New Website Feature - Policyholder Corner To better serve our policyholders, we have developed a new website feature called “Policy Corner.� It is available via the Employers tab of the website and requires employer log-in. This self service area provides access to more detailed policy information, such as policy documents, billing transactions, account statements and claims summaries. Please note that agents have access to the same policyholder information through the CompQuick system. Please share this exciting new self service feature with our policyholders and encourage access for their policy service needs. While there, free safety services are also just a click away!
NewMexicoMutual.com > Employers > Policy Corner *An employer log-in will be required to utilize these new features.
“La Voz” is the official monthly e-publication of the
a L
Independent Insurance Agents of NM 1511 University Blvd. NE Albuquerque, NM 87102. (505) 843-7231. Fax (505) 243-3367. Web site www.iianm.org. 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.
Features
o VZ
"The Voice" of Independent Agents since 1934
IIANM’s 2013 Company Partners 04 Workers Aren’t Ready for Healthcare Reform
05
32nd Annual WCA of New Mexico Conference
06
Reading Contracts
07
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.
Charity Golf Tournament Cancelled
08
Save the Date for Convention
08
Are Your Clients Saving Enough to Retire?
11
Advertising rates are available upon request.
Auto Insurers Raise Rates to Keep Pace With Increase in Severity
15
Is Online Marketing Working for Your Agency?
17
BOP Pricing Continues Upswing
19
Four Keys to Building Your Insurance Business
20
Maintaing Policies Locally & Emailing Policies to Clients
22
Beefing Up the Agents Role in Detecting Jewelery Insurance Fraud
24
Please contact Rachel Sheffield at rachel@iianm.org for details
IIANM Staff President/CEO Thom Turbett Chief Strategy Officer Marit Peters VP of Member Services Consuelo Trujillo VP of Insurance Programs Julie A. Franchini Communications Director Rachel Sheffield
In Every Issue Tech Talk
12
May's Clickable Calendar
28
Odds n Ends
29
Member Services Associate Renee Trujillo
2012-2013 Officers Chair PJ Wolff
Advertiser Index Acuity Burns & Wilcox
14
Back Cover
Litchfield Special Risks
21
Vice-Chair Diana Hobbs
Lovelace Health Plan
10
Secretary/Treasurer Gabe Portillo
Market Finders, Inc.
18
Mountain States Insurance Group
National Director Sam Conlee Immediate Past Chair Scott Jones
16
New Mexico Mutual
02
Philadelphia Insurance Companies
09
Trustco
09
The companies listed below have made a commitment to support the strongest agents' association in New Mexco. In turn, as members, please show your thanks by utilizing their varied products and services!
Become a Partner! We invite companies to experience the networking, recruiting and branding opportunities presented by becoming an IIANM Corporate Partner. Our Associate's Partnership Program puts supporters front and center in a meaningful and memorable fashion. Click here for more info!
Workers Aren't Ready For National health reform and cost-cutting by employers is changing the way many workers get health insurance, but a majority of employees may not understand what's ahead.
T
he Aflac WorkForces Report, the insurer's third annual employee benefits study, polled 5,299 employees across the country and found that three-fourths said they'd never heard the phrase "consumer-driven health care." That's a problem. Consumer-driven health care is the direction the nation is moving. It's the underlying concept that requires individuals to take more control over their health care spending. "It may be referred to as 'consumer-driven heatlh care,' but in actuality, consumers aren't the ones driving these changes, so it's no surprise that many feel unprepared," said Audrey Boone Tillman, executive vice president of corporate services at Aflac. There's another problem. The survey found that more than half of the workers polled said they preferred not to have greater control over their health insurance options. Fiftyfour percent said they don't have the time or knowledge to manage the responsibility. How will workers learn to navigate the world of health care and insurance choices? Seventy-five percent said they expected their employers to educate them about the details of reform. There's another problem. Only 13 percent of the 1,884 "benefits decision-makers" in organizations, who were reached in a companion poll, said they thought educating employees about health care reform was "important" to their organizations. At least most employees realize they're not ready. About half said they fear they'll leave their families less protected if they make poor insurance plan choices. The poll emphasized the education challenges as employers shift away from their health care benefits. One-third of the employees polled said they weren't knowledgeable about health savings accounts; three-fourths said they weren't knowledgeable about the impending federal or state health insurance exchanges; half said they weren't knowledgeable about health reimbursement accounts, and one-fourth said they weren't knowledgeable about flexible spending accounts.
By Diane Stafford, The Kansas City Star McClatchy-Tribune Information Services
All of those are benefits options for employers to subsidize employee health care in different ways, or exit health benefits entirely. "It's time for consumers to face reality," Tillman said. "The responsibility lies in the hands of consumers to educate themselves."
Healthcare MAYDAY! The term ‘mayday’ has two different meanings to most Americans. Anyone who watches old war movies will recognize it as an international distress call (from the French venez m’aider, meaning ‘come help me’). Of course, it is also the traditional name for today (May 1st) on our calendars. Exactly eight months from today, on January 1st, 2014, the Affordable Healthcare Act (ACA or ‘Obamacare’) will kick in. It is becoming increasingly obvious to us that almost no one is ready for the massive changes we will all experience. Not insurance brokers. Not business owners. Not employees. Not trade associations. Not labor unions. Before everyone starts shouting “mayday!” (the distress call), you should know that IIANM has a plan. Beginning today (‘May Day’ the date), we have two different seminars ready to go. One is a CE approved 3 hour presentation for insurance brokers that will get you up to speed on ACA and the New Mexico Health Insurance Exchange (NMHIX). The second is a one hour presentation for business groups, labor unions, clients, employees, etc., that will educate them on how the ACA will work and how it is likely to affect them. We are partnering with New Mexico Health Connections, the new Co-Op healthcare plan and IIANM Silver Partner, to present these seminars. Both presentations are taught by insurance broker and healthcare expert Patty Padon, and we will send her anywhere in the state for our member agencies if the participation numbers are sufficient (we ask for a minimum number of 25 in attendance). If you have an interest in booking a seminar, please give Consuelo Trujillo a call at the association office (505-999-5805).
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Page 5
32nd Annual WCA of 32nd Annual WCA of New Mexico Conference New Mexico Conference May 15-17, 2013 May 15-17,Hard 2013Rock Albuquerque Albuquerque Hard Rock Hotel & Casino Hotel & Casino
10 10 Continuing Continuing Education Education Credits Credits have have been been approved approved for for this this conference! conference! The Workers’ Compensation Association of New Mexico will host its The Workers’ Compensation Association of New Mexico will host its 32nd Annual Conference May 15-17, 2013, at the Albuquerque Hard Rock 32nd Annual Conference May 15-17, 2013, at the Albuquerque Hard Rock Hotel & Casino, the perfect venue for this year’s theme, Hotel & Casino, the perfect venue for this year’s theme,
“Rock ‘n Roll: Back Stage Pass to Workers’ Comp!” “Rock ‘n Roll: Back Stage Pass to Workers’ Comp!” The conference features nationally known “The Passing Zone,” The conference features nationally known “The Passing Zone,” juggling act as the keynote to kick off the conference. juggling act as the keynote to kick off the conference.
