professional agent january | 2014
Wh atâ€™s Inside? What's Changed..................15 E&O Reality Check...................20 Life Insurance Trap.................28 New Members..........................29 Invest In Yourself..................35 Coming Events.. .....................38
Digital Editions of PIAW Magazine Available at
North American Grey Wolf
2 JANUARY 14
President Jeff Glass — President, PIA of Wisconsin
Hello Agency Owner—This One's For You One of the growing trends in our culture seems to be the lack of younger people getting involved in outside activities— i.e. Lion’s clubs, Rotary clubs, Fire Departments, churches, business organizations, golf and bowling leagues, city government etc.etc.etc. You pick the organization or activity, the numbers have trended down. There have been many talking heads putting their two cents into why this trend seems to be growing, and I have my suspicions, but I’ll let the so called experts figure it out. My concern is the insurance industry and younger people. Over the past several years, while working my way up the ladder at PIAW, I’ve had the opportunity to see the operations of many different agencies—from very large agencies all the way to the one man shop. The one pattern I’ve noticed is we “the agency owners” may be falling into that same trap of overlooking the need to get the next generation involved within our industry. I get that the current day agency is subject to so many variables that stretch resources in all sorts of different directions and agency owners having to use those “stretched out” resources in the most effective ways possible, but overlooking reinvestment in younger associates because it’s easy may come back to bite us all someday. Now this is just my personal opinion and observation, we agency owners need to get our younger people more involved at all levels of our industry. I’m not talking about sending associates off to “CE” class because they need to get compliant before their birthday. I’m taking about “proactive” reinvestment in agency staff from the receptionist to the most senior AE. Back when I decided to get into the Insurance business, the owner of the agency I worked at had me running off to the old Walworth County agent’s association meetings, CIC classes, forced involvement in YPC events and state
conventions. At the time, I didn’t understand why I had to hang out with all those “old warhorses”. Warhorses that I had nothing in common with other than occupation. But today, 25 years later I get it! That agency owner was “reinvesting in the industry”. That owner understood the need to get younger people involved with peer groups of older seasoned agents via networking, education, and volunteering, all in an attempt to establish relationships that helped the agency staff grow and become more valuable to the agency, industry, and the agency’s clients. The agency that I cut my teeth in had unreal employee longevity. One employee worked there for 55 years, another for over 30 years and a handful at 15 plus years. None of these associates had ownership, but they did have “agency re-investment”. The agency owner believed in keeping them involved and not “turning and burning”. So, the next time an associate comes up to you and asks to attend a company meeting, industry social function, or advance in education, say “yes” and watch that person grow. For 2014, I challenge you “agency owners” to get your associates involved. Step it up this next year and send an associate to the State Convention or the Winter Get Away or send a new agency member to a CIC institute or volunteer for a PIAW committee. Remember, the more you invest in your agency staff, the bigger your return will be in the future—it’s true. We can’t perpetuate our industry if we don’t re-invest in it. For you agency owners who embrace the “reinvestment mindset”, keep at it. Our industry THANKS YOU… Cheers J.J. Glass P.S. That agency owner who had the foresight to re-invest in his agency and staff was my father…THX Dad
www.sheboyganfallsinsurance.com JANUARY 14 3
Madison Ron Von Haden, CIC — Executive Vice President, PIA of Wisconsin
PIA is a Powerful and Respected Force PIA WAS HONORED to be invited to the Governor’s office on Thursday, December 12 as the Governor signed Assembly Bill 373 into law. This law now allows consumers to choose to receive proof of insurance via their electronic devices (i.e. cell phones). Of course, proof of insurance is still required in the vehicle so if you lend your vehicle to someone else or you do not have your cell phone with you, a paper proof will be required. This bill has been a priority for PIA and our crack legislative team who worked hard for passage. We have to thank Representative Mary Czaja, Representative Chad Weininger and Senator Frank Lasee for their efforts to introduce the legislation and to see it through to fruition. PIA is a powerful and respected force at the Capitol in Madison and good, common sense legislation like AB-373 is what we are known for. Working hard for agents, their customers, our industry and small business is the mission of PIAW. We don’t huff and puff about how great we are like other organizations, we just do the job that our members expect us to do! A photo of the signing ceremony appears below.
DID YOU KNOW that the penalty for a “Failure To Yield” ticket may be an automatic suspension of your drivers license? That’s right. This change snuck up on most agents and companies without any fanfare or notice. A bill was introduced in the Wisconsin legislature in March, 2011, more than 2.5 years ago. It passed the Assembly unanimously and the Senate unanimously as well and was signed by the Governor.
According to the Department of Motor Vehicles, under Wisconsin Act 173: “Any person who receives a citation and is convicted of Failure To Yield is required to attend a failure to yield right-of-way course. If the violation results in bodily harm, great bodily harm or death to another, the operating privilege will be suspended: •
If the violation results in bodily harm, suspension will be for two months.
If the violation results in great bodily harm, suspension will be for three months.
If the violation results in death to another person, suspension will be for nine months.
If your operating privilege is suspended, you will not be eligible to reinstate until you have successfully completed the failure to yield right-of-way course. The course has been designed to reacquaint you with vehicle right-of-way rules and provide awareness of keeping motorcyclists, pedestrians and bicyclists safe.” I’m sure your clients will be shocked when they get that good news from the DMV after an accident! It may be a good idea to inform all your agency staff and producers about this new law. AND REMEMBER…..There are two kinds of fishermen: Those who insist they fish for sport and those who catch something.
GOVERNOR SIGNS ELECTRONIC DELIVERY OF INSURANCE DOCUMENTS BILL Governor Walker signed AB-373 into law on Thursday, December 12, 2013 during a bill signing ceremony at the Governor's office in Madison. Consumers can now choose electronic delivery of their insurance documents to their cell phone or other device. The bill was authored by Representative Weininger (R-Green Bay) and Senator Lasee (R-DePere) and was instigated by PIAW and Representative Mary Czaja. We thank Representative Weininger, Senator Lasee and PIA member Representative Czaja for their effort and responsiveness. Pictured with Governor Scott Walker, from left to right: Theresa Elliott, Sentry Insurance; Andy Franken, Wisconsin Insurance Alliance; Representative Chad Weininger; Monica Groves, American Family Insurance; Kevin Jenkins and Rob Kovach of Senator Frank Lasee's office; Ron Von Haden, Professional Insurance Agents of Wisconsin and Representative Mary Czaja. 4 JANUARY 14
I realize the importance of political contributions to the future of the Professional Insurance Agents of Wisconsin and our customers. I want to be part of the process leading to success in achieving PIA’s goals in the Wisconsin Legislative arena. Please hold my contribution as a deposit in the PIA Legislative Conduit account to be used at my direction. I understand that I will be contacted in the future, by telephone, email or direct mail, to authorize the use of these contributions. I will be asked to respond with my signature on appropriate authorization forms. Name:___________________________________________________________________________________ (Please Print)
Primary Employer:________________________________________________________________________ (required to disburse any contributions greater than $100, by Wisconsin Law)
Business Address:_____________________________ City:_____________ State:_______ Zip:__________ Home address:________________________________ City:____________ State:_______ Zip:___________ Business phone:______________________________ Home phone:_________________________________ Email address:_____________________________________ Contribution amount:____________________ Credit Card Payment Name on card:_________________________________ Signature:__________________________________ Amount:______________ Card Number:_________________________________ Exp. Date:____________ Billing address on card:_____________________________________________________________________ City
Contributions are NOT tax deductible for income tax purposes. Donations must be made from Personal accounts only. NO Corporate or Business Checks or Credit Cards accepted Return to: PIAW Legislative Conduit Account PIA of Wisconsin, Inc. ● 6401 Odana Rd. ● Madison, WI 53719 Fax: 608-274-8195 ● www.piaw.org ● Email: firstname.lastname@example.org
JANUARY 14 5
Boardroom Brian MacGillis, CPIA, MacGillis Agency Inc. — Secretary, PIA of Wisconsin
Retention as Premiums Increase Your Agency quoting activity and new business numbers are up – great! How can you beat the retention average to grow your agency even more? There has and always will be ‘price only’ shoppers. There has and always will be people who will go down the road to save a nickel. However, a 1%-2% increase in your retention ratio can mean thousands of dollars to your Agency – and better numbers for the companies you represent. •
Drill coverage into their heads throughout the sale – even if they are at your Agency for only a low price. For those customers who sing price woes, and tell you how high their last renewal went up, it is most important to spend time with them through the entire insurance sale. They purchased on price in the past – it is your turn to change that.
