Tomorrow’s
Insurance
Professionals
INSURING THE
ENVIRONMENT
06
ROLE OF
AN AGENT
22
CREDIT SCORING
08
A MADISON COLLEGE PROGRAM PUBLICATION
ISSUE 6 | SPRING 2014
© 2014 SECURA Insurance
Feel the exhilaration.
Scoring your first job can quicken your pulse. And if
you’re lucky enough to land at SECURA, you’ll feel the rush
generated from a workplace that encourages innovation, rewards
results, and champions personal success.
Scan the QR code to visit our Careers section
or go to www.securacareers.net/matc,
or find us at linkedin.com/company/secura-insurance.
Business Home Auto Farm-Ag Nonprofit
Tomorrow’s Insurance Professionals
FOCUS ON THE FUTURE
04
06–07
10–12
14–15
16–17
21
23
CREDIT SCORing AND INSURANCE
STUDENT VOICES
Dr. Jack E. Daniels III President
Terry Webb Vice President, Learner Success
Turina Bakken Associate Vice President,
Learner Success
LIFE INSURANCE
Bryan Woodhouse Dean,
School of Business & Applied Arts
Shauna Rasmussen Associate Dean,
School of Business & Applied Arts
LEADERS IN THE CLASS
Kathy Sorenson Associate Dean,
School of Business & Applied Arts
Robert Dinndorf Executive Director,
Foundation
Martha Lester-Mittenzwei MBA, AAI, AIC,
CIC, Risk Management & Insurance
Program Director
TIPs is issued 2xs annually, Spring and Fall.
All profits are returned to the Insurance & Risk
Management Scholarship and Professional
Development Fund for students.
To support and encourage the students through
advertising, contact Martha Lester-Mittenzwei,
Risk Management & Insurance Program
Director, [email protected]
or 608-243-5417 for information and rates.
Volume 006 Copyright 2014
http://madisoncollege.edu/program-info/
insurance-certificate
Follow the students on Facebook: Insurance
& Risk Management Program, Madison College
Magazine template design by Ethan Frame
Page layout and production by Ingrid Slamer,
Graphic Design Program, Madison College
Disclaimer: The information provided in the
articles is based on students’ learning and interpretation and does not constitute legal advice.
Readers are advised to conduct their own due
diligence on information prior to implementation
or reliance upon any material provided.
ROLE OF INSURANCE AGENTS
FALL SCHEDULE
Mock trial brings issues to life
An amazing transformation occurred
at the West Campus on February 20th…
a simple training room morphed into a
courtroom complete with attorneys,
clients, jury and most importantly, a
judge. The trial brought the owners of the
Triangle Shirtwaist Factory to court
to determine if they were culpable for the
deaths of more than 140 of their workers.
While the actual trial occurred in 1911, the
ripple effect still influences laws today.
The students of the Risk Management and Insurance Club did a wonderful
job of presenting the trial, with the
attorneys interviewing witnesses,
making arguments, and occasionally
getting in trouble with the judge.
Somehow, the jury found the owners
“Not Guilty” just as they did in the
original trial. Many thanks to all of those
involved in bringing this trial to life,
including the students of the RMIC,
faculty member Carola Pfortner who
played the judge, and program director
for the Risk Management and Insurance
program, Martha Lester-Mittenzwei!
— Kathy Sorensen
A SSOCI AT E DEA N
BUSI N ESS A N D A PPL I ED A RTS
3
F U T U R E
T H E
O N
F O C U S
4
Martha Lester-Mittenzwei
RISK MANAGEMENT AND INSURANCE PROGRAM DIRECTOR
SUCCESS
CAN BE
FOR EVERYONE
PASSION GENERATES VISION
A
s we discuss leadership qualities and the importance of goal setting, commitment, vision, and
confidence in that role this semester, we also define
success. The truth is, however, that there isn’t one definition of the word. Success carries different meanings
for different people and businesses. Success may be
something that doesn’t have a monetary value. (Nonprofits may measure it based on how many people they
are able to touch.) Success to an individual may represent owning a home, running a profitable business, or
becoming the CEO of a fortune 500 company. Yes, to
another, the explanation may include a million dollars.
In order to measure success, we must first interpret
what that means to us. Once you know the destination,
you can draft the map to get there.
The students took this a step further and brainstormed what foundations are needed to achieve
success. The list was very interesting. Money was
included but the students also named support of family, confidence, setting goals, and believing in achieving. Certain factors, like a college education or startup funds for a business, do take money. That doesn’t
mean, however, that if a person doesn’t have financial
resources they can’t make these accomplishments
happen. It just involves figuring out how and where to
get the money; loans, grants, awards, etc. If you don’t
have a passion for the goal you don’t have a chance.
“Passion generates vision” says John Maxwell. If
you aren’t excited about crossing the finish line, it will
be a long, hard road. “Passion is the difference-maker” adds Maxwell. What are you passionate about?
Lead with passion and your team will follow.
I’ve been able to bring some famous motivational
leaders, and their philosophies, into the classroom to
talk to the students, thanks to YouTube. Tony Robbins’
life story, by itself, is inspiring; a young man who was
raised without a lot of money who became an entrepreneur and is now a millionaire. Tony’s message is
simple “If you don’t like your life, change it”. We’ve discussed how each one of us really does have the power
to change direction. “What we can or cannot do, what
we consider possible or impossible, is rarely a function of our true capability. It is more likely a function
of our beliefs about who we are.” says Tony Robbins.
“What do you focus on?” Tony asks. His belief is
that you will see whatever it is that you focus on. If you
choose to focus on the positive aspects of life, you will
see them. Success isn’t just for a few chosen people,
it can be for everyone. It’s a powerful message that is
never too late to implement. At Madison College, our
classrooms are filled with students ranging from 18 to
50+. These folks have already taken the first step to
make success a reality in their lives; they’ve chosen to
learn and earn a college education.
Once the goal is set and the steps to achieve it are
laid out, ask what you can do this week, this month, this
year to work towards the finish line. In business, tactical
plans are set to support strategic plans. All goals are
easier to manage when they are broken down into bite
size pieces and we can feel little wins to keep us motivated. “Motivation is a fire from within. If someone else
tries to light that fire under you, chances are it will burn
very briefly” says author Stephen R. Covey.
