Greetings

Dear Readers:

Welcome to our second quarterly issue of Cline Wood Agency Transportation and Agribusiness Review.  We were very happy — and frankly a little surprised — about all the positive feedback we received on our first issue. 

We also received some helpful, constructive suggestions. For example, many of our business partners and associates know us only as Cline Wood. Our use of “CWA” in the title caused some to delete the newsletter without opening it because they didn’t recognize “CWA” as a trusted source. As a result, we have changed the name of our newsletter to Cline Wood Agency Transportation and Agribusiness Review.  This illustrates why we seek and need your feedback. We are determined to constantly look for ways to improve our communication to you.

In addition to the Review, we have started sending out a Cline Wood Agency Special Report in the months between the quarterly Review.  The first edition was sent in March and dealt with the Employee Free Choice Act legislation, also known as “Card Check.” This is an example of the type of timely subject we intend to highlight in each one of these quick, one-page messages.

In addition to feedback about the quality and format of these new communication tools, we are interested in your thoughts about the industries that we serve and the issues that are important to you.  We encourage you to fire off a memo sharing information or opinions, or asking for information or commentary.  We will respond to all the messages we receive and print as many of the messages in the newsletter as possible.

Finally, as the owners of Cline Wood Agency, we would like to sincerely thank all of our customers for your business and your continued faith in our company. We also thank our insurance company and intermediary associates for all your help and support in providing our customers with quality products and services. It’s a challenging time for all of us, and we are proud that you have chosen Cline Wood as your partner to help meet the challenges.

Sincerely,

John Cline and Mike Wood, Founders

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What's New

• Our new larger space is almost ready for us, and we have begun planning the move of our Leawood office to take place in June. It will be a relief to go from trying to figure out how to fit everything and everyone to having some room to continue our growth. Our new space also is in Leawood and only about three minutes from our current location. You will be getting an announcement with our new street address soon, and we will give you a report on the move in the next quarterly newsletter. Rest assured we will continue our commitment to providing you the very best service before, during and after the move.
• Skip Wombolt and Marshall Sherlock, transportation producers, both passed the Great West Casualty Company Producer School last March. Both have been recognized by Great West Casualty Company as dedicated transportation insurance professionals.

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Out and About

If you’re at any of these events, please stop by to see us:

May 1-2: South Dakota Livestock Auction Markets Association Annual Convention in Aberdeen, S.D. – Jeff Howard, Producer.

May 10-12: National Tank Truck Carriers 61st Annual Conference and Tank Truck Equipment Show in San Diego — John Cline, Co-owner and David DeBolt, Vice President – Risk Services.

June 21-23: ATA National Accounting and Finance Committee Annual Meeting in Lake Tahoe — Tom Dickmeyer, CEO, will be a member of a panel discussing insurance and risk management.

July 14-18: National Cattlemen’s Beef Association Summer Meeting in Denver.

July 22-24: Missouri Agribusiness Industries Council (MO-Ag) Summer Meeting in Lake of the Ozarks, Mo.

July 28-31: Texas Motor Transportation Association Annual Conference in Bastrop, Texas – Jeff Boan, Sales Manager – Southeast Region, and John Cline, Co-owner.

Aug. 20-22: Great American Truck Show in Dallas.

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The Faces of CWA

Meet Jeff Howard
Producer

As a producer at Cline Wood Agency, Jeff Howard, manages business relationships with existing clients while working to inform new clients about the agency’s products and services. 

“I believe customer service is the difference at Cline Wood,” Jeff says. “Our clients rely on us to provide the best possible insurance programs and excellent customer service to support those programs.”

With nearly 21 years at the agency, Jeff has witnessed a great deal of change, and he says those changes continue today. “Our agribusiness division has expanded beyond insuring livestock auctions to offering insurance programs for feedlots, grain, feed, chemical and fertilizer operations, and cooperatives in several states,” he says. “This diversification benefits the agency and our clients. We continue to specialize in our core business of livestock auctions and feedlots with any eye toward the future of agribusiness.”

