January-February 2014

kentucky ia January/February 2014

Meet Your IIAK Leadership Tools that Enhance Claims Information & Efficiency for Independent Agents & Brokers – p.26

S T R E N G T H

I N

N U M B E R S

Our 'Strength in Numbers' comes from our dedicated and highly-skilled employees along with over 33 years of our strong commitment to be a fiscally responsible fund.

Everyday at KESA, we come to work with one goal in mind - to be the best. We want to provide the best service, underwrite accounts with precision, care for injured employees with clear and accurate communication, answer every question quickly and knowledgeably, and be the unequivocal first choice for workers' comp in Kentucky.

Contact us about our SAFETY W.O.R.K.S program at www.kesa.org.

200 Executive Park, Louisville, KY 40207 502.894.8484 | 800.367.5372 | www.kesa.org

Page 11

Page 22

In the Spotlight 6 Meet Your IIAK Leadership 8 2014 Associate Members

In Every Issue 4 From The Chair Trusted Choice: Trusted Choice Marketing 15 Reimbursement Program is Back!

10 Big “I” PAC Surpasses $1 Million in 2013

16 Industry Partners 21 People In The News 25 Benefits Spotlight: Want to Add LIFE to Your

11 Hit the Ground Running in 2014 22 Kentucky General Assembly 2014 Session 26 Tools that Enhance Claims Information &

Agency?

Efficiency for Independent Agents & Brokers

29 Agency Financial Management

Page 26

28 Classified Ads 28 Education & Events Calendar

THE KENTUCKY INDEPENDENT AGENT is the official magazine of Independent Insurance Agents of Kentucky, and is published bi-monthly. Editorial offices are located at 13265 O’Bannon Station Way, Louisville, Kentucky 40223, telephone (502) 245-5432; E-mail IIAK@iiak.org; FAX (502) 245-5750.

Officers

Directors

Staff

John Funkhouser, CIC, CWCA Chair; Danville (859) 236-5922

Chip Atkins Louisville, (502) 585-3600

Peggy P. Porter President/CEO

Michelle L. Love Chair-Elect; Owensboro (270) 926-2806 David M. Houk Vice Chair; Horse Cave (270) 286-2724 James D. England, AAI Treasurer; Pikeville (606) 437-7361 Stephen R. Kinkade, CPCU, AAI National Director; Leitchfield (270) 259-5465 William S. Latta, Immediate Past Chair; Henderson (270) 827-3543

Jason D. Billington, CIC Murray, (270) 753-4751 Allen J. Crawford, CIC Somerset; (606) 679-6311 Diana G. Hunt, CIC Barbourville, (606) 546-4132 Michael G. Johnson, CIC Lexington, (859) 233-1461 Aaron LaRue Bardstown, (502) 348-0050 Skip McGaw Madisonville, (270) 821-3122

Arlene Adonis-Hawkins Director of Communications Crystal Brown Administrative Assistant Katie Freshley Education & Events Director Tara Purvis Marketing Director Kristie Weyer Insurance Services Manager

Mark “Ross” Richey Bowling Green; (270) 754-4881 Ray A. Robertson, CIC Mt. Sterling; (859) 498-3410

The Kentucky Independent Agent welcomes all advertising and editorial submissions. Inquiries for advertising, news releases and editorial contributions can be directed to: Arlene Adonis-Hawkins, 13265 O‘Bannon Station Way, Louisville, Kentucky 40223, Ph: (502) 245-5432, Fax: (502) 245-5750, Email: aadonishawkins@iiak.org

Mission Statement

The mission of the Independent Insurance Agents of Kentucky, working in the public’s best interest, is to be the preeminent advocate for Kentucky Independent Insurance Agents and support their business and professional development needs.

www.iiak.org

Kentucky IA

| January/February 2014 | 3

From the “B

Chair

e the preeminent advocate for the Independent Insurance Agent and support their business and professional development needs.”

This is the mission statement for IIAK. This may take a time or two, but before my year is out, I want to make sure that our members know what we are about.

We have a responsibility as members of IIAK to help in the advocacy department. On February 4th, members had the opportunity to do just that with Agents Legislative Day in Frankfort. At the event, agents from our organization, as well as the Kentucky Association of Health Underwriters (KYAHU) and the National Association of Insurance and Financial Advisors (NAIFA) came together as a united agent force. Unfortunately, weather did not permit us to visit the Capitol, however, we were able to hear from our own IIAK Board member, Chip Atkins and Navigator/ Agent subcommittee chairman of the Kentucky Health Benefit Exchange Advisory Board, Marcus Woodward who provided us with an update on the Affordable Care Act in Kentucky. In addition, we heard from Representative Jeff Greer who talked about how important it is for agents to visit with their representatives.

We may not have been able to visit with individual representatives during Agents Legislative Day, however I greatly encourage you, to meet with them whenever you have the chance. Not only does it help them understand the issues we face as agents, but also show them that we have a voice. The power of our grass roots system is tremendous. Yes, we have our paid staff, but the one that makes the most impact is YOU.

Our lobbying efforts could not be done without money. Please consider giving to KAPAC. These contributions do not “BUY” votes, they help to get us a seat at the table so that our voices and concerns are heard. There will be some interesting races coming up shortly and monies are needed.

Secondly, we have an opportunity in April to go to DC for our National Legislative Day. This will be my third year to attend this event. What an awesome opportunity to go to our nation’s capital and meet with our leaders. I realize in the previous paragraph I mentioned giving to our state PAC. Here I go again and will plug making a contribution to InsurPac as well.

The second part of our mission statement refers to our Professional Development needs. IIAK is giving you that opportunity in April. On

4 | January/February 2014 | Kentucky IA

John Funkhouser 2013 - 2014 IIAK Chair April 2-5 we will host the CRM: Principles of Risk Management. What a powerful course if you are looking for an update, maybe finishing up a designation and want to switch out a class or just interested in gaining some useful information.

I have stated previously, our clients and prospects are expecting so much more out of us. The “Quote and Hope” game is about as antiquated as “Dial-up”. Let the CRM program help you stand out in the pack. Obtaining necessary CE hours is great, but the knowledge and useful tools that you will acquire is priceless.

Membership in IIAK is not an expense; it is an “Investment”. Like any investment, you must be an active participant to get the most out of it.

Respectfully, John A Funkhouser

www.iiak.org

Our Members Say It Best

The KRF-SIF’s loss prevention and safety training has meant the world to our company. Prior to becoming members of the Fund, we spent quite a bit on annual safety training. Since the Fund provides this type of training at no charge to its members, we have been able to significantly decrease our training expenses.

Jennifer Shaw, HR Manager, Kentucky Lake Oil Company ‌the main reason we went with the KRF-SIF workers’ comp program is because of their reputation for handling claims management in a manner that is fair not only to the individual, but also to the company holding the policy. The Fund has proven to be able to reduce the cost per claim and overall claims costs.

My advice is that if claims management counts, you can count on KRF-SIF. If not, you can go anywhere.

Bruce Pieratt, President/CEO, Pieratt’s

Want to have a voice in your workers’ comp? For more information, contact your independent agent or: Mary Carney, KRF-SIF Program Manager ‡ /RXLVYLOOH DUHD )D[ e-mail: mcarney@ccmsi.com www.krfsif.org

www.iiak.org

Kentucky IA

Administered by CCMSI

| January/February 2014 | 5

cover story

Meet Your IIAK

ach year the Kentucky Independent Agent produces a profile of IIAK’s Eworks. current Board of Directors, along with some facts about how the Board This serves as a great resource for IIAK members to become familiar with the leadership body of the association and offers an exchange of information and communication between board members and members.

