Jeff Albright
Chief Executive Officer
jalbright@iiabl.com
(225) 236-1366
Benjamin Albright
Vice-President of Strategic Initiatives balbright@iiabl.com
(225) 236-1357
Karen Kuylen
Director of Accounting & Finance kkuylen@iiabl.com
(225) 236-1353
Jamie Newchurch
Director of Insurance Programs jnewchurch@iiabl.com
(225) 236-1350
Kathleen O'Regan
Director of Communications & Events koregan@iiabl.com
(225) 236-1360
Brandi Van Pelt
Insurance Programs Administrator bvanpelt@iiabl.com
(225) 236-1358
Dustin Wambsgans
Agency Consultant dwambsgans@iiabl.com
(225) 236-1361
Karson Roberts Communications & Event Administrator kroberts@iiabl.com
(225) 236-1351
How Reinsurance Rates are Contributing to the
Market P&C Market to Remain Unprofitable Until 2025
Louisiana Assignment of Benefits Ban a Win for Insureds & Carriers
Why Teachers & Tutors Need an RLI Home Business Insurance Policy
Round Two of Insurer Application Period Now Open for Insure Louisiana Incentive Program
Avoiding E&O Exposure When Turning Prospects into Long-term Clients
Finance Dance: The Quiet Movement Toward Transforming the Finance Team
Fast-Track Contract Program: Flexibility to meet the needs of your Small Contractor Advertiser Index
5 Ways to Market Insurance to Micro Small Businesses
Why Carriers Choose to Partner with IMS Upcoming Events 2023 Industry Partners
IIABL has received numerous questions and concerns from member agents regarding LDI Directive 222 - Louisiana Citizens Takeout.
Commissioner Donelon has stated publicly in multiple media outlets that he thinks that every LA Citizens policyholder should take advantage of the takeout program to save money.
On behalf of our member agencies, IIABL has explained to Commissioner Donelon and to the media that there are many legitimate reasons why an agent may advise their customer NOT to accept the takeout. Price is not the only consideration.
1) A number of take-out insurers that did get take-out policies approved in the past went insolvent. This caused significant problems for policyholders and agents with cancel and rewriting of policies, unpaid claims, long delayed return premiums, etc.
2) Some take-out insurers took policies out, reunderwrote the policies on renewal and then nonrenewed policies which had to be placed back in Citizens. That is not good for the policyholder or the agent.
3) Other take-out insurers took policies out and on renewal applied big rate increases which made the policies unaffordable, so policies had to be moved back to LA Citizens.
4) Some take-out insurers have coverage limitations which make their policies inferior to Citizens. The agent must protect policyholder coverage.
IIABL has expressed agent concerns to Commissioner Donelon, in part:
We know that you have many considerations to weigh in these communications, but the negative tone towards agents is causing significant problems for our members who are already overwhelmed by the market availability crisis, and who are trying to get the best option available for their policyholders.
Continued from page 6
As you know better than most, price can't be the ONLY consideration in insurance. Agents have to consider the coverage forms, limits, and underwriting guidelines of a takeout carrier to truly do their due diligence for their client, not all of which is considered in a takeout call.
If a policyholder is taken out of Citizens only to be nonrenewed at the first inspection, that's bad for the agent, the policyholder, and the Citizens team who has to re-underwrite that policy.
We understand the need to depopulate Citizens, but we would appreciate some consideration of factors beyond price in the future. Agents often have very legitimate reasons for denying a takeout and communications regarding the program have not considered that fact to this point.
We asked Commissioner Donelon to clarify what agents are required to do to comply with Directive 222.
Commissioner Donelon acknowledged that there legitimate reasons for agents not to authorize a LA Citizens takeout.
The requirement in Directive 222 is for agents to communicate with each policyholder who is eligible for takeout and advise them of the action the agency plans to take, so the policyholder is informed and can get additional information or take further action if necessary.
Continued from page 7
Charles Symington is the new president & CEO of the Independent Insurance Agents & Brokers of America (the Big “I"), effective Sept. 1.
Joining the Big “I" nearly 20 years ago, Symington previously served as senior vice president for external, industry and government affairs. Last September, he was promoted to executive vice president and selected to succeed the retiring Bob Rusbuldt as president & CEO.
Indepedent Insurance Agents & Brokers of America
“The Big 'I' is proud to have such a dedicated and experienced leader at the helm," says Big “I" chairman John Costello of USI Insurance Services in Rochester, New York. “Charles has spent many years fiercely advocating on behalf of the independent agency channel and is well-attuned to the needs of independent agents and brokers across the country. The Big 'I' Executive Committee and Board of Directors look forward to working with Charles as he takes the Big 'I' to new heights."
President & CEOIn his first presentation to the IIABA Board of Directors in September, Symington outlined his priorities for the future of the Big I.
1) Advocacy – representing agents on Capitol Hill has always been the great strength of IIABA, and will continue to be a critical mission for the Big I.
2) Diversity and inclusion – expanding Big I membership to reflect all aspects of our diverse population and cultures.
