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September 2013

"The Voice" of Independent Agents since 1934

Celebrate, Innovate, Educate, Rejuvenate IIANM’s 79th ANNUAL

CONVENTION SEPTEMBER 18 & 19, 2013 - SANDIA RESORT & CASINO WWW.IIANM.ORG/EVENTS

&

MEGA TradeShow

More Value for your Customers!

Policyholders now Qualify for Discounted Drug Testing New Mexico Mutual

is pleased to announce a collaboration with two laboratory vendors, TriCore Reference Laboratories & Quest Diagnostics, to provide discounts for our policyholders for drug screening services.

Save 15% or more based on testing volume and the combination of services.

• Utilize pre-employment drug screening as well as post-accident drug testing.

• Include routine employee drug screening as part of a comprehensive work place risk and safety program.

• For more information about discounted drug testing services with TriCore or Quest, please visit our website at NewMexicoMutual.com/Employers/PolicyholderResources.

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

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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. 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 rachel@iianm.org 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

Features

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"The Voice" of Independent Agents since 1934

IIANM’s 2013 Company Partners

04

A Twist on the Wolf Recovery Program

05

IIANM Convention & MEGA TradeShow

06

Brand Evaluation: Would You Invest in You?

08

It Pays To Be A Bad Customer

11

Bills Targeting Navigator Programs Introduced

13

Top 4 Industry Sectors with Big Growth Potential

16

P&C Lines Rates Tick Up

17

Big “I” Flood is Your Alternative for Travelers

18

Webinar to Explain Upcoming Flood Insurance Changes

18

The REAL Reason Insurance Agents Fail to Sell

20

How a Claim is Made

22

What Liability Limits Do I Need? (Ask an Expert)

24

Insurance Charity to Evolve

26

In Every Issue

Communications Director Rachel Sheffield

Tech Talk

14

September's Clickable Calendar

28

Member Services Associate Renee Trujillo

Odds n Ends

29

2012-2013 Officers Chair PJ Wolff

Advertiser Index Acuity Burns & Wilcox

12

Back Cover

Litchfield Special Risks

19

Vice-Chair Diana Hobbs

Market Finders, Inc.

10

Secretary/Treasurer Gabe Portillo

New Mexico Mutual

02

Philadelphia Insurance Companies

21

Trustco

17

National Director Sam Conlee Immediate Past Chair Scott Jones

Mountain States Insurance Group

15

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!

A Twist on the Wolf Recovery Program

by Thom Turbett, IIANM CEO

Do you remember the Aesop’s Fable ‘The Boy Who Cried Wolf’? It told the story of a bored shepherd boy that sounded a false alarm for help when his flock was not really in danger. Of course, when the wolf really appeared, no one was willing to come to his aid.

I think a modern insurance industry version of this fable might be completely reversed. In today’s adaptation, the shepherd (represented by most independent agents) would not be bored but would be sound asleep. Unable to grasp the situation, his flock of sheep (your personal lines customers) are being devoured by two stealthy wolves (the captives and direct writers).

Unfortunately, this new story is not a fable, and it has been playing out for over a decade. We offer as proof, recent research by Accenture that shows insurance industry growth trends since 2002. It shows that Geico, USAA, and Progressive Direct have all outperformed the industry as a whole, and along with our captive competitors, have taken almost 10% out of the independent channel’s market share (that equates to $2 billion in lost commissions over 10 years!)

Please consider this a call to action for independent agents. Today’s tech savvy consumers don’t know who we are, what we stand for, or how to reach us. The direct writers and captives have figured it out, and they will soon use their marketing expertise to take away your commercial business, as well. An overwhelming number of consumers today research online before they purchase, even the older ones. (You do that too, right?)

If you think you are immune because you cater to mostly rural or business customers, you are sadly mistaken. Even those agencies will quickly become irrelevant to insurance consumers as they increasingly demand an online presence and services.

But have no fear, because there is also good news, and the Accenture study shows that, as well. Consider the following graph: This completely debunks the myth that younger buyers don’t want personalized insurance advice. There are other indicators in the study as well. As the Accenture study concludes, “Meaningful growth is eminently attainable – but the choice of distribution strategy is critical.”

Why is that good for independents? First, although many consumers don’t yet know it, we have exactly what they are searching for: choice, value, advocacy and expertise. If you learn how to market this message effectively, you will become the Trusted Choice for consumers.

Secondly, the national Big I CAP project has launched and we now have an effective way to compete online.

To help you understand all of this, IIANM has put together a very unique ‘working’ convention program this year. With a simple commitment of $65.00 for a terrific luncheon speaker and one afternoon of your time, you will come away with an individualized, actionable marketing plan that will resonate with your prospects and clients. It will create or supplement your current marketing plan and layer in a digital marketing strategy with specific resources you can rely on.

If you take this first step, I am confident that this updated fable will have a happy ending for you. I hope you will choose to take advantage of this powerful opportunity. (Details can be found in our convention spread on the following pages.)

If we all work together, we will banish those stealthy wolves and begin to take back the market share and commission income that are well within your reach!

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Page 5

IIANM’s largest and most anticipated event of the year is our Annual Convention. Several hundred member agents, young professionals, company representatives and other industry leaders will join together in a fun, festive, and informative atmosphere.

The Annual Convention includes the state’s largest insurance industry tradeshow, informative educational sessions from expert speakers, and lively social events in a Mardi Gras atmosphere with our own unique New Mexico ‘Big I’ flavor.

This is an invaluable opportunity to celebrate, innovate, educate and rejuvenate alongside insurance industry peers of all ages and experience levels!

Day 1 - Wednesday, September 18 9:00 am Young Agents Meeting We are revamping our traditional Young Agents program and will launch the ‘Next Gen’ version at this important meeting. We are so excited about this development that we have invited Jason Cass, the national Chair of IIABA’s Young Agent Committee to help us with the announcement. Please join Jason, IIANM staff, and other young professionals to learn about the exciting changes and innovations we have planned for this important association program.

10:00 am IIANM Board Meeting This is our IIANM ‘Annual Meeting’ and an opportunity for members and industry partners to learn how the association is doing and where we are headed. We think you will be more than a little impressed!

11:30 am Chairman’s Luncheon:

Company of the Year Award Ceremony Featuring world renowned marketing strategist, Steve McKee

Steve McKee is president of integrated marketing firm McKee Wallwork & Company, an advertising columnist for Businessweek.com, and the author of “When Growth Stalls: How it Happens, Why You’re Stuck and What to Do About It.” His company has been recognized by Inc. Magazine as one of the 500 fastest-growing private companies in America and by Advertising Age as one of ten top small agencies in America.

A marketing strategist for nearly three decades, Steve has been published or quoted in The New York Times, USA Today, Advertising Age, Adweek, Investor’s Business Daily and The Los Angeles Times, among others, and he has appeared on CNBC, ESPN2, CNNfn, Bloomberg TV, and network television affiliates across America. (See Steve’s piece, “Brand Evaluation - Would You Invest in You?” on page 8, which is the 2nd installment of a three-part series.)

