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May 2014

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Five Reasons Your Customers Should Be Protected By New Mexico Mutual



Created by New Mexicans for New Mexicans, we understand the diverse operations of our state’s workforce. By placing business with our company, premium dollars stay in New Mexico. We are an A-(Excellent) A.M. Best Rated company and take ownership of providing New Mexico businesses cost-effective workers’ compensation coverage.

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Our tagline, coverage @ work, states our purpose. We protect businesses as well as employees. We ensure that your customers’ business investments are protected from the costs of an accidental injury and provide programs and services to keep their employees safe at work and rehabilitate those who may suffer a workplace injury.

EXCELLENT CUSTOMER SERVICE We distinguish ourselves from the competition by providing the highest standard of customer service. We are a local company that understands the state and your customers’ specific needs, not a faceless 800 number. We are committed to service excellence and our local team of safety and claims professionals know how to take care of injured workers and provide useful and practical information to keep workplaces safe. Our website, which includes safety videos (streaming or checkout), Pay My Bill, File a Claim and many other features, is another valuable resource available to all employers and their employees.


New Mexico Mutual works to ensure that New Mexico continues to be a good place to do business by monitoring legislative and regulatory bodies throughout the year. We are an industry leader in collecting and providing workers’ compensation data to the state of New Mexico. We represent our clients and their employees in Santa Fe by advocating legislation that protects businesses and workers, while keeping the cost of workers’ compensation insurance to a minimum.



New Mexico Mutual is recognized as one of the most ethical companies in New Mexico and we’ve earned that designation by being forthright and respecting the relationships we’ve built with our agents, policyholders and injured workers. We have fair processes for employees and employers that are all handled locally. We are financially strong and can be trusted to back your customers when they need us most.

New Mexico’s Experts in Workers’ Compensation Insurance

“La Voz” is the official monthly e-publication of the

Independent Insurance Agents of NM 1511 University Blvd. NE Albuquerque, NM 87102. (505) 843-7231. Fax (505) 243-3367. Web site This publication is intended to provide accurate and authoritative information on the subject matter covered, but is distributed with the understanding that neither IIANM, nor any contributing author, publisher, contributor or advertiser is rendering legal, accounting or any other professional service and assume no liability whatsoever in connection with its use. Further, the electronic links to our advertisers and/ or contributors found in this publication are provided as a courtesy to our readers and do not necessarily indicate an endorsement by IIANM. News items from members of Independent Insurance Agents of New Mexico and the general insurance industry are encouraged. The advertising deadline is the fifteenth day of the month, preceding publication. Advertising rates are available upon request. Please contact Rachel Sheffield at for details

IIANM Staff President/CEO Thom Turbett Chief Strategy Officer Marit Peters VP of Member Services Consuelo Trujillo Insurance Programs Administrator Suzie Dodds, CIC Communications Director Rachel Sheffield Member Services Associate Renee Trujillo

2013-2014 Officers Chair Diana Hobbs Vice-Chair Gabe Portillo


Independent Insurance Agents of New Mexico




On the Cover:

Celebrating 80 Years in New Mexico

This month’s iconic New Mexico locale: The Karl G. Jansky Very Large Array

The VLA is a radio astronomy observatory located between the towns of Magdalena and Datil, some 50 miles (80 km) west of Socorro, New Mexico. Astronomers using the VLA have made key observations of black holes and protoplanetary disks around young stars, discovered magnetic filaments and traced complex gas motions at the Milky Way’s center, probed the Universe’s cosmological parameters, and provided new knowledge about the physical mechanisms that produce radio emission. The observatory consists of 27 independent antennae, each of which has a dish diameter of 25 meters (82 feet) and weighs 209 metric tons (230 Short tons).

Features IIANM’s Southern Educational Seminar Registration


Down With Pigs & Geckos! 06 Long-Term Challenge 09 Big “I” Responds to HHS on Navigators


What is a “WindStorm”? 13 NextGen Isotopes Game 15 P&C Insurers Hit Profit Mark Not Seen Before Recession


2014 Wine & Wishes 20 The Most Important Lessons I’ve Learned About Selling for a Living


Hiring Quality Producers 22

In Every Issue IIANM 2014 Company Partners! 04 Tech Talk 16 March’s Clickable Calendar 26 Odds n Ends 27

Advertiser Index Acuity 10 Burns & Wilcox Back Cover

Secretary/Treasurer Connie Sevier

Litchfield Special Risks


National Director Sam Conlee

Molina Healthcare 14

Immediate Past Chair PJ Wolff

New Mexico Mutual 02

Market Finders, Inc. 12 Mountain States Insurance Group


Trustco / HCIT 11

These carriers have partnered with our association to support the vitality of the independent agent system in New Mexico. Take a moment to visit their new page on our site and take advantage of their varied products and services. Independent agents have the freedom to choose!

15 hours of continuing education for insurance professionals



CE Seminar

/ 5/21/14

Choose a morning class: Commercial Lines Coverage Gaps Jeff Straight, CIC,LUTCF, AAI

Obama Care in the Insurance Agency / NMHIX Update Patty Padon, CIC, LUTCF, AAI

Ethics Townhall Luncheon

11:30am - 1:00pm

Choose an afternoon class:

IIANM’s Annual Southern Seminar


What is a Co-op? / ACA Update

Jeff Straight, CIC, LUTCF, AAI

Patty Padon, CIC, LUTCF, AAI



Las Cruces Convention Center

/ 5/22/14

Choose a morning class:

May 21 & 22

Personal Lines Coverage Gaps Jeff Straight, CIC,LUTCF, AAI

Best Practices: Keys to Remaining Independent Part 1 Marit Peters

Choose an afternoon class: Certificates of Insurance & Additional Insureds Jeff Straight, CIC,LUTCF, AAI

Best Practices: Keys to Remaining Independent Part 2 Marit Peters

Full Seminar (15 CE hrs): Member: $200 / Nonmember: $240 One Full Day (8 CE hrs): Member: $105 / Nonmember: $140 One Half Day (AM 4 CE hrs / PM 3 CE hrs): Member: $70 / Nonmember: $75 Ethics Only (1 CE hrs): Member: $35 / Nonmember: $45 May 2014

(Be sure to log-in in order to receive member pricing!)