Visit www.wcaofnm.com or contact Michael Zambrano at 505-724-3201 Visit www.wcaofnm.com or contact Michael Zambrano at 505-724-3201 for conference registration information for conference registration information
http://www.passingzone.com/ http://www.passingzone.com/
Reading Contracts I am fairly certain very few agency owners got into the business so they could read all the various contracts that go with the business. Many prefer to simply sign their contracts without even reading them. While an agency owner may not know the law and may not enjoy reading the contracts, this is a responsibility that goes with the job. Just ignoring them is a recipe for eventual pain and misery. Firms spend a lot of money and time having a contract written and usually the party paying to have a contract written pays to have some biases included to protect themselves. So to sign a contract without reading and understanding it is quite similar to putting a sign around your neck saying, "Please take advantage of me! Pretty please!" Here are some examples: 1. Obviously the most important contracts are an agency’s company contracts. There is a lot to read and many of these contracts definitely include one-sided clauses. The argument I get is, "Why bother reading the contract? I can't get anything changed!" If you don’t ask, you definitely don’t get anything changed. Moreover though, if a company takes advantage of you, what are you going to claim? You signed the contract and never asked for a change. At least go on the record requesting contractual improvements. For example, some contracts are silent about whether companies can contact your clients. They may memorialize that you own your list, but if they can contact your clients, the value of your ownership may decline precipitously. This point is not theoretical as numerous agencies have painfully discovered. Another example is how companies want agencies to not send them certificates of insurance, so most do not. This is not wise without getting a hold harmless from the carriers. 2. Another example is website developers and marketing consultants. With these firms, the agency usually signs a contract holding the firm effectively harmless from errors and omissions (E&O) claims incurred by the agency related to the advertising developed. Most of the agency advertising developed by these firms that I've seen, especially websites, has initially been a billboard advertising to every ambulance chaser, "Sue me, please!" The claims made are highly unlikely to be supported by the agency. The fact is if you advertise you’re going to do something, you better do it. Making the situation worse is these are usually multi-year contracts so an agency can find itself paying these firms even after it no longer can use the advertising. 3. Some of the most problematic contracts involve IT
By Chris Burand issues. I recently read a contract that stated if the data provider caused a virus or introduced spyware, etc., the agency agreed to hold the data provider harmless. The clause was horrible. However, the data was important and the agency needed it. At least they read it and did take precautions. I know dozens of other agencies that have signed the same contract but they never read it. So now they are just sitting ducks because they do not know they signed a contract holding the data provider harmless for any damage the provider causes. Even if the agency protests and does not negotiate a change, they could have made significant efforts to build better cyber protections. Given how intense the IT relationship can be, cyber liability definitely increases and warrants either a better contract and/or loss control. 4. Another IT type issue involves record retention. This is a huge issue today, bigger than ever before due to changes in laws, regulations, and agencies' increasing use of electronic files and data transmission. Furthermore, I find most agency owners do not know that electronic files make a plaintiff's case 1,000 percent easier to pursue. Discovery is easier because it is so much easier to search electronic files than paper files. This makes record retention and specifically, consistent record retention more important than ever before. And yet a huge proportion of agencies have signed contracts with agency management system providers that do not allow agencies to purge data, even when a layman’s reading reveals that certain laws clearly require record destruction. This is not just an E&O issue (although it definitely can be). It is a legal issue. These are critical, high risks issues, so it pays to hire a good attorney to review an agency's contracts before signing them. If you or your attorney needs context, hire someone who works in the industry and who sees lots of contracts. On the other hand, if you enjoy messy legal battles and gambling your agency's future, kind of like the people who like playing Russian roulette, then keep on signing those contracts without reading them!
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Page 7
Charity Golf Tournament Cancelled Some of you may have noticed that we are not advertising for our annual IIANM/ New Mexico Mutual Scholarship Golf Tournament this May. Since this is a charity tournament, it is structured as a 501 c-3 charity under the tax code, and as such is run by an independent board of directors comprised of IIANM and New Mexico Mutual staff members. Recently the board met and made the decision to discontinue the annual golf tournament as a fundraising event. Over the years, the number of charity golf tournaments has increased dramatically. With the increased competition for players, it has become increasingly difficult to draw the number of golfers necessary to maintain tournament profitability. It’s hard to believe, but even insurance people have a limited amount of time and money they can devote to such events! In addition, it has been more difficult to identify qualified candidates for the program and many of our scholarship winners have not collected on their full benefits. As a result, the Board for the scholarship program has taken a
look at the by-laws to see how we can benefit more individuals seeking higher education while promoting the perpetuation of our industry. Long story short‌it became obvious that we could become a much more effective charity by reorganizing our fundraising efforts and scholarship targets. Since 1995, we have raised roughly $400,000 and awarded $300,000 in scholarship grants. We believe we can raise even more money by moving away from a single fundraising event, and moving toward more of a year-round foundation structure.
It is exciting to know that our insurance community has been steadfastly committed to raising funds each year toward higher education in New Mexico. As we re-design this program, we will be communicating our goals and a new approach for fundraising. This will be a featured item at our 2013 Convention. We appreciate your on-going support as we make this happen, and we believe that everyone will be better served by the end product.
Save the Date!
Page 8
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Over 100 Speciality Niches, Exceptional Service, Rock Solid Financials...
Why Not Put PHLY to Work for You! Philadelphia Insurance Companies (PHLY) designs, markets, and underwrites Commercial Property & Casualty and Professional Liability insurance products tailored for the unique exposures of niche markets, providing competitively priced policies, local service relationships, and differentiated coverage features. As a member of the Tokio Marine Group, we are part of one of the most financially solid organizations in the world, with total assets of nearly $200 billion.* Innovative coverages, state-of-the-art service, stable pricing, rock solid financials... What more can you offer to your customers? Why not put PHLY to work for you! Some of the products offered by PHLY are as follows: • Amateur and Professional Sports • Sports Camps and Leagues • Private, Academic and Vocational Schools
• Religious Organizations/Churches • Non-Profit and Social Services • Cyber Security
800.873.4552 PHLY.com Philadelphia Insurance Companies is the marketing name for the insurance company subsidiaries of the Philadelphia Consolidated Holding Corp., a Member of the Tokio Marine Group.Coverage(s) described may not be available in all states and are subject to Underwriting and certain coverage(s) may be provided by a surplus lines insurer. Surplus lines insurers do notgenerally participate in state guaranty funds and insureds are therefore not protected by such funds. | © 2013 Philadelphia Consolidated Holding Corp., All Rights Reserved *Japanese GAAP basis. As of the year ended March 31, 2012. Exchange rate is as of March 31, 2012 $1= 82 Japanese Yen.
