Kentucky IA - Summer 2019

Summer 2019

How to win 65% What did you do more business with a with your tax savings?

5-minute video Page 8

Create an app-less mobile experience Page 34

Page 17

4 Ways to scale referrals with a niche Page 36

Our Future is Bright AM Best Rating “A-“ (Excellent) with a Stable Outlook Highly Competitive Rates Precision Underwriting Expert Claims Handling Comprehensive Loss Prevention Services

200 Executive Park, Louisville, KY 40207 | t 502.894.8484 | 800.367.5372 | clearpathmutual.com

What's

Inside

Page 6

Contents

6 Apprentice Spotlight: Ashley Gilmore 8 What Does the New 199A Tax Regulation Mean for Big “I” Member Agencies and Brokerages?

17 How to win 65% more business with a 5-minute video

Page 20

20 Leadership Conference Recap 27 An Overtime (and overdue) report from the Road Shows 30 Technology Deep Dive: Introduction to the Internet of Things 34 No App? No Problem. Creating an app-less mobile experience

Page 27 The Kentucky IA is the official magazine of the Independent Insurance Agents of Kentucky, and is published quarterly.

Office Address 13265 O’Bannon Station Way, Louisville, Kentucky 40223.

Telephone:(502) 245-5432 Email: iiak@iiak.org Fax: (502) 245-5750 All advertising and editorial submissions are welcome. Direct any inquiries and submissions should be directed to Nikki Robins, Communications Director at nrobins@iiak.org

36 Niche Marketing: 4 Ways to scale referrals with a niche

In Every Issue 4 From the Chair

12 Industry Partners

5 DOI News

38 Advertiser Index

7 Upcoming Events

38 Classified Ads

10 Education Calendar

38 Social Media Links

Mission Statement Create value for our members through innovative resources and legislative advocacy while fostering industry relationships.

Kentucky IA - Summer 2019 | 3

Officers Aaron LaRue

Chair, Bardstown 502.348.0050 Ray A. Robertson, CIC

Chair-Elect, Mt. Sterling 859.498.3410 Kevin T. Desmond

Vice Chair, Bellevue 859.491.5100 James D. England, AAI

Treasurer, Pikeville 606.437.7361 Stephen R. Kinkade, CPCU, AAI

National Director, Leitchfield 270.259.5465 Michael G. Johnson, CIC

Immediate Past Chair, Lexington 859.233.1461

Directors Allen J. Crawford, CIC, CSRM Somerset, 606.679.6311 Whitney L. Floyd, CISR Henderson, 270.827.3543 Mark Linkous, CIC Edmonton, 270.432.3491 Barrett H. “Skip” McGaw, II, CIC

Madisonville, 270.821.3122 Carolyn Reynolds

Richmond, 859.623.8485 Nicholas Rolf

Emerging Leader Chair, Ft. Thomas 859.781.0434 Chris J. Wiseman, CIC

Bowling Green, 270.781.2020 Laura Yount, CIC, CISR London, 606.878.0100

Staff Tara T. Purvis

President & CEO Amy Good

Financial Services Director

Chair From the

I’d like to start out this column by thanking everyone who took the time to attend our regional road shows and Leadership Conference. We had great attendance at all and I enjoyed meeting a lot of new people. Huge thanks to our staff and our sponsors who made it all possible! Moving into summer, we look forward to vacations, lake time, the oppressive Ohio Valley humidity (maybe not so much) and of course the Fourth of July. As we celebrate Independence Day with fireworks and cookouts, we should all pause to reflect on the struggles and sacrifices of those who made it all possible.

The war for independence lasted roughly eight years from the time the first shots were fired until the final peace treaty was signed. In the early years of the war there were numerous times the patriots could have given up due to lack of participation, lack of funding, low morale and other obstacles. Through perseverance and determination, with a final goal in mind, our founding fathers were able to overcome those obstacles and create the greatest country in the world. That same spirit is alive and well within our industry. But instead of taking eight years to succeed due to being outnumbered, out-gunned and waiting on the French, our members have the tools and resources available from Day 1 to achieve their goals in much quicker fashion.

Whether an agency is new or established, IIAK is there for you to assist in accomplishing their goals. The Big “I” can help provide the road map and essentials (Errors & Omissions Insurance, Group Health, Agency in a Box) needed to get an agency started. With Big I Hires, WAHVE and our apprenticeship program up and running we’ve got your numbers covered.

The apprenticeship program is now open to all member agencies so reach out to the staff to find out how to get started growing your own talent. (See page 6 for our first full-time hire from this prograom.) As a Big “I” member you also have access to Insurbanc, for acquisitions, perpetuation and other transactions to help with your funding needs. The Big “I” is also a partner when it comes to your technology needs providing access to leading edge speakers at our events, online training and the Agents Council on Technology (ACT). These are just a few of the 90+ products and services available to YOU. Just like our country, the independent agent woudln’t get anywhere without allies. While providing some similar resources, the BIG I, our carrier partners, the SIAAs, Keystones and other aggregators all bring unique, vital elements to the table. In order to succeed, we need support & cooperation from all of the above. When we get that support and cooperation, the sky is the limit. So thank you to our partners!

I hope your summer is a great one and look forward to seeing you at some of our upcoming events.

