GREEN MOUNTAIN AGENT A PUBLICATION OF VERMONT INSURANCE AGENTS ASSOCIATION
FEBRUARY 2018
Seasons May Change, But Our Commitment to the Independent Agent Channel Remains the Same...
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ermont Mutual is proud to have served Vermont and the New England market through the longstanding partnership with our Independent Agents. It remains our privilege to work with the finest Independent Agencies in the industry … the only place you can buy a Vermont Mutual policy.
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In This Issue: February 2018 4 Message from the President
600 Blair Park Road Suite 100 Williston, VT 05495 Phone: 802-229-5884 Fax: 802-876-7912 www.viaa.org VIAA Officers President Erin Odell Vice President Paul Plunkett Secretary/Treasurer Alan Kinney National Director Ron Bixby
Features 7 On the Hill: What Does Tax Reform Mean for You 8 Department of Financial Regulation: Vermonters should exercise caution with Cryptocurrencies 11 Duty (an Opportunity) to Read an Insurance Policy 16 How to Hire the Salespeople of Today and Tomorrow 19 Are You Wasting Time and Money on the Wrong People? 22 A Happy Distribution Force Equals Increased Carrier Profitability 27 E&O Corner: Safety Nets
Directors Chip Ams Daniel Rodliff Michael Barrett
Staff Executive Director Mary Eversole meversole@viaa.org
GMA Publication Design LONDONmiddlebury londonmiddlebury.com
Company News 31 Acuity Insurance 32 Hickok & Boardman
Help Wanted 34 The Richards Group 36 NFP
Message from the President Limitless Possibilities There are many well-known observances in February. They range from haiku writing, Mardi Gras, National Nutella Day, Super Bowl Sunday and that day with all the hearts and roses. A recent addition to this list is Insurance Careers Month, which is an industry wide collaborative effort to raise awareness of the dynamic opportunities in the risk management and insurance profession. We know the statistics. 400,000 insurance positions will be vacant by 2020 nationwide. Millennials are the target market to fill these vacancies. But only five percent of millennials are interested in an insurance career. What I find interesting is while only five percent of millennials express interest in insurance, 50% of millennials want a stable job and 64% of millennials want to make a difference. Insurance offers limitless possibilities in many fields of expertise from accounting, to business, to claims, to math and statistics in addition to of course insurance sales and service itself. Your association is looking at ways to address the talent crisis within the agency plan and respond to an identified need of our membership—help with recruiting and training right here for our agencies in Vermont. This will require significant investment of VIAA resources and it may require additional resources from our members. We are exploring the creation of the “Vermont Insurance Talent Pipeline�, in collaboration with key stakeholders, to help add 4
qualified candidates to the independent insurance agency employment pool. There are great minds who have volunteered to help tackle this issue and design a sustainable training program. Based on early feedback from agency principals, we know that agencies want and will utilize this newly proposed member benefit. In the interim, we are working on leveraging technology to begin educating millennials on a career in insurance and expanding our job posting capabilities for our members. Erin Odell, CIC, CISR, MBA Odell Insurance Agency VIAA Incoming President
Entrepreneurial, Not Bureaucratic Niche Workers’ Compensation and Commercial Line Coverages for Main Street America Get started with an agency appointment application at amtrustappointments.com/Vermont1.
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On the Hill What Does Tax Reform Mean for You? By Jennifer Webb
On Dec. 22, 2017, President Trump signed into law the widest-ranging tax reform legislation in decades. The legislation will impact the tax liability of agents and brokers in 2018 and beyond. The centerpiece of the law is a reduction of the corporate tax rate from 35% to 21%—a significant reform that will positively impact the thousands of Big “I” members organized as C Corporations. The law also changes tax rates for individuals and creates a special deduction for many small businesses, including insurance agencies. The Big “I” government affairs team will continue to update our webpage with the latest information on tax reform and exclusive resources for Big “I” members. The resources are intended to help Big “I” members navigate the salient provisions of the new law, which spans over 500 pages of legislation. Big “I” members can find a twopage chart that outlines the major provisions
of the new law, as well as a ten-page white paper, “Tax Reform: What Independent Insurance Agents & Brokers Need to Know.” Note, however, that the impact of the law will vary depending on the individual circumstances of tax filers. Consult with your accountants, lawyers and other relevant tax and estate planning professionals for advice based on your individual circumstances. As tax reform progressed through Congress, the Big “I” led a coalition of other major producer groups expressing concerns about the bill’s initial treatment of some small businesses. This effort led to improvements in the treatment of pass-through entities in the final law. The Big “I” was also the only insurance group to work closely with the American Society of Association Executives and a small group of other trade associations to strike a provision that would have subjected association name and logo royalties income to the unrelated business income tax for the first time. This change eliminated a new tax liability of millions of dollars per year for the national association and our state associations that would have led to decreased services for independent insurance agents and brokers. Now, the Big “I” will continue advocating with Congress and the Administration on behalf of members regarding recent changes to the tax code, as well as other tax measures that could impact insurance markets or Big “I” members, such as retirement savings. As implementation of the law begins, the Internal Revenue Service will be issuing regulations and guidance, and interpreting provisions of the law that will impact tax planning for insurance agents and brokers moving forward. Keep an eye on the News & Views e-newsletter and the Big “I” tax webpage for future updates on tax reform implementation. 7
