Making Your Association Safe for Change


July 14, 2014

ant_waterHistory tells us, or at least the story has it, that Henry Ford was once asked if his prospective customers were asked anything about the Model T before it went into production. Ford’s supposed response went something like,

“…if I had asked my customers what they wanted they would have said a faster horse.”

One hundred and six years later, the fact that he brought the single greatest change to personal transportation since the horse, meant that change was something Ford was not only comfortable with but anxious to bring to the world. Few of us are so courageous.


Part of the answer is rooted in the Law of Diffusion of Innovation. The graphic below illustrates how a given population of people is generally distributed across a spread of tolerance for change – any change. It is weighed with observations of human psychology and our propensity to be comfortable with change and how we are influenced to change, and by whom.


Starting from left to right – those on the left, the “Innovators,” are the natural leaders who enjoy being out in front of everything and everyone. These are the ultimate risk takers. Next are the “Early Adopters,” who enjoy being among the first to try something new and are influenced by the actions of the Innovators – but want the Innovators to go first. The line between Early Adopter and the “Early Majority” is called, “the tipping point,” which is the point where once crossed into the Early Majority we will see success in the innovation being brought to the population. Once the Early Majority has adopted the innovation the “Late Majority” comes along – with the “Laggards” bringing up the rear. As Simon Sinek once said, Laggards are the people who only use push button phones because they can no longer buy rotary dial phones.

Making our associations “safe” for change, given that all change is usually hard, means that we find those populations within our membership most often found to be innovators – and then early adopters of change. This creates the environment within which change is possible. This also establishes the strategy one employs in considering change. First, one would never start with Laggards – or work from right to left on this graphic. One begins with getting the Innovators on board, and then from that point having the Innovators influence the Early Adopters in your group.

Everyone has encountered someone in their professional lives who is resistant to change. Resisting change is a normal human reaction arising from a number of factors ranging from fear of failure to a perceived lack of capacity to learn or do something new.Fear is a powerful emotion that is a primitive reaction designed to preserve our lives by preventing us from doing things that might cause us harm. Fear also can prevent us from doing things that benefit us most.

We need to make change safe, and resisting change uncomfortable.

“Our role is to make our associations safe for change by creating the environment within which change is not feared, nor is fear of failure allowed to exist.”

Making professional life accommodate failure as a natural part of human endeavor, not as an objective of outcome but a recognition of its reality, is an essential part of leadership. It is also among the most valuable learning experiences. The country was not built by those who were averse to risk – but by those who saw risk as a necessary part of conquering frontiers of geography, science, transportation, medicine and virtually everything else we enjoy today in our daily lives. Incentivizing the desirability of rational risk taking and allowing people to grow from within that environment is what enables change and growth to flourish.

Our project on private health insurance marketplaces is instructive in this discussion. Since World War II, employers have borne the burden of providing health insurance and other benefits to their employees. This developed solely out of the federal government’s wage and price controls during the war. Employers couldn’t pay higher wages to keep or attract employees – so they started adding desirable benefits. And there it began.

After 70 years of this system we have employers who can barely afford to provide benefits and 75% of employees who don’t really understand what their benefits are or how they work. In a system that represents $2.4 trillion a year of the economy, we are not in a good place.

  • First, we need to change the system where an employer chooses the benefits that everyone lives with – that’s called “defined benefits.” The modern version is called “defined contribution,” where the employer decides how much money to give each employee for benefits and then the employee decides what to buy;
  • Second, we need to forget carriers, policies and plan comparisons by employers. Employers need to decide what their budget will be to pay for benefits. That’s right, no more sweating out renewals – the employer controls what the employer wants to spend on benefits and then decides how to divide up that budget among his/her employees;
  • Third, after the employer has a budget and has decided how to divide it up, we educate employees about the bold new world of no longer having decisions made for them – now they get to decide for themselves what they want to buy for benefits. What a liberating experience!
  • Fourth, the employees go to a private association marketplace where they make their benefit choices with the help of professional benefit planning advice. These marketplaces help turn employees into consumers for the first time. The importance of making your own choices, learning the value of what you chose, and how your own benefits work cannot be overstated.