Thank you,

Katie Hines

Membership Services Director Nikki S. Robins

Communications Director Kristie Weyer, CISR

Insurance Services Director Cassie Young

Workforce Development Director

4 | Kentucky IA - Summer 2019

Aaron LaRue Chairman, IIAK

Breaking Barriers to Innovation

House Bill 386 creates ‘sandbox’ to test new products

By Commissioner Nancy Atkins The Kentucky Department of Insurance (DOI) is encouraging innovation with the creation of an initiative to develop creative risk management and insurance solutions. “Innovation” is described as a new method, idea or product, which ultimately turns into a product or service that creates value for the consumer.

House Bill 386, passed by the 2019 Kentucky General Assembly, offers companies that meet specific requirements, with the opportunity to apply to DOI to test new products in our sandbox. The “Innovation Application” is a one-of-a-kind framework in the United States. We have already received numerous inquiries on the legislation and application process, and we anticipate the inquiries will continue to grow as word begins to spread throughout the insurance and tech communities.

Through our innovative “sandbox,” we are letting organizations experiment with ideas that are prohibited under the current insurance code. As insurance commissioner, I am excited that this legislation gives Kentucky a leadership role for economic growth across the insurance industry.

In a rapidly evolving technological economy, Kentucky’s sandbox legislation could lead to new products introduced to the market faster; provide cost savings for businesses and consumers; initiate private-sector flexibility; and continue consumer protection efforts.

will be required to report key data to DOI for ongoing evaluation and oversight. Sandbox products and processes that prove to be successful and provide benefits to Kentuckians will serve as powerful evidence for reforming the Insurance Code.

DOI will provide updates to legislators to ensure adequate monitoring of this unique framework.

DOI will accept applications beginning June 27, 2019.

Applications can be hand-delivered or mailed to: Kentucky Department of Insurance Attn: Insurance Innovation Review P.O. Box 517 215 W. Main Street Frankfort, KY 40602 DOI staff can assist applicants through this process. Please do not hesitate to contact us if you have questions or need assistance: Patrick O’Connor II patrick.oconnor@ky.gov; 502-564-6026.

John Melvin john.melvin@ky.gov; 502-782-5295.

Visit https://apps.legislature.ky.gov/recorddocuments/ bill/19RS/hb386/bill.pdf to view a copy of House Bill 386.

Companies wishing to participate in the sandbox must apply to DOI for admission. An applicant must explain their product’s innovation, value to customers and demonstrate financial stability. All sandbox participants Kentucky IA - Summer 2019 | 5

Ashley Gilmore

Daviess County High School 2019 Graduate E.M. Ford - Owensboro

What are your job duties?

My job duties are to help out as much as I possibly can around the office. I have shadowed all of the CSR’s and have a good idea of their everyday jobs also. My main duty is to soak up and learn about the business as much as I can!

Have you had any “a ha” or surprising moments?

Since I have started my apprenticeship, I have learned so much about insurance. Many things have stood out to me but the biggest shocker for me was to discover all of the terminology used within the company. Learning insurance is like learning a whole other language and I never realized that there was such a wide variety of terms used!

Has this apprenticeship helped you pick a future career?

Participating in this apprenticeship has most definitely helped me pick a career! At this point, my plans are to stay within the insurance business and be with EM Ford for as long as I can. I have grown to love it here at EM Ford and I hope to remain in insurance for the rest of my career!

Principal Perspective

“Ashley has been a great addition to our agency. She has a great attitude and is excited to get to work each day she walks in the door. She wants to learn as much as she can and help out wherever needed and we certainly have appreciated that. Her youth has also brought a different perspective to the agency, which helps us continue to think of new ways to improve our client experience. We look forward to her continued development in the insurance industry and her becoming a valued asset to the EM Ford team.”

- Neel Ford, E.M. Ford

6 | Kentucky IA - Summer 2019

UPCOMING EVENTS august 8

blue grass sportmen's league wilmore, ky register at www.iiak.org/clayshoot

Kentucky IA - Summer 2019 | 7

Jan. 18, 2019 IRS issued Section 199A of the tax code, which includes 20% deduction for certain small business owners. Here's how the Big "I" helped.

APRIL 23 Big "I", Council of Insurance Agents & Brokers (CIAB), National Association of Insurance and Financial Advisors (NAIFA) sent comment letter to Department of Treasury

APRIL 25 Big "I" meets with CIAB and NAIFA and senior staff at the Treasury Department.

MAY 15

Big "I" sends follow-up comment letter with CIAB and NAIFA.

MAY & JULY

Big "I" meets with key members of Congress drafting section 199A to exclude agents & section 199A to exclude agents & brokers from "specified services trade or business."

MAY 31

Big "I", NAIFA and CIAB submitted joint testimony to the House Ways and Means Committee for the "Tax Reform and Small Businesses: Growing our Economy and Creating Jobs" hearing.

JUNE 20

Big "I" NAIFA and CIAB submitted joint testimony to the House Financial Services Committee "Empowering a Pro-Growth Economy by Cutting Taxes and Regulatory Tape" hearing.

AUGUST 8

Treasury Department and IRS released draft regulation that EXCLUDES insurance agents & brokers from the definition of "specified services trade or business.”

OCTOBER 1

Big "I" submitted a comment letter to the IRS after the draft regulation was released.

DECEMBER 10 DECEMBER & JANUARY

IRS issued draft publication 535 that INCLUDED agents & brokers as "specific services trade or business."