Department of Financial Regulation Vermonters should exercise caution with Cryptocurrencies January 29, 2018 – With cryptocurrencies continuing to attract headlines, the Department of Financial Regulation (“DFR”) reminds Vermont investors to be cautious about investments involving cryptocurrencies. “The recent success of cryptocurrencies has drawn considerable interest from the investing public and the media, however, Vermonters should educate themselves about the risks associated with cryptocurrencies, including high volatility and limited oversight, before deciding to invest,” said DFR Commissioner Michael Pieciak. Cryptocurrencies are a medium of exchange that is created and stored electronically in the blockchain, a distributed public database that keeps a permanent record of digital transactions. Current common cryptocurrencies include Bitcoin, Ethereum and Litecoin. Unlike traditional currency, these alternatives have no physical form and typically are not backed by tangible assets. They are not insured or controlled by a central bank or other governmental authority, cannot always be exchanged for other commodities, and are currently subject to little or no regulation. A survey of state and provincial securities regulators by the North American Securities Administrators Association (NASAA), of which DFR is a member, shows 94 percent believe cryptocurrencies involve a “high risk of fraud.” Regulators also were unanimous in their view 8
that more must be done to provide greater investor protection. “Until this past year, the price of Bitcoin was relatively stable, but dramatic price increases and FOMO (the ‘Fear Of Missing Out’) have caused some investors to rush into an investment they may not fully understand,” Pieciak said. “Cryptocurrencies may be a highrisk product with an unproven track record and high price volatility, and when combined with a high risk of fraud, investing in cryptocurrencies is not for the faint of heart.” Last month, NASAA identified Initial Coin Offerings (ICOs) and cryptocurrency-related investment products as emerging investor threats for 2018. Unlike an Initial Public Offering (IPO) when a company sells stocks to raise capital, an ICO typically sells “tokens” in order to fund a project, usually related to the blockchain. The token likely has no value at the time of purchase. Some tokens constitute, or may be exchangeable for, a new cryptocurrency
to be launched by the project, while others entitle investors to a discount, or early rights to a product or service proposed to be offered by the project. NASAA offers a short animated video to help investors understand the risks associated with ICOs and cryptocurrencies. Vermonters are encouraged to call (802-828-3420) or email (dfr.securitiesInfo@vermont.gov) DFR with questions relating to cryptocurrencies. Common Cryptocurrency Concerns Some common concerns investors should consider before investing in cryptocurrency: •
The high volatility of cryptocurrency investments makes them unsuitable for most investors, especially those investing for long-term goals or retirement.
•
Cryptocurrency accounts are not insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA), which insures bank and credit union deposits up to $250,000.
Common Red Flags of Fraud • DFR also reminds investors to keep watch for these common red flags of investment fraud: • “Guaranteed” high investment returns. There is no such thing as guaranteed investment returns, and there is no guarantee that the cryptocurrency will increase in value. Be wary of anyone who promises a high rate of return with little or no risk. •
Unsolicited offers. An unsolicited sales pitch may be part of a fraudulent investment scheme. Cryptocurrency investment opportunities are promoted aggressively through social media and craigslist. Be very wary of an unsolicited communication—meaning you didn’t ask for it and don’t know the sender— about an investment opportunity.
•
Sounds too good to be true. If the project sounds too good to be true, it probably is. Watch out for exaggerated claims about the project’s future success.
•
Cryptocurrency are subject to minimal regulatory oversight, susceptible to cybersecurity breaches or hacks, and there may be no recourse should the cryptocurrency disappear.
•
•
Investors in cryptocurrency are highly reliant upon unregulated companies, including some that may lack appropriate internal controls and may be more susceptible to fraud and theft than regulated financial institutions.
Pressure to buy immediately. Take time to research an investment opportunity before handing over your money. Watch out for pressure to act fast or “get in on the ground floor” of a new tech trend.
•
•
Investors will have to rely upon the strength of their own computer security systems, as well as security systems provided by third parties, to protect purchased cryptocurrencies from loss or theft.
Unlicensed sellers. Many fraudulent investment schemes involve unlicensed individuals or unregistered firms. DFR can help investors research the background of those selling or advising the purchase of an investment. The Department can be reached at 802828-3420, dfr.securitiesInfo@vermont. gov or through our website at dfr.gov.
9
being independent doesn’t mean going it alone.
