Your customers deserve a
INDEPENDENT AGENT MAY 2013 Eric Schwartz, Editor
Open Door Policy Get Involved To Make Dreams A Reality. . . . . . . . . . . . . . . . . . 5 Marketing Minute A Prescription For Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Member Profile The Hanover: Coverage For Generations. . . . . . . . . . . . . . . . . . 12 News From ACT Electronic Agents Will Shape The Future. . . . . . . . . . . . . . . . . . 14 Commentary From Counsel Flexibility For Small Employers Under PPACA?. . . . . . . . . . . . 18 Ask An Expert Apples To Oranges: All Insurance Is Not The Same. . . . . . . . . 21 Errors & Omissions An E&O Claim Waiting To Happen?. . . . . . . . . . . . . . . . . . . . . . 22 Government Affairs Rep. Kevin Petersen: An Ally To The Industry . . . . . . . . . . . . 24
When something happens to your customer’s home, car, or business, it may not be a disaster. But no matter what it is, your customers always deserve fast and fair service from their insurance company. West Bend provides a Silver Lining, no matter what the claim may be. When vandals threw a rock through the plate glass window of Jenny and Richard’s gift shop, repairing it quickly was important. So that’s just what we did. Sometimes little things mean a lot. And every day, when something bad happens to someone, West Bend makes sure your customers experience the Silver Lining. Because the worst brings out our best.®
Independent Insurance Agents of Wisconsin 725 John Nolen Drive, Madison, Wisconsin 53713 Phone: (608) 256-4429 or (800) 362-7441 ■ Fax: (608) 256-0170 ■ Web: www.iiaw.com Executive Vice President - Matt Banaszynski
On The Cover… Novalie is an energetic 7-year-old with cystic fibrosis. The illness doesn’t hold her back and she wants to be a rock star. To help Novalie attain her dream, the IIA of Wisconsin, with a grant from Trusted Choice, has partnered with Make-A-Wish to sponsor Novalie’s wish. Independent agents and supporting companies are often leaders in the community. You can help Novalie and other Wisconsin children by participating in Walk & Run for Wishes in Milwaukee, Appleton or Madison later this summer. To learn more about Novalie and how you can get involved, please turn to the stories on page 5 and 6. Find out even more about this great cause at www.wisconsin.wish.org.
> OUR ADVERTISERS AAA................................................................. 30 ACUITY Insurance............................................. 31
2012-2013 Executive Committee
2012-2013 Committee Chairs
President........................................................ Michael Froh P.O. Box 1320 Sheboygan, WI 53082-1320
Agency Operations........................................ Kim Dandrea 1300 South Green Bay Rd. #100, Racine, WI 53406
President-elect............................................... Dave Dunker P.O. Box 443 Brookfield, WI 53008-0443
Automation/Technology................ Cathleen Christensen P.O. Box 949, Fond du Lac, WI 54936-0949
Badger Mutual................................................. 27
Secretary-Treasurer..................................... John Wickhem P.O. Box 1500, Janesville, WI 53547-1500
Employee Benefits.............................................. Tim Bever 555 Main St. #320, Racine, WI 53403
Big “I” E&O..................................................... 20
Chairman of the Board......................................Mike Hierl P.O. Box 949 Fond du Lac, WI 54936-0949
Finance & Compensation...............................Skip Hansen 100 North Corporate Drive #100 Brookfield, WI 53045
Burns & Wilcox................................................. 17
State National Director................................. Linda Steiner 555 Main Street #320 Racine, WI 53403
Government Affairs........................................Skip Hansen 100 North Corporate Drive #100 Brookfield, WI 53045
2012-2013 Board of Directors
Industry Relations...............................................Ted Haase P.O Box 6, Seymour, WI 54165
Mike Ansay 101 East Grand Ave. #11, Port Washington, WI 53704 Jason Bott 330 East Kilbourn Avenue Milwaukee, WI 53202 Thomas Holter P.O. Box 938, Beloit, WI 53512-0938 Lise Meyer Kobussen P.O. Box 633, Sauk City, WI 53583 Bruce Kommers P.O. Box 66, Antigo, WI 54409-0066
Membership Development.................................. Jeff Thiel P.O. Box 1610, Waukesha, WI 53187-1610 Smaller Agencies..................................... Michael Walston P.O. Box 236, Kewaunee, WI 54216-0236 Technical.......................................................Andy Burkart P.O. Box 1320, Sheboygan, WI 53081-1320 Young Agents........................................... Derek Wickhem P.O. Box 1500, Janesville, WI 53547-1500
Axley Brynelson.............................................. 25
IIAW Continuing Education.............................. 28 The IMT Group................................................. 27 Ins. Associates of America................................ 6 JM Wilson........................................................ 22 Make-A-Wish...................................................... 4 Pekin Insurance............................................... 29 SECURA Insurance............................................10
Jeff Rasmussen 525 Junction Road, Madison, WI 53717
Society Insurance............................................. 7
Cap Wallrich P.O. Box 90, Shawano, WI 54166-0090
West Bend......................................................... 2
Matthew Weimer 100 North Corporate Drive #100, Brookfield, WI 53045
Western National Insurance............................ 23
Donald Williams P.O. Box 595, Beaver Dam, WI 53916
Wilson Mutual.................................................... 9
WISCONSIN INDEPENDENT AGENT
MAY 2013 | 3
Make-A-Wish Wisconsin ®
We grant the wishes of children with life-threatening medical conditions to enrich the human experience with hope, strength and joy. Who We Are Make-A-Wish® is the largest wish-granting charity in the world, with 62 chapters in the United States and its territories and 37 affiliates on five continents. With the help of generous donors and a network of nearly 25,000 volunteers, Make-A-Wish grants a wish every 38 minutes, and has granted more than 225,000 wishes nationally. Since the founding of Make-A-Wish Wisconsin in 1984, nearly 4,600 families throughout the state have experienced the transformative power of a wish. Last year alone, the Wisconsin Chapter granted a record-breaking 325 wishes. What We Do We grant the wishes of children with life-threatening medical conditions to enrich the human experience with hope, strength and joy. 100% of the children who medically qualify (according to their doctors) receive a wish, so long as they are between the ages of 2½ and 18 at the time of their referral and have never received a prior wish from any wish-granting organization.
OPEN DOOR POLICY
GET INVOLVED TO MAKE DREAMS A REALITY
In times of need independent insurance agents are quick to answer the call to action. Whether it’s going the extra mile with a customer’s claim, helping out in your local community by participating in a charitable walk/run, or sponsoring a local soccer team, each of you exemplifies the very principles, characteristics and ideals that make this country great.
Where Our Funds Come From Our funding comes through donations from individuals, businesses, foundations, charitable trusts and fundraisers. We DO NOT solicit funds via telemarketing. Thanks to our generous supporters, there has never been a waiting list for wishes in Wisconsin. How We Help According to a national study, a wish helps children feel stronger, more energetic and more willing and able to battle their lifethreatening medical conditions. For many, it marks a turning point in the fight against their illness. A wish also improves children’s state of mind, replacing fear with happiness and helping them feel like normal kids again. Parents report that the wish experience helps repair and strengthen the family through a return to normalcy, and that feelings of hope and optimism replace fear and stress. The act of wish granting also serves to strengthen communities. Volunteers who help grant wishes become more trusting in others and more optimistic in the future, creating a ripple effect of social value. How You Can Help tMake a monetary donation in honor or memory of loved ones tDonate unused airline miles at www.wisconsin.wish.org/miles tAttend a Make-A-Wish fundraiser, or start one of your own tPurchase the annual Make-A-Wish holiday cards and calendar tDonate goods or services for auction at Make-A-Wish fundraisers tVolunteer at Make-A-Wish events, or serve as a wish granter and act as a liaison to wish families tInvolve your children in our Kids For Wish Kids® or Wishmakers On Campus® youth fundraising programs tAsk your employer about donation matching programs, or contribute through workplace giving campaigns like United Way or Community Health Charities tHelp share our mission through social media: www.facebook.com/wisconsinwish www.flickr.com/makeawishwisconsin www.youtube.com/makeawishwisconsin
Kathleen, 11 wished to swim with dolphins at Discovery Cove in June of 2012.
To complement our members’ charitable actions in their communities and to elevate the Trusted Choice® brand across Wisconsin, the IIA of Wisconsin is giving back. Novalie is a 7-year-old from Middleton, Wisconsin. She was diagnosed with cystic fibrosis when she was just a baby — one month old. Cystic fibrosis affects the body’s ability to move salt and water in and out of cells, and primarily affects the lungs and digestive system.
