FYI Express - August 2017 by Eddie Emmett

More Tips & “How-To” videos at www.FYIExpress.com

EXPRESS “What You Don’t Know Can’t Help You!” … Eddie K. Emmett, Editor / Publisher

How Does GEICO Save Customers 15%? By Bill Wilson

In This Edition

Easy question, simple answer: They don’t.

How Does GEICO Save Customers 15%? ...................... 1 Do You Really Save 15%? ......... 2

The implication is that an agent ‘skims’ 15% commission off the top, as if

Hudgens Announces He Will Not Seek Re-Election In 2018 ......... 10

(1) agents STILL get 15% commission on auto insurance,

Zalma's Insurance Fraud Letter, Volume 21, No. 15 .................... 12

(2) agents don’t do anything to earn their meager commissions (like exposure analysis, product selection, claim advocacy, etc.), and

Personalization – The Fifth P In Marketing .................................. 16 Why should I join your organization? ............................ 18 GIAA .......................................... 19 What is the value your agency puts on staff education? ......... 20 If it's not broke, it's not covered ................................................... 22

(3) GEICO has no acquisition costs like advertising, sales and service staff salaries and benefits, etc. The Florida Association of Insurance Agents (FAIA), the state affiliate of the Big “I”, has a blog area where agents can comment on staff blogs. Here is an agent’s response to a recent blog post: “Highest per policy acquisition costs in the industry.” I certainly don’t put myself in the ranks of Warren Buffett and we clearly have a different target client than his GEICO brand does, but it is very interesting to look at their recent financial reports.

Info at

If you do the math that is $1,437 per policy in acquisition costs just for advertising, not including other underwriting expenses. Now remember they have another 21 million customers on the books already. I wonder how they like subsidizing all those new policies….” So, all you agents out there, how many of you get $1,437 commission on each auto policy? If that represents less than 15% of the premium dollar, then GEICO’s average auto premium would have to be about $9,600. Of course, that 15% claim might be a little off, perhaps by 100% or more? Thirsty for more? Read my blog post from six months and a day ago: “Car Insurance Price Shoppers: Do You Really Save 15%?” Continued on page 2

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GEICO’s recent disclosure notes that it wrote 974,000 new policies last year. Sounds like they are hitting us hard. They also spent $1,400,000,000 on advertising last year. That’s 1.4 BILLION with a “B”.

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August 2017

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Do You Really Save 15%? Continued from page 1 On a Yahoo Group I belong to, someone posted about a startup called Bought by Many where prospective insureds can be grouped to buy insurance, including some forms not yet available. He thought it was a very intriguing way to identify enough demand to perhaps open up new coverages not available from other sources. I visited the web site and noted that it claimed an “18.6% Average Discount.” The question was, an average discount on what? Apparently, the coverage provided by their products and alternatives to their products makes no difference. The only distinguishing feature they consider to be relevant is price. This is reminiscent of the promotions by other wellknown insurer advertisers such as Progressive Direct’s premium comparison board on some of their TV commercials and, of course, GEICO’s “Save 15%” slogan. The GEICO savings premise is likely based on the consumer allegedly saving 15% by not using an agent (as if agents still made 15% on commission on auto insurance rather than the 7-10% more common today). AND it ignores the fact that GEICO still employs agents (legally only agents can sell or service insurance) who they must pay salaries and benefits. AND it ignores their $1 BILLION advertising budget that dwarfs that of most insurers using agents who market for them. FYI Express

Also, similar claims that “People who switched their insurance to us saved an average of $346 a year!” are misleading because they don’t reflect the fact that many of their quotes don’t result in consumers actually switching, so on average the premiums being quoted could be the same or even greater than those available from other insurers. In addition, these savings don’t reflect the possibility that their quotes are for minimum limits and/or inferior coverage. If you get an online quote that appears to be a better deal than you already have, ask the carrier for a copy of their policy so you can compare it to the one you currently have. They won’t give it to you. Why? You be the judge of why they won’t let you examine the contact before you sign it. Do you enter into any other kinds of contracts (e.g., leases, loan agreements, service contracts, etc.) where the party that drew up the contract refuses to let you review it before you sign? When you consider the real commission levels agents receive for booking auto insurance vs. employee salaries and benefits direct sales carriers pay, plus the HUGE advertising expenses of these direct sales carriers, it is highly unlikely that there is a 15% savings solely attributable to buying insurance without an agent. Even more important, such sales slogans completely ignore two critical values a good independent agent provides. One is assistance in loss exposure analysis to make sure the customer has the right insurance product package.