When you work for yourself, you make your own success. But that doesn’t mean you can’t get help along the way. That’s why Safeco offers programs and services that position you to win. From producer-development and agency-training programs to Bricks & Clicks™, Customers for Life™, and 24/7 Gold Service™ call center support, we’re there.
Reach out to your Territory Manager or Agency Specialist, or visit Safeco.com, to learn more. The audience for this information includes insurance agents and brokers nationwide and is therefore general in nature. Every agent and broker is responsible for knowing the guidelines and laws that govern rating, underwriting, and claims handling in their states. Coverages and features not available in all states; see the Product Guide(s) for details. ©2017 Liberty Mutual Insurance AP 300783 SMART2 2017/01
Feature Article Duty (and Opportunity) to Read an Insurance Policy
Who reads rental agreements at the counter when renting a car? Pretty much no one. Who reads 78-page software or phone app licensing agreements? Almost certainly no one. Who reads insurance policies? Virtually no insureds and far too few insurance professionals like agents, underwriters, and adjusters. Why? In the case of insureds, one reason might be that the actual policy forms are not provided for days or weeks after coverage is bound. A presumption of an insured might be that, if the insurer doesn’t see a need for the insured to read the policy before entering into the insurance contract and perhaps weeks afterwards, is there really any need to read it when received? Would whether or not an insured reads the policy make any difference in how a claim is resolved? Opportunity to Read the Policy Three times in the last few years, I’ve conducted research on the danger of purchasing insurance online. Most recently, it involved getting online quotes for auto and homeowners insurance directly from an insurer’s web site or through several of many web sites that allow you to get multiple premium quotes. In each instance, I communicated through the web site or via email, asking for a copy of the insurance contract (i.e., policy forms) to review in order to make a purchasing decision. In every single instance, as was my experience
in my prior two experiments, the insurer refused to give me a copy of the policy forms. Can you think of any other type of written contract you enter into (financing or leasing an auto, buying or renting a home or apartment, etc.) where the party that wrote the contract REFUSED to allow you to read it before signing? For years I have had a standing $100 offer to the first person who can explain this rationale in a reasonable way. This bizarre approach is dangerous in many ways, the most important one for the purpose of this book being that it conditions consumers (along with incessant price-focused industry advertising) to believe that insurance is a commodity distinguished only by price. By the time you finish this book, we will have dispelled that dangerous myth. What do the courts have to say about the ability of insurers to enforce exclusionary or restrictive policy provisions if the insured has never been given the opportunity to read the policy? In one case, Miller v. Safeco Ins. Co. of America, 683 F. 3d 805 (U.S. Court of Appeals, 7th District, 2012), the court said the “…insurer may not deny coverage based on an exclusion in the policy.” In its decision, it explained that an insurer should not be able to accept a premium “…and then deny liability based on an exclusion of which the insured was not aware because the insurance company had not informed him or her of the exclusion or given him or her the means to ascertain its existence.” In the state of Wisconsin, other cases include Kozlik v. Gulf ins. Co., 268 Wis.2d 491, 673 N.W.2d 343, 348 (Wis. Ct. App., 2003) and Gross v. Lloyds of London Ins. Co., 121 Wis.2d 78, 358 N.W.2d 266, 271 (Wis. Ct. App., 1984). The Kozlik case also references decisions in Alabama, Florida, Kentucky, Michigan, North Dakota, Utah, and Washington, but I have not done an 11
exhaustive review to determine how widespread this position actually is in the judiciary. To answer a prior question, would an insured reading or not reading the policy prior to a claim make any difference in how that claim is resolved? Probably not. However, it might make a BIG difference in whether an insured engages in certain activities, purchases (and uses) certain property, etc. Knowing the likelihood and adequacy of coverage, whether learned by
researched and monitored case law dealing with an insured’s duty to read insurance policies. Over that period, the case law ran about 50/50 as to whether insureds were responsible to read. In many cases that held that the insured was not responsible, the logic of the court was that, even if they read it, they were unlikely to understand it. Rather than print pages of case law on this subject, I’d simply direct you to the often-cited West Virginia Supreme Court “Broadnax” case that discusses this issue and
reading the policy or asking a representative of the insurer, is a critical aid to decision making that involves the assumption of risk.
links to other cases (e.g., Kelly v. Painter) that link to other cases addressing an insured’s obligation to read the insurance contract.