Together we can do more than just sponsor a wish for a child like Novalie; we can build a contagious charitable movement that starts in local communities and expands throughout our state and country. The illness has not dampened her spirit at all. Novalie is a typical energetic little girl and her dream is to be a rock star. Her dream is about to come true.
main motivating factor, it can lead to more favorable impression of an agency and its brand.
The Independent Insurance Agents of Wisconsin has partnered with Make-AWish® Wisconsin to make it happen. Trusted Choice provided a grant to aid our mission. Since 1980, the Make-A-Wish Foundation has enriched the lives of children with life-threatening medical conditions through its wish-granting work. Although it has become one of the world’s most well known charities, the Make-A-Wish Foundation has maintained the grassroots fulfillment of its mission. A network of nearly 25,000 volunteers serves as wish granters, fundraisers, and special events assistants and in numerous other capacities. They do amazing work helping children and we can help. Community relations are the personal contacts and relationships built between an organization and the public. And its community relations that set independent agents apart, because they are truly members of the local community. Community involvement enhances perceptions of trustworthiness and likability, and, while helping others is the
This culture of service and absolute dedication is what Trusted Choice independent agents embody and it makes for an almost perfect partnership with the MakeA-Wish Foundation. Nearly 4,600 families throughout the state have experienced the power of a wish. Last year alone, the Wisconsin chapter granted a record-breaking 325 wishes. Together we can do more than just sponsor a wish for a child like Novalie; we can build a contagious charitable movement that starts in local communities and expands throughout our state and country. As our Association continues to evolve, its mission will remain steadfast and we will look for ways to assist and supplement the work you do in your community. Join us to give children an opportunity to share the power of a wish and encourage others to do the same. The opportunities to give back are limitless and the rewards are priceless. To learn more about how to get involved, go to www.wisconsin. wish.org,or www. wish.org.
> Matt Banaszynski is the Executive Vice President of the Independent Insurance Agents of Wisconsin. Contact him at email@example.com.
ACCREDITED CHARITY WISCONSIN INDEPENDENT AGENT
MAY 2013 | 5
© 2013 Society Insurance
Get ready to rock. For a 7-year-old Middleton girl with cystic fibrosis, her dream of performing is about to come true.
She’s a rock star! Thanks to Make-A-Wish Wisconsin, Novalie will record and perform an original song and star in a music video.
Novalie was diagnosed when she was just one month old but she hasn’t let her illness keep her from living life to the fullest. She loves sparkles, whether it’s in nail polish, makeup or clothing, but she really loves to sparkle on stage.
No waiting period. Small detail. Big difference.
Novalie’s one true wish is to be a rock star. To make her dream possible, she and her Dad started writing an original song. Novalie then had the idea that it would be cool to make a music video and perform the song live. Her great ideas are taking flight; her wish will come true late this spring or early summer.
Some insurance companies say your customer’s power has to be out for at least 72 hours before they’ll
Make-A-Wish® Wisconsin is working with Novalie and her family to arrange recording the song and shooting the music video. Make-A-Wish will also set up a premiere party for Novalie where her video will debut and she will perform To help Novalie her new song live.
be reimbursed for loss of business. But we both know a business starts losing money the second it loses power. That’s why our coverage kicks in immediately. And it’s just one of the reasons we’re endorsed by organizations like the Wisconsin Restaurant Association. If you agree that details like these can make a big difference, give us a call at 888-5-SOCIETY or visit societyinsurance.com.
attain her dream, the
To help Novalie attain her dream, the Independent Insurance Agents of Wisconsin, Agents of Wisconsin, with a grant from Trusted with a grant from Choice, has partnered with Make-A-Wish to sponsor Trusted Choice, has Novalie’s wish. You can help partnered with MakeNovalie and other Wisconsin children by participating A-Wish to sponsor in Walk & Run for Wishes in Milwaukee, Appleton or Novalie’s wish. Madison later this summer. You can raise pledges to make a difference in the lives of children with life threatening medical conditions.
6 | MAY 2013
For more information on Walk & Run for Wishes, please visit www. walkforwishes.com. Since granting its first wish in 1980, Make-A-Wish has become the largest wish-granting charity in the world, with 62 chapters in the United States and its territories and 37 afﬁliates on ﬁve continents. With the help of many generous donors and volunteers, Make-A-Wish grants a wish every 38 minutes, and has granted more than 225,000 wishes nationally. WISCONSIN INDEPENDENT AGENT
WISCONSIN INDEPENDENT AGENT
MAY 2013 | 7
A PRESCRIPTION FOR SUCCESS: HOW TO ACT LIKE A SALESPERSON
1. Every prospect isnâ€™t a potential customer. Some may consider this a â€œnegative thoughtâ€? and want to be focused on the â€œpositive.â€? Always looking at the â€œbright side,â€? however, can mean missing critical clues that are valuable in properly evaluating prospects. â€œReadingâ€? prospects correctly is essential to know how best to work with prospects and understand their needs and problems. The goal is not to â€œsellâ€? the prospect but to decide if, at some point, the prospect can or should become a customer. If the answer is no, then itâ€™s time to move on. A salespersonâ€™s success depends on getting prospects right. 2. Invest in prospects. While salespeople talk about â€œbuilding relationships,â€? their performance can tell quite a different story. Cultivating prospects isnâ€™t limited to spending time with them or even learning more about their goals and problems, both of which are necessary. Salespeople often miss what is always clear to prospects: prospects know you want their money. Most are not willing to say yes easily, particularly today. One way to help overcome what we call â€œthe dollar doubtâ€? is by investing in our
8 | MAY 2013
mission to take advantage of salespeople. Yet, adept salespeople can help avoid such situations by putting themselves in the customerâ€™s position. For example, we all see what we want to see, which can be quite different from what was actually intended. Particularly when terms, descriptions, dates, and costs are involved. Written and oral communications, including e-mails and voice mails, are often so confusing that they open the door wide to misinterpretation. These can be huge problems. To say that â€œissuesâ€? can arise is an understatement, so be prepared to make it right. The consultant sent an invoice to a new client, who called and said, â€œI thought it was going to be half of that.â€? A day later, the consultant responded, â€œI may not have
First impressions are
permanent impressions, which is why, at a first
Selling is the worldâ€™s most personal profession â€” but not in the way you might think. In fact, many salespeople are downright superstitious. For some, itâ€™s the way they shake hands, others are fanatical about punctuality, wearing certain jewelry or using a favorite pen. The list is almost endless. It may be the only time of day to call for an appointment, interpreting a customerâ€™s body language, or what to order when having lunch with a prospect. Success is all about following a salespersonâ€™s â€œpersonal rules.â€? Break the rules and something goes wrong. While all such personal preferences are interesting and sometimes even helpful, there are certain â€œactionsâ€? that may reap far more robust sales results. Here are eight to think about:
nothing to do with a salespersonâ€™s wardrobe, car or favorite restaurant. But it has everything to do with the way an individual thinks, particularly a personâ€™s knowledge and ability to identify and solve problems. In other words, it has everything to do with being authentic. The objective is to avoid sending a prospect or customer mixed or misleading messages about you. Such confusion eventually leads to doubt. First impressions are permanent impressions, which is why, at a first meeting, itâ€™s important to clearly formulate the impression you want the customer to have by the time the meeting ends.
meeting, itâ€™s important
to clearly formulate the
impression you want the
prospects. It seems fair since we expect them to invest in us. What should you do? It may be as basic as investing time in helping to solve a problem, conducting a test, creating a mock up or preparing a detailed report. If you do, you may pass the test. Later, you can talk about the prospect investing in you. 3. Get relationships right. There are many salespeople who seem to believe that becoming friends with their customers is the best way to solidify a business relationship. Some put more effort into the friend task than anything else. Yet, there are indications that point in a different direction; namely, that customers want to be treated like customers. Whether itâ€™s Apple, FedEx, Staples, Amazon or Southwest Airlines, itâ€™s the combination of competence and performance that creates enduring customer relationships. Itâ€™s the same for salespeople.
â€œPoor follow upâ€? is near the top of everyoneâ€™s list of mistakes salespeople make. It may do more damage than just about anything else. Why? Because customers never forget. â€œYes, Don is a great guy, but his follow through leaves much to be desired. Just be prepared to remind him what he said he would do.â€? Success eludes salespeople who are follow up failures. 5. Avoid the â€œhot potatoâ€? syndrome. If thereâ€™s a close second to not keeping promises, itâ€™s gone missing after getting the order. Whether theyâ€™re conscious of it or not, customers are particularly sensitive to even infinitesimal changes in a salespersonâ€™s behavior once the sale is made: â€œWill she be as attentive and responsive now that weâ€™ve signed the contract?â€? or â€œWill he drop me like a hot potato now that Iâ€™m a customer?â€? This is about just one thing: commitment. By making a purchase (the amount doesnâ€™t really matter), customers make a concrete commitment, and they expect the salesperson to be equally committed. Theyâ€™re on the look out for â€œmoving onâ€? indications, which translate into a feeling of being â€œdropped.â€? When this occurs, customers begin to doubt a salespersonâ€™s integrity by finding other ways to justify their belief that the person was only interested in getting the order.
customer to have by the time the meeting ends.