3) Technology – helping agents utilize technology to maximize their business opportunities and expanding the use of technology to serve Big I members.
4) Market access – the current hard market has demonstrated the need for the Big I to work with insurance company partners to provide markets to member agencies, particularly small agencies and start up agencies.
5) National–State relationships – improved integration of Big I national and state associations to maximize benefits to member agencies.
Continued from page 10
Symington joined the Big “I" in 2004 on the government affairs staff. He has been regularly recognized by The Hill newspaper as a top lobbyist in Washington, D.C., and has been a key leader in many industry coalitions on Capitol Hill, advocating on issues important to Big “I" members. Under Symington's leadership, the Big “I" has had numerous legislative wins, including securing substantial small business tax relief, defending a modernized state regulatory system for insurance, preserving the Federal Crop Insurance Program and National Flood Insurance Program, and extending the Terrorism Risk Insurance Act (TRIA).
“Independent insurance agents are a critical piece of our nation's economy with their tireless work serving their communities and protecting the livelihoods and property of their neighbors," Symington says. “It is an honor to continue my work at the Big 'I' on behalf of our members in my new role. As we provide resources, support and advocacy for independent agents through the challenges and opportunities ahead, I look forward to working together with the many dedicated leaders in our industry to improve and protect the independent agency channel and the many customers it serves."
Prior to joining the Big “I," Symington served as a senior counsel with the U.S. House of Representatives Committee on Financial Services from 2000-2003 where he focused on insurance issues. During that time, he was actively involved in drafting TRIA in 2002 and other significant legislation. He also worked as a majority counsel for the House Committee on Energy and Commerce, concentrating on health care policy and oversight.
Continued from page 11
Symington worked in the private sector before his time on Capitol Hill, first as an associate attorney with Drew, Eckl & Farnham in Atlanta, specializing in insurance defense litigation, and then as an attorney with the firm Matricardi & Moylan in Springfield, Virginia.
Each year, IIABL analyzes the data insurers must file with the Department of Insurance to better understand our marketplace. This year’s version of the marketplace summary will be available soon (watch for the email), but here is a preview of some of the key takeaways:
Total written premiums in Louisiana rose significantly from 2021 to 2022
Increased by 12% ($1.6 Billion)
For comparison, the previous 2 years experienced a growth rate of 5.6% (~700 Million) and 0.8% (~100M) respectively
The average total premium per capita is up to $3,227 in Louisiana (from $2,844)
Homeowners premiums rose by around 15%
Allied Lines premiums (which include nonhomeowners wind/hail) grew by over 50% in a single year
Noteworthy loss ratios – note that these are pure loss ratios, so they do not account for expenses While it varies by company and by line, healthy loss ratios are generally expected to be in the 60s or lower
Commercial auto – 78%
Private Passenger auto – 75%
Homeowners – 39%
Allied Lines (includes non-homeowners wind/hail) - 29%
Fire (non-homeowners) – 119%
Workers Comp – 43% Crop – 90%
Workers Comp continues to be the only major line of business that is proving profitable in Louisiana, long-term. Auto and property continue to be unprofitable for insurers because of catastrophe and tort issues. Crop is not profitable and will likely continue to take rate, as in the rest of the country.
Independent agents are writing a bigger percentage of the total premiums than ever before.
60% of total premium volume in 2022 (up from 57%)
47% of Homeowners (up from 44%)
More business continues to move to surplus lines (13.1% of all premiums)
This figure is almost certainly underrepresented because of the lack of data available on alien insurers
We are all too familiar with the current hard market – upswing in insurance market cycle, premium increases, coverage terms restricted, and capacity for most types of insurance have decreased.
Several different factors affect insurance pricing and contribute to a hardening market: Catastrophic losses – floods, hurricanes, wildfires, and similar disasters. Sound familiar?
Navigating a hard market calls for strategic foresight and well-informed decision-making. Businesses are reassessing their insurance needs, refining their risk management strategies, and engaging in discussions with YOU, the insurance professional, who can guide them through these challenging times.
The hard market is an opportunity to focus on the value that you can provide your customers, not just pricing.
During this series of luncheons, Jeff & Ben Albright will help you understand the causes of the hard market and provide you with resources so that you and your employees can better communicate with your customers during these difficult times.
Jeff and Ben will share data from AM Best, NAIC, and other industry sources to provide attendees with an overview of the state of the marketplace when navigating the hard market. The data shared can inform your business decisions and how you discuss renewals with clients.
Talking about insurance is not a client’s favorite thing to do. They may not understand the depth of today’s adverse conditions. Does your team know how to advise clients and what not to say during a hard market? During a hard market, it’s imperative to stay in continuous communication with your clients.
Teaching your employees how to help customers and create better strategies, processes and procedures. Membership with IIABL means you have access to a variety of resources to help set you up for success.
There are six opportunities to join Jeff & Ben as we share ways you can help your customers through the hard market. Please make plans to join us and register for one of the locations near you!
