October La Voz 2012

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"The Voice" of Independent Agents since 1934

THERE’S NO PLACE

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Running

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

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What To Do When A Customer Complains

05

Convention Photos!

07

The Adversity of a Desperate Market

08

New Technology... Learning to Adapt

11

Keeping Customers for Life

15

Coverage Varies for Damaged Lawn Mowers

16

Reacting to a Carrier Downgrade or Carrier Assessment Decision

18

Open With... Estate Tax

21

Thank You Partners

22

InsurPac Contributors - Thank you!

23

Introducing IIANM's New 2013 Board

24

Boomerang Kids

26

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

"The Voice" of Independent Agents since 1934

Features

President/CEO Thom Turbett Vice President of Member Services Consuelo Trujillo Vice President of Insurance Programs Julie A. Franchini Communications Director Rachel Sheffield

In Every Issue Tech Talk

12

ABEN - The Next Big Thing in Continuing Education

16

October's Clickable Calendar

28

Odds n Ends

29

Member Services Associate Renee Trujillo

Advertiser Index Acuity

17

Burns & Wilcox

14

Hallmark Insurance Company

19

Litchfield Special Risks

20

Vice-Chair Diana Hobbs

Lovelace Health Plan

06

Market Finders, Inc.

04

Secretary/Treasurer Gabe Portillo

MexiPass

09

Mountain States Insurance Group

10

New Mexico Health Insurance Alliance

09

New Mexico Mutual

02

2012-2013 Officers Chair PJ Wolff

National Director Sam Conlee Immediate Past Chair Scott Jones

What To Do When a Customer

Complains

No matter how hard you try, customers will find fault with you or your staff. How you handle those complaints will determine account retention and customer satisfaction. I have listed below items to consider regarding customer complaints.

Complaints Pay Off Complaints can point out areas that need improvement in your agency. For example, the timely return of your customer’s phone calls. These complaints would give you a second chance to provide the stellar service and satisfaction that you promised during your initial sales presentation. It will also provide you an opportunity to strengthen this customer’s loyalty. The best customer is the one that has had a problem with your agency or their insurance company, and you fixed the problem.

By Jack Fries

Specifics For That “Moment Of Truth,” When Receiving A Complaint All staff members should receive training that addresses customer complaints. They should be trained to: • Listen with understanding • Paraphrase & record what the customer tells you • Find out what the customer wants • Propose a solution and get their support • Make follow-up calls to insure satisfaction • Never let the customer lose face • If the customer doesn’t like the solution, ask him what he would consider fair Remember that complaints are not bad unless you ignore them. Complaints will provide you and your agency with an opportunity to improve and, if properly handled, will enhance you in the eyes of your client.

Set Guidelines For Handling Complaints Seek out and welcome complaints. An agency cannot operate in a vacuum. Input from customers and companies will allow the agency to continue to improve. Take complaints seriously. I'm not talking about the chronic complainer, but the customer who rarely seeks assistance from you or your staff.

All complaints should be documented and classified and should include not only the complaint, but also the personnel involved. All staff members must be required to report all complaints to the manager, supervisor or the agency owner.

You should set goals for resolving complaints. The faster that you can resolve a complaint or a problem presented by your customer, the happier your customer will be. All complaints should be discussed at agency meetings. It is not necessary to identify the agency personnel involved, but it is important that all learn and improve.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 5

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

This year’s Convention was a

total blast!

We had a record number of attendees, the Governor, a wonderful TradeShow and awesome entertainment!

It was great seeing everyone!

We’re looking forward to

next year!!

By Marty Agather, CPCU

We have lots more pics posted on our facebook page.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 7

In almost 25 years in this industry, I have never seen such desperation.

One of the unfortunate results is that many good agencies that have worked hard, done things well, and are not grasping at straws, are still at a competitive disadvantage. It is much like the situation faced by the most responsible citizens bailing out the most irresponsible or incompetent (take your pick) individuals and companies.