•

•

In 2010, the association changed its by-laws to reflect continuity between state and national officer titles. As a result it now uses the titles Chair, Chair-Elect, and Vice Chair, whereas previously these officer titles were President, President-Elect and Vice President.

In addition to this, the position formerly known as Executive Vice President is now President/CEO. The Board usually meets four times in a fiscal year. This includes a weekend board meeting that is held at the Chair’s hometown or place of choice. This meeting includes some social functions with invited guests and spouses. In cases where an urgent matter is needed to be discussed, the Chair will call for a special meeting.

•

The IIAK Young Agents Committee is represented on the Board by its Chair, who is also a voting member.

•

When there is a new agency or associate member applicant, votes are taken from the entire Board of Directors to determine membership of that agency or company/vendor. There is a majority vote rule for that potential member to have membership into the association.

•

Any association agent member in good standing may serve on the Board of Directors. There is always an attempt to get representatives from all regions of Kentucky and from varying size agencies.

•

The Chair serves a one-year term and the directors, who are appointed by the Chair, serve a three-year term unless that individual is going through the chairs or serving an unexpired portion of a term.

The positions of Treasurer and National Director are elected by the Board of Directors, while the positions of Chair, Chair-Elect and Vice Chair are elected by the membership.

Executive Committee

Chair John Funkhouser, CIC Johnson-Pohlmann Insurance – Danville jfunkhouser@johnsonpohlmann.com

Vice Chair David Houk Houk Insurance Agency – Horse Cave davidmhouk@gmail.com

Treasurer James D. England, AAI Peoples Insurance Agency – Pikeville james.england@pebo.com

6 | January/February 2014 | Kentucky IA

Chair-Elect Michelle L. Love E.M Ford & Company – Owensboro mlove@emford.com

National Director Stephen R. Kinkade, CPCU, AAI Kinkade-Cornell Insurance Agency, Inc. – Leitchfield steve@kinkadecornell.com

Immediate Past Chair William D. Latta Latta Insurance Services – Henderson wslatta@lattainsuranceinc.com

www.iiak.org

cover story

Leadership Board of Directors

Diana G. Hunt, CIC Mountain Valley Insurance – Barbourville dhunt@mviweb.com

Chip Atkins R. H. Clarkson Insurance Agency, LLC. – Louisville catkins@rhcgroup.com

Jason D. Billington, CIC The Murray Insurance Agency – Murray jason@themurrayinsuranceagency.com

Barret H. “Skip” McGaw, II, CIC Riddle Insurance – Madisonville smcgaw@riddleins.com

Michael G. Johnson, CIC Al Torstrick Insurance Agency – Lexington mjohnson@altorstrick.com

Aaron LaRue LaRue Insurance, Inc. – Bardstown aaron@larueinsurance.net

Allen J. Crawford, CIC Reed Brothers Insurance Services – Somerset acrawford@mkrotec.com

Mark “Ross” Richey Lawton Insurance Agency – Bowling Green rrichey@lawtoninsurance.com

Ray A. Robertson, CIC Limestone Agency, LLC – Mt. Sterling ray.robertson@limestoneagency.com www.iiak.org

Kentucky IA

| January/February 2014 | 7

membership

2014 Associate Members

AAA Auto Club P&C Insurance – Louisville, KY Contact: Robert L. Jones Ph: (616) 556-6699 Email: rljones@aaamichigan.com

CCMSI/KRF-SIF – Louisville, KY Contact: Mary Carney Ph: (502) 426-7474 Email: mcarney@comsi.com

American Mining insurance Company – Lexington, KY Contact: Michael Prickett Ph: (859) 971-1955 Email: mprickett@americanmining.com

Columbia Insurance Group – Johns Creek, GA Contact: Mamie Madden Ph: (770) 410-3720 Email: mmadden@colinsgrp.com

American Mining Insurance Company – Birmingham, AL Contact: Bryant Brown Ph: (205) 870-3535 Email: bryantb@cghinsurance.com

Cumberland Surety, Inc. – Lexington, KY Contact: Don Charlet Ph: (859) 254-8622 Email: dcharlet@cumberlandsurety.com

American Resources Insurance Co. – Mobile, AL Contact: Lamar Lee Ph: (251) 509-0860 Email: lamar.lee@aric.cc

FCCI Insurance Group – Indianapolis, IN Contact: Craig Evans Ph: (317) 571-3031 Email: cevans2@fcci-group.com

Amerisafe, Inc. – DeRidder, LA Contact: Becky Fejarang Ph: (337) 460-3380 Email: bfejarang@amerisafe.com

Guard Insurance Group – Wilkes-Barre, PA Contact: Shawn Roguskie Ph: (570) 825-9900 Email: shawnr@guard.com

Anthem Blue Cross & Blue Shield – Louisville, KY Contact: Karen Hall Ph: (502) 889-2405 Email: karen.hall@anthem.com

Hamilton Mutual Insurance Company – Blue Ash, OH Contact: Kent A. Kochheiser Ph: (513) 221-6010

Arlington/Roe & Company – Indianapolis, IN Contact: Bobbi Simmons Ph: (317) 554-8550 Email: bsimmons@arlingtonroe.com Arlington/Roe & Company – Louisville, KY Contact: Toni Beard Ph: 5029698058 Email: tbeard@arlingtonroe.com Auto-Owners Insurance Company – Lexington, KY Contact: Lee Rademacher Ph: (859) 278-6181 Email: rademacher.lee@aoins.com Berkley Mid-Atlantic Group – Harrisburg, PA Contact: Marianne Morosko Ph: (800) 283-1153 Email: mmorosko@wrbmag.com Bituminous Insurance Companies – Nashville, TN Contact: Jo Tally Osburn Ph: (615) 871-9042 Email: tosburn@bituminousinsurance.com Bolton & Company – Louisville, KY Contact: Greg Allgeier Ph: (502) 583-8361 Email: gaabolton@aol.com

8 | January/February 2014 | Kentucky IA

Insurance Institute of Kentucky – Lexington, KY Contact: Mark Treesh Email: mark@iiky.org J.M. Wilson – Portage, MI Contact: Cathy Baldwin Ph: (269) 321-4713 Email: cbaldwin@jmwilson.com KEMI – Lexington, KY Contact: Roger Fries Ph: (859) 425-7800 Email: rfries@kemi.com Kentucky Agents Finance, Co. – Indianapolis, IN Contact: Carol Dulle Ph: (317) 824-3780 Kentucky Growers Insurance Company – Lexington, KY Contact: Charlie Busby Ph: (859) 252-3439 Email: bus001@aol.com Kentucky League of Cities – Lexington, KY Contact: Joseph R. O’Nan Ph: (859) 977-3700 Email: jonan@klc.org Kentucky National Insurance Co. – Lexington, KY Contact: David McMullen Ph: (859) 367-5200 Email: damcmullen@kynat.com

www.iiak.org

membership

2014 Associate Members (cont.)

Kentucky Retail Federation Insurance – Frankfort, KY Contact: Tod A. Griffin Ph: (502) 875-1444 Email: tgriffin@kyretail.com

Safeco Insurance – Fairfield, OH Contact: Matt Warye Ph: (513) 965-4326 Email: matt.warye@safeco.com

KESA – Louisville, KY Contact: Melinda Ellingsworth Ph: (502) 894-8484 Email: mellingsworth@kesa.org