Duty to Read the Policy
The bigger issue, in the context of this book, is whether those in the insurance industry agents, brokers, underwriters, adjusters, consultants, educators, and others have an obligation to read the policies they sell, service, underwrite, adjust, and consult and educate on. The obvious
What do the courts say about an insured’s responsibility to read the policy? As part of a decade-long project on insurance agents’ errors and omissions (E&O) loss control, I 12
response to that question is, “Duh, of course they do.” The reality, though, is that far, far too many do not. I base that contention on a career spanning the past four decades where I’ve worked with many hundreds (if not thousands) agents on literally tens of thousands of coverage and claims issues. There are many outstanding P&C insurance agents in the industry. These are people with an historical perspective of the industry, that understand that our industry’s primary mission is to assist consumers and organizations in minimizing their exposure to serious or catastrophic financial loss. These are men and women who engage in life-long, quality education and abide by the highest professional and ethical standards. They read and understand the insurance policies they sell and service. Sadly, they represent a minority of agents. There are far too many who: • Don’t read policy forms because either they don’t care (apathy or price focus) or they don’t think there’s really any difference (the “Insurance is a Commodity” myth); •
Can’t read policy forms (due to functional illiteracy?);
•
Read but can’t or don’t understand policy forms;
•
Read and THINK they understand policy forms but are not adequately tested by traditional educational and training approaches; or
•
Read and perhaps understand policy forms but can’t apply them to real-life coverage or claims scenarios.
By far, the worst class of agent is the one that doesn’t read the forms they sell or service. In many cases, they simply enter information into a comparative rating system that spits out a list of insurers and premiums with a total disregard to the differences in
coverages between the products and the standards of service provided by the insurers. Worse are those that are simply apathetic and likely working in the wrong industry: “The fact you don’t know “Is enough of a curse; “Not to want to know “Is a fate that’s much worse.” – Rolf B. White These agents offer little more than a professional liability (E&O) insurance backstop for their incompetence compared to the “caveat emptor” do-it-yourself web sites that provide the same type of service. Why don’t they read the policy forms they sell? Many share the mistaken consumer view that insurance is a commodity, that all auto or renters or homeowners policies are essentially the same. As we will discover in this book, that is far from the truth. Others imply don’t care and their apathy imperils the financial solvency of individuals and families. You might ask, how do I know this? Again, from the tens of thousands of questions I’ve received from agents, I can tell by the very nature of their questions. For example, the following are all real questions: “I’ve always heard that insurers must provide 60 days notice of policy nonrenewal. Is that correct?” •
“What is the rule of thumb for cancelling a homeowners policy?”
•
“Does ‘an auto policy’ cover….”
•
“Does ‘a CGL policy” cover….”
•
“Does ‘a’ renter’s/D&O/umbrella/ etc. policy cover….”
Several years ago, I got an inquiry from an insurance agency’s commercial lines manager who also had the Certified Insurance Counselor (CIC) professional designation. She wanted to know if a liquor store needed liquor liability coverage. According to her email, “I 13
was always told that unless you were in the business of selling liquor for consumption on your premises, you did not need to purchase liquor liability.” Just recently I viewed some agent professional liability statistics and noted a very similar claim that arose from the failure to provide liquor liability coverage for a liquor store. “Knowledge by Folklore” (aka, “I’ve always heard that…” is not how coverage determinations should be made. Cancellation and nonrenewal of insurance contracts is something always addressed by
14
insurance policies, often based on permissible reasons and timing prescribed by statutes. When it comes to policy rights, there is no “rule of thumb” or generalization based on hearsay. It’s impossible to answer coverage questions based on “an” auto policy or “a” CGL policy. To answer coverage questions and resolve claims, one must read and interpret the exact language in the insurance contract in question.
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Feature Article How to Hire the Salespeople of Today and Tomorrow By CALIPER Long before a salesperson meets a customer, that customer researched the features and benefits of the products and services in question, read online reviews from other customers and assessed competitor offerings. And that means a successful sales professional can no longer expect to show up, fill the room with personality and win based on a persuasive presentation of features and benefits. To be successful, a salesperson must be a business consultant and partner who conveys a deep knowledge of client needs, competitor activity and consumer trends, as well as how their product or service fits into the client’s strategic plans and helps them hone their competitive advantage. Finally, the salesperson must demonstrate return on investment both in terms of hard dollars and positive, long-term outcomes. At the same time, certain “traditional” aspects of the sales personality continue to bring value to the process. Sales leaders still need representatives who can network for connections, build rapport and develop relationships, establish credibility and trust, ask questions, tailor communication to suit the audience, and use personal impact to promote, persuasively and confidently, solutions that are anchored in industry and functional expertise. That sounds complicated—and it is. So how do you get there? 16
Current Sales Models Research from consumer, personality and business angles reaches the same conclusion: The transactional, “hunter” sales approach does not work as well as we once thought it did, especially not in the present market. It costs more to run a sales operation than it used to, partly thanks to the more sophisticated buying process described above, and some studies suggest aggressiveness in salespeople makes potential buyers feel threatened or otherwise retreat into a defensive posture. This awareness has led to the development of a variety of nuanced sales models in the talent assessment field: •
New business development: similar to the traditional “hunter” role, this type of salesperson is expected to bring in new accounts through some combination of professional networking, cold calls and following up on leads. Negotiating acumen is important as well, as is persisting to close business.