s . m e smi ile. fe v . o l e le. feeelltthheelov AWARDS & RECOGNITION AWARDS & RECOGNITION TOp RANkED ppO IN NEW MExICO NCQA’s Private Health Insurance Plan TOp RANkED ppO IN NEW MExICO Rankings, 2011-2012 NCQA’s Private Health Insurance Lovelace Insurance Company,Plan Inc. Rankings, 2011-2012 4-STARInsurance RATING Company, Inc. Lovelace Center for Medicare & Medicaid Services 4-STAR RATING Lovelace Health Plan Center for Medicare & Medicaid Services BEST plACES TO WORk Lovelace Health Plan Modern Healthcare Magazine for 2011 BEST plACES TO WORk Lovelace Women’s Hospital Modern Healthcare Magazine for 2011 Lovelace Westside Hospital Lovelace Women’s Hospital ROADRuNNER RECOGNITION Lovelace Westside Hospital Quality New Mexico ROADRuNNER RECOGNITION Lovelace Women’s Hospital Quality New Mexico Lovelace Westside Hospital Lovelace Women’s Hospital BREAST IMAGING CENTER Of ExCEllENCE Lovelace Westside Hospital College of Radiology BREAST IMAGING CENTER Of ExCEllENCE Lovelace Women’s Hospital’s Diagnostic College of Radiology Imaging Center Lovelace Women’s Hospital’s Diagnostic Only hospital in Albuquerque recognized as Imaging Center TOp pERfORMER ON kEy QuAlITy MEASuRES Only hospital in Albuquerque recognized as The Joint Commission TOp pERfORMER ONHospital kEy QuAlITy MEASuRES Lovelace Westside The Joint Commission Only hospital in New Mexico Lovelace Westside Hospital CARf ACCREDITED IN SIx pROGRAMS Only hospitalRehabilitation in New MexicoHospital Lovelace CARf ACCREDITED IN SIx pROGRAMS GET WITh ThE GuIDElINES Lovelace Rehabilitation Hospital STROkE SIlvER pluS pERfORMANCE AChIEvEMENT AWARD GET WITh ThE GuIDElINES American Heart Association/STROkE SIlvER pluS pERfORMANCE AChIEvEMENT AWARD American Stroke Association American Heart Association/ Lovelace Medical Center American Stroke Association BEST plACES WORk Lovelace Medical TO Center New Mexico Business Weekly for 2011 BEST plACES TO WORk Lovelace Health Plan New Mexico Business Weekly for 2011 Lovelace Health Plan LHP 976-0112 LINC 483-0112
things just keep getting better. things just keep getting better. A few years back, we began telling you that you’re going to
loveyears Lovelace. we didn’t just you tell you we began toto show A few back, But we began telling that–you’re going you. We made commitment to change the way healthcare love Lovelace. Butawe didn’t just tell you – we began to show is delivered just here in Albuquerque, the whole you. We made not a commitment to change the but wayinhealthcare state. Wenot made commitment to hard but workinand is delivered justahere in Albuquerque, the providing whole quality to recruiting the best and to state. We healthcare, made a commitment to hard workemployees and providing providing affordable, accessible plans to businesses quality healthcare, to recruiting the health best employees and to and individuals. providing affordable, accessible health plans to businesses and individuals. Our commitment is showing results. Today, Lovelace Health System is proudisto be recognized by these independent Our commitment showing results. Today, Lovelace Health organizations. But not finished. Ourindependent focus remains on System is proud to bewe’re recognized by these bringing theBut best health to you. And giving you even organizations. we’re notcare finished. Our focus remains on more to about Lovelace day.giving you even bringing thelove best health care to every you. And more to love about Lovelace every day. It’s proof positive that we’re changing the way healthcare delivered. It’sisproof positive that we’re changing the way healthcare is delivered.
Lovelace Health System, Inc. • Lovelace Insurance Company Lovelace Health System, Inc. • Lovelace Insurance Company
lovelace.com
lovelace.com
exceptional care for
Are Your Clients Saving Enough to Retire? By Dave Evans
Studies show that some may fall short of affording their current lifestyle in retirement.
account balance, if he wants to maintain the purchasing power of his withdrawals over a 25-year period. That’s assuming the account balance still has a meaningful commitment to stocks, with the majority in bonds. For a retiree with a 401(k) balance of $150,000, the monthly withdrawal should not exceed $500. If the retiree has a Social Security benefit of $2,000 a month and his spouse’s benefit is $1,000 a month, the couple’s income would total $3,500 a month, or $42,000 a year.
N
ew research suggests that some Americans may be unable to afford their current standard of living in retirement, even if they continue to work past traditional retirement ages.
Considering the ongoing cost of Medicare premiums, outof-pocket health care, living expenses, taxes and car bills, the $3,500 monthly retirement income doesn’t leave much for discretionary spending, such as traveling, giving gifts to children and grandchildren, and donating to charities. If retirees have significant equity in their home, they could tap it through a reverse mortgage.
An Employee Benefit Research Institute study shows 57% of surveyed U.S. workers reported having less than $25,000 in total household savings and investments, excluding their homes and defined benefit plans. Five years ago, only 49% reported saving less than that amount, according to the Wall Street Journal, which reported on the findings released this month.
Retirement experts suggest that, depending on the amount of preretirement income, most people will need to replace 70%-80% of it to have a comparable standard of living in retirement. A couple with a preretirement annual income of $70,000 should have at least $50,000 annually in retirement to avoid a significant change in their standard of living.
This means that many households have no emergency funds to handle unexpected expenditures. And as the nation ages, there could be less spending to power the economy.
People should have other savings separate from their pretax IRA and 401(k) plans, such as life insurance cash values, annuities or after-tax mutual funds.
Meanwhile, a recent Fidelity Investments analysis of 401(k) plans shows the average balance rose to a record-high of $77,300 at the end of 2012, representing a 12% increase from the previous year’s average balance of $69,100. In addition, average 401(k) balances for those older than 50 were above the overall average, ranging from $111,900 for ages 50-54 to $136,800 for ages 65-69. But while this growth may seem like good news, these amounts still won’t generate adequate income for many retirees. The conventional rule of thumb is that withdrawals from 401(k) plans and IRAs should not exceed 4% of a person’s
But as considerable attention is paid to the future of government entitlement programs, many also need to reevaluate their budgets for retirement savings while they are still working in order to save more. With a tepid economy, college expenses and other family priorities, this may involve an unpleasant rearranging of expenditures. Dave Evans is a certified financial planner and an IA L&H contributing editor. Are you concerned that your employees aren’t saving enough for retirement? Check out agency and individual plans from Big “I” Retirement Services, which is also planning to offer a multiple employer plan in the coming months.
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Page 11
Steve
Anderson.com 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!)
Scheduling Social Platform Updates A question I often receive is: "How do you have time to post as much as you do?" One of the hardest parts of being involved with multiple social platforms is finding the time to post good information on each. Fortunately, there are a number of applications that will help you manage your time well. The one I use consistently is Buffer. Buffer is designed to provide both a personal and yet more time-efficient solution to handling posts and status updates on various social platforms. Some of the best status updates you can post are links to articles and other information that you find interesting and want to share. Buffer allows you to capture this information easily and automatically schedule when the post will go live on the specific platform. You can literally spend 30 minutes and fill up your Buffer app at one time with multiple updates. Then, based on the schedule you set, Buffer auto-magically posts them for you through that day or for the next several days. Buffer provides an easy way to have a consistent social platform presence all day or all week long. Capturing this information is easy using plug-ins for Firefox and Chrome. I can be reading an article on a website, click on the Buffer icon and the app will extract the URL of the site and open a window where I can write my post. It will include the URL in the post using a shortened URL. I have accounts set up for LinkedIn, Facebook, and two Twitter accounts. I am also experimenting with posting to a LinkedIn group. On the Buffer website you can set a posting schedule. You have complete flexibility on the number of posts each day, what days you want posts sent Page 12
and the time the posts will go live. For example, I generally post three times a day during the work week, two times on Saturday, and none on Sunday. The application also has some useful shortcuts built in that help make your experience better. Here are a few of my favorites: • Highlighting text on a page and clicking the Buffer icon will paste the highlighted text in the window. This is an easy way to post a quote. • You can directly share photos from websites to Facebook and Twitter - no more download/upload nightmares. All you have to do is right click any image and share it right away. It will go into your Buffer as the full size image. • Using the mobile Safari sharing bookmarklet, you can share any article on the go from your iPhone. Simply go to the apps section after downloading the iPhone app and install the bookmarklet in just two easy steps. You can also add to your Buffer via email. Each account has an email address associated with it. Simply email the information and it will be added to your Buffer. You can also pause your Buffer updates. You might be on vacation, or want to slow down your updates over the holidays. Simply go to the Buffer web app, and under "Schedule," click on all green days. If it's all grey, you aren't posting any updates any more. There is a free version of Buffer you can use to try it out. This version limits the number of accounts you can add. The paid version is $10 per month (less if you pay annually). I use the paid version. This is a great tool and highly recommended. What tools do you use to manage your social platform time well? Let me know.
