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A Subsidiary of Risk Placement Services, Inc. Serving the Transportation Industry Since 1946 Winter 2014 • THE BIG “I” VIRGINIA



BIG I Official Publication of the Independent Insurance Agents of Virginia



Nettie Ardler, CPIW, DAE, AIAM Insurance Account Executive Robert N. Bradshaw, Jr., MAM President & CEO cell (804) 929-4134 Teri Chester Executive Secretary/ Receptionist & Membership Coordinator Natallia Chyhryna Accounting Assistant Sherry Grubbs, AISM Accounting Manager Joe Hudgins, CPCU Technical Consultant cell (804) 929-4138 Bonnie Joyce Insurance Administrative Assistant Melanie Kjar Communications/Website Director Linda Loving, CIC, AISM, AIAO IIAV Chief Operating Officer & VFSC Executive Vice President cell (804) 929-4133 Danny Mitchell Vice President Business Development cell (804) 929-4135 Susan E. C. Perkins Membership/Education Coordinator

Kristina Preisner IIAV Director of Education & VAIA Executive Director Erin Taylor Insurance Account Executive Marie Toney Sales Associate cell (804) 929-4136 James West Director of Finance


THE BIG “I” VIRGINIA • Winter 2014

IIAV is an organization devoted to promoting, enhancing, serving and assisting independent insurance agents.

The Big I Virginia is a publication of the Independent Insurance Agents of Virginia 8600 Mayland Drive, Richmond, VA 23294 Phone: 804.747.9300 / Toll-free: 800.288.IIAV (4428) Fax: 804.747.6557 E-mail: / Website:

Inside this issue



Message from the Chairman of the Board - Robert Short


Message from the State National Director - James P. Bradner


Message from the President and CEO - Bob Bradshaw


Embracing Usage-Based Insurance: The Time is Now


Reduce Agency E&O Exposures for Mobile Devices


Enhance Agency Loss Control with Technology and Disciplined Workflows


2013 IIAV Young Agents Conference


Agency Strategies to Successfully Manage Change


Agency Website E&O Exposures: Don’t Get Caught in the Web


Technology Self-Assessment


Employee Handbooks: Who Needs Them?


Becoming a Social Business: A Model for Success


Why Free-Form Text Fields On Your Website Constitute an E&O Risk


The Five Biggest Sales Mistakes Insurance Agents Make

IIAV extends our appreciation to the following sponsors of this publication: Anderson and Murison


JMWilson 19

Atlantic Specialty Lines


Jackson Sumner & Associates

Atlas General Services


Johnson & Johnson

Brethren Mutual Insurance Company


Millers Mutual Group

Builders Mutual Insurance


Penn National Insurance


Preferred Property Program


Burns & Wilcox


2 24, 25 7

Eastern Insurance Holdings


RPS Rollins


FCCI Insurance Group



GUARD Insurance Group


Southern Insurance Company of VA


Harford Mutual


TAPCO Underwriters


Harleysville Insurance


The Iroquois Group


ISU Agency Network


Utica National


For information on advertising please contact: Jim Aitkins, Blue Water Publishers, LLC / 22727 161st Ave SE, Monroe, WA 98272 phone: 360.805.6474 / fax: 360.805.6475 /

The Big I Virginia is a publication of the Independent Insurance Agents of Virginia and is published quarterly by Blue Water Publishers, LLC. IIAV and Blue Water Publishers, LLC do not necessarily endorse any of the companies advertising in the publication or the views of its writers.

Strong Agencies Made Stronger

For 35 years Iroquois has helped make strong, independent agencies even stronger and more independent. And it shows.

LEADERSHIP Iroquois recognizes some of its members who have recently played key leadership positions within the industry: John W. Atkins, III

Edward C. Kellam, Jr.

2012 Best Practices Agencies

James P. Bradner

Douglas B. Megill

Towne Insurance Agency, Inc. Chesapeake, VA

Barry K. Carper

Crystal Miller-Johnson

V. Richard Divers, Jr.

J. Vince Mullins

Dawn Dotson

Jordan Reynolds

Michael F. Funkhouser

Robert T. Short

Frances P. Garrett

Dennis C. Winfree

Tyler W. Hancock

Benjamin G. Winters

President, VFSC Board of Directors Lewis Insurance Associates State National Director, IIAV Towne Insurance Agency, Inc.

Short Insurance Associates, Ltd Charlottesville, VA

District 2 Director, IIAV The Ware Co.

District 5 Director, IIAV McLean Insurance Agency, Inc.

President, PIA of VA & DC Insurance Center of Winchester

Second Vice Chairman, IIAV Associated Insurance Systems Services, Inc.

VFSC Board of Directors Savage & McPherson Insurance

Board Member, PIA of VA & DC Huffman Insurance Agency, Inc.

VAIA Board of Directors Robins Insurance Agency, Inc.

Outstanding Agent, PIA of VA & DC SWVA Professional Insurance Agency, Inc.

Vice President, VFSC Haun Magruder Inc.

Chairman, IIAV Short Insurance Associates, Ltd

Immediate Past President, PIA of VA & DC Chas. Lunsford Sons & Associates VFSC Board of Directors Ford & Thomas Insurance Agency, Inc.

Treasurer, IIAV & VAIA Board of Directors Wood Insurance Agency District 3 Director, IIAV Winters Oliver Insurance Agency

Independent agents with premium from $1 million to $100 million join The Iroquois Group® for market optimization and strategies to increase their revenue, profits and agency value—without giving up their independence.

Shannon H. Herring

Young Agent Liaison Hubbard Insurance Agency, Inc.




To learn more about how Iroquois could further strengthen your agency, contact Matt Ward at 804-320-6984 or and visit our website at

Winter 2014 • THE BIG “I” VIRGINIA


Chairman of the Board Robert Short

CAP and Social Networking


AP is an industry initiative designed to address the loss of personal lines market share to the captive agency companies and the direct writers. To achieve this mission the strategy focuses largely on the development and deployment of two major entities: a new Consumer Portal that allows insurance shoppers to compare rate quotes from multiple independent carriers and choose a local independent agent to serve them; and a new Industry Website that provides independent agencies and carriers with all of the tools, training and insight required to attract and capture today’s digital consumer. Based on a wealth of both industry experience and Internet expertise, the Consumer Portal is designed to address the insurance customer’s collective desire for knowledge, choice and comprehensive service. While other online options may also offer consumer research and rate comparisons, none present the unique combination of benefits found here. Aside from the chance to evaluate dozens of different insurance carriers, the opportunity to select an independent agent who will advocate on their behalf before any of those companies is an advantage most consumers will find almost enjoyable. At the same time, the Industry Website not only equips participating agencies and carriers with the technology to manage prospect relationships generated through the Portal, but also arms them with an unparalleled program of digital marketing courses, systems and services that help build their brands and advance their online presence. From introductory selfinstruction to advanced professional services, each element is integrated with the next to develop agency marketing strategies that dominate local online markets while reinforcing national brand values. Project CAP is providing agencies with the tools they need today to attract new prospects, cross-sell existing clients, and increase retention. Sign up today to stay abreast of the fast-moving Project CAP development. 6

THE BIG “I” VIRGINIA • Winter 2014

Welcome to Project CAP’s new blog. While Project CAP may be a new company with which you may not be familiar, there is a good chance that you may have heard a bit about our initiative, which some know by our working name ‘The Consumer Agent Portal’. Have a Website, No Idea Where to Start or Finish? Essentially, every agency has a website but very few agent producers realize it takes regular maintenance to make their site viable to search engines used by prospective customers. Project CAP conducted a poll during a recent “Ask the Experts” webinar that supports what we are hearing in the marketplace. While almost every agency has a website, nearly 80% of poll respondents admitted they haven’t updated their site in at least six months, and many were not updated in over two years. “It’s nobody’s fault that this is the case. Not that long ago, you could introduce yourself to prospects simply by handing them a business card, which never needed updating. But the simple truth is, people don’t use business cards; they use URLs or they plug “insurance in Anytown, USA” into Google to see what pops up.”(1) “Traditional marketing methods just don’t work like they used to. Just ‘being in the ballpark’ isn’t close enough for Google and other search engines. Their goal is to provide search results that are as accurate and as relevant as possible every single time. The words on your website matter. Blogging helps you keep your site fresh. Links to your site from online directories and reviews on those directories keep people engaged and help convert them to customers. All of these things help you rank higher on Google.”(2) Social Networks Work To explain the concept of social media and social networking, it’s a lot like going to the local Civic Club. Back in the day, you could join local civic groups, meet

Winter 2014 • THE BIG “I” VIRGINIA


new friends and build relationships over time. Will you make money because of your involvement in Civic Clubs? Yes. The same principle applies to building a social network on Facebook or LinkedIn. It’s simply about acknowledging that the customer has moved online and you must follow just to keep up. Project CAP social media programs are working, and our case studies show that it’s about swapping traditional networking methods for electronic meet and greets. The Youth Movement Who is going to take over when that day comes? It might be the twenty-something kid you recently hired or are about to hire. Agency veterans are the first to admit they don’t understand the Internet. Where does a “tweet” end up? How can you link your blog to your Facebook profile? What is a SERP and why should you care? It’s scary and it’s okay to be scared! In order to proceed in the digital age, you just might have to turn over the reins to someone who grew up with the technology.