•
Account development: also known as a “farmer” approach, this model is based on relationship management and seeking new business through referrals and introductions. Top account developers collect and leverage information they obtain through formal and informal communication channels and power relationships.
•
Account service: appropriate for roles in which up- and cross-selling existing accounts is the primary method of revenue generation. The person in this type of position should be adept at identifying needs, offering information and building sales though trust established by strong customer service.
markets and client business practices, but also bring new insights and challenge assumptions and conventional approaches. In short, they manifest competencies that are reflective of organizationwide, conceptual, bigpicture thinking. A New Paradigm
•
•
•
Consultative sales: requires a salesperson who can frame the sales role to customers as a business partnership and work collaboratively on solutions. This approach is a more recent trend that developed in response to the information-age sales environment discussed above. Top performers should be able to leverage the relationship to ask probing questions and systematically uncover root causes of business issues, then take ownership of solutions. Technical sales: the purview of the subject-matter expert who can generate sales by leveraging deep, industry-specific knowledge and technical expertise few others possess. The emphasis for this type of sales position is on analytical ability, learning agility and business acumen. Those who specialize in technical sales might partner with a more traditional “closer” to finalize an agreement with a client. Strategic sales: the model that perhaps works best in today’s business climate, strategic sales require what a “knowledge broker.” Such salespeople not only display a deep understanding of products, industries,
Role boundaries and expectations that once dominated thinking in the world of sales are no longer valid. Buyers can gather detailed information about products and the companies that sell them, read reviews, study alternatives and even use software and spreadsheets to eyeball complex data at a glance. They’ve bypassed the features and benefits person completely. Nowadays, the sales professional must do a deep dive into a client organization’s needs to uncover issues the client itself does not recognize, provide insight into the buyer’s industry and stay on top of market trends. The complexity of the current business environment blurs roles and organizational boundaries, necessitating that sellers and buyers collaborate more extensively than ever to navigate intricacies and achieve complementary goals. Today’s successful sales professional must also convey business value, not through charismatic persuasiveness but through compelling and tangible ROI evidence. Hiring managers should be looking for knowledge brokers who bring insight and wisdom to the customer— and differentiate themselves by becoming true strategic partners for their clients.
17
Designations of Distinction In Vermont & New England
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The Certified Insurance Service Representative (CISR) designation program is a nationally recognized education program directed at a very particular job description in the agency—the customer service representative. CISR COURSES MAY BE TAKEN FOR CE CREDITS FOR THOSE NOT SEEKING THE DESIGNATION.
CISR Elite status now offers an even higher distinction for those eager to gain greater skills and knowledge of insurance service and sales.
The CIC Program is for agency and company personnel -- owners, producers, agents, account managers, brokers, underwriters, and marketing or claims personnel. Participants should be licensed agents, brokers, adjusters, or solicitors; or have at least two years of full-time experience in the insurance industry or as a risk management professional; or have served for at least two years as a full-time insurance faculty member at an accredited college or university. CIC COURSES MAY BE TAKEN FOR CE CREDITS FOR THOSE NOT SEEKING THE DESIGNATION. ATTENDANCE REQUIRED FOR ALL DAYS TO RECEIVE CREDIT FOR INDIVIDUAL CLASSES.
James K. Ruble Graduate Seminars are designed specifically for CIC Designees and feature a variety of topics along with real-life applications in a seminar that is designed to satisfy the CIC annual update requirement. YOU MUST BE A CIC OR CRM AND A DUES-PAYING MEMBER OF THE SOCIETY TO ATTEND A RUBLE SEMINAR.
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Feature Article Are You Wasting Time and Money on the Wrong People? By Keith Baldwin It’s a common scenario: You spend weeks interviewing potential candidates for a position at your agency, and you think you’ve found “the one.” After months of training, you realize they’re not right for the position. You, the new recruit and the rest of the team are all frustrated. You let the person go and start the interview process again—and on and on and on. The financial and opportunity costs of making a wrong hiring decision are enormous. According to some estimates, the costs of recruiting, interviewing, selecting and training a new employee range from one to five times the annual salary of the position you’re hiring for. Ouch! Often, the problem is that business owners lack a clear picture of exactly whothey need to hire. You may know everything about the position you’re trying to fill, but understanding who’s best for that position is another matter entirely. Start by asking yourself three questions: What outcomes do I expect for this role? Are you looking for a producer? Someone who continually generates creative ideas? Someone who brings a sense of order to a chaotic work environment? Who’s your dream employee, and how would they impact results? How will the new hire spend their time? What will they do on a daily basis to achieve the outcomes you expect? Will they be in a
back room entering and processing data, or will they be the face of the company? Will they eventually become a team leader in a management position? What talents and traits would make someone excel in this role? Think about someone who’s excelled in this role in the past. What were their talents? What was their personality? Once you have a list, drill down deep. For example, if the best receptionist you ever had was friendly, what exactly do you mean by “friendly”? Good eye contact? Good engagement? A soothing personality? Putting a person in a role that does not utilize their strengths is the surest path to disengagement and frustration for both you and your customers. As Jim Collins said in “Good to Great : Why Some Companies Make the Leap... And Others Don’t,” it’s not just getting the right people on the bus, but getting them in the right seats, too. What to Ask Once you have a solid picture of who’s the ideal candidate for a position, develop interview questions that will help you find the right fit. Your questions should elicit stories that display how someone exemplified the talents and strengths you’re seeking. This helps identify their real self, rather than the “best foot forward” self most people bring to the interview. —K.B. 19
Insurance Careers Movement insurancecareertrifecta.org
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Millennials tend to stay with their career employers longer than Gen X Millennials are now the majority of the workforce in the U.S.