Lafayette Luncheon – Oct. 3 – Ruffino’s
Alexandria Luncheon – Oct. 16 – Diamond
Grill
Shreveport Luncheon – Oct. 17 – The Shreveport Club
Baton Rouge Luncheon – Oct. 18 – Juban’s
Mandeville Luncheon – Oct. 26 –
Benedicts
Metairie Luncheon – Oct. 31 -- Metairie
Country Club
Continued from page 15
September 2023
The soft reinsurance market conditions that had prevailed for close to 15 years came to an end in 2020. Since then, 40-year high inflation rates that have been exacerbated by the war in Ukraine, a challenging 2022 storm season, concerns over climate change, and investor pressures to improve performance are all factors that have been impacting reinsurance rates and capacity offerings, according to “Aon's Reinsurance Aggregate (ARA) Results for the Year to December 31, 2022" report.
These headwinds, coupled with a complex reinsurance renewal period this year in which reinsurers followed strict underwriting guidelines and tightened treaty terms and conditions with new exclusions, combined to drive insurance prices up during the first quarter of 2023, according to the report.
Common exclusions added by reinsurers include communicable diseases and cyber. New this year was an updated cyber war exclusion covering attacks that could cripple a nation's ability to function. While this has raised some concerns within the industry, it may offer more benefits for policyholders.
Overall, the lines of business most significantly impacted by increasing reinsurance rates include catastrophe-prone property risks and specialty lines of business
“Reinsurers are focused on improving the bottomline results, since legal system abuse, inflation and climate change have really taken a toll on industry results over the past five to six years," says Kerri Hamm, executive vice president, head of business development, Munich Re U.S. “Reinsurers are focused on getting high-quality quantitative and qualitative information, which they used to deepen their analyses of significant loss exposures."
Further, after years of low-interest rate returns on their fixed-income portfolio along with poor underwriting margins, reinsurers are looking to reset the market by putting upward pressure on pricing and regaining some capital, which declined by approximately 15% in 2022, according to Beinsure While insurers were able to purchase the reinsurance protection they needed during the January renewal period, it was at significantly higher rates and retentions
Continued from page 18
In the commercial property segment, property rates rose by 20% in the first quarter due to large increases in reinsurance costs, according to CIAB while some reinsurers partially or completely withdrew from the property & catastrophe segment in an effort to limit losses. Specialty lines closely connected to war, including marine and aviation, also saw rate increases linked to increasing reinsurance costs.
More recently, commercial property reinsurance rates rose between 30% and 50% for accounts with catastrophe losses at June 1 and July 1 reinsurance renewals, according to a report from Gallagher Re. While significant, such increases were less than those experienced earlier in the year as mid-year property catastrophe capacity improved with top layers on some oversubscribed U.S. national programs, according to an Aon report.
Looking ahead, changes in terms could be even more important than higher pricing, with the property reinsurance market in true hard market territory for the first time in over two decades, according to analysts at JMP Securities LLC. As claims inflation is expected to continue through 2023, reinsurers are expected to continue to push further price increases and higher limits in this line.
However, “there are certainly opportunities for reinsurers to expand their portfolios in ways that are responsible and healthy, especially as insurers desire not just high-quality capacity, but also market insights and risk guidance that knowledgebased reinsurers can bring to the table," Hamm says.
The hard market requires that risks are explained and negotiated in every detail, both in numbers and in words. Meanwhile, insurers and reinsurers are looking for more information and transparency before assuming any risk.
As agents look to provide coverage for clients in this atmosphere, “my advice is for agents to read the forms, learn the coverage, and get into the details," Hamm says. “I also recommend specializing where possible: Join a trade association and really get into the details of the businesses that you are insuring and get to know the deeper business needs of your clients "
Continued from page 19
The overall property & casualty industry is forecast to finish 2023 with a net combined ratio at 102.2, nearly identical to the final 2022 result of 102.4, according to the latest underwriting projections by actuaries at the Insurance Information Institute (Triple-I) and Milliman, which also said that the p&c industry will not post a ratio below 100 and return to profitability until 2025.
The projection provides little solace after underwriting results deteriorated across the board for big personal lines carriers in the first half of 2023, prompting more carrier pullbacks.
Poor personal lines underwriting performance is the key driver of results in 2022 and 2023, with personal auto projected to post a net combined ratio of 109.5 in 2023. Additionally, large catastrophe losses in the first half of 2023 dashed hopes of a market recovery after a difficult 2022.
The net combined ratio is the sum of two ratios, one calculated by dividing incurred losses plus loss adjustment expense (LAE) by earned premiums in a year, and the other by dividing all other expenses by either written or earned premiums, according to the Insurance Risk Management Institute.
A ratio below 100% indicates that the company is making an underwriting profit, while a ratio above 100% means that it is paying out more money in claims than it is receiving from premiums.
“Catastrophe losses in the first half of 2023 were the highest in over two decades, slightly higher than the record set in first half of 2021," said Dale Porfilio, chief insurance officer at Triple-I. “The good news is that the personal auto net combined ratio is beginning to show incremental improvement. Moreover, commercial lines continues its strong overall performance."