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Continued on page 4 August 2017

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More Tips & “How-To” videos at www.FYIExpress.com Do You Really Save 15%? Continued from page 2 The second is the immeasurable value an independent agent brings to the table in advocating on the customer’s behalf in the case of contested claim denials. I have spent over 28 years assisting great agents go on the mat for their customers in getting the insurers they represent to overturn or reconsider initial claim denials. In the coming weeks and months, I’m going to provide blog subscribers with many real-life examples of where consumers had significant uncovered claims because they, thinking they were “saving 15%,” chose to buy their insurance without the aid of an agent. As my blog “Reprint” policy says, you will be free to use these posts to educate your customers and prospects. When my son moved into an apartment, the property management company required renters insurance and they had a relationship with a vendor that could provide it. You could read the policy online. No endorsements. Limited named perils. Minimal additional coverages. $50,000 liability limit. Pure junk. For an extra $80, I could get him a good HO-4 from a decent company. For an extra $120, I could get him a premium policy. He went with that AND a personal umbrella policy. I told him if he was ever short in paying for this superior coverage, I’d pay it, but he was going to protect his assets and income stream AND, even more important, he was going to protect the public from his possible negligence.

FYI Express

Direct sales insurers and online comparison raters don’t discuss these issues. To quote legendary salesman Morty Seinfeld, “Cheap fabric and dim lighting, that’s how you move merchandise.” Do direct sales insurers and most of the new upstart InsurTech “disrupters” really care about helping consumers identify their exposures to loss and insuring them, or are they more interested in “moving merchandise” by quoting cheap premiums on inferior products and generating cash flow for themselves and their investors and venture capital providers?

Bill Wilson Founder at InsuranceCommentary.com One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.

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August 2017

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Attention Underwriters and Marketing Reps: How to Make the Most of Agency Visits A few months ago, I received an email from a company underwriter which, to his credit, sought information about how to make his agency visits more productive. He has allowed me to share our correspondence anonymously, but I will say he works for a regional insurer that is very agent-focused, along with being consumer-focused. Here is his email: “I love your stuff and find everything you write worthwhile and meaningful. Not sure if you saw the recent National Underwriter magazine where they conducted a survey with PIA on independent agents and their thoughts on carriers, their needs and wants, etc. I found it really interesting. “I work for an insurance carrier now as a commercial lines underwriter and work from the desk, but also perform agency travel as well. I’m expected to meet with agents at their offices at least 15 times a year within my territory. Here’s my question…from your experience, how can I make these visits worthwhile? “I feel like agents don’t find them worthwhile. We’re all busy so I hate wasting people’s time. I know it’s about building relationships and talking about what’s new at my company, new opportunities, etc., but I don’t feel like that’s enough. “I want differentiate myself but I’m unsure how. I’m sure you have had to meet with carrier folks in the past, so hopefully whatever guidance you can offer will be greatly beneficial.” The first thing I did was send him a link to an article at PC360 about what agents are looking for in commercial lines carriers based on the survey he mentioned. The second thing I did was solicit feedback from several outstanding agents.

If you’re an underwriter or company marketing rep, I hope you’ll take these suggestions constructively. If you’re an agent, feel free to share them with your underwriters, marketing reps, and adjusters, along with local company management Start by contacting the agencies and admit what they already know, that you are aware that all too often company visitors (especially marketing reps) are better at wasting time than being helpful. Ask agency staff (and not just owners/managers, but also CSRs and producers) what you can offer that would help the agency help themselves and your company. They will appreciate this. As Will Rogers said, “Always be honest. That will gratify some people and astonish the rest.” And consider coming and bearing gifts…if you’re at an agency in the morning, bring some doughnuts…in the afternoon, bring some cookies. Seriously, that will set you apart from others and office staff will really appreciate the thoughtfulness. It at least sends them a subliminal message if not a direct one. From the information you gather from your initial contact, prepare a timed agenda. It might include a 10 minute training session on something unique to your company procedures, basic CLM information, or reviewing cool endorsements to customize coverage which would be new and unique especially to younger agency personnel. Maybe another 10 minutes on some emerging issue and how the company is addressing it. Maybe 10 minutes on best ways to submit accounts for maximum quote opportunities. At the end of the visit, wrap up with agency ownership/management on relationship issues. Continued on page 8

Below are some of their thoughts.

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August 2017

More Tips & “How-To” videos at www.FYIExpress.com How to Make the Most of Agency Visits Continued from page 6 Let the agencies know if there is something you can do to make it easier for them to place good business with you. For example, one insurer found out how far behind an agency was in quoting new business and offered to do that for them. What can you do that they might not be aware of or that they’re not taking advantage of? For example, one insurer does virtually (no pun intended) everything online. Rather than submit an app, email follow ups a few times, and PRAY that a quote comes back in a week, this carrier can often quote in 15 minutes with a note if any other information is needed. This same carrier also offers an insured contract review (for construction contracts insureds enter into) and loss control inspection services on request. In addition, they offer CE classes and PAY agents to take them…many carriers offer no CE classes or they charge for them or at best make them free…imagine PAYING to attend. In your meeting, or as a handout supplement, explain where your policies may be broader than the competition. Just as important, explain where you know you are lacking and why. Solicit feedback well in advance of the meeting from agency staff on problematic policy language or procedures that you might be able to fix. Give the agency market intelligence about your and their competition.