The Adversity of a Desperate Market The categories in which this is occurring are widespread.

Here are some important examples.

The desperation of this market

1. Certificates of Insurance. The changes to certificates have caused widespread carnage, frustration, anger, and virtually every other negative emotion imaginable. One item that is not being discussed much publicly is the difference between agencies following the rules versus agencies that are not following the rules. In particular, the question is whether to issue certificates that violate contracts, copyrights, and regulations. There is no question some agencies are doing so knowingly or, if ignorant, they are living in a deep, dark hole.

has clearly changed buyers’ perspectives of what they are buying.

by Chris Burand

Neither companies nor associations nor many regulators (the Wisconsin Department of Insurance is a notable exception and there may be others of which I am not aware) have done much to correct the abusers. The result is that sometimes the agency willing to violate the rules, contracts, and copyrights make sales they would not otherwise make. By being silent on this issue, companies, associations, and some regulators are assisting the irresponsible—and the responsible are paying the price.

2. Premiums payable. An even more verboten subject is whether all companies and brokers are truly requiring all agencies to pay premiums on time. My theory, based on my experience, is they are not. I understand that many companies are so desperate to hang onto whatever premium they can that they would prefer to work this out rather than lose their premiums. But the best agencies lose as a result because this amounts to a handout.

3. Giving away free services. The debate that is Chris Burand is president of Burand & Associates, LLC, an insurance agency consulting firm. Readers may contact Chris at (719) 485-3868 or by e-mail at chris@burandassociates.com.

NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

Page 8

occurring between agencies and brokers and even among regulators on whether it is ethical for agencies to give away free services such as loss control in order to get accounts is eye-opening.

The average agency makes zero dollars of profit on a commission basis per the last Growth and Performance Standards (GPS) study by the National Alliance Research Academy. So how do these firms plan on increasing their costs without going broke? Free services require significantly good management and good cost accounting meth-

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

odology, which are severely lacking in most agencies, even large and supposedly sophisticated brokerages. I suspect many of these accounts will cost the agency much more than it makes; either that or the free services being offered are not that real.

More than one agency/brokerage advertises services they don’t deliver. Sometimes they don’t deliver because they don’t actually offer the service. Sometimes they have the service but the producers won’t deliver it because the producers have to pay for it through a lesser commission.

when rates rise. They will be susceptible to promises that they don’t need limits and coverages. They’ll be susceptible to buying insurance from poorly rated carriers and ignorant agents. The question is, what are you doing to protect yourself and your agency when the market turns hard in a poor economy?

On the other hand, the desperation of this market has clearly changed buyers’ perspectives of what they are buying. They understand better now that the insurance policy is only one aspect of their purchase. So moving forward, it is no longer an issue of whether these services need to be offered to adequately complex commercial accounts. Burying your head in the sand while thinking important clients will never demand these services is pure denial of reality. The real issue is what price an agency will charge for these services.

4. Companies buying into agencies. Companies cannot figure out how to grow themselves, but they are convinced they can grow agencies; so their strategy is to buy into agencies. Insurance companies may not be able to grow, but they have a lot of excess cash and are desperate to invest that cash, just like they are desperate to grow. It is too early to know, but the question worth asking is whether an agency owned wholly or even partially owned by a carrier will treat all carriers equally? Will they treat other agencies equally?

5. Rising rates in a poor economy. Most people in this industry have never experienced a hard market in a poor economy. Customers will shop harder than ever

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Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 9

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New Technology...

Mobile, cloud, and social technologies are quickly evolving, causing societal transformation and giving rise to a new empowered and connected consumer.

How well an agency understands this change, learns to adapt, and effectively engages the new connected consumer will determine their future viability.

Keeping up and adapting to new technology and

the changing demands of customers and prospects has always been a challenge for business. What is different today is that advancements in technology and changes in consumer behavior are happening “scary” fast, and are now being driven by the consumer rather than the corporation.