THE BIG “I” VIRGINIA • Winter 2014

Younger producers speak the language of younger clients. In a few years when your young recruits are in their thirties and networking with peers who have become decision makers As we approach uncharted territory it becomes even more imperative that we address customer service and the expectations of the buying customer. In all the rush to Facebook, LinkedIn, Twitter, and whatever is new today, we may find that we have lost sight of the target. Where is the customer and are they happily being served? Or have they found the subject boring and moved to another option of providing coverage and services. There is a need for the proper mix of new options and the old-time desire to provide the long-term customer services that so many times today are being eroded. Robert T. Short, CPCU, AIS IIAV Chairman of the Board – 2013-2014

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State National Director James P. Bradner


s there value in being a member of our National Association? What have we gotten, other than a new logo, in the last 20 years?   Since we pay dues to be a member of our Association, we need to believe we receive a value equal to or greater than the cost. We are all pretty familiar with our Virginia Association (IIAV), and thanks to Danny Mitchell, we know what the benefits are.  As we know, our industry is very State centric, controlled by a State bureaucracy, headed by an appointed commissioner.  Our legislative efforts, led by Bob Bradshaw, help keep our state insurance regulations reasonable.  We lobby both sides of the aisle, and are considered a “force” by most legislators.  Your contributions to our PAC (VAPAC) are used very effectively to have access to the right legislators. So, what can a National Association do for us?  Plenty!  All members of IIAV are members of IIABA, and a good portion of the dues we pay to our State association goes directly to membership dues in the National Association. The mission of Independent Insurance Agents and Brokers of America is to “… provide a sustainable competitive advantage to our members…”.  The Board of Directors and the Executive Committee (the Directors that are involved in the daily operation of the Association) are undertaking a new 5 year


THE BIG “I” VIRGINIA • Winter 2014

plan with an eye toward some major changes geared toward the mission. The Plan will look at all of the programs of IIABA, and if they don’t contribute to the mission, they will be scuttled.  I have to applaud our Executive Committee for this undertaking.  These members are volunteers and are committing a huge amount of time to this project. Back to the logo.  Trusted Choice is being embraced more and more by our States.  It’s not a dislike of the old Independent Agent (Post Office style) logo, but a feeling that we need to have a new, fresh, message-backed logo…and it seems to be getting traction. The National PAC (INSURPAC ) is on schedule to top $ 1,000,000 and (drum roll, please ) Virginia has made its goal for the first time!   Federal legislative issues are Flood, NARAB II (licensing), and ironically, keeping the Feds out of our business! Our National also has a lot of other specific benefits, but with the space constraints of this article, I will try to spotlight these benefits in future articles. I hope you can tell by the tone of this article that I’m pleased with the leadership of our Association and the direction they are taking us.  They seem to be fully committed to …” providing a sustainable competitive advantage…” for all of us members. Best Regards and Happy Holidays from your State Director, Jim Bradner

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The ISU Agency Network Winter 2014 • THE BIG “I” VIRGINIA


President and CEO Bob Bradshaw

Technology is great but…..


once heard someone say that “you’re either on the cutting edge or the cutting floor”. The trick is, of course, to know when to stop. It’s always interesting to read what percentage of people have to have the very latest in technology. Newest TV, newest computer, newest laptop, newest phone….and next it will be the newest wrist computer/phone/ TV. But all the technology in the world won’t compensate for poor customer service. You might have the greatest website in the world, the greatest FaceBook page, etc. but if the customer calls your office and is brushed off, they’re not going to return. Regardless of where you position yourself in this industry, you have to be a master of customer service – principal – producer – CSR – receptionist. It is sometimes surprising how much poor customer service people will indeed tolerate. I could mention a couple of fast food restaurants that certainly excel in poor customer service but I suspect that our legal counsel – Doug Palais – would not be too happy about this article. Having said that, technology has allowed the consumer to broadcast poor customer service, not only in writing but also with their smart phone video camera. A whole website has been created – Yelp – with the bottom line basis being customer reviews and experiences with the purchase of a product or a customer experience in a store. People simply want to know what others think. So when you think about customers in your agency, you have to look at the entire customer “experience”.


THE BIG “I” VIRGINIA • Winter 2014

There’s a law firm in town that I believe went overboard with the customer experience. When you visit their office the only word that comes to mind is “opulent”! And then it’s “good lord, this is where the hourly rate goes.” While you want to welcome customers to your office, you don’t want the first thing that comes to their mind to be “wow, how much in commissions do they make on me?” Neither however do you want them to think, “man, I’ve just entered the dark ages.” Customers should have the welcome experience while also thinking that you are on the cutting edge of experience and technology. It’s probably not a good idea to brag about your flip phone and how long ago you bought it….”and it still works!” Like other industries, ours is “on call” 24 hours in a day. Customers want to know how they can reach you in an emergency because…..isn’t that entirely what you’re selling them? That you will be with them in an emergency? Like many other industries, we have a lot to think about in terms of cutting edge technology – not only in the management of our offices but in the advances of the world around us. This issue of The Virginia Big I is designed to provide you with some thought-provoking issues related to technology. Embrace technology and change, otherwise….you’ll end up on the cutting floor. Robert N. Bradshaw, Jr., MAM President & CEO

We look for the best independent agents and build relationships that last the duration. We are committed to the independent agency system as the only means to deliver our products. Because of that, we work hand-in-hand to help our agencies grow profitably.

Our agents set us apart. Business • Surety • Auto • Home Visit our website to find out more. Winter 2014 • THE BIG “I” VIRGINIA



Usage-Based Insurance:

w o N s i The Time

“With Progressive’s patented data collection program—called Snapshot—customers plug a small device into the on-board diagnostic (OBD) port in their car. The device collects and transmits data to Progressive on the time of day the car is driven, hard brakes and total mileage. Progressive then factors the data into the customer’s rate calculation and, of those who save, the average savings is $150. Snapshot is available in 44 states and the District of Columbia.”

By Bill Everett, Senior Product Development Manager Progressive Insurance ‘Pay as you drive.’ ‘ Usage-based insurance.’ ‘ Snapshot®.’ ‘Telematics.’ All of these are names for the innovative insurance programs that let drivers earn personalized rates when they choose to share information about how their car is driven. Historically, auto insurers set prices by grouping individuals into actuarial classes. These classes are based on observable and verifiable characteristics like age, vehicle year/make/model, ZIP code, claims record, etc. As good as the base science is, it lacks direct relationship to individual driving behavior. It’s only in recent years that the concept of pricing auto insurance based on actual driving behavior has become both technologically and economically feasible. Previously driving behavior was difficult or impossible to ascertain in a traditional insurance rating plan. Usage-based insurance (UBI) considers multiple dimensions of driving behavior. This driving data can be integrated with traditional auto insurance rating factors to provide a comprehensive individual profile for predicting the risk of accidents. For example, Progressive’s Snapshot device collects and transmits data to Progressive on the time of day the car is driven, hard 14

THE BIG “I” VIRGINIA • Winter 2014

brakes and total mileage. Progressive then factors the data into the customer’s rate calculation. Progressive Insurance® has emerged as the leader in UBI. Since the late 1990’s, the company has introduced a series of UBI models—refining technologies and consumer approaches while collecting the critical mass of driving data needed. For more than 15 years now, Progressive has been collecting data on customer driving behavior and analyzing how that data relates to the likelihood an individual will have a claim. With over eight billion miles of UBI data collected, 1.6 million customers and over $1.5 billion in written premium related to its Snapshot® product, Progressive has found that driving behavior is by far the most predictive rating variable. Other insights include: Driving behavior is the most predictive risk factor— more than twice as predictive of claims costs as any other factor. Drivers with the highest-risk driving behavior have loss costs that are approximately 2.5 times higher than drivers with the lowest-risk behavior. The majority of drivers with lower-risk driving behavior are subsidizing a smaller number of drivers with higher-risk behavior. (continued on page 16)


Capitalizing on Market Disruption: UBI Tipping Point Currently, there are 10 carriers in Virginia with some kind of UBI program in place, more than most other states. This shows that Virginia drivers have an appetite for UBI and options. With many carriers in the state offering a UBI product, it may be close to the tipping point when consumers start looking for UBI and those not offering it could be out-segmented. A 2013 LexisNexis Insurance Telematics Survey, conducted by independent research firm Lynx Research Consulting, measured policyholder interest in allowing insurance companies to use data collected from telematics devices in their vehicles to help determine rates. The webbased survey polled 2,072 U.S. residents representing a sample of insured drivers, ages 21 to 74. According to the study, one in every three consumers is aware of UBI, or telematics, tripling its awareness in the last three years. The study found discounts are the number one driver for UBI enrollment – half of consumers are likely to sign up for a 10% discount while 36% would actually change carriers for a 10% discount. The study also found 61% are more likely to accept telematics if insurers offer a trial period for 3 months, while 72% percent of drivers are more likely to accept if an insurer offers an automatic discount of 10% for the first 6 months. UBI is gaining more popularity in the mainstream media as well: • ‘Sanford Bernstein analyst Joshua Stirling estimates the current market of usage-based insurance at $1 billion in annual premiums, mostly generated by Progressive.’ – Wall Street Journal •