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Keyboard Shortcuts for All Web Browsers I use keyboard shortcuts a lot! Learning these quick shortcuts will help reduce the time needed to accomplish many tasks. Each major Web browser has a large number of keyboard shortcuts in common. Whether you're using Internet Explorer, Firefox, or Google Chrome - the following keyboard shortcuts will work in your browser. Each browser also has some of its own, browser-specific shortcuts, but learning the ones listed below will serve you well as you switch between different browsers and computers. Most of these commands will work in Mac browsers as well when you substitute Command for the Control key. My Favorite Ctrl-F: Find words or text on the browser page. This is especially useful when you have a long page with lots of information. Simply type in a specific word or phrase you are looking for and it will be highlighted. You can navigate directly to the part of the page where that word is located. This is a big time saver. Managing Tabs Ctrl+1-8: Switch to the specified tab, counting from the left. Ctrl+9: Switch to the last tab. Ctrl+Tab: Switch to the next tab, in other words, the tab on the right. (Ctrl+Page Up also works, but not in Internet Explorer.) Ctrl+Shift+Tab: Switch to the previous tab, in other words, the tab on the left. (Ctrl+Page Down also works, but not in Internet Explorer.) Ctrl+W, Ctrl+F4: Close the current tab. Ctrl+Shift+T: Reopen the last closed tab.
Navigation Alt+Left Arrow or Backspace: Back. Alt+Right Arrow or Shift+Backspace: Forward. Zooming Ctrl and + or Ctrl+Mousewheel Up: Zoom in. Ctrl and - or Ctrl+Mousewheel Down: Zoom out. Ctrl+0: Default zoom level. F11: Full-screen mode. Scrolling Space or Page Down: Scroll down a frame. Shift+Space or Page Up: Scroll up a frame. Home: Top of page. End: Bottom of page. Middle Click: Scroll with the mouse. (Windows only) Address Bar Ctrl+L or Alt+D, F6: Focus the address bar so you can begin typing. Ctrl+Enter: Prefix www. and append .com to the text in the address bar, and then load the website. For example, type steveanderson into the address bar and press Ctrl+Enter to open www.steveanderson.com. Alt+Enter: Open the location in the address bar in a new tab. Search Ctrl+K or Ctrl+E: Focus the browser's built-in search box or focus the address bar if the browser doesn't have a dedicated search box. (Ctrl+K doesn't work in IE, Ctrl+E does.) Alt+Enter: Perform a search from the search box in a new tab.
Ctrl+T: Open a new tab.
Ctrl+F, F3: Open the in-page search box to search on the current page.
Managing the Browser
Ctrl+G, F3: Find the next match of the searched text on the page.
Ctrl+N: Open a new browser window. Alt+F4: Close the current window. (Works in all applications.)
Ctrl+Shift+G, Shift+F3: Find the previous match of the searched text on the page.
F5: Reload.
Other Functions
Ctrl+F5: Reload and skip the cache, re-downloading the entire website.
Ctrl+P: Print the current page. Ctrl+S: Save the current page to your computer.
Escape: Stop.
Ctrl+O: Open a file from your computer.
Alt+Home: Open homepage.
Ctrl+U: Open the current page's source code. (Not in IE.)
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Page 13
$1,000,000,000 CELEBRATING ONE BILLION IN WRITTEN PREMIUM! DOUBLE DIGIT GROWTH has pushed ACUITY over the $1 billion revenue mark! In the past 14 years, we’ve quadrupled our written premium and you are responsible for that. Thank you! We have the agents, employees, and strategic plan to allow our growth to keep compounding on the path to becoming a multibillion-dollar insurer.
www.acuity.com Page 14
facebook.com/acuitywow For AllIndependent That Matters Insurance Agents of New Mexico - www.iianm.org - * May 2013
Auto Insurers Raise Rates to Keep Pace with Increase in Severity Source: BestWire - Michael Buck
A
utomobile insurers are responding to a prolonged rise in the bodily injury portion of claims by increasing prices to keep pace with loss costs, with several publicly traded insurance companies noting the trend. "We have seen over the past few years moderately rising claims severity for bodily injury claims, which has mainly been attributed to medical cost inflation," said Charles Huber, an A.M. Best Co. managing senior financial analyst in the property/casualty ratings division. A weak economy may also be contributing to higher liability claims because there is potential for more fraud, Huber said. Insurers overall have recognized the trend and have responded by increasing rates, which have kept earnings stable in the private passenger auto liability line in recent years, Huber said. The cost per claim may have two components: bodily injury, which is the liability portion and includes items like medical bills; and physical damage, which includes the cost of auto repairs. "When we look at the results, although claims severity has been trending upward, we see loss ratios on the auto liability line being fairly stable," Huber said. "As a matter of fact, the loss ratio through nine months is about a point better for 2012 than it was in 2011." The industry has also seen rising auto repair costs in recent years, which would impact the physical damage portion of the auto cover, Huber said. Physical damage claims have also gone up due to severe weather and damage from hail and flooding. "We may see an increase in the physical damage loss ratios in the fourth quarter of 2012 because of Hurricane Sandy losses," Huber said. Through the first nine months of the year ... the auto physical damage loss ratio has been down for the industry. "That's pre-Sandy numbers, so just how much impact Sandy might have on industry numbers for the year we won't know until we compile annual statements." The insurance industry in 2011 wrote direct private passenger auto liability premiums of $102 billion, which is a 6.7% increase from the 2007 figure, according to BestLink, A.M. Best Co.'s online financial system. The industry in 2011 wrote direct private passenger auto physical damage premiums of $64.6 billion, a 2.6% decrease from the 2007 figure. Mercury General saw its bodily injury severity increase in 2012, Gabriel Tirador, the company's president and chief executive officer, said in a recent conference call. The company raised auto rates in its home state of California by 4% in the fourth quarter, but he doesn't think that will be enough to reach the company's profitability target this year. "We believe the increase in severity we are seeing is in part due to more severe accidents," Tirador said. "Overall, we have
experienced an increase in medical bills and medical procedures such as epidural injections." Brian MacLean, president and chief operating officer of Travelers Cos., said during a recent earnings call that severity, particularly the bodily injury component, has been trending upward for the company. MacLean said the rise has several parts, including expected general inflation and simply more severe accidents. He said the physical damage portion of severity was elevated in the first half of 2012, but returned in the second half of the year to near-normal levels. Nationwide has seen severity pick up in the past few years, leaving the company reacting from an underwriting and pricing standpoint, Nationwide Chief Financial Officer Mark Thresher told Best's News Service. "We can speculate on a lot of things," Thresher said. "People talk about older cars and a variety of things, but we're taking a look at where it has happened and why and making sure we understand it from an underwriting standpoint." Travelers data on the industry show severity has been creeping upward in the past decade, showing average losses per claim for the industry in 2002 were about $2,500, whereas the figure was about $3,000 by the third quarter of 2012. As severity has risen, frequency had been trending downward until a few years ago when it bottomed out. MacLean attributed the frequency reduction to societal changes in vehicle safety and young drivers, which had been offsetting the severity trends. "So, auto has been ... a place where, quite frankly, we are disappointed with the returns that we're generating," MacLean said during a recent presentation. "And we need to do better. And in the near-term, pricing needs to be a significant component of that." MacLean said the company is responding to the severity uptick with rate increases, with renewal premium change at 9% in the fourth quarter. The company's auto retention is at 81%, but new business levels have been impacted by rate increases. It's not just private passenger auto MacLean said commercial auto has also been severity driven recently from the bodily-injury side. State Auto Financial Corp. is also dealing with elevated levels of bodily injury severity in personal auto, as well as commercial auto, said President, Chairman and Chief Executive Officer Bob Restrepo. The company in 2012 increased personal auto prices 4.3%, but that did not exceed loss cost trends, he said. The top five writers of private passenger auto in 2011 were State Farm Group, with market share of 18.07%; Allstate Insurance Group, with 10.48%; Berkshire Hathaway Insurance Group, with 9.22%; Progressive Insurance Group, with 8.06%; and Farmers Insurance Group, with 5.99%, according to BestLink.