7. Always make it right. Granted, there are some customers who deliberately make it their
made the price clear enough. What if we split the difference?â€? Making it right is always a gain. 8. Never get comfortable. A pervasive myth that circulates among salespeople (and others) suggests a time comes when weâ€™ve â€œpaid our duesâ€? and we have a right to such rewards as more pay with less work, access to prestigious accounts, little or no prospecting, and, of course, â€œspecial treatment,â€? whatever that means. Translated, this comes down to â€œthe right to be comfortable.â€? Nothing is in writing and no one talks about it, officially. Even so, itâ€™s what we expect, with each of us setting the timetable for when it should kick in. > John R. Graham of GrahamComm Itâ€™s a career killer is a marketing and because, inevitably, we sales consultant and begin to act as if the business writer. He time has come to be publishes a free monthly eNewsletter, â€œNo comfortable. Nonsense Marketing In spite of what we & Sales.â€? Contact him may say or think, itâ€™s at firstname.lastname@example.org, actions that determine 617.774.9759, or the salespersonâ€™s destiny. johnrgraham.com.
teamwork. Rely on Wilson. Quality . Stability . Teamwork . Service . Integrity
A salespersonâ€™s success depends on getting prospects right.
4. Follow up faithfully. Salespeople seem to find it quite easy to make promises to customers and prospects, but their performance is something less than 100 percent. â€œNot to worry, it will be here in a day or two,â€? the salesperson assured the customer. That was Monday and there was no word by Friday. The customer placed a call. â€œOh, yes. It should have been hereâ€ŚIâ€™ll check and call you back.â€? A week later, she had not called. â€œSheâ€™s out today. Let me see what I can find out.â€?
6. Shape the way youâ€™re perceived. This has WISCONSIN INDEPENDENT AGENT
Our people make the difference. Contact us today to see how you can become part of the Wilson Mutual family.
4UBIM3PBEt4IFCPZHBO 8* XXXXJMTPONVUVBMDPN
Lori Kulpinski, District Sales Manager WISCONSIN INDEPENDENT AGENT
MAY 2013 | 9
© 2011 SECURA Insurance
FILL YOUR PIPELINE WITH QUALIFIED PROSPECTS Make those sales calls count. To get sales, you need qualified prospects. Here are seven ideas to get all the prospects you’ll ever need. 1) Spend at least four hours a day prospecting. That’s not a misprint. Four hours. In order to get a sufficient number of leads, you need to spend a significant amount of time prospecting. For most salespeople spending far too little time prospecting is their primary issue. If you’re wondering where you’ll find four hours in a day, the answer is simple: First, stop wasting time on unqualified prospects you’ll never convert. You know who these people are. You’ve been calling them for months, maybe even years. Either get rid of them immediately, or give them one final call and tell them this is the last time you will contact them. It’s now or never. Second, stop over contacting and irritating the qualified leads. The reason salespeople tend to keep unqualified prospects in their funnel and harass qualified leads is because they have no one else to call. Spending a lot of time prospecting will give you an abundance of prospects and solve both these issues. Third, cut out all the busy work you do to avoid the hard work of prospecting. Most of us are very creative at coming up with ways to avoid hard work. Don’t clean When it comes your desk and do to prospecting paperwork in the middle of the day, you want to be or schedule personal in control of the appointments during prime calling numbers and the times. Stop it!
only way to do that is through active
prospecting. Phone calls, knocking on doors, asking for
Success is finding an advantage. Intensity can set one apart from all others. Agents know this. That’s why so many choose SECURA to help their business grow. Call 1-800-558-3405. Write your own success story.SM
and calling referrals, Commercial Personal
and networking are all examples of active prospecting.
10 | MAY 2013
WISCONSIN INDEPENDENT AGENT
Finally, schedule your prospecting time and stick to the schedule. For example, block off 8 a.m. to 10 a.m. and 2 p.m. to 4 p.m. for prospecting and don’t allow anything to infringe on that time.
WISCONSIN INDEPENDENT AGENT
I realize that if you are doing little or no prospecting, four hours is a big jump, so start with an hour or two and build from there. For 95% of you, following this one tip alone will give you all the prospects you’ll ever need. 2) Be consistent. A big problem I see with prospecting is a lack of consistency. A salesperson prospects until he or she has enough business or appointments and then they stop prospecting. When business and appointments drop, they go back to prospecting again. To be good and stay good at prospecting, and to have a steady stream of prospects, you have to be consistent. Sure, there may be times when you’re out of balance, but even when you have plenty of business and appointments, block off some time to prospect. 3) Choose active rather than passive prospecting activities. Phone calls, knocking on doors, asking for and calling referrals, and networking are all examples of active prospecting because you control the contact. Mailers, social media, the Internet, radio and television ads, and other similar marketing techniques are all passive because you have to rely on someone to contact you. When it comes to prospecting you want to be in control of the numbers and the only way to do that is through active prospecting. While it’s good to have both active and passive marketing in your prospecting plan, far too many salespeople put most of their effort into passive methods because they are easier and more comfortable. On the flip side, they are also far less effective than active prospecting. 4) Get better at prospecting. Of course you always want to be getting better in each area of the sales process and prospecting is no exception. When you get better at prospecting, you can make fewer calls and work less, while at the same time getting better, more qualified prospects. Read books and articles, listen to
watch programs of prospecting, and perhaps most importantly, model yourself after people who are highly successful at getting qualified prospects. Find out what they do and then take the same actions. 5) Be committed. If it takes six hours of cold calling and making calls on the weekend, that’s what you do. The bottom line is: you must be willing to make many phone calls, knock on many doors, and talk to many people in order to get the prospects you need. 6) Keep track of numbers and results. If you go to a networking event for four hours and talk to one or two average prospects, that is not a good use of prospecting time. If you get on the phone for four hours and get ten qualified prospects, that is a good use of prospecting time. You have to know where you’re effective and ineffective and spend your time on the right activities. 7) Prospecting is a numbers game. The more people you talk to, the more prospects you will get. If you talk to enough people during the day, you will eventually bump into someone who says, “I need what you have,” or “I know someone who needs what you have.” If you’re going to get an abundance of prospects, you need to talk to an abundance of people.
> For access to John Chapin’s free monthly newsletter, go to www. completeselling.com. John is an award-winning sales speaker, trainer and coach. He is a number one sales rep in three industries and author of the gold-medal winning “Sales Encyclopedia.”
MAY 2013 | 11
By Eric Schwartz
THE HANOVER INSURANCE GROUP: COVERAGE
As a member of the 1915 Boston Red Sox, his first year as full-time player, Babe Ruth hit .315 and won 18 games as a starting pitcher. That same year he hit the first of his 714 career home runs against the New York Yankees, the team he would join five years later and establish his legend. For his efforts, the Bambino earned $3,500 that season.
Not bad for a 20 year-old in 1915. The average American worker made about $700 a year then. It is baseball season but what are Babe Ruth’s statistics and salary doing in an insurance trade magazine?
are 12 employees in The Hanover’s Brookfield office and a total of 21 employees throughout Wisconsin. These include dedicated local underwriting, claims, marketing, loss control and surety positions.
The Hanover Insurance Group’s corporate headquarters in Worcester, Massachusetts. The company’s Wisconsin branch is located at 100 North Corporate Drive in Brookfield.