Big "I" coordinates with CIAB and the National Association of REALTORS (NAR) to express concern with the recent IRS draft to Treasury Department, White House, National Economic Council, Office of Management & Budget (OBM).

JANUARY 7 IRS issued new draft publication 535 that EXCLUDES brokers as "specified services, trade or business."

January 10

Big "I" meets with OMB, Treasury Department and IRS staff.

JANUARY 18 independentagent.com

Treasury Department and IRS released final rule confirming insurance agents & brokers are not “specified services trade or business.”

Independent Insurance Agents & Brokers of America . 20 F Street, NW, Ste 610, Washington, DC 20001 GOVERNMENT AFFAIRS .

What Does the New 199A Tax Regulation Mean for Big “I” Member Agencies and Brokerages?

WORKING for

YOU .

does not impact you. Under the 2017 tax reform law starting

BIG “I” MEMBERS, whether organized as a pass-through entity or a C-corporation, can now rest assured that the tax reform law is working for them and their employees.”

tax and there is no corporate alternative minimum tax (AMT).

- CHARLES SYMINGTON, Big “I” Senior Vice President

Section 199A of the Tax Code, which created a deduction of up If your agency is organized as a C-corporation the regulation

Prior to 2018 the tax rate for C-corporations was tiered with the highest marginal tax rate being 39%. Approximately one-third of Big “I” members are C-corporations.

For the two-thirds of Big “I” members who are organized as S-corporations, partnerships and sole proprietorships, the 2017 tax reform law created a new deduction which the Jan. 18 regulation implemented. The deduction is based on taxable income levels and can be taken by owners and shareholders of certain businesses organized as pass-through entities. The

depending on the types of activities the business undertakes.

The deduction may be limited on income derived from activities (e.g. non-traditional insurance activities) if that income exceeds certain de minimis thresholds. Additionally, above these same income levels, the total amount of the deduction cannot exceed 50% of employee W-2 wages or 25% of W-2 wages plus 2.5% of capital assets, whichever is greater.

deduction is available to itemizers and non-itemizers alike. shareholders of insurance agencies and brokerages organized through income to approximately 29% from 37%. For those in the 24% bracket, it can reduce the rate to as low as 19.2%.

The deduction is available for the next seven taxable years (i.e.

2018-2025).

insurance agencies and brokerages where the owner or shareholder’s annual taxable income does not exceed $315,000

that taxpayers in this category can take up to a 20% deduction

For insurance agencies and brokerages where the owner or shareholder’s annual taxable income exceeds these levels, the deduction is still available, but it is subject to some limitations

as pass-through entities can take a deduction of up to 20% of their insurance producer income, no matter their taxable income levels. This is because the IRS does not consider the service trade or business.”

make sure the sale and servicing of insurance products would regulation.

Other professions such as doctors, lawyers, accountants, stock

businesses” the deduction is phased out and cannot be applied at all over certain income thresholds.

WHAT DID YOU DO WITH YOUR TAX SAVINGS? www.independentagent.com

Empowering Trusted Choice® Independent Insurance Agents.

We want to hear from you at iiak@iiak.org

Kentucky IA - Summer 2019 | 9

DATE/TIME

SEMINAR NAME

August 27 @ 1 pm September 24 @ 1 pm

Agency Management Based E&O and Ethics

3

August 1 @ 3 pm September 5 @ 3 pm

Annuity Basics and Where They Fit

1

August 21 @ 11 am September 18 @ 11 am

Business Auto Claims That Cause Problems

2

August 8 @ 11 am September 12 @ 11 am

Business Fraud Protection

1

August 16 @ 11 am September 19 @ 11 am

Certificates of Insurance – Emerging Issues and Other Stuff that August Scare You!

3

August 27 @ 2 pm September 13 @ 10 am

Commercial Lines Claims That Cause Problems

2

August 13 @ 2 pm September 10 @ 10 am

Commercial Property Endorsements That Can Make You Money!

2

August 6 @ 1 pm September 19 @ 1 pm

COPE – Property Underwriting and Effective Loss Control

2

August 2 @ 2 pm September 4 @ 2 pm

Data Privacy Insurance

2

August 7 @ 10 am September 4 @ 10 am

Directors and Officers Liability Insurance

2

August 12 @ 1 pm September 9 @ 1 pm

Double Trouble - Certificates of Insurance and Business Auto Endorsements

2

August 6 @ 9 am September 3 @ 9 am

E&O Risk Management – Meeting the Challenge of Change (6 hour course)

6

August 22 @ 10 am September 24 @ 10 am

E&O Risk Management – Meeting the Challenge of Change (Part 1)

3

August 27 @ 2 pm September 26 @ 2 pm

E&O Risk Management – Meeting the Challenge of Change (Part 2)