Know the policy you are selling. Your customers may not know or appreciate the details of Loss Assessment Coverage or Loan/Lease Coverage. Each customer has a unique set of insurance needs and you need to tell them exactly what those needs are – even if they ask you to quote “apples for apples”.
Don’t assume when they go for “direct” pricing, that they are making an accurate comparison. Too often we all hear that someone ‘found’ better pricing with their new quote – only to find out that the limits are cut in half and essential coverage’s are missing.
Call your customers back….today. Oftentimes you will get a call from an unhappy customer as their rates just went up 10% - 15%. If you call them back as soon as possible, that will greatly reduce the chances of them making their next phone call – to the agent down the road. In addition, the heavy majority of your current customers will be less likely to move their insurance business from your agency if they know you are easy to reach and willing to speak with them.
If someone calls for a claim – drop everything - #1 priority. We deal with claims on a daily basis, but your customers don’t. They expect that when they have their 1st minor fender bender in 15 years, that this should be the most important part of your day. Make it the most important – and they will stick with you because you gave them Superior Service. When they do have that “big claim”, follow up
6 JANUARY 14
with them to ensure they were contacted by the company and ask if there is anything you can do. You wouldn’t move your business from someone that treated you with fantastic claim service, and your good customers will not either. •
Contact throughout the year. I certainly don’t expect to hear from my doctor until I am in his/ her office with a problem – should that be the same with Insurance Agents? Our companies track our progress throughout the year – so should we with current customers. How about a “Happy Birthday”, or a letter/e-mail with a life insurance quote? Maybe a holiday letter or card. You just wrote up a Business Insurance policy, stop in 1 month later to see if they have any additional questions or concerns.
PIA of Wisconsin offers many member benefits that are under-utilized. Use your friends at PIA to help retain your clients, by using the materials that are provided to you by PIA. The “why are my flood insurance premiums rising” flyer and “why are my homeowners rates going up” flyer are put together for you to send to your clients. Please make an effort to go to piaw.org and go to the “Member Benefits” section. You will be surprised at all your association has to offer.
Ensure your customer stays by serving all or the majority of their insurance needs. You can bet that if you write just the auto or home, or just the workers compensation – that the other agent is knocking on their door every year to write the rest of their business.
Don’t take for granted long term relationships. These 20-30 year customers are less likely to stay with you now in our ‘what have you done for me lately society’. Thank your long term customers for their loyalty and let them know you appreciate their business.
If a customer does leave – treat them with dignity and respect (not tears). As much as you want to scream and yell, restraint is the best course of action. Often the grass is not always greener with that new insurance policy – and they will be back IF and only if you treated them well upon their exit.
People who run a business know. The most valuable things
are also the hardest to get.
Your customer’s business didn’t grow overnight. It came from years of hard work, confidence in what they could do, and making smart decisions. That’s why an insurance policy from West Bend makes sense. It protects these valuable and hard-earned businesses so your customers can focus on doing what they do best. And with West Bend, it’s backed by your knowledge and experience.
West Bend. Insurance your customers buy when they can’t afford anything less.
JANUARY 14 7
Actions Ted Nickel â€” Commissioner of the Office of Insurance
Madison, WIâ€”OCI has taken the following administrative actions. In many of these cases the respondent denied the allegations but consented to the action taken. Any forfeitures paid in these administrative actions are deposited in the Common School Fund which is administered by the Board of Commissioners of Public Lands. The earnings from this fund are distributed to all public K-12 schools in Wisconsin and are used by school libraries to purchase books. Copies of the administrative action orders may be viewed online at https://ociaccess.oci.wi.gov/OrderInfo/OrdInfo.oci. OCI is responsible for overseeing the operations and marketing of insurance companies and agents in Wisconsin. OCI encourages anyone with a question or a complaint regarding an insurance company or agent to contact the office at this toll-free telephone number: 1-800-236-8517.
Actions Against Agents
Sonja Anderson, W5976 Plateau Rd., Elkhart Lake, WI 53020, agreed to surrender her insurance license and agreed to pay a forfeiture of $250.00. These actions were taken based on allegations of failing to timely report criminal charges and convictions to OCI. Kimberly Donise Arce, 12238 Silicon Dr., Ste. 150, San Antonio, TX 78249, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and being involved in a lawsuit. Roice Matthew Arnold, 280 Country Club, Stansbury Park, UT 84074, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct. Paul A. Barr, 207 E. Church St., P.O. Box 849, Marshalltown, IA 50158, had his application for an insurance license denied. This action was taken based on allegations of being involved in lawsuits substantially related to insurance marketing type conduct. Britney L. Bergum, 1070 N. Pleasant View Rd., Apt. 202, Middleton, WI 53562, had her insurance license revoked and was ordered to pay a forfeiture of $500.00. These actions were taken based on allegations of unauthorized use of a business credit card and failing to respond promptly to inquiries from OCI. Patty D. Buska, 1114 Clement St., Watertown, WI 53094, agreed to the denial of her application for an insurance license for 60 days. This action was taken based on allegations of failing to respond promptly to inquiries from
OCI and having unpaid civil money judgments. Danielle S. Byrd, 868 Faile St., Apt. 42, Bronx, NY 10474, had her insurance license revoked. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to timely report an administrative action taken by the state of Missouri. Justin Craig Clock, 101 Brook St., Sanford, ME 04073, had his insurance license revoked and was ordered to pay a forfeiture of $500.00. These actions were taken based on allegations of failing to respond promptly to inquiries from OCI and failing to timely report an administrative action taken by the state of Missouri. Donald Wayne Cooper, 1350 N. Glenville Dr., Richardson, TX 75081, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of resident state title insurance licensure. Thomas Francis Coughlin, 1325 St. Davids Ln., Vero Beach, FL 32967, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI, being involved in a lawsuit, and having his employment terminated by an insurance company. Susan Marie Deyo, 3300 Business Park Dr., Stevens Point, WI 54482, had her application for an insurance license denied. This action was taken based on allegations of having criminal convictions which may be substantially related to insurance marketing type conduct, owing delinquent child support, and having unpaid civil money judgments. Gregory J. Fencl, 2228 S. 13th St., Manitowoc, WI 54220, [continued on page 10]
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OCI Administrative Actions [continued from page 8] agreed to the denial of his application for an insurance license for 30 days. This action was taken based on allegations of failing to disclose criminal convictions on a licensing application and having a criminal conviction which may be substantially related to insurance marketing type conduct. Venita C. Flanagan, 4304 Retreat Rd., Louisville, KY 40219, had her application for an insurance license denied. This action was taken based on allegations of having a criminal conviction which may be substantially related to insurance marketing type conduct. Gilbert Escobedo Flores, 12238 Silicon Dr., Ste. 150, San Antonio, TX 78249, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and owing delinquent child support. Mario J. Garcia, 7801 S. Colony Cir., Apt. 102, Tamarac, FL 33321, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having criminal charges and convictions which may be substantially related to insurance marketing type conduct. April Mae Gonzalez, 1231 Greenway Dr., Ste. 600, Irving, TX 75038, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct. Grant Edward Hightower, 11800 City Park Central Ln., Apt. 436, Houston, TX 77047, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct. Jay Rudi Branch Jordan, 5705 S. Topaz Pl., Chandler, AZ 85249, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of resident surplus lines insurance licensure. Rachael A. Lambrose, 1935 E. Vine St., Ste. 460, Salt Lake City, UT 84121, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct. Sarah E. Laux, 13907 N. Port Washington Rd., Mequon, WI 53097, had her insurance license summarily suspended. This action was taken based on allegations of utilizing