In 1915, auto insurance was a cutting edge product. The Hanover responded to the mass production of cars with this type of coverage. After he put down his hot dogs, Babe spent part of his salary on a new Packard and engaged a local agent for his automobile policy. He was one of the company’s earliest auto customers and one of its earlier auto claims. In fact, following his accident, he wrote a complimentary letter about how his claim was handled. The letter was later published in newspapers. Since the company’s founding in 1852, The Hanover Insurance Group has been on the vanguard of the industry. The company has managed to introduce new products to the marketplace that appeal to their customers and the independent agents that sell the products. This is true once again in 2013. In February, the company launched The Platinum Experience on the East Coast. Platinum is comprised of three key components: Services; Protection; and
12 | MAY 2013
Solutions. All three elements are designed to work together to create a complete product. This exciting new offering just became available in Wisconsin in midApril. “With increased competition and a dynamic personal lines market, Platinum will help Wisconsin independent agents differentiate themselves with customizable marketing tools and special services,” said John Vose, assistant regional vice president, personal lines. “Also, Platinum will enable our agent partners to attract and retain more account customers by providing a flexible product suite for every stage of a customer’s life. Platinum offers an innovative approach to personal lines business that allow The Hanover’s agents to provide account oriented customers with not only unequaled protection and service, but also unequaled peace of mind.” The product’s rollout in Wisconsin makes sense because the company is looking to expand in this state. Currently, there
“We are very dedicated to the state of Wisconsin,” said Vose, who received his MBA from Marquette University. “Our growth here has been solid and steady and we are achieving profitable results. Our focus is to improve the economic value of our agency partners by helping them to leverage the many account opportunities to increase their revenue. We will continue to build out our resources in Wisconsin and I expect that our employee team will grow over the next few years.” The Hanover only distributes its products through a select group of independent agent partners who are among the best in their local markets, and who differentiate themselves based on value creation for their customers. The company uses sophisticated tools to find agencies that are a match for their products, services and expertise. When it’s all said and done, there should be no surprises. “We offer enhanced franchise value through limited distribution by providing our agents with the best possible coverages, service and responsiveness – WISCONSIN INDEPENDENT AGENT
this is part of our Total Solutions operating model,” said John. “Expense improvement, agency acquisition, wholesale reduction, new market opportunities, enhanced revenues within an existing book, and sales assistance are a few of the levers that Hanover offers to provide a ‘total solution’ to our agency partners. Ultimately, this is how we help our agency partners increase their economic value.” To further assist agents, the company uses an online system that provides easy access to Webinars, training support, underwriting manuals and guidelines, claims information, billing data, sales support systems, policy data and other relevant information. There’s also assistance for policyholders, too. The Hanover’s consumer Website provides easy to access policy, billing and claims information. Additional resources have been introduced now that Platinum has been launched. The Hanover is seeking several more quality independent agents in Wisconsin to become partners. “We spend a great deal of time getting to know each other,” said John. “We are quite efficient at finding the right agency partners.”
John Vose is Hanover’s assistant regional vice president, personal lines business. In mid-April, the company launched a new product in Wisconsin, The Platinum Experience. “Platinum will enable our agent partners to attract and retain more account customers by providing a flexible product suite for every stage of a customer’s life.”
By the time an agency is appointed, the partnership been thoroughly vetted so risk is reduced and the relationship is mutually beneficial for both parties.
The Hanover only distributes its products through a select group of
“On the commercial side, we offer a robust small commercial portal and various microsites that give agents everything they need to sell a particular industry, like technology, education, media or human services, just to name a few,” said John. “It’s a comprehensive resource.”
It’s clear that The Hanover’s longevity (it is one of the oldest members of the New York Stock Exchange) stems from its ability to mix in fresh ideas to its rock solid foundation. The company that Babe Ruth trusted nearly 100 years ago has changed with the times by ushering in new products and technology, but has managed to embrace the traditions of financial stability and savvy business strategies. It’s safe to say that The Hanover will be there to insure the next generation of baseball superstars.
who are among
the best in their local markets.
“We have been assembling one of the very best locally based teams in the industry and making unprecedented investments in our product and service capabilities,” said John. “Our company is a leader in the industry, recognized for its commitment to our agent
WISCONSIN INDEPENDENT AGENT
partners, and for providing them with the support they need to compete and win. Our business success has allowed our company and employees to work together to make the communities where we live stronger and healthier through a variety of charities. It’s very rewarding.” The Hanover Insurance Group’s home office is in Worcester, Massachusetts, about one hour A great celebrity endorsement. Babe Ruth west of Boston. was an early auto insurance customer of The The company Hanover. Here he is driving a Packard similar to the one he had insured in 1915. has a Wisconsin branch at 100 N. Corporate Drive, Suite 110 in Brookfield. A top 25 P&C insurance carrier, The Hanover’s 5,000 employees serve more than 1.5 million individual and business policyholders worldwide. The Hanover is an exclusive company sponsor of the Independent Insurance Agents of Wisconsin. Find them on the Web at www.hanover.com, or call 262.796.6720.
MAY 2013 | 13
NEWS FROM ACT
NEWS FROM ACT
ELECTRONIC AGENTS WILL SHAPE THE FUTURE Ever since our first digital search we’ve all spent increasing amounts of time on the Web looking for the information we need. Since most of us are in a hurry, we’ve used various search sites and portals over the years, from early players like AOL and Excite to today’s leaders such as Google and Bing. You know the process: you enter a keyword or phrase to find what you are looking for, and then you manually scan the results (which are sometimes staggering in length) looking for what you really want. The good news is that the Web has provided us with a world of information at our fingertips. The bad news is that the world of information we have access to is getting bigger by the day. As a result, we are all spending way too much time looking for the information we really want.
HELP IS ON THE WAY! We are now on the brink of having access to a powerful new tool that will do much of the search and sorting work for us, with far more intelligence and personalization than we have had in the past. Very soon you will find yourself using, on a daily basis, an emerging new technology called an ultra-intelligent electronic agent. Actually, Apple introduced the first generation of intelligent agents when the iPhone 4S was launched. Siri, what Apple calls their intelligent personal assistant, was very different from the Google app (that was available at the time) on your smart phone where you would ask for directions or a restaurant and it provided written search results. While Google search was intelligent and worked very well, Siri provided you with an actual agent with which to interact. Siri has a woman’s voice. It has a personality. It can even give you some humor. Essentially, it’s an audio avatar. And if we look to the future a little further out, it’s obvious that soon we’ll be able to see Siri’s face (or visual representation) on a smartphone, tablet, computer, or even TV screen. Of course, Siri was just the beginning. In no time at all we saw a Google version for Android phones, and as you already know, there are many others including IBM’s Watson. So what makes Siri an ultra-intelligent electronic agent versus a text-based search engine? Siri (as well as its competitors) are linked to a super
14 | MAY 2013
computer in the cloud that can tap into all of the world’s databases and news feeds. It has access to increasing amounts of information coming from everywhere. This is about machines talking to machines and sensors, all communicating through the Internet. In addition, it’s connected to our personal computing devices with access, granted by you, to your calendar, contacts, and more. All the data goes to a super computer that feeds into our ultra-intelligent agent, which can then give us the actionable knowledge that’s pertinent to us.
WHY YOU NEED TO TAKE NOTICE Most people don’t realize the impact an ultra-intelligent agent will have, much less how it will transform companies the world over. Think about it...If you have an ultraintelligent agent that can give you exactly the information you want, do you need to take the time to personally go to a Website to get it? Did you do a traditional search? Did you issue the request for information, analyze the information, or even physically place the order for a product or service? The answer to all of these questions is “no.” The agent did the search, gathered the information, issued the request, and in some cases, even analyzed the results and placed the order. This is something powerful and disruptive and it’s not an “if” or a “maybe.” We can see already with Siri and some of the Siri competitors how this technology is taking hold. And because of bandwidth, storage, and processing power growing exponentially, we’ll see more advanced versions of the ultraintelligent electronic agent coming onboard very quickly. When you know what’s going to happen before it happens, you have the upper hand. Therefore, you have to start looking at how you can both control and use this technology in your company rather than waiting for your
competitors to use it, which puts you in the position of having to play catch-up.
SELL & CONNECT BETTER Ultra-intelligent electronic agents provide a new level of competitive advantage to organizations because they help create a level of electronic advice and trust between your company and your customers. Even though the world is more and more technological, relationships are increasingly more and more important. Trust, or the lack of trust, still wins or loses business. Business — all business — is still about trust and relationships. You could expand upon this trust by offering your customers a plug-in to their ultraintelligent electronic agent. Basically you’re making your company’s information a part of your customer’s intelligent agent so your company is always top of mind for them. For example, your financial planner may offer an agent plug-in module to help you manage your investments. Your child’s school might offer a plug-in giving you information about your child’s progress. And your bank might offer a plug-in to help maintain your account balances and other financial information. The list of possible plug-ins is endless. Essentially, you’ll build your agent based on the relationships of the different companies and organizations you work with and have a trusting relationship with.
and I’d win. Why? Because I have hundreds of thousands of apps to choose from. So it’s not an iPhone; it’s a myPhone customized by me to serve me best. The same is true for other smart phones and tablets. In that same way, we’re going to create a customized ultra-intelligent agent by adding little components to it from the most trusted providers. That’s why business needs to wake up to this and take part — you want your company’s plug-in a part of every customer’s intelligent agent. Additionally, we’ll have B-to-B intelligent agents. Now it’s not just about interacting with customers. It’s also about selling to
In addition to helping your customers, your company’s ultra-intelligent electronic agent will be able to help your employees work smarter. businesses that service or sell to other businesses, to suppliers, to distributors, etc. Various levels of this selling, servicing, and advising will be done using intelligent agents to save us time; therefore, you have to decide how you’ll build the intelligence of your agent that’s helping you.