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Down with pigs and geckos!: Trusted Choice urges smart insurance picks in new ads By, Lewis Lazare* Does the independent insurance agent matter? The thousands of agents who comprise the Trusted Choice nationwide network of independent agents sure think so. And collectively, they have turned to the Marc USA ad shop in Chicago to develop a new ad campaign to address that point. The key line repeated in several print executions that are the centerpiece of the new marketing effort asks the crucial question: "Is your insurance agent free to get you a better deal?" The campaign tagline is "Free To Do What's Right For You." The ad campaign's message is visually reinforced through images that rather emphatically suggest many agents may in fact not be in a position to get a better deal for their clients. In one execution, for instance, an insurance agent is seen chained to his desk chair with a huge ship anchor added to the mix just to make sure the point is made that this particularly sorry broker has his hands bound and tied. Of course, Trusted Choice's aggressive new ads are in large part a response to an insurance company marketing landscape that has changed dramatically over the past 10 years. Geico, in particular, began spending huge sums on advertising to raise its profile and distinguish itself from the intense competition via the use of wacky pigs and geckos and all sorts of other amusing characters. The tactic forced every other major insurer, including Allstate and State Farm, to up their game as well to remain competitive.

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Now Trusted Choice is trying to use a forceful, but straightforward approach to grab consumers' attention. Noted Cari Bucci, Marc USA Chicago office general manager: "Collectively, Trusted Choice is the largest insurance brand in the country. With this massive national network now banding together under a common brand, they have the potential to be more powerful than any of the other high-spending brands in the category." Of course, it's going to take a lot of firepower to pull focus from those geckos and pigs and mayhem and other schtick now used by an array of insurers. Trusted Choice, however, apparently recognizes what it's facing. Added Trusted Choice President Robert Rusbuldt: "Our network might be the underdog when it comes to media spending, but by banding together we can grow market share." Trusted Choice includes more than 27,000 independent insurance agency locations nationwide. The network is supported by 70 insurance companies. *Reprinted from the Chicago Business Journal (This is an independent, unbiased source commenting on the effectiveness of these new marketing efforts. If you’re interested in learning more, please contact Thom at 505-999-5806 or

May 2014

May 2014

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LIFE-HEALTH Reprinted from IA Magazine by, Dave Evans, certified financial planner & an IA contributor.

Long-Term Challenge Long-term care insurance is an intuitive product for clients

the needing the coverage—that in the future, clients will be

who want to protect assets and control their care in retire-

able to rely on their LTCi policy to meet a financial need.

ment. But independent agents often find that LTCi proves a

And many people have accepted rate increases or modified

very challenging sale.

their policy, lowering the payout but keeping the premium increase within their budget.

The reasons vary from cost to misconceptions about how the product works. Recently, substantial class premium

In response to marketplace increases, carriers have intro-

increases have disillusioned many comsumers.

duced more hybrid policies that combine life insurance and annuities with LTC riders, allowing the policyholder to tap

In fairness to the carriers, the prolonged, abnormally low

the policy in a tax-efficient way. Sales of these products

interest rates have made it difficult to generate adequate

are expected to increase, and agents should stay tuned to

investment returns to meet the long-term tail of claims. In

monitor the evolution for their clients.

turn, a number of carriers exited the market while others increase their rates: five out of 10 of the largest LTCi carriers

Because women tend to live longer than men and there-

in 2010 are no longer writing LTCi. Going back a decade,

fore file the lion’s share of LTCi claims, many carriers have

almost 100 carriers were active in the LTCi marketplace—

increased rates for single women in the last 12 months.

but now only about a dozen major carriers are still writing policies.

Nationally, premiums for policies for single women will rise 12% in 2014, while rates for single men will decline more

A major factor has involved the assumed “lapse” rate, which

than 14%, according to a recent price index from the Ameri-

has been lower than some carriers expected. Many insur-

can Association for Long Term Care Insurance (AALTCI).

ers predicted that 5–7% of people who bought LTCi would

This year, a 55-year-old single woman will pay an average

cancel their policies each year without tapping their ben-

of $1,225 annually for the same level of benefits available

efits. Instead, actuaries report the annual cancellation rate

to a single man at just $925.

has been less than 2%. PricewaterhouseCoopers estimates initial premiums would have been about 35% higher if insur-

The AALTCI also reports, however, that 70–80% of LTCi

ers had assumed such a low cancellation rate.

policies are bought by couples, whose rates will only increase 3%.