As you already know, many of the old ways of doing business are no longer effective. As an example, traditional Yellow Page advertising is no longer effective in reaching most consumers. Email is passé for many of the younger generations who prefer texting instead.

Today, consumers are demanding that their business partners be online, transparent, accessible, open, socially responsible, and honest. They want to feel that they know their favorite brands on a personal or personalized level.

The challenge facing our industry is not just about making sure agents have blogs, Facebook pages, Twitter accounts and are using Pinterest to curate relevant business information. Yes, it is important to learn how to effectively use new technology. But it is critical to pay close attention to the evolution of consumer behavior. Successful agents have learned to use the new technologies as an effective way to grow a community of online relationships to convert employees and followers into brand advocates. Rather than use the tools to simply amplify their sales message, these firms use social networking to build and strengthen relationships, connect and build trust. It’s a subtle but powerful difference in approach.

Equally important, a good social networking implementation must be more than a marketing department project.

Social networking does not magically transform or solve an agency’s marketing or communication problems.

Adapting to the new business environment requires that social networking initiatives be an integrated part of a comprehensive business strategy, as it will involve and impact all business units within the agency. There are many social tools (Facebook, Twitter, LinkedIn, YouTube, Google+, and Pinterest, etc.) that can be used by an

Learning to Adapt

By Marty Agather, CPCU agency to build and strengthen its brand. Yet, like any successful agency initiative, it must be well managed, monitored, measured and evaluated.

Getting Ready Creating a good agency Social Media policy guide is an important first step. Such a guide clearly lays out what is and isn’t permissible when employees are formally presenting themselves as agency representatives online.

Many agents and brokers already have guides outlining use of the Internet and email at work. For these businesses, additional guidelines covering use of the social web may suffice, and for those that do not, a newly created guide can cover employee use of all of these tools.

The IIABA’s technology working group known as ACT (or Agents’ Council on Technology) has sample Social Media policies available on its section of the IIABA.net website.

Another important step in implementing a social media initiative is making sure you have someone responsible for overseeing and managing the initiative, someone to take on the responsibility as “Community Manager”.

Ideally, the Community Manager manages the communication flow between the company and its engaged online users. Ultimately charged with implementing the company’s online strategy, this digital-savvy employee provides vital oversight for all communications, PR, social media, events, and content creation.

Once you have your guide and your manager in place, the company will be ideally positioned to execute consistent use of online tools and in-person networking to create relationships and seamlessly project the company’s brand, both online and off.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 11

Steve

Anderson.com by, Steve Anderson

A Website that Makes Lists

There are many ways to keep track of to-dos and

lists of items that you want to accomplish: Your agency management system reminders, Outlook tasks, Evernote, as well as a simple pen and notepad. I've experimented with just about all of these (and more) to try to find the best system for me.

An app like Workflowy, or perhaps others like Evernote, may give you some method to the info-madness of those conferences and also make it easier to refer back.

WorkFlowy has some powerful features.

Here are a few of them.

I began experimenting with another Web-based application called WorkFlowy, a very simple, well designed website that makes it very easy to capture, in one place, your thoughts, notes, and tasks you want to complete.

Completing items: Every item can be a task if you want it to be. Once you've completed a task, hover over the bullet point of the corresponding item and click "Complete" in the menu that pops up. This will strike out the item.

The website is flexible enough to allow you to store and keep track of just about everything, not just to-dos and grocery lists, but also ideas for articles, notes you may gather while researching, and tasks you need to accomplish. The service is flexible and not complicated to learn or to use.

You can remove completed items from your view by clicking on the "Completed: Visible" button in the upper right of the page. This will change the page view to "Completed: Hidden." There's also nothing sweeter than completing tasks and seeing them disappear before your eyes.

Some lists are obvious: stuff I have to do today, things I've got to remember to pack for a trip. Others are just lists by another name. The notes I jotted down during a meeting - that's a list of stuff people said in chronological order.

The notes I took while reading a book about how to use Google+ - that's a list of my observations. The phone number I jotted down while listening to a voicemail - a one-item list under your name.