Poor personal lines underwriting performance is the key driver for deteriorating results, with a personal auto combined ratio forecast of 109.5 for 2023.Will Jones IA editor-in-chief
“We forecast net combined ratios to incrementally improve each year from 2023 to 2025, with the industry returning to a small underwriting profit in 2025," he added.
For homeowners, Porfilio noted that the 2023 net combined ratio forecast of 104.8 is nearly identical to the 2022 actual ratio, and said that homeowners incurred the majority of the first half of 2023 elevated catastrophes.
“A cumulative replacement cost increase of 55% from 2019-2022 contributes to our forecast of underwriting losses through 2025," he said. “Premium growth in 2023-2025 is forecast to be elevated primarily due to rate increases."
Continued from page 22
Louisiana’s property insurance market has been challenging after the state was hit by record hurricane activity during the 2020 and 2021 seasons. Louisiana suffered from a string of hurricane hits with Laura, Delta and Zeta hitting the state in 2020, followed by Ida in 2021. That heightened hurricane activity generated approximately 800,000 claims in those two years alone, resulting in $25 billion in paid losses that caused insurers to pull back from the Louisiana market.4 In fact, 11 insurers writing homeowners coverage in Louisiana were declared insolvent between July 2021 and February 2023.
Twelve additional insurers withdrew from the state and 50 companies stopped writing new business in hurricane prone parishes, creating a capacity crisis. On top of capacity issues, legal system abuse had become a persistent issue in recent years with strict bad faith laws contributing to inflated claims payments and awards.
During the 2023 legislative session, Louisiana lawmakers took strides to foster a healthier insurance marketplace in the state by passing a broad ban on assignment of benefits (AOB). AOB is the practice by which policyholders sign over their insurance benefits to a third party, such as a contractor, attorney, or public adjuster for repairs or other services. While AOB has become a common practice across the U S , in some states – most notably, Florida and Louisiana – it had become a source of widespread claim fraud 1 It also frequently led to insurers being faced with unnecessarily high claims
These problems were highlighted in February 2023, when Louisiana Insurance Commissioner, Jim Donelon, ordered a Houston-based law firm to cease and desist, accusing the firm of committing fraud involving hundreds of hurricane- related claims in Louisiana. The firm had filed more than 1,500 Hurricane Laura claim lawsuits in Louisiana over the span of only three months in 2022, just prior to the deadline to file suits related to the Category 4 hurricane that struck in 2020.
An investigation by the Louisiana Department of Insurance found the Houston-based law firm, McClenny, Moseley & Associates (MM&A) engaged in insurance fraud and unfair trade practices through Alabama-based Apex Roofing & Restoration. MM&A started working with Apex Roofing in 2021, and their agreement revolved around AOBs. Apex’s strategy was to walk through neighborhoods and knock on doors after a hurricane or other major wind/hail event to drum up roofing claims and drive forced arbitration for full policy limits.
According to the roofing company, MM&A was hired to review their clients’ policies, process the AOBs, and represent Apex’s interests with the insurance companies.
Considering most homeowners in a neighborhood were insured by a limited number of insurance companies, this put the majority of losses on the same carriers, wiping out reserves and resulting in carrier downgrades while insurers grappled with what to do in the face of outsized losses. Since the commissioner’s original cease and desist, MM&A has faced accusations of criminal behavior along with growing sanctions and has since shuttered operations in Louisiana.
Continued from page 24
Louisiana’s AOB ban follows a similar recent ban in Florida. In December 2022, Florida’s Governor signed Senate Bill 2-A, a new law to help support the state’s property insurance industry. One of the most important parts of that bill was its prohibition on assigning benefits. According to SB 2-A, Florida property owners with insurance policies issued after January 1st, 2023, may not assign their insurance benefits to another party.
Similarly, Louisiana policyholders can no longer assign post-loss benefits under residential or commercial policies to anyone providing services, such as a contractor. It does carve out assigning benefits to a lender or purchaser and applies only to property coverage. Closing the AOB loophole means assigning residential or commercial property insurance benefits is now illegal and considered an unfair or deceptive trade practice.
Continued from page 25
It is hoped that banning AOBs will help stabilize Louisiana’s property insurance market and attract new entrants to the space by reducing the strain on insurers and leading to lower prices for consumers. As measures are put into place to protect companies and policyholders from scams and financial strength rating downgrades, carriers will have the opportunity to take a different approach to insuring Louisiana property.
The Louisiana Legislature also agreed to allocate an additional $10 million for the previously approved insurer incentive program, bringing the total amount available to insurers that agree to enter the state’s home insurance market and offer new coverage, to $55 million. In addition, the legislature approved $30 million for a long-term grant program intended to help homeowners fortify their homes against hurricanes
Time will tell whether the fresh legislation will have the desired effect. However, hopes are high that Louisiana has paved the way for claims process reforms that should strengthen the property market for the long term. The state’s new law is good for carriers and should attract them to the area. It’s also good news for policyholders, ensuring that their coverage limits aren’t abused by a third party. Navigating placements in Louisiana can be complicated, and partnering with a trusted wholesale broker with extensive market access and knowledge can make a difference in your results. Reach out to your local CRC Group producer today to learn how we can help your insureds navigate the evolving coverage landscape in Louisiana.