‘Gizmos that track driving habits are changing the face of car insurance.’ – The Economist

‘Welcome to pay-as-you-drive car insurance. Available from several mainstream insurers in 44 states, it’s worth considering for anyone looking to rein in their household budget.’ –

What’s In It For Agents? Most importantly, by identifying interested drivers, you can help customers earn the rate they deserve from their safe driving habits. The customers that enroll in UBI are preferred customers you want in your agency. For example, Progressive has found that users of its Snapshot program are ideal customers:


Are 41% more likely to be preferred

Are 34% more likely to buy full coverage

THE BIG “I” VIRGINIA • Winter 2014

Are 33% more likely to have multiple cars

Are 25% more likely to own a home

UBI is a powerful tool for customer satisfaction and retention. Progressive’s customer retention numbers are higher for discount-earning Snapshot customers—over a 9% improvement. That means agents earn more by having a unique competitive offering, more sales and referrals and better retention.


U.S. Department of Transportation Insurance Research Council 3 Harris Interactive 2

Progressive’s Snapshot data supports the popular notion that there’s a better way to calculate an individual’s rate. The consumer was right all along— most drivers’ rates are higher than the risk they present, and they’re subsidizing higher risk behavior. What is surprising, perhaps, is the degree to which that notion is correct. Insurers and agents can now offer customers a far more personalized price—and lower-risk, preferred drivers, will benefit the most. Bill Everett is a senior product development manager for Progressive Insurance. He is currently the supply chain manager for the telematics device being used in the company’s usage-based insurance initiatives. Since joining Progressive in 1986, Bill has held various leadership positions in pricing, marketing, research and development, customer relationship management, and brand. Bill earned his Bachelor of Science degree in computational mathematics and statistics from Kent State University in Kent, Ohio in 1985, and his CPCU designation in 1991. If he’s not in the office, he’s likely on the trails logging miles of his own as a long-distance runner.

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Winter 2014 • THE BIG “I” VIRGINIA


Reduce Agency E&O Exposures for Mobile Devices

By Chris Burand


echnology provides solutions for better and faster service. It also makes communicating with clients easier. But sometimes, technology makes communicating with customers too easy—and too easy to forget about the need to document communication. This can create more errors & omissions exposures and leave agencies more exposed when defending E&O claims. Communication through handheld devices, such as texts and emails, are the biggest culprits. When producers use their devices to email or text clients, there is often no record in the agency management system. Most agencies fail to keep a record of other than what may or may not be on a producer’s device, and they are relying on a producer to put the information on the management system. If that does not occur, the CSR will not know what is happening with the account. The good news is that technology also provides great solutions. Agency staff must be educated and some hard decisions must be made for the solutions to be implemented successfully. Here are a few important points to consider:


THE BIG “I” VIRGINIA • Winter 2014

Some hardware devices can automatically integrate email from mobile devices to the agency’s systems. Integrating texts may or may not be possible. If not, prohibiting texts may be necessary, if they are not guaranteed to be saved in the agency management system. Someone must determine who owns the hardware. If the producer owns it, can the agency control it? This may mean the agency prohibits the use of personal handheld devices for business purposes and purchases business use-only handheld devices. In addition, producers are required to exhibit more selfdiscipline, and they understand they will face severe consequences if they don’t. The people involved need to understand the importance of privacy. Cell phones are more easily hacked than agency systems. Only non-private data should be transmitted by handheld devices— which may be a reason for choosing a particular handheld device and mandating uniformity in the handheld devices all producers use.

The agency must mandate that communication sent or received by mobile devices—including personal devices— possess the same disclaimers as if the communications were sent to or received by the agency directly. Agency staff should add a disclaimer to cell phone voicemails stating that no coverage can be changed or bound simply by leaving a voicemail. This is another reason for having completely separate business and personal cell phones. • Communication from mobile devices is easily tracked in discovery. However, the actual communication may not be easily discovered. This leaves the plaintiff’s attorney plenty of room to imply the nature of the discussion and to point out the holes in the agency’s documentation because it will be evident that a communication occurred, but a record does not exists of what was said or written. The plaintiff’s attorney may even go as far as proposing that producers use their own cell phones for all communications they do not want recorded. Minimizing these exposures requires discipline and some hard decisions. An owner of an agency needs to ask: Is it worth the battle to mandate a simple, free solution like a disclaimer—which is accepted by nearly all agencies as being necessary for their phone system and defense—even if it inconveniences their producers’ friends who call the business cell phone? Is the battle for mandating a business-only phone worth fighting? Or is it worth mandating that only emails can be sent because the agency’s hardware and software cannot integrate texts messages automatically? All of these solutions are reasonable. The costs will vary, depending on the agency’s hardware and software, and its willingness to accommodate different people’s demands. The key is to get ahead of this now before the volume of lost emails, texts and voicemails grows even more voluminous. There is no telling how much documentation the agency has already lost. How much more can your agency risk losing? Chris Burand is the founder and owner of Burand & Associates, LLC. In Pueblo, CO. Email:


“I go the distance on my bike— just like my 30-year journey with J.M. Wilson. I lead a great team of managers and underwriters that work hard to help our agents be successful.”

Sandi Fritz, CIC Vice President, Underwriting and Branches— and fixture on the bike trail Connect with Sandi on LinkedIn!

Managing General Agency Since 1920 Property/Casualty • Professional Liability • Surety Commercial Transportation • Personal Lines • Premium Finance


Winter 2014 • THE BIG “I” VIRGINIA


By Jeff Yates

Enhance Ag ency Loss Control with Technology and Disciplined Workflows


hile there is still a lot to do, the industry has made great technological advances in recent years. Agencies that stay current with these new technologies make significant progress in virtually all aspects of their operations. They are also extremely well positioned to manage their errors & omissions exposures. A Texas agency provides a good example: With six branches and a seventh office for franchise business, this agency eliminated several processor positions by implementing commercial lines download and realtime transactions and going paperless wherever possible. The agency currently downloads 5,500 commercial policies from eight carriers. It also implemented automatic invoicing for direct bill downloaded policies and turned off the agency policy paper for all downloaded policies. By taking these steps, the agency eliminated its processing backlog, meaning all of its information is current. This reduces the need for paper handling in the mailroom, and the agency was able to reduce its processing and accounting staff by seven. Taking the same steps in personal lines, where the agency downloads with 10 carriers, enabled it to go from three personal lines processors to one, and it estimates download accuracy at 98%. Innovative agencies such as this one are better able to manage their E&O exposures for several reasons. First, these agencies have eliminated backlog—a major cause of E&O losses—and are able to keep their agency management systems up-to-date. Perhaps most important, these innovations have freed up agency staffs so that they do not have to rush through their work just to keep their heads above water. They now have the time to do their work more carefully—without cutting corners. These employees also have the time to do annual policy reviews with their clients and suggest coverage enhancements where the current limits do not meet the agency’s recommendations. Not only do these annual policy reviews build client relationships and enhance retention, they catch potential E&O exposures and correct them. 20

THE BIG “I” VIRGINIA • Winter 2014

When we drill down deeper, there are additional things going on that help these agencies more effectively manage E&O exposures. They have a technology/process-oriented culture, where they are constantly looking for process improvements to increase their sales power, provide better service and enhance their efficiency. These agencies schedule agenda time at management meetings to discuss how new technologies and workflows can improve the business. These agencies think in advance about the exposures the agency faces, in the same way they perform risk management analyses for their clients. Staff teams evaluate exposures that might arise from an E&O, a breach of security, the theft of their clients’ confidential information or a disaster situation. But they do not stop there. These teams then develop written policies and documented workflows to manage the exposures as effectively as possible and take the time to train their employees in the new requirements. These agencies understand the critical importance of maintaining an accurate database. If a carrier has a good record of sending correct data, then the agency would periodically audit these downloads for accuracy. Where the agency is less comfortable with the accuracy of the data, the agency would check each download. It is also important for agency employees to fully understand any carrier-specific idiosyncrasies in their downloads, and how the agency handles them. The industry is currently working hard to improve the quality of commercial line downloads because of the enormous efficiencies these downloads can bring to agencies. As an additional E&O loss control tool, agencies can instantly check or supplement specific policy information in their database by using real-time Electronic Policy View through their agency management system to view the actual Declarations Page from the company. Jeff Yates ( ) is executive director of IIABA’s Agents Council for Technology. This article reflects the views of the author and should not be construed as an official statement by ACT.

2013 IIAV Young Agents’ Conference Thank you to everyone who attended the 2013 IIAV Young Agents’ Conference on October 3 & 4 in Virginia Beach, Virginia. We look forward to seeing you again in Virginia Beach next year on October 9 & 10. A special thank you to all our sponsors and exhibitors. Without you this event would not be possible.