3

August 8 @ 3 pm September 12 @ 3 pm

Estate Planning Basics

2

August 7 @ 11 am September 4 @ 11 am

Ethics and Business

3

August 15 @ 2 pm September 10 @ 11 am

Home Based Business Exposures

2

August 1 @ 11 am September 5 @ 11 am

Hot Topics in Personal Lines

2

August 8 @ 11 am September 13 @ 2 pm

Liability Issues to Worry About – Indemnity Agreements and Additional Insureds

2

August 5 @ 10 am September 2 @ 10 am

Long Term Care Insurance

2

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CE CREDITS

DATE/TIME

SEMINAR NAME

CE CREDITS

August 15 @ 11 am September 19 @ 11 am

National Flood Insurance Program Basic Course - 2016

3

August 16 @ 2 pm September 20 @ 2 pm

Personal Fraud Protection

1

August 14 @ 11 am

Personal Lines Claims That Cause Problems

2

August 23 @ 11 am September 27 @ 11 am

Professional Ethics in the Insurance Industry

3

August 1 @ 2 pm September 5 @ 2 pm

Property & Liability Concepts - Comp. Cov. Series

2

August 20 @ 9 am September 17 @ 9 am

Rental Cars: More Than Meets the Eye

2

August 16 @ 10 am September 20 @ 10 am

Shake, Rattle, and Roll with it- Earthquake Basics

1

August 26 @ 11 am September 23 @ 11 am

Those Kids and Their Cars!

2

August 13 @ 2 pm September 26 @ 2 pm

Top 5 Life Insurance Uses

2

August 14 @ 3 pm

What you Need to Know about Employment Law & Coverage

2

August 6 @ 1 pm September 19 @ 1 pm

Workers Compensation Beyond the Basics

3

VISIT IIAK.ABEN.TV FOR: • • • • •

Class descriptions Faculty Group discounts Bundle discounts Professional development courses

Kentucky IA - Summer 2019 | 11

Thank You

2019 Industry Partners

GOLD

PLATINUM

DIAMOND

(as of 07/01/19)

BRONZE

SILVER

Kentucky Associated General Contractors SIF Keystone Insurers Group State Auto Insurance Company

Amerisafe, Inc. Anthem Blue Cross & Blue Shield Auto-Owners Insurance Company BITCO Insurance Companies ClearPath Mutual Columbia Insurance Group EMC Insurance Company FCCI Insurance Group FFVA Mutual Insurance Co

12 | Kentucky IA - Summer 2019

Frankenmuth Mutual Insurance Imperial PFS J.M. Wilson Kentucky National Insurance Co Kentucky Retail Federation SIF Market Finders Insurance MetLife Midwestern Insurance Alliance Prime Insurance Companies

RT Specialty Group, LLC Selective Insurance Summit SwissRe Corporate Solutions The Hartford United Home Insurance Company Westfield Insurance

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This line offers optional coverage for manufacturers and delivery errors or omissions, plus employment practices liability. Certain coverages are even bundled automatically — meaning whatever your clients make, EMC makes insuring their businesses easier.

Count on EMC ® to make light work of light manufacturing coverage.

www.emcins.com ©Copyright Employers Mutual Casualty Company 2018. All rights reserved.

Introducing

IIAK’s NEWEST member benefit

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Kentucky IA - Summer 2019 | 15

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How to win

65% MORE BUSINESS

with a 5-minute video

By Sydney Roe

Here’s the problem: We don’t have the luxury of meeting all of our prospects in person anymore.

(Thank you, internet.) I actually kind of miss that.

There’s something awkwardly special about sitting across from someone you’re meeting for the first time, shootin’ the breeze for a few minutes, then getting down to business. You can see their facial expressions, read their body language and vibe off their energy. And they can do the same with you.

But over the phone? Or over text? Or Facebook message? Or LinkedIn? Or email? Or however else you’re selling digitally in 2019?

It’s just harder to make a connection online.

OR………is it that we haven’t yet utilized the right digital tools?

If you follow me on YouTube, you know my obsession with video. What most don’t know about my video obsession is it has nothing to do with video and everything to do with connection.

Let me tell you a story

Last year, I was at an insurance conference in Washington, D.C. I was walking through the crowd at a happy hour and all of a sudden I hear someone calling my name behind me. I turn around and see a lady standing up waving her arms and I freeze.

I have NO idea who she is!! This is my JOB, guys and gals. To know people. To remember people.

To have their names ready to pull out of my back pocket at any moment. And I couldn’t for the LIFE of me recall who this person was.

I start to walk slowly towards her…hoping that her name would eventually pop up in my head if I could make this walk of shame last long enough. Nope.

Nothing. No name. Not even a first letter. Too late.

I dive in and shake her hand with the biggest, most energetic smile I can find.

She starts with, “I LOVE watching your videos!

They’re amazing!” After which I immediately thought, “YESSS!” (Because I really didn’t have any idea who she was.) And because my videos had Kentucky IA - Summer 2019 | 17

once again worked their online magic: helped me make yet another connection. By the way, the lady’s name is Lauren. She’s a Travelers Regional Manager. We ended up talking for quite a while and then put out a piece of cobranded Travelers/ Agency Nation content together a few weeks later. So, BOOM. That’s the power of video.

No, we can’t meet all of our prospects in person.

And no, ultimately, video won’t ever be quite the same. But it comes pretty darn close. It gives people the chance to see your facial expressions, read your body language, vibe off your energy.

Aka, connect. And it’s why MANY independent insurance agents have jumped on board the video proposal train.

Here’s a note from a recent prospect (now client) who needed to insure his $500,000 home: “Thank you very much for the proposal and detailed video. The video was very helpful in going through everything. The policy you chose looks like a great value for the cost. Below is what I received from the bank for their requirements on the insurance coverage. Can you please verify that the proposed coverage meets their request?”

What’s a video proposal?