1:00 - 4:00 PM Marketing Breakout Sessions: The 1 to 4 pm breakout sessions are meant to complement and augment the marketing knowledge you will receive from Steve’s McKee’s lunchtime keynote address. In these 3 consecutive one-hour sessions you will receive insurance industry specific marketing ideas, tools and strategies to help you compete in today’s rapidly changing sales environment. Please plan on spending the afternoon with us, because the consulting value that you will receive from all four sessions would cost you thousands elsewhere! (See a more detailed description on page 9)

1. The Power of We: Us vs Them 2. Uniquely You: Creating Corporate Charisma 3. Inspiring Action: Converting Your Qualities to Cash 2 to 4 pm Concurrent Breakout Session: NM Health Connections Certification Class

For the life & health contingent attending our convention, we offer a concurrent breakout session. Sponsored by our new health insurance carrier, New Mexico Health Connections, this two-hour session will inform agents about the differences between a health co-op and other carriers. Attendees will earn the required certification to be a NMHC producer, as well as a working knowledge of the New Mexico Health Insurance Exchange, which will launch in October.

4:00 - 7:30 PM MEGA TRADESHOW & Block Party!

Help kick off this year’s convention at the MEGA Trade Show that will feature 70 companies & vendors. The afternoon/evening hours will allow all agency staff to attend and enjoy great food & drinks while providing valuable opportunities for networking.

Come join the fun, Visit the exhibit booths, Register to win prizes!

Day 2 - Thursday, September 19 8:00 am

Golf Tournament

6:00 pm

Past Chair Reception & Induction

7:00 pm

Dinner & Entertainment

Don’t Just Sit There - Get Up & Laugh!

Join Shawn Rapier as he takes the traditional comedy show and turns it on its ear!

Join us for our Annual Convention!

September 18 & 19, 2013 / Sandia Resort & Casino Please note that the cut-off date for special room rate is September 30th, 2013.

In business, a brand is like a baby: Yours is never ugly. No matter what shape your brand is in, you put your blood, sweat, and tears into building it and, despite whatever shortcomings it may have, you're proud of it. As you should be.

by Steve McKee

S

Would You Invest in You?

till, it can be helpful to take a step back and try to evaluate the results of your branding efforts from an objective standpoint. There are a number of ways to do it, but I've found one in particular that can be very revealing.

I need to warn you in advance, though—it may sting a bit.

It requires you to set aside your biases and evaluate your brand through the cold, hard lens of an independent investment analyst.

It’s true that the financial sector has received a lot of criticism of late, in many ways deserved. Think about it—it’s an analyst’s job to pass judgment on which corporations’ stock investors should buy, sell, or hold, yet no analyst can ever know more about individual companies than those who are immersed in their operations day after day and year after year. No one knows more about my company and its prospects, for example, than I do, yet even I can’t predict where we’ll be in six months or two years.

That said, analysts do tend to concentrate on broad industry sectors, providing them a unique perch from which to view the goings-on therein, and their training and experience enable them to recognize patterns within companies and across industries that highly focused management teams may miss. Plus, they don’t have a dog in the hunt; all they’re trying to do is pick the winners and losers based on the available information.

There are a handful of crucial questions an analyst might ask to determine whether a company represents a good investment. Imagine for a moment that you are that analyst, and it’s your job to critically examine your company (or in this case your brand) and subsequently make a buy, sell, or hold recommendation. Answer the seven questions below on a scale from one (awful) to 10 (excellent) as objectively as you can. As you do, keep in mind that it’s a rare brand that excels in every area, and if one does, an intensely competitive business landscape will ensure that its advantages won’t last.

1. Is the brand in a growing sector? This is a measure of your industry as much as it is of your brand. Is it growing?

Are economic, demographic, or cultural trends working in its favor, or are you witnessing steadily shrinking demand?

Is this industry going to be healthy and growing—or for that matter even around—in two, five, or 10 years?

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2. Is the brand making consistent share gains? Regardless of the industry in which you operate, if your brand is healthy you should be taking market share from your rivals, and doing so in a sustainable way (i.e., not by giving away the store). (See my previous column “How to Discount (If You Insist).”)

3. Does the brand have a dominant competitive position?

Your industry may be growing, your share may be growing, but has your brand achieved a position of dominance? This doesn’t have to mean global dominance; if you serve a welldefined geography, for example, it may be enough that you’re dominant within it, even if there are bigger competitors across town, across the country, or across the world. If they can’t horn in on your customers, they may not be relevant.

4. Is the brand clearly differentiated? When prospects compare you to the competition, do clear differences arise or are you basically cut from the same cloth? This factor affects all of the other factors, which is why it’s so critical.

One of my favorite pieces of marketing advice is, “Don’t be better. Be different.” If the people with whom you do business can’t clearly articulate your brand’s point of differentiation, an analyst certainly won’t be able to.

5. Are there high barriers to entry for competitors? The airline industry has extremely high barriers to entry; it takes a lot of money—to say nothing of the regulatory hurdles— to get a new airline off the ground (pun intended). But it costs very little to launch a catering business or consulting firm. True, depending on the specialty, the expertise required to launch either of the latter two could be considered a barrier to entry, but an objective analyst would ask some pretty tough questions about how high that barrier really is.

6. Does the brand generate outstanding margins?

There are two ways to answer this question: in absolute terms and relative to your industry competitors. Margins, of course, don’t grow in a vacuum; if you’re clearly differentiated and operating in a thriving industry with high barriers to entry, you’re more likely to be able to maintain healthy margins than if you’re slugging it out in a commoditized, shrinking sector.

7. Is the brand creating strong cash flow? There’s a lot of pressure on public companies to fund shareholder dividends. Just because your company isn’t public doesn’t mean you shouldn’t feel the same pressure. Your investors (that would be you—and any others who have staked their hard-earned capital on you) deserve a regular dividend.

That is, unless you choose to reinvest most or all of your profits in growing your brand. But you should be in a position where the option is yours.

Seven questions. Simple to ask; a bit more difficult to answer objectively. If your brand scores well on all seven, congratulations—you’ve got yourself a great investment. If not, don’t despair, because at least you now have an idea of where you should focus your efforts.

But don’t hesitate to get moving. Even if you have no intention to ever take your company public, the better your brand performs as an investment, the better off you—and everybody connected with it—will be.

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Join us on Wednesday, September 18th, for a fantastic day filled with meaningful advice on how to develop your own marketing strategy. /// AT 11:30, WE’LL HAVE LUNCH WITH STEVE

/// IMMEDIATELY FOLLOWING LUNCH (AT 1:00),

MCKEE, PRESIDENT OF MCKEE WALLWORK

THERE WILL BE THREE ONE-HOUR BREAKOUT

& COMPANY AND AUTHOR OF WHEN GROWTH

SESSIONS DESIGNED TO COMPLEMENT AND

STALLS: HOW IT HAPPENS, WHY YOU’RE STUCK

AUGMENT THE MARKETING KNOWLEDGE

AND WHAT TO DO ABOUT IT.