Search: WorkFlowy lets you navigate through your lists by expanding them and zooming. But sometimes you forget where you put something. Or maybe you want to bring up all the items that contain a specific word. The search feature lets you filter your information in WorkFlowy (or whatever list you're currently zoomed to) instantly, as you type.

Once you get used to this basic idea about life - that everything you can think of is one small part of some bigger thing - WorkFlowy's minimal interface becomes very easy to use.

Note-taking is an under-appreciated art. Agency personnel attend many meetings and conferences that can create useful information and ideas. Most of those notes are jotted down on whatever notepad is handy. But what happens to those notes? How much attention do we pay to them later?

Page 12

Sharing and collaboration: You can share or collaborate on any sublist in your WorkFlowy account. This is a powerful feature that lets you turn any portion of your notes, tasks, lists, etc. into a page that others can view or edit.

They'll see your updates (and you'll see theirs) in near real-time. Click "Share" in the menu that pops up when you hover over a bullet point.

Tagging: Sometimes you might want to associate items together that are in different parts of your WorkFlowy tree.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Say you have tasks for a trip you're planning in one area and tasks for a project you're working on in another. You want to mark tasks in both areas as being "high priority," and then you want to view only the high priority tasks.

Tags let you do this. Add the tag "#highpriority" to all your high-priority tasks. Then click the tag (once you've stopped editing the item) to filter only items with that tag.

Click the tag again to turn off filtering.

WorkFlowy Basic is free for up to 500 items per month.

WorkFlowy Pro is $49 per year (annual payment).

Additional functionality in the Pro version includes: • Unlimited Lists: Pro users can make as many lists and items as they want.

• Backup to Dropbox: Have full backups automatically uploaded to your Dropbox account every day.

• Password-Protected Collaboration: Pro users can share parts of their WorkFlowy account with specific people, verified by email address and password.

• Offline Editing: The ability to use WorkFlowy when you're not online (coming soon).

• Theme and Fonts: Pro users get to change the look and feel of WorkFlowy with a library of themes and fonts. Make your WorkFlowy more personal.

• Premium Support: Pro members get their emails answered first.

The WorkFlowy website is optimized for mobile devices.

To access, simply navigate in your browser to the website and log in. Your information will be displayed.

I recommend you experiment with the free version to see how this tool might help you keep track of your thoughts, ideas, notes, and tasks.

WorkFlowy https://workflowy.com

Create a Custom iPhone Case with 3-D Printing This TechTip is perhaps a little less of a "Tip" and a little more of a view into the future. I have been monitoring the 3-D printing industry for the last couple of years. I have been amazed to watch the quality improve while the price drops dramatically. This is yet another example that Moore's Law is alive and well.

Companies, and individuals, are using 3-D printing technology to create physical objects from computer drawings of everything from board game pieces to parts for firearms. While there have been relatively inexpensive 3-D printers available like the ones from Makerbot for some time, 3-D printing has been limited to those who have more money and time to learn and use 3-D design software.

That is beginning to change. Companies are beginning to create products and services that streamline the design process. Sculpteo is a French 3-D printing company that has recently released an iPhone app, 3DPCase, that lets you quickly and easily design a customized case for your iPhone.

The process works like this: Using the app, you choose from 12 available templates -- more are being created -- and then customize that template design by changing the shape, switching the colors, or adding images and text. The entire process can take just a few minutes of your time to design and upload to Sculpteo.

Sculpteo then takes your design and prints it using a 3-D nylon extrusion process -- typical of what you'd find in other 3-D printing processes. Finished cases typically ship within four days for North American orders.

Clement Moreau, CEO and co-founder of Sculpteo, says his company is trying to make 3-D printing more accessible to the average user by reducing the time and energy needed to create a design. "This application really shows that 3-D printing will change the way we build objects in the future," Moreau says.

I agree with Moreau; 3-D printing is taking the concept of custom manufacturing to a whole new level. The insurance coverage implications for this new type of industry are intriguing. I can already see that an enterprising agent will create an insurance program designed for custom manufacturers using 3-D printing processes.