If you would like more information on IIAV’s Young Agents’ Program, please contact Kristina Preisner,


THE BIG “I” VIRGINIA • Winter 2014

ost there when it matters most there when it matters


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Winter 2014 • THE BIG “I” VIRGINIA


to s e i g te a r e t g S a y n c a Agenessfully M Succ

By Jeff Yates


ew would dispute that we are living in a time of rapid and profound changes. Consumer expectations are changing fast, often shaped by their experiences in other industries. More and more consumers are “connected” and will communicate with their business partners using any device that is handy to them at the time. These consumers are also empowered by social media and will use these tools to research their potential business partners, as well as to spread the word when they receive bad service. New technologies are enabling businesses to enhance the consumer experiences that they provide and to differentiate themselves from their competitors. Managing through all of this change has become a major challenge even for the most tech savvy agencies, as well as for our carriers and vendors. What are the key trends that will affect my business materially? Where will my major competitors be in five years? Which new technologies should I implement and when? Agencies can position themselves to prosper in this rapidly changing environment by creating a culture that embraces innovation and implementing a defined change management process. Below are several insights gleaned from ACT discussions to assist agencies in managing change successfully within their firms.

Management Sets the Tone Agency management plays a key role in creating a culture where innovation is prized as a core value of the business. These agency leaders look at new technologies and other innovations strategically, as tools that will give them a competitive advantage. They encourage ideas from every source – most especially from their employees and clients – as to how the agency can do things better. Clients are surveyed regularly and some agencies have even set up client advisory councils to test ideas and get fresh thinking. These agency leaders are involved in their associations and organizations like ACT, AUGIE (ACORD User Groups Information Exchange) and their user groups, as well as with their carriers, to keep up with the latest innovations available to them and the benefits other agencies are deriving from these implementations. The ACT website contains a number of resources to assist agencies in considering the key trends that are likely to affect them and how their fellow agencies are changing to position themselves for the future. (Examples include: 2012 Key Trends & Industry “Must Do” Issues (currently being updated); “Agency Perspectives on the Future” Video; How Consumers, Businesses & Agencies will Change; Attributes of Successful Independent Agencies of the Future.) (continued on page 28)


THE BIG “I” VIRGINIA • Winter 2014

Winter 2014 • THE BIG “I” VIRGINIA


Keeping up with Innovation in Other Industries Innovative agencies also are keeping up with the innovations taking place in other industries, because consumer and business expectations increasingly are being shaped by the experiences they have in these other industries. Agents can also learn from their business clients by asking them about their recent innovations and their resulting impact. Daniel Burrus, the author of Technotrends, notes that successful businesses of the future will not only need to be “agile” but “anticipatory.” Agility is important in reacting to competition. But being anticipatory enables you to become the competition because you are thinking through the “hard” trends that will affect you and you foresee where your consumers and your competitors will be in the future in light of these trends. (“Hard” trends are those that are certain and permanent.) The anticipatory firm begins to make the changes now to position itself to be where its consumers and competitors will be in the future. The other key for successful implementers of change is to create metrics, so that you can quantify whether the change has been a success or not.

Employee Involvement & Training are Key The agencies that are implementing change successfully involve their employees in the shaping of that change. Employees – representing all of the disciplines affected by the change – work together in teams to implement it. Employees are empowered to innovate based upon the firm’s principles and are rewarded for doing so. There is an understanding that many innovations will not work perfectly at the start and will need to be modified and enhanced. These employees are also encouraged to work through these issues and to pursue problems with their carriers and vendors until they are fixed. The innovative agency makes sure it has the right employees in the correct spots. These agencies are looking for employees who are willing to embrace change and who know how to ask the right questions to get their jobs done correctly. These qualities have become the top factors these agencies look for in candidates – even more important than the individual’s insurance expertise. Some agencies also are striving to have a staff make up that reflects the multiple generations and ethnic groups their firm is serving, to encourage diverse thinking and more effective understanding of

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each of their client segments. These agencies are also more willing to delegate authority and responsibility to employees in areas where they have a special interest and skill (in social media, for example). In order to achieve a successful implementation, these agencies tell their employees the “why” for the change, how it fits with the agency’s vision (which the employees have bought into) and then thoroughly train them on how to implement the change effectively. Once the agency implements the new workflow or technology, the employees are expected to use it, so that there is consistency throughout the agency. Innovative agencies also provide their employees with training that helps them to become more effective employees in areas such as teamwork, leadership and management. “Slow Down in order to Speed Up” This expression, coined by Paul Fuller of Strategic Insurance Software, expresses so well the importance of the agency’s taking the time to make sure the change it is pursuing – whether a new technology, workflow, etc. – is the right solution. Employees should be given

uninterrupted time to confirm that their defined solution is the correct one. In addition, rather than just automating a traditional workflow that was devised for a paper world, these agencies rethink the workflow from the ground up in light of the new possibilities that have been enabled by technology. Willingness to Experiment Successful agency innovators are willing to experiment with new technologies and continue to “tweak” them based upon feedback from clients and others. Creating a mobile friendly website and mobile apps provide great examples. There is no question mobility and the “connected” consumer are both “hard” trends that will increasingly affect us. Steve Anderson reports in a recent TechTips that 43% of Google searches are local and 74% are performed via a mobile device. So, it makes good sense for agencies to position themselves for this inevitable change, fully realizing they are going to have to enhance these mobile tools over time based upon the features that consumers ask for and use. Another good example where agents are experimenting with new technology tools involves

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Internet marketing. Agencies continue to measure the effectiveness of the social media ads they run and modify the criteria until they hit upon a strategy that attracts the most correct leads, most cost effectively. The keys for these innovative agencies are: (1) to be willing to experiment; (2) to measure the effectiveness of each change they make; and (3) to refine the implementation as needed. Innovations Save Time & Money Successful innovations often cut the time it takes to accomplish particular processes. For example, Stu Durland, a New York independent agent, found that he was able to cut his agency’s turnaround time to receive signed client documents from an average of 23 days to 3-5 days by implementing an electronic signature tool. Think about all of the time and follow ups this one innovation is saving his agency! Similarly, Applied Systems has been able to greatly speed up its responsiveness to customers by creating faster communications vehicles for reporting issues and 7.5implementing x 4.625 an Agile development process, which brings jgs_umbrella_7.4x4.625v1 together multi-functional teams to work with customers to 2012 devise and implement solutions without delays.

There are numerous technologies available to agencies today that can enhance their competitive position. None of these specific implementations, however, is as important as positioning the agency to implement change successfully. The agency that embraces innovation as a basic value, keeps up with key trends and opportunities both within the industry and in other industries, empowers its employees to participate in the change process and implements a defined change management process – will position itself effectively for an environment that will continue to experience rapid and profound change. Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. Jeff can be reached at ACT’s website is www. This article reflects the views of the author and should not be construed as an official statement by ACT.

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Agency Website E&O Exposures

t h g u a C t e G t ’ n o D ? b e W in the Be aware of and mitigate E&O exposures from your website

By Sabrena Sally, CPCU


ver 40% of agencies insured through the IIABA-Swiss Re E&O program now have their own website, having grown from 19% in 2006. Having a good website, with robust functionality, has become a core tool for agencies with a modern marketing strategy. Agencies are moving to more complex websites to respond to consumers and clients who increasingly want to shop online and be able to handle basic service needs when convenient for them. Virtually all agency websites provide basic advertising for the agency, showing the agency name, logo, phone number, address and email link. Over the past eighteen months, however, applications for E&O show a clear trend toward agency websites expanding beyond standard advertising information, as might be expected from expanding consumer online behavior and the services being offered by competitors and other industries. Advertising Exposure Let’s first examine what errors and omissions exposures an agency can face from the more traditional type of website. Many of the exposures

on these sites are the same that exist in the ‘paper’ world. Advertising liability can arise out of the use or misuse of a trademark, or from the copyrighted material of others, and statements regarding the services available through the agency may be subject to regulatory requirements. At least one state, New York, makes this clear in Circular Letter No. 5 (2001), “Advertisements, Referrals and Solicitations on the Internet,” where it states that “Advertisements that appear on the Internet are subject to all applicable existing statutory and regulatory guidelines and restrictions applicable to advertisements in any other medium.” E&O Tip: The same level of care in creating ‘paper’ advertising is appropriate for the agency advertising contained on the website. If in doubt, a quick consultation with your qualified legal counsel is well worth the cost. Websites commonly provide a button allowing a site visitor to contact the agency via email. One could certainly expect questions about what services the agency provides, hours open for business or even driving directions. Keep in mind, however, that there is no way to control what a visitor might choose to include in the content of