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Female millennials are entering the global work force in larger numbers than ever before, but financial services sector remains least popular. LEARN MORE Millennials and young professionals WANT to work for collaborative and socially conscious organizations.
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Feature Article A Happy Distribution Force Equals Increased Carrier Profitability
The study examined many topics from the agent perspective, including the quoting/ underwriting process, claims process, policy servicing, communications, commissions management, product and service offerings, and insurer risk appetite.
By Katie Butler
“We have what we call key performance indicators (KPIs)—best practices that have the greatest impact on performance—and insurers tend to meet them at a low frequency in this study,” says Jessica McGregor, strategy and growth director, global insurance practice at J.D. Power. “The study looked at KPIs for both personal and commercial lines, and there were common themes [in agent sentiment] in both areas.”
Independent agents represent a “significant growth engine” for insurers that understand how to build strong relationships with their distribution force, according to a new J.D. Power study. But there is room for improvement in the agent-carrier relationship. According to the inaugural J.D. Power Independent Insurance Agents Satisfaction Study developed in alliance with the Big “I”, carriers with the highest satisfaction rate among agents are able to offer competitive agent commission while maintaining expense ratio discipline—and are ultimately more profitable. But overall, property-casualty carriers are falling short of agent expectations. The new study shows that among agents, overall satisfaction with carriers is just 696 on a 1,000-point scale for personal lines and 686 for commercial lines—among the lowest scores for business-to-business relationships across all industries in J.D. Power satisfaction studies. “Consumers tend to be fairly happy with their p-c carrier, and the fact that agents were not was the biggest surprise of the study,” says Greg Hoeg, vice president, insurance practice at J.D. Power. “Or maybe it’s not a not a surprise, because agents are responsible for their clients, and they expect carriers to honor their commitment. It’s a credit to agents that they are being vigilant and ultimately a good filter in improving the end client’s satisfaction with carriers.” 22
For personal lines, the top three agent KPIs include factors in product offerings and risk appetite, quoting, and commission. Agents said it’s most important for carriers to be “completely flexible during the design/ onboarding of client policies”; the ability to “easily find support information on a carrier’s website to help sell a policy” came next, followed by “total compensation is reasonable to reinvest into the business and achieve a reasonable ROI.” In commercial lines, agents also ranked flexibility during the design/onboarding of client policies as the most important factor in carrier satisfaction. Having clients “‘often’ or ‘sometimes’ qualify for a program” came in second, followed by the ability to “easily find support information on a carrier’s website to sell a policy.” What can carriers do to improve their relationships with agents? In line with the results of the KPI rankings, J.D. Power notes that independent agents want p-c insurers with broad risk appetites. Agent satisfaction is lowest when an insurer only offers standard options
for policies, scoring 643 for personal lines and 634 for commercial lines. When insurers offer standard coverage but also accommodate specialty risks, overall satisfaction scores jump to 756 for personal lines and 708 for commercial lines. In addition, the study found that personal lines insurers with the highest commission ratios also have the highest satisfaction among independent agents and maintain the most profitable operating ratios. “Companies that are willing to compensate well are picky about what agents they have,” Hoeg says. “If you’re going to pay a high commission, you’re a demanding company.” But the study notes that fostering a trusted adviser relationship between agents and carriers gives carriers access to a relationship with the agent’s most valued customers and potential customers—thus improving the carrier’s bottom line. Overall, Hoeg notes carriers need to focus on ease of doing business with agents to increase
sales volume, customer retention and overall satisfaction. “The more you make an agent work to find out things on behalf of their customer, it takes time away from the carrier’s employees and the agent,” he says. On the flip side, Hoeg points out that agents sometimes make it harder on themselves by not being oriented with a company’s way of doing business, suggesting they change the way they look at a carrier’s digital interactions with consumers. “Agents are still viewed by customers as the expert and the trusted adviser,” he says. “Agents shouldn’t view digital interactions that carriers have with consumers as competition— it’s a tool to help them be more effective in their role.” Top-performing carriers in the study for personal lines were Auto-Owners Insurance (795), followed by Safeco (742) and Travelers (700). Liberty Mutual performed highest in commercial lines (714), followed by The Hartford (710) and Travelers (705).