When it comes to helping students learn, educators are at the top of their class. And with many institutions offering classes virtually, these teachers and tutors are often working as independent instructors or from their homes.
That’s why it’s important to educate teachers and tutors about the importance of a home business insurance policy from RLI.
An RLI Home Business Insurance policy provides coverage related to:
business personal property (equipment, inventory and supplies) and business-related liability exposures lost income losses or damage from business activities conducted at the business owner’s home or offsite at another location business property while in transit liability coverage when performing businessrelated activities at someone else’s residence.
With liability limits up to $1 million and business property protection up to $100,000 (with a $250 deductible), an RLI Home Business Insurance policy provides valuable coverage at affordable rates.
So be smart when it comes to your teacher and tutor customers. Let them know that an RLI Home Business Insurance policy is the best way for them to stay at the head of the class.
For more information, contact your state's administrator or visit www.iiaba.net/homebusiness
Contact Brandi Van Pelt, IIABL Insurance Programs Administrator, for additional information on our RLI program.
Email: bvanpelt@iiabl.com
Phone: (225) 236-1358
September 1, 2023
Insurance Commissioner Jim Donelon announced that the second 30-day application period for insurance companies to apply for Insure Louisiana Incentive Program funding will open September 1 and close September 30. The program is designed to offer grants to insurers that write new policies in Louisiana. Insurance companies that are interested in participating can learn more and apply at ldi.la.gov/insurela.
"This program is designed to bring immediate relief to residents who can’t find a policy or are experiencing unaffordable rates, especially those in Louisiana Citizens," Commissioner Donelon said. "Getting policyholders out of Citizens is vital to Louisiana’s economic recovery, and I strongly encourage all Citizens policyholders to contact their agents and request to be notified if they have an opportunity to find another insurer in the private market at a lower premium."
he total amount of grant funds available during this application period is $13.1 million. Nearly $42 million of the available $45 million was awarded to eight insurers following the first round of applications. The remaining $3 million plus the $10 million added to the program during the recent Regular Session of the Louisiana Legislature make up the funding for Round Two.
The Incentive Program offers matching grants to incentivize new and existing insurance companies to write residential and commercial policies in coastal areas, including writing policies out of Citizens.
Approximately 28,600 policies have been written through the Insure Louisiana Incentive Program as of July 30. The top five parishes for new policies are Jefferson, Orleans, Terrebonne, St. Tammany and Lafayette. SafePoint Insurance has also been approved to take over 19,000 policies out of Louisiana Citizens during the upcoming round of depopulation. The assumption date for those policies eventually authorized by policyholders’ agents is October 1.
The participating insurance companies must meet solvency standards that are in line with those required by the federally backed mortgage companies. The insurers will also be subject to enhanced solvency monitoring including, but not limited to, newly increased capital and surplus requirements, monthly reporting and in-depth reinsurance program reviews.
The original Insure Louisiana Incentive Program was vital to the successful recovery of our property insurance market after hurricanes Katrina and Rita in 2005. The program was recreated during the 2022 Legislative Session, and the legislature overwhelmingly passed $45 million in funding for the program during a Special Session earlier this year.
James J. Donelon
Madlyn Tombs
September 2023
Every salesperson's aspiration is to turn every prospect into a successful business relationship. In sales, you want a seat at the table with the inner circle—the elite group that holds conversations about business growth because their growth is your growth.
However, to earn that coveted seat, there must first be an earned level of trust through careful preparation that begins well before the sale.
The foundation for your client's trust is established during the fact-finding part of the sales process, where you learn as much as you can about the business, its products and services, its team, its locations and its plans for the future. When you sit down with business owners, listen as they express pride in their business accomplishments while guiding the conversation to fill the gaps in your understanding of the risks involved both today and in the coming months and years.
During your meeting, take careful notes about what's discussed. Your fact-finding notes should be supported by a checklist that will guide you through the conversation. If you haven't prepared your own, the Big “I" Virtual University offers several great examples.
The customer may confide in you about their last insurance experience what they liked and what they would have changed. As part of that discussion, you should ask the customer to share what coverage is currently in place and what changes they are looking for. Although your role in many states is that of an order taker, at least initially, you are not required to stop there. However, discussions regarding offerings and rejections should be carefully documented.
This is the point where you have an opportunity to take advantage of what is, perhaps, the most important strategy of all for avoiding or mitigating errors & omissions claims: sell insurance. It is possible to offer a quote without substituting your judgment for your customer's, which is a leading cause of E&O claims. There is a subtle, but significant, difference between offering to quote a higher limit or new coverage and actively recommending it.