Many people have failed before they have succeeded. Failure has lessons built within. The key is to
learn from them. “Success is the result of perfection,
hard work, learning from failure, loyalty, and persistence”
said former U.S. Secretary of State, Colin Powell. Failure shapes us into who we are and makes success that
more enjoyable. When you look back at the obstacles
you’ve faced, what do you see-failures or lessons?
As I look towards the end of a class, the end of a
semester, the end of the program with my students,
and the beginning of their careers, I see them moving
into the future with opportunities to succeed. Whatever success means, if they draft the map, focus on
the goal, have the passion, learn from the failures and
keep going, they will find what they are looking for.
Martha Lester-Mittenzwei is the Risk Management and Insurance Program Director. An alumnus of Madison College, Martha
returns with over 30 years of industry experience and a Masters of Business Administration, with a double emphasis in Insurance & Risk Management and Human Resources, from Concordia University. She has earned her Associates in Claims, Accredited Advisor in Insurance, and Certified Insurance Counselor Designations. Martha can be reached at 608-243-5417 or email
[email protected].
M E S S A G E
Jack E. Daniels, III, PhD
PRESIDENT, MADISON COLLEGE
ship that has endured for more than 100 years. It
helps shape our programs and services and often
takes us in new directions to meet the workforce
needs of our community.
The insurance and risk management industry is
experiencing changes as well. An aging population
and changes in federal regulations, especially with
the federal health insurance program, have had an
impact on the field. In Wisconsin, this has meant
a projected job growth of up to 31 percent in the
decade leading up to 2020.
The college works closely with our partners in
the insurance and risk management field to ensure
we attract and prepare students for these careers.
As changes unfold, we may develop or update
curriculum, add different options for course delivery
or provide new opportunities for specialization or
further study.
We are open to the future of the industry and
of our community. Whatever comes, we will move
forward together.
P R E S I D E N T
nput from students, faculty, employers, community leaders, alumni and friends of the
college played a big role in the physical changes
on our campuses, but the partnership goes well
beyond the last bit of landscaping. It is a partner-
T H E
I
F R O M
This year at Madison College has been one of
change. Thanks to the generosity of our community,
we began the academic year with new buildings and
updated spaces designed to prepare our students for
the careers of today and tomorrow.
%
31
Projected Insurance
job growth in WI BY
2020
Interior view of the new Gateway, at Madison College. Photo by Loren Zemlicka
5
M A N A G I N G
T H E
R I S K S
CREDIT SCORING
?
Have you ever wondered why your insurance premiums are so high?
Consider your spending and bill paying habits with your credit cards.
As a freshman in college you may, for the
first time, have the freedom of coming and going
whenever you please, use your credit card on
items that you want and need, spend time shopping with friends, and eating out. If you just make
the monthly minimum payments, when you can,
your balance will never get paid off and late payments will negatively affect your credit score.
When you move on to purchasing your first
home, if you get a loan, the premiums on your insurance are likely to be higher than necessary because
of your past bill paying history. Your credit score
impacts your insurance in this manner - if your
credit scores are low, your premiums are high.
6
What is a credit score and how is it scored?
A credit score according to Bankrate.com is
“a three-digit number generated by a mathematical algorithm using information in your credit
report”. It is scored by the payment habits and
how many loans, credit cards and other liabilities
a person has. How does your credit score affect
your insurance? According to Bankrate.com, many
insurance companies believe that a person with a
bad credit rating is a higher risk. According to an article found on CNN Money
titled “Bad credit can almost double your car insurance premiums”­—credit scores not only affect the
premium on home insurance but car insurance as
M A N A G I N G
well. As stated in the article, drivers with median
credit scores were found to pay 24% more than
drivers with perfect or close to perfect credit scores.
40% of the score, it describes, is based on whether
or not a person pays their credit obligations on time.
Everyone needs insurance in some form.
Making sure a credit score that is high, and making
INSURANCE RATES
poor credit
HIGHER
subprime
acceptable
credit
good credit
excellent
credit
LOWER
R I S K S
sure that all liabilities have been paid on a timely
basis, will help keep the premiums low and make
you a happier insurance customer.
—PRIYA SHARMA
Priya Sharma is a Business Management major who is also
completing the Risk Management & Insurance Certificate.
How credit impacts insurance
Many people underestimate
just how much their credit score
affects their insurance premium. 92 percent of all insurance
companies use credit information when underwriting new
policies. It is important to note
that a credit score is just one of
several underwriting tools. Insurance companies also consider
rating variables such as driving
record, type of vehicle, where
you live, your age, and other factors. According to an article from
www.Realtor.com, your score
is calculated based on a few
variables:
• 30 percent-How much you
owe. This typically evaluates
how many accounts you have,
how many have balances, and
how much is owed on existing
loans.
• 15 percent-Length of credit
history. Usually the longer your
credit history, the better your
score on this section.
• 10 percent- New credit. If
you’ve opened a lot of new
accounts in a short period of
time, your score will be lower.
The system also takes into
account how long it’s been since
T H E
92%
of insurance
companies use
credit information
when underwriting
new policies
you’ve opened an account. If you had a bumpy
period followed by a strong payment history, it will
be considered favorably.
• 35 percent- Payment history. You’ll score high
here if you make your payments on time and you
don’t have any bankruptcies, foreclosures, liens,
or the like. If you have made late payments in the
past, your score will reflect how frequently you
were late and how late you were. In the eyes of
insurance companies 90 days is viewed as much
riskier than 60 days.
• 10 percent -Types of credit. This will factor in
your credit mix - retail accounts, installment loans,
credit cards, finance companies, etc.
Why do insurance companies use
credit scoring to determine “rates”?
Auto insurance carriers use financial history along
with other factors (such as years of driving experience) to properly classify an insured according
to his/her potential risk. Numerous studies have
shown a very strong correlation between a consumer’s financial history and their future insurance loss potential. Thus, auto insurance companies believe the use of credit helps to underwrite
an applicant at a cost that most accurately reflects that particular applicant’s specific risk.
Joshua Banks is a graduate of the Criminal Justice Program,
completing the Risk Management & Insurance Certificate. He
works at CUNA Mutual as an intern in the Special Investigations
Unit. Josh’s long term career goal is to be a field investigator.