Secura Insurance Company – Appleton, WI Contact: Wedny Kraus Ph: (920) 830-4363 Email: wendy_kraus@secura.net

Keystone Insurers Group – Northumberland, PA Contact: Nancy Tehan Ph: (570) 473-1352 Email: ntehan@keystoneinsgrp.com

Secura Insurance Company – Louisville, KY Contact: Darlene Rufra Ph: (502) 429-3829 Email: Darlene_rufra@secura.net

Liberty Mutual Insurance – Lexington, KY Contact: Robert D. Fehrenbach Ph: (859) 219-3910 Email: robert.fehrenbach@libertymutual.com

Seneca Insurance Company – Louisville, KY Contact: Michael Kotte Ph: (502) 495-2627 Email: mkotte@senecainsurance.com

Lloyd’s of Kentucky, Inc. – Frankfort, KY Contact: Patrick Talley Ph: (502) 875-5940 Email: pat.talley@llodskentucky.com

State Auto Insurance Company – Columbus, OH Contact: Elise Spriggs Ph: (614) 917-4787

Market Finders Insurance Corp. – Louisville, KY Contact: Joe Miller Ph: (502) 339-5958 Email: jmiller@mfic.com McIntyre, Gilligan & Mundt, Inc. – Louisville, KY Contact: Michael P. Gilligan Ph: (502) 582-3744 Email: mike@mgmadjusters.com NAI Kentucky, Inc. – Hendersonville, TN Contact: William E. Hall Ph: (615) 264-8714 Email: bill.hall@nai1982.com Premium Assignment Corporation – Franklin, TN Contact: Laura Gaunt Ph: (615) 419-1797 Email: laura.gaunt@suntrust.com Prime Insurance Company – Chicago, IL Contact: Barbara Malkowski Ph: (800) 456-4576 Email: barbara@primeis.com Progressive – Austin, TX Contact: Linda Rider Ph: (615) 391-7431 Email: lrider@progressive.com Risk Placement Services, Inc. – Lexington, KY Contact: Ron Smedley Ph: (859) 245-2500 Email: ron_smedley

www.iiak.org

Strategic Comp – Metairie, LA Contact: Catherine Senac Ph: (504) 840-4998 Email: csenac@strategiccomp.com Summit Consulting – Corydon, IN Contact: Rusty Wells Ph: (812) 972-1433 Email: rusty.wells@sumitholdings.com The Hartford – Franklin, TN Contact. Carolyn S. Nalley Ph: (502) 259-8694 Email: carolynsuenalley@thehartford.com The Kentucky Fair Plan – Louisville, KY Contact: David Asher Ph: (502) 327-8909 Email: david.asher@kaip.org The Motorists Insurance Group – Columbus, OH Contact: Megan Rettig Ph: (614) 225-8226 Email: megan.rettig@motoristsgroup.com Travelers – Cincinnati, OH Contact: Gary Rogers Ph: (800) 842-0067 Email: grogers@travelers.com West Bend Mutual Insurance Company – Middleton, WI Contact: Drew Light Ph: (608) 410-3245 Email: alight@wbmi.com Westfield Insurance – Westfield Center, OH Contact: Kevin Wermer Ph: (330) 887-0580 Email: kevinwermer@westfieldgrp.com Kentucky IA

| January/February 2014 | 9

national government affairs

Big ‘I’ PAC Surpasses $1 Million in 2013

by Nathan Reidel

I

North Carolina, North Dakota and South Carolina.

When the dust settled and all the numbers were crunched, InsurPac, the

In the 2012 election cycle, InsurPac distributed more than $1.8 million

Big “I” political action committee (PAC), raised a total of $1,007,668 dur-

to senators, representatives and other candidates for federal office. Also

ing the 2013 calendar year.

in 2012, 84% of InsurPac-supported candidates won with 237 victories of

nsurPac closes 2013 books as top P&C political action committee.

the 282 races it supported.

Surpassing the $1-million mark in one year is an important accomplishment for InsurPac. The Big “I” membership prides itself on political

The power of InsurPac is credited with the association’s continuing posi-

engagement and involvement, and the continued growth of InsurPac is

tion as one of the most well-respected business associations in Washing-

further evidence of this commitment.

ton, D.C.

Nearly 4,000 agents, brokers and company representatives came together

In disbursing contributions, InsurPac does not consider party affiliation,

to voluntarily support InsurPac in 2013, with contributions ranging from

but rather supports representatives, senators and candidates for federal

one dollar to the maximum allowed $5,000. Forty-three states achieved

office who have been supportive of the independent agency system.

their InsurPac goal, and six states achieved Eagle status for averaging in excess of $100 donated per agency: Louisiana, Montana, New Hampshire,

10 | January/February 2014 | Kentucky IA

Nathan Riedel is Big “I” vice president of political affairs.

www.iiak.org

sales & marketing

Hit the Ground Running in 2014

By John Chapin

s this finally going to be the year? Will 2014 be the year that you finally

I

once you’re way out ahead of the pack and feeling great, don’t fall into your

step up, stand out and live up to what you know you can do, to what

comfort zone and take your foot off the accelerator. If you do, you’ll lose

you’ve been telling yourself for years that you’ll show the world one day?

momentum, slip back and next thing you know you’ll be back to 90% of

Do you remember when you used to think about how old you’d be and

quota at the end of March. Don’t back off, keep going. Pedal to the metal.

what you’d be doing in the year 2000? That was 14 years ago. Enough of the “next year,” it’s time to make this year “next year” and in order to do

Tip 2: Double your activity

that, you’ll have to hit the beginning of 2014 like a freight train. Here’s how.

If you usually make 50 prospecting calls in a day, make 100, if you usually make five presentations, make ten. If you double your prospecting calls and presentations, you should double your sales. Is that potentially going to take more time and resources? Yes, do it anyway. Follow tip 4 below and manage your time better, get those non-productive activities off your plate or table other things for off-hours or even the weekends.

Look, what activities pay you the most?

You need to find creative ways to find more time to spend on those.

Tip 3: Go to extremes Doubling your activity and using endof-year and other tactics may sound extreme, but what I’m talking about here is really pushing yourself. I’m talking about a marathon prospecting day in which you make four to five times the number of

Five Ideas for Exploding Out of the Gate in 2014

calls you’d usually make, or a day in which you make four or five times as

Tip 1: Use end-of-month, end-of year sales tactics now.

many presentation calls. These may be days when you dedicate the whole

Are there certain things you do to get business when you need it? If so,

day to one sales activity and you start your day earlier and end it later.

use those now. You can offer special discounts, have sales, you can also

Another form of extreme activity is to make a BIG call every day. This

call your best customers and ask them to invest now. Whatever it is that

refers to finally making that call you’ve been thinking about forever and

you do to scare up business when you need it, this is the time to use those

you just can’t get yourself to make it. Another form of this idea is to call

techniques now. The overall idea here is to develop a sense of urgency

at least one elephant, or person that intimidates you, every day.

to get as much business in as fast as possible so that you can build some powerful momentum and get way out ahead. Ideally you’re looking for

Tip 4: Get better at selling and time management

the equivalent of three months of business in January. Another key here is

This one is pretty self-explanatory. Obviously the better you are at sell-

www.iiak.org

Kentucky IA

| January/February 2014 | 11

sales & marketing

ing, the better qualified your prospects will be and the better and more

carrot and stick here. Can you post-date a check for $1,000 or $10,000 or

effective you’ll be at all aspects of the sales process. This also means that

more and if you don’t do what you say you’re going to do, someone gets to

less time will be required to make the same amount of sales. That said,

cash it, or it otherwise disappears forever? Can you make your dream va-

you still need to get better at focusing on your key activities which are:

cation to Hawaii a reality if you make it happen? Maybe you can do both.

prospecting, presenting, closing and client relationship building. Read,

The point is, if there is enough on the line, if you have a strong enough

take courses and study sales and time management. Also find people that

reason(s) to make it happen, you’ll make it happen. It simply comes

are great at time management and sales, these may not be the same people

down to knowing what your hot buttons are and then pushing enough of

by the way, and find out what they do. Do the same things the same way

them so that you’re crazed with enthusiasm and drive to make it happen.

and get the same results.