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&O ECORNER Safety Nets: Setting the right E&O limits for your agency By Ellen McCarthy At some point, a customer has probably asked you, “What coverage limits do I need?” In response, you advised a thorough risk analysis and consideration of ultimate payout in the event of a claim, including property value, potential lost income and liability exposure. But when determining what errors & omissions limits to purchase for your own agency, how often does the “Do as I say, not as I do” mentality reign? Consider the following examples from the Swiss Re Corporate Solutions claims archives: Scenario 1: An agency writes commercial property insurance for a number of large manufacturers. A client’s warehouse burns to the ground in a fire that destroys the building and all inventory, with losses in excess of $15 million. The carrier denies coverage on the basis that the policy identified the wrong entity as the insured. The client makes a claim against the agency for the error. The agency carries $2 million per claim/$4 million aggregate E&O coverage— leaving a substantial uninsured exposure. Scenario 2: An agency writes only personal lines insurance for moderate value homes. The agency is confident that its $1 million per claim/$2 million aggregate E&O policy is sufficient to cover any potential E&O claims. But when a major hurricane strikes the area and affects many of the agency’s customers, more than 60 of them assert that the agency
failed to advise the need for flood insurance, with aggregate claims totaling more than $10 million. The agency’s limits may be inadequate to cover all claims. Scenario 3: An agency’s client has $1 million auto liability limits. The client is responsible for an accident that renders the other driver a paraplegic. The injured party sues the client in a dangerous jurisdiction and obtains a verdict of $6.8 million. The client then sues the agency on the basis that the agency should have urged them to purchase higher limits. The agency itself has $3 million E&O limits—insufficient coverage for the asserted damages. All these scenarios are common causes of E&O claims. Want to avoid getting a letter from your E&O carrier informing you of an uncovered, excess exposure? When selecting E&O coverage limits, ask—and honestly answer—the following questions: 1. Are our current E&O limits equal to or higher than the highest limits written for our customers? 2. Are our aggregate E&O limits sufficient in the event of multiple claims during a policy period, such as because of a catastrophe? 3. Is our agency located in a jurisdiction known for runaway verdicts? 4. Do we have sufficient assets or other protection to sustain a loss in excess of our E&O limits? At E&O renewal time, don’t just check the box with the lowest (or last year’s) premium. Do a thorough risk analysis for your own business, because spending a few more dollars now could be well worth it later.
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Helen Collins hcollins@viaa.org
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Company News Acuity Sets Growth Records in 2017
quotes received, quote hit ratio, new business written premium, new policies issued, and customer retention. In personal lines, the insurer achieved an astounding 21st consecutive year of growth, setting a record for total written premium.
Acuity Insurance announced that it set new records for business growth across several categories in 2017. Highlighting the insurer’s financial success is a gain of over $62 million in total written premium during the year, bringing its revenue to an all-time high of $1.44 billion as it enters 2018.
“Acuity’s financial success in 2017 is the result of an outstanding partnership between our independent agency force and dedicated staff and the trust of our mutual customers,” said Wally Waldhart, Vice President - Sales and Communications. “We are thankful to everyone who helped us achieve another record-setting year, and we look forward to continued success in 2018.”
“For the past 18 years, Acuity has consistently grown faster than the insurance industry, and this past year is no exception to that trend,” said Acuity President and CEO Ben Salzmann. “Our 2017 growth is more than double what we expected earlier in the year and is particularly remarkable given the challenging industry conditions that have other carriers struggling.” In 2017, Acuity broke the barrier of 300,000 policies in force for the first time in its 92-year history, reached an all-time high companywide new business written premium, and smashed records in both commercial and personal lines. In commercial lines, Acuity attained new high marks in
“We see insurance industry conditions for 2018 supporting even more growth for Acuity,” Salzmann added. “For instance, many of our competitors are significantly tightening their appetite in commercial automobile insurance or pulling out of the line altogether. In contrast, we are an active market for commercial auto and anticipate continued long-term profitable growth opportunity in the line.” _______________________________ Acuity, headquartered in Sheboygan, Wisconsin, is a property and casualty insurer that operates in 26 states, generates nearly $1.4 billion in revenue through 1,000 independent agencies, and manages over $4 billion in assets. Named one of the top 10 large companies to work for in America, Acuity employs over 1,200 people.