premiums for personal use, committing forgery, and making misrepresentations to customers. Derrik J. Lindelof, 38930 N. Northwestern Ave., Wadsworth, IL 60083, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to complete prelicensing education prior to examination. Stormi A. Malesevich, 1210 W. 5th Ave., Oshkosh, WI 54902, agreed to the denial of her application for an insurance license for 60 days. This action was taken based on allegations of failing to disclose an administrative action taken by the state of Wisconsin on a licensing application and failing to respond promptly to inquiries from OCI. Paul Isaiah Malone, 8201 Ridgepoint Dr., Irving, TX 75063, had his application for an insurance license denied. This action was taken based on allegations of owing delinquent child support. Scott Michael Mears, 4260 N.E. 10th St., Apt. 2, Des Moines, IA 50313, agreed to the denial of his application for an insurance license for 120 days, agreed to timely report administrative actions, and agreed to respond promptly to inquiries from OCI. These actions were taken based on allegations of failing to timely report administrative actions taken by other states while licensed in Wisconsin and failing to respond promptly to inquiries from OCI. Scott Michael Mears, 4260 N.E. 10th St., Apt. 2, Des Moines, IA 50313, agreed to pay a $500.00 forfeiture, agreed to the suspension of his insurance license for 30 days, and agreed to timely report administrative actions to OCI. These actions were taken based on allegations of failing to timely report administrative actions taken by other states. Stacy Carolina Menjivar, 4732 Oliva Ave., Lakewood, CA 90712, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of equivalent resident state insurance licensure. Hilario Gilberto Morales, P.O. Box 785, Morenci, AZ 85540, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and owing delinquent child support. Ann M. Nelson, 701 N. 10th St., Wausau, WI 54403, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and owing delinquent child support. Spenser L. Nickelatti, 805 Angel Ct., Apt. 15, Holmen, WI 54636, had his application for an insurance license denied. This action was taken based on allegations of failing to [continued on page 12]
10 JANUARY 14
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OCI Administrative Actions [continued from page 10] disclose a criminal charge on a licensing application. Scott T. Nowakowski, 28 Grove Ave., Genoa City, WI 53128, had his application for an insurance license denied. This action was taken based on allegations of owing delinquent child support. Daniel Herbert Peaslee, 1115 N. 8th St., Wausau, WI 54403, agreed to the revocation of his insurance license and agreed to pay a forfeiture of $35,000.00. These actions were taken based on allegations of utilizing the services of an unlicensed and disciplined insurance intermediary and making false representations to insurance companies and consumers. Christopher Marshall Pope, 623 N. O St., Lake Worth, FL 33460, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of equivalent resident state insurance licensure. Isabel D. Rojas, 3233 Chardonnay Ct., Green Bay, WI 54301, had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of eligibility to work in the United States. Michael Rush, 2012 Columbia Pike, Apt. 4, Arlington, VA 22204, had his application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and having a criminal conviction which may be substantially related to insurance marketing type conduct. Dianne M. Tralmer, 420 Breckenridge Rd., Verona, WI 53593, agreed to the suspension of her insurance license for 14 days; agreed to pay a forfeiture of $2,000.00; agreed to complete eight hours of continuing education coursework, plus three additional hours of ethics training, within three months;
Roshunda D. Turner, 1350 N. Glenville Dr., Richardson, TX 75057, had her application for an insurance license denied. This action was taken based on allegations of having a criminal conviction which may be substantially related to insurance marketing type conduct and failing to respond promptly to inquiries from OCI. Mark Vaughan, 5220 S. Harlan Way, Littleton, CO 80123, agreed to surrender his insurance license. This action was taken based on allegations of failing to timely report a criminal arrest and conviction to OCI and having administrative actions taken by numerous other states. Ronald D. Wage, N2344 Elm Grove Rd., Merrill, WI 54452, agreed to the revocation of his insurance license and agreed to pay consumer restitution of $2,534.74. These actions were taken based on allegations of utilizing the services of an unlicensed and disciplined insurance intermediary and making false representations to insurance companies and consumers. Sandra Louise Wilson, 2503 Bobwhite Blvd., Mesquite, TX 75149, had her application for an insurance license denied. This action was taken based on allegations of having a criminal conviction which may be substantially related to insurance marketing type conduct and failing to respond promptly to inquiries from OCI.
Actions Against Companies
Dallas National Insurance Company, 5501 LBJ Freeway, Ste. 1200, Dallas, TX 75240, agreed to an amended order requiring payment of a $6,000.00 forfeiture, agreed to cease assisting unauthorized Wisconsin warranty plans, and agreed to honor all warranties previously issued by Tier One Warranty Services, LLC, or any of its affiliated or subsidiary companies. These actions were taken based on allegations of assisting an unauthorized insurer. Educational Healthcare Exchange, Inc., P.O. Box 183, Bala Cynwyd, PA 19004, had its application for an insurance license denied. This action was taken based on allegations of using a firm name similar to the Federal Exchange Marketplace under the Affordable Care Act. 12 JANUARY 14
agreed to provide documentation of the education to OCI and not count it toward her current continuing education requirements; and agreed to the revocation of her insurance license upon failure to comply with any of the terms of the stipulation. These actions were taken based on allegations of making misrepresentations to OCI and The American College, obtaining continuing education credit for courses that she did not complete, and allowing another person to take continuing education examinations on her behalf.
Essex National Securities, LLC, 550 Gateway Rd., Napa, CA 94558, had its application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of resident state MGA insurance licensure. Wilson Mutual Insurance Company, P.O. Box 1340, Sheboygan, WI 53082, was ordered to update and endorse its form filings to reflect the fact that premium is not audited on its Commercial General Liability policies; was ordered to provide OCI with form filing confirmation; and was ordered to cease and desist providing misleading information to consumers. These actions were taken based on allegations of making misrepresentations to consumers.
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AUTO • HOME • BUSINESS • LIFE • HEALTH JANUARY 14 13
14 JANUARY 14
Ignore the Signs of CHANGE
by Rick Dennen, Oak Street Funding
A lot of people hate going to the doctor. They avoid going at all costs, whether it is for a simple physical or even to address an illness or ailment. This can especially be true as people age. The rationale is often, “If I go to the doctor they might find something wrong; I’d rather not know.” In essence, these people don’t want to address any health issues until they reach the do-or-die stage. They prefer ignorant bliss over facing the inevitable realities of getting older. They stick their heads in the sand.
A lot of business owners feel the same way about facing the realities of business. They know taxes aren’t going down and interest rates are going up. They know they are aging and need to plan for succession. They know the market and carriers can change the agency game at any moment. Yet, instead of facing these issues, they wait and see what happens, and put off making any decisions or changes. Running any business involves a series of constant challenges, frequent setbacks and frustrating surprises. The longer an owner operates a business, the easier it becomes to get complacent. But complacency can be deadly to the longterm health and value of a business, especially when you start thinking about an exit strategy. In today’s marketplace, independent agents can’t afford to take a “wait and see” approach to business. If you ignore market and economic changes, you may miss windows of opportunity. If you aren’t actively working at growing the business, it’s probably shrinking. If you aren’t focused on developing new talent, you may well find yourself with an agency that’s essentially worthless. And, if you think you’ll “know” when it’s time to walk away, you’ll probably wind up with far less than you expect for your years of sacrifice.
Ignoring reality Everyone knew the capital gains tax was set to change in 2013. As a result, 2012 saw a record number of mergers and acquisitions as sellers scurried to get as much profit as possible. The new reality facing businesses is that taxes are not going to decrease and rates are trending upward.
Taxes and rates have a major impact on profitability and the ability to buy or sell a business. The math is fairly simple— as taxes increase, selling an agency will yield less money for retirement. As rates increase, it becomes more costly to obtain capital for acquisitions or growth. Owners who took a chance on the hope that capital gains tax laws would be extended beyond 2012 are likely kicking themselves right now. Others who were considering an exit but never really prepared are probably just as frustrated. They may have kept telling themselves there would be time to enact a strategy later, only to realize later has already occurred. You need to keep a watchful eye on economic and industry trends and forecasts. Choosing to ignore them altogether or delaying a response can place you in a vulnerable position or cause you to miss great opportunities.
Failing to grow Just like it’s easy to take your health for granted and believe your body will always have the same, youthful functionality, it’s easy to become complacent and assume you can live off renewals after you’ve built a sizable book of business. Typically, though, failing to move forward doesn’t mean you stay in the same place—it means you actually lose ground. This is because even when your revenues remain generally flat, your costs of doing business continue to climb. In this era of low inflation, that may not be particularly noticeable, but each year, inflation carves away at your profitability. In addition, revenue from a stable book of business really [continued on page 16] JANUARY 14 15
What's Changed? [continued from page 15] doesn’t remain flat. There is always some degree of natural attrition as clients die, move to other places, or give in to your competitors’ more aggressive sales efforts. Client relationships are like their romantic counterparts: if you don’t make clients feel special and wanted, someone down the street will.