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Page 15
M O U N TA I N S TAT E S INSURANCE GROUP® Underwriting Appetite
Mountain States’ underwriters have the skills, flexibility and decision-making abilities to provide insurance to meet our customers’ needs. We are known in the Southwest region as commercial construction specialists, but we have a broad risk appetite, and entertain many different types of accounts. Our underwriters are versed in all classes of businesses and work closely with our agents to place quality risks. RETAIL/WHOLESALE
HOSPITALITY
Furniture Stores
Luxury Hotels
Hardware Stores
Franchised Hotels/Motels
Building Materials Dealers
Bed and Breakfasts
Grocery Stores
Conference Hotels
Auto Accessories
Inns
MANUFACTURING
RESTAURANTS
Sign Manufacture
Cafés & Bakeries
Machine Shops
Delicatessens
Metal Goods Manufacture
High-end Dining
Concrete Products
Family Style Restaurants Franchised Restaurants
CONSTRUCTION
SERVICE
Electrical Contractors
Packaging
HVAC Contractors
Auto Body and Repair Shops
Glaziers
Janitorial
Metal Building Construction
Tire Sales and Service
Garage Door Installers
Water Companies
Landscapers
Stable – Secure – Permanent www.msig-nm.com – 505.764.1400 Page 16
5051 Journal Center Boulevard N.E., Albuquerque, New Mexico, 87109 Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Is Online Marketing Working for Your Agency? By Marty Agather
E
ver get the feeling you’re running in place? Like the poor hamster, moving perpetually on that silly little wheel, only to get off and find you’re in the same spot you started? It happens with a lot of things in life. Unload the dishwasher only to fill it up again. Top off the gas tank on Monday; back at the station on Wednesday. Reach the end of your inbox list at work just as new emails arrive. Fortunately, real progress can be measured with your online marketing. Take these steps to measure your success with prospects. Here are just a few facts that can help charge you to start your online efforts. According to netwitsthinktank.com: • 57% of businesses have acquired a customer through the company blog. • 67% of B2B companies and 41% of B2C companies have acquired a customer through Facebook. • The number of marketers who say Facebook is “critical” or “important” to their business has increased 83% in just two years. But once you’ve made a commitment to online marketing, how do you know you’re making any progress? While most businesses are on a perpetual search to tie hard–and-fast figures to every business effort, it’s often tough to tie dollars to online marketing, just as it is with more traditional marketing. But you can still measure success: Just ask. When you come in contact with new prospects, take the time to find how they learned of you and your services. If they didn’t find you online, extend an invitation through LinkedIn; send a follow-up message on Facebook, or ask if they’d be interested in following your blog. If they accept, send a message of appreciation for their initial online contact and take the time to respond to any inquiries they make in the future. Check your ranking on Google. How often do people worldwide use Google for online searches? According to pingdom.com, a whopping 85.78% of all searches are conducted on Google, making it the No. 1 website globally. If you don’t rank there, you don’t really rank anywhere. So type in your company’s name before you begin online efforts, and check periodically to see how or if you trek up in numbers. Not only is your ranking important for helping individuals find you, but it also makes it less likely that a negative news story or online comment can usurp your position in the future.
Track progress. Identify measurements that you’re most interested in tracking, and then implement a consistent reporting schedule. Consider tracking: • Number of new business partnerships gained • Number of followers • Website traffic • Qualified leads generated • Number of successfully closed business leads • Reduction in marketing expenses Share progress or difficulties with a core team and you’ll not only generate enthusiasm for your efforts, but you may also find some great ideas coming from coworkers who aren’t part of your department but are actively engaged online themselves. It’s often tough when you’re sitting at your desk to fully grasp that you have instant access to the world beyond. Tracking progress with a few key measurements will not only help you map your success, but it will also motivate you to go after more. Marty Agather is vice president of client development for Project CAP. Project CAP provides digital marketing tools and services to help independent agencies, brokers and insurance carriers build their online brands and visibility in order to attract and interact with today's digital consumers. It was created through an alliance of the Big "I" and state associations, Trusted Choice® and insurance carriers to expand the independent agent's share of the personal lines insurance market.
If you’re interested in better positioning yourself online, please use our Big “I” resources through Marit Peters. Send her an email: marit@iianm.org
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Page 17
BOP Pricing Continues Upswing Coverage for tech and health care risks are expanding; fracking is an emerging issue.
I
nsurance price increases might not be welcome news for small business owners who continue to be sour on the
By Katie Butler
economy—88% think the economy is on the wrong track, according to a recent U.S. Chamber of Commerce Small
you are going to see coverage experimentation. Compa-
Business Outlook Survey. But a bigger coverage price
nies will continue to play with industry specific bundles and
tag is the news independent agents will have to deliver to
professional services bundles and allow more risks to be
small business clients this year.
served with a BOP.”
Pricing
BOPs continue to be a product that the agents really like
Industry watchers say they expect 2013 to look a lot like 2012 in terms of businessowners policy pricing increases. “It’s well documented that BOPs are going up single digit [percentages] to a bit higher,” says Benedikt Sander, senior vice president of Liberty Mutual Commercial Insurance.
because they have a high degree of automation, enabling agents to handle customer needs quickly, Sander notes. “That is why the market is trying to serve more risks under BOPs [and] push the automation higher to meet agencies’ business customers’ expectations,” he says.