It’s difficult to explain to a client that the carrier assumed more people would drop their coverage prior to incurring a

- See more at:

claim. That message essentially contradicts the premise of


May 2014

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For All That Matters

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May 2014

Big “I” Responds to HHS on Navigators

and overseen,” says Charles Symington, Big “I” senior vice

Association supports state consumer protection efforts.

ly, the recently released draft rule would undo much of the

The Independent Insurance Agents & Brokers of America

are properly regulated and consumers are protected.”

president for external and government affairs. “Unfortunategood work done at the state level to ensure these entities

(IIABA or the Big “I”) has submitted official written comments to the U.S. Dept. of Health and Human Services

In its officially submitted comments, the Big “I” expresses

(HHS) on the recently proposed federal regulations regard-

serious concerns over many aspects of the proposed rule.

ing navigators and similar assisters under the Affordable

The association sees the draft regulations as chipping away

Care Act (ACA).

at state authority to enforce consumer protection laws, and at the same time expanding the duties of navigators and

The HHS draft regulations were released as part of a larger

similar entities.

rule and were written largely in reaction to many states putting in place their own consumer protection laws and

“If the regulations are approved without changes, it will

regulations related to navigators and similar assisters.

likely prove to be a dangerous mix for many insurance

Past HHS rules properly allowed states broad authority to

consumers who could be harmed by bad advice from an

oversee these entities, but the new regulations unjustifiably

individual operating within one of these programs and left

reverse course and restrict states regulatory power.

with no financial recourse,” says Ryan Young, Big “I” senior director of federal government affairs. “We will continue to

“Since passage of the ACA, the Big ‘I’ has viewed these

advocate in defense of allowing states to enact and enforce

programs as having the potential to create serious consum-

consumer protection laws.”

er protection issues and has favored efforts to ensure navigators and similar entities will be properly licensed, trained

The Big “I” comments are available HERE.

Representing some of the most financially strong and innovative insurance companies in the specialty marketplace


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Virtual University’s Ask an Expert

What is a “windstorm”? ulty

VU Fac

Most named perils property policies cover "windstorm." Note that this doesn't say "wind," but rather "windSTORM." So the question is, what constitutes a windstorm? This issue recently arose in an auto claim, but the peril is the same as that under homeowners and commercial property policies.

"We have an insured that reported an auto loss. He is a farmer and his truck was parked at the farm. On that day we had high winds, but no storms. A bale feeder located on the farm was blown into the side of the truck, denting the vehicle. The feeder bounced off and the wind grabbed hold of it again and it slid down the side of the truck, scratching the vehicle and knocking off the mirror. We turned the claim into the insurer as a comprehensive loss using windstorm as the cause of loss. "I received a fax from the adjuster denying this claim as a comprehensive loss,saying that it should be paid as a collision loss for the following reason. The insurer defines a windstorm as 60-70 mph documented wind speeds. Our investigation of this loss revealed documented wind speeds of up to 30 mph. These speeds do not meet the insurer's windstorm definition. "I called the adjuster back on the phone and explained that the ISO form shows that a windstorm is considered an Other Than Collision loss and that they could not make up their own definition of what a windstorm was to determine whether to pay a loss under comprehensive or collsion. The adjuster was holding her ground and I have asked for her supervisor to call me back but as of yet have heard nothing. In the meantime I wanted to get your opinion." FACULTY RESPONSE 1. A 30 mile an hour wind won't move a large piece of farm equipment. 2. Wind speeds aren't constant over a large area. 3. Ask the adjuster to determine the wind velocity to move the equipment. FACULTY RESPONSE Unless the insurance policy has its own contractual definition of windstorm or a precise definition of collision and other than collision that is different from the ISO form, I do not see how one can be made up after a loss. You may find, in coastal areas, that some residual or excess market policies may define this term, but ISO and most company forms do not. FACULTY RESPONSE If the insurer has defined the term, why didn't they include it in their contract? If the policy does not define windstorm with a certain velocity of wind, the insurer cannot retrospectively add one. FACULTY RESPONSE The policy does not define windstorm, so we turn to dictionaries. I looked at a half dozen dictionaries and none of them agreed on a precise definition. Therefore, the term is ambiguous and a "windstorm" is whatever the insured reasonably thinks one is. Click here to view more responses. Please note that you will have to log-in in order to view. Contact Rachel if you need help with your log-in.

May 2014

FACULTY RESPONSE Dictionary definitions: • A storm with heavy wind but little or no precipitation. • A storm with high winds or violent gusts but little or no rain. • A storm consisting of violent winds. • A storm marked by high wind with little or no precipitation. None of these attach a speed to the wind. If the insurer says a “windstorm” involves winds in excess of 60 mph, why don’t they simply put that in the policy? The dictionaries say a “windstorm” is one with winds that are “heavy,” “high,” or “violent.” I’d say if winds caused damage, they were “heavy,” “high,” or “violent.” FACULTY RESPONSE If you asked any property adjuster in America if a hurricane was a “windstorm,” he or she would say “yes.” That’s not even being argued in all of the Katrina claims. However, if you look at dictionary definitions of “windstorm,” they most often say it’s a storm “with little or no precipitation.” Well, we know that hurricanes include HUGE amounts of precipitation. Therefore, if you look at the dictionary definitions of “windstorm,” they wouldn’t include hurricanes and, without special causes of loss (“all risk”) coverage, named perils policies would provide little or no coverage. Obviously that’s not the case, so I believe this makes the term “windstorm” ambiguous. As such, any reasonable interpretation of the insured should trigger coverage.

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• Large Provider Network • Comprehensive and Preventive Dental Services • Vision Exams and Eyewear • Transportation • Over-the-Counter Medications and Supplies • Strong Compensation Plan • Renewal Commissions • Competitive Plan • Market Year Round to Dual Eligible Customers

If you have a New Mexico Life and Health License, contact us to learn more. Please contact: Broker Support Unit (866) 440-9788



Thank you NextGen members, for coming out with your families and enjoying the day with us!

May 2014

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Steve by, Steve Anderson (Always feel free to email me with comments, new ideas or products that have worked for you. I will check them out and spread the word!)

Using Electronic Signatures in Your Agency In today’s world, technology is making everything easier, more efficient, and less expensive. Unfortunately, one area where technology efficiency has not impacted the insurance industry is in the active use of electronic signatures. This is unfortunate, as significant productivity gains and expense reductions can be achieved by the widespread use of electronic signatures for most insurance transactions. While many agencies have heard of electronic signatures, many questions still remain. Is a digital signature truly legal? Will it hold up in court? Are cloud-based digital signatures secure? What choices do I have for e-signing documents?