In every case, resist invitations to “tell me what I should buy." Rarely will your judgment be as good as your customer's when it comes to their business and livelihood, especially when 20/20 hindsight comes into play in the wake of an inadequately insured loss.
Continued from page 30
Trust is also earned over time through a continuing sense of security. You've heard the old adage “the only constant is change" countless times, and that is especially true of your customers in this rapidly changing world. Though your initial placement of coverage may have been outstanding, it will not withstand the effects of time, growth, inflation and innovation.
Granted, it may not be possible to visit every client at every renewal, but there needs to be a sensible cadence with your contacts. In many cases, your client's business will have changed substantially in just a few years, presenting new risks. If inflation has been running hot, there has been a recent storm that led to a boom in the rebuilding of homes and businesses, or the client purchased new vehicles or equipment, you may need to accelerate the timing of your visits.
But even if there hasn't been such an event, new insurance products are coming on the market all the time in response to unmet insurance needs that may benefit your customers. A disappointed client may or may not be successful in pursuing an E&O claim against you for failing to recommend new limits or coverages, depending on the law in your jurisdiction but they almost certainly will not trust you going forward
For that reason, your early conversations should identify a point of contact within the business and plans of ongoing communication to ensure that questions can be asked and answered as they arise.
This creates a reliable channel through which updates, acquisitions or changes can be reported and handled in a consistent manner beyond simply trading cell phone numbers.This ensures easy access to trackable information where everyone is engaged and in participant mode during communication about needed updates and included on communication follow up confirmations
Your communication plan is a tacit reminder that you can provide insight into the best insurance products to protect them and their business … but only as long as they keep you informed.
September 2023
For all the effort poured into growing a book of business and servicing accounts, surprisingly little time goes toward ensuring commission from those policies hits the general ledger. In fact, the chief financial officers (CFOs) and chief operations officers (COOs) of top 100 brokers often say that underpaid and missing commissions, along with the expensive manual cost of processing revenue, can eat into more than 5% of their net revenue.
Historically, this problem has been incredibly complex to tackle. Each month, direct bill statements arrive in different shapes and sizes via snail mail, PDFs and spreadsheets. In-house or outsourced teams spend hours sometimes days processing commissions for a single carrier. Then, they endure a tedious reconciliation process to match a policy to a transaction. This patchwork process, combined with agency management systems rife with missing or incorrect policy data, leaves teams so underwater that they're barely able to close the month on time.
And that's just where the pain begins. Brokers, whether they're doing $1 million or $10 million of revenue, struggle to estimate how much revenue they'll receive this month, let alone for the rest of the year. Instead of forecasting on a policy level, multimillion-dollar brokers still rely on extrapolating last year's net income for their strategic planning.
Most want to do variance tracking but lack the tools to do so. Then there's ASC-606, 5500 reporting, ballparking future contingencies, and aggregating precise compensation data. No wonder so many broker CFOs say that they're flying blind.
The solution to this challenge has proved elusive until now. By leveraging purpose-built revenue automation and intelligence, broker finance teams are transforming their revenue process and upending the decades-old status quo.
Jordan Katz
Revenue automation eliminates over 90% of manual work to process and reconcile revenue between data entry, preparing spreadsheets and fighting legacy importers. Revenue automation allows carrier statements to be uploaded so that commissions are automatically extracted and reconciled to policies in a broker's management system, even if policy details are incomplete.
Automation unlocks a treasure trove of compensation data that is too expensive and complex to operationalize today. Purpose-built revenue intelligence automatically unifies the hundreds of ways carriers report or don't report key compensation details like graded rates, commissions per employee per month, number of lives, overrides, fees and more
By making these metrics reportable, the answers to the number of lives insured with a carrier last month or which account manager has the weakest account retention are just clicks away
Continued from page 32
Through automation, revenue intelligence extends to forecasting by automatically projecting the cadence and timing of receivables on a policy level and rolling these up into dynamic timeframes. This intelligence, combined with purpose-built drill-downs, enables continuous real-time variance tracking.
CFOs and controllers are also seeing their revenueautomation projects create levers for improved profitability when revenue data is used to consolidate and negotiate contracts and compare retention.
Having moved on from the days of complaints about missing commissions or looping in service teams with revenue questions, the front office is now freed up to focus on delivering strong service and driving new business. Meanwhile, using newfound time, finance teams can efficiently investigate discrepancies to recover revenue, flipping accounting from a longtime cost-center into a new profit center
At CNA Surety, we provide a streamlined application process that keeps your small contractor working on the jobsite instead of working on paperwork. Some of the key features of the FAST-Track Application include:
A simple one-page application
Flexibility to meet the needs of your qualified small contractor
No financial statements required for single bond requests up to $500,000
BONDLINE® Data Reuse allows you to submit an application without retyping your contractor’s information
You’ve spoken and we’ve heard: FLEXIBILITY
Single Limit Flexibility – Does your well-qualified small contractor need a bond beyond $500,000? Ask to speak with a CNA Surety underwriter to discuss an accommodation.