John Chapin is a professional sales speaker and trainer. John has over 26

Tip 5: Up the ante

years of sales experience as a number one sales rep and is the author of the

What can you do to really put some pressure on yourself to make it hap-

2010 sales book of the year: Sales Encyclopedia. You can find out more at

pen? On the other side of the coin, what can you do to make the reward

www.completeselling.com.

so great that you simply have to get the year off to a great start? Think

A new logo for a new era.

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12 | January/February 2014 | Kentucky IA

www.iiak.org

Relax...

You’ve offered each of your clients a personal umbrella policy.

Right?

It might not be quite as relaxing as a day at the beach, but knowing you’ve done everything in your power to protect the customers who trust you to help them will go a long way towards easing your mind.

Offering each and every client an umbrella not only protects those who choose to purchase the coverage. It protects your agency from liability. And it protects your book of business, since studies show that customers who have multiple policies are less likely to move their business elsewhere.

As a Big “I” member, you have access to a stand alone personal umbrella program from A+ rated carrier RLI, featuring: Limits up to $5 million available Excess UM/UIM available in all states You can keep your current homeowner/auto insurer New drivers accepted - no age limit on drivers Up to one DWI/DUI per household allowed Auto limits as low as 100/300/50 in certain cases

Competitive, low premiums for increased limits of liability Simple, self-underwriting application that lets you know immediately if the insured is accepted E-signature and credit card payment options Immediate coverage available in all 50 states plus D.C.

So cover your clients... protect your agency... and profit from umbrella sales!

Contact Jennifer Hopper, your RLI Administrator at: Email: jhopper@arlingtonroe.com Tollf Free: (800) 878-9891, ext. 8639 Local Fax: (317) 554-8551 Toll Free Fax: (888) 552-9891

Calling all Risk Managers!

We invite you to attend the certified Risk Manager’s Program (CRM) - Principles of Risk Management Course. A CRM designation is visible confirmation of professionalism. It demonstrates knowledge in areas of managing risks, exposures, perils, and hazards—tangible evidence of a commitment to continuing excellence.

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izations when they learn to protect against risks that can interrupt the flow of earnings Strengthened job security in a competitive market Real-life examples and experiences, shared by risk management experts who are active in various industries Ability to add value and increase an organization’s profitability and reputation Active involvement in a network of risk management professionals When taken annually, CRM courses meet or exceed the state CE requirement in all states and jurisdictions.

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Individuals who currently hold the CIC designation can satisfy their annual update requirement by taking the CRM. Participants in the CIC program can customize their education while earning the CIC designation by substituting one CRM course for one CIC institute.

Event Details: Principles of Risk Management April 2-5, 2014 Hyatt Regency Louisville

For additional information and/or to register please go to: www.iiak.org.

trusted choice®

Trusted Choice® Marketing Reimbursement Program is Back!

Brand to help agents deliver the Trusted Choice® brand experience to consumers and maximize advertising and marketing budgets. s your agency makes its marketing and advertising plans for 2014, Abursement don’t forget to take advantage of the Trusted Choice® Marketing ReimProgram (MRP), which is back for another year.

Under the 2014 Trusted Choice® MRP, member agencies can be reimbursed for a portion of expenses, up to $1,600, incurred in 2014. These expenses include co-branded materials for items such as advertising, business cards, letterhead, envelopes, agency signage and logo-wear; and in creating or updating a digital presence to include the Trusted Choice® logo, link to the Trusted Choice® website and Pledge of Performance.

This is not meant to replace your agency’s brand, but to complement it by including the Trusted Choice® logo on these materials.

All reimbursements will be made based on which tier your co-branded material(s) falls under. The three tiers include: • Tier 1: The MRP will reimburse 50% of your total spent on allowable co-branded marketing and advertising expenses, to a maximum of $500.

• Tier 2: In addition to the $500 as part of Tier, you are eligible for an additional $350 reimbursement if your agency uses the advertising materials provided by Trusted Choice®.

• Tier 3: Throughout 2014, Trusted Choice® will purchase large blocks

of wholesale digital media on websites focused on “in-market” consumers. Any member agency wishing to purchase units of this media may do so at a cost of $2,250. Each unit is valued at $3,000 and will deliver approximately 600,000 consumer impressions. The MRP will provide a subsidy of $750 to lower your cost to $2,250. The banner ads will be provided by Trusted Choice® and customized with your agency’s information and will be targeted to your specific market.

The Trusted Choice® will manage all tagging, placement and tracking on your behalf. The digital ads will link to either your website or your agency profile on TrustedChoice.com. For more information on this tier please contact Kiescha.Cherry@iiaba.net.

An agency taking full advantage of all three tiers can be reimbursed to a maximum of $1,600 per calendar year. However, any agency may purchase 2 or more Tier 3 units of advertising at the full cost of $3,000. The wholesale digital media subsidy is provided on a “first-come, first-serve” basis and may be discontinued if the budgeted funds are depleted.

To download the full guidelines of the 2014 Trusted Choice® MRP, visit the new Trusted Choice® Agent Resource site at TrustedChoice.com/ agents. You can also contact Kiesha Cherry by phone at (703) 706-5443 or email kiesha.cherry@iiaba.net.

Acquisition Strategy

#11

LOSS CONTROL SERVICES

“ Reducing losses adds value for your clients.”

Chad Veach, Engineering Services Supervisor Provide more than protection to your clients.

Provide the added value of EMC’s no-fee loss control services, which could help reduce the cost of their insurance. It’s just one of the many reasons policyholders Count on EMC®.

Cincinnati Branch: 800.732.5595

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Home Office: Des Moines, IA

© Copyright Employers Mutual Casualty Company 2013 All rights reserved

www.iiak.org

Kentucky IA

| January/February 2014 | 15

industry partners

Calling All Companies, Wholesalers and Vendors – Support Independent Agents Today!

The Independent Insurance Agents of Kentucky invites your company to become an Industry Partner.

T

he Industry Partners program allows insurance companies, wholesalers and vendors, to support IIAK on an on-going

basis. IIAK Partners receive year-round exposure to members of the Independent Insurance Agents of Kentucky through a wide range of benefits and signifies you as a supporter of the Independent Agency System. Your backing makes it possible for IIAK to develop affordable, quality programs that enhance the professionalism of Kentucky’s independent insurance agents.

“IIAK Partners receive yearround exposure to members of the Independent Insurance Agents of Kentucky through a wide range of benefits and signifies you as a supporter of the Independent Agency System.”

The value you receive as a Partner for the year far exceeds the cost and the benefits you receive are exclusive only to Partners. There are seven levels of participation available: Premier, Diamond, Platinum, Gold, Silver, Bronze and Sterling. Each level has a sponsorship value, with benefits allocated to it.