Imagine going to hundreds of employers who, for 70 years, have done something a certain way – painful or not – and trying to convince them that everything they know and have been doing needs to end and they all need to learn something totally new? Then there are the employer’s insurance brokers – who are in just as much need of changing their business model as the employers.

If we ever have a chance to get some degree of control over health insurance costs we need to inject real market-based competition and create consumers of us all. The 1/7th of the economy that is health care is the only segment of the economy that almost totally lacks transparency of price of services and outcomes. We compare everything from buying a toaster oven to a house and mostly online and wouldn’t buy anything without price, service and performance comparisons – except for health care.

This is not a commentary on the Affordable Care Act, and only focuses on the fact that health insurance costs have risen rapidly, and annually, every year since the early 90s for many reasons and associations have tried to find solutions. One such solution that works is a private, association-based marketplace that creates both competition and consumers where neither had existed before. Without government.

  • employers control costs by setting their own budgets
  • employers divide up their budgets among their employees
  • employees make their own choices for what they want to buy for themselves and their families
  • employers have stability and employees control their own lives

We need to make this endeavor safe for change as this is as unknown as virtually everything else we deal with in our daily lives. That’s exactly what we are trying to do – make this extraordinary change in the lives of businessmen and women and their employees – safe.

“If you want something you’ve never had, you’ll need to do something you’ve never done.”

It’s time for change. Associations are leading – the Innovators.

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What Happened Under the ACA Just As You Were Getting Away for the 4th?


July 7, 2014

aca_flag_gavelJust as most of America was getting ready to enjoy the 4th of July holiday, Washington was issuing 1,296 new pages of regulations concerning the Patient Protection and Affordable Care Act. In fact, the release of the new regulations came at 4.15pm on July 3rd.

Last year, the Obama administration used the days surrounding the July 4th holiday as an opening to announce a delay to the employer mandate and to disclose the fact that the exchanges would operate on the honor system, doling out benefits without properly verifying information provided by applicants.

What did this latest pre-holiday release of regulations contain?

  1. This proposed rule would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2015 to implement applicable statutory requirements and changes arising from our continuing experience with these systems.
  2. This major proposed rule addresses changes to the physician fee schedule, and
    other Medicare Part B payment policies to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services,
    as well as changes in the statute.
  3. On June 26, 2014 the IRS also issued final regulations on the tax credit available to certain small employers that offer health insurance to their employees. The regulations affect small employers, both taxable and tax-exempt, that are eligible for the tax credit. The regulations, which are effective as of June 30, 2014, include guidance on the definition of eligible small employers, the calculation of full-time equivalent employees and the credit amount, filing requirements, the uniform percentage requirement, and other related matters

The Patient Protection and Affordable Care Act encompasses more than 2,700 pages of law and 25,000 pages of regulations from three federal agencies.

Part of what we do for our private association health insurance and employee benefits marketplace clients is to keep them up-to-date with what comes from Washington regarding the ACA.

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gbac Association Practice Group Opens Broker Training Program


June 30, 2014

The gbac Association Practice Group is pleased to announce the launch of its new broker training program for association private health insurance and employee benefit marketplaces. This initiative is pioneered by gbacAPG’s newest partners in Nelson Griswold and Scott Cantrell of Bottom Line Solutions of Nashville, Tennessee.

gbac APG operates seven private association healthbrokers_Future insurance and employee benefit marketplaces and is about to open an eighth in Tennessee with the West Tennessee Home Builders Association.

The gbacAPG broker training program is designed to help brokers in three key areas we have identified as critical needs; [a] key elements of the Affordable Care Act, and [b] how to transition an employer from a defined benefits program to a defined contribution program, and [c] how to operate with an electronic marketplace.