7
M A N A G I N G
T H E
R I S K S
POLLUTION & ENVIRONMENT
Kari Dybdahl from American Risk Management Resources (ARMR)
came to speak to the class about environmental insurance and wholesale brokering. Environmental insurance is for businesses who want
to transfer risks that are not insured by a commercial general liability
policy due to the pollution exclusion. A wholesale broker works with
front line agents whose clients have an insurance need and matches
them up with an insurer that is willing to provide that coverage.
Environmental insurance is relatively uncommon
and does not have standardized and regulated
forms and policies like many other types of insurance. ARMR will write policy language themselves
and then shop it around to different insurers until
they find a company willing to issue the policy.
These contracts cover a wide range of exposures
from mold inside of buildings to hazardous waste
in the soil or groundwater of property owned by the
insured. Some of these exposures can cause property damage and bodily injury on their own, or there
may be statutes that require the company to pay
the sometimes very high remediation costs.
A wholesale broker generally works through
retail agents. An insurance agent that’s already
working with a business and providing them with
We Take The Stress
Out Of
Environmental
Insurance
other types of coverage may see the need for insurance to cover an environmental risk. The agent will
then go to the broker to find that coverage.
Before an insurer will consider a policy that
covers pollutants on a property they’ll want a
phase one environmental site assessment to give
it a clean bill of health. There are so many things
that fall under the pollution exclusion in a traditional liability policy that it seems like there would
similarly be numerous different types of insurance
policies to cover them.
—TIMOTHY STRUTZ
Timothy Strutz is a Finance Student who is also taking Risk
Management & Insurance courses.
American Risk Management Resources Network, LLC
We can help write environmental insurance
on any risk that needs the coverage!
ARMR is a wholesale brokerage firm that
makes it easy for you and your insured to
purchase the right environmental insurance
and reduce your agency’s E&O exposure.
Call Us Today To See How We Can Help!
877-735-0800 WWW.ARMR.NET
8
ENVIRONMENTAL
INSURANCE
Environmental insurance covers the costs related
to unexpected pollution that has harmed the
environment. The need stems from coverage gaps
and exclusions in existing commercial coverage
forms. Separate environmental insurance policies address this.
The most common types of coverages include:
• Site-Specific Environmental
Impairment Liability Policies
This covers third-party claims arising from
releases of pollutants from specified locations.
• Underground Storage Tank
Compliance Policies
This provides proof of financial responsibility for
owners and operators of underground storage
tanks containing fuel or other hazardous materials.
• Remediation Stop-Loss Policies
This insures remediation costs that exceed the
projected costs of performing an environmental
cleanup of a specific location that is being sold.
Water, Fire and
Mold Damage
RESTORATION AND
REMODELING SERVICES
Serving All of South Central WI
C o t t a g e G r o v e ,W I 6 0 8 . 8 3 9 . 41 0 0
www.pdrmadison.com
GHC AND MADISON COLLEGE
BETTER TOGETHER!
• Contractors Pollution Liability Policies
This covers the pollution-related loss exposures
of a contractor.
• Environmental Professional Errors &
Omissions Liability Policies
This covers professional environmental services
vendors who face potential liability from errors,
omissions, or commissions.
—GLENN WEAVER
Glenn Weaver is employed at American Family Insurance
and is completing the Risk Management & Insurance
Certificate.
Photo provided by THE CLARION
Group Health Cooperative of South Central
Wisconsin together with Madison College, our
valued community partner, opened a new clinic
called the Madison College Community Clinic in
August. This state-of-the-art, full service Primary
Care Clinic is conveniently located on the first floor
of the new Health Education Building at Madison
College’s Truax Campus. As of January 1, 2014,
members have the option to seek Primary Care from
this new facility. (see ad on page 16)
For more clinic information:
http://madisoncollege.edu/student-health-clinic
9
T I P S
V O I C E S
The Value of Property
M
any commercial properties are
valued incorrectly; about 75% are
insured for substantially less than what
their actual replacement value is. This
is according to Kory Dogs of CBIZ
Valuation Group. There are many ways
to improve the accuracy of property
valuation including: dedicated valuation firms, construction contractors,
architects, and brokers. There are three
definitions of insurable value. The
first is Replacement Cost, which is the
cost to construct or replace an entire
building of equal quality and utility
using modern materials and current
methods. The second is Reconstruction Cost, which is the cost to replicate,
at current prices, using like kind and
quality materials, construction standards, design/layout, and quality of
workmanship. The third is Reproduction Cost, which is the cost to replicate,
at current prices, using exact replica
kind and quality materials, construction standards, design/layout, and
quality of workmanship.
People often are under the impression
that same or similar buildings should
be similarly valued. The presenter
gave the example of two 1500 square
feet storage buildings of similar
construction that were valued very
differently. Though they looked, and
were built similarly, one had office
space, central heat, and insulation, and
the other did not. Historical and ornate
buildings are also valued very differently than most properties. They often
have unique designs, high-quality
craftsmanship, and are built of uncommon materials.
Another factor that can greatly impact
the value of a property is the use of
green technologies and other advanced materials and equipment in
the building. These types of things are
often found in Leadership and Energy
Environmental Design (LEED) certified buildings, hospitals, and research
centers. The four basic elements
used in the valuation of property are:
construction (what the
building is made of),
occupancy (what the
building is used for),
protection (security systems, fire suppression),
and exposure (risks or
threats in the area).
75%
I found the difference between replacement, reconstruction, and reproduction values, and how they can greatly
vary, to be very interesting. Kory used
this example; if a courthouse had a fire
and the paintings of previous judges
were destroyed how would they be
replaced . For unique artwork such as
these, reproduction would mean that
the original artist would have to recreate the painting in the same way as the
original, where a reconstruction could
be a different artist using similar techniques and paints as the original, and
a replacement would just be a painting by any artist using any equivalent
technique or paint. This is true for
historic buildings as well, and depending on which of these they’re insured
for, they can be extremely expensive to
replace/replicate.
Kory was just one of the presenters we
heard from at the Public Risk & Insurance Management Association’s fall
meeting in Wauwatosa. I think it’s very
important for students to go to events
like these for their field of study because it is a great learning experience.