The 3DPCase app is available in the iTunes App Store for iPhone 3G, 4/4S cases, and Sculpteo will start taking orders for iPhone 5 cases as soon as it is announced.

I'm ordering mine today.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 13

PROFESSIONAL LIABILITY COVERAGE IS IN THE DETAILS At Burns & Wilcox, no detail is too small to go unnoticed. To ensure we match your clients with the proper professional liability coverage, we look at every possible scenario. From data privacy to miscellaneous errors and omissions, medical malpractice to architects and engineers, our expertise across a wide breadth of categories makes certain nothing is missed.

As an international company, our relationships provide us unlimited access to the broadest range of markets. So if you need to find the right policy in a flash, work with the largest independent wholesale broker – Burns & Wilcox.

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

Page 14

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2014

s r e Keeping Custom

For LIFE

by John Chapin

These days I hear many excuses for agents losing customers. The most prevalent by far is price. “The other company had a better price. There was nothing I could do.” While price is always a factor, very rarely is it the main consideration when considering a switch, the best estimates put the percentage at about 7%. The reality is, many agents simply aren’t building the strong relationships and they use price and other excuses when the customer naturally goes elsewhere. If you build a strong relationship and keep customers happy, they won’t jump ship the first chance they get.

Also, if you thrill customers such that they are customers for life, they are much more likely to refer friends and family, thus increasing business and making your life a whole lot easier. In addition, if you’re working with happy, life-long customers all day, your work and life will be also be much more enjoyable.

Always make the customer your number one priority.

You must bend over backwards for the customer and make sure that every experience with you and you company is an absolute pleasure. This begins with the number one rule of customer service: making sure the customer is always right. It also means doing what you say you’ll do when you say you’ll do it, and going above and beyond, doing more than you get paid for, to make sure the customer is always pleasantly surprised by the extra service they receive. In addition, the customer comes before paperwork, phone calls, and other tasks you need to get done. When customers think of the best customer service they’ve ever received, you should be the one that comes to mind. They should always feel like a V.I.P. Keep communicating.

While some people require more communication than others, you want to reach out to people on a regular basis.

This includes sending at least three cards to everyone you do business with: a Birthday Card, Holiday Card, and Anniversary Card on the date you started doing business with them. You also want to have your e-mail customers on an e-mail list that you send something of value to once a month. The title should make the content obvious to the recipient. In addition, you should talk to each client on the phone a minimum of once or twice a year, and meet with

them in person at least once a year to review their coverage and find out if anything has changed that might affect their coverage.

A note on your cards: make sure they are personally signed by you in blue ink. Better yet, handwrite a personal note. If you don’t have good handwriting, you can have the note printed, but make sure you still sign it no matter what your signature looks like.

Personalize the relationship and always seek to build and strengthen it.

You want to take a personal interest in customers. Where are they from, where did they go to school, what interests do they have, do they have kids, grandkids, are they married? What activities are the people in their lives involved in? Once you have this information, show interest is what makes each customer unique. Ask about children, grand children, their personal interests, and the like.

Also, ask customers for their personal preferences and do business with them according to those preferences. For example, do people prefer e-mail or hardcopy? Are they okay receiving their renewal in the mail, or would they rather you deliver it personally? Yes, these are extra steps, but they are extra steps that your competition is more than likely not taking.

Ultimately you want to move customers from acquaintances, to friends, to good friends. The better relationship you have with a customer, the more likely they are to stay with you. If all your customers are good friends, and you take good care of them, they will stay with you.

Let them know you appreciate their business and that you don’t take them for granted.

Thank customers for their business on a continual basis.

You should be saying, “Thank you for your business, I really appreciate it” and/or “Thank you for being a customer” during phone calls and in-person meetings. You don’t have to mention this in the Birthday and Holiday Cards you send out, but you do want to mention it in the Anniversary Card as that is the main focus. The primary objective of the Holiday and Birthday cards is to add a personal touch.