(as of 1/14/2014)

Benefit to you: Year-round exposure and access to member agents of the Independent Insurance Agents of Kentucky.

Savings: The value you receive from the benefits of your participation as a Partner, far exceeds the cost.

Exclusive: Many of the benefits you receive as a Partner are not available to other companies, wholesalers and vendors—at any cost!

Convenient: This is an annual, one-time solicitation. No hassle.

Questions?

Contact IIAK by phone at (502) 245-5432 or email iiak@iiak.org

16 | January/February 2014 | Kentucky IA

Gold Level Bolton & Company KEMI Silver Level Amerisafe, Inc. Keystone Insurers Group Bronze Level Auto-Owners Insurance KESA www.iiak.org

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The Big “I” and Swiss Re are jointly committed to providing IIABA members with leading edge agency E&O products and services. The IIABA and its federation of 51 state associations endorse Swiss Re’s comprehensive professional liability program.

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| 17

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people in the news Louisville Board Installs New Officers The Louisville Board of Independent Insurance Agents installed new officers to its board of directors, at its Annual Meeting on January 23rd in Louisville.

The event marked the groups 159th Annual Meeting. Installed to its board of directors were: • Michael L. Schmidt, CIC as President. Schmidt is a producer with Schmidt Insurance Agency, Inc. • Michael Rademaker, CIC as Vice President. Rademaker is a Vice President with Thoroughbred Associates, Inc. • Jimmy Blount as Treasurer. Blount is a producer with Garrett-Stotz Company • Brian Smith, CPCU, ARM, CIC as Secretary. Smith is Branch Manager with Arthur J. Gallagher Risk Management Services, Inc.

He is the 21st recipient of the Robinson Award which is the highest honor presented by the Louisville Board. It is named after Arthur Harley Robinson, who was the first member of the Louisville Board to serve as President of the Independent Insurance Agents & Brokers of America.

Each officer will serve a one-year term in their respective positions.

Don Mucci (left) receiving the Robnson Award from Louisville Board President Mike Schmidt (right).

Brown Joins IIAK Team

The new officers of the Louisville Board (l to r): Jimmy Blount, Brian Smith, Mike Rademaker and Mike Schmidt.

Mucci Receives Esteemed Robinson Award Don Mucci, Vice President of Garrett-Stotz Company in Louisville, was presented with the Robinson Award by the Louisville Board of Independent Insurance Agents on January 23rd at the group’s Annual Meeting in Louisville.

Mucci began his career as a claims adjuster with Allstate while he was in college. Following graduation from Bellarmine University in 1981, where he graduated with a Bachelor of Arts in Business Administration, Mucci became an independent agent. He specializes in employee benefits and business insurance.

An active member of the industry, Mucci has served with a number of organizations including, the Kentucky Association of Health Underwriters as past Legislative Co-Chair and is a two time President of the Louisville Board of Independent Insurance Agents, just to name a few.

Mucci is also active in his community serving on the board of the St. Meinrad School of Theology’s Board of Overseers and is a past member of Bellarmine University’s Board of Trustees, Board of Overseers and Alumni Board. www.iiak.org

Crystal Brown has joined the IIAK team as Administrative Assistant. In her role, Brown will be the first voice members hear when calling IIAK, as well as providing support to the different IIAK departments.

Brown has over 12 years of experience working in a variety of areas including accounting, customer relations, insurance and general office operations. Prior to joining IIAK, Brown worked as a receptions at an accounting firm and as an executive assistant at a TPA insurance company.

Born and raised in the Louisville area, she currently resides in Oldham County.

Brown and husband, Chris, have a 2 and a half year old son Jeremiah and has two stepchildren, son Ian and daughter Shelby who are 15 year old twins.

A graduate of Strayer University with a BS in Business Administration, Brown’s interests include cooking, cross-stitching and spending time with family and friends.

Crystal Brown IIAK Administrative Assistant

Kentucky IA

| January/February 2014 | 21

state government affairs

Kentucky General Assembly his year, the Kentucky General Assembly’s 2014 session began on JanuT60 ary 7th and is expected to adjourn on April 15th. It is expected to last working days, which is the maximum allowed by the state constitution in even-numbered years.

Legislators will not be meeting on January 20 in observance of Martin Luther King, Jr. Day and February 17th in observance of President’s Day. The veto recess – the period of time in which lawmakers return to their home districts to await possible gubernatorial vetoes of legislation, will last from April 1 to 11. Lawmakers will return to the Capitol on April 14th and 15th for the final two days of the session.

The 2014 session calendar can be viewed online at: http://www.lrc.ky.gov/ sch_vist/14RS_calendar.pdf.

Kentucky Legislature Contact Information: Legislative Message Line 1-800-372-7181 Bill Status Line 1-866-840-2835 Calendar (Meetings) Line 1-800-633-9650 TTY Message Line 1-800-896-0305 En Español 1-866-840-6574 Website: www.lrc.ky.gov/

Senate Leadership

President: Sen. Robert Stivers (R), District 25 President Pro Tempore: Sen. Katie Kratz Stine (R), District 24 Majority Floor Leader: Sen. Damon Thayer (R), District 17 Minority Floor Leader: Sen. R.J. Palmer (D), District 28 Majority Caucus Chair: Sen. Dan Seum (R), District 38 Minority Caucus Chair: Sen. Johnny Ray Turner (D), District 29 Majority Whip: Sen. Brandon Smith (R), District 30 Minority Whip: Sen. Jerry Rhoads (D), District 6

2014 Senate Standing Committee on Banking & Insurance Sen. Tom Buford (R-Nicholasville) – Chair Sen. Jared Carpenter (R-Berea) – Vice Chair Sen. Julian M. Carroll (D-Frankfort) Sen. Julie Denton (R-Louisville) Sen. Chris Girdler (R-Somerset) Sen. Morgan McGarvey (D-Louisville) Sen. Dennis Parrett (D-Elizabethtown) Sen. Dorsey Ridley (D-Henderson) Sen. Albert Robinson (R-London) Sen. Dan “Malano” Seum (R-Fairdale) Sen. Brandon Smith (R-Hazard)

House of Representatives Leadership

House Speaker: Rep. Greg Stumbo (D), District 95 Speaker Pro Tempore: Rep. Larry Clark (D), District 46 Majority Floor Leader: Rep. Rocky Adkins (D), District 99 Minority Floor Leader: Rep. Jeff Hoover (R), District 83 Majority Caucus Chair: Rep. Sannie Overly (D), District 72 Minority Caucus Chair: Rep. Bob M. DeWeese (R), District 48 Majority Whip: Rep. Tommy Thompson (D), Disctict 14 Minority Whip: Rep. John Carney (R), District 51