The opening of the new gbacAPG program for brokers occurs just as the June 27, 2014 edition of the Employee Benefit Adviser highlighted a story entitled, “Half of Benefit Advisors Considering Leaving the Industry,” and citing research in the graphic above. The article today goes on to cite that…

“While some brokers have left the industry and others are considering it, benefit advisers who not only want to survive but thrive in the changing health care environment know they need to adapt, says Tye Elliott, vice president of broker sales at New York-based Aflac.

Advisers are “expanding their focus to be more consultative and to offer a wider range of products and services,” he says, adding that data shows “this has been a successful strategy as many businesses are now relying more heavily on their partners for guidance.”

Employee Benefit Adviser, the broker industry publication, announced on June 12th that private employee benefit marketplace enrollment has hit 3 million – which is 3 times the previous estimate by 2014. Growth is now estimated to go to 9 million by 2015. Clearly the evolution of private health insurance and employee benefit marketplaces is growing, especially in the association space addressed by gbacAPG. With the appropriate training and orientation, brokers can achieve access to cutting edge technology and learning new methods of helping association members organize and deliver employee benefits.

This is What Brokers Receive for the Fee They Will Pay to be Trained

1. Access to an exclusive endorsed channel of hundreds of association members and thousands of employees for the broker’s small business book development and retention;
2. Access to a powerful, electronic marketplace that, were they to engage with the backbone vendor today, would cost the broker a $30,000 application fee and $250,000 annual commitment;
3. Broker commissions are largely protected and provide for growth through providing consumers with added benefits usually not provided under the old defined benefits model;
4. Broker can earn a portion of the pepm on a scale related to the number of enrolled that the broker generates;
5. Broker receives comprehensive training including key ACA issues, how to transition an employer from a defined benefits program to a defined contribution program, and orientation to the use of the electronic marketplace;
6. Broker joins a network of brokers involved in developing association practice group association-based business;
7. Upon completing training successfully, the broker signs a broker participation agreement with our ebenefit marketplace and with that, will be good to go serving their association’s members through the association marketplace. Trained and qualified first!

Through the gbacAPG Broker Training Program found here, now brokers of all types may access comprehensive training and then have access to powerful new tools to help their small group book of business remain competitive and provide choices they would otherwise never have had before.

Associations can learn more about the gbac Association Practice Group private, association-based health insurance and employee benefit marketplaces by going here and contacting us today!


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Reversing The Trend In Declining Association Revenues




June 29, 2014

healthinsur_spending_growthWe’ve met with two associations in the past two weeks, one state and one national. In both groups, resource constraints and the need to expand into new areas in order to meet budget demands was on their radar.

Declining revenues, industries with consolidation that reduces association membership, and then associations with resource problems are commonplace today. We can help both groups but no one, single solution creates a reversal of the fortunes of any association.

Look at the graphic above. That graphic depicts the rise in health care spending between 2001 and today and then estimated out to 2019. Our association members are spending more and more on an out-of-control health care system for their employees through an insurance system to pay for it that goes back to World War II.

When our members have been seeing massive health insurance cost increases since the mid-90s, and then seen the incredible challenges posed by the Affordable Care Act, it’s no wonder our members have less money to spend on our associations. Despite what some politicians are saying, the system was unaffordable before the ACA passed and given the more than $800 billion in new taxes, fees and still rising premiums the system isn’t getting less expensive.

As associations we’ve tried a number of approaches to helping our members solve their benefits costs challenges and we’ve run every single one of them. All have failed to achieve the desired results over time. We’ve chronicled them all here >

We have just opened our seventh private, association-based health insurance and employee benefits marketplace. When we open our eighth in a few weeks we will have extended the power of free markets to more than 8,000 businesses and 69,000 employees who, for the first time, will enable employers to control their own health insurance costs and provide greater choices to employees. These association marketplaces reflect the need for change in how we approach organizing and delivering employee benefits and the important role associations can play in facilitating that change.

Now, if your association doesn’t have resource issues and your members are comfortable with what they pay for health insurance – you’re in a happy place and don’t need help.