Also, the more entrepreneurial you can be, the better. If you submit a report on each agency visit, with information gathered based on the above suggestions, I think you will stand out from others at your company by providing very substantive information that helps both you and your agency force be more successful. Interested in advancement in your company? Help your agency force and I guarantee they will help you.

Make sure the agency understands why kind of business you want and if this is a long-term commitment to that class. Explain your pricing philosophy and flexibility. Tell agency staff how you want the submission sent and what you expect in it. If the agency is agreeable, consider bringing an adjuster, premium auditor, and perhaps loss control person with you so agency staff can get to know them. Provide an updated contact list of company staff that can help the agency staff…not a general directory, but specific individuals and contact information that the agency can access. In particular, when issues arise, be in a position to make a difference in resolving them and identify the ultimate decision makers at the company. This is really a lost art and needs to be re-established by many carriers. In everything you do associated with these meetings, think the bottom line: Make a difference. Your job requires 15 agency contacts. Rather than tick them off just to meet that requirement, bring the agency something of value and you might be surprised when you start getting more business.

FYI Express

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August 2017

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Hudgens Announces He Will Not Seek Re-Election In 2018 ATLANTA - Insurance Commissioner Ralph Hudgens has announced that he would not seek re-election for a third term as Georgia’s Insurance and Safety Fire Commissioner. In conjunction with that announcement, he releases the following statement: My Fellow Georgians, After much thought, prayer, and discussion with my family, I have decided not to seek a third term as Georgia’s Insurance Commissioner. I am immensely grateful for the opportunity that the people of this State have given me to serve in this capacity, but I look forward to retiring from elected office to spend more time with my wife Suzanne, my four kids, and 12 grandchildren. I ran for Insurance Commissioner because I believed I could be an effective advocate for consumers. My office has helped consumers get payment after insurance companies originally denied claims and has aggressively pursued insurance fraud. I focused on those consumer protections while also working to make sure we had a competitive insurance marketplace. The Department has accomplished a lot, but there is still much to do. I look forward to actively serving out the year and a half that remains in my term. I will continue to work to protect Georgia consumers and make sure that Georgia remains a competitive place to do the business of insurance. While I am retiring from elected political office, I intend to stay involved in politics. My political activity began when I accompanied my wife to meetings with conservative activists in 1980. I quickly developed a passion for politics and a belief that the right people running for office could make a difference for our country and our state. I still have that passion, and I still have that belief. Suzanne and I will continue to stay involved in politics and will continue to work for the people and the causes in which we believe. I enjoyed my time in the State House and State Senate, but I am particularly grateful for the privilege of serving as Georgia’s Insurance Commissioner. I am grateful to my best partner for the last 54 years, Suzanne, who stood by me and worked with me through successful elections and failed ones. I am grateful for the excellent staff at the Department of Insurance that has enabled me to be successful over the last seven years. I am grateful for my supporters around the State who helped me get elected and re-elected to this office. Most of all, I am grateful to my God who has given me so many blessings- the greatest of which have nothing to do with politics. Sincerely, Ralph Hudgens Editor’s note: It has been an honor to have Commissioner Hudgens serve as Georgia’s Commissioner of Insurance and Fire Safety. I vehemently disagree with the picture of his acomplishments that has been painted by writers in the Atlanta Journal-Constitution. Not a single word of how he asked to sit in on PIA’s CE classes so he could know more about the industry. Not a single word of the Fireman’s Prayer Book that he personally autographed and asked Jim Beck to present to the Cherokee County Fire Department. Is it too much to ask that folks be recognized for the good they do for Georgia’s citizens?

Get to know Jim Beck at

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August 2017

More Information about Georgia Insurance Agents Alliance Membership at www.Georgia-Agents.com

EXPRESS “What You Don’t Know Can’t Help You!” … Eddie K. Emmett, Editor / Publisher

Do CSRs have to be licensed? Do CSRs have to be licensed? The answer is “Yes” if: The CSR is a person who sells, solicits, or negotiates insurance. The CSR receives commission on insurance sales. The CSR handles endorsements and reinstatements. The CSR gives quotes for insurance. The CSR completes insurance applications. The CSR handles renewals. The CSR answers coverage questions. So just what can an unlicensed CSR do? Mostly managerial and clerical tasks only indirectly related to the above tasks. I’m not so sure they can even take payments since that is a vital part of insurance sales. Check out O.C.G.A. § 33-23-4 in the “Laws & Regs” link at the bottom right corner of www.GAInsurance.org for a more murky explanation. So what should an unlicensed CSR do? If they are handling only Personal Lines P&C, a Limited Subagent license should do the trick. The sponsor is responsible for their actions, a state exam is not required and they can take the required 20 hour pre-licensing course from the comfort of their desks for only $79.00 at www.Georgia-Agents.com.