22 | January/February 2014 | Kentucky IA

2014 House Standing Committee on Banking & Insurance Rep. Jeff Greer (D-Brandenburg) – Chair Rep. Will Coursey (D-Symsonia) – Vice Chair Rep. Ron Crimm (R-Louisville) – Vice Chair Rep. Mike Denham (D-Maysville) – Vice Chair Rep. David Osborne (R-Prospect) – Vice Chair Rep. Steve Riggs (D-Louisville) – Vice Chair Rep. Bart Rowland (R-Tompkinsville) – Vice Chair Rep. Kevin Sinnette (D-Ashland) – Vice Chair Rep. Johnny Bell (D-Glasgow) Rep. Dwight D. Butler (R-Harned) Rep. Robert R. Damron (D-Nicholasville) Rep. Joseph M. Fischer (R-Ft. Thomas) Rep. Jim Gooch, Jr. (D-Providence) Rep. Mike Harmon (R-Danville) Rep. Dennis Horlander (D-Lousville) Rep. Dennis Keene (D-Wilder) Rep. Thomas Kerr (R-Taylor Mill) Rep. Adam Koenig (R-Erlanger) Rep. David Meade (R-Stanford) Rep. Michael Meredith (R-Brownsville) Rep. Brad Montell (R-Shelbyville) Rep. Sannie Overly (D-Paris) Rep. Ruth Ann Palumbo (D-Lexington) Rep. Ryan Quarles (R-Georgetown) Rep. Jody Richards (D-Bowling Green) Rep. Jonathan Shell (R-Lancaster) Rep. Fitz Steele (D-Hazard) Rep. Wilson Stone (D-Scottsville) Rep. Tommy Thompson (D-Owensboro) Rep. John Tilley (D-Hopkinsville) Rep. Ken Upchurch (R-Monticello)

Independent Agents Elected to the House of Representatives Rep. Ron Crimm (R-Louisville) House District 33

Rep. Ron Crimm has served Jefferson County since 1996. A former teacher turned independent insurance agent, Representative Crimm started his own agency in 1977. He managed and owned that agency until 1999 when it was sold to Thoroughbred Associates in Louisville.

He continues to be active in the insurance business on a daily basis.

He is currently a vice chair of the House Banking & Insurance Committee and Rep. Ron Crimm (R-Louisville) serves on a number of other committees including; Appropriation & Revenue, House District 33 Local Government, Veterans Military Affairs and Public Safety. Additionally, Rep. Crimm is vice chair of the Life Committee for the National Council of Insurance Legislators (NCOIL) and serves on the Communications, Financial Services and Interstate Commerce workgroup of the National Council of State Legislators (NCSL). He has been a long-time member of IIAK. Rep. Crimm is a graduate of Shippensburg University in Pennsylvania. www.iiak.org

state government affairs

2014 Session Rep. Jeff Greer (D-Brandenburg) House District 27

Rep. Jeff Greer has served Bullit, Hardin and Meade counties since 2007. He founded Greer Insurance in 1990 and has been active in the industry ever since.

He served as the chair of IIAK’s Young Agents Committee in 2005. In 2012, he was presented by IIAK with the distinguished E. Starling Holloway Award.

Rep. Greer is co-chair of the House Banking & Insurance Committee, is a co-chair Rep. Jeff Greer (D-Brandenburg) of the House Committee on Veterans, Military Affairs and Public Safety, is liaison House District 27 member of the House Budget Review Subcommittee on Transportation, and member of the House Committee on Tourism Development and Energy. Additionally he is a member of the National Council of Insurance Legislators (NCOIL).

Steve Riggs (D-Louisville) House District 31

Rep. Steve Riggs has been serving part of Jefferson County as legislator since 1991. By trade, Rep. Riggs has over 26 years of experience in the insurance industry, both as a company representative and independent agent. He has been a long-time member of IIAK and is a producer with Nelson Insurance Group in Louisville.

Rep. Greer attended Eastern Kentucky University where he obtained a BA in Business Administration.

Rep. Jim Gooch, Jr. (D-Providence) House District 12

Rep. Jim Gooch has served as a member of the Kentucky House of Representatives since 1995. He is an independent agent by profession.

Currently Rep. Gooch sits on the House Banking & Insurance Committee, is chair of the Natural Resources & Environment Committee and sits on the Tourism Development & Energy Committee.

Rep. Jim Gooch, Jr. (D-Providence) House District 12

Rep. Rick Rand serves Carroll, Henry, Oldham and Trimble counties, and has done so since 2003. Prior to serving in the House, Rep. Rand served in the Senate from 1991 to 1994. In addition to his legislative duties, Rep. Rand is both a farmer and an independent agent with membership in IIAK. He is an agent with Rand Insurance Agency, Inc., in Bedford.

Currently, Rep. Rand is the chair of the House Committee on Appropriations and Revenue. In addition, his is ex-officio to several House Budget Review sub-committees including; General Government, Finance and Public Protection; and Economic Development & Tourism, Natural Resources and Environmental Protection. www.iiak.org

Rep. Riggs is a graduate of the University of Kentucky with a degree in Business Administration.

Bart Rowland (R-Tompkinsville) House District 53 Rick Rand (D-Bedford) House District 47

Rick Rand (D-Bedford) House District 47

Rep. Riggs is a vice chair of the House Committee on Banking & Insurance. In addition, he is also chair of the House Committee on Local Government and member of the House Committee on Transportation.

Steve Riggs (D-Louisville) House District 31

Rep. Bart Rowland serves Cumberland, Green, Metcalfe and Monroe counties.

He is the vice president of Rowland Insurance Agency, Inc., in Tompkinsville and has been an independent agent since 1999.

An agent member of the association, Rep. Rowland was active in the Young Agents Committee (YAC) from 2002 to 2005. In state government, Rep. Rowland Bart Rowland (R-Tompkinsville) is member of several House commitHouse District 53 tees including; vice chair of Banking and Insurance, Agriculture & Small Business, Education, and Elections, Constitutional Amendments and Intergovernmental Affairs.

Rep. Rowland is a graduate of Western Kentucky University (WKU).

Kentucky IA

| January/February 2014 | 23

From left to right: Andy Roe, Patrick Roe and Jim Roe

Arlington/Roe. You have our word on it.

“Whether you choose Arlington/Roe for our breadth of knowledge, product line diversity, market access or industry know-how, you may be assured we are in business primarily to serve you. We will do our best to earn and keep your trust. You have our word on it.”

– James A. Roe, CPCU, ASLI, President

Managing General Agents and Wholesale Insurance Brokers

800.878.9891

s

ArlingtonRoe.com

Aviation | Bonds | Brokerage | Commercial Lines | Farm | Medical Professional | Personal Lines | Professional Liability | Transportation | Workers’ Compensation

24 | January/February 2014 | Kentucky IA

www.iiak.org

benefits spotlight

Want to Add LIFE to Your Agency? of IIAK and IIABA, you have access to two programs for AsLifea member and Disability products.

With the Big “I” and LifeSource (brought to you by Crump Group), you have access to the Crump’s multiple insurance carriers to provide you with a competitive advantage in the marketplace. With access to over two hundred insurance carriers, they closely partner with a subset of these carriers to offer a product suite with the depth necessary to meet almost any client need. With LifeSource you will have access to a full range of Life, Disability, Annuity and Critical Care products and a dedicated sales and case management team to assist you during the sale.

• Short Term Disability for your employees • Systematic Enrollment • A+rated carrier • Portable Benefits You can ask for a quote today by calling (574) 231-6514 or email Life-DI@iiak.org.

How to get considered:

• Go to Big “I” Markets and go to “Offline Products” and select “LifeSource.” Click on “Request a Quote” to begin the electronic record.

This starts the LifeSource Registration process (Please note you are not actually requesting a quote).

800-226-3224 www.fcci-group.com

• Complete the information as requested on the Quote Request Wizard screen. ENTER YOUR AGENCY NAME & ADDRESS AS THE CLIENT, as you are actually the client in this case. Click Next.

• Continue through the Quote Request Wizard Screen. On Underwriting Information: Step 4, print the LifeSource Producer agreement.

• On Confirmation: Step 5, click submit to confirm the quote request which will alert LifeSource of your interest.

• Complete the Producer Agreement downloaded in the quote request process. Fax the Producer Agreement and copy of your life license to 717703-4810.