—TIMOTHY VANDERZOUWEN
Timothy Vanderzouwen is a Business Management Major who is also taking Risk Management & Insurance courses.
Left to right: Serge Bamana, Kory Dogs of CBIZ, Shona Allen, John Rath,
Debbie Allen, Tim Vanderzouwen and Kevin Miller of M3
10
of commercial
properties are
UNDER INSURED
PRIMA PAYS OFF!
M
embers of our class, Intro to
Business Insurance Contracts, attended the PRIMA meeting
in Wauwatosa at the Cities Villages
Mutual Insurance Company. Our first
speakers of the morning were Brynn
Bruijn-Hansen, the Fund Manager of
the Local Government Property Fund,
and Kory Dogs from CBIZ, a Property
& Casualty Brokerage and Risk Consulting Firm that performs property
valuations. The topic of their presentation was making sure your property
is properly insured. With better data,
comes better rates and reduced risk
of loss. If anything were to happen
to a building, and it wasn’t properly
insured, the owners would not be able
to rebuild or repair to their desired
specifications. In order to be properly
insured, the members should have a
I had to think about what it takes to protect a small town
or a bustling city against claims and lawsuits. - Shona Allen
valuation done. This is an overall
assessment of risk and coverage needs.
A lot of towns have historical
buildings and sites. Due to their age,
some of the materials or building
methods that might have been used to
build them are sometimes exhausted
or extinct and would cost a great
deal of money to rebuild or replicate
- if even possible. Municipalities are
sometimes given property that can
be costly and or dangerous to accept.
The property could include pollution
runoff or hazardous buildings. Understanding the risk involved will help to
make good decisions for the town.
Our second presenter was Kevin
Miller of M3, a leading commercial
insurance agency. Kevin spoke about
potential insurance coverage gaps that
the members might not be aware of.
I had to put myself into their mindset and think about what it takes to
protect a small town or a bustling
city against claims and lawsuits. We
have covered much of what Kevin was
talking about in our classes, making it
easier to understand.
I am so glad I was able to attend
the PRIMA meeting. I enjoyed learning
more about the potential career opportunities and about the issues that
are involved in the risk and insurance
field. This was a great way to reinforce
everything that we have learned in
class and see it put to use.
— SHONA ALLEN
Shona Allen is a Business Management student who is also taking Risk Management and
Insurance classes.
CBIZ Valuation Group, LLC
The climate in today’s insurance market has elevated the importance of property
valuation and underwriting data. The depth and accuracy of this data can directly
impact premiums and access to markets. CBIZ Valuation Group specializes in
providing cost effective, customized property valuation services to address each
client’s specific need.
Insurance Appraisal & Loss Control Inspection Services:
Diverse Property Valuation Expertise | Supplemental Data Collection Services
Loss Control Inspection Services | Data & Insurable Value Management Services
Kory Dogs · 262.677.1838 ext. 222 • [email protected]
www.cbizvaluation.com
@ValuationAlerts
cbizservices
ATLANTA | BOCA RATON | CHICAGO | DALLAS | DENVER | LOS ANGELES | MILWAUKEE | NASHVILLE
NEW YORK | PHOENIX | PRINCETON | SAN DIEGO | ST. LOUIS | WASHINGTON, DC
© Copyright 2014. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved.
11
TRIANGLE
SHIRTWAIST FIRE
Photo: Kheel Center for Labor-Management Documentation
and Archives,Cornell University Library
M A R C H 2 5 , 1911
NEW YORK CITY
Max Blanck and Isaac Harris, the owners of the Triangle
Shirtwaist Factory in New York, are tried for manslaughter
The fire trapped and killed 146 factory employees.
T
he students reenacted the court
trial of Max Blanck and Isaac
Harris, the owners of the Triangle Shirtwaist Factory in New York.
The Triangle operated the 8th, 9th, and
10th floors of the Asch Building. The
business owners were tried for manslaughter as a result of a fire on March
25, 1911 that killed 146 employees. The
accusation was the door on the 9th floor
was locked and the employees could
not get out, resulting in their death.
The owners were accused of
regularly locking the employees in the
building until the end of the workday.
Upon their exit, they were required
to open their purses for inspection.
Blanck and Harris wanted to make sure
the employees weren’t taking products
or raw materials home with them. Was
12
the door locked on March 25, 1911 or
was it simply a terrible accident?
Most of the dead were immigrants who came to New York for a
better life. All but 23 were women and
half of those were teens. The report
shows that 53 people jumped to their
death to escape the flames, 19 fell
in the elevator shaft trying to catch
a ride down, 20 died in the fire and
50 were burned on the factory floor
– many in front of the door that was
thought to be locked.
Labor and safety laws at the
time were few. Wages were $2.00 per
day, for a 12 hour day, and employees worked 6 days a week. Worker’s
Compensation didn’t exist at the time
but was established later that year as
a result of this tragedy.
MOCK
TRIAL
On February 20, students from the Risk & Insurance Club offered three Wisconsin
Continuing Education Credits for attendance at a mock trial of the owners of the Triangle
Shirtwaist Company. This was a fundraising event for Risk Management and Insurance
students heading to Switzerland in May, 2014.
Madison College
Clockwise from top: Mock Trial jury; Mock Trial defense team; students from the Risk
Management & Insurance Club.
Unfortunately, it is often a catastrophe that creates change and the
Triangle Shirtwaist Factory Fire will
forever be known for making the workplace safer. As a result of the fire, the
New York Factory Investigation Commission was established, and a total
of 37 laws were enacted including exit
doors opening outward and lighted exit
signs, fire extinguishers, and sprinkler
systems being required in commercial
buildings. The American Society of
Safety Engineers and Occupational
Safety and Health Administration were
formed. Fair labor, minimum wage, and
the right to organize were now laws.
The jury, made up of our guests,
found the owners not-guilty. This was
the same verdict found in 1911.
“Thank you for offering the Mock Trial. It was a
very enjoyable experience and the best day of CE
I have spent – EVER! I was actually sad when the
class was over. I look forward to attending this
again next year. “
­—PENNY BOUND,
SENIOR ACCOUNT MANAGER, DEAN HEALTH PLAN
“The mock trial helped us take a much deeper
look into a historical event and learn from it. I’ve
been taking courses at Madison College for many
years and plan to continue.”