Service Contracts – Annual mowing, janitorial services, snow removal (just to name a few). We also consider multi-year service contracts subject to acceptable contract terms.
Supply Contracts – School and building supplies, supplying motor vehicles, local government operating materials (gravel, salt, etc.).
Higher Aggregate Limits – In-house financial statements may qualify your small contractor for increased aggregate limits.
Continued from page 34
Download the FAST-Track Application, open BONDLINE®, or give us a call at 800331-6053 with any questions about our small contractor program.
To support your contractor’s other bond needs, we are one of the largest writers of License and Permit Bonds in the country. We provide a quick, easy market to place this business. To obtain a License & Permit Bond, apply by submitting a completed and signed Form 10 Application or Form 10-E Application. Or, for immediate processing, our licensed agents can use BONDLINE®. Underwriting requirements vary according to the bond.
Coterie
August 2023
Just like larger companies, micro businesses also need small business insurance. However, their unique needs call for a tailored marketing approach that prioritizes empathy, respect, and understanding. Learn how to market insurance to micro small businesses.
Small businesses may be (relatively) small in size, sales, and footprint, but they make up a massive portion of the U.S. economy. In fact, the Small Business Administration finds that small businesses comprise 99.9 percent of all businesses in the U.S.
According to the SBA, micro-small businesses employ one to nine employees with less than $250,000 in annual sales and require less than $50,000 in initial capital.
Micro businesses encompass a wide variety of industries, too. Independent contractors, freelancers, retail stores, solopreneurs, and sole proprietors may all be classified as micro-small businesses depending on their employee count, annual sales, and initial capital.
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Unfortunately, for too long micro-small businesses have been underserved and neglected by insurance companies. After all, micro business accounts typically average for less than $2,500 in premiums; and with low commissions and lengthy underwriting processes, micro businesses struggle to easily get the insurance they need.
However, companies like Coterie Insurance are dedicated to making insurance easy for micro businesses and want to provide some tips for insurance agents and brokers to market commercial insurance to them. How do you approach an owner or stakeholder with so many other responsibilities on their plate?
The needs of micro small businesses some with no more employees than the owner themselves differ greatly from larger small businesses that employ one or two dozen employees if not more.
Adjust your marketing strategies to meet the unique needs of a micro small business. Start by considering that a micro business owner is likely even more of a jack of all trades, with less time and resources available for their insurance. They need to clearly understand the insurance they need, why, and be able to purchase it quickly.
For example, a micro business operating with a single employee the owner may not need or be required to have a workers’ compensation policy.
Micro businesses may also have grown from a hobby or side hustle that, over time, grew enough to become an established business without checking off every item on the “essential business to-do- checklist.” You may need to spend a bit more time on education with these businesses
For example, a micro business operating with a single employee the owner may not need or be required to have a workers’ compensation policy.
Micro businesses may also have grown from a hobby or side hustle that, over time, grew enough to become an established business without checking off every item on the “essential business to-do- checklist.” You may need to spend a bit more time on education with these businesses.
Take time to identify and understand the unique challenges, requirements, and pain points felt by the micro small business owners you’re targeting. Ask questions, listen to their story, and then develop an actionable marketing strategy that fulfills their needs.
2.Respect the time of micro small business owners
Owners of micro small businesses often wear multiple hats. An owner is responsible not only for providing the business’s products or services but for duties such as:
Advertising, marketing, and operating social media accounts
Bookkeeping, accounting, paying bills, and invoicing
Customer service
Hiring, training, and managing any employees
Outsourcing tasks to contractors
Inventory management and order fulfillment
In other words, micro small business owners do it all by default. Even if they have a few contractors or employees helping, there are likely more tasks to handle than there are people.
Acknowledge this by respecting the time of micro small business owners. Prioritize quick and simple methods of selling commercial insurance. Offering, binding, and issuing sameday insurance coverage helps micro small business owners satisfy the need for commercial insurance without siphoning time away from their daily responsibilities.
Consider quoting with tech-forward companies like Coterie, which takes just seconds and you can do it while you’re on the phone with the client.
Focus, too, on the ways your policies and processes support an ultra-busy owner. Emphasize the helpfulness of your customer service team, the knowledge of your agents, tech tools that allow business to be conducted in the evenings or weekends, and the rapidity with which claims are processed.
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Knowing that your agency responds quickly to a micro business owner’s questions and concerns ensures they are not kept from other duties longer than is necessary, and they have the support they need.
3.Develop authentic relationships with micro small business owners
Micro small business owners may be busy, but they want genuine relationships. Developing authentic relationships with colleagues and other professionals is an integral part of operating a small business.
79 percent of business buyers believe salespeople should serve as trusted advisors and not just sales reps. Position your agency to be a trusted source for guidance and information about small business insurance and how insurance helps protect micro businesses. Provide helpful information such as disaster prep and share best practices you may have learned from working with other micro small business owners.