WORK SMARTER In addition to helping your customers, your company’s ultra-intelligent electronic agent will be able to help your employees work smarter. Chances are you have many employees who don’t always have access to a computer screen but still need information. This could pertain to employees who are on the road, such as salespeople, as well as those in the field, such as repair and maintenance people or engineers. These people can pull out their smart phone or tablet and ask their intelligent agent for detailed information. For example, suppose you have a maintenance person fixing an air conditioner. He can pull out his smart phone and ask his agent, “Do I have this part in my truck?” And the agent can reply, “No, you don’t have that part in your truck.” He can then ask, “Well, do we have it back at the shop?” As he asks and gets his answers, he’s still working and doing maintenance, essentially multiplying his time. Instead of having to go their laptop back in the truck or type in search terms on their smart phone, employees simply ask a question and have access to all of the information they need, including diagrams and videos for just-in-time training. These ultra-intelligent electronic agents are the way to help employees do more with less. So determine how your company can use its ultra-intelligent electronic agent in the various functions. Just like mobility is driving a transformation of almost every business process — including purchasing, logistics, supply chain, etc. — we can do the same with an ultra-intelligent electronic agent.
THE FUTURE OF GOOGLE, SEARCH & YOUR COMPANY In the future, will anyone want to do a manual search or surf the Web when their electronic agent can simply do the work for them? Some people will want to surf the Web and do manual searches while others will never take on that task again. It is easy to predict that the number of people going to a search site will diminish greatly because of the increasing value of our time. So does that mean that companies who offer only text-based search are out of business? Not if they have expanded their vision of what they are and how they serve customers. In fact, Google, Yahoo, Bing, and other search companies are already in the process of becoming key players in the development of ultra-intelligent agents. Why? Because if they don’t do it, someone else will. The same can be said for your company. You want to be the first in your industry to offer customers an ultra-intelligent electronic agent plug-in. Remember, offering an ultraintelligent electronic agent is not something that is here today and gone tomorrow. It’s something that is already here today — it just hasn’t been fully applied to business yet. If you don’t act > Daniel Burrus is the CEO first, someone of Burrus Research. Daniel is else in your considered one of the world’s industry will. leading futurists on global Plan your future trends and innovation. Find out more at www.burrus.com. now.
Currently, Siri and its competitors represent a general, early intelligent agent, which means it’s intelligent, but not that intelligent. In the near future, though, it will get a lot more intelligent. Not only will it get more intelligent, but it will also get more personalized. For example, let’s say you and I both have iPhones and we both use AT&T as our carrier. Even though we have the same phone, I can bet you $1,000 that my phone is still much different than your phone, WISCONSIN INDEPENDENT AGENT
WISCONSIN INDEPENDENT AGENT
MAY 2013 | 15
WS E N E H T N I S R E B MEM Liberty Appoints Shapiro Executive VP & Chief Claims Officer On April 8, 2013, Liberty Mutual Insurance announced that Glenn T. Shapiro had been appointed executive vice president, commercial insurance, and chief claims officer. Glenn succeeds George A. Neale, who recently retired from the company. Based in the company’s Boston home office, Shapiro will lead a commercial lines claims organization whose goals are to deliver industry leading claims outcomes that meet or exceed customers’ needs, and further enhance the relationships between claims personnel and agent and broker partners. “Under Glenn’s leadership, we’ll continue to leverage our national scale and strengthen our local claims service teams to best serve our agents, brokers, and policyholders,” said J. Paul Condrin, executive vice president, Liberty Mutual Insurance, and president, commercial insurance. Glenn has more than 23 years of industry experience, including leadership positions in personal, commercial, and disability claims organizations. Prior to this appointment, Shapiro was senior vice president and manager of field operations for commercial insurance claims for Liberty Mutual Insurance. He has also served as senior vice president of claims for Safeco Insurance, a Liberty Mutual Insurance company.
Special Olympics of Wisconsin – Support for sports training and competition programs Big Brothers Big Sisters of Dane County, Madison, WI – General support American Cancer Society, Stephenson County, IL – Relay for Life Brain Tumor Foundation, Atlanta – Brain and spinal cord tumor research support Camp Dream Foundation, Georgia – Leadership program for children and young adults with disabilities Central Washington University, Ellensburg, WA – Matching scholarship grant The Extension, Marietta, GA – Support for chemical dependency rehabilitation services Feeding America, nationwide – Support for hunger relief Forum School, Waldwick, NJ – Day school support for children with developmental disabilities who are unable to attend public schools Insurance Federation of NY/YES! Solutions, Inc., Mt Vernon, NY – Internships for disadvantaged students
P E R S ON A L I N S U RA N C E
Junior Achievement of Dallas – Support for global economy education program
When it comes to placing personal insurance for high-net-worth clients, your success is our success.
Long Beach Lido Little League, Long Beach, NY – Team sponsorship
Grow your business by partnering with Burns & Wilcox. By working with our Elite Client Solutions team, you do not have to turn away clients: We have the products to cover all their needs. Our high-net-worth specialists have the expertise to create personalized solutions. Plus, our unrivaled access to markets allows us to create solutions with speed and diligence. Making personal insurance even more personal is what Burns & Wilcox does best as the largest independent wholesale broker.
Muscular Dystrophy Association, nationwide – Support for research Pancreatic Cancer Action Network, nationwide – Research, patient support and community outreach
Find Liberty on the Web at www.libertymutualinsurance.com.
QBE Foundation Announces Grants The QBE Foundation has awarded nearly $60,000 in grants to programs provided by 14 charitable organizations across the country, including two in Wisconsin. They are:
16 | MAY 2013
Foundation Chair Sue Harnett says she’s pleased with the wide variety of support for programs provided by organizations that were nominated by QBE employees. “It’s absolutely wonderful to see the enthusiasm employees have for their favorite charities,” she says. “I’m proud the foundation is making better lives possible for people in the communities QBE serves.”
Milwaukee, Wisconsin | 262.347.0266 | toll free 800.544.5700 fax 262.347.0440 | milwaukee.burnsandwilcox.com
Find QBE on the Web at www.group.qbe.com.
WISCONSIN INDEPENDENT AGENT
Commercial | Personal | Professional | Brokerage | Binding | Risk Management Services WISCONSIN INDEPENDENT AGENT
MAY 2013 | 17
COMMENTARY FROM COUNSEL
COMMENTARY FROM COUNSEL
FLEXIBILITY FOR SMALL EMPLOYERS UNDER PPACA MANDATE? Tired of the Affordable Care Act yet? Hunker down; it’s got at least three and a half years to play out! One of the crossroads employers are approaching this year is whether to “pay or play” under the ACA employer mandate (see my columns in the August and December 2012, as well as February and March 2013 Wisconsin Independent Agent magazines for additional background). For large employers, the decision involves offsetting potential penalties against savings gained by bucking the system. For small employers, the penalties are not part of the calculus, but calculus (or trigonometry) is indeed what it is. Most complicated are the scenarios for small employers who want to save premium dollars by dropping their group plan, but also want to soften the blow to employees by offering cash compensation in lieu of the benefit. In that situation, the decision is not as simple as how much premium savings can be passed on to employees while still saving money for the company.
What Choice Is There? Under the “pay or play” federal health care reform rules, an “applicable large employer” — generally one with 50 or more full-time employee equivalents during the preceding year — will be subject to a penalty starting in 2014 if it does not provide satisfactory health insurance coverage to full-time employees. If an applicable large employer does not offer satisfactory coverage to at least 95% of its full-time employees and any full-time
Employers in the small group market need to give serious consideration to whether elimination of health insurance coverage will make it hard to recruit employees, especially if their competitors are keeping their plans.
employee obtains governmental subsidies for coverage under a health insurance exchange, the employer will be subject to a monthly penalty (the “First Level Penalty”) of $166.67 multiplied by the number of the employer’s full-time employees in excess of 30. Even if the First Level Penalty does not apply, an employer will be subject to a different
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penalty (the “Second Level Penalty”) if an applicable large employer offers coverage to full-time employees that is not “affordable” or does not provide “minimum value” and a full-time employee obtains governmental subsidies for coverage under an exchange. The monthly Second Level Penalty is $250 multiplied by the number of the employer’s full-time employees who actually obtain these governmental subsidies. In some instances, the First Level Penalty payable by an applicable large employer will be smaller than the amount the employer would pay for its employees’ health insurance coverage. Consequently, there is speculation that some applicable large employers will choose to pay the First Level Penalty instead of continuing to offer group health insurance to employees. In the small group market — generally, employers with fewer than 50 employees — plans are expected to see substantial premium increases in 2014 and thereafter due to other health care reform mandates. As a result (and because these employers generally will not be subject to the First Level or Second Level Penalties), many employers in the small group market are considering whether to drop their group health insurance coverage. Some of these employers are contemplating providing cash compensation to employees who formerly were participants in the plan. If your agency is a small employer for ACA purposes, or has customers that are, and considering dropping your group health plan and replacing it with additional financial support for your employees, there are some hidden costs and other issues to consider.