There are two primary reasons. First, most acquirers want the
There’s another element many agents don’t realize. When you stop working at growing your business, clients can sense it. If they feel you’re no longer enthusiastic, they’ll lose their enthusiasm for working with you. Carriers know when you’re not trying, too. They may claim to be loyal to you, but their real loyalty is to your book of business and the premium income it produces. If they think that income is in danger because of your inaction, they may take away your appointment and hand that business over to an enthusiastic competitor.
start “taking it easy” as their exit nears.
Failing to develop talent
wait until these factors erode value before putting their
present owner to stick around for several years, and someone in his or her early 50s is far more likely to do that than someone closer to the traditional retirement age. Even more important is the tendency of many agents to slow down and
That lack of energy and enthusiasm has a negative effect on the business and can depress its value. In addition, carriers expect to see consistent new business, or they may end their relationship with the agency. A third factor is the increased likelihood that the agency’s primary owner may encounter health problems that will distract from daily business operations. Unfortunately, many agency owners stubbornly
You probably take great pride in what you’ve been able to accomplish. But keep in mind that none of us lives forever. Although it’s human nature to cling somewhat selfishly to what we’ve built, sharing our successes with current or future employees can actually be far more rewarding, both financially and emotionally. By making it possible for trusted employees to create their own success and wealth, you can actually strengthen your business and enhance their loyalty to you.
agencies up for sale.
There’s often a temptation to wait until we’re ready to retire before we start thinking of passing the business along, but that’s far too late. Instead, providing opportunities early in employees’ careers is more beneficial. Their motivation to succeed will improve their quality of life, and the revenue they create will increase the value of your business.
for clients and carriers.
Have you heard business owners complain their employees just don’t understand what’s involved in owning a business? The most effective way to teach them is to help them become owners. Something funny happens when an employee begins to notice the relationship between the work he or she performs and the financial results it creates. They see that working just a little harder pays off, and working a lot harder and smarter pays off handsomely.
circumstances outside of their control (such as health). Or,
When you extend ownership to employees, you also give them motivation to remain loyal. As the business grows, your credit risk improves along with your ability to withstand economic downturns. As their shares of the business grow, they may eventually be able to obtain sufficient credit to buy you out and facilitate your comfortable retirement. Or, if you choose to sell the agency to someone else, their presence will enhance its value.
hard work and other resources will provide the greatest return
Waiting to sell
and a licensed Certified Public Accountant in the state of Indiana.
In the current marketplace, vibrant and growing agencies command the greatest interest and the highest prices. Most acquirers prefer to buy agencies where the owner’s age (or the weighted average of multiple owners) is closer to 50 than to 60 or 65.
16 JANUARY 14
The sale of a business takes a significant amount of time, too. If the current owners fail to remain engaged in day-to-day business activities, such as building new business, the value of the agency can decline dramatically from the opening of negotiations to the actual close. Owners cannot allow a pending sale to distract them from what they should be doing
Proactive preparation Agents who take the “wait and see” approach risk losing control of their future. They’re likely to find themselves in a situation where they are forced to sell because of they’ll have to settle for far less than the may have received had they taken a more proactive approach. Their golden years may not be as bright as they hoped. Whether you’re 30 or 50, you should be planning for the day when you’re ready to turn ownership over to someone else. Develop a time horizon and a plan to ensure your investment of when the time comes. You may not be able to “take it easy” for quite some time, but you’ll face far less stress along the way. Rick Dennen is president and CEO of Oak Street Funding, which provides commission-based lending for insurance agents that need capital to buy, build or sell their agency. Dennen is a licensed agent in the state of Indiana for Life, Accident & Health products In addition, he holds an MBA in finance and is an instructor of venture capital and entrepreneurial finance at the Indiana University Kelley School of Business. He can be reached at email@example.com.
Attention Utica E&O Policy Holders:
Do you know a student who could use some $$ for school?
The following PIAW education classes are approved for Utica’s premium discount. Please contact Darcy at PIA for details. 1-800-261-7429 or firstname.lastname@example.org
YPC Scholarships Available! PIA of Wisconsin — (10) – $2,500.00 (Deadline 03/01/14)
• Any CIC Update • CIC Agency Management • CISR Agency Operations • Dynamics of Service • PIAW Ethics and E&O Seminars
See the banner on the PIA Home Page for more details or to fill out the scholarship form.
• PIAW Conducted In-House Seminars
Education Schedule: www.piaw.org or 1-800-261-7429
Through a new partnership with Vertafore, PIAW is offering FREE access to Sircon online licensing and continuing education management services. Login to: www.piaw.org and get started today! USING SIRCON SERVICES, YOU CAN: • APPLY FOR A LICENSE • RENEW YOUR LICENSE • LOOK UP AVAILABLE COURSES • CHECK LICENSE RENEWAL STATUS • CHECK LICENSE APPLICATION STATUS • REQUEST A LETTER OF CERTIFICATION CERTIFI • UPDATE YOUR NAME OR ADDRESS • FIND YOUR LICENSE NUMBER/NPN • CHECK YOUR STATUS WITH A STATE • MAINTAIN YOUR FIRM ASSOCIATION • UPDATE YOUR ADDRESS • UPDATE YOUR EMAIL ADDRESS • PRINT YOUR LICENSE © 2011 Vertafore, Inc. Vertafore, the Vertafore logo and design, Unleash your potential, and the Vertafore trademarks listed are owned by Vertafore, Inc.
From the friendly voices of our customer service staff to the personal visits by our marketing managers and underwriters, to the promptness of our claims adjusters, we are told time and again …
Our people set us apart. For information about becoming a Partners Mutual Insurance Agent please contact Lyn Schumann at 262.432.3430 or email@example.com
Where Better Service Matters | Since 1931 JANUARY 14 17
MAPLE VALLEY MUTUAL Insurance Company “The Promise You Can Trust” Maple Valley Mutual’s vision is to be the best smaller mutual insurance carrier in northeastern Wisconsin. This means providing exceptional service and top-notch products to our Agents and Policyholders/Owners while maintaining the Company’s excellent financial condition and A.M. Best Rating of A- (EXCELLENT). • Well Established, Competitive Farmowners Program • Comprehensive Modern Homeowners Program • Competitive BOP & Commercial Programs Writing Territory Northeastern Wisconsin
• Unique Quotation System for New Business • Above Average Commissions For more information Contact
Al Schuettpelz, President, at: firstname.lastname@example.org | 800-23MAPLE | www.maplevalleymutual.com
18 JANUARY 14
5th Annual PIAW Winter Get-Away Registration Fee Only $75.00 ($45.00 non-insurance spouse/guest)
2014 , 7 5 y ebruar
a inocqu M f 14 o s r ate ff 1/15/ O t u The W C fast ens— l Break wo Que a t T n e — n 9 i t 9 $59. e Con s Delux e d u l 8-4000 c n I 715-35 .com nocqua i m f o s r ate www.w
Wednesday – February 5 2:00 - 5:00 p.m. 2013 ISO Commercial Property Changes (3 WI CE) 5:30 p.m. Get-Away Fun at The Waters Free Appetizers to 7:00 p.m., Drink Tickets, Karaoke, Darts
Education by Todd Davis, CIC All New WI CE course #s
Thursday – February 6 9:00 a.m. - noon Cyber Liability, Exposures & Insurance (3 WI CE) 1:00 - 5:00 p.m. PIA Scavenger Hunt — Sled or Car or, PIA Game Day — Bowling, Billards & Cards 6:45 - 7:45 p.m. Buffet Dinner, Cash Bar Whitetail Inn–St. Germain (buses provided) Friday – February 7 9:00 a.m. - noon Ethical Standards (3 WI Ethics CE) Visit www.piaw.org for print and online registration or call 1-800-261-7429
Member & Non-Member $75
Non Insurance Spouse/Guest $45
Full Name_________________________________________ First Name for Name Tag_____________________________________ Spouse/Guest Full Name ___________________________ First Name for Name Tag_____________________________________ Agency/Company_______________________________________________________________________________________________ Address__________________________________________ City_______________ State_____ Zip____________________________ Phone____________________________________________ Cell or After Hours____________________________________________ Email___________________________________________ WI Ins. License Number________________________________________ Check Payable to PIA, or MC, AMEX, DIS Card #_______________________________________________________ Exp. Date________________________________________ Return to: PIAW, 6401 Odana Rd., Madison, WI 53719 Fax: 608-274-8195 Register online www.piaw.org Confirmation will be emailed upon receipt of registration. No refunds without 10 days notice, substitutions only. 1-800-261-7429 JANUARY 14 19
Time for an E&O
By Curtis M. Pearsall
An important component of errors-and-omissions loss prevention involves continuous improvement. This is an ideal time of year for agencies and their staff to assess the level of their E&O culture and commitment. In some respects, making this assessment is easier said than done. Perhaps a more appropriate way to look at it is whether your agency is a better E&O risk today compared to the same time a year ago. Honesty is critical for this exercise to have any real benefit for the agency and each staff member.