The bottom line: Treat customers right by making them a priority, taking a personal interest in them, and by letting them know that you appreciate and care about them.

If you would like access to John’s free white paper on what it takes to be successful in sales along with a monthly newsletter, you can visit John’s website at http://www.completeselling.com John Chapin’s specialty is helping salespeople and sales teams double sales in 12 months. He is an award-winning sales speaker, trainer and coach, a number one sales rep in three industries, and the primary author of the gold-medal winning "Sales Encyclopedia". In his 24 years of sales, customer service and management experience, he has sold in some of the toughest markets and economies.

For permission to reprint, or to reach John, email him at johnchapin@completeselling.com.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 15

Coverage varies for

damaged Lawn Mowers Virtual University’s Ask an Expert

ulty

VU Fac

by Bill Wilson

Look to the ISO homeowners policy edition for answers.

An insured’s mower is damaged in an auto accident while he is hauling the mower on a trailer with his pick-up truck. Is there coverage for the insured, whose policy uses the 2000 ISO HO-3 form?

This is a great question for illustrating how important it is to know what policy edition date is being used. The mower is personal property under all editions of the ISO

mowing the insured’s church’s lawn, there’s no coverage.

In the 2011 edition of this ISO policy, coverage is broad-

HO-3.

ened slightly so there is coverage if the mower is used to

The unendorsed HO-3 covers damage to personal property caused by vehicles. Presumably, damage to

service “a residence.”

the mower resulting from an auto accident would trigger

That means there is coverage if the equipment is being

coverage under this peril.

transported after it was used to mow Aunt Bertha’s lawn.

But one must then look under the Property Not Covered section on page four of the 2000 policy. Motor vehicles are excluded, but some exceptions are made—including

But there is no coverage if it’s being hauled after it was used to mow the church’s lawn—unless one only mowed the lawn of the parsonage.

this one: "We do cover 'motor vehicles' not required to be

Coverage was much broader in the 1991 edition of the

registered for use on public roads or property which are...

ISO HO-3. As long as a person used a lawn mower to

used solely to service an 'insured's' residence.’"

sometimes service his/her own premises, he or she would

The key word in the 2000 edition of the ISO HO-3 policy

be covered.

is “solely.” If the mower is ever used for anything other than servicing the insured’s residence, it’s no longer covered.

That brings into question why the mower is being transported on a trailer. If it’s on the way home from mowing Aunt Bertha’s lawn, or if it’s on the way home from

Page 16

This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are on the VU. For help accessing the website, email rachel@iianm.org to request login information.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

RELAX. WE’VE GOT YOUR BACK.

FOR ALL

THAT MATTERS

www.acuity.com facebook.com/acuitywow

REACTING TO A CARRIER DOWNGRADE OR CARRIER ASSESSMENT DECISION You placed the business in an approved market per your agency’s market selection process. In placing the business you informed your client of the available options with alternate markets, and if the policy was assessable, provided full details. In summary, you acted in a fully prudent manner by placing business in a market to protect both yourself from claim and your policyholder from financial loss.

NOW, due to your agency’s current procedures that monitor the ratings and activities of your carriers, you discover that one of your carrier’s financial ratings has dropped significantly to a level below that approved by the agency’s selection process, or that it is considering assessing its policyholders due to financial problems.

WHAT TO DO? The following checklist recommends actions to be taken to provide the best service to your policyholders while at the same time reducing the potential for claims against the agency.

PROTECT YOUR POLICYHOLDERS • Notify them in writing about what has happened and respond to any queries without delay. If a rating downgrade or potential insolvency issue, be prepared to explain the reasons given for the downgrade by referencing the comments of the rating agency. If an assessment issue, also notify any prior policyholders affected.

• If a potential insolvency issue, make them aware of what protection exists via any state or other guarantee fund.

• Keep policyholders informed as events transpire, including any open hearings that are scheduled. Let them know that you are concerned with keeping them informed.

erage. Have them confirm the option selected in writing.