So glad you asked. Right now, as I’m typing this, most agents email insurance quotes to their prospects with either (a) a huge block of “explanatory” text or (b) one line of text that says “quote attached.”

First of all, no insurance consumer actually understands what’s inside their quote.

So, the agents who ship off the quote with one line of text are asking their consumers to make a price-based decision. Second, reading text is WORK. Especially any insurance text. Are you sure they’re understanding the real “value” in their value-based decision?

Many agents are scrapping both of the above. They’re now popping up their webcam, filming themselves walking/ talking through the quote and shipping that 5-minute video off in an email to their prospects.

Nicole Johns from The Johns Family Agency, who has been doing this for a few months now, has recorded a 65% higher close rate on business pitched with a Video Proposal.

18 | Kentucky IA - Summer 2019

More than an account.

A relationship.

More than a policy. A promise.

At FCCI, we’ve been working with select independent agents to insure businesses for more than 60 years. Your clients are more than an account to us. We’ll work with you so they can face the future with confidence.

800-226-3224

www.fcci-group.com PROPERTY I CASUALTY I SURETY I RISK MANAGEMENT I SECTOR EXPERTISE

Want to try this strategy for yourself?

Here’s how to do so, for FREE: • Download Loom (or a software similar to Loom that allows you to record your screen and webcam simultaneously – like Wistia’s Soapbox).

• Record your video. Make sure to include a warm intro, keep your quote walk-through under 5 minutes and be sure to ask them to call or email you at the end.

• Take a shot of the video’s cover (hint: INCLUDE the play button. People can’t not click a Play button. Believe me.)

• Put your shot (with the Play button!) in an email • Hyperlink your image with the video’s URL! Congrats, you’re now officially a video rockstar.

It’s really that simple, people!

Ok, truth be told, there are ways you can make this strategy even beefier.

Your customers deserve the best PROTECTION. RLI Personal Umbrella Policies are DIFFERENT.

But I’ll save that for those of you who really want to take it to the next level.

If that’s you, check out Agency Nation Insiders, where you’ll learn how to crush video proposals and MORE. Sydney Roe the Director of AgencyNation.com. She’s also a licensed Florida insurance agent who’s currently trying to survive the 20 degree Minnesota tundra. As a passionate advocate for the agency channel, she’s constantly working to help agencies learn how to make the internet work for them.

They stand alone. RLI, A+ rated by A.M. Best, has over 30 years of experience providing affordable personal umbrella coverage - so your customers can protect their hard earned assets.

CONTACT Jennifer Hopper

jhopper@arlingtonroe.com 800-878-9891 ext. 8639

Kentucky IA - Summer 2019 | 19

We would like to thank the 90+ attendees who were able to join us for another spectacular Leadership Conference in Bowling Green.

Sunshine and blue skies were the name of the game for this year’s Conference. Wednesday morning Seth Zaremba gave an eye-opening presentation on using technology to enhance your customer’s experience and use the information you have on clients to create meaningful sales growth.

After a delicious taco bar lunch, Matt Naimoli and Zack Gould gave attendees step-by-step tactics on how to get 3,000 referrals in 2020. Their presentation focused on how finding a specialization, niche or a perfect type of client could help agents and companies fine-tune their efforts.

A short break and a stretch of the legs later and it was off to our final presentor of the day, Brett Allen, who urged attendees to incorporate social into their selling process.

The night concluded with our 4th Annual Pitchin’ for PAC Corn Hole Tournament. The competition was stiff once again, but a team of previous champions emerged the winners: Robert Palmer from KEMI and Logan Edelen of Roeding Insurance added another trophy to their case. We upped the mulligan ante this year. Not only did they give teams an extra toss per round, but also used leftover mulligans to enter drawings for custom cornhole boards and a basket of rare bourbons! But best of all, we were able to raise more than $14,000 for our state and national PACs. 20 | Kentucky IA - Summer 2019

Thursday started bright and early with breakfast and a Skype call from DOI Commissioner Nancy Atkins with a update on issues affecting our industry. Next, we rounded up all of our speakers for a SUPER engaging tech panel.

The golf scramble ended a successful conference with beautiful weather and 32 golfers.

The team of Chip Wilkins (Lawton Insurance), Danny Greene (Epic Insurance Solutions Agency, LLC), Kevin Wallace (United Fire Group) and IIAK’s Tara Purvis prevailed as champions.

Thank you to all who made their way to Bowling Green and for those of you that missed... we hope to see you next year!

Check out our Instagram and Facebook pages for even MORE fun photos!

You are all sitting on a pile of gold in your agency - and if you’re not going to get, someone else is going to dig it out from under you.

Seth Zaremba

Price doesn’t matter anymore, it matters what pain point you solve.

Matt Naimoli and Zack Gould

Approach social selling like it’s a game. All you have to do is spend an hour this week filtering and making connections on LinkedIn.

Brett Allen Kentucky IA - Summer 2019 | 21

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Kentucky IA - Summer 2019 | 23

24 | Kentucky IA - Summer 2019

NEW

Risk Management Premium Credit

PROFESSIONAL LIABILITY .