The Georgia Department of Insurance encourages the insuring public to report any complaints about insurers, agencies and agents. The first thing checked is whether or not the person in the complaint is properly licensed for that transaction. Here’s the scenario if the CSR is found to be in violation of O.C.G.A. § 33-23-4: Any person who willfully violates this Code section shall be guilty of a misdemeanor and, upon conviction thereof, shall be subject to punishment as provided in Code Section 17-10-3, relating to punishment for misdemeanors. Code Section 17-10-3: By a fine not to exceed $1,000.00 or by confinement in the county or other jail, county correctional institution, or such other places as counties may provide for maintenance of county inmates, for a total term not to exceed 12 months, or both. That applies to the CSR, the agency owner, and the insurance companies who paid commissions to unlicensed entities. I wonder if they assign adjoining jail cells.

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Zalma's Insurance Fraud Letter, Volume 21, No. 15 * A prolific staged crasher was braked. Frandy “Jimmy” Dugue belonged to a ring that set up about 50 crashes in Eastern Connecticut. Most wrecks were single-vehicle crashes on remote roads. The only witnesses were the vehicle occupants. The crashers filed bogus injury and damage claims afterward. The payouts ranged from $10,000 to$30,000 per accident. Dugue was involved in 5 false claims, receiving $11,004 from insurers. He also received100 days in federal prison, followed by 3 years of supervised release. And Dugue must repay $10,000. Citizen of Haiti, Dugue could be deported after prison. Six other ring members also were convicted, and await sentencing. * Someone stole Carlos Becker’s Range Rover from in front of his home in Hempstead, the former NYPD cop told GEICO. Firefighters soon responded to a 911 call. They discovered the vehicle burning on a residential street in Queens. The insurer paid out more than $34,000. Except Becker hired cronies to burn the Range Rover for insurance money. He was tired of paying for mechanical repairs tithe troublesome vehicle. Becker stiffed the cronies, refusing to pay their fee. So an irate cohort told the police about the insurance plot, and later recorded an incriminating conversation. Becker won’t need any vehicle for a while. He received 2 years in federal prison, and threw away 10 years as a member of NYPD’s elite highway patrol unit. * A ruse to peddle compound creams laced with addictive opioids was a deadly money factory.

* Dr. Edwin L. Fuentes had no defense, so the Danville, Va. provider pleaded guilty instead of resisting in court. Fuentes was the only person authorized to conduct a superbill, a form that determines which services to invoice insurers. He double-billed insurers: Fuentes charged patients using both an “evaluation and management” code, and “preventative counseling” code for the same visits. Fuentes also directed employees to bill health insurers for phantom treatment. He tried to conceal the fraud by forging patient notes to invent treatment. All and all, Fuentes raked in nearly $1million. He diverted some of the money to a Wells Fargo bank account for day trading. He didn’t report the income, so tax fraud was added to his crime list. Fuentes will be sentenced Dec. 12. * Rough escort duty, it seemed. Police officer Ryan Patrick Natividad said he hurt his hand while escorting a suspect into the Costa Mesa, Calif. city jail for booking. Natividad slammed his fist against a brick wall to prevent the suspect from stumbling, he claimed. Natividad filed a workers-comp claim, and sought medical help. Investigators checked the jail surveillance camera footage and determined the incident never happened. Natividad injured his hand while off-duty. He received probation and home confinement. * A driver rammed Michaelynn G. Christy’s vehicle in a Walmart parking lot and sped off, she said. The Boise, Idaho-area woman filed a hit-and-run claim with Esurance. Her story was inconsistent with damage caused by just 1 crash, and with the kind of damage to her car. Christy finally admitted she drove her car into a carport post, and that her brother backed into the vehicle. Christy received 3 years of probation, the Idaho Insurance Department says. She also must repay $1,517 to the insurance department and $179 to Esurance.

Tamara Mitchell owned 2 pharmacies that mixed and sold the creams. Her stuff had no medical benefit — the Fulshear, Tex. woman simply wanted to sell creams to make money. Mitchell falsely billed insurers $17 million. She never examined patients, and claims were fabricated with bogus notes suggesting medical need. Mitchell had a pharmacy tech and pharmacist run the day-to-day operations. Another pharmacist hawked the creams to anyone with insurance that would pay. Mitchell also bribed a doc and nurse practitioner thousands of dollars per month to pre-sign prescription pads without examining patients. A patient died; tests revealed the active opioid ingredients in the creams. Mitchell was handed 14 years in federal prison. FYI Express Page 12 of 23