What Happens Next?

“The FCCI Surety team excels at finding creative solutions to get bonds written. One of the things I enjoy most is working along with an agent to help a contractor evolve from being unable to obtain bonds to being the type of contractor sought out by surety companies.”

Once you are in receipt of your log in information from LifeSource, you will be directed to complete an Anti-Money Laundering training program - which is available at no cost and online. You will then have access to the Life, Disability and Critical Care products.

Dan Pikar Senior Contract Surety Underwriter FCCI Insurance Group Midwest Region

LifeSource will review your Producer Agreement and will contact you via email with your user id and password. LifeSource will also obtain all information necessary for your appointment to the appropriate carrier.

Contact Christine Muñoz at 800-848-4401 with questions on LifeSource.

IIAK Life & Disability

Through your relationship with IIAK, you have access to the IIAK Life & Disability Program, underwritten by Lincoln Financial. Here are some features of the program: • Up to $200,000 Guaranteed Issue Group Life • Up to $150,000 Guaranteed Issue Supplemental Life • $12,000/month Guaranteed Issue, TAX FREE, Long Term Disability www.iiak.org

Now, let’s talk about your business.

General liability t Auto t Property t Crime Workers’ compensation t Umbrella Inland marine t Agribusiness t Surety Coverage available in 18 states. © 2014 FCCI

KYIA13_Pikar_5x6.625.indd 1

Kentucky IA

2/11/14 5:10 PM | January/February 2014 | 25

technology

Tools that Enhance Claims Information & Efficiency for Independent Agents & Brokers

by Donna J. LaGoy AIT, ACE

A

bout this article: Several tools are now available to agents that can streamline their claims processes significantly and enable them to automatically download claims information. The author demonstrates how an agency can fit each of these tools together to create more efficient claims workflows. The article also points out the critical role agents play in advocating for their carriers and vendors to provide these tools and then to implement them in their agency.

update the status on each of the claims, as it is paid or closed? The agency’s employees are already working overtime under terrific stress, and they want the needed claims information to be handy in their system. They want to spend their limited time assisting their clients regarding the claim and demonstrating the value added that their agency provides to its clients.

The last thing these employees want to spend hours upon hours doing is entering all of this claims information into their system.

This article discusses technology tools that have been introduced to permit independent agents and brokers to serve their clients more promptly and effectively in claims situations. Claims download, real-time claim inquiry, real-time filing of First Notice of Loss (FNOL), real-time requests for loss runs, and Activity Notes all have great promise to make agency workflows more efficient.

Claims download allows for all of the claims to be: • automatically entered into the agency management system

Most of these new capabilities have already been introduced by some carriers, but we need to see much broader usage. The agents will play the critical role in making this happen, but first they need to be convinced that these new technologies will materially improve their workflows. This article seeks to make that case.

Claims Download

One of the most exciting new opportunities is for the automatic downloading of new claims and claims status information into agency management systems. An ACORD standard has been put in place for claims download, and several vendors and carriers have begun to implement the new capability.

However, an agent might ask: “How exactly will claims download benefit me? I already have claim inquiry available via carrier websites or through my agency management system using real-time inquiry.” Or, the agent might say: “Why do I need download, when I already receive an e-mail or Activity Note into my agency management system that tells me there is a claim?”

Real-time claim inquiry has been a great enhancement for agents and will continue to be so for up-to-the-minute information. But, it is only beneficial if the agent knows the claim has taken place! Further, real-time claim inquiry does not populate the agency management system’s database, and so the agent must enter the claims information into his or her system.

E-mails or Activity Notes are also great “incremental” steps, but again, the agent has to enter the claim into the agency management system and update the information as the status of the claim changes.

1

The goal is for all of the latest features of technology to work hand-in-hand to make the claims process as streamlined as possible.

Claims Download Critical in Disaster Situations

The horrific storm seasons we have had in recent years provide an instructive example as to how claims download can help agencies. If an agent has had no power and has had clients reporting claims directly to the carrier, how does he or she know what claims have been filed? Once the agency finds out about the claims, who is going to enter the hundreds or thousands of claims into its agency management system? Who is going to

26 | January/February 2014 | Kentucky IA

•

updated as the status is changed, and

•

closed when the carrier closes it.

Claims download would save the typical agency hundreds of hours per year, as well as enable agency employees to provide better service to their clients should a claim occur.

Recommended Claims Workflow

The question, then, is how do claims download, real-time claims inquiries and e-mail or Activity Notes work most efficiently together? Consider the following workflow: 1) The claim is reported directly to the carrier by the client (FNOL reported by the agent is a different workflow and is addressed below.).

2) An e-mail message or Activity Note is sent to the agency instantly notifying it of the loss.

3) Overnight, the claims are processed via a batch process and downloaded into the agency management system.

4) A log is waiting for the agent in the morning, when he or she comes in to review what was attached (similar to policy download) and what went to suspense to be attached.

5) The claim is now in the agency management system and is ready to be serviced.

6) Claim inquiry can be used at this point to look at anything that has transpired during the current day, if necessary. An example would be that the adjuster had not been assigned when the claim was downloaded, and you need to get that information today.

7) Any updates to the claim will download each night (or at given intervals during the day, if the carrier and vendor provide this feature).

Again, this download information will populate a log for review.

8) The agency is now in the position to run reports from the agency management system to track losses.

First Notice of Loss (FNOL) Claim Reporting

Another very important technology for agencies is real-time FNOL 1

Note that Activity Notes today are typically downloaded after the close of the business day. In the future, it is hoped that carriers will deliver time sensitive Activity Notes multiple times a day to their agents’ IVANS mailboxes and agencies will pick up those messages several times a day as well. www.iiak.org

technology

claim reporting, where the agent can submit the claim to the carrier and instantly get back the claim number and adjuster for the claim. What a terrific service to be able to provide the client with this information on the spot! Even where the agent is using real-time FNOL, however, claims download still plays an important role, because it allows for the automatic updating of the status of the claim, including payments made, adjuster notes, and the closure of the file.

Real-Time Loss Runs

Claims download and real-time claims inquiry will provide the foundation for this enhanced consumer capability. Consider once again what this would mean to an agency devastated by a disaster, struggling to make or receive phone calls of any kind. What a godsend it would be if anxious clients could go to the agency’s website and learn that their claim has been received and is in processing, and receive the assigned adjuster’s contact information. Organizations like ACT will continue to work with carriers and vendors to make this future a reality.

Requesting loss runs through the agency management system and receiving them back in Real Time from the carrier is another significant improvement for agents, providing clients with immediate service and saving considerable time for the agent.

Most important today, agents, carriers, and vendors should continue to collaborate to harness the exciting technologies that are available to us now to significantly improve the overall customer experience and to make our distribution system more efficient and responsive.

Agents Play Key Role

Donna LaGoy is a Client Partner of Applied Systems, Inc. and is Chair of the ACORD Claims Download Working Group. Before taking her current role, Donna was an independent agent, with many years of experience working for a national broker and then owning her own agency. She is dedicated to improving the technologies and workflows available to independent agents and brokers, both internally and with their insurance carriers. She has been deeply involved in ACT, AUGIE, ACORD, and ASCnet. Donna LaGoy can be reached at dlagoy@appliedsystems.com. She prepared this updated article for the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. For more information about ACT, contact Ron Berg, ACT’s incoming Executive Director, who can be reached at ron.berg@iiaba.net. This article reflects the views of the author and should not be construed as an official statement by ACT.

