The decision whether to report and recall a product is never simple, but it is always time-sensitive and critically important. Brushing off the possibility, or burying one’s head in the sand, is almost always a recipe for disaster. If your clients come to you with product safety concerns, ensure that they deal with them seriously and with competent counsel by their side.
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Posted By IIAW Staff,
Friday, October 29, 2021
Updated: Wednesday, December 1, 2021
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By: Chris Boggs, Executive Director Risk Management and Education, Virtual Big I University Within ISO’s Building and Personal Property Coverage Form (CP 00 10), a 180-day limitation applies to three situations: • Within the Additional Coverage – Debris Removal. Simply stated, debris removal expenses, up to the eligible limit, are paid only if they are reported within 180 days of the direct physical loss. • Within the Additional Coverage – Pollutant Clean-up and Removal. Like coverage for debris removal, the forms states that is pays for eligible expenses only if reported in writing to the carrier within 180 days of the date of the Covered Loss. • As part of the requirements of the Optional Coverage – Replacement Cost. This use of the 180 day “limitation” in the ISO form is the subject of this article. ISO Coverage Form Language To begin this discussion, let’s review the relevant “180-day” wording found within the Replacement Cost provision of ISO’s CP 00 10: c. You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim for the additional coverage this Optional Coverage provides if you notify us of your intent to do so within 180 days after the loss or damage. Key terms and conditions within this language must be reviewed to understand how this provision applies: • “You…”: The very first word of this provision points to WHO gets to make what decision. The “you” is the named insured. From the beginning it is clear that the named insured is making a decision. • “…actual cash value basis…”: What does the “you” or the named insured get to decide? The named insured is given the option to make a claim on an actual cash value (ACV) basis rather than on a replacement cost basis as allowed when the insured choses this optional coverage. • “In the event…”: Means, “If.” •“…you may still…”: The you/named insured has the option to change his/her/its mind. • “…notify us…”: If the you/named insured changes his/her/its mind, the insurance carrier must be notified. • “…within 180 days after the loss or damage.”: Although the you/named insured has a right to change his/her/its mind regarding ACV versus Replacement Cost, that right expires 180 days after the loss. What does this mean? Simply, the INSURED (not the insurance carrier) has the option to settle the property loss on an ACV basis rather than a replacement cost basis when this optional coverage is chosen. However, this provision gives the INSURED (not the insurance carrier) the right to change its mind and seek recovery on a replacement cost basis – provided the insurance carrier is notified of such intention within 180 days of the loss.
All decisions within this provision are those of the INSURED. None of these decisions are given to the insurance carrier. What This Provision Does NOT Allow Insurance carriers misapply this provision regularly, and in many unique ways. This provision does NOT allow: • The insurance carrier to deny replacement cost if the damage is not discovered until more than 180 days after the loss occurred. Note again that all the decisions within this provision lie with the insured and NOT the insurance carrier. If, upon discovery of the damage, the named insured makes it known that repair or replacement is desired, the insurance carrier owes replacement cost. The only caveat to this may be the insured initially stating that they have no intention to repair or replace and changing their mind later. Past the 180 days, the insured does not have the ability to flip-flop on the ACV vs. Replacement Cost decision. But again, if it’s stated up front that replacement cost is desired, it doesn’t matter how long after the loss the damage is discovered, replacement cost is owed. • The insurance carrier to deny replacement cost because repairs or replacement took longer than 180 days. Nowhere in this provision is there a specified time limit for repairs. The only requirements for payment on a replacement cost basis are: 1) Adequate coverage amounts; 2) The Replacement Cost optional coverage has been chosen; and 3) Actual repair or replacement of the damaged property. While the policy does state that repair or replacement must be completed “as soon as reasonably possible,” the policy does not place a time limit on what this phrase means. There are times when a damage may not be discovered for more than 180 days (i.e., hail damage). Nothing in this provision allows the carrier to avoid paying replacement cost. Time to repair or rebuild often takes more than 180 days, especially for a major loss. If the carrier was able to deny replacement cost simply because the repair/replacement took more than 180 days, replacement cost coverage in the commercial property policy would be almost illusory (sometimes it takes longer than 180 days just to dig the first hole for the replacement building. Proper Application of the 180-Day “Limitation” for Replacement Cost First, note who gets to make what decision. The named insured (not the insurance carrier) gets to decide whether or not he/she/it wants coverage on an ACV or replacement cost basis. Second, IF the “you” initially chooses ACV rather than replacement cost, that same “you” has the ability to change its mind and chose replacement cost – if such choice is made within 180 days of the loss. Lastly, if the named insured chooses replacement cost within the specified time period, there are adequate coverage limits, and repairs or replacement actually occurs, the insurance carrier owes replacement cost. Nothing within the 180-day “limitation” allows the insurance carrier to make any decisions or take any action; it only allows the insurance carrier to respond to decisions made by the insured. All this provision does is allow the insured to change its mind!
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building and personal property
commercial lines
commercial property
insuring Wisconsin
ISO
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