“It’s a broad trend across the industry, and I don’t think it is
Keane says Hanover is always looking at emerging classes
going to recede.”
for BOPs, pointing specifically to the mobile food service
Michael Keane, president of small commercial at The Hanover Insurance Group, agrees and says he expects price increases to continue through the end of the year, driven both by geography and by line of business performance. “Some companies will take a broad-based approach to price increases not accounting for good performance by
industry and independent distributors as two active areas. “For independent distributors, an example would be a bread manufacturer’s delivery force,” he says. “It used to be that every manufacturer would have its own delivery force. Now a lot of that business is being subcontracted out, and needs to be insured.”
class, but there will be some carriers that will take a more
On the Horizon
reasoned approach,” he says.
Gaynor points to technology and the home health care and
Dan Gaynor, head of commercial lines for The Main Street
medical industries as sectors of small business growth, and
America Group, says for some carriers, there might be
says agents should expect more product development in
reinsurance increases due to the number of catastrophes
those areas.
in 2012.
“And when we talk business owners, one of the emerg-
“It will be interesting to see what effect [Sandy] has on the
ing issues is fracking,” Gaynor says. “What are the true
Jan. 1 reinsurance renewals,” he adds.
exposures there? It will be key for the contractors business
Coverage Developments “BOPs are a fairly stable product,” Sander says. “I think
in the next few years. How can we and other companies successfully capitalize [on this need] and stay within [the] small business framework?”
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Page 19
Four Keys to Building Your Insurance By John Chapin
There are only four activities you have to engage in to significantly grow your business. If you get good at these and do them consistently, it is possible to double or even triple your business within one year. 1) Retain Current Customers
It takes five times as much time, money, effort and energy to get a new customer as it does to retain a current one. Current customers are your foundation and the first step to building a business is keeping that foundation firmly in place. You keep that foundation in place by regularly communicating with customers, delivering top-notch customer service, and overall making sure your customers are extremely happy with you and the service you are providing. You should be asking, and otherwise surveying customers, on a regular basis as to what they like and what they think you can improve upon. When you do speak with customers, let them know you appreciate their business. Never take customers for granted or let your service slip. Do what you can to build a personal connection with customers. Send thank-you notes, cards on special occasions, and find other ways to add that special touch and let customers know you care. We know that people do business with people they know, like, and trust, and in fact, studies show that 97% of people list that as the number one reason for doing business with a particular company. It’s simple, before a friend leaves you for a better price or perceived better service, they will at least pick up the phone and call you. Note: I realize there may be some customers you don’t want to retain and that’s fine, just make sure to remain professional and above-board. You don’t want to tarnish your image or give anyone any unnecessary ammunition against you.
2) Review Coverage
Not only is reviewing coverage on an annual basis the right thing to do for your customer, it can also provide the opportunity to increase coverage and add other items thus adding premium dollars. Of course you only suggest increasing coverage if it is necessary, never in an attempt to simply increase premium and make more money at the expense of your customer. In addition to opportunities for more business, reviewing coverage helps ensure that both the customer and you are covered in the case of a claim, as most complaints come from inadequate coverage and a lack of communication.
3) Inquire
Studies show that the average policy holder has 6-7 policies while each agency has only 1.5 of those policies. During your annual review and other conversations with the customer, you want to inquire about other policies the customer might have. Page 20
For over 20 years I had my auto policies with one agent, my home-owners with another, and several other policies in other locations. This was due to several reasons, but it is clear that I am more the rule than the exception. Not once in that twenty-year time frame was I asked by any of my agents about other policies I had elsewhere. Not once. If they were trying to get rid of me, I would understand. However, due to the fact that I have never had a claim, pay my above-average premiums in full with the first invoice, and am otherwise a good customer, I can only assume that they are missing the boat. If someone has a home-owners policy, there is a very good chance they at least have an auto policy or two. It’s as simple as saying something along the lines of, “By the way, if we bundle your auto and home-owners I may be able to save you some money. Can I simply give you a quote?” With one or two simple questions during each review, it’s entirely possible to double your business.
4) Pursue New Business
In addition to adding new customers to your current base, you will occasionally have to replace customers that die, ones you decide to let go, or ones that leave for some other reason. Start by deciding how many new customers you would like and then determine how many prospects you need and how you will get those prospects. Break your annual goals down to monthly, weekly, and daily activity and then get to work. And remember, you’re in sales and sales is a numbers game. While it’s true that you need quality behind the numbers and the eventual relationships, in order to get the relationships, you need to talk to lots of people. It’s simple, the more people you talk to the more business you will do. If you talk to enough people during the day, you will eventually run into someone who says, “I need what you have” or, “I know someone who needs what you have.” During prime working hours you should be spending as much time as possible on the above four items. Other tasks should be delegated or, if you must do them yourself, wait and do them off-hours. For access to John Chapin’s free monthly newsletter, visit John's website at http://www.completeselling.com John is an award-winning sales speaker, trainer and coach. In over 24 years of sales he became a number one sales rep in three industries, and author of the gold-medal winning “Sales Encyclopedia”.
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
As agencies go paperless and carriers stop providing paper policies, agencies have to decide whether to continue to retain policies locally or rely on electronic policy view to access the policies on the carrier’s website. Agencies are also considering whether to begin to email policies to clients, rather than sending them paper copies. Since I get these questions frequently, I decided to reach out to a number of agency consultants and E&O risk management experts to get their insights on these questions. (Please see acknowledgements at the end of this article for the names of these individuals.)
Maintaining Policies Locally in Today’s Agency and Emailing Policies to Clients
by Jeff Yates, ACT Executive Director
Agency Retention of Policies Many agencies have decided to retain commercial lines policies locally, even if they have a good download of policy data and electronic policy view in place, because they find they need to refer to these policies and endorsements frequently when coverage and claims issues arise. In contrast, many agencies with a good download in place have decided not to retain personal lines policies locally, because they are able to handle the typical client inquiries without referring to the policies. Often these questions relate to billing and making a payment and the agents are able to handle these inquiries efficiently by using real-time Billing Inquiry and Make a Payment functionality. Each agency is different, however, so I have provided a list of considerations to assist agencies in deciding this question: 1.How frequently does the staff need to refer to the actual policies for the line of business and for what purposes? Does the amount of usage justify the amount of time it will take to attach them to the client file? 2.Is there a good download in place for the line of business and is my database accurate? If there is not a good download for the business then the agency will probably want to retain at least the dec page locally. 3.Does the agency use the dec page for policy checking and like to retain it as part of the documentation of the policy checking process?
Industry Opportunity Since many agencies have made the decision to retain commercial lines policies locally, it is incumbent on carriers and agency management system providers to make it as simple as download for agencies to attach these policies to their client files. One approach would be to give the agency the option to have the carrier download PDFs of policies (new, renewal and endorsements) each evening using realtime Activity Notifications and Alerts. An option could even be given to receive the dec pages with links to the actual policy forms or the complete policies. Agency management systems should have the capability to route these notifications to the appropriate person in the agency for checking and attachment to the client file. Using this real-time workflow would be an improvement over the emailing of these policies because of the added security and transmission directly into the agency management system. Since some agencies use the personal lines dec pages to check policies for accuracy and then retains them, the same workflow should be made available to agencies for personal lines. Delivering Client Policies Electronically
4.Does the carrier provide links on the dec page to all of the actual policy forms and endorsements applicable to that risk – not just the latest editions of these forms – so that they are easy to access? 5.Has the carrier provided a contractual guarantee that the agency will continue to have access to its policy information in the event the carrier or the agency terminates the relationship? This commitment should be for the statutory period in which the agency must retain this information (usually seven years). 6.Do the applicable state laws require the agency to retain the policy documents locally or is access to them at the Page 22
carrier website sufficient? Agencies should go through the same analysis with regard to their E&S policies.