Continued on page 13

August 2017

More Tips & “How-To” videos at www.FYIExpress.com Zalma’s Insurance Fraud Letter Continued from page 12 * From our “Bunglers Bungle in the UK” file: Two bumbling men mixed too much gas and blew up their UK home while trying to mask the fire as a hate crime. Samuel Todd and RyanIbbitson poured gallons of petrol around, then flooded the place with fumes from the stove gas connect. The home blew up when they lit the match. A next-door home was so badly damaged that repairs took 2 years before the owners could move back in. Surveillance video caught them running down a path — with the petrol can — to escape the flames. Todd had called police who found a window had been forced open with a crowbar and the words “thieving scum. I’m going to burn you down” were scratched onto a TV, along with knives plunged into the leather sofas. Investigators also found fire-damaged clothing, a petrol can and lighter in Ibbotson’s cars. Todd and Ibbitson will be sentenced August 15. * A nurse helped recruit homeless and other patients for the largest home-healthcare scheme in U.S. history. Charity Eleda was a lead player in the $375-million Medicare and Medicaid plot in the Dallas area. She teamed with ringleader Dr. Jacques Roy. The ring wooed about 11,000 Medicare patients with promises of cash, food stamps and groceries. Hundreds of patient homecare visits were logged each day by more than 500 home health agencies that routed patients to Roy. He set up a full-time forgery operation with people hired to sign his name. Billings continued even when Roy and his family vacationed in France. Eleda was handed 4 years in federal prison and must repay $400,000. Roy could spend life in prison when sentenced. Guilty of Part in $150 Million WC Fraud Marissa Nelson, a Redondo Beach, California, woman accused of participating in a $150 million workers’ compensation insurance fraud scheme pleaded guilty July 26, 2017, according to the Los Angeles County District Attorney’s Office. Forty-year-old Nelson faced one felony count of conspiracy to commit insurance fraud and admitted a special allegation of taking property of a value exceeding $3.2 million, according to the prosecutor’s office. Ms. Nelson is one of a dozen people accused of fraudulently billing tens of millions of dollars to insurance companies for fraudulent surgeries, prescription medications, fake MRI results, and falsifying medical reports and office visits, the prosecutor said.

FYI Express

She was a personal assistant to orthopedic surgeon Dr. Munir Uwaydah, also charged, and the wife of codefendant Peter Nelson, a physician’s assistant who never attended medical school and allegedly performed invasive and sometimes unnecessary surgeries, the district attorney’s office reported. The case is still under investigation by the Los Angeles County District Attorney’s Bureau of Investigation and the Organized Crime Division. Ms. Nelson’s sentencing hearing is scheduled for July 27, 2017. Another Murder for Insurance Fails Laura Rideout, 46, and Colin Rideout, a New York woman and one of her sons were found guilty July 25, 2017 of killing her estranged husband and pouring acid on his face to make identifying him more difficult before the body was dumped in the woods. A Rochester jury convicted Laura and Colin of second-degree murder in the slaying of 50-year-old Craig Rideout. The mother and son were also found guilty of evidence tampering. Alexander Rideout, Laura’s son and Colin’s brother, was acquitted of murder charges but convicted of evidence tampering. Laura Rideout’s 51-year-old boyfriend, Paul Tucci, was acquitted on both charges. All four were charged with second-degree murder after Craig Rideout’s tarp-covered body was found in the woods in the Finger Lakes region. Prosecutors said he had been strangled and beaten inside his suburban Penfield home on July 20, 2016, while the couple was going through a contentious divorce. Craig Rideout’s mutilated body was found wrapped in a tarp off a rural road in a Finger Lakes town about 40 miles southeast of Rochester. A man stumbled upon it and alerted police. As investigators gathered evidence at the scene, they heard a phone ringing. It turned out to be Craig Rideout’s cellphone, which the killers had overlooked in his pocket. The discovery helped identify his body. The evidence presented during the three-week trial included video footage from a Walmart where Colin Rideout bought a shovel and four pairs of work gloves on the day prosecutors said Craig Rideout was killed. A day earlier, Laura Rideout and Tucci bought drain cleaner, a tarp and bungee cords at another store. A shovel similar to the one bought at Walmart was found near Craig Rideout’s body, while four pairs of similar work gloves were found covered with the victim’s blood.