Workflow improvement Consider how a simple agency workflow - getting an application signed - could be improved with an electronic signature process. The basic workflow steps would look like this: • Agency staff inputs application information into the agency management system. • The ACORD application is generated by the system and is probably printed as an electronic PDF file. • The electronic application is sent as an email attachment to the client for signature. • The client physically prints out a copy of the applications and signs with a pen. They then scan the application and email it back to the agency. • Agency staff receives the signed application, forwards it to the insurance company for processing, and attaches the document to the client file. Consider how much easier this process would be, and how much time and expense would be saved, if an electronic signature process was involved: • Agency staff inputs application information into the

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agency management system. • The ACORD application is generated by the system, attached to an email, and sent to the policyholder for their signature. • The client receives the email and opens the document. They electronically sign the document and immediately send it back to the agency. • Agency staff receives the electronically signed application, forwards it to the insurance company for processing, and attaches the document to the client file. When you add up the time savings and multiply that by the number of documents sent daily that require a signature, significant productivity and expense reduction can be achieved.

Are electronic signatures legal? It all started in the 1980s when many companies began sending documents via fax machines. Although the real signature was on the paper, the signature’s image was transmitted electronically. Courts in different jurisdictions made a decision that electronic signatures can be enforced. This way, agreements can be performed with the use of email. President Clinton signed the ESIGN Act into law in 2000. ESIGN, short for the Electronic Signatures in Global and National Commerce Act, legalized the validity of digital signatures on contracts and other legal documents. The law says that a contract signed in digital form cannot be legally denied simply because it is in digital form. Basically, ESIGN says your electronic signature is just as valid as a paper signature. While some states have their own laws when it comes to digital signatures, the Federal law governs interstate commerce. In addition, many states have adopted The Uniform Electronic Transactions Act (UETA) proposed by the National Conference of Commissioners on Uniform State Laws (NCCUSL). Forty-seven states, the District of Columbia, Puerto

May 2014

Rico, and the U.S. Virgin Islands have adopted it into their own laws. Its overarching purpose is to bring into line the differing state laws over such areas as retention of paper records (checks in particular), and the validity of electronic signatures, thereby supporting the validity of electronic contracts as a viable medium of agreement. UETA allows e-signatures to be covered in legal documents in all states but New York, Washington state, and Illinois, in which UETA is not yet acknowledged. No matter your state, however, electronic signatures are becoming much more commonplace. UETA has its own requirements, some of which include: • The signature must be logically associated with the document. • Both parties must have agreed to conduct the transaction via electronic means. • If the sender inhibits the receiver’s ability to either store or print the record, the document is not enforceable against that recipient. UETA also specifies that if a law exists that requires a signature, an electronic signature will satisfy that requirement. This gives signers the confidence of knowing a digitally signed document is as legally valid as a document signed the old-fashioned way. Big “I” members receive exclusive discounted pricing from the industry’s #1 esigniture solution, DocuSign. Click here for more information.

Delivering a “WOW” Experience During the Claims Process I recently received an email from an agent asking about how his agency can do a better job of following up on claims. He was involved in a car accident and, in his opinion, Geico and Progressive handled it better than his own carrier. He wanted to know what systems were available to him as an agent to be able to communicate better and follow up regarding a claim. My answer… An insurance policy is simply a promise to our clients to “make them whole” and get them back to the same place they were prior to an accident. A claim situation allows us to deliver on that promise when a claim occurs. Geico and Progressive understand that a key part of “good service” during a claim is communication. There are several activities any agency can create and build into a process that will help clients have a great claims experience—as well as others involved in the accident. Here are a few ideas: Website information Create a “how to file a claim” page on your website, and make sure the link is prominently displayed on your home page. You want to make it as easy as possible for people who have just had an accident to find your guide on the next steps they need to take. This information should

May 2014

include a listing of all the insurance companies you represent and their claims contact information. This information should include their 800-number as well as the direct website link for submitting a client online. Mobile app An increasing number of agencies are developing their own branded iOS (Apple) and Android mobile applications. The insurance company contact information included on your website should also be included within this app. You can also include a checklist of next steps so your client knows exactly what they need to do next. Claims kit As soon as agency personnel learn that a claim has been reported - either because the client called the agency directly or you received notification from the insurance company - you should mail your client your “claims kit.” This can be as simple as a brochure that includes a section for writing down the claim number, adjuster information, and “what to expect next” information. Follow-up Creating a follow-up system that allows you to stay in touch with your client during the claims process is key to a satisfied client. Too many agents take the initial claim and then never follow up with the client to help them through the claims process. Following is an example of a follow-up process: • Claim kit mailed the same day claim is reported. • Phone call (or email) one day later to touch base with the client to see if they have any questions. • Email two days later to make sure they have been contacted by the insurance company adjuster. Ask them to call the agency if they have any problems or questions. • Five days later, staff checks with the insurance company to determine the status of the claim. • Once the claim is completed and closed, follow up with your client - either by phone or email - to make sure the claim has been settled to their satisfaction. The key to making this actually happen for each and every claim is to create a process supported by a system. There are a number of options for systems that will help support this process. Some include: • The most basic system might well be a simple written checklist template that details the steps the assigned staff person will take for each claim. They then check off each step after it has been completed. • Your existing agency management system may have the capability to allow you to create a sequence of steps that are automatically completed. • There are a number of email management systems that do allow you to create sequential emails that are processed on the specific time-frame you establish. A few of the more popular include: AWeber, Constant Contact, iContact, and Emma. The key to delivering superior customer service during the claims process is communication. Creating a system to manage the communications steps allows the agency to deliver a consistent—and positive—customer experience.