Winter 2014 • THE BIG “I” VIRGINIA


their email. The visitor might decide to include confidential personal information (such as a name coupled with a social security, drivers license or credit card number) in the unprotected email, creating an exposure to breach of data privacy. E&O Tip: To help mitigate the liability exposure from this common website feature, posting an appropriate disclaimer is a best practice. A sample disclaimer is provided at the end of this article for agents to use as a starting point and to customize to their agency’s situation. Posting Website Content As a simplified case study, let’s view the stages a hypothetical agency might follow in expanding its website over time, and how these changes can affect the agency’s E&O exposure. After constructing a basic website, the next step an agency often takes is to add articles that will be of interest to site visitors. Articles of interest can range widely in subject matter and may be available for viewing only or also as a download. “What is an umbrella policy,” “How to implement an employee wellness plan,” and “Where to find information on OSHA requirements” are examples of topics seen on agency websites. Content can be general in nature or become more technical and

specific to certain types of exposures. The options are practically endless. Posting informative articles on the agency website can draw visitors, generate stickiness with existing customers, and lead people to contact the agency for additional information. In addition to these positive benefits, there are risks that accompany posting information. E&O Tip: If the content is original material created by the agency, practicing due diligence to ensure accuracy of the information is a key preventative measure. The more specific the information provided, the higher the risk of generating allegations against the agency for misrepresentation or providing inaccurate advice. There is one significant difference between content posted on a website and content published in more traditional forms. Posting content online makes the information available to anyone regardless of their physical location. This instantaneous world-wide availability raises the issue of jurisdiction. It is not yet clear how legal jurisdiction might be applied to content published on a website. Including an appropriate legal disclaimer as part of posted information is for now one’s most effective tool in mitigating the jurisdictional risk.

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E&O Tips: If the content is obtained from another source, the first step in risk management is to verify the expertise of the information’s source. This step helps minimize the exposure to allegations of misrepresentation or inaccurate advice. The information is also most likely copyrighted, creating exposure to allegations of copyright infringement. Obtaining written permission from the owner or licensor of the material prior to posting and giving appropriate credit of authorship can help mitigate the copyright exposure. If the content is obtained under a licensing agreement, explore what options may exist to protect the agency via contractual indemnification. As with information authored by the agency, it is recommended that appropriate legal disclaimers be clearly posted with information obtained from other sources. Website Referrals As agencies often receive requests from customers for referrals to other service vendors, it is a natural next step for the agency website to include links to these types of service vendors. Windshield repair services, CPAs for tax preparation, and disaster recovery solutions firms, are just a few examples of service vendor links seen on agency websites. Linking to vendors on the agency website can

create the same exposure to negligent referral that exists when the referral takes place verbally, through email or snail mail. Regardless of how a referral is provided, the best practice recommendation is to provide at least two referrals, leaving it to your customer to choose which vendor to use. If the agency site links directly to a vendor, there also may be exposure to allegations of trademark infringement or unfair use of cyber marks from the vendor. E&O Tips: The best practices to follow to mitigate allegations of negligent referral for vendor referrals, including linking, are to: 1. obtain written permission from the vendor or site to which the link leads 2. provide always more than one selection for each type of service 3. ensure there are appropriate disclaimers regarding the services being provided by these vendors. Interactive and Web-based Transactions Agencies are increasingly adding interactive website features to increase the effectiveness and efficiency of

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the agency. When interactive features are included on an agency website, more unique E&O exposures can quickly develop. The most rapidly growing exposure we have seen is the number of agency websites that are accepting application information. As part of the underwriting process on a recent renewal, we reviewed an agency website. The site opened to a very professionally designed home page. The site had clearly written text, eye-pleasing graphics, was wellorganized, and quick-loading. At the bottom of the first page, a link to the agency privacy statement was prominently posted. Following the various tabs, one could easily find informative articles which clearly showed authorship and contained appropriate disclaimer language. So far, so good. We then clicked on a button titled Personal Lines, on through the Auto Insurance button, to “Submit Application.” The Submit Application button led to a page where a full spectrum of personally identifiable information can be submitted, including: name, address, date of birth, social security number, drivers license number – basically all the information one needs to carry out identity theft. There was no indication of security being enabled by an ‘https’ displayed before the URL (evidence of creation of an SSL connection), and nothing contained within the web page itself referred to secure transmission of this data. An agency has the duty to protect personally identifiable information and a myriad of both state and federal laws apply. Violations of these laws carry significant financial penalties, not to mention the extreme damage that can be done to the agency’s reputation. One state, for example, specifically requires “encryption of all transmitted records and files containing personal information that will travel across public networks, and encryption of all data containing personal information transmitted wirelessly.” At the most recent count, forty-six states have some type of law or regulation addressing the protection of personal information. E&O Tips: Agencies that collect personally identifiable information (whether on their websites or not) should take the necessary steps to be knowledgeable about state and federal laws and regulations that protect such personal information and provide the level of data security required by them. A best practice is that the agency website create an SSL connection with the visitor’s browser before the visitor is asked to enter an id or password or any personal information, such as that included on insurance applications, so that this information cannot be read by unintended parties over the Internet. 34

THE BIG “I” VIRGINIA • Winter 2014

Many agencies are now expanding their online presence to include social media as a part of their advertising and customer interaction. ACT has an article and webinar on the E&O exposures arising from the use of social media which can be found at at the “Website & Social Media” link. Key activities for mitigating E&O exposures generated by a web presence It’s an exciting time as agencies become more creative in using the opportunities that websites can provide. Be creative, but not naive. Keep in mind that with every opportunity, there is risk. Consider the following quick tips to help mitigate your agency’s exposure to errors and omissions that may arise from your agency’s website: 1. Review website advertising with the same level of legal scrutiny toward copyright and trademark issues as the agency’s more traditional advertising 2. Post an appropriate Privacy Statement prominently on the website 3. Review original content posted on the website for accuracy and post appropriate disclaimers 4. Obtain written permission for content obtained from other parties, be confident they are a knowledgeable source, credit their authorship, obtain the author’s indemnification (if feasible) and post appropriate disclaimers 5. If you decide to refer to other service providers, provide more than one provider name, obtain written permission to link to them and post appropriate disclaimers regarding the services provided by the vendors 6. If the website has interactive features that collect personally identifiable information, comply with all state and federal privacy and data breach notification laws and regulations and create an SSL connection with the visitor’s browser before the visitor is asked to enter an id or password or any personal information. Sample Website Disclaimers Agents should consult with their local counsel to customize these sample disclaimers so that they fit their website, are positioned at the appropriate places on the site and comply with all of the federal and state laws and regulations that apply to them. These disclaimers are in addition to the Privacy Statement that the agency should include at the bottom of its website setting out its privacy policies.

Website Disclaimers Please review carefully! “This information is not an offer to sell insurance. Insurance coverage cannot be bound or changed via submission of this online form/application, e-mail, voice mail or facsimile. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly with a licensed agent. Note any proposal of insurance we may present to you will be based upon the values developed and exposures to loss disclosed to us on this online form/application and/ or in communications with us. All coverages are subject to the terms, conditions and exclusions of the actual policy issued. Not all policies or coverages are available in every state.” “Please contact our office at 555.555.5555 to discuss specific coverage details and your insurance needs. In order to protect your privacy, please do not send us your confidential personal information by unprotected email. Instead, discuss that personal information with us by phone or send by fax.” “Statements on this website as to policies and coverages and other content provide general information only and we provide no warranty as to their accuracy. Clients should consult with their licensed agent as to how these coverages pertain to their individual situation. Any hypertext links to other sites or vendors are provided as a convenience only. We have no control over those sites or vendors and cannot, therefore, endorse nor guarantee the accuracy of any information provided by those sites or the services provided by those vendors.” “Information provided on this website does not constitute professional advice. If you have legal, tax or financial planning questions, you need to contact a qualified professional.”

the statements and/or opinions contained are those only of the author and do not constitute and should not be construed to constitute any statement, opinion or position of Swiss Re, IIABA or ACT. Sabrena Sally, CPCU is Senior Vice President of Westport Insurance Corporation, a Swiss Re company, and manages the Big “I” Agency Professional Liability Program, which is endorsed by IIABA and 51 Big “I” state associations. Sabrena can be reached at sabrena_sally@ Sabrena produced this article for the Agents Council for Technology (ACT), a part of the Independent Insurance Agents & Brokers of America. For more information about ACT, visit act or contact Jeff Yates, ACT Executive Director at jeff. This article reflects the views of the author and should not be construed as an official statement by ACT or IIABA.