Agents are generally supportive of personal lines carriers that give clients discounts in order to go paperless and access their policies electronically. In the commercial lines and E&S markets, however, many agents are concerned about the inefficiency and cost shifting that takes place when carriers stop sending the paper policies to the agent for delivery to the client, because many insureds still want the paper. Electronic policies represent the future and are more efficient in many ways (no mail time, do not to be scanned into agency system, potentially save printing costs). Agents should encourage their
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
clients to make the transition to electronic policies, in the same way that other financial services companies are inviting their clients to move to electronic delivery. Carriers, in turn, should help their agents with this transition by providing them with electronic policies and the option to receive paper copies for clients who are not ready to accept the electronic model. Many agencies like to deliver commercial lines policies to their insureds personally and are now delivering these policies on a CD as a “value add,” where clients agree to this method. Several larger agencies provide a secured area on their website where clients can access their policies. Hopefully, technology providers will increasingly provide turn-key solutions for the broader agency population so that they can provide their clients a secured portal for accessing their policies, as well as linking to their carriers to make payments and perform other self-service functions. This is an area in which ACT’s Consumer Functionality Work Group is trying to spur more industry action. Emailing Policies to Clients In this emerging “paperless” environment, many agencies are considering emailing policies to their insureds. There are several issues for agencies to assess and then incorporate into their procedures when considering such a change in delivery: 1.Confirm that the particular state’s laws and regulations permit the emailing of policies and do not require that the insured be provided a physical copy. 2.Secure the advance agreement of the client to receive policies electronically by email. 3.Provide in the email attaching the policy a request that the client acknowledge receipt of the email and policy by return email and have a procedure – that is consistently followed – of following up with the insured if he/she does not acknowledge receipt. 4.Include in the email a disclaimer that the insured should read the policy to ascertain that its limits and coverages are appropriate for its needs and that it should contact the agency if it would like to add any coverages or make any changes. The notice should also give the insured the option to elect to receive paper policies. (This disclaimer should be provided in the cover letter that accompanies the personal delivery of a paper policy or CD as well. 5.Check the policy for accuracy before sending as provided in the agency’s procedures. 6.Send the email by secure email if the policy contains any private personal information under the applicable state and federal privacy and data breach notification laws. Such private information might include the federal employer identification number, driver license numbers, etc. ACT encourages the use of TLS email encryption for secure email, and TLS works very well in agent-carrier communications when both parties have it. A proprietary secure email solution,
however, will be necessary for many client communications when the client does not have TLS. 7.Deliver the policy to the client promptly after being received – whether emailed or delivered personally – and avoid any agency backlog in policy deliveries. 8.Document in the agency management system that the policy has been sent, the steps taken to follow up if necessary and attach the transmittal email in unalterable form. The emergence of a paperless environment is precipitating changes in agency workflows and is creating opportunities for carriers and technology providers to provide new tools to help agencies function more efficiently in this new environment. These new tools include the use of Activity Notifications and Alerts to send electronic policies to agencies and the availability of easy to use and cost effective “plug ins” to enable agencies to provide secure portals for their clients to access documents and to perform other services online. I’d appreciate receiving your thoughts on how your agency and the industry can best adapt to these trends (Email me here). Acknowledgements: I would like to thank the following agency consultants for their insights on these issues: Pat Alexander, Steve Anderson and Laura Nettles. I’d also like to thank the following agency E&O risk management experts: Dave Hulcher, IIABA; Jim Keidel, Keidel, Weldon & Cunningham; and Sabrena Sally, Westport Insurance Corporation. Thanks also to the ACT Agent Feedback Group for its input. Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. Jeff can be reached here. This article reflects the views of the author and should not be construed as an official statement by ACT.
Insurance fraud is not new, but it is a growing industrywide problem. But from an agent’s point of view, one might ask, “What is an agent’s role in detecting possible insurance fraud?” After all, the insurance process starts with the agent who collects information about what is being insured. Until verified or proven otherwise, the agent more or less assumes that the information provided by the applicant is accurate, complete, and reliable.
Beefing Up the Agent’s Role in Detecting Jewelry Insurance Fraud By Steve Brightbill
Y
ears ago, a widely publicized Accenture press release about insurance fraud no doubt raised some eyebrows. The press release (and the study it highlighted) reported, among other things, that “one-fourth of Americans say it’s acceptable to defraud insurance companies.” Perhaps just as alarming, the Accenture survey also indicated that “about half the respondents (49 percent) said that people commit insurance fraud because they can get away with it.” Jewelry insurance: under-appreciated but highly susceptible to fraud Most P&C agents are trained and experienced with auto and homeowner risks — it’s the lion’s share of the business they write. But there are other insurance risks with which agents are less familiar. Jewelry insurance is one. But why be concerned about jewelry? Jewelry is one risk where fraud and the potential for it are rampant. And while some jewelry is covered as part of a homeowners policy, the problem becomes compounded with scheduled jewelry covered by different policies. Furthermore, while jewelry remains an under-appreciated insurance topic, audits of carrier jewelry losses consistently reveal that carriers overpay jewelry claims upwards of 40 percent. But there’s more. Consider this: 1) annual jewelry sales in the U.S. top $50 billion; 2) over $2 billion in jewelry insurance premiums is written every year; and 3) the U.S. Justice Department reports that $1 billion-plus in jewelry
Page 26
"disappears" annually, which represents 70% of all stolen personal property. What’s more, most jewelry “mysteriously” disappears at two distinct times of the year — in the months before Christmas and the April 15 tax deadline. When it’s all said and done, jewelry insurance related losses are huge — much more than most jewelers, insurers, and consumers realize! Jewelry fraud easy to perpetrate There are a number of reasons why jewelry insurance fraud is so easy to perpetrate. First, jewelry is small. Unlike cars and houses, jewelry is easily “lost,” or so claimed. Second, when truly lost, most jewelry is deemed a total loss. Compared to a house that suffers hail damage, only the roof usually needs to be replaced, not the entire house. Third, and perhaps the biggest contributing factor, is that jewelry comes from an unregulated industry that is not governed by uniform standards or ethics. Jewelers are represented by various professional groups and organizations, each governed by their own standards, criteria, and ethics. When consumers purchase jewelry, it is strictly a “buyer beware” proposition, with few consumer protections. A jeweler does not need special training or licensing to become a jeweler. And as if that weren’t enough, the problem is magnified when it comes to jewelry appraisals, which are typically the basis for valuations and jewelry insurance underwriting and claims. So, with a significant number of Americans having no scruples about committing insurance fraud coupled with the
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