—BONNIE ERNST,
COMPLIANCE CONSULTANT, CROSSCHECK COMPLIANCE
“I thought the discussion of historical context
and its contrast to our present civil and criminal
legal systems was very interesting.”
­— CURT HELLMER,
SENIOR CLAIMS SPECIALIST, CAPITOL INSURANCE COMPANIES
­—MARTHA LESTER-MITTENZWEI
13
H I S T O R Y
O F
I N S U R A N C E
Ever since Eve bit the apple in the garden, death has been an inevitable
part of life. As people began earning wages and acquiring assets, there
became a financial reason to miss a loved one after death. Business
ideas 101­—find a need and create a solution. Life Insurance was born.
DEATH = LIFE insurance
Life insurance in the United States began in
1754 by the Presbyterian Synod of Philadelphia
when they formed the Synodical Company. In
1759 a charter was issued to the company allowing them to separate from the Synodical Company, forming “The Corporation for Relief of Poor and
Distressed Presbyterian Ministers and Distressed
Widows and Children of Presbyterian Ministers” –
the first life insurance company.
There were a few flaws in the life insurance
system in the early years that made it difficult to
grow the industry. 1. The synod didn’t pressure the
clergy who didn’t pay their insurance premiums.
Often, they were providing coverage without collecting the funds. 2. Women’s lives could not be
insured. The common law concept of “insurable
14
%
44
of U.S. HOMES
HAVE INDIVIDUAL
LIFE INSURANCE
interest” stated that there had to be a financial
interest in a person’s life in order to secure insurance on them. Since women didn’t work outside of
the home, they didn’t earn a paycheck, and therefore were seen as not having a financial value.
3. The law at the time would not allow women to
enter into a contract. Since insurance is a contract,
they were prohibited from taking out a policy on
their husband’s lives. The man would have to purchase it and name his wife as the beneficiary. 4.
The life insurance proceeds were considered part
of the deceased’s estate and could be taken by
creditors.
On April 1, 1840 New York passed a law that,
in essence, fixed these problems. Women could
now enter into a contract, purchase life insurance
on their husbands (with his permission), be insured
under a life contract without proving financial value
(thus changing the definition of insurable interest
to include love and affection), and creditors could
not attach the proceeds. Other states followed.
The financial troubles of 1839 made it difficult
for insurance companies to form on a stock basis
but mutuals required little capital to charter. This
proved ineffective as it allowed easy entry for businesses creating an opportunity for carriers to form
with no ability to pay losses, as well as to establish a firm with fraudulent intent. A new law was
passed requiring a minimum amount of capital
to start a mutual insurance company; a big step
towards monitoring a carrier’s surplus.
By the late 1850’s states were creating insurance departments to oversee companies. Consumers’ confidence and life insurance sales began
to increase. The Civil War, combined with a war
endorsement, (allowing men in combat to purchase coverage for an additional premium) grew
awareness of immortality and an increased interest in life insurance. Unfortunately, an economic
depression followed that put a large number of
insurers out of business.
The increased awareness of death that wars
bring improved sales after World Wars I & II.
Strong economies result in more people purchasing life insurance and poor economies prove the
opposite. Issuance of policies has dropped over
the last ten years. According to a 2010 report by
LIMRA (Life Insurance and Market Research Association), only 44% of U.S. homes have individual
life insurance. The same report indicated 40% of
U.S. homes would have immediate trouble meeting daily expenses if the breadwinner died
Group insurance began in 1911 when insurers saw the benefit of providing coverage to a
large number of people with similar exposures, all
at once. Many full time employees now have term
insurance through work. This coverage generally
ends when employment ends. Some employersponsored contracts allow the employee to convert the policy after separation but with restrictions
and increased premiums.
CNN.com, in an article titled “The high cost of
saying goodbye” cited the typical cost of a funeral
in 2012 was $10,000. Have you set aside financial resources to cover your end of life expenses?
Consult with your insurance agent regarding your
life insurance needs.
—MARTHA LESTER-MITTENZWEI
Businesses have human assets to
insure and business life insurance can
be used to insure key employees as well
as assist in business continuation.
Key Employee Life Insurance
The death of a key employee, whose loss would have an
economic impact on a company, can be mitigated with
a life insurance policy. This would provide the company
with adequate capital to replace the deceased employee.
The company is the owner and beneficiary of these
types of policies.
Business Continuation Life Insurance
In a sole proprietorship business, the assets are also the
personal assets of the owner, so if the owner should die,
the assets are part of the owner’s estate. The business
owner can arrange the sale of the business, in the event
of their death, to someone interested in continuing the
operation. The funds needed for such a purchase can
be provided with life insurance on the owner’s life,
payable to the buyer.
Buy-Sell Agreement
In a partnership, ownership of the business is shared
by a group of individuals. If one partner dies and the
remaining partners wish to continue the business by
buying out the deceased partner, they can plan ahead
for this scenario with a buy-sell agreement. This type of
contract has each partner buying life insurance on the
other partners to provide the cash needed to purchase
the deceased’s share from the estate.
This type of buy-sell agreement can also be
applied to close corporations where shareholders are
also key employees and officers. However because
there would be too many cross-purchase agreements,
the business as an entity purchases life insurance on
the lives of the owners and then uses the proceeds to
purchase the deceased’s interest.
Term Insurance
Term is limited to a specific length of time. Premiums
buy only insurance coverage, with no cash value, and
this is reflected in low premiums.
Permanent Insurance
Permanent covers an individual for a lifetime.
Premiums buy insurance coverage and also an investment component where cash reserves accumulate. This savings is tax deferred.
Business life insurance plans have tax advantages, but
an insurable interest needs to be present. Business Life
Insurance can help businesses continue after the death
of a vital individual. Buyers need to decide if it is worth the
expense of taking money away from the business to pay
premiums. That decision is not easy­—one would need an
experienced agent to assist in that decision making process.
Glenn Weaver works at American Family Insurance and is
completing the Risk Management and Insurance Certificate.