OFFERED BY MR. MCKEE:

1

THE POWER OF WE: US VS THEM

You’ll learn how the unique advantages of the American Agency System insurance carriers and Trusted Choice independent agents can create a strong distribution system to provide leverage over our competition and bring back market share.

2

UNIQUELY YOU: CREATING CORPORATE CHARISMA

This session will focus on creating a unique brand for your particular agency or company.

Steve will offer an unusual perspective on the challenges we’ve all been facing over the last several

3

INSPIRING ACTION: CONVERTING YOUR QUALITIES TO CASH

The final breakout meeting will teach you how to put it

years. Don’t miss his eye-opening keynote presenta-

all together into a cohesive, distinct marketing program

tion entitled, “We Have Met the Enemy. And It Is Us.”

that will resonate with your clients and prospects.

Join us on September 18th at 11:30 at Sandia Casino and Resort and get some sound marketing advice that can be tailored to your agency or company.

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Page 9

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

“FINDING MARKETS FOR THE AGENTS OF NEW MEXICO SINCE 1977” WE THANK YOU FOR YOUR BUSINESS!!

Top-Tier Markets For:

Commercial / Public Auto General Liability Property / Vacants Garage / Dealers Liquor Liability Special Events Inland Marine Directors & Officers Liability Professional Liability / E&O Commercial Umbrella Watercraft / Motorcycles / ATVs Personal Umbrellas Homeowners Mobile Homes Dwelling Fire / Vacants New Mexico’s Locally Owned Managing General Agency

ESTABLISHED IN 1977

Market Finders, Inc. 5201F Venice Ave NE - P.O. Box 90280 Albuquerque, NM 87199-0280 (800) 530-8711 (505) 822-8711 Fax: (505) 822-1165 www.marketfindersnm.com

It Pays To Be A

Bad Customer When I consult with agencies, I spend a lot of time with CSRs, Claims Personnel, Marketing Personnel and the Accounting and/or Bookkeeping staff. I always ask one question; "Who do you spend more time with, the good customer or the bad/problem customer?"The answer is always, "The bad/problem customer."

Why is that? There are several reasons.

Reason #1: Our agency has to be all things to all people. You can't and you are foolish to try.

Just as paying more attention to the bad employee and not the good employee, encourages mediocrity in your agency; paying more attention to the bad/problem customer, develops into mediocre customer service for all clients. It's time to fire the 1% to 2% of your customers that are using up the precious customer service time of your employees and not favoring you with sufficient commission dollars.

There are other options you can also consider. You can place the difficult customers in a service center or outright sell the clients to another agent. Remember, you're in business to make a profit, not to provide insurance for every individual or business in your community.

Just ask your employees, "Which clients are your time wasters?" You can also take a hard look at those customers that are generating less than $50.00 of commission per year. Refer these individuals and businesses to your number one competitor and let them occupy the time of your rival's time. Time is your most valuable asset. However, it's nonrenewable. Once it's spent, it's gone forever.

Spend that time with your good customers. It will increase your retention and increase your profits.

by Jack Fries proactive and reactive customer service. This can only be attained by reducing the time wasters in your office. Many agencies and brokerages have found that by adopting EFiling (click here to learn more) they can spend more time doing annual account reviews, claims follow-up, crossselling, etc.

Reason #3: Most agencies treat all customers alike.

Very few agencies have established a differentiation of service between the VIPs and the remainder of the customers.

Specific procedures should be established in personal lines for the VIP. This should include annual face-to-face reviews of exposure and needs. It can also include seminars on Long Term Care and investments.

Reason #2: Processing has become customer service in the minds of the employees.

Commercial clients should be recognized as "Exception" and Non-Exception accounts. By definition, the "Exception" commercial accounts are those that contribute at least 50% of the agency's income. Every agency should develop a program of additional services that they will provide these accounts.

I find many CSRs who can't wait to get off the phone, so that they can return to customer service. That's right.

There's no time for delivering on your promises of "Great Customer Service," because of the time it takes to process all the paper. There should be a balance between

If your independent agency is to compete with the megaonline insurance purveyors, the banks and the company direct programs available to customers today, you must provide exemplary customer service to the clients that pay for it and deserve it.

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Page 11

Have u heard the latest about ACUITY ?

YES! Every1 is talking about them : )

See what they’re saying at: www.acuity.com

For All That Matters

facebook.com/acuitywow

Bills Targeting Navigator Programs Introduced House Republican Conference Chair elevates consumer protection issues.

Rep. Cathy McMorris Rodgers (R-Wash.) recently introduced two bills targeting the much-maligned Navigator programs, as well as in-person assisters and certified application counselors, as enacted under the Affordable Care Act (ACA). The Big “I” has long advocated that these programs in the new health care law have the potential to harm consumers and waste taxpayer dollars.

In her role as Conference Chair, Rep. McMorris Rodgers is fourth highest-ranking official in House Republican leadership. She also serves as a senior member of the House Energy and Commerce Committee, which has jurisdiction over much of the ACA. The Big “I” government affairs team worked with Rep. McMorris Rodgers and has publically endorsed both bills. The association’s position is that the Navigator programs were improperly designed in the ACA, empowering individuals with no relevant health care background to advise consumers on health care decisions that will greatly impact their day-to-day lives. These bills would put in place common-sense safeguards to help protect consumers from bad actors who might attempt to take advantage of these deeply flawed programs.

The first bill, H.R. 2980, takes aim at some of the regulatory and consumer protection issues concerning Navigator programs. The legislation stipulates that no funds may be awarded to potential Navigators (or for any of the Navigator-like programs) until the Secretary of the Dept. of Health and Human Services confirms these entities: (1) will not provide advice concerning benefits, terms and features of a particular health plan; (2) will not recommend or endorse a particular health plan or advise consumers about which health plan to choose; (3) will not accept any compensation that is dependent on whether a person enrolls in or purchases a health plan; and (4) will not violate any applicable insurance law or regulation.

Another bill, H.R. 2951, focuses on putting safeguards, certifications and audits in place to guard against waste, fraud and abuse created by exchanges, subsidies and Navigator programs. This is of particular importance since the Administration has announced plans to loosen the verification mechanisms for subsidy eligibility through the new health insurance exchanges. Only if the certifications and safeguards stipulated in the bill are enforced can the exchange subsidies be distributed and enrollment assistance funds— including Navigator grants—awarded.

With the Senate in the hands of the Democratic Party and President Barack Obama in the oval office, these bills face an uphill climb toward enactment into law. But as the first bills on this important issue to be filed in Congress, they will at the very least serve as useful tools in the regulatory battles the Big “I” will face when it comes to the ACA and implementation of the Navigator programs.