This article is intended only for educational or illustrative purposes and should not be construed to communicate legal or professional advice. You should consult legal or other professionals with respect to any specific questions you may have. Further, Winter 2014 • THE BIG “I” VIRGINIA


TECHNOLOGYSELF-ASSESSMENT SELF-ASSESSMENT TECHNOLOGY TECHNOLOGY SELF-ASSESSMENT Always Often Seldom Never ACTION Always Often Seldom Never ACTION 4 3 2 1 REQUIRED 4 3 2 1 REQUIRED 1. We maintain a single file system and document all matters relating to a client 1. We maintain a single file system and document all matters relating to a client in the system. in the system. 2. We require all agency personnel to document in the system. 2. We require all agency personnel to document in the system. 3. We input information into the agency management system promptly upon 3. We input information into the agency management system promptly upon receiving it. receiving it. 4. We have information input into the system by the person closest to the 4. We have information input into the system by the person closest to the transaction. transaction. 5. We require that information be input by a competent person. 5. We require that information be input by a competent person. 6. We have a procedure to verify the accuracy of all data input by the agency. 6. We have a procedure to verify the accuracy of all data input by the agency. 7. We have a procedure to verify the accuracy of all information received from 7. We have a procedure to verify the accuracy of all information received from insurance companies via download. insurance companies via download. 8. We use voice mail to document cell phone conversations as soon as they end. 8. We use voice mail to document cell phone conversations as soon as they end. 9. We document all phone conversations in the system as soon as they are 9. We document all phone conversations in the system as soon as they are concluded. concluded. 10.We confirm in writing with the insured any requests received via voice mail. 10.We confirm in writing with the insured any requests received via voice mail. 11. We update our voice mail messages daily. 11. We update our voice mail messages daily. 12. We advise callers when we will be out of the office for an extended period of 12. We advise callers when we will be out of the office for an extended period of time. time. 13. We maintain a log of voice mail messages including time, date, caller, and 13. We maintain a log of voice mail messages including time, date, caller, and message. message. 14. We include a disclaimer on the agency’s and each individual’s voice mail 14. We include a disclaimer on the agency’s and each individual’s voice mail message. message. 15. We provide remote access to the agency’s management system for 15. We provide remote access to the agency’s management system for individuals who are away from the office. individuals who are away from the office. 16. We have a system to deal with personal voice mailboxes when a person is 16. We have a system to deal with personal voice mailboxes when a person is out of the office. out of the office. 17. We provide a “human option” for all callers. 17. We provide a “human option” for all callers. 18. Our voice mail system is easy to navigate and understand. 18. Our voice mail system is easy to navigate and understand. 19. We ensure that all fax messages are distributed to the appropriate person 19. We ensure that all fax messages are distributed to the appropriate person immediately. immediately. 20. We make sure the date and time on our fax machine is correct at all times. 20. We make sure the date and time on our fax machine is correct at all times. 21. We do not fax confidential information unless we have the permission of the 21. We do not fax confidential information unless we have the permission of the recipient. recipient. 22. We are familiar with the laws in our state pertaining to the legality of fax 22. We are familiar with the laws in our state pertaining to the legality of fax signatures. signatures. 23. We maintain a log of incoming and outgoing faxes. 23. We maintain a log of incoming and outgoing faxes. 24. We have a written e-mail policy that is signed by each employee. 24. We have a written e-mail policy that is signed by each employee. 25. We monitor compliance with the e-mail policy and act upon any violation. 25. We monitor compliance with the e-mail policy and act upon any violation. 26. We train employees on the proper use of e-mail. 26. We train employees on the proper use of e-mail. 27. We regularly discuss the importance of confidentiality in using e-mail. 27. We regularly discuss the importance of confidentiality in using e-mail. 28. We use auto responders when people will be away from the office and unable 28. We use auto responders when people will be away from the office and unable to access their e-mail. to access their e-mail. 29. We periodically purge our e-mail system. 29. We periodically purge our e-mail system. 30. We include an appropriate disclaimer on our agency’s website. 30. We include an appropriate disclaimer on our agency’s website. TOTAL SCORE (maximum of 120): _____________________ TOTAL SCORE (maximum of 120): _____________________ Any score of less than 4 indicates that an action must be taken to reduce E&O exposures in that area. Any score of less than 4 indicates that an action must be taken to reduce E&O exposures in that area. Copyright © 2007, Big “I” Advantage, Inc. and Swiss Re Americas. All rights reserved. Copyright © 2007, Big “I” Advantage, Inc. and Swiss Re Americas. All rights reserved.


THE BIG “I” VIRGINIA • Winter 2014

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EMPLOYEE HANDBOOKS Who Needs Them? You Do! By Paige McAllister, SPHR, Contributor Affinity HR Group, LLC


mployee handbooks are an essential tool in managing employee relations and therefore successfully operating your business. An up-todate, well-written handbook gives your employees clear guidelines of how you want your business to run. What is an employee handbook? An employee handbook is a guide that has essential legal and regulatory information and company policies – with the company’s employees as its intended audience. Policies should be written in concise, straightforward language and be laid out in a logical, user-friendly way. Along with relevant employment laws and regulations, the handbook should provide an employee with up-todate information on workplace culture, benefits and compensation. A handbook is legally binding so make sure it says what you need it to and that you have each policy reviewed by legal counsel. Handbooks are also an important resource for supervisors and managers to rely on when setting expectations and managing performance. Because of this, they should be detailed and comprehensive, but also flexible enough to allow managers and supervisors some discretion when managing employees. For example, while a statement about normal working hours is important to include, such as “Normal hours of operation are from 8:30 am to 5:00 pm,” a statement such as “Each employee’s work schedule will be set by his/her supervisor” gives managers the flexibility they need to manage their distinct work unit. What types of companies need to have an employee handbook? Any company that has at least one employee is subject to an array of federal laws. So 38

THE BIG “I” VIRGINIA • Winter 2014

if you have employees – even just one – you need a handbook. While your company’s industry, location and number of employees will impact its content, you need to develop and implement an employee handbook that communicates the policies and laws that your employees are protected by and need to follow. What should be included in an employee handbook? The contents of an employee handbook can range from very basic to lengthy and extensive depending on your company’s structure and the purpose for your handbook. At a minimum, your handbook needs to include certain federal, state and local employment laws and regulations to ensure your employees are aware of their rights and responsibilities. Examples of these policies include, but are not limited to, employment-at-will, nondiscrimination, non-harassment, equal employment, safety regulations and wage payment, attendance, absenteeism, conduct, discipline, termination, performance evaluations, leaves of absence, travel, nepotism, internet & email usage, media relations, social media, uniforms and voting. Policies covering non-solicitation and confidentiality are also important but are often separate from the handbook and need to be carefully worded so as to not violate NLRB standards (even if the company does not have unionized employees). How do I get an employee handbook? We do NOT recommend that you download a handbook off of the internet or borrow one from a friend. Remember, handbooks are legal documents and any courts will require that you meet the obligations that are outlined in the document. Online templates are notoriously

wrong, outdated and not state specific, and copying another company’s handbook carries the same risks and can obligate you to laws and practices that do not pertain to your industry or company size. The first place to check for relevant information is your state Department of Labor website, which will have the most up-to-date information. Alternatively, you can check with your contact at IIAV or hire a legal or HR advisor to help you draft it. What other things do I need to consider regarding our employee handbook? Make sure all of your employees have access to the handbook whenever and wherever they need it. In some places, electronic versions are appropriate. In others, a hardcopy handbook distributed to each employee may be the best option. Have employees sign an acknowledgement form stating they received the handbook, have had a chance to read it and agree that it does not constitute an implied contract of guaranteed employment. This will give you some protection if you have to take action against an employee. And, as with any employment form, if an employee refuses to sign the acknowledgment, have another person sign the form stating they witnessed the employee receiving the handbook. We recommend an annual or biennial review of your handbook to capture legal changes and/ or changes to your workplace such as your size or location. Finally, the handbook needs to clearly state that management/ownership reserves the right to change and alter the handbook and its policies without notice and at any time. While handbooks can seem like a lot of work, they can provide you with essential protection and guidance. Dedicating the time and effort now to make sure the policies are legal and describe how you want to run your business will pay off well in the long run.


INDUSTRY EXPERTISE. PERSONAL SERVICE. “At FCCI, we keep our customers informed. I get to know agents and policyholders and they get to know me, so they know who to call for help. They know I’ll give them great service!” Katrina Turner Senior Underwriting Technician FCCI Southeast Region Duluth, Georgia Now, let’s talk about your business. General liability • Auto Property • Crime • Workers’ compensation • Umbrella Inland marine • Agribusiness Surety Coverage available in 18 states. © 2013 FCCI

Paige McAllister is a contributor for Affinity HR Group, LLC, IIAV’s affiliated human resources partner. Affinity HR Group specializes in providing human resources assistance to associations such as IIAV and their member companies. To learn more, visit www.

Winter 2014 • THE BIG “I” VIRGINIA BIV13_Turner_3.725x9.9875.indd 1


10/28/13 12:50 PM

Becoming a Social Business: A Model for

Success A social business is one that possesses the culture, organization and processes that position it to thrive in the current environment characterized by rapid change and the emergence of the “social culture” and “connected society.” This article defines what is meant by a social business and then describes how it is different from traditional hierarchical businesses. The complete picture of what social businesses ultimately will look like is still evolving, but the article points to the many exciting things agencies and other businesses are already doing to transform themselves into more flexible, social and collaborative organizations.