For everyone else, we’ve been where you are and have done something about it that works for our members, their employees and our associations. Give us a call.

Posted in Association Health Insurance and Employee Benefit Marketplaces, Association Property & Casualty Insurance, GBAC APG News, Health Insurance Reform | Leave a comment

Our Approach Centers on People


May 23, 2014

shakehandsWe were out for dinner one night this week to celebrate one of our daughter’s birthdays. Amazing to look around in a public space today and take note of how little human interaction there is because most people have their noses buried in their smartphones.

Technology can do wondrous things and make our lives easier, to be sure. It is also healthy to remember that technology is here to serve us, not command our lives and most of our attention to the detriment of genuine human contact.

We have never lost sight of the fact that the technology of our private association health insurance and employee benefit marketplaces is a means to an end – not the end. Our business is still centered on the people we have who are professional benefits advisers helping other people make good choices for their personal and family benefits.

Without the professional benefits adviser to help, the technology we have is nothing more than an assortment of random electrons. Hardly compelling stuff for a movie. With a professional benefits adviser, our ebenefit marketplaces in trade associations can help people protect themselves and their families.

Let’s meet face to face and have a conversation about how our people with a great private health insurance and employee benefits marketplace can help your people.

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Solving the Math Problem in the Affordable Care Act With Associations


May 21, 2014

HouseAlmost every day we get asked to handicap the November elections and how the outcome might effect the Affordable Care Act. This isn’t solved with a crystal ball as much as with a calculator.

No worries, there are no quizzes after this, so come along for the numbers.

The House of Representatives has voted 50 times to repeal the Affordable Care Act. Not once did any of the 50 actions see a floor vote in the Senate. Why? Apparently Senate Majority Leader Reid has found other pressing priorities to debate in the Senate first so, no repeal votes. What if Senator Reid was temporarily blinded by the sun and allowed for a vote? Still not going to prevail, Democrats control the Senate 55-45. What if 51 Senators somehow voted “Yea” mistaking it for “Nay?”  and it got to the President’s desk?


Article 1, Section 7 of the Constitution tells us that for Congress to override a Presidential veto, two-thirds of both Houses of Congress must vote to override. Here’s where we need the calculator.

To override a Presidential veto takes 67 out of 100 Senate votes and 290 of 435 House votes. Today, Republicans have 45 votes in the Senate and aren’t likely to get 6 Democrats to vote with them on repeal if it ever came to the floor, or 22 Democrats to join them for an override vote. In the House, Republicans have 233 members and Democrats 199, with 3 vacancies. To override a veto in the House takes 290 votes – and Republicans would need all 233 of their own votes and 57 Democrats. Not likely.

What of November, 2014?  Interesting Rasmussen poll the other day of the generic Congressional ballot where 41% of Americans would vote for a Democrat for Congress and 37% for a Republican.

2014 senateFor Republicans to achieve a veto-proof Senate, they would need a pick up of 22 seats to reach 67. There are 36 U.S. Senate seats up for election in 2014. Of those seats, 15 are currently held by Republicans and 21 are held by Democrats. In other words, a clean-sweep of Democrat seats and holding all 15 of their own.

By even optimistic Republican sooth-Sayers, the Rs might have a shot at +6.  Of course the Republicans were supposed to take the Senate in 2010 and 2012 and failed in both cycles.

Over on the House side, where Rs currently have 233, there may be a chance for the Republicans to pick up a few seats but the end result of the November elections may just be like 2012 – with a great deal of noise, $5 billion spent and nothing really having changed in the numbers.

By our calculator, this means that the Patient Protection and Affordable Care Act is on the books until the next President is sworn in on January 20, 2017 – and assuming the Congressional re-alignment that would be necessary along with the Presidency allows for a repeal.

This means we need to find ways to help our members deal with the many challenges of this law and health care costs and benefits delivery – with – the ACA being on the books for at least another three years.