Margarita Tapia is Big “I” director of public affairs.

Ryan Young is Big “I” senior director of federal government affairs.

Photo of Rep. Cathy McMorris Rodgers (R-Wash.) courtesy of mcmorris.house.gov

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!)

Manage Your Clipboard One of the great Microsoft Windows functions is the simple copy and paste — CTRL-C to copy to the clipboard and CTRL-V to paste the last item added to the clipboard — allowing you to take information from one program and, simply and quickly, adding it to another.

master management panel where you can group and edit your clippings, and finally the ClipBar integrates right into the Windows Task Bar to provide a quick access list to your frequently and most recently used clippings.

And that’s why clipboard utilities were created.

ClipMate also features encryption if you need to keep your clippings secure when not in use. PowerPaste adds advanced paste options that support structured data like tabs and delineation. A license lets you use ClipMate on two computers plus a portable installation, which would easily cover a single user with a desktop/laptop/thumb drive setup.

I have utilized a number of clipboard utilities over the years.

There are a lot of options. My current tool of choice is ClipMate for Windows v7.5 ($34.95).

While I elected to use this paid version, there are a number of Freeware options including ClipX, CLCL, ArsClip and Ditto.

ClipMate enhances the Windows Clipboard, making it a true power tool. The cut / copy / paste capability of Windows is not very useful to move a lot of data or keep data longer than your next cut or copy.

Properly setting up a clipboard utility can help streamline how you move data from one program to another.

Unfortunately, the functionality and utility of this standard window function has not improved at all over the years. It could be so much better.

ClipMate works alongside the regular Windows Clipboard and remembers every piece of data (both text and graphics) that you cut or copy. Once your data is saved in ClipMate, you can select an item and it is automatically placed back on the Clipboard or directly into an application. Within ClipMate you can view, print, edit, reformat, convert to upper/ lower case, search, rename, and reorder Clip Items.

There are several “heavy lifting” features such as PowerPaste, Templates, and Clean-Up, that help with big data conversion chores like contact and lead management, data acquisition, document assembly, and research.

There are multiple ways to view this information.

The Classic view gives you a toolbar with dropdown options, the Explorer view — seen below — is the

Page 14

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

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 5051 Journal Center Boulevard N.E., Albuquerque, New Mexico, 87109 Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Page 13

Top 4 Industry Sectors with

by, Russ Banham, IA senior contributing writer.

Big Growth Potential

Specialization reveals varying degrees of growth prospects among industry sectors.

S

pecializing in the insurance and risk management needs of a particular industry is a tried-and-true way of generating revenue and maintaining it for independent agents—unless the particular industry sector is undergoing economic pressures.

The agents who specialized in the construction industry after the real estate debacle reared in 2008 learned this lesson the hard way. Ironically, specializing in constructionrelated insurance and risk management has again become a viable area of expertise, now that new housing starts are up nationwide. What industry sectors are currently poised for growth?

According to consultants and economists, the hot industries in which agents might consider pursuing specialization include health care, energy, technology and construction.

Each appears on the brink of significant market growth over the next several years.

Health care The health care industry is undergoing pronounced change in the aftermath of the Affordable Care Act. According to Robert Hartwig, chief economist and president of the New York-based Insurance Information Institute, health care expenditures could go from 14% of GDP to 20% by 2020. As health care becomes a bigger part of the economy, experts expect to see more jobs available in the industry.

“More jobs indicate larger payrolls for workers compensation exposures and more commission revenue for agents— hence the wisdom in specializing in the industry’s highhazard risks and insurance solutions,” Hartwig says.

“I’d hitch my wagon to health care,” agrees Cheryl Koch, CEO of Agency Management Resource Group, a Roseville, Calif.-based independent agency consulting and training firm. “Until all of us boomers are dead and in the ground, someone will have to take care of us. This means that skilled nursing, home health care, assisted living and other related businesses should take off. I’d say the industry is pretty recession-proof for the next 20 years.”

Energy Energy is another industry experts project will grow leaps and bounds, particularly if the United States becomes energy self-sufficient, as projected. “The energy business is booming in North Dakota and other regions with high shale oil deposits,” Koch says. “The bubble is growing and will burst at some point, so the time is ripe to get in early.”

Page 16

“The ability to find energy in shale is one of the biggest stories in the U.S. economy the last couple years, with the promise of energy independence not far off in the future,” says Kevin Stipe, president of Reagan Consulting, an Atlanta-based independent agency consulting firm. “Some people predict the U.S. will become an exporter of oil in the next ten years. This is one industry that will surely grow.”

Hartwig concurs, noting that the sector is creating jobs not only in oil and gas exploration and production, but also the many businesses that serve the industry, including trucking, pipeline manufacturing, rail and technology. “There is so much here for agents to specialize in,” he says.

Many “green” energy initiatives, like solar power and sustainable building materials, constitute other growing sectors within the energy industry. Sustainable products that simulate wood, stone and other natural materials are predicted to grow 26% in revenue this year, according to a report by IBISWorld.

Technology IBISWorld further posits employment growth in the technology sector, citing a 51% annual growth in jobs for social networking sites alone. Hartwig notes the seemingly unending line of tech start-ups, including cloud-based service providers, Big Data analytical firms and the proliferation in mobile business apps, as well as the many services they will require from a cyber security, business interruption and insurance standpoint.

Construction Strong signs indicate a continuing rebound in the construction industry. After eight consecutive years of contraction, construction activity increased by 3.2% in 2012 thanks to strong growth in private residential construction, according to an analysis by the Bureau of Economic Analysis in the U.S. Department of Commerce.

According to Stipe, the best ways for agents to specialize in a particular industry sector remain the same: learn everything you can about the industry, join relevant trade associations, attend seminars with others in the industry and identify yourself as a member of that sector.

“It’s like declaring a major in college, where you decide to truly and deeply focus on this one thing,” Stipe says.

“If someone asks you what you do for a living, tell them `I’m an insurance consultant to the construction business.’

When you specialize, you are redefining who you are and the role you play.”

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

P&C Lines

Rates

Tick Up

H

omeowners, D&O and general liability lead the way.

The march toward a harder market continues, according to the latest pricing statistics from MarketScout.

The firm reported a premium increase in the composite rate for U.S. personal lines business from 3% in April to 4% in May, while the commercial lines composite rate was up 5% for the third month in a row.

Homes across all price categories were assessed a 4% rate increase. Auto rates also increased from 3% to 4%, while personal articles premiums remained steady at a 3% increase.

“Regardless of the value of your home, most insureds had premium increases for renewals in May,” says Richard Kerr, CEO of MarketScout. “Perhaps the pending hurricane season had an impact on pricing. We feel the increases are driven more by underwriter’s sentiment than actuarial projections.”

On the commercial side, D&O, general liability and EPLI policies all experienced higher rates on a month-to-month comparison. Business owners policies, crime and fiduciary were slightly less expensive than the prior month.