• If coverage is moved midterm, attempt to secure prorated cancellation terms from the existing carrier due to the circumstances outside the policyholder’s control.

• Maintain positive relationships with both the carrier and policyholders. Policyholders should understand that you are looking out for their interests by doing all you can do to protect and inform them.

PROTECT YOURSELF • Immediately review the facts concerning the ratings downgrade or assessment action using your agency’s market selection and review process. Decide on a course of action and apply it consistently to all policyholders.

Document all decisions reached and develop a written plan to follow.

• Check with your Association concerning the issue and any recommendations or loss control measures it may recommend.

• Consult with your own legal counsel regarding your actions and the content of what is sent to policyholders.

• Document all actions taken by the agency in responding to the situation.

• Keep informed about the issue in order to answer policyholder questions without delay and to demonstrate full and accurate knowledge to the policyholders.

• In letters to policyholders consider using wording such as: “As we discussed when you selected this coverage option…”

“Per the summary sheet provided you/that you initialed…”

• Keep informed as to what the carrier is doing to notify your policyholders of its actions.

The intent is to remind them that THEY made the decision and were properly informed as to all options available.

• Use carrier supplied or approved notices whenever possible.

• Maintain a positive relationship with the carrier. Avoid any negative references regarding it or its actions.

• Avoid conflicting information being sent to the policyholders.

• Clear any correspondence with the carrier if required.

Check your contract with the carrier to determine what your duties or limitations may be in regards to the issue.

• Inform the policyholders about the implications of a midterm coverage move, a move at expiration, or remaining with the current carrier. Explain the possible loss of unearned premium if the carrier does become insolvent and coverage must be replaced midterm or the possibility of short rate cancellation terms if moved prior to actual insolvency or in an assessment situation.

• Offer the policyholders the option to move coverage midterm, and if declined, advise them that you will investigate replacement coverage at renewal with their agreement.

• Let the policyholders make the decision regarding covPage 18

• Be consistent! If you do something for one policyholder, do it for all of them.

For more valuable agency E&O risk management information and tools available exclusively to Swiss Re policyholders, visit www. independentagent.com/EOhappens.

The information outlined on this sheet is a guide to policies or procedures that are considered good minimal business practices.

It does not include all potential controls and is not intended to warrant that claims will not be incurred if guideline elements are followed. This information is based upon general isk control suggested practices and is not intended to be, or represented as legal advice.

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Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 17

Page 20

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Open with...

Estate Tax Ask questions about estate tax concerns to pitch an irrevocable life insurance trust to prospects.

By Dave Evans

It is the time of year when salespeople shift into high gear for the post-Labor Day sales season. For agents who are trying to get an appointment with that elusive business owner or executive to review their life insurance and estate planning needs, it can be very frustrating to get a face-to-face meeting.

Of course, a prospect may think your sole intent is to sell him an insurance policy and make a nice commission from the sale. But you just want to meet them, learn about their objectives and see how you can help them achieve them. You realize that not every client opportunity will result in a sale, but if you meet with enough qualified people, the sales will take care of themselves.

So, what is an effective opening remark to generate interest and an appointment, if you meet someone at a business or social gathering?

For people who are likely to have permanent insurance, such as business owners, ask them two basic questions: Are you aware that while the proceeds of life insurance are income tax–free, the insurance can be included in your estate?

Do you realize that on Dec. 31, 2012, the current estate tax exemptions of more than $5 million per person will revert to $1 million, with an ultimate estate tax rate of 55%? Yes, Congress could vote to raise the limit, but do you want to have your estate situation dependent on what Congress does or doesn’t do?

Those are effective questions because most people have no idea that life insurance can be subject to estate taxation. The conventional understanding is that life insurance

proceeds are tax-free—but, and it’s a big “but”—many people don’t realize that life insurance proceeds can result in a significant estate tax liability.