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August 2017

More Tips & “How-To” videos at www.FYIExpress.com Zalma’s Insurance Fraud Letter Continued from page 13 Police initially charged Laura with evidence tampering after her husband’s body was found. Soon afterward sons Alexander, 20, and Colin, 23, were arrested on the same charges after witnesses told police they saw the brothers throwing a bag with solvents, gloves and drain cleaner into a pond at a suburban Rochester park the day after the slaying The mother, two sons and Tucci were later charged with second-degree murder. Illinois Insurance Agent Sentenced to 5 Years for Fraud Scheme James P. Smith, a Decatur, Ill., independent insurance agent was sentenced to 63 months in federal prison for defrauding his clients. Chief U.S. District Judge James E. Shadid sentenced James P. Smith for fraudulent activity conducted from February 2011 to July 2016. Smith was also ordered to pay $349,777 in restitution to victims of his crime. The court ordered Smith to supervised release for three years after he is released from prison. A condition of release is that Smith cannot work in insurance or other financial-related business. The U.S. Attorney’s Office said Smith pleaded guilty on March 23, 2017, to wire fraud (one count); mail fraud (two counts); and money laundering (one count.). Smith worked as an independent agent at the Prairie State Insurance Agency in Decatur. According to court documents and statements made in court, from at least February 2011 through July 2016, Smith solicited clients to purchase insurance, including whole life insurance, and financial products, including annuities. Smith admitted that he falsely represented the minimum rate of return the annuities could obtain for his clients. Instead of investing clients’ money in insurance, annuities, or other financial products, he used the money for his own benefit. Smith requested that clients make payment to “MSM Inc.,” which he represented was the insurance company or the investment company for the annuity the clients were purchasing. MSM was actually Main Street Marathon, a gas station in Mt. Zion, Ill., that Smith owned. Smith used the money to finance the gas station and to make mortgage payments on his personal residence. Smith also admitted he cancelled or cashed out clients’ insurance policies or annuities without their knowledge or permission, and then used the cash value and/or future premiums or payments for personal expenses.

FYI Express

He admitted he used the money to pay his attorney’s fees, personal bankruptcy fees, and to make purported annuity payments to other clients to prevent them from discovering that he had not purchased their annuities as promised. ZIFL is certain that the chances his victims have of recovering what Smith stole from them during the five years he is in prison is slim to none. Murder for Insurance Fails in Fiancé’s River Kayaking Death Angelika Graswald, a Latvian national, who was accused of intentionally drowning her fiancé in the Hudson River by tampering with his kayak as part of a murderous plot to collect on his life insurance pleaded guilty in July to a lesser charge that could minimize the amount of additional time she spends in jail. Graswald had been charged with secretly removing a drain plug from Vincent Viafore’s kayak before a daylong boating excursion and then watching him drown after he capsized in the river in 2015. Her attorney had said that the death was an accident, caused by high waves, cold water and alcohol, and that police investigators had coerced her into blaming herself for the death during a lengthy interrogation. Graswald, who had been facing murder and manslaughter charges, had been in custody awaiting trial. Graswald, of Poughkeepsie, N.Y., pleaded guilty to criminally negligent homicide, admitting she caused Viafore’s death on April 19, 2015, by removing the plug from his kayak, knowing that he wasn’t wearing a life vest or wetsuit and that the Hudson River waters were dangerous and cold. The couple had been visiting an island that is home to Bannerman Castle. Graswald was arrested on April 30, 2015, and Viafore’s body was found almost a month later. Prosecutors said the missing plug from Viafore’s kayak was found in the car Graswald was driving. Officials had argued a $250,000 life insurance policy was the motivation. The criminally negligent homicide charge carries a sentence of up to four years in prison. Graswald is scheduled to be sentenced on Nov. 1. Portale said with the time she’s already been in custody she would likely be out by late December. The guilty plea will make Graswald, who has legal permanent U.S. residency, liable to be deported. Portale said if the federal government filed to have her deported, there would be a court proceeding to contest it. ZIFL wonders why the state allowed such a plea to a minor crime when she admitted what was needed to prove premeditated murder. At least the insurer didn’t need to pay the claim.

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More Tips & “How-To” videos at www.FYIExpress.com Fake Insurance Agent Defrauded Investors out of $874,000 Gets Four Years in Prison Anthony Sciarra, of Wethersfield, Conn., was sentenced July 19, 2017 in Hartford federal court will spend almost four years in prison for operating an investment scheme that defrauded people of more than $874,000. Sciarra pleaded guilty to wire fraud in February. Court documents say Sciarra operated AGS Financial, through which he offered insurance, securities and other financial products. He operated the firm from 2001 until May 2012. Around that time, the state revoked his insurance license. Between 2007 and 2015, Sciarra presented himself as an insurance agent and financial advisor when he was not. Through AGS Financial and later another entity, he solicited investments from at least 12 investors with promises of high returns. Authorities say Sciarra used the funds for personal use. Attorney Given Two-Year Prison Sentence for Mail Fraud Susan Kevra-Shiner, who owned a company in Avoca, Pennsylvania that sold insurance policies, was sentenced by a federal judge in Scranton, Pennsylvania. She was previously convicted on seven counts of mail fraud. Kevra-Shiner, a former Pennsylvania attorney was convicted of defrauding dozens of homeowners out of more than $69,000 was sentenced to two years in prison. According to prosecutors, Kevra-Shiner sold fraudulent insurance policies through her company after her insurance underwriter, Stewart Title Guaranty Company, terminated their business relationship in 2008. She defrauded 69 people with these invalid policies and must repay them in full as part of her sentence. Kevra-Shiner will also face three years’ probation after her release from prison. 20-Year Sentence for Firefighter Arsonist Adam Selbee, 20, was sentenced after pleading guilty in May to four counts of arson. Selbee, a former volunteer firefighter in Indiana was sentenced after he was convicted of arson. He was arrested following a spate of fires between July and October 2016 in the Springville area, south of Bloomington, Indiana. Selbee allegedly set fire to homes, a gymnasium and hay bales. He was also accused of placing objects in roadways, which caused accidents.