15
In our fall Management Techniques class,
we had the opportunity to hear three leaders
from three different types of organizations
discuss their leadership philosophies. The
students were not told who they were or what
type of organization the speakers led. Students
had to ask probing questions to figure it out.
Our first of the three was Pastor Paul Lundgren.
Paul is in his 20’s, recently graduated from seminary, and is the pastor of a non-denominational
church in Middleton. As a pastor, Paul leads people who aren’t being paid to follow him.
Our next speaker
was Pat Thompson
from EPIC in Verona.
Pat travels nationally,
overseeing the installation of new software
in health care facilities. She informed the
class how important it is to have real
plans with real goals.
“You can’t just hope
for things to happen.
Hope is not a plan,
Hope is not
a plan, and soon
The most important
is not a date.
part of management to
Pastor Paul Lundgren is
to build his people up so they feel like partners in the
business. He seems to be very planning-centered
and goal-oriented which are great qualities to have
in a leader.
Paul told us how he had taken over for an
established leader who was much older. Not only
did Paul have to win over the people as a new
leader but he was also much younger than most of
the people who were to follow him.
Cody Atkins is a Business Management Student.
16
and soon is not a date.” She explained that execution is very important. “See your plans all the way
through. Do what you say you are going to do.” Pat
made it clear that when she provides her clients with
a “launch” date for the new software, she meets it.
The third presenter was the new president
of Madison College, Dr. Jack E. Daniels III. The
students were very surprised that he would take
time out of his day to visit with them. Dr. Daniels
explained his philosophy on leadership, how he
likes to get to know the people he is leading and
find out what is important to them, and asked the
students questions.
Having real leaders talk to the students
about leadership is very valuable. It brings the
textbook topics to life. The students asked great
questions and were able to identify the company a few minutes into each presentation
— MARTHA LESTER-MITTENZWEI
Pastor Paul spoke about instituting change
and how important it was for him to get to know
the people in the church. His philosophy is to
be slow paced and careful not to make a major
change that will lose the people. It’s all about creating a buy-in from your people.
I learned that there are all different types of
leaders. I thought it was really cool to see how you
can relate the way he leads into a more traditional business setting. I also learned how important
it is to get to know your people before you start
demanding things.
Share interests
and emphasize
mutual gains
As someone who got to know and work
with our past president, I am aware of the
amount of hard work and thought that
goes into making decisions that affect the
college’s stakeholders. From listening to
Dr. Jack Daniels, I am confident that the
college is in good hands. He has the experience to make the decisions that will
move the college forward in the right
direction.
Dr. Jack E. Daniels, president
of Madison College, visited our
class and shared his leadership philosophy. He says having informal talks with
employees is a very good way to get useful
feedback and is a good tool for effective
I have met with Dr. Daniels twice
and both times we spoke about the
value of the insurance program, as
well as other programs at the college.
We discussed how these programs
focus on educating students for
careers. Dr. Daniels agrees that we
have a unique opportunity to train
people in many nontraditional
ways at Madison College, and that
businesses around the area rely on
the workforce we create.
communication. Research is key, he says.
It helps to find out what the team and the
community’s needs are and how we can
help. In the event of conflicts, he recommends identifying shared interests and
emphasizing mutual gains.
Serge Bamana is a graduate of the Finance Program and is
completing the Risk Management and Insurance Certificate.
CONGRATULATIONS!
Spring 2014 Scholarship Winners
American Institute
ê of CPCU $500
Adrian Holtzman
$
ê 300 Award made possible
by our industry supporters
Steven McCarthy
Dr. Daniel’s goal is to build
stronger connections with the
community and local business
leaders. He wants to implement
more focused and specialized
coursework that will train our
students and prepare them for
careers in high-skill, high-pay
industries.
Adrian Holtzman is a Liberal Arts student
who is completing the Risk Management
& Insurance Program. He is currently
serving as President of the Madison
College Risk & Insurance Club. Adrian
plans to transfer to the University of
Wisconsin-Madison.
17
I
CongRAtulAtIons on beIng A
DRIVIng FoRCe
In ouR CoMMunIty
AAA salutes the Insurance & Risk Management Program of Madison College
for making a difference.
AAA is proud to support initiatives that strengthen our community.
By pooling our talents and resources, we can build a more fulfilling future.
Who picked out
your health plan?
Was it you... or your employer?
It’s good to have options – especially when it comes
to something as important as your health.
CHOICES
If you have a preference...
you have a choice.
Employers all over Dane County know there’s
no such thing as a one-size-fits-all health plan.
That’s why so many offer Group Health Cooperative
side-by-side with other plans – so people like you
can compare and choose what’s best.
18
Group Health Cooperative of South Central Wisconsin (GHC-SCW)
MK12-51-1(10/13)A
GHC_13_039_MadisonCollegeAd_f.indd 1
10/24/13 11:30 AM
CONGRATULATIONS!
May 2014 Risk Management & Insurance CERTIFICATE GRADS
Joshua Banks
Kip Finger also holds a Bachelor’s
Adrian Holtzman is also a liberal
Priya Sharma is currently enrolled
previously graduated
with an Associate’s Degree in Criminal
Justice from Madison College in December 2013. Josh has received scholarships
from the Public Risk & Insurance Management Association of Wisconsin and an
Insurance & Risk Management General
Scholarship funded by a number of our
industry supporters including the Wisconsin Risk & Insurance Management Society.
Josh has been an active member of the
Risk & Insurance Club. Josh has interned
at both QBE in property claims and now
at CUNA Mutual in the Special Investigation Unit for Credit Life and Disability
Claims. Josh’s long term career goal is to
obtain a position in field claims.
arts student who is transferring to the
University of Wisconsin. Adrian has
previous work experience in construction
and a Texas Adjuster’s License. Adrian
interned at QBE in property claims during
the Spring and Summer of 2013. He is currently serving as the President of the Risk
& Insurance Club and previously held the
position of Vice President. Adrian received
scholarships from the Dairyland Chapter
of CPCU, The Institutes and the Risk Management & Insurance General Scholarship
fund financed by our industry supporters.