Financial and Legal Considerations Income and Payroll Tax Impact. If an employer drops group health insurance and chooses to increase the pay of applicable employees to make up for the loss of the employer contribution for their health plan coverage, the increased pay will be subject to federal and state income taxes. Plus, those extra wages will be subject to Social Security taxes (both the employer and employee shares) up to the Social Security wage base and Medicare taxes (both the employer and employee shares). Retirement Plan Contributions. Another important consideration is that increased pay will likely constitute “compensation” for retirement plan purposes. Thus, if a company contributes to a retirement plan for employees — such
as a matching contribution or profit sharing contribution — that contribution likely will be larger than it would have been without the increases in pay. Worker’s Compensation. If an employee’s taxable gross earnings increase, the potential disability benefit the employee could receive in the event of a worker’s compensation injury will increase. The worker’s compensation carrier may pass these additional risks on to the employer through premium increases. Discrimination Claims. An employer’s decision to offer pay — in the form of increased wages — as a complete substitute for employerprovided health insurance coverage could create risks of discrimination claims from employees. While there is no Wisconsin case that directly involves increased wages as a substitute for health insurance coverage, depending on how an employer establishes such a substitution, it is possible that an employee could claim, and a court could sustain, that such a substitution of pay in lieu of health insurance coverage discriminates against employees who have certain legally protected characteristics. Even unsuccessful claims are defeated at a price. Employers are prohibited by both federal and Wisconsin law from basing employment decisions about applicants and employees on any of a set of legislatively defined characteristics. Under the Wisconsin Fair Employment Act (WFEA), for example, employers are prohibited from basing employment decisions on an individual’s sex, race, creed, color, disability, marital status, national origin, ancestry, arrest record, conviction record, military service, use or nonuse of lawful products off the employer’s premises during nonworking hours or declining to attend a meeting or to participate in any communication about religious matters or political matters. Employment decisions or practices based on any of these protected characteristics violate the WFEA and can lead to liability for an employer. An employer that offers increased wages to an employee as a substitute for employerprovided health insurance coverage may consider increasing the employee’s wages in a manner that is commensurate with the health insurance savings the employer receives from not having to cover that employee’s health insurance premiums. For example, if an employer pays a higher premium for an employee with family coverage than an employee with single coverage, the employer WISCONSIN INDEPENDENT AGENT
might consider, as a substitute for health insurance coverage, increasing the pay of the employee with family coverage more than the pay of the employee with single coverage. In theory, this differential pay increase could result in discrimination claims from the employee who receives the lower pay increase. Such an employee might, for example, claim that his or her lower pay increase is based upon marital status discrimination under an argument that family coverage costs more (and thus is the basis for a larger pay increase) because it is effectively a proxy category for individuals who are married. Another option for an employer implementing some form of pay as a substitute for health insurance could be to calculate the overall savings obtained by not offering employer-sponsored health insurance, divide that savings (or logically, some portion of it, since the goal is to save money) by the number of employees in the company, and provide this average amount as a pay increase to all employees employed at the time of the increase. This option would seemingly reduce potential arguments of discrimination with regard to the wage increase. At the same time, however, it could raise discontent among workers, since even individuals who were not participants in the company’s health insurance plan would receive a pay raise. An employer could also consider applying the averaging mechanism described above WISCONSIN INDEPENDENT AGENT
only to those employees who are participants in the company’s health insurance plan at the time of the plan’s elimination. While this might engender protest from those employees who are not participants in the plan (who, therefore, do not receive pay increases), discrimination claims from non-participants in the plan would be less viable due to the fact that the distinction being drawn is based only on plan participation, not on any protected characteristic. However, an employer chooses to structure a program of pay increases in lieu of health insurance, the plan of action should be reviewed by an attorney before implementation.
Operational Considerations Recruiting and Retention. Many employers view health insurance as a recruiting tool, and prospective employees differentiate between job offers based on the quality of overall benefit packages. Employers in the small group market need to give serious consideration to whether elimination of health insurance coverage will make it hard to recruit employees, especially if their competitors are keeping their plans. Improving Health & Reducing Absenteeism. The elimination of health insurance may reduce an employer’s ability to affect the health of its employees. For example, an employer may
believe it can establish a health insurance plan, in conjunction with a wellness program, that best fits its workforce. However, if the employer drops health insurance coverage and forces employees to obtain coverage under a health insurance exchange, the employer will lose the ability to customize a health and wellness program for its employees. Although the employer will no longer need to concern itself with any resulting increase in health plan claims, it may see an increase in absenteeism on the job.
Bottom Line A popular 80s police drama ended each preshift briefing with the admonition: “Be careful out there.” The same is true for employers as the ACA mandate approaches. Seemingly simple decisions based on an opportunity to save money may turn out to be more complex and costly down the road. Included in this magazine is a newsletter to share with your customers who are small employers considering a cashinstead-of-benefits option for their work > Josh Johanningmeier is the IIAW’s General force. Take time to sit Counsel. Call the Legal down with them to Services Hotline at (877) discuss their options. 236-1669.
MAY 2013 | 19
ASK AN EXPERT
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APPLES TO ORANGES: ALL INSURANCE IS NOT THE SAME Ask An Expert is a great feature of the Big “I” Virtual University. There are questions and answers about a variety of personal and commercial insurance topics. What follows is one example of an Ask An Expert question.
You’ve seen the commercials: “Call now and save 15% or more on your car insurance!” The advertising campaign leads consumers to believe that the only difference between insurance companies is price. Here’s proof that you can’t compare apples to oranges when it comes to insurance. Educate your customers about the value of their policy and how it can protect them when trouble strikes.
“Our insured’s auto was stolen and destroyed. The carrier denied the claim because his keys were in the car and there was no sign of forced entry. According to the adjuster, the policy does not cover theft without evidence of forcible entry.” Any time a claim is denied, the adjuster has an obligation to show explicitly in the contract where the loss is not covered, and the insured/agent should read the policy to determine whether coverage exists or not. Under the current ISO PAP, there is no requirement of evidence of forced entry to substantiate a theft claim...”theft” is simply the unlawful taking of someone else’s property. Likewise, there is no exclusion if a vehicle is stolen as a result of someone leaving their keys in the car.
Price is no basis for comparison between products or companies. It’s incumbent upon the agent in particular, and the industry in general, to better educate consumers about what their premium dollar actually pays for.
According to several of our faculty members who have reviewed a lot of auto policies, it is very unusual for them to include policy language that excludes theft under these circumstances. Most of our faculty had never seen a policy this restrictive in recent times. However, the policy in question
is not an ISO form. According to this proprietary company form: “This policy does not apply under Part IV to loss due to theft under Coverage D of Part IV if evidence exists that forcible entry was not required to gain access to the automobile and violation of the steering column and/or the ignition system is not present. “Forcible entry means felonious entry by actual force and violence evidenced by visible marks on the exterior of the automobile and the destruction of the lockable steering column; or evidence of actual force to gain entrance to the premises on which the automobile is garaged at the point of entry.” Based on the above, it seems clear that the claim is not covered and there does not appear, under the contract, to be any recourse for the insured. This points out a valuable lesson that all (auto) policies are not equal. Anyone choosing coverage based solely on price may get what they pay for. I took a look at the insurer’s Web site and the slogan says, “An Insurance Program with a Difference.” So, the insured was warned. The personal auto insurance section indicates that they insure nonstandard exposures and that their policy forms are “nontraditional.” That certainly appears to be the case.
I point this out, not in criticism of this insurer – they have the right to offer a contract that fits their underwriting standards and clientele, and to price it accordingly – but rather to illustrate that price is no basis for comparison between products or companies. It’s incumbent upon the agent in particular, and the industry in general, to better educate consumers about what their premium dollar actually pays for. Likewise, it’s essential that agents understand the coverage variations among policies. Even a “deluxe” policy can include language that’s more restrictive than a “standard” ISO form. In one HO condo claim, water from a broken water pipe in an upstairs unit resulted in extensive damage to the subject unit. The “deluxe” condo policy excluded water damage that originated outside the “residence premises.” This term was defined as the unit itself. The ISO condo form, on the other hand, excluded water damage that originated outside the BUILDING, so it would have covered the loss. > Bill Wilson is It “pays” to read those policies!
the director of the Independent Insurance Agents & Brokers of America’s Virtual University.