By Rick Morgan

Neither do men put new wine into old bottles: else the bottles break, and the wine runneth out, and the bottles perish: but they put new wine into new bottles, and both are preserved.” (Matthew 9:17, King James version of the Bible)

This parable accurately identifies the dynamic our industry grapples with as it tries to adapt, stay relevant, and make sense of the many challenges it faces in today’s rapidly evolving business environment. More often than not, agencies try to make social and mobile technologies work within the constructs of outdated business models, organizational structures and traditional processes. The result is an effort that fails. For example, social media is treated simply as a marketing tactic; a Facebook Page is launched and an administrative employee is put in charge. Disruption in day-to-day office procedures results with little if any real benefit. Clearly, there is a difference between organizations that simply engage in social activity and execute social media tactics, and those that actually become social businesses. What is a Social Business? A Google search will turn up hundreds of definitions. Understanding what a social business model is and how it differs from a traditional business model is not all that simple. The concept of social business is new and still 40

THE BIG “I” VIRGINIA • Winter 2014

evolving. Yet, the definition below is a good start. I have followed Amber Naslund on several social channels for the past four years and consider her to be a pioneer and thought leader in this space: •

“Social Business is the creation of an organization that is optimized to benefit its entire ecosystem (customers, employees, owners, partners) by embedding collaboration, information sharing, and active engagement into its operations and culture. The result is a more responsive, adaptable, effective, and ultimately more successful company. Social business can encompass using external social media, but it’s not a requirement. Technically, an organization can be a social business without engaging publicly in social media at all.” (Amber Naslund, President, Sideraworks)

The concept of social business is more than theory. A growing number of agencies realize the need to adapt and understand that their business must be transformed

or reinvented. They realize the need for a comprehensive social strategy that is clearly aligned with business goals. (Too often this is not the case. An Altimeter survey of nearly 700 social media professionals and executives found that only 34% of businesses felt that their social strategy was connected to business outcomes.) Further, these agencies have senior management involvement, organizational alignment and operational processes in place that enable execution of their social strategy. They also understand the need to integrate social methodologies into their organizations in order to enable their businesses to adapt to the fast and ever changing business environment. These agencies know that use of new technology, as well as social and mobile initiatives, will only be successful if there is an organizational and cultural transformation that changes the way employees work, interact with one another and communicate with customers and prospects – in essence, a reinvention of the agency. The concept of reinvention is not new to our industry. When we first started installing agency management systems, we found that there was a big difference between just using “automation” vs. becoming an “automated agency.” Only when agencies reinvented operational processes and procedures (remember Transactional Filing?) did their investment in technology start paying off. Only when management became involved did agency management systems transition from being primarily accounting systems to tools that supported agency service, sales, and marketing activity. As difficult as process change is – changing an agency culture and the “people” part is even harder. It all starts with leadership. Leadership Charlene Li, founder of Altimeter Group, and Keynote speaker at the 2013 ACORD Insurance Systems Forum said this about social business adoption: “The biggest determinants, by far, of whether you will be successful at social business are leadership and culture.” As mentioned above, all the technology in the world is useless if operational processes and organizational behaviors aren’t changed. Change starts from the top and an agency’s senior management and leaders are the ones responsible for facilitating this change. That is, success depends on change management initiatives being driven by agency leadership and practiced at every level from senior management down to customer service and support personnel. Thus, executives must not only talk about changing the organization; they must also become involved and demonstrate the behaviors that drive change.

This is often referred to as “transformational leadership” where the leader provides employees with an inspiring mission and vision for the organization and encourages them to challenge the status quo and to alter the landscape in which the business competes. What does a Social Business look like? It is difficult to understand exactly what a social business is and how it is different from a traditional business by a definition alone. Perhaps looking at some examples of the operational and organizational changes a growing number of agencies are making will make it easier to understand what becoming a social business means. Trust Employees Empower and trust your employees to participate on social sites on the agency’s behalf and trust that they will do the right thing. Consider starting a blog and use it to educate your customers and prospects and demonstrate your subject matter expertise. But also use it to build and strengthen your brand personality. Agency staff will be the foundation for building a fully collaborative social business. A shift in employee behavior becomes a key success factor in driving organizational change. Encourage your employees to build personal brands on social sites. Thus, opting out of social networking activity is not an option. Successful social businesses depend upon a team effort. They create processes that support organizational consistency. For example, when a new employee joins the agency and wants to start blogging or Tweeting on behalf of the agency, a process should be in place that governs employee training and certification in the social media policy that the agency has in place. (See ACT’s guide to creating a social media policy.) Flexible and responsive work The definition of work changes – the incoming workforce will demand a more open and flexible work environment. Options as to how, when, and where work happens are expanded. For example, new models in the form of small virtual offices, expanded geographic locations, flexible work hours, 24/7 availability, outsourcing, niche or expertise-driven agents are transforming how we define work. For example, becoming a social business means producers – in addition to using social tools to create personal brands – spend less time behind desks and more time in the field making “real life” contact, meeting in places like Starbucks. Winter 2014 • THE BIG “I” VIRGINIA


Collaborative work environment Develop a collaborative (vs. hierarchical) organizational structure. The new social and connected cultures have set new expectations when it comes to speed of communication and response. Traditional hierarchically structured agencies will not be able to adapt to this new standard of consumer expectation. Further, information must be available and shared – not hoarded, restricted or reside in silos. In fact, many agencies are inviting customers to participate in agency decisions. For example, they have customers sit on the agency’s board of directors or participate in advisory councils. Become transparent in your communication. Customers and employees expect to communicate more seamlessly and develop personal relationships. Agencies have found that this is one of the best ways to build trust. Community Involvement Become personally involved in your real-life community, including active involvement and support of charitable initiatives. The profiles of successful agencies reflect social values that are embedded in the core of the organization. This is also a key value for customers – they want to do business with a company that is socially responsible. Technology Deploy technology that facilitates collaboration. Technology will not change an organization’s culture. However, having a strong understanding of your agency’s cultural objectives will have an impact on your technical requirements, choice of technology and how to implement and configure it. Clearly, there will be need for agency management system technology to support the new social business model. Responsive Marketing Most personal lines and small commercial customers are interacting with agents and insurers across the full range of channels: in-person, by mobile device, by phone, and even through services like Skype or Google Hangouts. It is necessary to understand your customer and adjust your marketing and communications accordingly. For example, shift marketing dollars from traditional marketing channels to digital ones. (i.e., Yellow Page ads to digital/on-line marketing). Keep track of the communications preferences of your clients and be prepared for communications of differ types from a wide variety of devices. Reinvention of Agency Processes In addition to organizational and cultural changes, many 42

THE BIG “I” VIRGINIA • Winter 2014

traditional processes are also in need of reinvention. We need to think through how many of our everyday processes might and should change, enabled by the new technologies available to us. Everything from managing passwords, e-signatures, certificates of insurance, ID cards, online self-service, mobile options, policy delivery, billing and payment options, and even coverage offerings must change to meet current customer service expectations. Summary It is important to remember that consumer expectations are set by the culture, not the industry. The culture is shaped by new technologies and innovative applications of those technologies by other industries and social institutions. We have become a “social culture” and a “connected society,” where consumers are increasingly connected and empowered through changing technology to interact with and shape the world around them. Local agents are not on the verge of extinction, but we do need to change and adapt. We are past the theoretical stage – there are a growing number of agencies that have started to make the shift/transformation. Agencies that are able to make the transition and become social businesses will be well positioned to meet the challenges of the new business landscape and the demands of the new social culture and connected society. Tying this to the opening parable, they are putting new wine in new bottles. Additional Resources For additional examples as to how agencies are reinventing themselves for the future, please see: • ACT’s “Agency Perspectives on the Future” Video • ACT’s “Agency Strategies for Growth” Video • “5 Ways Agency Principals Can Seize the Future” by Peter van Aartrijk • “Agency Strategies to Manage Change Successfully” (page 26) by Jeff Yates Rick Morgan, in addition serving as a consultant to ACT and chairing the ACT Social Web Work Group, is senior vice president with branding consultancy Aartrijk. He has four decades of experience in innovative technology, marketing, and publishing in the independent insurance agency system. Rick produced this article for ACT It reflects the views of the author and should not be construed as an official statement by ACT.

Why Free-Form Text Fields On Your Agency Website Constitute An E&O Risk By Linda S. Loving, CIC, AISM, AIAO Independent Insurance Agents of Virginia


gency websites have become an essential element of marketing strategies for independent insurance agencies. One of the growing concerns as a result of this is the use of free-form text fields. This article explores some of the E&O exposures that may arise from the use of free-form text fields and tips on how to reduce those risks. The use of free-form text fields is a concern because it opens up the potential of transmitting personal identifiable information (PII) or protected health information (PHI) that is subject to state and federal privacy, data breach notification and/or HIPAA laws. It is imperative that agencies provide a secure website for consumers (where an HTTPS connection is created) when they ask for PII or PHI. Agencies have the duty to protect PII and PHI, and are subject to a myriad of both state and federal laws. Violations of these laws carry significant financial penalties, not to mention the potential damage that can be done to the agency’s reputation. Questions we receive frequently from our members include:

• • • •

What is encryption? How do I know if my website is encrypted? What is considered Personal Identifiable Information? How can I protect myself from a data breach and a potential E&O claim?