“The commercial p-c market in the U.S. is continuing its steady trend of rate increases,” Kerr says. “There is ample capacity, but underwriters continue to increase rates as appropriate.”

Sept. 5 Webinar to Explain Upcoming Flood Insurance Changes CRITICAL 2013 National Flood Insurance Program

Big ‘I’ Flood is Your Alternative for Travelers

Changes and Issues Every Agent Needs to Know On Sept. 5, the Big “I” will host a webinar from 2-4 p.m.

Transfer one or dozens of flood policies from Travelers to Big ‘I’ Flood.

outlining last year’s changes to the National Flood Insurance Program (NFIP). By reauthorizing the program until

In the aftermath of Travelers’ exit from the WYO flood business, Big “I” Flood offers easy transfer of one or many policies, whether from the NFIP direct or a WYO carrier.

Normally, the Big “I” WYO-endorsed carrier Selective Flood

2017, the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters) provided stability to the NFIP and its 5.6 million policyholders.

prefers a 90-day lead to the expiration date, but many apBiggert-Waters also applied major changes intended to

proaches may work within a shorter time frame.

help ensure the program’s financial security by removing This summer, Selective Flood enhanced their online sys-

subsidies, phasing out grandfathered rates and gener-

tem to simplify writing flood business and is now ready to

ally allowing the program to charge higher, more actuarial

accept your transfer, whether it’s just one policy or an entire book of business. Should you require assistance, Big “I” staff or your Selective Territory Manager would be happy to help.

rates. Experts estimate that Biggert-Waters represents the most sweeping changes to the program in decades.

Biggert-Waters provisions are being implemented in stag-

If your Big “I” Markets registration did not indicate that your

es. While some changes from the law already took effect

agency wished to participate in Big “I” Flood at the time of

in January, the most critical date for implementation will be

registration, your registration will need to be updated before

Oct. 1, when much of the phase-out of program subsidies

we can accept flood new business or a book roll. While up-

will begin. Further major changes related to grandfathered

dating your Big “I” Markets registration, simply click on the highlighted link at the bottom of the screen during Step 1 in order to advance directly to Step 6, where you can change the information. You can also review each screen to be

policies and new and/or updated flood maps are scheduled for implementation next year.

sure your information is up to date, making any necessary

The Sept. 5 webinar is critical for all agents who write flood

changes along the way.

insurance policies, as it will discuss the changes resulting from Biggert-Waters as well as how agents can best

If you are interested in starting your book roll with Selective

help their clients. Significant interest in the flood insurance

Flood, review the instructions and submit your information

webinar is expected across the country and participation is

via email to Linda Mackey. Big “I” Flood recommends running an expiration report from not only your current carrier system, but also your own agency management system in order to ensure nothing slips through the cracks. To discuss

capped at 1,000, so the Big “I” strongly encourages agents to register for the webinar as soon as possible.

your options, email the Big “I” Flood team or call 800-221-

Visit the Big “I” website or follow this link to register for the

7917, ext. 5380.

Sept. 5 flood insurance webinar.

Page 18

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Page 19

The REAL Reason Insurance Agents Fail to Sell paying all his bills. Jim’s base pay was $650 per week plus benefits. That was more money than Jim had seen in his life, probably more than his buddies were making, and ultimately it was more than enough beer money. The bottom line: Jim was comfortable and he had absolutely no motivation to take on the world and chase down business. That’s why he was running out at five and had only sold one policy in six months to… you guessed it… a family member.

How to move agents out of their fear and comfort zones:

by John Chapin

Y

ou can give an agent all the sales skills training in the world. You can lay everything out and tell them exactly what to say and do in each and every situation and yet, if they have either of the two afflictions I’ll talk about here, no amount of sales or product training will help them. When an insurance agent fails over the long haul, it is always a failure in activity, a failure to do the things necessary for success. Below are the two reasons agents ultimately fail to do the necessary work and, in the end, fail to sell, along with some ideas on what you can do about it.

Reason #1: They’re scared.

At the request of an agency owner, I sat down with an agent to listen to her make some prospecting calls. He was concerned because she hadn’t sold a single policy in five months. When she picked up the phone, she began to shake with fear. She then put down the phone and said, “I can’t, I just can’t do it! Not with you sitting here!” I offered to stand outside the door. When that didn’t work, I told her she could record the calls and I’d listen to them afterwards. She then got up, marched into the agency owner’s office and said, “This isn’t going to work! I quit!”

Whatever the fear, be it fear of rejection or the fear of being yelled at or hung up on, all fears lead to extraordinary effort to avoid doing the things necessary to be successful. They all leave the agent frozen and unable to consistently do what needs to be done.

Reason #2: They’re comfortable.

An agency owner recently said to me, “When the clock hits five, Jim runs out of the office like a scalded cat!” After a couple of questions it became apparent as to why. Jim was fresh out of college with no student loans, he lived at home, his parents had bought him a new car and they were also Page 20

First, it’s extremely important to have a good working environment that is conducive to doing business and supports the agent. This includes proper incentive and recognition plans, good training, good support people, and an office where other producers are producing and everyone is professional, generally happy, gets along, and everyone is treated with respect.

Second, it’s imperative that you have strict standards and measurements of success for each agent and that they are measured against those every 90 days. Each agent needs to have reasonable but challenging goals and objectives.

It’s also important that you create these goals and objectives with the agent and you both agree they are attainable.

Agents should be pushed out of their comfort zone but they have to believe they can do what you’re asking of them.

Each agent needs to be held accountable. You must hold their feet to the fire. If an agent does not hit their 90-day goals and objectives, you need to find out why, make the necessary changes and adjustments, and then review these with the agent in another 30 days to see where they’re at.

If they are not hitting their goals, look at their daily activity and determine the problem. If they are simply not doing the necessary activities, you have to introduce the “fear” of losing their job if they don’t get to work. This will move most of your fearful and comfortable agents either to action or out the door. If they don’t move, and they continue to miss their numbers and skirt the necessary work, then you have to put your foot down and move them out the door yourself.

Keeping these people around will kill morale, cause you major headaches, and at the end of the day, you’re not doing yourself or them any favors. It’s time for them to go find themselves… somewhere other than at your company.

Remember that each individual is motivated differently.

Most are motivated by money, other incentives and gifts, but people also like recognition and appreciation. Let them know through your words and actions that you care about them, support them, and you want them to be successful.

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

If you are the failing agent, here’s what to do: Take 100% responsibility for your life and truly commit to your job. Let your boss know you’re on board and you’re going to do whatever it takes to be successful and ask for his or her help.

Get disciplined, face your fears, and get comfortable being uncomfortable. You simply must get yourself to do the necessary activities whether or not you feel like it, whether or not you’re scared, and whether or not you’re comfortable.

Find your motivation. Why must you be successful? What are the benefits if you succeed and the disadvantages or pain if you fail? If you have powerful enough reasons WHY you have to succeed, you will.