Ask An Expert is a Big “I” members-only resource. Members using the Big “I” Virtual University (VU) sometimes need answers to questions that they can’t find in the Research Library or classrooms. In such instances, the VU has a volunteer faculty of experts who can usually answer, or find an answer, to your questions. Go to www.independentagent.com/Education/VU/AskanExpert/. You will need to login before using Ask An Expert. WISCONSIN INDEPENDENT AGENT
MAY 2013 | 21
ERRORS & OMISSIONS
AN INSURER DENIAL OF CUSTOMER CLAIM.
AN E&O CLAIM WAITING TO HAPPEN? From time to time, the insurance carrier may deny a claim incurred by one of the agency’s clients. When this occurs, it is critical that these situations be handled delicately. There is potential that the claim denial could turn into an E&O matter. Typically this occurs when the client, who is obviously disappointed by the denial, feels that it’s the agent’s fault. The allegations can include poor advice, failure to secure the coverage requested, providing the carrier with incorrect information, etc. Although these situations can be difficult for the agent as they have the potential to damage the relationship, the agency needs to avoid admitting liability or fault. Any admission of liability by members of the agency could have some E&O policy/defense implications if the matter develops further. In addition, while the agency may very well “feel bad” that their customer’s claim has been denied, they should not agree to just pay the claim. While these “agency goodwill payments” do occur in our industry, they should not be done without full discussion with the agency’s E&O carrier. The reason why the E&O carrier should be contacted is that payments by the agency could be considered an admission of liability
and impact issues such as the defense of the agency for any subsequent developments. In anticipation of the day when one of your customers has a claim denied, the agency should have procedures in place. The procedures should include: a Ascertaining the facts of the claim. a D etermining the cause of the denial. The denial could be due to a policy exclusion, incorrect information on the application or other reasons. If it appears that the denial is proper, explain this to the client. If there are questions on whether the denial was proper, check with the carrier to request that coverage be reconsidered. If the carrier is made aware of additional issues perhaps they would reconsider their position. a C ontacting the customer and show care and support. This could help to diffuse any anxiety and emotion on the customer’s part.
a Reviewing the agency file to see what it contains. While it is okay to organize the file, DO NOT add or delete anything. In addition, at no time should the agency provide the customer with a copy of the agency file without the “blessing” of the agency’s E&O carrier. Since E&O matters sometimes develop because the client has suffered a loss and the loss is denied, these matters require careful handling. It is advisable that the entire agency staff (or at least the CSRs, producers, and claims staff) be advised of the proper handling of carrier denials so that the procedure can be consistently followed in the agency. Don’t hesitate to contact your E&O carrier. There is a good chance that you are not the first agency that has had a customer claim denied. The E&O carrier’s advice and guidance will be extremely valuable at times like this.
IT’S WHY WE STAND OUT FROM THE CROWD “I’m a mom, and for me excellent communication is important. The same holds true for my role as a Bond Underwriter. Developing personal relationships with our customers is essential—it’s who we are.”
Robyn Shepherd Bond Underwriter—professional listener and “customer care” expert Connect with Robyn on LinkedIn!
Managing General Agency Since 1920 Property/Casualty t Professional Liability t Surety Commercial Transportation t Personal Lines t Premium Finance
22 | MAY 2013
WISCONSIN INDEPENDENT AGENT
REP. KEVIN PETERSEN: AN ALLY TO THE INSURANCE INDUSTRY Rep. Kevin Petersen (R-Waupaca) is chairman of the Assembly Insurance Committee, a postion he’s held for two consecutive terms. The committee, which includes 10 Republicans and six Democrats, has primary jurisdiction over all state insuranceI was first introduced to Rep. Petersen in 2006. Every election cycle I travel around the state to meet with candidates running for office. Petersen was gearing up for a run at a vacated Assembly seat so we met on Main Street in Waupaca. When I reached out to meet with him, he graciously accepted my invitation. To this day he shows a willingess to listen and maintain an open dialogue. I quickly learned that his priorities included being a strong advocate for small business owners and preserving a healthy, competitive private marketplace. Incidentally, Petersen is a small business owner; he co-owns and operates a consumer electronics repair business. He understands and appreciates the hindrances of overly intrusive government regulations and the many daily challenges faced by small business operators. I knew instantly that he would be a strong ally in Madison for our industry, an industry that thrives under a free market and open competitive system. Petersen went on to win a close race in his first election in November 2006 by winning just 52 percent of the vote over his Democratic rival. He has subsequently won re-election three times, with each margin of victory larger than the last. In 2012, he was one of a handful of incumbent lawmakers who ran unopposed. This is a testament to his hard work and commitment to the people he serves. When he first came to the Capitol, it’s fair to say he was not thinking about Insurance as one of his niche issue areas. He didn’t run for office with the goal to become the next Insurance Committee chairman. But since his initial appointment to the post in 2010, he’s become more comfortable in the job. He points to his degree in mechanical engineering and a background in nuclear engineering as helping to prepare him for the complex insurance issues that come before his committee. Petersen served served honorably in the United States Navy as a Nuclear Reactor Operator and Submarine Warfare Officer aboard a nuclear submarine. But despite his impressive background, he comes across as a regular, hard working, unpretentious and unassuming individual.
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related legislation and regulations. This is the committee where I spend the bulk of my time lobbying on your behalf, forging relationships with its members, and educating them about the IIAW and the issues we care about.
to Madison to fulfill his legislative duties. making sure state government either favorable legislative and regulatory Petersen firmly believes that running a gets out of the way or provides the environment. small business helps him make better and needed tools to allow the industry For more information about Rep. smarter decisions for his constitutents back and its agents to operate in the 21st Kevin Petersen, visit his Website at legis. AIA Tired PC BACKcentury. 11_9_11:AIA 02.10.10 PC BACK 11/16/11 1:35 PM Page 1 home. wisconsin.gov/assembly/petersen/Pages/ For his work as chairman of the Assembly a Continuing to preserve Wisconsin’s default.aspx. Insurance Committee and defender of independent insurance agents, Rep. Petersen is the ideal choice to receive the 2013 Legislator of the Year Award. Rep. Petersen continues to be one of our strongest advocates in the Legislature and he is certainly deserving of this award. During the current legislative The Midwest’s Premier Cluster Group session, Rep. Petersen plans to address the following issues: * 100% Retained Ownership * Increased Markets-Over 30 Represented a Ensuring that independent * Knowledgeable Support Staff insurance agents in the Commercial Assistance - Placement private health market * Increased and More Stable Contingencies are not undermined by * Comparative Rater Provided implementation of a federal * Retain 90% of Commission health insurance exchange * Reduced Cost of Applied Management System under the Affordable Care * Preferred Agency Contracts Act. Check out our website at www.iaanetwork.com a Assisting the insurance For more information call Mike Sabourin 866-789-9712 industry with modernization efforts and
Tired of Walking Away from Business? We Can Help!
Rep. Kevin Petersen (3rd from left) is the Assembly Insurance Committee chairman. He is one of the insurance industry’s strongest allies in the Capitol. Standing with Rep. Petersen at last year’s Day on the Hill: Dave Dunker, Zingen
& Braun Insurance; Mike Hierl, Hierl Insurance; Rep. Kevin Petersen; Skip Hansen, Diversified Insurance Services; Linda Steiner, Johnson Insurance Services; and Mike Froh, BurkartHeisdorf Insurance.