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P&C insurers hit profit mark not seen before recession Property/casualty insurers in the US hit a profit milestone the industry hasn’t seen since before the 2008 financial crisis. According to a Verisk Analytics/Property Casualty Insurers of America (PCIAA) report, US carriers’ net income after taxes reached $63.8 billion in 2013 - up from $35.1 billion in 2012. Carriers’ overall profitability also jumped from 6.1% to 10.3%, as measured by their rate of return on average policyholders’ surplus. That’s the biggest rate of return since 2007, when insurers hit the 12.4% mark. The figures account for at least 96% of all business written by private P&C insurers in the US, Verisk and PCI said.

by, Insurance Business

Indeed, direct insured losses from catastrophes in 2013 fell by $22.1 billion to $12.9 billion, noted Insurance Information Institute President Robert Hartwig. “Last year’s catastrophe losses were far below the 10-yearaverage annual catastrophe losses of $23.9 billion,” Hartwig said. “The largest catastrophe event of 2013 was an EF-5 tornado that struck Moore, Oklahoma on May 20, causing nearly $2 billion in insured damages.” Hartwig does see the P&C industry’s good fortune continuing to grow, however. Thanks to strong showings in auto, home and major commercial lines, “overall industry growth could outpace overall economic growth in 2014, as was the case in the prior two years,” he said.

According to Robert Gordon, PCI senior vice president for policy development and research, the 2013 results signal a market whose players are “strong, well capitalized, and well prepared” to meet future claims demands.

The report reflects an insurance industry starting to make great strides after suffering a major blow during the 2008 financial crisis and resulting recession. Producers themselves are making great strides, as a March Bureau of Labor Statistics puts agent/broker employment just 2,400 jobs shy of the sector’s pre-recession peak of 684,500.

However, Gordon cautioned that much of insurers’ great success last year was due to a low level of catastrophic losses. As such, “insurers will need to keep on building their financial resources to protect policyholders and bolster economic resiliency before the next major event like Hurricane Katrina or the September 11 terrorist attack occurs.”

“The economy is continuing to grow, so there’s more demand for insurance and as long as agents and brokers play a constructive role in helping those who need it get insurance, I think companies will continue to employ them in increasing numbers,” commented III economist Steven Weisbart.

Free E&O Loss Control Credit Seminar July 23 - IIANM Building This seminar looks at E&O risk management from the agency perspective. It addresses the fundamentals of reducing the E&O exposures of today’s ever changing agency operations including:



• Understanding duties owed to both carriers and customers • Reviewing the most frequent E&O claims using real-life examples • Agency defenses such as documentation, disclaimers & consistent procedures • Exploring exposures within the agency’s daily operations • Issues with certificates of insurance • Considerations of social media • Limiting exposures to data breaches Loss Control Credit Through completion of this course by appropriate agency staff members, IIANM members with E&O coverage through Swiss Re/Westport or Fireman’s Fund may qualify for a 10% premium credit upon renewal, good for three policy periods assuming the agency remains claim-free. For details, contact Suzie Dodds, CIC at (505) 999-5802 or


We stand tall above the rest. Mountain States has been at the top of the local insurance landscape for more than 75 years. We stand behind you and your clients, offering not only stability and rock solid experience, but also a variety of products -all the things you, as an agent, count on to protect your clients’ businesses.

The Mountain Stands Behind You. Albuquerque, New Mexico 505.764.1400

Long House Bandelier National Monument

May 2014

New Mexico

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An evening of fine wine, food, fundraising and entertainment!

10 W Were ishes Gran ted!

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May 2014

The Most Important Lessons I’ve Learned about Selling for a Living . . . After 26+ years as a successful salesperson, here is what I know to be true about sales.

Lesson #1: If you’re looking for 9 to 5 and safety and security, sales is not for you.

Sales really is the hardest high paying work or the easiest low paying work. Top salespeople are extremely hard workers, they get in early, stay late, and most work the weekends. While it’s true that well-established salespeople sometimes cut back a bit on their hours and weekends, when needed, they are still able to call upon a great work ethic and put in the extra hours. Top salespeople go above and beyond, they answer their phones off-hours, and they are always ready to respond at a moment’s notice. In addition to putting in extra hours, working outside of “normal” hours, and working extremely hard, top salespeople are able to take the ups and downs of a sales career. They are experts at overcoming adversity and pros at controlling their emotions. They realize that sales is not for the feeble or faint-of-heart. They know you need to keep your mental edge at all times and you must learn to use everything to your advantage.

Lesson #2: Successful salespeople always find a way

to succeed.

Have you ever noticed that the most successful salespeople are always successful regardless of how bad the economy, the market, or anything else seems to be? Have you also noticed that unsuccessful and mediocre salespeople are always, at best, average no matter how good things are? 90% of your brain, the subconscious, is super creative. Successful salespeople use the creative brain to come up with resourceful ways to increase business, get through hurdles, and overall, become more successful. Unsuccessful and mediocre salespeople use the creative brain to find ways to look busy, waste time, and otherwise avoid the hard work necessary for success. They clean their desk, do paperwork in the middle of the day, or schedule doctor appointments and other personal items during prime calling times. This is the same theory behind why the rich get richer and the poor get poorer.

Lesson #3: Sales success or failure comes down to you. This ties in with #2. Successful salespeople know that if you do the proper amount of the right activities during the day, you will be successful, if you don’t, you won’t. This of course assumes that you have a decent product and

May 2014

by John Chapin

work for a reputable company. If that is the case, and you still fail, you have no one to blame but yourself. It’s not the economy, your upbringing, or the bad break you got 15 years ago. Many others have had it much worse than you and have been successful; the top salespeople understand that you and you alone are responsible for your success or lack thereof.

Lesson #4:

You need to have a burning desire to succeed.