Talk with us – we know how to help.






Posted in Association Health Insurance and Employee Benefit Marketplaces, GBAC APG News, Health Insurance Reform, Legislative and Regulatory Affairs | Leave a comment

Your Members Two Biggest Risk Concerns Are…


May 20, 2014


The #1 risk concern of members of trade associations is the cost of health insurance. The #2 concern? The rising cost of employee benefits.

That’s why more trade associations are turning to the gbac APG private health insurance and employee benefits marketplaces. Businesses that are members of trade associations can gain enormous advantages when their associations offer them the services and strengths of their own private insurance marketplace.

None of your members should ever have to suffer under a large rate increase again.

Learn more here

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A Small Business Success Using An Association Private Health Insurance Marketplace


May 16, 2014

It’s Time To Change – Because the Business of Health Insurance Has Changed

When it’s time to renew your health insurance, most businesses are finding that their new premium costs are an expensive shock. Double digit rate increases are common. Insurance carrier CEOs say it could get even worse going into 2015. Given everything that has happened with the federal Affordable Care Act and new state coverage mandates and how insurance carriers have responded – merely tinkering with plan designs will not make things much better.

It is time that businesses changed the way we organize, purchase, fund and deliver benefits and that is exactly what the CEMA private benefits marketplace does for its members – but only with local brokers who understand how the new world of benefits management is evolving.

We don’t start by discussing premiums, carriers or plans or rate hikes. The new world of defined contribution plans and electronic marketplaces is here today. And, don’t be confused by the federal and state run “exchanges” – ours is very different. Below illustrates an actual renewal process for a small business in Connecticut that has transitioned from the old defined benefits model to a defined contribution plan using a private marketplace just like ours. As a member of the CEMA, your company and your employees can participate in the same experience.

An Actual Renewal and Transition to Defined Contribution Plans – May, 2014 in Connecticut

A small business with 18 employees was on an Anthem Blue Cross “Gold plan” and faced a large rate increase for the coming year, too large for the company to afford. The company decided to end its defined benefits plan and transition to defined contribution to control its costs while providing great benefits options for its employees.

How? The first conversation with a professional benefits advisor, such as gbac (CEMA marketplace manager), is about what the company can afford to spend on benefits.

Once the decision is made to go with a private marketplace and defined contribution model, the company does not start by discussing plans, carriers or rates. gbac starts by working with the company to come up with a budget for benefits with which the company is comfortable. So, the company – out of the gate – exercises control and certainty over its costs.

Then and only then, the company decides what benefits, carriers and plans are to be offered to its employees. The company doesn’t pick one plan that fits all – the company can pick the full range of benefits, carriers and plans from which its employees will choose.

Next, the company decides how it will divide up its benefits budget among its employees. It can do that by those who are in executive or management or rank and file roles, or by age banding, or by whether they are an employee, employee with children, employee with a spouse, family and so on. So, your employees will be able to choose what level of benefits are appropriate for them, knowing how much the company will cover and how much it will cost the employee.

gbac then meets with the employees to explain their new ability to choose the benefits they want to buy based on what’s best for them and their family. Employees are informed of what amount the employer has on account for them in the health insurance and employee benefits marketplace – and how the CEMA’s private benefits marketplace works.

Next, each employee is walked through enrolling for the benefits they want in the marketplace, using the funds the employer has put on account for them. If they spend more than what has been put on account, the balance is paid by the employee through payroll deduction.

Finally, the company pays the carriers each month just as it does now. What is paid is based on what the company budgeted plus what has been deducted from the payroll of employees, much the same as it works now. The CEMA marketplace and gbac make it all easy to administer.


• the company avoided a large rate hike
• the company set its own benefits budget
• the company determined how to divide up its benefits budget among its employees
• the company decides what benefits, carrier and plan options to offer to its employees
• the employees were educated about their choices for their own benefits
• the employees used the marketplace to make their benefit program choices for themselves, becoming informed consumers of benefits for the first time.
• the employees are happier because they are in charge of making their own benefit choices, rather than having those choices made for them
• the employees get to purchase ancillary and voluntary benefits beyond health insurance, some of which they have never had a chance to see before, such as vision and dental coverage, and life and disability insurance.
• The company enjoys the ease of administration of its benefits package.