One of Petersen’s first hard fought battles as committee chairman was helping to pass a sweeping auto insurance reform bill, the Consumer Choice in Auto Insurance Act. This legislation repealed many costly auto insurance provisions institued under the previous administration in 2009. As many of you know, those law changes artifically increased auto insurance costs for consumers. As chairman of the Assembly Insurance Committee, Petersen doesn’t hold committee hearings just for the sake of holding hearings. He convenes the committee only when there are important issues that need to be addressed. Petersen is also unabashed about wanting to protect Wisconsin’s independent insurance agent community. He understands and appreciates the role of the industry and the vital role agents play in communities and on main streets all across Wisconsin. More importantly, he respects that the decisions made in Madison can impact the overall stability or instability of the insurance market. Perhaps that’s why Rep. Petersen is now
serving his fourth term as the representative for the 40th Assembly District. His district runs as far north as Marion, west of Waupaca, east to New London, and as far south as Redgranite and Berlin. He was born and raised in Waupaca and continues to reside there today with his wife and two daughters. While serving in the Legislature can be viewed as a full-time job for many, it remains a part-time job for Petersen who co-owns Dave’s Electronic Repair, Inc. in Waupaca. Petersen soon will be assuming full ownership and responsibility for the family business that his parents founded in Waupaca 37 years ago. He says > Misha Lee is Owner/ his small business Founder of Lee Government Relations, experience keeps LLC and lobbyist him grounded for IIAW. Follow Lee in the real world Government Relations when he heads on Twitter @mishavlee. WISCONSIN INDEPENDENT AGENT
WISCONSIN INDEPENDENT AGENT
MAY 2013 | 25
T H E S H O C K I N G T R U T H I N P E WAU K E E
HUMANA CEO: . HEALTH INSURANCE GOING THE WAY OF PENSIONS The health care system of the future will likely come with fewer guarantees, said Bruce Broussard, CEO of Humana Inc. In other words, rather than offering a health plan, employers will probably begin offering specified payments and telling their employees to buy their own insurance. “What happened to retirement is probably going to happen to health care,” Broussard said.
On March 28, more than 60 participants attended Mike Foster’s continuing education session, The Shocking Truth: What You and the Insurance Industry Need To Know In Order to Protect Your Computer Systems, Your Company and Your Job, at the Holiday Inn in Pewaukee. Mike Foster is a world-renowned
The shift, from defined-benefit to defined-contribution plans, is exactly what happened when 401k retirement accounts replaced pensions.
technology expert, author and speaker whose clients include Amazon.com, American Express, Dell, Blue Cross/Blue Shield, Chase Manhattan Bank, Honeywell and Microsoft. Foster discussed strategies to implement to make sure your essential information, network and assets are protected.
Broussard figures that change will take a decade to kick in fully. Corporations will increasingly use wellness offerings, he said, to differentiate themselves in recruiting. Questions that insurance companies already face, such as whether their customer is the employer or the individual, will be amplified. “Our role becomes a role around health more than just the financing of health care,” he said.
Source: James Ritchie, Cincinnati Business Courier
ARE YOU totally
WORRY FREE? Andy Burkart (left), Burkart-Heisdorf Insurance, Walt Frank, RobertsonRyan & Associates, and Fred Thomas, Robertson-Ryan & Associates, before Mike Foster’s session.
WEST DES MOINES, IOWA • 800.274.3531 • WWW.IMTINS.COM
26 | MAY 2013
WISCONSIN INDEPENDENT AGENT
WISCONSIN INDEPENDENT AGENT
MAY 2013 | 27
A SEVEN-PACK OF MARKETING IDEAS According to Alan Shulman on Insurance Journal’s Website, the following are seven marketing
FROM THE ARCHIVES
tools that can be used by independent insurance agents. For the full article, see insurancejournal.com. > Social media. You know about Facebook and LinkedIn and Twitter. They are not going away. People follow you to be informed; don’t disappoint them. Post good stuff on a timely basis. > E-mail. Venerable e-mail serves as a one-onone communicator, as well as a mass mailer. Don’t overlook the marketing value of periodic single topic “email alerts” to advise insureds about important insurance issues they may otherwise miss. > Website. Your Website is the hub of your agency’s online presence, and as such, it
needs to be contemporary in appearance, continuously updated, and offer interactive functions like client service and quote generation. > Client newsletters. This classic communicator is an excellent marketing device, especially when it’s printed and mailed (with older issues archived as PDFs). > Videos. It seems that reading even short bursts of practical information is too much for some people, hence the growing popularity of minivideos. Yours may consist of brief recordings on such topics as discounts, inadequate insurance issues, testimonials from happy claimants, etc.
> Direct mail. This medium is not obsolete, even if Saturday delivery goes the way of the Dodo in August. Printing and mailing is still worth the expense when you have an important marketing message to deliver. > Blogs. Most typically staffed agencies can’t afford a dedicated blogger to write fresh content. Use this digital-only to repost articles from your newsletter and reformat them for the blog. Do the same with your social media posts. Let your blog become a second-chance repository for agency insureds. > Alan Shulman is the publisher of Agency Ideas and writes frequently for Insurance Journal.
I NDEPENDENT I NSURANCE A GENTS OF W ISCONSIN
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In October 1982, former IIAW president and state national director Robert Clayton (left) accepted the Woodworth Memorial Award at the Independent Insurance Agents of America’s (IIAA) 86th annual convention at the New York Hilton Hotel in New York City. Robert Treweek, president of the IIAA, presented the award to Mr. Clayton. Clayton was also the president of Fitzgerald, Clayton, Noyes & Kasten, a Milwaukee independent agency. The award, the highest the IIAA bestows on member agents, is awarded to individuals who distinguish themselves as providing outstanding service and contributions to the American agency system. Clayton served as a member of the Wisconsin Commissioner’s Agents Advisory Committee and was an original member of the Governing Committee of the Wisconsin Insurance Plan. He was president of the IIAW from 196566 and IIAA president in 1976-77.
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AUTO HOME BUSINESS LIFE HEALTH
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Write for a company that continually searches for ways to become the easiest company for your agency to communicate and do business with.
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F OR M ORE I NFORMATION AND TO R EGISTER F OR T HESE I N P ERSON C LASSES , P LEASE G O T O IIAW.COM! 28 | MAY 2013
WISCONSIN INDEPENDENT AGENT
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Competitive Rates Competitive Commissions with Unique Commission Earning Opportunities Broad Portfolio of Products (Personal Lines, Commercial Lines, Life, Health, and Annuity) Profit Sharing (1-Year Agreement with Lock-In Option) Company Trips Every Year Co-op Advertising Program Social Media Campaign Easy-to-Use Raters for All Lines of Business Upload and Download Capabilities Qualified Field Representation Training Department with CEC Classes Life, Annuity, and Health Specialists Unique Coverage Enhancements Available like Pet Insurance, Water & Sewer Line Breakage, Equipment Breakdown, and many more! Agent-Friendly Intranet Site 24-Hour Claim Call Center with 4-business-hour call-back Guarantee Catastrophe Team with Mobile Claim Office And, there’s much more!
Pekin Insurance • Beyond the expected. ® 2505 Court Street • Pekin, IL 61558 • 800-322-0160 • Extension 2394 • pekininsurance.com beyondtheexpected.com WISCONSIN INDEPENDENT AGENT
MAY 2013 | 29
FOOD FOR THOUGHT
SHEPARD SHEPHERDS IN SPACE AGE
GET READY FOR FOOD ON A STICK!
On May 5, 1961, Alan Shepard became the first American in space and the second man ever to accomplish this. He piloted the spacecraft Freedom 7 during a 15-minute 28-second suborbital flight that reached an altitude of 116 miles above the Earth. Russian cosmonaut Yuri Gagarin was launched into space 23 days earlier. Shepard’s voyage paved the way for NASA’s moon explorations. As a weird footnote to history, approximately 36,600 pounds of equipment and debris have been left on the moon by NASA.
The weather is getting warmer and soon it will be fair season. The first state fair in Wisconsin was held in Janesville in 1851 and sponsored by the State Agricultural Society to showcase the state’s advances in agricultural machinery and products. About 10,000 people attended. From 1851 to 1885, different cities took turns hosting the fair, including Madison in 1858, 1860, 1867, 1868, 1878 and 1879. A Milwaukee fairground was the site from 1886 to 1891, and since 1892 the fair’s permanent home has been in West Allis. The annual fair has only been cancelled five times: in 1861, 1862 and 1863 during the Civil War, in 1893 when the World’s Columbian Exposition was held in Chicago, and in 1945 by request of the U.S. Office of War Transportation.
Sources: historyplace.com and Harper’s Magazine
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CELEBRATING ONE BILLION IN WRITTEN PREMIUM!
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DOUBLE DIGIT GROWTH has pushed ACUITY over the $1 billion revenue mark! In the past 14 years, we’ve quadrupled our written premium and you are responsible for that. Thank you! We have the agents, employees, and strategic plan to allow our growth to keep compounding on the path to becoming a multibillion-dollar insurer.
Insurance underwritten by Auto Club Insurance Association or Auto Club Group Insurance Company.
30 | MAY 2013
WISCONSIN INDEPENDENT AGENT
For All That Matters
PRSRT STD US POSTAGE
Independent Insurance Agents of Wisconsin
725 JOHN NOLEN DRIVE MADISON, WI 53713 RETURN SERVICE REQUESTED
' 0123'%+*"%'4'*"+5"!%6$7'.()8"!")."' 9:)"'0;<0=>'0123'?'@+*+6+!$'!"%(!&
MADISON WI PERMIT NO. 2506