A simple definition of encryption is the process of encoding information in such a way that it cannot be read by unauthorized parties. One way to determine if your website is encrypted is to verify that the path is preceded with https. HTTPS or Hypertext Transfer Protocol Secure is a communications protocol for secure communication over a computer network. In Internet Explorer, you will see a lock icon in the Security Status bar. The Security Status bar is located on the far right side of the Address bar. The definition of PII varies by state and is contained in the State Security Breach Notification Laws, as well as in various federal laws, such as HIPAA. Note that the applicable state law is based upon the residency of the individual whose personal

Winter 2014 • THE BIG “I” VIRGINIA


data is being protected, not the location of the agency. This is an important consideration for agencies who write business in multiple states. Some examples of PII per Virginia code 18.2-186.6 (Breach of personal information notification) are: name coupled with social security number, driver’s license number or state identification card number, financial account number, or credit card number. If an agency provides a “non-https” protected freeform text field which the consumer can use to contact the agency and make requests, there is some risk the consumer might include confidential personal information. To help mitigate the liability exposure from this common website feature, the Agents Council for Technology (ACT) recommends one of the following best practice steps with regard to this free-form text field: 1. Secure it 2. Change it to specified fields that ask only for basic contact information, such as name, phone number, email, address 3. The least attractive option is to use a freeform text field that is not secure coupled with a prominent disclaimer beside it that it should not be used to provide any private personal data, along these lines: “Please do not send any private personal information via this text box because it is not secure”. We reached out to Sabrena Sally, CPCU, Senior Vice President of Swiss Re Corporate Solutions, of which Westport Insurance Corporation is a subsidiary, who manages the Big “I” Agency Professional Liability Program, and asked her to weigh in on this. She agreed that the first two options are preferable as once the agency is the recipient of PII, they are then subject to applicable regulations regarding the protection and storage of such information. Option three, while it does provide the user with the “warning” that the site is not secure, it does not alleviate the agency’s regulatory obligations. Swiss Re Corporate Solutions recently introduced a new coverage feature to their professional liability policy for Data Breach coverage. 1st party coverage is automatic to all Westport clients, and 3rd party coverage is available for those who qualify. To qualify for 3rd party coverage, agencies must use encryption when transmitting PII. There is no additional premium for these coverages. In addition to the E&O exposure from transmitting unencrypted personal data, agencies using a free form text field on their website would be well served to prominently post the standard disclaimer used in the agency voice mail “Please note that coverage cannot be changed or altered without speaking with an agency 44

THE BIG “I” VIRGINIA • Winter 2014

employee”. This basic risk management practice applies regardless of which technology is being used to communicate with customers. I cannot exclude mentioning Virginia Code 38.2-613.2 (Information Security Program) which requires agents to implement comprehensive written information security programs for their business. These programs must include administrative, technical, and physical safeguards for the protection of policyholder information. If your agency has not complied with this requirement, IIAV, through their for-profit subsidiary VFSC and partnership with Cyber Security Firm Sera-Brynn, has a solution. Sera-Brynn has developed an information security policy specifically for IIAV member agencies for only $150. This includes a PCI addendum (to help meet PCIDSS compliance), one hour of free Incident Response consulting by a PCI QSA (in case of data breach), and a security policy letter to distribute to clients to demonstrate security policies are in place and in adherence to information security regulatory requirements. There is an additional fee of $25 for agencies needing a HIPAA Security Rule Addendum. Don’t get overwhelmed with the technical jargon of the information required and discard complying with this code. Order your Insurance Agency Information Security Policy today by simply logging onto and click on the “Insurance Information Security Policy” link on the front page. You will be in compliance within 48 hours. It’s quick, easy, and well worth the nominal cost. Furthermore, ACT’s Security & Privacy web page contains a wealth of available articles and resources to assist agencies with protecting their clients’ and employees’ private information and complying with state and federal laws. This article is intended only for educational or illustrative purposes and should not be construed to communicate legal or professional advice. You should consult legal or other professionals with respect to any specific questions you may have. Further, the statements and/or opinions contained are those only of the author and do not constitute and should not be construed to constitute any statement, opinion or position of Swiss Re, IIABA, ACT or IIAV. Linda Loving, CIC, AISM, AIAO is Executive Vice President of VFSC, a wholly owned subsidiary of the Independent Insurance Agents of Virginia. Linda can be reached at For more information about ACT, visit or contact Jeff Yates, ACT Executive Director at This article reflects the views of the author and should not be construed as an official statement by Swiss Re, IIABA, ACT or IIAV.




Sales Mistakes

Insurance Agents Make By John Chapin


f all the sales mistakes insurance agents make, the five discussed here are by far the most critical. Side step these by being aware of them and using the recommendations below and you will be well on your way to success. FIVE SALES MISTAKES INSURANCE AGENTS MAKE Mistake #1: No accountability to a plan of action It’s important to have daily, weekly, monthly and yearly goals regarding the number of calls, number of contacts, number of appointments, and number of sales you need to make, and you must push yourself to meet those goals on a daily basis. Equally as important, there needs to be accountability to that plan. In addition to holding yourself accountable, you have to have someone else, preferably a manager or boss, holding you accountable to ensure you don’t let yourself slide. Review your numbers daily and have your manager look at them weekly. If you are not hitting those numbers, sit down with your manager and make the necessary adjustments. In this case, your manager should be reviewing your numbers daily until you are on track. If you manage agents, it’s a good idea to have numbers posted during sales meetings for all the agents to see. This will serve as extra incentive for agents to work hard and stay on track. This one item alone has been shown to instantly increase office production by an average of 18%. Mistake #2: No follow through, no follow up It’s important to have a system in place that keeps you organized and ensures you follow up and follow through on commitments to prospects and

customers. Doing what you say you’ll do, when you say you’ll do, builds instantly credibility. Not doing so, immediately destroys credibility. In addition to follow through on commitments, it’s also important to return phone calls, e-mails and other communications promptly. Forget the old 24-hour rule. With the speed of business these days, you need to think in minutes and hours. The longest anyone should have to wait for a return phone call or communication from you is an hour or two. Yes, even on weekends and evenings. The longer you wait to communicate, the greater the chance something bad will happen. Your objective is to be known as someone who is super responsive, reliable, a person of your word, and as someone who is almost always available. Mistake #3: Wasting time and majoring in minor things Anything other than servicing current customers, reviewing current coverage, cross-selling, and pursuing new business are minor things. These minor items include: reviewing a customer file before you contact them, driving to and from appointments, handling the paperwork, and all other items that do not involve interaction with a prospect or customer, potentially leading to addition business. Don’t get me wrong, those items are important, but they are still minor. The mistake that most agents make is that, in addition to spending too much time on these minor items, they also waste a lot of time looking for things on their messy desk, chatting with friends and colleagues, checking e-mail, taking multiple coffee breaks, and, in general, finding things to do other than calling on prospects and customers. Your highest priority, the only time that really counts, is the Winter 2014 • THE BIG “I” VIRGINIA


time you spend with prospects and customers. Mistake #4: Focusing on new business at the expense of current customers Your long-term business success will come down to your ability to acquire, maintain, and solidify customer relationships. If you get enough customers and treat them right, your business will be fine. If you focus only on chasing new business, taking existing customers for granted and failing to nurture those relationships, you will always have to make tons of contacts to replace the current customers you’re losing. That is a recipe for frustration and failure. Every day you have to carve out some time to work on solidifying relationships with current customers. This involves phone calls, in-person visits, and other ways of reaching out. In addition to sending birthday, holiday, anniversary, and thankyou cards, look for other creative ways to keep your name in front of customers. Perhaps you send an article or book on an area of interest, or send a gift for a special occasion. The key here is to stay in touch and keep the lines of communication open. Most customer issues begin with a lack of communication. Finally, don’t ever take your current customers for granted or let service slip. While it’s important to get new business, your current customers are your number one priority. Mistake #5: Pointing the finger elsewhere Many times when sales are off, a deal falls through, or we are otherwise unsuccessful, we place blame on factors other than ourselves. It is 46

THE BIG “I” VIRGINIA • Winter 2014

imperative to accept responsibility for your results. If things aren’t working out, why aren’t they working out? Are you sticking to your daily plan? Are you effectively handling all aspects of your business from finding leads to servicing customers well and making them happy? Where are you having some success and where do you need some work? You should always be growing and improving in the areas of personal and professional development. This becomes even more important when you are struggling. Keep in mind that ultimately success and failure come down to you. Whatever issue or problem you are having, others have been in a worse position than you and have still been successful. John is an award-winning sales speaker, trainer and coach. With over 24 years of sales he is a number one sales rep in three industries, and author of the gold-medal winning “Sales Encyclopedia”. For permission to reprint, or if you have sales questions, e-mail: For access to John Chapin’s free monthly newsletter, go to: http:// John Chapin Complete Selling, Inc. Helping you find and get all the business you want Cell: 508-243-7359 LINKEDIN: once logged in find me under: johnchapin1 FACEBOOK: johnjchapin TWITTER: johnjchapin


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