Police say Selbee admitted to starting the fires and placing objects in roadways because he enjoyed responding to emergency calls Longest Sentence in California for Fraud: 21 Years in Prison Charles Waldo was sentenced to 21 years in prison, and avoided a murder-for-hire case after being convicted of 37 counts related to fraud. Pittsburg resident Waldo was accused of hiring a fellow county jail inmate to kill nine witnesses against him in an insurance fraud and embezzlement case, where Waldo was accused of cooking the books at a junk business he helped manage, and stealing highpriced equipment. Apparently the jurors didn’t believe two jailhouse informants with lengthy criminal records who testified against Waldo. Both jailhouse informants were released from jail after cooperating with law enforcement, and within weeks had been re-arrested and charged with new crimes. Prosecutors were able to convince jurors, though, that Waldo was running illegal moneymaking schemes. He was convicted of 37 counts including insurance fraud, embezzlement, grand theft, illegal gun possession, and arson. Prosecutors say that when he helped run the Martinez junk business, he set up his own cars to be stolen or burned, took money from the business, and also stole a $38,000 generator. It was a contentious trial that included allegations of misconduct and tense moments in court. Judge Barry Baskin indicated at one point he would hold Waldo’s attorney, Chris Martin, in contempt of court, but decided not to at Waldo’s sentencing, Martin said. Waldo, in a jailhouse interview before trial, conceded his guilt on some charges but adamantly denied embezzling the money, saying he was being scapegoated for shady practices of the business’s owner, a prosecution witness, who was engaged in a lawsuit with Waldo. The sentence of 21 years, eight months is one of the longest secured in a fraud case, according to a Contra Costa District Attorney news release that makes no mention of the failed murder-for-hire prosecution. With good behavior, Waldo will be eligible for release after serving half his sentence. Waldo was also ordered to pay $22,500 in fines and stay away from one of his victims. Martin, Waldo’s attorney, said his client is planning to appeal the verdict.

Selbee was a volunteer firefighter with the Perry Township Volunteer Fire Department at the time. FYI Express

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August 2017

More Tips & “How-To” videos at www.FYIExpress.com Word-of-mouth is the strongest marketing there is. This leads us to a fifth P, which helps create an experience that makes people want to talk about you and your organization.

Personalization – The Fifth P In Marketing

The fifth P stand for Personalization. Personalization is a popular word these days. Companies who can personalize their experiences win over customers. I recently attended the Internet Retailers Conference and Expo (IRCE) in Chicago and listened to a number of keynote and breakout presenters talk about how personalization is becoming one of the major differentiators. So, let’s talk about what this really means. Traditional personalization came from remembering past customers, using their name, building rapport and other personal, human-to-human, interactions. A good customer relationship management program (CRM) could help in certain sales and support situations. And today we have amazing technology that plays a part in personalization. Artificial Intelligence puts different types of customers into “personas,” grouping customers by common interests and buying patterns, which allows the company to target customers with extremely relevant promotions. Websites “welcome back” customers, reminding customers what they looked at and bought the last time they visited the site. Better technology has allowed a static website to become interactive and personal – as if you were coming back to a favorite sales person at a favorite store.

I will always remember my first marketing class in college when we learned about the 4 P’s – Product, Price, Place, and Promotion. Well, now there is a fifth P. Before I go any further, as a customer service and experience expert, I believe that service and experience are all about marketing. The first P is about Product. It is assumed that the product is going to do whatever it is supposed to do. After that, it’s about the experience. Is it good enough to get people to come back? Is it good enough to get people to talk about you to their friends and family? If the answer is yes and yes, then your customer service and customer experience are a marketing machine. The nice thing about creating an amazing service experience is that done well, the second P, price, becomes less important. Sure, you need to be competitive, but when there is value in the product and the experience, you take the emphasis off a low price The third P, Place, is about location, be it in close geographical proximity, placement within a store, or by today’s standards, just a simple click away on a website. And the fourth P, Promotion, is obvious. But what if your customers were doing the promoting instead of you? FYI Express

Another powerful personalization strategy is to do something after the sale is made. It can be a follow-up call or a thank you note. Anything that adds value to the relationship or the last interaction. So, here is a little homework. Sit down with your team and discuss the concept of personalization. Then ask: What can we do to deliver a more personalized experience for our customers? Shep Hyken, CSP, CPAE is a customer service expert, hall-of-fame speaker and New York Times and Wall Street Journal bestselling author. He works with organizations to build loyal relationships with their customers and employees. He is also the creator of The Customer Focus, a customer service training program that helps organizations develop a customer service culture and loyalty mindset. For more information contact (314) 6922200 or www.Hyken.com

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August 2017

More Tips & “How-To” videos at www.FYIExpress.com

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August 2017

More Tips & “How-To” videos at www.FYIExpress.com

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We have created the only Virtual Insurance Agent Organization. Our benefits are designed to help agencies in every aspect of their operation and all of it is done on the Internet. It is delivered in a combination of “How-To” videos, interactive quizzes and breaking-news. Just last month I created the “Complete CSR Training” program. Enjoy learning for a change. Next month I’ll be rolling out the “Complete Insurance Agency Owner Training” program. We already have a library of “How-To” booklets on a wide range of agency topics. Want to create a YouTube channel or Facebook for your agency. We have a booklet that takes you by the hand.