You control your own success or failure. It has nothing to do with the economy, your parents, or that bad break in high school, at the end of the day it comes down to you.

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, number one sales rep in three industries, and author of the gold-medal winning "Sales Encyclopedia".

For permission to reprint, or if you have sales questions, e-mail: johnchapin@completeselling.com.

Big business benefits that small businesses can afford Just because your agency is small doesn’t mean that you or your employees deserve less. You spend each day providing financial protection for your clients but have you provided it for you and your employees? Group benefits are a well appreciated benefit that you can provide to your employees. It saves them the trouble of having to obtain individual coverage, it shows them that they are valued employees and in some cases can even boost morale. As an agency owner it could set your agency apart during the hiring process and help you find the best employees.

What we offer is an excellent group benefits program with easy quoting, administration and affordability. We offer group plans that allow you to offer protection to your employees that they want and deserve.

As an IIANM member you have exclusive access to the Big I Employee Benefits group programs which include Group Life, Long Term Disability, Short Term Disability and Dental.

This program is offered through The Guardian Life Insurance Company who has a strong reputation for customer service and a solid financial rating. To request additional information or to receive a quote, please contact Christine. munoz@iiaba.net. Already have group benefits in place?

Drop us a line to see if we can beat your current rates!

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.

How a Claim is Made

By Shirley Zelenski, Swiss Re

F

ans of the TV show “How It’s Made” enjoy watching how some of the most seemingly mundane objects in the industrialized world today are created. The show’s presentation of the steps and materials it takes to create objects as simple as a mirror or silk gloves, make us more appreciative of how easily these things are available to us. And yet the life cycle of any object is more than the sum of its parts; each step in the process of making those parts is a story of its own.

Luckily for most, the life cycle of a professional liability claim is a mystery. For those who have had the experience, some perhaps didn’t really know what stage their E&O claim was in until it affected their deductible or until their E&O carrier paid to defend and settle. If you are one of the curious, stay tuned and enjoy; here’s the story of how an E&O claim is created - with no commercial interruptions.

How a claim is defined First, the claim is created by policy definition. The Westport Insurance Agents Professional Liability policy defines a claim as: 1.) an insured has received a summons, a subpoena, or any other notice of legal process; 2.) an insured has received notice of any “suit”; 3.) an insured has received notice of a written demand, or a written demand for money or services; or 4.) an insured has received a request to provide a recorded statement.

In any or all of these instances, the claim must be immediately reported by the agency to the E&O carrier.

Reporting the Claim to the E&O carrier: Behind the Scenes Once the claims department receives notice, a claims specialist contacts the insured agency to notify them that a claim has been received. A claim file is opened and the claims specialist reviews the applicable deductible, policy limits, retro date, and confirms that the policy is in force.

A determination is then made as to whether the alleged error or omission of the “claim” is covered by the policy. If the allegations fall within the coverage terms, the claims specialist then attempts to determine the insured’s potential liability. The claims specialist will speak with individuals from the agency who were involved in the matter, including the agency principal to determine what happened. He or she will ask them about standard agency procedures and Page 22

practices, and will check to see whether the underlying carrier (or others) have made payments yet. They will also ask for any and all documentation from the agency file so they can review it to support the agency’s defenses to the claim.

Many times the allegations of the claim do not indicate that the agent has made any error. In those cases, the claims specialist will advise the claimant that their claim has no valid basis and will deny the claim. However, if the allegations may give rise to a valid claim, and if a lawsuit has not yet been filed, the claims specialist will ask for documentation that supports the claimant’s allegations. If the claimant has retained an attorney, the claims specialist will work directly with the attorney. The claims specialist will then review the information they provide and determine what further action to take to resolve the claim.

Bringing in Defense Counsel If a lawsuit results from the allegations of a claim, the claims specialist will choose appropriate Defense Counsel for the agency, sometimes referred to as the “DC”. The DC selected usually comes from a panel of defense attorneys that have a proven history of excellence in defending insurance agents errors and omissions claims. The DC represents and has an ethical and professional obligation to the insured first and is the insured’s representative in a court of law. In some cases, Swiss Re has enhanced the E&O policy with an endorsement that allows insureds to choose their own defense counsel, subject to some limitations.

The DC will meet with the insured and begin the discovery process. This begins by requesting written discovery and may include subpoenas of various records including tax returns, receipts, or payroll records. Depositions are another part of discovery. Depositions are sworn testimony of the parties, witnesses and experts in order to determine what their testimony will be at trial. Individuals involved in the alleged error from the agency are deposed in most cases to document their side of the story. All of this is used to help build the agency’s defense and may also factor into the ongoing updates of the reserves. The agency’s potential liability is the logical conclusion that develops in the mind of the claims specialist as the discovery process unravels the facts. The claims specialist will then analyze, with the help of the defense counsel, how a judge or jury will view the agency’s liability and establish the expense, defense, and loss reserves. Defense counsel will continue to have regular contact with the insured, following the case to the end

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

and keeping the insured informed about progress, delays, and the eventual outcome.

Mediation, summary judgment, or trial In many cases, it is appropriate for a case to be mediated.

This is a non-binding process involving an independent third party whereby an attempt is made to negotiate a settlement. The process is non-binding because it is voluntary and the parties are not required to reach a settlement.

If a settlement is not reached, the case continues in the litigation process..

In some instances, where there is no dispute as to the facts of the case and the evidence clearly supports the agency and law supports the agency, the DC will file a motion summary judgment. This is a request where the attorney will ask a judge to determine as a matter of law that the claimant’s case should be dismissed. It can only happen if the material facts are not in dispute such as whether a faxed document was received by the intended recipient or whether an injured worker is an employee of the plaintiff.

The goal is to save time and money that would be spent further representing the insured by going to a jury trial when it is clear that there is no basis for the claim. If the motion is unsuccessful, the case goes continues in the litigation process.

A trial can last from one day to several weeks. On average, most E&O trials last two or three days. After the jury or the judge has reached its verdict and the trial has ended, either side may seek to appeal the verdict if they believe that the verdict was against the weight of the evidence or that there was an error as a matter of law. This can add several months to the process.

At some point, just like a mirror or a silk glove, the claim will finally come to an end. The entire process, from the first demand letter to the agency to the final closing letter from defense counsel or the claims specialist, can last from just a couple of months to a couple of years. Either way, the goal is to successfully defend the agency and resolve the claim. Being accused of making an error is never pleasant. But hopefully now you will have a better understanding of the life cycle of a claim and will be prepared if it should ever happen to you.

"Agency Strategies for Growth" video now available ACT has made available 2 videos that provides a great tool for individual agencies to use internally to spark creative discussions about positioning for the future.

Agency Perspectives on the Future It runs 6 minutes 51 seconds It focuses on: • Agency Leadership • The Changing Consumer • The Changing Agency • and The Future.