Successful salespeople know what they want for themselves and their families, they have a plan to get there, and they will either win or die trying. They do not allow for anything other than success. You can see it in their eyes, hear it in their voice, and sense it in the way they carry themselves. There is an overwhelming confidence that they will achieve the outcome they desire and they do so time after time. Top salespeople know that you can have it all and you don’t have to sell your soul to get it, but you do occasionally have to go through hell.

Lesson #5: You are the parent of an 18 year old… and the 18 year old is you. Any parent of an 18 year old knows how tough it can be to get them to do some things. Well, when it comes to sales, you are your own 18 year old. Top salespeople are selfstarters and have the self-discipline to govern themselves and get themselves to do what must be done every day. They realize that in sales you are self employed and that if you make the sales, you’ll stick around, if you don’t make the sales, you’ll be gone. The bottom line is: if you need someone standing over you to make sure you are doing what you have to do, you’re in the wrong business. Top salespeople have the drive and motivation to push themselves extremely hard even when they’re all alone.

Lesson #6:

You always have to be learning and improving.

Top salespeople know that you can never know it all. There are always new techniques, new technology, and new ideas that are being created every day. Top salespeople stay up on changes in the industry, keep abreast of the latest sales ideas, and constantly look for ways to stay positive and motivated. They are always looking for ways to develop themselves personally and professionally. Top salespeople get that there is no neutral or standing still, you’re either getting better and moving forward, or losing your edge and moving backward. They know that school is never out and there is always more to be learned.

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A simple and obvious solution to many, likely most, agencies’ growth issues is to hire a quality producer. As proven by the 70%-80% failure rate, the solution is much easier said than done. However, hiring quality producers is not as hard as it often seems if agencies follow these rules. By the way, these rules are based on my clients’ actual, repeatable success. These rules are not theory based.

by Chris Burand

Hiring Quality Producers 1.

Identify the dead wood. Quality producers do not want to work with a bunch of retired-in-place producers and owners clipping coupons. Just think about it from their perspective. Can you see a really good producer saying, “I can’t wait to get to work to sell lots of insurance while all my coworkers sit around not making any sales! What an invigorating place! The competition is energizing! Even better, I am making all the sales while the owners rest on their renewals. I just love making everyone else rich!” Good producers want to work in agencies where everyone is pulling their own weight, where other producers are good and generate competition. Good producers want to work in an agency that is growing. Agencies supporting dead wood don’t grow.


Create a real sales culture. To create a sales culture, first eliminate the dead wood. While hiring quality producers is easier said than done, firing dead wood or invigorating them is even more difficult to do for most agency owners. I do not know what else to write about this point. Firing people is rarely easy but for what it is worth, I have never seen a producer fired who did not benefit by the firing. To the best of my knowledge, they have all found a better job that fits their personalities better thereby reducing stress and increasing happiness. I have even seen many return to the agency and thank the owner for firing them because they knew they needed to leave but they did not have the inner strength to leave.

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If an agency owner cannot fire deadwood, he or she cannot build a true sales culture. Building a sales culture with deadwood producers is like attempting to build a house with twigs as the foundation. A real sales culture is based on accountability. The producers not only have to make sales, but more importantly, they are held accountable for all the activities that eventually lead to sales. In this manner, the sales culture is built and managed daily rather than just measured once a month or more honestly as usually happens, annually. Try it! You’ll like it!


Test. The best test for producers is the SPQ Gold test from Behavioral Sciences. This test is good on many levels but what has been interesting to me is the fear and apprehension that flashes across the face of so many agency owners when I describe the test. They know they would “fail” the test, which creates an emotional bind. They have to hire someone that is better than they are at selling. One of the key secrets to why producers fail 70%-80% of the time is that a large proportion of agency owners are not good producers and if someone is not a good producer, they typically do not like to hire good producers. Good producers are intimidating and ego busting. Good producers can even be grating. My clients who climb this emotional mountain successfully typically do so using the same technique: They separate their emotions from what is best for the agency. Again, easier said than done and hard to do on one’s own. A sup-

May 2014

port system is likely required. Asking for help is actually key to successfully hiring producers. Asking for help is a sign of strength, not a weakness.


Owners should not be involved in ANY initial interviews. When agencies advertise for producers, they list all the desired qualities. However, I have never seen an advertisement that lists the most important quality to owners. That quality is the agency owner must think the producer is a “good guy” or a “good girl.” That quality is a huge reason so many producers fail. Do you want a producer that is a “good guy” and can’t sell or a producer that may or may not be a “good guy” but can sell? Owners have a tendency to fall in love with every producer they interview, so stay out of it. Let just about anyone else do the initial interviews.


Develop and manage. Did you notice that the first four steps do not involve planning or contracts or training or anything else? If you just follow the first four steps, your odds of successfully hiring a quality producer will increase dramatically. If you want to maximize your odds of success, create clear producer development and management plans. These are two different plans, and considerable detail is required. If you’ve never done this previously, these plans are nearly impossible to create on one’s own. Hire producer development and training specialists. Once these five steps are in place, the search can begin. Don’t begin the search first. These are not easy steps. Frankly, most agency owners are not capable of steps 1, 2, 4, or 5 combined. Many agency owners are simply not emotionally capable of taking these steps and many are not emotionally capable of delegating these steps either. The pain of delegating the hiring to people who are better equipped to hire successfully is often the most painful part of the solution.

Chris Burand is president of Burand & Associates, LLC, an insurance agency consulting firm. Readers may contact Chris at (719) 4853868 or by e-mail at NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

NextGEN members are New Mexico’s Future of the Insurance Industry! • Enhance your leadership and business strategy skills to grow your career. • Gain expertise and knowledge in the insurance field to better serve your clients. • Develop cutting edge digital marketing and sales strategies to build your book of business. Visit our page for more information and to apply.