E&O culture is only as strong as its weakest link.
20 JANUARY 14
Many issues factor in to making this determination, including staff education, customer education, enhanced documentation expectations, producer training, file auditing, etc. The overwhelming majority of agencies in a recent industry survey indicated they made a substantial improvement over the previous year. What about your agency? Here are some important areas to help you and your staff assess the E&O culture and current level of commitment.
Does management “walk the walk” and “talk the talk?” An insurance agency’s E&O culture starts with its management and leadership. It is imperative that the staff sees and feels that management is committed to a strong errors-and-omissions culture as this commitment will heavily drive staff behavior. Without this commitment on the part of management, it is doubtful the agency can achieve the desired level of E&O commitment. E&O is a serious issue requiring an “all in” commitment by every staffer – and that starts at the top.
Is each staff member committed to a strong E&O culture? Agencies don’t make mistakes, people do. In many respects, an agency’s E&O culture is only as strong as its weakest link. Does your agency have a weak link? Now is as good a time as any to strengthen your E&O culture by identifying and “fixing” that link. Although producers and CSRs are traditionally the main drivers of E&O claims, virtually everyone in an agency, including the receptionist and claims team, has the potential to cause – and actually are causing – E&O claims.
Does each employee have the necessary technical proficiency? This is a key component for all staff members. After all, your customers count on the staff’s expertise on a wide range of insurance matters. Agency leadership should identify opportunities for technical training for each employee. As you develop 2014 goals for them, include these “education goals” as a part of each person’s annual performance review.
Are your customers more educated today? Many agencies would contend that the best customer is an educated customer. Within the last year, has your agency undertaken or enhanced a campaign to educate customers on various coverages and how these coverages respond? There are many approaches to take, including producing a newsletter to send to customers. How about a weekly “Did You Know?” e-mail blast? This can be effective because shorter messaging has a greater chance of being read. There isn’t a shortage of topics, either. Consider starting with seasonal issues (Valentine’s Day, kids going to college, boating, etc.) and the coverage exposures each presents.
Another useful approach is performing an annual agency review for each customer. This will help customers understand their coverages and may also identify any exposures that are not properly insured. While it may be difficult to have a dedicated conversation with each customer, at least make the offer. Many agencies send every personal lines customer a checklist to review, with the request that the customer contact the agency for further discussion on some possible uninsured exposures.
What’s the quality and timeliness of your file documentation? There are two good rules of thumb for documentation: 1) It should be at a level enabling another staff member to review it and easily identify any issues or open items in the customer’s file. 2) Don’t put anything in a file you wouldn’t want a jury to read. How does your agency file documentation measure up?
Are you auditing the files? To truly assess the E&O culture and commitment of the agency staff – and how well the various agency procedures are being adhered to – review their files and the detail each contains. Develop an audit form addressing the main issues, perform periodic reviews of a pre-determined number of files for each staff member, and then measure the results. This will show the commitment that the agency has toward a strong E&O culture.
How well are you holding your customers responsible for their insurance decisions? Possible approaches include 1) providing options for the customer to consider and requiring the customer to sign off on the coverages and limits selected and rejected, and 2) sending a cover letter with the policy to the customer requesting that the customer review the policy and advise your agency of any questions or problems. Was 2013 a good year in terms of your E&O culture and commitment? Does your staff believe the E&O culture is stronger now? Do a reality check. It might be a great conversation to have at an upcoming staff meeting.
Curtis M. Pearsall, CPCU, AIAF, CPIA President, Pearsall Associates Inc. and Special Consultant to the Utica National E&O Program
JANUARY 14 21
Certified Insurance Service Representative Open to Anyone!
7 WI CE Credits Course #69338
COMMERCIAL CASUALTY II
This course, like Commercial Casualty I, strengthens your ability to have productive, assured interactions with your commercial customers. You will imporve your understanding in each of these areas. • Business Auto Exposures and Coverages • Workers Compensation and Employers Liability Insurance Policy • Commercial Umbrella and Excess Liability Policies
Please note: Those who completed the Insuring Commercial Casualty course (which was available prior to Commercial Casualty I and Commercial Casualty II), may choose either Commercial Casualty I or Commercial Casualty II as part of their five courses to earn the CISR designation, but not both.
$155 Per Course
CLASS SCHEDULE Course Instructor Todd Davis CIC
Instruction 8:00 a.m. – 3:45 p.m. Group Lunch 12:00 p.m. – 12:45 p.m. Optional Exam 4:15 p.m. – 5:15 p.m.
Register at www.piaw.org or call 800-261-7429
AIA Tired PC BACK 11_9_11:AIA 02.10.10 PC BACK 11/16/11 1:35 PM Page 1
Tired of Walking Away from Business? We Can Help!
The Midwest’s Premier Cluster Group
* 100% Retained Ownership * Increased Markets-Over 30 Represented * Knowledgeable Support Staff Commercial Assistance - Placement * Increased and More Stable Contingencies * Comparative Rater Provided * Retain 90% of Commission * Reduced Cost of Applied Management System * Preferred Agency Contracts
Check out our website at www.iaanetwork.com
For more information call Mike Sabourin 866-789-9712
22 JANUARY 14
CISR Elite: The Designation That Grows With Commitment It is now possible for CISRs to keep their commitment to continuing education and earn the highest recognition—CISR Elite. By taking and passing nine CISR courses—in class or online, they will be honored with the prestigious new status. In addition to a well-rounded education, they will be publically recognized at a conferment ceremony and presented with a CISR Elite pin and a special certificate symbolizing their achievement. The National Alliance will provide designees with a news release template and the CISR Elite logo so clients (and prospects) will know they have gone well beyond the minimum continuing education requirements. Obtaining the status of CISR Elite is evidence of commitment to the agency, the client, and the participant’s personal growth. Earning CISR Elite: — represents increased specialized knowledge — increases earning power — enhances professional status — creates more value for your agency or company When the CISR Program was new there were only five courses to choose from to earn the designation. Today, there are nine courses to choose from, allowing participants to focus on Commercial Lines or Personal Lines. In addition to the Personal Auto, Personal Residential, Commercial Property, Commercial Casualty, and Agency Operations courses, the new CISR courses are: — Commercial Casualty II – BAP, WC, Excess Liability — Personal Lines – Miscellaneous — Life & Health Essentials — Elements of Risk Management It takes 5 passed courses to earn the CISR designation and now committed individuals can take it a step higher to earn CISR Elite. By attending annual updates, a current CISR can earn update credit, state CE credit, and credit towards earning CISR Elite. All CISR courses provide practical information about insurance policies and coverages that can be applied immediately. Each is taught by a seasoned faculty member that has been vetted and approved by The National Alliance. They assist participants in understanding every concept. Even if taking the courses online, an online mentor is available to help candidates have the best possible learning experience. For CISRs planning their future career paths, CISR Elite will offer a practical and distinguished choice. For more information call PIA at 1-800-261-7429.