Agency Strategies for Growth It runs runs 10 minutes 25 seconds and is divided into the following sections: • Positioning the Agency • Successful Strategies • Importance of Measurement • and Technology Enables Growth.

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article.

The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group ("Swiss Re") and/or its subsidiaries and/or management and/or shareholders.

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Page 23

what liability limits do I need?

Virtual University’s Ask an Expert

ulty

VU Fac

One of the most common questions from both personal and commercial lines clients is, "How much insurance do I need?" In this article, we'll take a look at some of the issues that must be considered in determining what liability limits are appropriate. This article uses both personal and commercial lines examples.

I just recently wrote coverage for a client who has posed a question to me as to "How much liability coverage is enough?" The client indicates that they've been told by their peers that they should have the proper amount to cover what they'd lose in net worth. Or two and a half times ones net worth. My client is looking for more substantiated criteria as to what are the averages for different catagories of claims, i.e., Boat/Yacht losses - Is there an industry average for liability claims for yacht losses? Property Losses - Avg. Homeowners liability claim experience, etc.

As the agent I understand that this is a very fluid area and there are many variables involved, and have explained this to the client, however, I was hoping that you may have some more insight on this matter, or you may be able to advise me where I could obtain additional information or further statistics regarding this issue. I look forward to hearing from you.

FACULTY RESPONSE

1. Not only is there no precise, scientific answer to this question, there is not even a reliable “rule of thumb.”

2. Two of the key issues are how high the potential award might be following a lawsuit, and the amount of time that compensation is owed to the plaintiff. In many states, judgments can last for many years, and can often result in garnishment of wages, loss of most tangible assets, both at the time of the judgment, but years into the future, when future assets are acquired (including inherited).

3. From an E&O perspective, one of the most frequently recommended suggestions is to provide the insured with a “menu” of limits and coverages available from the agency’s markets, and have the insured make the choice.

In determining "adequate" liability limits, "average" losses have very little to do with it. The average auto BI claim is less than the financial responsibility limits of most states. However, it's the BIG claims that help create the averages and those are the claims that should carry the most weight in any determination of limits.

4. In addition, another E&O recommendation is for the agency to avoid giving any sort of “legal” answer to legal questions such as this. In all likelihood, there is no correct or accurate answer anyway, and there is great risk for the agency to go out on a limb, and be not only wrong, but to possibly be accused of practicing law without a license.

We ran this question by our faculty and got the answers below.

FACULTY RESPONSE

FACULTY RESPONSE

This is really scientific, but I would seriously suggest that an individual should have as much liability insurance as he/she can get. When you get into the millions, excess liability is so cheap that the cost is almost insignificant, the only problem is getting a company to write very high limits (over $10 million or so).

And if a person’s personal net worth is even one times that number, he/she should also have a non-insurance asset protection plan, including things like exempt assets (homestead, cash-value life insurance, and annuities), jointly-owned property, and offshore trusts.

Page 24

Your question asks about average claims. Liability insurance isn’t purchased for average claims...most minimum auto liability limits are adequate for “average” claims. If the average automobile liability claim closes for $10,000 or $25,000, this amount will not become the amount of coverage sold. The limits decision needs to be redirected to catastrophic injuries.

Watercraft mishaps are not widely understood. Examples of serious watercraft injuries are near drowning, carbon monoxide poisoning, hypothermia and burns. A near drowning may involve brain injury. Hypothermia may impair a person’s ability to regulate body temperature, resulting in death following an extended period of hospitalization.

Medical expenses related to severe burns are often seven figures prior to any claim for damages.

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Only an insured can calculate that amount and the broker who says to an insured a particular number is “enough” should immediately make a report to his E&O insurer of a potential claim when the insured has a major loss and finds that the limits are not “enough.”

Be careful.

FACULTY RESPONSE

Seldom a month passes that we don’t get such a question. The answer is always the same. When someone asks, “How much liability coverage should I buy?” the response is, “A dollar more than you’ll be sued for.”

Burns are a common watercraft injury. A recent article in the New York Times states sixty-five percent of the beds for burn victims in the entire United States are located in major teaching hospitals. This speaks volumes about the complexity, difficulty and expense of treatment.

The answer to your clients should not be limited to the insured and insurance agent. A yacht owner, or any other wealthy client, has assets to protect. Similarly, they have attorneys to advise them on legal matters. The client should raise this question with their attorney. The attorney typically has better knowledge of: (a) the insureds assets, and (b) the legal environment in your area. It is not uncommon to hear an attorney advise a wealthy client to purchase $10,000,000 or $25,000,000 in personal limits.

In your query for statistics, let me suggest you look for claims experience in the top five percentile. Advise the insured to raise the question with their attorney. And offer several limits options for the insured to consider.

FACULTY RESPONSE

The answer is a question -How much are you willing to absorb with your own funds?

On first-party policies, the amount is enough if it is sufficient to replace the property with new for old if you buy a RCV policy and the Actual Cash value of the property if you buy an ACV policy.

Liability is harder but should be based on what is sufficient to protect the personal assets of the insured.

Limits that are too high tend to make plaintiff’s greedy but there is no question that if there are assets to protect, the insured should carry enough coverage so that any catastrophic accident—like an auto accident that turns a young father into a quadraplegic—which could take all coverage and all your personal assets. You want a big enough number that the claimant will accept your policy limits rather than try to collect the limits plus the personal assets.

No one knows what enough is. How about the Rhode Island nightclub fire where 100+ people died? What about the senior citizen who plowed his car into a farmer’s market in California killing 11 people? Buying two or three times your net worth isn’t a drop in the bucket.

As an agent, you simply explain coverages and costs and let the insured make the selection. Then document it out the wazoo.

FACULTY RESPONSE

How much liability insurance individuals need cannot be set by a formula. There are too many criteria and the answers are as different as the people, their value set, their goals, and their fears. However, if the individual has a personality type that seeks to analyze risk quantitatively and feels more comfortable with that approach, then I’d suggest they go with a limit equal or close to the net present value of current and future assets.

To illustrate my point though, consider the point of liability insurance—to make the other party go away. The more limit you give the company, the greater their ability to successfully buy off the injured party, getting the insured off the hook.

FACULTY RESPONSE

If you’re looking for statistics, check out www.juryverdictresearch.com. They have lots of statistics, though most of their information is available for sale.

FACULTY RESPONSE Here is a web site from RiskMail: • Liability Trends and Jury Verdicts

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

Page 25

Insurance Charity to Evolve Founded in 1995, IIANM/NMMCC Scholarship, Inc. is registered as a 501 c-3 charity under the federal tax code, and has been run by an independent board of directors comprised of IIANM and New Mexico Mutual staff members. The primary source of revenue has been an annual charity golf tournament in the spring. Over the years, this has raised roughly $400,000 in net contributions to the charity. The money has been used for two purposes: • A single $10,000 annual college scholarship to an individual (or one of their family members) who has suffered a debilitating workers compensation injury. Typically, recipients have four years to complete their education and must meet certain other academic requirements.