Delegation feels like abdication of personal responsibilities. Yet delegation is really leadership. Being a leader, and a leader is the decision maker who does what is right for the agency rather than making the emotionally easy answer for the owner, is what really makes the difference in finding and hiring quality producers.

May 2014

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Advise clients on data breach risk management and cyber liability insurance - and practice what you preach.

By Russ Banham

The theft or loss of employee and customer personally identifiable information is a rising liability for small and medium size enterprises. Hackers are increasingly targeting SMEs, knowing these businesses have a storehouse or personal information but are less likely than larger organizations to secure it.

But what about a very specific type of SME independent insurance agencies? Few orgaizations possess the breadth of customer insormation in their databases and through their routine correspondence with carriers than an insurance agency. While agents advise clients on data breach risk management protocols and the purchase of firstparty and third-party cyber liability insurance, the question is are they drinking their own Kool-Aid?

Locking Up Shop

Many agencies indeed are following the same prudent steps they advise clients. When it comes to the cyber liabilities confronting small and midsize concerns, insurance agencies by and large are on top of the issue. “This is one of the major programs that Agents Council for Technology (ACT) gets involved in,” says Jeffrey Yates, retired executive director of the Agents Council for Technology at the Big “I.” “We understood from the beginning that all the other efficiencies that agencies strive for, such as real-time marketing on the Internet, would be blown out of the water if there was a security breach. This is an essential part of what we do.” ACT assembled a working group of agents to develop best practices for data security, culminating in a prototype agency security plan (it’s available to all Big “I” members at The organization also has developed with carriers and vendors user-friendly ways to secure email and websites, and it regularly sponsors webinars on the subject of agency security. Apparently, these messages are getting through to agents who understand business hazards posed by a security leak. 73% of 2,100 SMEs in a survey by Symantec experienced a cyber attack. Of these, 30% cited the attacks as “somewhat or extremely effective.” Just how vulnerable are agencies to a data breach? Of 761 data breaches investigated by the U.S. Secret Service and Verizon Communications Inc.’s forensics analysis unit, 482 of them (63%) occurred at companies with 100 or fewer employees, a metric that describes many agencies. Don’t expect hackers to give up either. “As more agencies use mobile

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devices,” Yates says, “their cyber risks are proliferating.” Rules and Regulations Approximately 46 states currently have laws on the books regarding the notification of individuals whose personally identifiable information has been stolen or lost. Aside from these state data breach laws, agencies also are subject to federal laws like the Health Insurance Portability and Accountability Act (HIPAA) and the Gramm-Leach-Bliley Act, each requiring that specific actions be taken to protect consumers’ non-public personal information. Massachusetts has passed the nation’s stiffest data security law. It applies to any entity interacting with residents in situations where the exchange of personal data may have occurred. The law states, “all persons that own, license, store or maintain personal information about a resident” of Massachusetts are subject to the regulation. Thus, an agent in California who sells an insurance policy online to someone in Massachusetts, and in the course of this transaction receives and stores the person’s identifiable information, is in for a harsh surprise if this data is stolen or lost. How harsh? The regulation (201 CMR 17.00) requires the business, well in advance of a potential data breach, to assemble a written plan explaining the steps it is taking to protect personally identifiable information it stores electronically or on paper. This plan must be routinely audited. The law further requires that email containing “personal information” be sent in an encrypted manner. This would include, for example, personal information submitted by an agent on a commercial lines application. Moreover, the law requires that personal information contained

May 2014

on laptops and mobile devices be encrypted because of the higher risk that these devices will be lost or stolen. Now, if personal data is indeed lost, leaked or stolen, potentially serious consequences await. Massachusetts General Law, Chapter 93A, Section 4, authorizes the attorney general to seek injunctive relief, which may involve a court-imposed $5,000 civil penalty per violation. That’s just one person’s personally identifiable information; the potentially crushing damages in a breach involving hundreds of affected people give serious pause for consideration. Then, there are the legal defense costs if an action is brought against the entity, not to mention the dire risk of reputational harm if the public becomes aware of the incident. Even a business not specifically subject to 201 CMR 17.00 may incur significant defense and settlement costs, if, for instance, the plaintiff attorney contends that Massachusetts’ personal information security law is effectively the standard of care for safeguarding private data. Other possible costs include the need to notify affected parties of the breach and provide credit-monitoring services to assess if the individuals’ bank accounts and credit cards have been violated. In cases of a comprehensive breach, the business may need to hire a network security expert to determine the technological causes of the breach, and a crisis management firm to handle the public relations fallout. Steven J. Aronson, president of Aronson Insurance, is especially cognizant of the Massachusetts law, given the agency’s two locations in Needham and Newton in the state. Aronson recently was asked by the Big “I” and the Massachusetts Association of Insurance Agents to assess the law’s impact on the agency system, in order to train agents to ensure effective compliance. “There is no need for an agency to research each state’s data privacy laws, since if you just follow the law here you will be in pretty good shape,” Aronson says. “It’s the most onerous one out there.” In his own agency, Aronson has made great strides securing his customers’ and employees’ personally identifiable information. “Most people forget that technology is not the only way for a criminal to get at this stuff,” he says. “The first thing I advise is to lock the windows and doors, and install a central station burglar alarm. You’d be amazed at how easy it is to steal a server or a drawer’s worth of files.” He adds, “Of course, this is just the first step.” Serious Stuff Many agents like Stan Burnett take the threat of a data breach seriously. “We were an early adopter of technology, purchasing an imaging system that was connected to our servers about 14 years ago,” says Burnette, president of Burnette Insurance Services in Suwanee, Ga. “Within a week, the firewall was hit with thousands of hackings. We were scared to death. Then, someone hacked into the computers and destroyed our database - didn’t steal the data, just blew it up. That’s when we realized we needed help.” The agency brought in MIS Solutions, a managed services provider also based in Suwanee. MIS beefed up the fire-