A 10% credit on your Swiss Re Corporate Solutions E&O premium may be earned by attending an approved loss control seminar prior to your policy anniversary. The number of agency staff required to attend is based on agency size. The credit is applicable for two consecutive policy terms. w:

Agency Staff Size

Total Required Attendees

1–4 5 – 11 12+

1 3 25% of staff

(Max of 15 attendees)

The following additional credits are available, up to a maximum total risk management credit of 20 percent:  50% or more of staff attendance = 5% credit available  Agency use of a coverage checklist = 5% credit available  Voluntary website review with findings implemented = 5% credit available Please contact Kristie Weyer at kweyer@iiak.org or call 502-245-5432 for more information.

Additional agency risk management information is available 24/7 via the E&O Happens web site. Visit: www.iiaba.net/EOHappens

You’re in the business of protecting others.

So, who’s watching out for you?

We are. At Arlington/Roe, we put the needs of our customers first. What does that look like? Well, it looks like experience you can trust, integrity you can count on, promises we stand behind and an independent and family-owned industry partner who understands your specific needs. Located in nine states and licensed in all 50, we’ve got your back.

Get to know the people of Arlington/Roe. We’ve been doing the right thing since 1964.

Let us help you find the right solutions.

Managing General Agents | Wholesale Insurance Brokers

800.878.9891 | ArlingtonRoe.com

Aviation | Bonds | Brokerage | Commercial Lines | Healthcare & Human Services | Farm Personal Lines | Professional Liability | Transportation | Workers’ Compensation

By Rick Pitts

Earlier this year, we did a series of Road Shows throughout Kentucky. I’m overdue to get to this, but I’ve asked my editor for a few extra words in this article to say thank you.

Thank you to Tara and Katie and the entire IIAK staff at IIAK for putting on seminars we can all be proud of.

Even more props for taking them directly to your front porch, so to speak. I had the chance to visit with old and new friends in Louisville, Somerset, Lexington, Kentucky Dam Village, Northern Kentucky and Owensboro.

I’d also like to extend a special thanks to Dustin Miller, IIAK’s contract lobbyist, and the various legislators he brought to us to educate everyone on the legislative and regulatory developments from Frankfort in person.

But most of all, I’d like to express my thanks to each and every member of IIAK who attended the seminars, supported the Association, and participated enthusiastically with questions and comments. For myself, I learn more in the few weeks we’re on the road about what’s really

happening than I do at any other time of the year.

If you didn’t have the opportunity to attend, we’d be delighted to see you next year. The news dictates the agenda – we address what’s new both at a state and a national level. One example of a subject we talked about is the subject of this piece.

But first, a warning – there’s some dense language ahead!

The topic is overtime rules and regulations. Of course, we’re interested in this subject not only within our own organizations, but for all our commercial clients, too.

The United States Department of Labor is in charge of enforcing overtime pay laws throughout the country. The overtime law is part of the Fair Labor Standards Act (FLSA), which actually had its start as part of the New Deal. It passed in 1938 and it was the law that introduced the fortyhour workweek into statute. In May of 2016, the Department of Labor announced new rules under the FLSA that are designed to make a whole lot more workers eligible for overtime. They were set to go into effect on December 1, 2016.

Kentucky IA - Summer 2019 | 27

In September of that year, a pair of lawsuits were filed trying to stop the new regulations from going into effect. One was filed by several states, and one was filed by several businesses. While the lawsuits were pending, there was an election and an administration change. Eventually, in 2017, the new administration withdrew the rules, ended the litigation, and said, in effect, “We’ll get back to you.” Up to March of this year, nothing happened.

the Department now also believes that increasing the standard salary level to $913 per week was inappropriate. The increase excluded from exemption 4.2 million employees whose duties would have otherwise qualified them for exemption…

• “The Department believes that the proposed update to the standard salary level will maintain the traditional purposes of the salary level test, and will help employers more readily identify exempt employees.”

Then, the Department of Labor “got back to us,” (as in all of us). The Department surprised many by proposing changes to existing regulations. Right now, the Department’s proposed changes are in the notice-and-comment period. This means the Department has notified everyone about the suggested changes. The “comment” part means that people may send the Department comments on whether the rules are a good or bad idea and the Department will take those comments in to consideration before making the new rules final.

I mentioned earlier that the news dictates our agenda when we’re doing the road shows. In this instance, the news wasn’t only that the overtime rules were set to change. It was also that there had been a case outcome. That case outcome reminded us of how severe liability for making overtime pay mistakes can be.

The biggest thing that the new Department of Labor rules do is “raise the floor” for qualifying for the so-called “white collar” exemptions.

Right now, basically, if an employee makes more than $455 per week, that employee is eligible for consideration to see if they meet the rest of the tests to be a qualifying executive or administrative/managerial employee.

The case did not involve the new rules, or the “floor” change discussed above. Rather, it was simply a case where employees were treated as exempt from overtime but were in reality doing work that wouldn’t qualify for the exemption. In essence, they were treated for pay purposes as “exempt” managers but spent a good portion of their time actually doing line or service work.

Under the rules that would have gone into effect in 2016, that floor would have gone up to $913 per week (or just about double). That means that the threshold would have gone from $23,660 in annual pay to $47,476.

The case is Drake v. Steak N Shake Operations, Inc., and it was decided by a federal court in Missouri. The case had a history exceeding five years. It was a class action brought by managers who claimed they had been improperly classified and had been denied overtime compensation. A six-day long jury trial resulted in a jury verdicts totaling just more than $3,000,000.

The new Department of Labor rule will still move the floor up, but it just won’t move it up so high.