Degree from the University of Wisconsin, LaCrosse in Sociology and Criminal
Justice. Kip interned at CUNA Mutual in
the Credit Life and Disability Claims Unit
before being hired as a Senior Claims Adjuster. Kip has also been an active member
of Madison College’s Risk & Insurance
Club and received scholarships from M3
and the Insurance and Risk Management
General Scholarship fund supported by
our industry donors.
in the Business Management program
at Madison College with an anticipated
graduation date of December 2014. Priya
previously interned at CUNA Mutual in
Credit Life and Disability Claims. Priya
currently serves as the Vice-President
for the Risk Management & Insurance
Club and previously held the position of
Secretary.
Lance Gruenke holds a Bachelor’s
Degree from the University of Wisconsin,
Oshkosh in Economics and History. Lance
was a recipient of a scholarship from M3
as well as one of the Insurance & Risk
Management General Scholarships funded by a number of industry supporters
including the Wisconsin Risk & Insurance
Management Society. Lance served as the
first President for the Madison College
Risk & Insurance Club. Lance has obtained
a position as an Underwriting Technician
for NSI, a division of West Bend Mutual
Insurance Company.
Glenn Weaver
presently works as a
Senior Scheduling Analyst at American
Family Insurance and has been with the
company for over 15 years. Glenn also
holds a Bachelor’s Degree from the University of Wisconsin, Green Bay, in Political
Science, a Bachelor’s Degree from Lakeland College in Computer Science, and an
Associate Degree from Madison College
in Computer Information Systems.
19
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•
AGENTS HELP PEOPLE
WHENEVER AND WHEREVER
THEY CAN
•
20
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rt of
an agent’s job to build
relationships with th
eir
customers. The newe
r
agents are using diffe
rent methods to make
those relationships
happen. Some are us
ing
traditional methods
like
FAQs (Frequently Aske
d
Questions) but makin
g
them into YOUTUBE vid
eos. Since the FAQs ha
ve been turned into
YOUTUBE videos, they
are more accessible
and readily available.
Other agents are experimenting with so
cial media marketing
including blogs.
There is a growing market
for my generation in the insurance industry. The possi
bilities are endless now tha
t
the internet and social media
are being used. Using the
internet to reach out to custo
mers is a great idea and it
will save companies a lot of
advertising money.
Agents are very important
and it is vital for
them to be able to make an
d keep good relationships
with their customers. It see
ms that agents have to
know everything about the
policies they are selling.
Agents also need to know
all of the different policies
that their customers need
. This takes a lot of work
and knowledge. I haven’t
had a lot of personal expe
rience with agents yet. Howe
ver, after researching
their job responsibilities,
I respect them and believe
they are there to help peop
le whenever and however
they can.
Jack For ward has an aut
omotive background and
is completing the
Risk Management & Insu
rance Cer tificate.
According to author Emmett J. Vaughan, the idea of redistributing risk
can be traced back as far as the year 3,000 BC when Chinese and Babylonian traders would redistribute their wares across many vessels to limit
the loss due to any single vessel’s capsizing. Thousands of years later, in
the late 1680’s AD, Edward Lloyd opened a coffee house in London, England that became a popular haunt of ship owners, merchants, and ship
captains and thereby a reliable source of the latest shipping news.
The coffee shop became a meeting place for parties wishing to
insure cargoes and ships, and those willing to underwrite
such ventures. Shortly after, Benjamin Franklin founded the
first insurance company in the United States. Not only did his
company warn against fire hazards, it refused to insure risky
buildings like wooden houses.
Today, insurance covers a lot more things than just fire or cargo on ships.
With all of the advancements in food service, money, and technology,
there is a wide spectrum of property with coverage needs and so many
more ways someone could be injured by someone or something.
People who purchase insurance want to make
sure they are getting the right type of coverage they need to
protect their assets. An agent will sit down with each client,
analyze their unique needs, and recommend coverage. To
become an insurance agent you must first become licensed
by the state. This involves passing tests that prove your
knowledge of the insurance policies you want to sell and the
laws that regulate them. Once an agent, you are required to
complete a certain amount of continuing education credits to
maintain your license. The education makes agents aware of
major changes in policies, coverages, and regulations.
Insurance agents do a lot more than just sell policies.
They are also usually the first person the customer contacts
when they have a claim. Insurance policies can seem confusing at times. The agent is the one who can help interpret the
policy for the customer. Depending on the type of insurance
they sell, and due to the nature of insurance, most agents
build strong relationships with the people they serve and are
looked upon as trusted members of the community.
One of the biggest perks of being an Insurance Agent
is the pay. According to the Bureau of Labor Statistics, the median pay in 2012 was $48,150 annually. The number of Insurance Sales Agents nationally was 443,400 with an anticipated
10% growth by 2022. The need for specialized insurance has grown and the agent as a
consultant is still an extremely important role in the insurance purchasing equation.
•
INSURANCE AGENTS
DO A LOT MORE THAN
SELL POLICIES
•
AGENTS ARE TRUSTED
MEMBERS OF THE
COMMUNITY
•
Adrian Holtzman is a Liberal Arts Major who is completing the Risk Management & Insurance Certificate. He is currently serving as the President of the Risk Management & Insurance Club. Adrian is transferring to the University of
Wisconsin-Madison.
21
How Can You HELP ATTRACT NEW TALENT TO THE INDUSTRY?
¾ Advertise in TIPs
DONORS
THANK YOU TO OUR 2013 SCHOLARSHIP DONORS
AAA Wisconsin
Chicago Chapter Risk and Insurance Management Society
CUNA Mutual Group
Dairyland Chapter of CPCU
Group Health Cooperative
Joshua Kosnick, Northwestern Mutual
M3 Insurance
Public Risk & Insurance Management Association
Wisconsin Chapter Risk & Insurance Management Society
Wisconsin Physicians Services
INSURANCE ADVISORY COMMITTEE
All profits are returned to the Insurance & Risk
Management Students Scholarship & Professional
Development Fund. Full Page Advertisers can also author an
article highlighting one of their employees,
a claim, or a topic related to the current issue.
Regular content included in each edition:
• Moments in insurance history • Graduate profiles
• Student profiles for those seeking internships
or part time work • What students are learning/industry activities
on and off campus • Highlights of current industry professionals
• Non-sales articles by “Gold” advertisers
¾ Advisory Committee
Volunteer your time to help direct our program.