May 2014

walls, layered in a range of different passwords for employees to ensure they perused only those files specifically related to their work, and policed the flow of information from customers though the agency to carriers. For instance, when the agency receives a client’s payroll census for workers compensation, the employees’ personally identifiable information is deleted so all that remains is the actual dollar figures of the claim. More recently, the agency implemented a decoder in mobile devices like smartphones and laptops that secures remote communications outside the agency’s firewalls. “The device changes the code every 30 seconds,” Burnette notes. “Users carry a little fob to get the code of the minute; otherwise they can’t log on.” Despite these best practices, Liam Holmes, CEO of MIS Solutions, says hackers remain undeterred in their quests. “I just ran a report last month and there were 32,000 unauthorized attempts to penetrate the firewall (at Burnette),” he explains. “None of them got through.” Some agencies have determined the risk of a data breach requires internal assistance from IT specialists (ACT advises that all agencies consider the appointment of a data security coordinator to develop and implement the agency’s security program). At Eustis Insurance & Benefits, Keith Oufnac is that person. “Our biggest problem is security,” says Oufnac, vice president of information technology at the New Orleans-based agency. Among the best practices Oufnac has implemented is secure email. All email is downloaded and filtered by Postini, an email security and archiving service now owned by Google. The Postini Communicative messages between business partners, such as an agency and a carrier. “We do this to protect everyone, since everyone is vulnerable to social engineering scams,” says Eufnac. Insurance Just In Case Each of the agencies in this article does something else besides implement data security and risk management best practices - they buy cyber liability insurance. “In today’s world, you simply must have it,” says Eufnac. “I bought the coverage last year,” Burnette agrees. “Our E&O carrier offered it as an extension to the policy we had. We’re selling a lot of network security and privacy coverage to our customers, and I felt we just had to have it too.” Aronson notes that his E&O carrier didn’t start offering the coverage until recently, but as soon as it became available he jumped on it. ACT warns that E&O carriers aren’t just giving away the coverage for the heck of it. “There is now coverage in many cases for a data breach, but it is often predicated on the agency having a written security plan, secure email and website, and other best practices in play. Risk management first, and then insurance: good sense for all

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May 2014

Clickable Calendar

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22 Specialized Insurance & Bonds





L&H Pre-Licensing Exam Review




14 P&C Pre-Licensing Exam Review





Other Commercial Insurance (AAI82B)

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Insurance Production Environment (AAI83B)

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IIANM’s Job Bank Attention hiring managers, students or insurance professionals. View available job listings and descriptions or post your resume for prospective employers. We will be encouraging university’s to use this resource for job placement and will need agencies and companies to be actively posting job opportunities as they become available. Click here to take advantage of IIANM’s Job Bank.

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May 2014

ODDS andends We’re in love with our cell phones The movie Her, in which the character played by Joaquin Phoenix falls in love with the voice of his smartphone, may be more realistic than you thought. Surveys cited by the Your Tango website have found that 50 percent of women would more willingly give up sex for a month than break up with their cell phone. Also: Seventy-two percent of Americans are no farther than five feet from their phones most of the time, 33 percent admit to using their phones during dates, and about 20 percent of young adults have used their phones while being intimate.

Cut your electric bill in the summer months Summer will be here before you know it, along with the hum of the air conditioner cooling your house while draining money from your wallet. How do you keep your energy bill from skyrocketing? Here are some suggestions: • Look toward the light. Switch to dimmers: They can save about 50 percent over standard light switches. Replace your incandescent bulbs with fluorescent light. And don’t forget to turn off lights if you’re going to leave a room for more than 10 minutes. • Invest in ceiling fans. You could cut cooling costs by up to 80 percent if you use them instead of running the air conditioner constantly. Using them in conjunction with an air conditioner lets you raise the thermostat between 2 and 6 degrees. Every degree can save 4-8 percent on cooling costs. • Lower the temperature of your water heater. Most folks have them set at 140 degrees. Water will still be hot if you lower the temp to 110 or 120 degrees. Another trick: Drain a few gallons of water from the tank every month. Sediment can gather, which makes the heating element work harder.

May 2014

Going to college online is growing in bandwidth Going to a classroom to learn is so 20th century. Online learning is the hot new thing, according to a study by the Sloan Consortium. In the fall of 2012, for example, more than 7.1 million college students took at least one online course, an increase of about 411,000 over the previous year. These days, almost 33 percent of college students are taking at least one online course. Between fall 2002 and fall 2012, the number of students enrolled in online classes rose 6.1 percent, while the number enrolled in standard, in-person college courses climbed only 2.5 percent. Professors and administrators seem to support the trend. The study found that over 74 percent of academic leaders consider online courses equivalent to, or even better than, traditional teaching, and 66 percent say that virtual classes leading to college degrees are essential elements in their schools’ longterm strategy.

How wonderful it is that nobody need wait a single moment before starting to improve the world. ~Anne Frank

Surprising facts about the world’s biggest brands: • Pepsi got its name from the digestive enzyme pepsin. • One in 10 Europeans are conceived on an Ikea bed, according to the New Yorker • Apple’s iPad retina display is manufactured by Samsung • The first item to appear on a McDonald’s menu was actually a hotdog • Google was originally called “BackRub”. • Facebook blue design is due to Mark Zuckerberg’s red/green color blindness. • Bottles of DaSani are actually purified tap water. "• Yahoo" is an acronym for "Yet Another Hierarchical Officious Oracle” • Coca-Cola’s famous red and white logo is recognized by 94% of the world’s population. • Walmart averages a profit of $1.8 million every hour.

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