All this can be done with the guidance of a professional benefits advisor, such as gbac.

You can avoid the treadmill of endless rate hikes and no choices through the CEMA Private Benefits Marketplace and benefit from gbac’s professional advice. You CANNOT get this service from the government exchange because the government exchange doesn’t provide this service nor does it provide the breadth of carriers, plans or benefit choices found in the CEMA Marketplace.

1/7th of the US economy has been upended by the Affordable Care Act, by government’s regulations and executive orders and how carriers respond. We aren’t going to make things easier on members by small measures or tinkering with a few plan design changes.

Make sure your broker understands our new private marketplace model and how it can provide a much better solution for you and your employees – better yet, make sure you do!

No member of CEMA or any other association using our gbac APG private association health insurance and employee benefits marketplace should ever have to face a massive rate hike thinking there are no options. There are options, great options that work for members of trade associations and their employees – just like the small petroleum marketer featured in this article.

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With Premiums Spiking – Now Is The Time To Change The Way We Structure and Offer Benefits


May 4, 2014

stormsThere is a storm coming for every small business in America – for your health insurance policies renewing for 2015.

Aetna CEO Mark Bertolini was among the first to sound the alarm about the potential for rate shock on the Obamacare exchanges. In December 2013, he told investors that “in some markets,” individual-market premium increases “could go as high as 100 percent.” This past January, in an interview with CNBC, he asked, “are we going to get beat up because [next year’s premium increases will be] double-digit or are we just going to have to pull out of the program?”

WellPoint CEO Joseph Swedish has also recently stated that he would “not be surprised” to see “double digit” increases for 2015 rates. Insurers will begin filing their 2015 rates this month and next. Other health industry officials told the media last December that “Obamacare-related premiums will double in some parts of the country, countering claims made by the administration.” One insurer indicated that “his company expects to triple its rates next year on the Obamacare exchange.” Other insurers expect to see rate increases of about 20 to 40 percent, on average, throughout the country.

Local insurance brokers in some parts of the country are already reporting spikes ranging from 35 percent to 120 percent on policies that renew from July to December. [1]/ “The increases are especially acute among employers with workforces made up of younger, healthier men. That’s because Obamacare prohibits offering lower rates to healthier groups. It also narrows the allowed premium gap between older and younger enrollees.”

These developments point to another reason why CEMA and other associations turn to private health insurance and employee benefit marketplaces for their members. Employers need to rethink their approach to offering benefits, expand their benefits choices NOT limit them, and empower employees to make choices and become informed consumers.

We Are Not Here JUST To Sell You A Policy – We Are Here To Guide You Through Fundamentally Changing the Way We All Structure and Deliver Employee Benefits

It is an accident of World War II that we get insurance coverage from our employer, where the employer picks the one policy we all live with. That is called defined benefits, where the employer has defined what employees get for benefits.

The modern alternative is where employers create a budget that’s affordable for them — the employer creates a strategy with a professional benefits advisor that allocates that budget among employees and then lets the employees pick whatever they want in this robust marketplace that allows them to have control, personal accountability and the ability to make their own decisions. That is called defined contribution, where the employer defines the contribution to each employee and then the employee decides what benefits to buy. To enable an employee to make their own decisions they need a place in which to make their decisions – the Association Marketplace.

Hence, your local broker needs to know how to transition an employer from the WWII defined benefits era to the 21st century defined contribution era using a marketplace. Your local broker needs to be up-to-date on the Affordable Care Act. Your local broker needs to be able to help you use our new marketplace as no one is ever in the marketplace alone – only with a qualified, professional benefits advisor.