The new, March of 2019, proposed rule will move the floor up to $679 per week, or the equivalent to $35,308 per year.

Why jump it, but just not so high? Two reasons among many stand out. According to the Labor Department: • “The Department agrees with the vast majority of [commenters] that the standard salary level needs to exceed $455 per week to more effectively serve its purpose. But 28 | Kentucky IA - Summer 2019

In May of this year, the federal District Court doubled the awards because it found the violations of were not “[in] good faith and [with] reasonable grounds for believing that it [Steak N Shake] was not in violation of the FLSA.” Attorneys’ fees drove the liability total for Steak N Shake over $7,000,000.

Why the doubling of the award at least for the federal law portion of the case? The Court explains:

“Indeed, SnS senior management testified that it was aware of chronic and widespread understaffing. The evidence at trial showed that SnS’s primary solution for understaffed stores was to use salaried Managers working overtime and that SnS must have known that those Managers were simply too busy performing production and service duties to meet the definitions for exempt employees. Thus, SnS’s failure to pay overtime was not a good faith mistake.”

These are the sort of developments we share each year at the road shows. This year’s developments were simply a stark reminder of how important and how difficult complying with overtime law can be. This of course has implications for our insureds and their employment practices liability exposures.

Who knows what the next twelve months will bring?

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TECHNOLOGY DEEP DIVE:

The Internet of Things (IoT) isn’t about any one technology, but rather the combining of technologies to solve problems and provide information and access. Eventually, the IoT will result in a connected world that few have imagined, profoundly transforming the insurance industry, governments, businesses and our personal lives.

Gartner calls the IoT “the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.” In simple terms, the IoT is a connected system of interrelated devices, mechanical and digital machines, objects, animals and pets, or people that have the ability to communicate, sense or interact without human-to-human or human-to-computer interaction.

Today, there are already billions of IoT devices around the world. Alexa and Google Home help us do homework, place orders or look up recipes on voice command. Smart thermostats like Nest enable us to monitor our heating and cooling from a mobile device, and smart door locks and security systems keep our homes secure. And if you don’t want to lose your keys anymore, Trackr or Tile make it easy to find them.

But how exactly does it work? The IoT integrates four distinct layers of capabilities to enable revolutionary new capabilities: Sensors communicate with the network to move the data to the computing platform, where the business applications interact with the data to draw conclusions and make decisions.

Kentucky IA - Summer 2019 | 30

Introduction to the Internet of Things

SENSORS

Sensors are at the remote end of the IoT stack. They have built-in communication capabilities to connect to the network. Appropriate sensors are deployed depending upon the monitoring need: • Geospatial sensors report their location to the network, allowing for data to be linked to location.

For example, a vehicle can report its location and other information to update the network on travel times, weather and more.

• Environmental sensors report “in situ” data, which means onsite or in position. They allow for remote monitoring of systems and processes or early detection of severe weather events. For example, wave sensors may report on wave and storm activity in an ocean.

• Biosensors such as smart watches, activity bands and rings, along with emerging implantable devices, monitor and report the status of humans and animals. They allow for remote monitoring by either humans or machines, providing early detection of potential health concerns.

• Equipment sensors are embedded in standalone machinery or as part of larger integrated systems and processes. Sensors detect and remediate issues to prevent equipment losses or maintain process and production quality and efficiencies.

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NETWORK

The network enables sensors to transmit data to the computing platform. It consists of two types of communication protocols: • In short-range communication, low-power technologies such as Bluetooth and radiofrequency identification enable sensors to communicate between themselves and with the long-range network.

• Long-range communication occurs via either cell services or non-cellular networks, such as Z-Wave or Wi-Fi. Fifth-generation (5G) cellular networks bring faster speeds, lower latency and the ability to connect more devices, such as phones or sensors.

COMPUTING PLATFORM

The computing platform performs multiple tasks, from managing communications to analyzing data and either making autonomous decisions or alerting operators of situations that require their intervention.

These platforms can be either located in dedicated data centers or, as cloud services, provided by third parties such as Amazon Web Services. The platforms perform low-level processes such as communications and device management, in addition to providing more sophisticated services such as application enablement, analytics and decisioning.

BUSINESS APPLICATIONS

This is the final layer in the IoT stack. Business applications request or receive information from the computing platform to provide the services of the application, which can be consumer- or businesscentric.

A consumer-centric application could be a smart speaker from Amazon or Google, or a home automation application like Philips Hue or Apple Home Kit. A business application could be industrial monitoring and automation, such as environmental monitoring at a petroleum refinery, or a mechanical breakdown application deployed by an insurer.

For details on how the IoT will impact personal lines, commercial lines and life-health insurance, keep an eye on IAmagazine.com and upcoming editions of the News & Views e-newsletter.

Ron Berg is executive director of the Agents Council for Technology (ACT). This article is adapted from ACT’s free IoT e-book. ACT’s Strategic Future Issues and Changing Nature of Risk work groups will continue to review and update this document when significant advances occur. View all of ACT’s IoT resources online.

IIAK WELCOMES OUR NEWEST MEMBERS: Agency Member Louisville Kentucky Insurance • Louisville Nova Insurance Group • Lexington

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Kentucky IA - Summer 2019 | 32

33 | Kentucky IA - Summer 2019

NO APP? NO PROBLEM. Creating an app-less mobile experience

By Jacquelyn Connelly

Over 40% of online transactions now happen on mobile, and 62% of consumers are less likely to purchase again from a brand that provides a negative mobile experience, according to Google.