Working at Cline Wood has been a great experience, Jeff adds. “Each member of our organization plays a key role in our success,” he says. “That success has been built through great customer relationships and by providing service that exceeds our customers' expectations.”

In his spare time, Jeff enjoys spending time with his son, who will soon be 16. He is looking forward to the numerous outside activities springtime brings. 

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News You Can Use

Know Your Insurance Companies’
Financial Condition
by Tom Dickmeyer, CEO

It’s not at all unusual for an insurance company to ask to see your financials before they agree to become your insurer. They want to be sure you are able to pay your premiums and keep your operation running smoothly and safely. Increasingly, especially with the current economic and financial turmoil, it is becoming important for YOU to review THEIR financial condition before agreeing to pay them to be your insurer.

It has always been important to insure with a financially solid company that can remain in business and pay your claims. A.M. Best, Standard & Poor’s and Moody’s are the three standard rating agencies that we have historically referred to for insurance company financial information. Each of these companies has a system for rating the insurers and symbols for each level of financial strength. One of the first indications that an insurance company is having financial issues is when one or more of these rating agencies issues a downgrade or places a company under review with negative implications.

Insurance companies count on underwriting profit and investment income to make their money. The most recent reports show the industry overall is suffering significant underwriting losses at the same time investment income is way down. As a result, there is a substantial and growing list of insurers and reinsurers that have been placed under watch and/or downgraded.

If an insurance company becomes insolvent, there are many extra steps for the customer and the agent to take. Timely action and follow-up are critical. If the company is an admitted market, chances are the states in which it is admitted to do business will each have a guarantee fund that will step in and pay losses. Each state administers these funds differently, however, and the limit per loss may be significantly less than the limit your policy provided.

In summary, it’s imperative to know your insurance companies' financial strength and to stay up-to-date on any changes to their ratings. The current economic situation is testing insurance companies’ financial strength. If your insurance company slips below B++, we will recommend that you consider changing to a policy with a stronger company. Throughout these challenging times, Cline Wood Agency is committed to keeping you informed on this critical issue.

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Risk Management Spotlight

Protect Your Business from ERISA Lawsuits

A secretary suffers a cerebral hemorrhage and subsequently requires skilled nursing care. In the course of her care, her employer changed its group health policy to a different plan, and the secretary enrolled in the new plan based on the mistaken representation that she would receive the same level of nursing care coverage. When the new plan stopped paying for the nursing services, the secretary filed suit, alleging that the employer breached its fiduciary duties under the Employment Retirement Income Security Act of 1974 (ERISA) by making misleading representations about the extent of coverage to which she was entitled. The company paid defense costs of $350,000 plus a $300,000 settlement.

There are many more real-life stories like this, and similar lawsuits can happen to your company in the blink of an eye. You can protect your company from the financial damages of this type of suit with Fiduciary Liability Insurance. This type of insurance is designed to protect past, present and future directors, officers, employees, trustees and others who serve as fiduciaries to a company’s employee benefit programs. Coverage also protects the entity and the sponsored plans. (Note: A fiduciary’s primary responsibility is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.)

ERISA sets far-reaching guidelines for most voluntarily established employee benefit plans in private industry to provide protection for individuals in these plans. These guidelines continue to be amended as the retirement and health care needs of employees and their families change.

Fiduciaries are required to act prudently, and ERISA guidelines are unequivocal with respect to violations. Section 409(a) of the act imposes personal liability on a fiduciary for breach of responsibilities, obligations and duties imposed under the act.

In addition to establishing fiduciary responsibilities for the people who manage plan assets, ERISA also creates a process for grievances, and allows participants to sue for breaches of fiduciary duty or other incidences of negligence or mismanagement. Allegations have included conflict of interest in investment of plan assets, imprudent investment decisions, inappropriate loans using plan assets, improperly advising plan participants, mishandling of funds, inaccurate year-end reporting and delinquent employer contributions.