Remember to focus on building a relationship, not pushing products for the sake of sales. Compare the benefits of your policies vs. the policies themselves: why does a plumber need a Business Owners Policy compared to a General Liability policy? What extra protection would he receive? What’s the likelihood he’d experience a claim covered by a BOP but not by GL insurance?
Nurturing an authentic relationship with micro small business owners can have a ripple effect on your agency, too Since micro businesses often network with one another, a good experience with your agency may encourage your clients to refer others in their network to your agency as well
In fact, a whopping 83 percent of B2B customers are open to referring a business after a successful transaction Additionally, 78 percent of those referrals amount to viable leads. Your efforts to develop a genuine relationship with micro small business owners may continue to pay off further down the road.
Your agency’s website serves as its digital footprint. Given that 69 percent of insurance customers conduct an online search before buying a policy, it’s a no-brainer that your agency needs a website to market commercial insurance to micro-small businesses.
A 2022 report found that only 14 percent of small businesses purchased commercial insurance online. However, those who purchased online were generally very happy with the experience.
Further, almost 90 percent of B2B sales have shifted to teleconference, phone, or web avenues.
In many cases, an insurance agency’s website is the first step in the sales funnel. After familiarizing themselves with your agency and its offerings, micro small business owners are still likely to pick up the phone to speak with an agent.
But that doesn’t discount the usefulness of your website. A powerful, easily navigable website serves as a portal for clients to manage their policies, access documents (such as their certificate of insurance) and interact with your customer service team.
As a result, an insurance agency website can make it quick and convenient for a micro small business to purchase and manage an insurance policy without needless complexity.
Because micro small businesses are so underserved, it may benefit your agency to partner with a company built around fulfilling their needs, such as Coterie. Coterie allows insurance agents and firms to determine if a given micro small business is in appetite, then quote, bind, and issue policies in a matter of minutes. You’ll also have access to Coterie’s world-class customer support to ensure your clients’ questions, concerns, and issues are quickly rectified and solved.
Partnering with a company like Coterie allows your agency to satisfy the unique needs of micro small businesses and provide them with the commercial insurance they require while eliminating or avoiding the time-consuming frustrations so common in the typical insurance-buying process.
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Market insurance to micro small businesses by showing empathy, respect, and understanding
Selling a policy to a micro small business is likely one of the more personal interactions you’ll have as a B2B insurance agent or firm. You won’t be put on hold as you skip through half a dozen departments, pawned off to someone who lacks any authority to buy from you, or asked to run through reams of bureaucratic red tape.
Instead, you’ll be speaking with micro-small business owners themselves or, at the very least, someone fairly close to the owner. Demonstrating your genuine interest in the success of the business and empathy for its struggles can go miles. It also helps you lay a foundation to offer a value-based solution to the business’s concerns and worries.
Market insurance to micro small businesses by empowering your product knowledge and sales skills with your humanity. You’ll be doing the business owner a great service they will come to appreciate and be grateful.
Independent Market Solutions (IMS) is a market access solution that helps IIABL members expand their reach and offer clients more choices. With IMS, you can access a wide range of quality insurance company appointments with fair and flexible terms.
IMS works with more than two dozen carriers and 1,100 agencies in 17 states, producing over $100 million in direct written premium. IMS attracts carriers to the program through operational efficiencies that result in improved terms and reduced agent on-boarding costs. IMS agents earn competitive commissions and enjoy 100 percent ownership of policy expirations written through IMS while carriers gain access to high-quality producers at a lower cost.
Over the past five years, most carrier partnerships established with IMS have experienced growth in production and profitability. Last year, the program earned and shared contingencies from four IMS carriers that offer profit-sharing. Additionally, thanks to the relationship IMS has established with select carrier partners, the
program has opened the door for agents to more easily qualify for appointments that can often lead to "graduation" a direct appointment when minimum premium thresholds and performance standards are met.
As IMS continues to grow, the number of carriers available to members will also increase. So, if you're looking for a way to expand your market reach and offer your clients more choices, IMS is the perfect solution for you. To learn more, click here.
IIABL 2023-2024
PRESIDENT, ARMOND K. SCHWING PRESIDENT-ELECT, BRET HUGHES
SECRETARY-TREASURER, ROSS HENRY
NATIONAL DIRECTOR, JOHNNY BECKMANN, III
PAST PRESIDENT, MICHAEL SCRIBER
YOUNG AGENT REP, KRISTIN SWANSON SCOTT
ANN BODKIN-SMITH
MATTHEW DEBLANC
CHRISTY DESOTO
DOMINIQUE DICARLO CROUCH
ROB W. EPPERS
MATT GRAHAM
CHRISTOPHER S. HAIK
STUART HARRIS
BEAU HEAROD
CHARLES H. LEBLANC
CRAIG MARTEL
LYDIA MCMORRIS
A. EUGENE MONTGOMERY, III
JOE KING MONTGOMERY
HARTWIG "ROBBY" MOSS, IV
ROBERT LOUIS PALMER, JR.
RANDY PERISE
ROBERT STONE
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