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Company News The Hickok & Boardman Network of Companies Honored As 2018 Best Places to Work in Vermont Burlington, VT – January 31, 2018 -- The Hickok & Boardman Network of Companies achieved the ultimate workplace trifecta as three companies from within the Network are recognized among the 2018 “50 Best Places to Work in Vermont.” The twelfth annual list of the Best Places to Work in Vermont was created by Vermont Business Magazine, the Vermont Chamber of Commerce, the Vermont Department of Economic Develop-
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ment, the Vermont Department of Labor, the Society for Human Resource Management (SHRM) – Vermont State Council and Best Companies Group. Three divisions of the Hickok & Boardman Network of Companies including Hickok & Boardman Insurance, Coldwell Banker Hickok & Boardman Realty, and Hickok & Boardman Financial Planning & HR Intelligence were each named to the list of Best Places to Work in Vermont. This statewide survey is designed to identify, recognize and honor the best places of employment in Vermont, its workforce and businesses. The origins of Hickok & Boardman date back to 1821 beginning with Hickok & Boardman Insurance. In the mid to late 1900’s, the company experienced significant growth to include Real Estate, Financial Planning, Retirement and Group Benefit services. Today, the companies each independently owned and operated, form the Hickok & Boardman Network of Companies with Burlington, Vermont serving as the headquarters for each firm. Combined, they employ over 220 Staff and contracted Real Estate Sales Associates.
Looking to Take Your Personal We Want You!
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South Burlington, VT NFP, a leading insurance broker and consultant that provides employee benefits, property & casualty (P&C), retirement, and individual insurance and wealth management solutions is currently seeking an experienced Personal Lines Producer to advance his or her career as a 2017, Commercial Producer Recognized in 2016, and 2018Lines as one of the in its South Burlington office. This position Best Places to Work in Vermont, The Richards for generating newinsurance sales for Groupisisresponsible an independent, full-service all Commercial Lines policies and requires and financial services agency who has been the ability to work closely with clients, serving the communities of the tri-state region customer service representatives, producers, since 1867. management, and insurance carriers. The work environment professional and very We are always looking forishighly motivated supportive. Theexcellent ideal candidate should have individuals who have customer service excellent interpersonal skills, {2+} years of and relationship skills. The Richards experience,building and ability to adapt to emerging Grouptechnology. offers a competitive salary commensurate They will be supported with with experience aslines well training as a comprehensive commercial and mentoring for benefits package. We are actively recruiting forand prospect/planning, sales calls, proposals education. A property and casualty license is required. NFP offers a highly competitive compensation and benefits package.
Please send your resume to: Dan Rodliff Vice President, NFP P&C theBox following PO 2243 positions: South Burlington, VT 05407 Or• Accounts Payable Coordinator, Brattleboro • Commercial Lines Sales Producer, Rutland Email: dan.rodliff @nfp.com • Receptionist, Brattleboro • Personal Lines Account Manager, Brattleboro • Employee Benefits Account Manager, all locations For job description and requirement please visit https://therichardsgrp.com/about/careers/ Submit Cover Letter and Resume to jobs@therichardsgrp.com
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Commercial Lines Account Manager Agency dedicated to superior customer service with employees committed to adding value to every client activity. We offer our clients complete insurance services. We are currently seeking an experienced Insurance Account Manager for our Commercial Lines Division. The position consists of primary day-to-day point of contact with customers and acting as a liaison between the client, the carrier and the sales producer.
• Renewals-retains and services existing accounts, maintains direct communications with each client. • Ensure proper account documentation • Monitor financial status of accounts, collect premiums, and adhere to agency collection policies. • Travel as needed to accommodate and attend scheduled client visits, company meetings, and continuing education. • EDUCATION/EXPERIENCE/ LICENSES/CERTIFICATIONS: • Highly organized with excellent verbal and written communication skills.
ESSENTIAL DUTIES & RESPONSIBILITIES:
• Computer literacy required.
• Professional and prompt customer service including phone, email and walk-in inquiries on new and existing client accounts, including client questions on topics such as coverage, reporting of claims, audits, etc.
• Flexibility and adaptability to changing priorities, deadlines and technology.
• Coordinate policy changes, receive and process new claims, and assist as needed on existing claims. • Review prospective new clients’ insurance policies. Develop accurate information for account submissions and analysis. • Prepare applications for quotation. Obtain updated renewal information and have to marketing 120 days out. • Review and quote renewal policies. Policy review – quality control for policies, new or renewal. 36
• Sharp attention to detail.
• Thrives in both team and independent working environments. • High School diploma required; college degree preferred. • Three to five years in company or agency underwriting a Plus. • Agency experience preferred • Property/Casualty License required Send your resume and cover letter to Robin Bilodeau, CPIW, CISR, Operations Manager at NFP P & C Services, Inc. Email Robin at robin.bilodeau@nfp.com
Granite
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Maple Travelers
Champlain AmTrust North America, Inc. Berkshire Hathaway GUARD
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Patriot Insurance Company
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