• Annual grants of varying amounts to New Mexico colleges to be used for the purpose of creating or furthering the development of insurance programs, including student scholarships and internships.

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!

(Please note: Although we will be discontinuing the charity golf tournament in the spring, the annual convention tournament in the fall will continue.)

In addition, it has been more difficult to identify qualified recipients for the program and many of our individual 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.

After much review and discussion, it became obvious that the charity could become much more effective by reorganizing our fundraising efforts and scholarship targets. 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 also makes sense to discontinue the individual workers compensation scholarships in favor of channeling our donations to support university and community college insurance programs that will work with us to attract and educate our future insurance industry leaders and employees.

The Vision: Investing in Our Industry’s Perpetuation & Professionalism The scholarship board believes that given the explosion of charity fund-raising events in the past decade, we would raise more money by moving to a typical foundation model. We propose conducting an annual fundraising drive with an established goal, concentrating our energy at the IIANM convention and trade show. We would like to create an endowment of $500,000 within five years, which would allow approximately $30,000 in annual giving without reducing the endowment.

Based on current annuity calculations, the following chart shows what we believe is a reasonable plan to take our current assets to the desired level:

Date

Sept 2013

Sept 2014

Sept 2015

Sept 2016

Sept 2017

Sept 2018

Assets

$ 80,000

$180,000

$260,000

$340,000

420,000

$500,000

Expenses

-$10,000

- $30,000

-$30,000

-$30,000

-$30,000

-$30,000

Annual Goal:

$110,000

$ 110,000

$110,000

$110,000

$110,000

$110,000

Page 26

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

We are hoping that individuals, insurance agencies, carriers, vendors and others with an interest in the success of the American Agency distribution system would be motivated to contribute to such a foundation. Since it is a well established fact that close to 50% of the insurance workforce will retire in the next decade, anyone connected to the industry in New Mexico should be motivated to contribute to a group effort to perpetuate and train our future leaders and employees.

The money raised would be used to fund grants for programs that the foundation board deems worthy of support.

Schools, agencies, carriers and others would apply to receive the funding. Although the current charitable purpose of the foundation allows us great latitude in what we could choose to fund, we initially envision the money going to fund university programs at NMSU and UNM. The grants could go toward scholarships, internships, or other expenses that would create insurance specific programs with the potential to bring exposure and jobs to our industry, and eventually would expand to include university and community college programs throughout the state.

To reach our goals, we propose the following fundraising categories, based on a 5-year pledge concept:

Donation Category

Total Pledge

Annual Give

Monthly

1- Freshman

$500

$ 100

$8.33/month

2 - Sophomore

$1000

$ 200

$16.67/month

3 - Junior

$2500

$ 500

$41.67/month

4 - Senior

$5000

$1000

$83.33/month

5 – Bachelor’s

$10,000

$2000

$166/month

6 – Master’s

$20,000

$4000

$333.33/month

7 - Doctorate

$25,000

$5000

$416.67/month

This Year’s Activities With this notice, we are officially announcing that the initial charity fundraising campaign has begun. We are hoping that every insurance carrier, independent agency, surplus lines brokers, and other industry support organizations will consider stepping up and donating to this worthy cause We are in the process of putting together several inducements to pledge. The insurance carriers pledging the largest donations this year will receive special recognition in the October edition of La Voz. A similar award will be made for agencies and brokerage firms, as well as industry affiliates.

Contest winners, major donors and amount of money pledged will be announced at this year’s final convention dinner on September 19th at Sandia Casino. We will have a booth at the trade show with volunteers soliciting donations, and signage throughout the two days of convention reminding attendees how important this venture will be for the perpetuation of New Mexico’s insurance industry.

Not only will the tax deductible money donated go to a worthy cause, but it can also directly benefit the insurance organizations and their employees that comprise the American Agency system in New Mexico. In addition to funding college level insurance education programs, individuals and their organizations will be eligible to apply for grants to fund internships and scholarships for their companies, employees and their children.

Together, we can all ensure that we will be able to compete with other industries for the best and brightest that will be our future employees and leaders.

Independent Insurance Agents of New Mexico - www.iianm.org - * September 2013

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September 2013 Click on class title to register

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P&C Pre-Licensing Exam Review

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L&H Pre-Licensing Exam Review

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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!

t Da y i b b o H September 22

Happy Birthday Bilbo and Frodo Baggins!

Life isn’t about finding yourself.

Life is about creating yourself.

(created by J.R.R. Tolkien in his books The Hobbit and The Lord of the Rings)

~George Bernard Shaw

New eavesdropping technology goes beyond reading lips You may not want to read this if you’re worried about people listening in on your private conversations: Scientists may soon be able to use high-speed cameras to “hear” voices from far away without the need for a microphone.

As reported on the Science News website, a scientist at Tokyo’s Waseda University used a camera capable of capturing thousands of images per second to analyze the movement of neck muscles, lips, and tongue, and developed a computer program to translate the data into sound.

Get organized for better creative results Creativity can seem like a mysterious and chaotic process, but staying organized is crucial to bringing your good ideas to life.

Great thinkers as diverse as Leonardo da Vinci, poet Walt Whitman, and inventor Thomas Edison all had so many ideas that they recorded them in notebooks throughout their lives.

Edison accumulated 3,500 notebooks that were discovered after his death. Whitman kept his ideas on slips of paper in separate envelopes, and went through them whenever he needed inspiration. Da Vinci reportedly kept detailed notes and reviewed them over the years, ultimately generating such ahead-of-their-time concepts as the helicopter and the bicycle.

Don’t depend on your memory, no matter how indestructible your idea seems to be at first glance. Write everything down and go through your notes regularly, and you may find great ideas you’ve forgotten about and intriguing connections between seemingly separate concepts.

The technique could be more useful than listening with a microphone, since it eliminates the problem of background noise drowning out sounds. So far, though, tests have only been run to identify single spoken words; the scientist hopes to be able to reconstruct a full sentence by the end of the year.

Secrets of the Sky: What to Know Before Your Next Flight 17 pilots from across the country give us straight answers about maddening safety rules, inexplicable delays, the air and attitudes up there-and what really happens behind the cockpit door.

What they told us will change the way you fly.

Our expertise is the key to gaining access to exclusive markets.

HEALTHCARE PROFESSIONALS AND ORGANIZATIONS

Enter exclusive markets for healthcare entities through our relationships with over 50 carriers. Whatever the diagnosis, our expertise delivers the fastest quotes.

Take advantage of our experience to cover everything from medical malpractice to general liability without any gaps. Why let anything stand between you and the coverages your clients need? At Burns & Wilcox, we make the hard-to-place easy.

Albuquerque, New Mexico | 505.822.0018 | toll free 866.643.8538 fax 505.822.0092 | scottsdale.burnsandwilcox.com

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