Related links:

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Transportation

The Safety Zone
by David DeBolt, Vice President – Risk Services

As predicted in my article in the winter newsletter, the adversaries of the trucking industry filed notice in the courts of their pending litigation against the final Federal Motor Carrier Safety Administration’s (FMCSA) Hours of Service rule.

Public Citizen, the Teamsters Union and other “concerned” groups have continued their alliance in opposing finalizing the existing rule. As of this writing, they have not actually filed their reasons for opposition, but I’m sure they remain the issues of the 11-hour rule and the 34-hour restart.

As you can see our adversaries remain committed to reducing trucking’s productive time when all the statistical data indicates that truck-related fatal accidents continue a downward trend under the current rule. Stay tuned for the continuing saga.

On another note, I hope that each of you closely read the March issue of the Cline Wood Agency Special Report. Tom Dickmeyer, Cline Wood’s  CEO, detailed a very real and pending problem for everybody in trucking — the Employee Free Choice Act, commonly referred to as “Card Check.”

As I am writing this, I am with a group of my safety peers, and the foremost topic of conversation within this group is this pending legislation. Most of their companies have had or are opening communication with their employees regarding this act and how it impacts not only the company, but the employees. Their focus is on providing detailed information on all facets of this act so that all concerned can make an informed decision if or when the time comes. 

The consensus of this group is that small- to medium-sized companies are the most vulnerable, and their employees are the most fertile group for solicitation under this act. It’s significant that a substantial group of safety professionals believe this act is a huge threat to our industry. Please read Tom’s article; it lays out the act in detail.

Related Industry News

Road Check Is Coming

Road Check is coming again this year, June 2-4.

Click here for more information

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Summertime, and the Driving Isn’t So Easy
by Cheryl Fennesy, Vice President – Transportation

’Tis the season to be a safe driver. Although most people would name the winter months as the most difficult for driving, the time from Memorial Day to Labor Day has been dubbed the 101 deadliest days on the road for all drivers.

More families are on the road for summer vacations, and especially in this economic downturn, more people are expected to go on driving vacations. Whether they’re on a “stay-cation” visiting local sites or heading across state lines, it’s likely we will see even more drivers on the road this summer.

While your good driving skills are important any time of the year, it’s worth a little extra precaution this summer to keep yourself and others safe on the road. Most drivers involved in accidents are “good drivers”; only 15 percent were in previous accidents, and nearly 59 percent had no previous traffic violations, according to the National Highway Traffic Safety Administration. Being a good driver, however, doesn’t preclude you from getting in an accident.

Here are some safety reminders:

• Make sure you leave enough space between you and the car in front of you. In an automobile that means one car length for every 10 mph of speed. In a truck or bus, it increases to two car lengths for every 10 mph of speed.
• Be aware of your “no-zone” — the danger areas around trucks where crashes are more likely to occur. One-third of all crashes between large trucks and cars take place in the no-zone.
• Watch out for highway construction. Especially with the president’s economic stimulus package, we can expect to see more of those orange barrels popping up on highways. Take your time maneuvering through work zones.
• Avoid aggressive drivers. You see them cutting in and out of traffic, speeding to get in front of your truck. The best thing to do is keep your distance and maintain a safe speed, regardless of how they may provoke you.
• Keep your vehicle well-maintained. Inspect it before each trip, and check your brakes regularly.
• Get plenty of rest, eat well and stay well-hydrated during your drive. You are the most important piece of machinery in your truck.
• Always wear your seatbelt. This is the single most effective thing all drivers can do to save lives and reduce injuries.

Related Industry News

Commercial Vehicle Safety Alliance Reveals Results of Operation Safe Driver

Members of the Commercial Vehicle Safety Alliance (CVSA), in partnership with the Federal Motor Carrier Safety Administration (FMCSA), are driving down the number of deaths on highways resulting from poor driving behaviors of car, truck, bus drivers through its Operation Safe Driver campaign.