The case for going mobile is clear. But only 19% of insurance agents offer a mobile app, according to the recent Insurance Digital Transformation Survey.

What if the delay in moving insurance to mobile is less about what to do, and more about how to do it? Apps are one way to offer customers a mobile experience, but they’re not the only option.

“As searchers, we aren’t jumping immediately to an app anyway,” points out Jason Walker, managing partner of Smart Harbor, a digital technology solutions provider for insurance agents. “We’re usually starting with some kind of keyword search to try to find what we’re looking for. As a result, I’m still working in a typical browser setting—I’m just doing it on a mobile device.”

Your task, then, is to make sure your agency’s website is responsive, meaning it adjusts its display settings depending on device size.

“With a responsive website, you don’t have to scroll a bunch, you don’t have to move left and right or zoom in to read something—it conveys an app-like experience without investing in an app,” Walker 34 | Kentucky IA - Summer 2019

explains. “It’s about basically taking your content and making it consumable to a small screen.”

For example, whereas menu navigation on your desktop website may read from left to right, on mobile it should stack up and down. “You can also make sure there are layers, so you might have four to five navigation buttons shrunk down to a screen size for a phone, and once you click one of those five buttons, it expands vertically,” Walker adds.

Then, the way you organize the information on your mobile site should relate to your goals. If the purpose of your website is to retain current clients and attract new ones, the mobile version should present two paths from the get-go: “I either click on something that says I’m already a customer, or I click on something that says I want to learn more,” Walker explains.

From there, “if I’m a prospect, I probably want information about product lines, carriers and getting a quote,” Walker says. “If I’m already a customer, I would expect to be able to file a claim, access my ID card or add a driver to my policy.”

Bottom line, Walker says: “Make it easy and clickable, no matter what that consumer’s trying to accomplish.”

Jacquelyn Connelly is IA senior editor.

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The source of where you get your prospects has a massive influence on your business. But too many agents are focused on increasing lead generation without evaluating the quality of the opportunity.

There are plenty of ways to generate leads digitally, but they will never hold a candle to the word-ofmouth referral. Most agencies, however, don’t have the volume to create enough of a flow to grow at the pace they desire.

This is where niche networking comes in. Creating relationships with influencers who can drive highquality referrals through your door is the least expensive and most powerful marketing strategy a small business can deploy.

No matter what your business focus, tenure or resources, here are four simple steps you can take to scale referral networks within a niche:

1) Determine your ideal client.

Your ideal client is your bull’s-eye prospect.

Everything you do should be to garner more prospects like your ideal client.

Choose your ideal client based on the cross section of three considerations: Your expertise and experience, your product offerings and the ROI on the particular client. Don’t pick a category if you’ve never been exposed to it—you should have familiarity and a gut feeling that it’s

36 | Kentucky IA - Summer 2019

your bread and butter. Make sure your products match up with what your ideal client needs so you have an easier time adding value. And understand that your time is valuable. If it takes a ton of time to quote, wait for underwriting and then convert the prospect to a client for a small revenue-generating sale, it’s probably not in your best interest from an ROI standpoint.

2) Reverse-engineer to the influencer.

Who are the influencers in the professional life of your ideal client? An influencer is someone your client trusts and relies on consistently.

For example, if your ideal client is a high networth individual, influencers might include family office planners and attorneys. If your ideal client is a commercial landlord, it might be commercial realtors or bankers. If your ideal client is an IT company, an ideal influencer might be a CPA firm that specializes in IT companies. If your ideal client is a moving company, a strong influencer could be the entity who sells or leases their trucks.

3) Become an expert in the influencer community.

It’s not enough to just show up and introduce yourself—and it’s even worse if you show up and explain why they should refer their clients to you.

To make inroads with influencers, you need to first learn their language, understand their processes, recognize their pain points, and become well acquainted with their opportunities. The only way to scale referral relationships within a niche is to help as many influencers get what they most want as possible.

This may mean removing obstacles, providing education and training, offering marketing support, helping with drip strategies or assisting with client appreciation events. The only way you can do this is to find out what matters to them, and the only way to do that is to spend time in their world. Join associations, networking groups and social media groups, and meet them with your interviewer hat on— not your sales hat.

4) Rinse and repeat your proven process.

Design a step-by-step process in checklist format for how you plan to scale networking within your niche. This should cover best practices for how to obtain meetings, how to master the in-person meeting, what to do post-meeting, and how to nurture your new relationships once they start referring you.

Since you now know all about your influencer community’s pain, processes and opportunities, you should be able to position value that matters.

If someone tells you they wish they could meet more of a particular industry professional, figure out how to make that happen for them. If your influencer says they wish they had more time to drip on old clients for new services, come up with a strategy to help them achieve this.

If someone wants help financing a specific marketing initiative, evaluate the opportunity, create an agreement and make it happen if you see fit. If people want help with social media, go take a course yourself and then offer the support for free to your influencer community.

Value is different to everyone. Your job is to find out what they want, then go produce.

Matt Naimoli is co-founder of G&N Insurance and the podcast “BobbleOn,” which releases valuable content weekly to help agents across the country improve their systems, enhance their culture and make better marketing decisions.

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