Whether we are talking about claims download or real-time claim inquiry, FNOL, loss runs, or Activity Notes, agents will play the critical role in making these improved workflows a reality within our industry.

Agents should advocate for these improvements with their carriers, and then “walk the walk” by implementing them within their agencies when they are introduced by particular carriers. High agency usage will be the dominant factor in convincing additional carriers to leave the sidelines and join the game by implementing these new capabilities.

The Future

As exciting as these new technologies are, the future will require the industry to take yet another step, and that is to permit the agency’s clients to access their claims information directly from the agency’s website. www.iiak.org

Kentucky IA

| January/February 2014 | 27

education

Classified Ads Acquisitions

Established Louisville agency interested in acquiring insurance agencies in Jefferson and surrounding counties. If you are interested in selling, merging or need assistance with perpetuation, we would like to talk with you in confidence. Call R. Alex Rankin, CPCU or Steve B. Thompson, CPCU, at Sterling G. Thompson, Co. at (502) 585-3277.

Looking for Producers

Independent with top best markets looking to expand presence in Jefferson, Oldham or Shelby counties. Wanting Personal lines, Producer or book of business to move or purchase. All arrangements possible, in strict confidence. Please send inquiries to Turner Insurance Agency, 2460 Shelbyville Road, Shelbyville, KY 40065 or call Kurt Turner, CPCU at (502) 633-6060.

Acquisitions & Producers

A well established regional agency is interested in individual producers and insurance agencies considering selling or merging. Commercial lines & personal lines wanted in Louisville, Lexington, NKY and BG. We represent the best and desired markets for growing an agency or book of business. Confidentiality provided to all interested parties. Call Scott Ferguson at The Underwriters Group (502) 244-1343.

Producer Wanted

Louisville Insurance LLC has producer opportunities with flexible compensation plans while offering ownership in book of business produced. Confidentiality provided to all interested parties. Contact Glenn Pike at 502-473-5454 or glenn@louisvilleins.com.

To place a classified ad please contact Arlene Adonis-Hawkins at aadonishawkins@iiak.org or (502) 245-5432.

28 | January/February 2014 | Kentucky IA

upcoming events

www.iiak.org

You can register for these events and education seminars or find out more information by visiting www.iiak.org. You can also call IIAK by phone at (502) 245-5432 or email iiak@iiak.org.

www.iiak.org

agency management

Agency Financial Management

by Chris Burand

A

gency financial management can make or break an agency. With a little preparations and a proactive approach, good financial management can substantially add to an agency’s profits. Financial management is a very broad topic, so for the purposes of this article I will focus on three critical aspects: managing accounts receivable, knowing and managing how much the agency spends to make a sale, and obtaining sufficient capital to grow.

Accounts Receivable Frequently, agencies find themselves with many overdue accounts, consistently late paying accounts, and/or bad debts. Each of these accounts receivable problems costs the agency money. First, let’s look at overdue

commission is only $200 and the potential profit is only $14? Why work so hard to lose money? Let your competitor lose money on that client!

Finally, bad debts obviously can be a killer and need little explanation.

However, do not underestimate how damaging they are to your bottom line. To make $10,000 in profit at a 7% profit margin, the agency has to generate $142,857 in revenue. Therefore, to make up $10,000 in bad debt, the agency has to generate an additional $142,857 in revenue!

Actively manage your accounts receivable. Stay on top of your overdue accounts, do not pay producers until they collect the premiums, keep track of your consistent late payers, and get rid of the accounts that cost you more than you make. Poor management of accounts receivable can destroy an agency. Good financial management can boost your profits and give you a healthier bottom line.

Cost of a Sale How much time do your producers and CSRs spend to sell an account? What do lost sales cost your agency? How much management time, marketing expense, overhead costs, and labor expense goes into every sale? Very few agencies can answer these questions, but knowing the actual cost of a sale is critical because based on APRS data, the average agency spends $1.03 to $1.11 for every commission dollar generated! In fact, the results of our Cost of Sales Analysis often show agencies spending as much as $1.90 for every commission dollar they generate!

accounts. Imagine your agency has $10,000 consistently overdue and the going interest rate is 10%. In this scenario, you are giving your clients an interest free loan that costs you $1,000 annually in lost interest (using simple interest). Meanwhile, at the industry’s average profit margin of 7%, the agency only makes $700 on the $10,000. Therefore, by giving these interest free loans, the agency loses 3% on those accounts. Look at your overdue accounts and before you continue to let them slide, ask yourself if you are in business to sell insurance or to be a bank giving interest free loans!

The next trouble area is consistent late payers. On $500 in commissions, an agency makes a $35 profit at the industry average of 7%. If an account pays late two or three times per year, the agency will probably spend extra postage, office supplies, labor expense, overhead, telephone costs, possibly even travel costs, and definitely frustration on the account. These extra costs commonly total $5 to $50. Suppose the agency spends something in the middle, say $20. On the $500 in commissions then, the agency will make a whopping $15 and could possibly even lose money. And what if the www.iiak.org

To help get your costs in line, the first step is to take a detailed look at all the costs of making a sale, including lost sales. An in-depth look at your costs will reveal if too much is being spent and if so, it will pinpoint where to trim the excess and uncover opportunities for improvement in many areas such as productivity, hit ratios, retention, and account targeting.

Capital to Grow Agencies need to grow and growth requires capital. With good financial management, an agency can obtain capital from the best source and at reasonable rates.

First, what sources of capital are available? Most capital is supplied by agency owners, either out of their own pockets and/or from the agency’s retained earnings. This form of capital is the most expensive because the dollars are after-tax dollars and none of it is tax deductible. The cheapest form of capital is usually debt because the interest payments are tax deductible and a lender has less risk than a stock holder. Therefore, when possible and reasonable, debt is the preferred method for financing agency growth.

The next question then is: where to get a loan? Many banks and thrifts Kentucky IA

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agency management

will not lend to an agency because they believe agencies lack sufficient tangible value in case of default. This is ironic because many banks believe agencies are good acquisitions while other banks will not even lend to them! If you do go to a bank, be prepared to prove your agency’s tangible value by having an appraisal from a qualified insurance agency consultant. Also present the bank with a strong business plan that shows you are committed to growing your agency.

Another alternative is insurance companies and they will often offer much better deals than any other source. In return, most companies want more business and they will not loan to just any agency. The agency needs to have a large book of business with them and/or the company has to believe the agency will build a large book with them soon. To convince a company the agency is a worthwhile investment, present a strong business plan to the company and ask them how they will work with you to achieve the goals outlined in the plan. If a company believes the agency has potential, I have seen them give agencies loans below market interest rates and even forgive the principal if things work out well. The first step though, before a company will consider lending money, is the agency has to ask!

The final consideration is to get a good interest rate. The difference between a 5% and a 10% interest rate on $100,000 over three years is almost $2,800 per year, which at a 7% profit margin is worth $40,000 in revenues. Therefore, before approaching any lender, take the necessary steps to present your agency as a low risk, good investment. Also, shop for the best rate and always ask for a lower rate. Be aware of loan initiation fess, mandatory offsetting accounts, and other buried costs. Help yourself to a more secure and brighter future. Actively practice good financial management foryour agency and watch your bottom line grow!

Chris Burand is president of Burand & Associates, LLC, an insurance agency consulting firm. Readers may contact Chris at (719) 485-3868 or by e-mail at chris@burand-associates.com.

NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this

30 | January/February 2014 | Kentucky IA

article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

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