JANUARY 14 23
Attention CICs! Exciting update options. CIC Graduate Ruble Seminar February 18 & 19, 2014 | West Bend Mutual Ins. Co. – West Bend, WI May 13 & 14, 2014 | Marriott Madison West – Middleton, WI 16 WI CE (4 are optional Ethics)
visit www.piaw.org or call PIA at 1-800-261-7429
TESTIMONIAL “The CIC Commercial Property institute was extremely beneficial! I learned a lot of new things and also solidified my knowledge of other topics that were pretty gray when I came in. I always enjoy the courses conducted by the PIAW. Thank you again for awarding me a CIC scholarship. It was very much appreciated!” Kayla Warmka, CISR, CRIS Account Manager, M3 Insurance
Certified Insurance Counselor Each Approved for 20 Wisconsin CE Credits commercial casualty
March 26-28, 2014 Radisson/Oneida Casino – Green Bay, WI 920-494-7300 $99 rate through 3/10/14 includes full breakfast
June 17-19, 2014 Crowne Plaza Miwaukee Airport 414-764-5300 $92 room rate through 5/18/14
• commercial general liability • additional insureds David Viola, CIC • WORKERS COMPENSATION John Dismukes, CIC, CPCU, AAI, AIS • business automobile coverages • excess liability/commercial umbrella coverages • commercial casualty case study David Pauly, CIC, CPCU, ARM, AAI
NEW WI CE Course # 69299
Day One: 8:00 – 5:15
Day Two: 8:00 – 5:00
• commercial PROPERTY COVERAGES & ENDORSEMENTS • COMMERCIAL PROPERTY CAUSES OF LOSS FORMS & ENDORSEMENTS Kevin Amrhein, CIC • COMMERCIAL INLAND MARINE COVERAGES John Dismukes, CIC, CPCU, AAI, AIS • TIME ELEMENT • BUSINESSOWNERS POLICIES • commercial PROPERTY CASE STUDY Catherine Trischan, CIC, CRM, ARM, AAI, AU CRIS, MLIS
WI CE Course # 69300 Day Three: 8:00 – noon, Optional Exam 2:00 – 4:00
$405.00 per institute. Register at www.piaw.org or call 800-261-7429. 24 JANUARY 14
OPPORTUNITY KNOCKS. Join AAA’s Network of Independent Insurance Agents and Enjoy Tremendous Benefits. • AAA brand strength • Competitive commission program • Outstanding contingency program • Innovative co-op advertising resources For even more great reasons to add our powerful brand to your insurance carrier line-up, contact:
Heidi Nienow at 608-828-2614 or hqnienow@AAAWisconsin.com today! Insurance underwritten by Auto Club Insurance Association or Auto Club Group Insurance Company.
JANUARY 14 25
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26 JANUARY 14
ROBERTSON RYAN & ASSOCIATES, INC.
WISCONSIN PIA IS A PROUD SPONSOR OF THE CPIA DESIGNATION PROGRAM The PIA of Wisconsin is a proud sponsor of the Certified Professional Insurance Agent (CPIA) professional designation program. The CPIA designation is comprised of a series of Insurance Success Seminars. These three, one-day workshops teach practical "before", "during", and "after" the sale techniques for insurance producers, sales managers, account managers and company marketing representatives. Participants leave with ideas that will produce increased sales results immediately. In fact, The Insurance Success Seminars are guaranteed: Implement the principles covered in these sessions and experience a 20% increase in personal production within six months, or your registration fee will be refunded! To maintain the CPIA designation: fulfill a bi-annual update by attending one of the core Insurance Success Seminars, an Advanced Insurance Success Seminar, a Pro-to-Pro Retreat, or maintain an active Level 2 or Level 3 membership in the AIMS Society. The CPIA designation is approved by Utica Mutual as part of the premium discount program.
3/12/14 Advanced Commercial Lines Risk Analysis for E&O Loss Prevention - Wauwatosa (7 WI CE) This seminar is open to anyone, approved for the Utica Discount, and a CPIA update option.
The AIMS Society is a national organization dedicated to providing interactive marketing and sales training, ongoing resources and networking opportunities to insurance professionals. www .aimssociety.org You can attend the CPIA courses in any order. No Test. Approved for 7 Wisconsin CE credits. CPIA 1 - Position for Success
CPIA 2 - Implement for Success
CPIA 3 - Sustain Success
During this program, participants are encouraged to focus on internal and external factors affecting the development of effective business development plans. Factors discussed include a review of the state of the insurance marketplace; analysis of competitive pressures; necessary insurance carrier underwriting criteria; and consumer expectations and understanding.
During this session participants will be provided with specific tools for analyzing consumer needs; will learn to utilize risk identification techniques to gather pertinent prospect information; will develop skills necessary to assimilate information gathered into a customized protection program; and will participate in exercises designed to promote effective delivery of proven solutions.
This program focuses on fulfilling the implied promises contained in the insuring agreement. Students will review methods of providing evidence of insurance coverage; will discuss policies and procedures for controlling errors and omissions including policy review and delivery, endorsements, claims-processing, and handling of client complaints. This course includes a review of the Professional Expectations; the Law of Agency; and Legal and Ethical Standards.
CPIA 1 – March 13, 2014 Wisconsin Mutual Insurance Madison, WI
CPIA 2 – August 21, 2014 Radisson Paper Valley Appleton, WI
CPIA 3 – October 9, 2014 Kelmann Restoration Wauwatosa, WI
Course Schedule 8:30 – 4:00 Lunch On Your Own 12:00 – 12:45 Registration Fee per Seminar: Includes Materials, Coffee in the a.m. & Soda in the p.m. PIAW Member $155.00 Non Member $190.00
Register at www.piaw.org or call PIA at 1-800-261-7429 JANUARY 14 27
Life Insurance. . . A Trap for the Unwary by Timothy D. Fenner
It is very common for small insurance agencies to engage in perpetuation/succession planning that may culminate in a number of agreements between various parties.
For example, multiple owners of an agency may enter into a stock redemption agreement, whereby in the event of death, the agency acquires the stock from the deceased stockholder. In addition, there may be instances where agencies procure “key man insurance” upon the lives of certain owners because it simply makes good business sense to do so. In the foregoing instances, the agency is acquiring life insurance upon an individual who also is generally an employee of the agency. For many years, life insurance was one of the very few assets that received preferential treatment for federal income tax purposes. In other words, proceeds were not taxed as ordinary income. However, that changed as a result of amendments to the IRS Code in 2006. At that time, Congress added a new subsection IRC 101(j), which provides that death benefits of employer-owned life insurance contracts issued after August 17, 2006, will be subject to income tax to the extent the death benefit exceeds the sum of premiums and other amounts paid by the policyholder for the insurance contract. That is the general rule. However, death benefit taxation of such policies can be avoided if (i) the notice and consent requirements of the Code are satisfied; and (ii) a safe harbor exemption exists relative to the transaction. Both of these items require explanation. In order to avoid death benefit taxation on business-owned life insurance, the Code requires that certain notice and consent provisions be satisfied prior to issuance of the policy. Specifically, the business (i.e., the agency) must give written notice to the employee indicating (i) an intention to insure the employee’s life; (ii) the maximum face amount of the intended coverage at the time of policy issuance; and (iii) a disclosure that the applicable policyholder (i.e., the employer) will be the beneficiary of any death benefits paid. The employee must then give his/ her written consent, permitting the employer to purchase the policy. The employee’s consent must indicate an awareness of the coverage amount; and the fact that the coverage may extend beyond termination of his/her employment with the employer. Please note that the death benefit may escape income taxation provided (i)
28 JANUARY 14
the notice and consent are satisfied before the policy issuance; (ii) the policy is in fact issued within the shorter of one year beginning on the date the consent was executed or before the termination of the employee’s employment with the employer; and (iii) one of two safe harbors exists. The focus now is on the safe harbor exemptions. The Code provides for two safe harbor exemptions. The first is whether or not the insured is a highly compensated employee at the time that the policy was issued. In situations involving “key man” insurance, the individual invariably satisfies this particular requirement. The second safe harbor applies when the death benefit on the policy is received by a family member or the estate of the insured, as a result of the purchase of the equity interest (i.e., stock) of the deceased in the employer (i.e., the agency). Specifically, the life insurance death benefit
must be used to purchase the equity interest no later than the due date, including any extensions, of the income tax return for the taxable year in which the death benefit is paid. Provided the notice and consent requirements are met and one or more of the safe harbor exemptions apply, the death benefit can remain tax free. As I noted at the beginning of this article, it is routine for agencies to procure life insurance upon owners for purposes of funding buy-sells/redemptions, as well as for key man purposes. For those agencies that are doing so, it is essential that they be aware of the potential taxability of those proceeds for income tax purposes; and take the necessary steps to fit within the exemptions. Otherwise, proceeds will be taxable; and the amount of the tax thereon could very well limit the implementation of the plan of succession/perpetuation.