Now Is The Time to Change The Way You Structure and Offer Benefits

Having a great marketplace for employers and employees starts with great technology to help people make those choices about their benefits with the help of an insurance professional. The CEMA benefits marketplace has tremendous technology that compares plans, asks employees questions about their needs and advises them of their choices. In addition to the support of gbac in making these decisions, the marketplace has a 24 hr a day, 7 day a week, 365 day a year support for the marketplace itself.

Employers need to change their perspective away from carriers, policies and premiums and instead concentrate on budgets, strategies for dividing budgets among employees and then empowering employees to make their own benefit selection choices. Employers can control their benefit costs and can empower employees to become educated consumers – as soon as they decide to take a different approach to how they organize, structure and deliver benefits.

Great employee benefit plans are not commodities, they are carefully planned with a professional using the powerful tools of a great private association marketplace.

For More Information Call Joe Bucci at 203.985.1703

For More Information Call Gene Guilford at 860 989 0756




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How Do You Assess Whether Your Association Is Properly Insured? Lessons to Learn From


April 25, 2014

ASAE has a great message board called “Collaborate,” where association executives can exchange views and ask questions about association management.

This week an executive asked a question about general rules, tools or guidelines about insuring an association, arising out of a recent quote where the magnitude of cost to the association for an insurance package had increased substantially.

The executive asked a great question and we contributed what we knew from twenty-eight years of running and insuring associations, and from the mistakes we made to be avoided.

Truth be known, every association is different. Each has different operations, services, communications and interaction with its membership, the public, the media and government. All of those differences pose different risks to be taken into account in fashioning not only the right policies to match the risks, but the right professional advice to mitigate the risks and still operate effectively. This means that there isn’t any one particular size solution that fits everyone – as everyone is different. The key is working with someone who gets to understand what you and your association does, how it works, in great detail, and then consults with you about your risks and how to best mitigate them.

This is not the space for “cookie-cutter” solutions, or for cutting corners.

I’ll give you one example. For years I bought D&O coverage because that’s what everyone said we needed to have and, they were partially right. Years after becoming an association executive I came to learn about “liability associated with the provision of professional services.”

As a general matter, D&O policies do not provide coverage for liability associated with the provision of professional services.  Thus, where a bank officer is liable for acts as a banker rather than an officer of the bank, a D&O policy with a professional liability exclusion would not provide coverage.  Similarly, where a doctor is the president of a professional corporation, the D&O policy would only protect him or her against liability from acts as president of the corporation, and would not provide coverage for professional malpractice claims.  The line between professional services and acts outside the scope of this exclusion can be a fine one.  Courts often draw a distinction between those acts that require special training or are at the heart of the profession and those acts that are administrative in nature.  See e.g. Harad v. Aetna Cas. and Sur. Co., 839 F.2d 979 (3d Cir. 1988).

These issues are among the most hotly contested in the courts, with debates raging between the exclusions for professional liability rendering the policies effectively useless to a strict construction where the exclusions stand to the detriment of the policy holder. One example of this debate was published recently about a court case arising in Rhode Island and a law firm sued for alleged false advertising []

If there is one thing worse the arguing with an insurance company about whether your coverage applies to your actual work, it’s having to litigate the same thing in court.

For years, one of my tasks was answering regulatory compliance questions for my members, as did other members of our staff[s]. As this was a part of our professional services, and as our D&O coverage excluded coverage for issues arising from these acts, what I needed in addition to D&O was errors and omissions coverage or other professional liability coverage beyond D&O.

A long line of brokers should have picked up on this, but did not. I wasn’t sufficiently informed to know what to explore and my former brokers didn’t take the time to learn about what our association[s] were doing day to day. This is about learning and listening, then acting prudently. It’s not just about cost – it is about carefully measuring risks and then meeting the risks with sound risk management. The time to do a comprehensive review of your risks and how to best mitigate them isn’t after a subpoena has been served, but now.

Born of years of experience, that is what we do here for trade associations – giving them the opportunity to learn from our mistakes.

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