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FYI Express

All agency staff members are included for one low fee of $99.00 per year. No hidden fees, no discounted programs. Just to show you how strongly I believe we offer more value for less money, I challenge everyone to dare to compare, dollar for dollar, our benefits against any other organization. If you can prove to me that some other organization has better benefits, I’ll give you a free year’s membership in our organization.

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August 2017

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More Tips & “How-To” videos at www.FYIExpress.com

What is the value your agency puts on staff education? When one thinks of the key pieces of a quality agents E&O prevention program, typically topics such as documentation, exposure analysis checklists, confirmation of client insurance decisions (purchases and rejections) and policy review all come to mind. And they are all very important if an agency truly looks to minimize their E&O claims potential. However, there is one area that could get overlooked or taken for granted. This deals with educating the staff regarding the areas of insurance they handle. There is no doubt that multiple times every day, your agency clients are asking questions on their insurance program. Questions such as the following:

approach. In addition, agencies should look to their state agents’ association for technical training. There are also designation courses (CIC, CPCU, etc.) that provide some technical information. One area that is often overlooked is insurance periodicals. Personally, I feel that the insurance industry is blessed with some great periodicals that cover technical topics on a monthly basis. Bottom line, education of agency staff is a key element in a quality E&O loss prevention program. Dedicating the time and resources should ensure that when the staff are asked the various questions that they are able to respond with confidence and accuracy.

1) What does co-insurance mean? 2) Mom and Dad are in a nursing home so the house is vacant – what do I need to know? 3) What is the difference between ACV and Replacement Cost? 4) Should I get an umbrella? – I don’t have any real assets And there are many more with many being much more complicated. Obviously, the manner in which these questions are answered is key as your clients are probably making decisions based on what you advise them. In addition, in virtually all states, agents will be held accountable for what they say and what they put in writing. Thus, if “incorrect” information is provided and a problem develops, your agency may be found liable.

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Based on this, clearly education of the agency staff should be at a very high level. There are multiple ways to do this. I know of several agencies that have a training department or at a minimum, staff dedicated to instructing the agency staff on a whole host of important technical insurance issues. For many agencies, this type of approach may not be feasible. A good place to start is to do an evaluation of each of the staff and what areas they need further training on. Posing this question to staff might actually be a good FYI Express

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http://www.fyiexpress.com/20-hourpersonal-lines-agent.html August 2017

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More Tips & “How-To” videos at www.FYIExpress.com

First, clearly identify the problem. Then move forward in finding the solution The Producer Online IN ACTION is a monthly reminder of how you can turn the knowledge gained from The Producer Online into powerful sales opportunities.

Finding the exclusions Every policy has a section called “exclusions” but it is very important to never stop reading there. Exclusions or exclusionary language can be found in any part of the policy. One of the most important but often overlooked places to find exclusions is in the Definitions Section.

If it's not broke, it's not covered

Click here to read the Definitions Section in the PF&M Analysis of the HO 00 03–Homeowners Policy Defining a problem

The Flaums proudly displayed their Renoir in their living room for more than30 years. They insured it for $350,000 using a fine arts endorsement on a homeowners policy purchased from Great Northern Insurance. In 2008, when they attempted to sell it they discovered it was a fake. Because their endorsement provided all risks coverage, they filed a claim with Great Northern for $525,000 due to loss of value.

The common definition of a term and the insurance policy definition of a term can be very different resulting in confusion and possible loss of coverage. Have you ever considered talking with your customers about the definition of a “residence” and how insured status changes as people move in or out of a residence? Click here for an e-marketing article you could blog, email, post or include in your newsletter.

Great Northern denied the claim because the painting had sustained no direct physical damage. Click here to see how the appellate court ruled. What is “all risk” coverage?

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The term “all risk” is no longer used in Insurance Service Office (ISO) coverage forms because it suggests unlimited coverage which can lead to claims, such as the one above. Instead, the ISO Fine Arts policy and other personal and commercial lines coverage forms protect against direct physical loss or damage. This very broad coverage is then limited by exclusions or limitations that apply as they are found in the coverage form.

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FYI Express

Questions? Contact Eddie K. Emmett at eddie@fyiexpress.com or (770) 312-2342.

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August 2017

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