PIA of Wisconsin
AGENCY American Insurance Group LLC Delafield, WI Bossert Insurance Group LLC Mineral Point, WI Central Insurance Services, Inc. Mauston, WI Choice Insurance Group LLC West Allis, WI Demming Noel Agency, Inc. New London, WI
Evolution Agency Portage, WI
Schmitz Insurance Services, Inc. Kenosha, WI
Goebel Insurance & Financial Inc. Fond du Lac, WI
Soodsma Insurance Agency LLC Manitowoc, WI
Keener Insurance Solutions Germantown, WI
Townsend’s Rite Choice Ins. Services LLC Pulaski, WI
Martinson Inc. Racine, WI Patri Insurance Agency, LLC Manawa, WI
TU Todos Unidos Agencia LLC Milwauke, WI
JANUARY 14 29
2014 Ethics & Hot Topics Seminars Anyone Can Attend! All Approved for the Utica Premium Discount!
4 Credit CE Day: $65 PIA Member / $90 Non Member 8 Credit CE Day: $155 (includes lunch) The full days, also known as William T. Hold Seminars, are an approved CISR update option. No dues required. John Dismukes CIC, CPCU, AAI, AIS
Patti Gardner CIC, CRM, CPCU
Todd Davis CIC
march 25 Radisson – Green Bay Ethics & Legal Considerations (John Dismukes) 4 WI Ethics CE – course # 61059
1:00 – 4:45 p.m.
May 15 Cranberry Country Lodge – Tomah Certificates of Insurance & Additional Insureds, Workers Compensation, Ethics (John Dismukes) 7 WI CE, 3 of 7 Ethics – new course #s
8:00 – 4:00 p.m.
Holiday Inn – Rothschild Certificates of Insurance & Additional Insureds, Workers Compensation, Ethics (Patti Gardner) 7 WI CE, 3 of 7 Ethics – new course #s
8:00 – 4:00 p.m.
1:00 – 4:45 p.m.
Holiday Inn – Fond du Lac
Ethical Standards (Todd Davis) 4 WI Ethics CE, course # 65902 Brookfield Suites – Brookfield Certificates of Insurance & Additional Insureds, Workers Compensation, Ethics (John Dismukes) 7 WI CE, 3 of 7 Ethics – new course #s
8:00 – 4:00 p.m.
$155 per course. Register at www.piaw.org or call 1-800-261-7429
30 JANUARY 14
To many people spend money they haven't earned, to buy things they don't want, to impress people they don't like. —Will Smith
Help Build Your Familyâ€™s Financial Future With
PIA Trust Insurance Plans INSURANCE PLANS DESIGNED WITH LOCAL AGENTS IN MIND As a PIA Member* serving Main Street America, you and your employees have access to a variety of highquality, competitively priced insurance plans. Plans available include: > Basic Term Life** > Voluntary Term Life > Dependent Term Life > Hospital Indemnity > Long Term Disability > Short Term Disability > Business Overhead Expense > Accidental Death & Dismemberment
PIA SERVICES GROUP INSURANCE FUND
*PIA National membership, when required, must be current at all times. **Only available if 100% employer paid and if the employer and 100% of the employees enroll. No medical underwriting necessary up to guaranteed issue limits.
For additional information about PIA Trust Insurance Plans, please contact your local PIA Affiliate or call the Plan Administrator at 1-800-336-4759. Additional information is also available on-line at www.piatrust.com. Policies or provisions may vary or be unavailable in some states. Policies have exclusions or limitations which may affect any benefits payable. Underwritten by Unimerica Insurance Company, Portland, ME. Administered by Lockton Risk Services.
JANUARY 14 31
Choose 5 of 9 to improve your 9 to 5. CISR EDUCATION FOR INSURANCE & RISK MANAGEMENT PROFESSIONALS
It still takes 5 courses to earn a CISR designation but now you have the flexibility of 9 course options. This allows you to focus on what’s important to you. We understand not everyone learns the same way or even at the same pace, so we offer courses in the classroom, online and in-house. Find out how CISR can improve your 9 to 5. Call or visit us on the web today.
• • • • • • • • •
Commercial Casualty I Commercial Casualty II Insuring Commercial Property Insuring Personal Auto Exposures Insuring Personal Residential Property Personal Lines Miscellaneous Agency Operations Elements of Risk Management Life & Health Essentials
www.piaw.org 1-800-261-7429 32 JANUARY 14
We Can Help!
The Midwest’s Premier Cluster Group
* 100% Retained Ownership * Increased Markets-Over 30 Represented * Knowledgeable Support Staff Commercial Assistance - Placement * Increased and More Stable Contingencies * Comparative Rater Provided * Retain 90% of Commission * Reduced Cost of Applied Management System * Preferred Agency Contracts
Check out our website at www.iaanetwork.com
For more information call Mike Sabourin 866-789-9712
O n -L i n e E d u c a t i o n
Open to Anyone & Everyone
On-Line educatiOn OppOrtunities thrOugh ! piaW For The NewFEmployee o r T h e(MERG) N e w– no E CE mployee (MERG) - NO CE
New Agency • Employee N e w A g e n Orientation cy Employee Orientation • D e l i vService ering Quality Service Delivering Quality • P eCoverage r s o n a l L i nBasics es Coverage Basics Personal Lines • C o m m e r c i a l L es Coverage Basics Commercial Lines Coveragei nBasics
• Pre-Licensing I n s u r a n c e , S e c u r i t i e s
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• Insurance Willia m T. Hold Se min a r s – 4 WI C E
• • • •
•• V aSecurities riety of 12 Topics
F l oWilliam o d – T.4Hold W ISeminars C E – 4 WI CE • Variety of Topics Ethics – 4 WI CE Flood – 4 WI CE CIS O Approved nLine – 8 WI CE • R NFIP
• Commercial Casualty I •Ethics C o m –m4e WI r c iCE al Casualty II • Elements of Risk Management L i f e –& 8 HWIe aCEl t h E s s e n t i a l s CISR•OnLine • Insuring Commercial Property • Insuring • I n s uPersonal r a n c e P eResidential r s o n a l R e sProperty idential Property • Insuring • I n s uPersonal r i n g P e r Auto s o n a lExposures Auto Exposures • Insuring • P e r sCommercial o n a l L i n e s Property Miscellaneous • A g e n c y O p e r a t i o ns • Insuring Commercial Casualty Exposures • W Agency Operations ebinars (Insurance Community Center) • 2-4 WI CE, No Exam
For more information and registration visit www.piaw.org or call (800) 261•7429. MARCH 12 21
JANUARY 14 33
Investing in yourself is the best investment you can make.
34 JANUARY 14
Yourself. . . Add Value to You by Walt Grassl
Karl and Bob were good friends when they attended college. After they graduated from college, life happened and they slowly lost contact. They reconnected at their 20 year reunion. They were working for similarly sized companies, graduated with nearly identical GPAs and had the same work ethic. However, for some reason, Karl was two levels higher in his organization than Bob.
At lunch a month later, Karl mentioned he had attended a
1 – Investing in yourself helps you
training seminar in Dallas the past weekend. Bob lamented
Investments come in the form of both time and money. You can invest in your mind by going to the library and getting a book to read to educate yourself in any area of improvement. This costs time, not money. You can attend training events that require an investment of time and money. You can invest in your health by investing 30 minutes a day to go for a walk. You can invest by hiring a personal trainer or joining a gym.
that, with the downturn in the economy, his company cut back on training, and he hasn’t been to a seminar in years. Karl shared that his company had cut back on training as well but that he paid for the training himself. Bob looked at Karl with a puzzled expression and said he didn’t understand how someone would pay for training out of his own pocket. It was an expense he couldn’t afford and besides, if the company didn’t pay for it, it must not be too important. Karl challenged Bob to think again. Karl explained that since
When you enrich yourself, you can feel yourself grow and will feel better about yourself. It contributes to your happiness.
he started with his company, he has always taken additional training that he paid for himself. He didn’t look at it as an
2 – Investing in yourself helps those you touch
expense, but as an investment in himself.