¾ Annual Executive Symposium
Attend or be a panel member. This is our biggest fundraiser each
spring. Top Industry Professionals discuss current insurance
and risk management topics and all profits from the program are
returned to the Insurance & Risk Management Student Scholarship & Professional Development Fund.
¾ Employ our Graduates
A SPECIAL THANKS TO THOSE WHO DONATE TIME
AND WISDOM TO MAKE THIS PROGRAM POSSIBLE:
Contact Martha Lester-Mittenzwei with job opening details.
Chair: Heidi Nienow
Provide a tax deductible donation to our Foundation specifically
for Insurance & Risk Management Scholarships & Professional
Development. Madison College derives most of its funding from
tax revenues and student fees. There are many needs that cannot
be met from these sources, including student scholarships and
opportunities to attend industry events. You may give online at
https://matcalumni.site-ym.com/donations/donate.asp?id=6893 or
mail your gift to the Madison College Foundation, 1701 Wright St.,
Madison, WI 53704. Please indicate that you wish your gift to go to
the Insurance & Risk Management Program.
Regional Sales Director, Independent Agents, AAA Wisconsin
Secretary: Diane Wilkinson
VP Client Services, M3 Insurance Solutions for Business
Roger Baker
Learning Consultant, CUNA Mutual Insurance Company
Greg Blaska
Claims Manager, QBE North America
Dean Boes
Executive Director, Wisconsin Municipal Mutual Insurance Co.
Dorothy Buechner
Continued Learning Administrator, American Family Insurance Company
¾ Financial Gifts
¾ Guest Speaking
Diane Dillett
Visit our classes and share your story, knowledge, and
experience.
Dan Edge
¾ Host a Dine & Discover
Agency Owner, The Dillett Company
VP Medical Affairs, WPS Health Insurance
Ryan Jones
Staffing Specialist
Joshua Kosnick
District Director, Northwestern Mutual Financial Network
Bonnie Kristan
Director-NSI Operations, NSI a division of West Bend
Kevin Murray
Vice President, Johnson Insurance Services
Ashley Natysin
Office of the Commissioner of Insurance
Allan Wearing Sales & Marketing Director,
Group Health Cooperative of South Central Wisconsin
22
Visit our campus, provide a lunch for a limited number of students, and tell them about your company, your career and the
Insurance & Risk Management industry.
¾ Internships
Offer our students part-time employment opportunities during
the school year or full time during the summer to enhance their
learning with a real taste of the industry.
¾ Promote the Industry to High School Students
¾ Tours
Invite our students to your business, or industry event, to learn
more about your organization and the industry.
If you are interested in supporting our efforts to attract new talent to our
industry, please contact Martha Lester-Mittenzwei, Risk Management
and Insurance Program Director. [email protected] or
608-243-5417.
DREAM OF OWNING YOUR OWN BUSINESS?
TURN THAT DREAM INTO A REALITY BY JOINING
OUR FAMILY AS AN AGENT-IN-TRAINING!
As an Agent-In-Training (AIT), you receive on-the-job
training—with pay—from highly successful agents while you work
as an employee of American Family. A blend of learning, practice
and real-world application, the AIT program combines current
technologies and tried-and-true techniques to provide a complete
learning experience along with a consistent income. We think it is
critical you have support and we give you that.
With some companies, it can take quite a long time to become an agent.
But not with American Family. In as little as one to two years you may be
ready to run your own agency and to enjoy all the benefits that come with it.
To begin your career with American Family Insurance,
Please contact Alison Kavanaugh at 1-888-374-7121 ext. 38166
or [email protected] Or
Agency Sales Manager Mike Lubahn at 1-888-374-7121 ext. 44319
or [email protected]
American Family Insurance Company and its Subsidiaries,
American Family Insurance Company Home Office – Madison, WI 53783 ©2012
2014 FALL SCHEDULE
DETECTING EMPLOYEE FRAUD
3 CREDITS ONLINE
9/3-10/24/14
The course will cover all of the major methods employees use to commit occupational fraud.
Students learn how and why occupational fraud is committed as well as how the conduct can be detected,
deterred, investigated and resolved.
INTRO TO BUSINESS INSURANCE CONTRACTS 3 CREDITS
TELEPRESENCE 5:30 to 8:20PM THURSDAYS 10/23-12/18/14
This course provides an understanding of the insurance protection any business should have. Whether you plan
on owning your own business or managing a business or department, this course provides valuable information.
A comprehensive study of policy language and coverage for Commercial General Liability, Commercial Auto,
Worker’s Compensation, Crime, Bonds, Umbrella, the BOP and Commercial Property is reviewed.
INTERNSHIP
2 CREDITS
ALL SEMESTER
Various paid employment opportunities available for students taking insurance or risk management courses.
4
Students working toward a degree in Business Management or Finance can earn
a Concentration in Insurance & Risk Management by completing 6 Insurance & Risk
Management Credits. Other majors may accept these courses as electives.
• Scholarships are availablE. madisoncollege.edu/special-scholarship-applications
• Consider joining our Club! Madison College Risk & Insurance Club
• Questions? Contact: Martha Lester-Mittenzwei (608)243-5417
[email protected]
MA DISON COLLEGE R isk Ma nagemen t
a nd Insu r a nce Cu r r iculu m
CoursesCredits
DETECTING EMPLOYEE FRAUD
3
INTRO TO BUSINESS INS. CONTRACTS
3
INTRO TO LOSS INVESTIGATION
3
INTRO TO EMPLOYEE BENEFITS
OR CURRENT ISSUES IN RISK MNGMNT 1
INTERNSHIP2
MANAGING BUSINESS RISKS
3
TOTAL CREDITS
15
I love the Risk Management
and Insurance classes because
they are very informative and
fun. The material is interesting and easy to follow. The
teacher is down to earth and
knowledgeable.
Debbie Allen
PRESORTED
STANDARD MAIL
US POSTAGE
PAID
MADISON
1701 Wright Street • Madison WI 53704-2599
PERMIT NO. 1389
Tomorrow’s
Insurance
Professionals
MOVING INTO THE FUTURE WITH
OPPORTUNITIES TO SUCCEED
A MADISON COLLEGE PROGRAM PUBLICATION