Click here for more information

Get Travel Documents in Order Soon,
Customs and Border Protection Advises

The Department of Homeland Security’s U.S. Customs and Border Protection reminds U.S. and Canadian citizens that travelers will see a change in travel documents required at the land border in 2009.

Click here for more information

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CEO Reports on TCA Convention

Tom Dickmeyer, Cline Wood Agency CEO, participated in the Truckload Carriers Association (TCA) annual convention held recently at the Gaylord Palms in Orlando. Tom is a member of the TCA board of directors, the Communications & Image Committee and the Industry Supplier Relations Committee. Click here to see Tom’s report.

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Agribusiness

Keep Your Hay from Going up in Smoke
by Gary Coady, Vice President – Agribusiness

Many farmers store hay on the premises either to feed livestock or for resale. Whether storing hay in the open or in a building keep these tips in mind to reduce the chances of a fire:

• Do not take delivery of any hay that has not had time to dry properly in the field. Hay of any kind should not be stacked for at least 14 days after cutting and baling.
• If you are dealing with large quantities of hay, use a temperature probe when the hay is delivered and again in 7-10 days to check for hot spots.
• Store or stack hay as far from possible ignition sources as possible, for example away from highways, streets, power sources and other work areas.
• If hay is stored in a building, do not store vehicles or other equipment in the same vicinity.
• Do not stack more than 50 percent of your hay or $100,000 in value in any one stack. Many insurance carriers impose maximum coverage of no more than $100,000 for one stack of hay. Most carriers define a “stack” as being separated by 100 feet. Regardless of the insurance requirements it is a good risk management practice.
• If you have hay coverage on your insurance policy and it is for a specified amount of insurance, keep apprised of the quantity you have on hand and price fluctuations in your area so that you are not storing a higher value than your insurance will cover.

If you have questions about hay coverage, contact your Cline Wood account manager.

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Packers & Stockyards Require Financial Statement

The Packers & Stockyards Administration has a new form, and is now requiring all market agency and cattle dealers to complete the financial statement on their form. In the past you could attach your own financial statement to the official form without having to fill it out. Now, if you don’t complete the official form, P&S sends out a Notice of Default. If you receive a Notice of Default, you have 30 days to complete the form and re-send it.

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Insurance to Value: Make Sure You Have Adequate Coverage for Your Buildings
by Wes Gamble, Underwriter – QBE Agri Insurance

Making sure that you have adequate limits of insurance, particularly at the time of a loss is critical to ensure you do not become a co-insurer in repairing a damaged building and its permanently attached machinery/equipment.

Insurance to Value (ITV) is a term commonly used when talking about property value. There are several ways to value one’s property, all of which serve a purpose, but which one is the best?

Market value is what you paid for the property or what you might be able to sell it for based on current market conditions. This has little impact on the insurance policy, as at the time of loss the insurer is not going to buy a new piece of property to replace the one damaged.

Construction cost is what will drive the insurance payment, as this establishes the cost to rebuild or repair a damaged building. There are two types of construction cost:

• New construction cost is the price a builder would charge to build a new building for you. This cost can vary greatly. It is highly negotiable based on what you are willing to settle for in terms of quality and extras, as well as how soon you need the work completed and whether the contractor is offering discounts.
• Reconstruction cost is what a contractor would charge to rebuild a structure after a loss. This cost takes into consideration similar kinds of materials and amenities, as well as the fact that you may be under time constraints to get your building operational. Your negotiating position is lessened considerably in this situation, and the cost will likely be higher than that of new construction. 

Reconstruction cost is normally the value your insurance company encounters when attempting to settle your loss and is the value that is weighed against your insured value (limit on your policy) when determining if you have adequately insured your building (ITV).

Thus, ITV should closely represent the cost to rebuild the specific property that is damaged and not just build or purchase a similar building. Your insurance agent can help you establish adequate ITV using various tools and experience with reconstruction costs in your area. Contact your Cline Wood account representative for information.

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