When you enrich yourself through your investments of time and money, you improve your relationships with others. Taking time to help others is not only an opportunity to be generous and giving with your time, it is almost always an opportunity to learn and grow, if you are present and “in the moment.” You may learn new information, gain new insights into how people behave, or develop new relationships. If I help you solve a problem with a spreadsheet at work, I will usually learn something as we figure it out. Instead of, “I have to help you out,” I get to help you out and learn. Our
Karl has the right attitude about investing in yourself. Your talent is your best asset. It can’t be taxed; it can’t be confiscated. You can take it with you, wherever you go. When you invest your time and money to improve yourself and learn new things, it is not an expense – it is the best investment you can make. Karl proceeded to explain to Bob the four benefits from investing in yourself:
[continued on page 36] JANUARY 14 35
Invest In Yourself . . . [continued from page 35] relationship improves, as does my knowledge base. Your investing helps your ability to teach others. You can share what you learn and bring value to others. You become an expert in your “tribe.”
3 – Investing in yourself helps your career When you invest in yourself it helps your career in two significant ways. It increases your value to your employer because your skillset grows. Maybe more importantly, it increases your earning potential over your peers, who only receive the company funded training. This translates into you becoming a more valuable asset and deserving of increased responsibility, resulting in increases in job titles and compensation.
an investment, not an expense. Your breadth of knowledge will help you develop new ideas for your business and will increase your chances of financial success. Bob realized that, had he not been trying to get better on the cheap, his career might very well have advanced more like Karl’s. With another 20 years left in his career, he vowed to see personal training as an investment in himself, rather than as an expense.
Invest in yourself; Add Value to You Learning doesn’t stop with your formal education. Continue to read, take classes and invest in your talents. Your talent is your best asset. It is portable and it can’t be taxed or confiscated. Investing in yourself is the best investment you can make.
4 – Investing in yourself helps your business Should you choose, or be forced, to become an entrepreneur, the asset that is your talent is transferrable. When you invest in yourself, your understanding of your corporate business environment improves. You are better positioned to run your own business. You not only know what you know, but more important, you know more of what you don’t know and will have the mindset to hire people to help you, rather than try to carry the entire load yourself. You will see hiring help as
Walt Grassl conquered his crippling fear of public speaking at the age of 50, and through his Internet radio show, “Stand Up and Speak Up,” he is determined to help others do the same. Walt’s accomplishments include success in Toastmasters International speech contests, performing standup comedy at the Hollywood Improv and the Flamingo in Las Vegas. He is also the author of the book “Stand Up and Speak Up”. For more information on Walt Grassl, please visit WaltGrassl.com
PEOPLE WHO EARNED THIS ALSO EARNED MORE
30,900 MORE OF THESE
If you’re looking to jump start a new career or make more with the one you are in, education is your best investment. Now, more than ever, it is important to invest in your greatest assets—yourself and your people. According to The National Alliance Producer Profile, commercial lines producers with the Certified Insurance Counselor (CIC) designation earn 30% more than those without the designation. To learn more about the CIC Program, call or visit us on the web.
The most successful training programs for insurance professionals
36 JANUARY 14
Register at www.piaw.org or call 1-800-261-7429
JANUARY 14 37
PROFESSIONAL INSURANCE AGENTS OF WISCONSIN, INC. OFFICERS
Mr. Jeff J. Glass, President A.F. Glass Insurance Agency PO Box 1149 Lake Geneva, WI 53147 Phone 262-248-5555 Fax 262-248-5544 email@example.com
Mr. Thomas Budzisz BWO Insurance Group, LLC 2111 E. Rawson Ave. Oak Creek, WI 53154 Phone 414-768-8100 Fax 414-768-8110 firstname.lastname@example.org
Ms. LouAnn Herriges, CIC, CISR Vice President Anderson's Insurance Associates 17500 W. Liberty Lane New Berlin, WI 53151 Phone 262-789-8500 Fax 262-754-6038 email@example.com
Ms. Jodi Cordes, CIC, CRM RC Insurance Services, Inc. 1320 Walnut Ridge Dr. Ste. 200 Hartland, WI 53029 Phone 262-367-8611 Fax 262-367-8529 JCordes@rcinsure.com
Mr. Rick Clements, LUTCF, MDRT Treasurer Clements Ins. Agency, Inc. 317 N. 6th St. Wausau, WI 54402 Phone 715-842-1664 Fax 715-848-3337 firstname.lastname@example.org
Mr. Matt Cranney, CIC M3 Insurance Solutions, Inc. 3133 W Beltline Hwy Madison, WI 53713 Phone 608-273-0655 Fax 608-273-7783 email@example.com Mr. John W. Klinzing, CIC Affiliated Ins. Agencies of WI, LLC 3830 Atwood Ave. Madison, WI 53714 Phone 608-310-3924 Fax 608-441-8787 firstname.lastname@example.org
Mr. Trey Neher, CIC, CISR THZ Insurance Group 420 E. Northland Ave. Appleton, WI 54911 Phone 920-730-0123 Fax 920-833-6870 email@example.com Ms. Tracy A. Oestreich CIC, AU, CPIA Anderson Ins. Associates, Inc. W177N9856 Rivercrest Dr., Ste. 215 Germantown, WI 53022 Phone 262-789-8500 Fax 262-754-6038 firstname.lastname@example.org
Ronald Von Haden, CIC Executive Vice President email@example.com Darcy Brown Member Benefits Coordinator firstname.lastname@example.org Heather Falk, CISR Bookkeeping email@example.com Mandy Penn Administrative Assistant firstname.lastname@example.org Becca Prestbroten Special Project Coordinator email@example.com Brenda Steinbach Education & Convention Director firstname.lastname@example.org
WINTER GET-AWAY Minocqua (9 WI CE, 3 of 9 Ethics)
CISR ELEMENTS OF RISK MANAGEMENT Rothschild, Brookfield (7 WI CE)
CIC RUBLE GRADUATE SEMINAR West Bend (16 WI CE, 4 of 16 are optional Ethics)
ADVANCED COMMERCIAL LINES ANALYSIS FOR E&O PREVENTION Wauwatosa (7 WI CE)
CPIA 1 Madison (7 WI CE)
CISR COMMERCIAL CASUALTY 2 Madison (7 WI CE)
CIC LIFE & HEALTH Middleton (20 WI CE)
38 JANUARY 14
Ms. Kathy M. Mulder Nolan Insurance Agency LLC PO Box 238 Brandon, WI 53919 Phone 920-346-2241 Fax 920-346-5600 email@example.com
STAFF PIA of Wisconsin, Inc. 6401 Odana Road Madison WI 53719 Phone: 608-274-8188 Toll Free: 800-261-7429 Fax: 608-274-8195 Toll Free Fax: 866-203-7461 www.piaw.org
Mr. Brian MacGillis, CPIA Secretary MacGillis Agency, Inc. W3934 County Highway H PO Box 100 Fredonia, WI 53021-0100 Phone 262-790-0000 Fax 262-790-0004 firstname.lastname@example.org
Mr. Dennis Kuhnke, CIC, CPIA PIAW National Director Jack C. Loyda & Associates, Ltd. 4414 N. Oakland Ave. Shorewood, WI 53211 Phone 414-332-5150 Fax 414-332-7267 email@example.com
25 ETHICS Green Bay (4 WI Ethics CE) 26-28
CIC COMMERCIAL CASUALTY Green Bay (20 WI CE)
CISR PERSONAL LINES MISCELLANEOUS Brookfield, Madison (7 WI CE)
CIC RUBLE GRADUATE SEMINAR Middleton (16 WI CE, 4 of 16 are optional Ethics)
Hot Topic/William T. Hold Tomah (7 WI CE, 3 of 7 are Ethics)
CISR PERSONAL RESIDENTIAL Green Bay, Brookfield (7 WI CE)
CIC COMMERCIAL PROPERTY Milwaukee (20 WI CE)
HOT TOPIC/WILLIAM T. HOLD Rothschild (7 WI CE, 3 of the 7 are Ethics)
DYNAMICS OF SERVICE Fond du Lac (7 WI CE)
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Professional Insurance Agents of Wisconsin, Inc. 6401 Odana Road • Madison, WI 53719 (608) 274-8188 • (800) 261-PIAW • FAX (608) 274-8195 • TOLL FREE FAX: (866) 203-7461 www.piaw.org
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