ease of perpetrating jewelry insurance fraud in particular, it’s no wonder that jewelry losses are disproportionately high. Unabashed jewelry fraud on a large scale Several years ago the jewelry industry began advertising diamond certificates as a means to “authenticate” a consumer’s diamond purchase. Consumers, who are neither jewelry experts themselves nor aware of the unregulated nature of the jewelry industry, quickly bought into the concept. As might be expected, not all diamond certificates are alike because different jeweler groups and sales organizations have their own idea of what constitutes a diamond certificate. What’s more, some diamond certificates are intentional marketing gimmicks. Consider what one well-known retail outlet is now doing. On the Costco Web site, a consumer can purchase a 3.06 carat diamond ring for $31,699.00. The item comes with a certificate that values the ring at $61,480 (see: http://www.jcrs.com/newsletters/2003/2003_02.htm). How can this be? What’s going on here? For a consumer with “easy money” in mind, the offer is almost too tempting to pass up. If insured for the valued amount of $61,480, it would seem to be a no-brainer to “conveniently lose” the ring and make a “profit” of nearly $30,000. Realistically, Costco (nor any other retail jeweler) cannot afford to sell its jewelry at half its valued price. The problem here (and in most similar cases) is the unrealistic and/or bogus appraisals from suspect appraisal sources. Remember, the jewelry industry is unregulated, subscribes to no set of uniform appraisal standards, and tolerates a variety of industry groups, each with their own standards and code of ethics. But the problem for insurers is obvious. If the agent, who knows little or nothing about jewelry and appraisals, passes such a certificate along to an underwriter (who also knows little about jewelry), the company ends improperly insuring the item. The agent’s customer ends up paying too much for insurance, all the while believing that if she files a claim against the ring’s loss she will get nearly twice what she paid. Then, when the loss occurs and claims gets involved, the company overpays the claim based on an inflated value that was never verified in the first place. Of course, this scenario applies not only to jewelry insurance. But it points out how critical agent training is. Trained agents can better protect their customers and companies from likely sources of insurance fraud. So, what’s an agent to do about jewelry fraud? Jewelry fraud — or any other kind of insurance fraud — will not be stamped out overnight. From an agent’s point
of view, it takes education. Dave Hendry, president of Oakland-based JCRS (www.jcrs.com), says that many insurance professionals aren’t even aware that there are ACORD Jewelry Standards and Forms that are useful tools in combating jewelry insurance fraud. JCRS Inland Marine Solutions, Inc. is the developer of the ACORD Jewelry Standards, which have been around since 1997. Hendry is an insurance professional who has special expertise in jewelry, furs, and inland marine. His company goes by the tagline, “the leader in jewelry underwriting and claims mitigation.” Hendry points out that the ACORD Jewelry Standards accomplish what the jewelry industry has not: namely, provide insurers with a reliable and uniform set of standards, forms, services, and tools that meet the needs of the insurance industry. According to Hendry, too many carriers and their agents — either knowingly or out of ignorance — simply accept “the word” of a jeweler who has no vested interest in the insurance implications of the merchandise or appraisals they offer. Agents, on the other hand, do have a responsibility to their insurance customer, as well as to their companies and their agency. Agents who are specially trained in jewelry insurance issues provide important consultative advice regarding jewelry purchases and insurance needs, as well as offer value-added service on behalf of their agency. Plus, says Hendry, personal lines jewelry insurance has great cross-selling potential into commercial accounts. For about a year, JCRS has been offering an 8-hour Continuing Education Credit workshop called Jewelry 101 for Agents, CSRs, Underwriters and Adjusters. Over 500 agents and CSRs have attended courses held all over the country. The course takes the approach that agents and CSRs are the first line of defense in jewelry insurance matters. Students learn how the jewelry industry works, how jewelers do business, the fundamentals of gemology and precious metals, appraisals, ACORD Jewelry Standards, fraud detection, and more. Finally, the agent’s role in detecting potential insurance fraud is obvious and vital. With respect to jewelry, however, the nature of jewelry and its susceptibility to fraud present special problems that can be mitigated with agent training, which ultimately benefits customers, agencies, and companies.
Steven Brightbill has been writing about insurance industry issues for nearly 20 years. He is the former editor of TAARReport and Assistant Editor of Sounding Line. Steve can be contacted at sebrightbill@earthlink.net.
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
Page 27
May 2013
Clickable Calendar
Click on class title to register Sunday
Monday
Tuesday
Wednesday 1 TOWNHALL MEETING
Thursday 2
ALBUQUERQUE
ACSR 9 CL Related Coverages 8 CE
Friday
Saturday
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
25
P&C Pre-Licensing Exam Review
L&H Pre-Licensing Exam Review
Lunch & Learn
SETTING 19
20
21
22
23
24
26
27
28
29
30
31
Office Closed
IIANM’s Job Bank Looking to fill a position within your agency? Trying to find a job but don’t know where to look? Whether you are looking for somewhere new to share your special skills or an employer looking for quality, professional employees, we are here to lend a helping hand. Click here to take advantage of IIANM’s Job Bank. Do you have an agency you’re trying to sell, or in the market to buy one? Check out our Classifieds! Page 32
Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
s Shakespeare d n
Things We Say Today Which We Owe to
n
Od
ds ce
Mis
us
eo llan
s,
item
’E e
r pi
s, o
ant
n rem
. ces
Flowers are lovely to look at, but they communicate more than beauty. Some have specific meanings behind them. Here’s what you can express to a friend or loved one by choosing just the right flower:
:
“Set your teeth on edge” “Good riddance” “Faint hearted” “Fight fire with fire” “Seen better days” “Come what may” “For goodness sake” “Full circle” “Baited breath” “Vanish into thin air” “Green eyed monster” “Makes your hair stand on end” “Brave new world” “Wild goose chase” “Love is blind” “A sorry sight” “A piece of work” “Laughing stock” “Break the ice” “Wear your heart on your sleeve” “Too much of a good thing” “The game is up” “Dead as a doornail” “Lie low” “In a pickle” “Naked truth” “So-so” “Heart of gold” “Send him packing” “What’s done is done” “Break the ice” “Love is blind”
• Carnation: constancy, joy • Chrysanthemum: optimism, hope, happiness • Daisy: purity, loyalty, innocence • Freesia: trust • Gladiola: remembrance • Iris: faith, wisdom, promise • Larkspur: appreciation • Lily: devotion • Orchid: love, beauty • Red rose: true love, desire • White rose: true love, purity • Yellow rose: friendship • Pink rose: sweetness • Tulip: love at first sight • Snapdragon: virtue Q. How many producers does it take to change a lightbulb?
A. None. They’ll just have a CSR do it
Q. How many CSRs does it take to change a lightbulb? A. Eight. One to change it, and seven to stand around and
complain about how producers do it.
Maintain a file marked
‘Me’
Your employers keep files on you for various purposes. Try keeping a file on yourself for your own benefit. Keep a record of all your major assignments, successful projects, and people you’ve worked with—clients as well as co-workers. Don’t include any proprietary or confidential information, but do highlight your career achievements as they occur. Over time, you’ll develop a document that describes your progress and your career, which you can use to reinforce your own motivation and demonstrate your expertise when you’re looking for advancement or other opportunities. Independent Insurance Agents of New Mexico - www.iianm.org - * May 2013
PERSON A L
I N S U RA N CE
When it comes to placing personal insurance for high-net-worth clients, your success is our success. Grow your business by partnering with Burns & Wilcox. By working with our Elite Client Solutions team, you do not have to turn away clients: We have the products to cover all their needs. Our high-net-worth specialists have the expertise to create personalized solutions. Plus, our unrivaled access to markets allows us to create solutions with speed and diligence. Making personal insurance even more personal is what Burns & Wilcox does best as the largest independent wholesale broker. Albuquerque, New Mexico | 505.822.0018 | toll free 866.643.8538 fax 505.822.0092 | scottsdale.burnsandwilcox.com
Commercial | Personal | Professional | Brokerage | Binding | Risk Management Services