So, when a person expresses surprise at this fact, you are in a great position to say, “For my clients, we have the life insurance structured so that it is not includable in their estate and therefore not subject to estate taxes.” Stop at that point, and say that it would be best to discuss the subject in person at the client or agent’s office. Ask for a time to get together.

Of course, a client must use an irrevocable life insurance trust to have the trust be the owner of the policy and remove all incidence of ownership from the insured. The law requires that a three-year period tolls, so the policy is not included in the person’s estate.

This three-year requirement should serve as adequate motivation to avoid procrastination and put the policy in the trust. This conversation also serves as a great starting point to discuss a person’s insurance needs.

The concept is solid, but the key is reaching out to enough people to make sure they understand that you are a problem-solver on their behalf. And if you have clients who have purchased life insurance from you and you haven’t had the conversation about using an irrevocable life insurance trust, be sure to contact them before another agent does first.

The public can be skeptical about Congress’ ability to do anything and more importantly, regardless of what Congress does, every agent who sells a large insurance policy should talk to their client about using an irrevocable life insurance trust.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 21

THANK YOU to the members of the IIANM 2012 Partners Program.

The companies listed below have made a commitment to support the strongest agents’ association in New Mexico.

In turn, as members, please show your thanks by utilizing their varied products and services.

Page 22

Thank You!

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Thank You Contributors!!

William Burke

Burke Insurance Group, Inc.

$2,500

Bill Fortner

AVI Risk Management Services

$1,000

Scott Jones

Brown & Brown

$ 500

Thom Turbett

IIANM

$ 500

Bruce Vidal

Carney-Vidal Insurance Agency

$ 500

The following people from

Jenny Wood

One General Agency

$ 500

New Mexico stepped up this year

Roger Downey

Downey & Company

$ 500

Gail Bundy

First Santa Fe Insurance Services, Inc. $ 250

Sam Conlee

Wells Fargo Insurance Services USA

$ 250

As donors, they understand that

Bart Garrison

High Country Agency, Inc.

$ 250

an investment in InsurPac is an

Chris Williams

Western Assurance

$ 250

Kathy Yeager

High Country Agency, Inc.

$ 250

Gena Fredrickson

Meridian Insurance Services

$ 250

George Shaffer

Market Finders

$ 250

PJ Wolff

Northern Insurance Agency

$ 250

Connie Sevier

Western States Insurance Group

$ 180

Ken Gehrke

Millennium Insurance Agency, LLC

$ 150

Diana Hobbs

Millennium Insurance Agency, LLC

$ 150

Carroll Leavell

Leavell Insurance, Inc. - Hobbs

$ 150

Joe Lujan

Manual Lujan Insurance, Inc.

$ 150

0

Gary Sims

JS Ward & Son, Inc.

$ 150

0

Heather Fortner

AVI Risk Management Services

$ 150

0

CJ Wiegel

Tucumcari General Agency

$ 150

Al Berryman

New Mexico State University

$ 150

Ed Risley

Daniels Insurance Agency

$ 150

Millie Howle

Millennium Insurance Agency, LLC

$ 100

Crews Brandhorst

Colorado Casualty Insurance Co.

$ 100

Bobby Armstrong

Armstrong Coury Insurance

$ 100

Mike Parisi

Western Assurance

$ 100

Rebecca Martinez

New Mexico Mutual

$

25

Casey Dove

The Republic Group

$

25

Bob Smith

Mountain States Insurance Group

$

25

Joan Buckner

LegalShield

$

25

WE REACHED OUR GOAL!

and contributed to InsurPac.

investment in the future of our business.

$10,0

00

$9,00

0

$8,00

0

$7,00

0

$6,00

$5,00

$4,00

$3,00

0

$2,00

0

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

Page 23

Introducing IIANM’s 2012 - 2013 Board of Directors

Executive Committee

PJ Wolff Chair

Diana Hobbs Vice-Chair

Gabe Portillo Sec/Treasurer

Northern Insurance Santa Fe, NM

Millennium Insurance Farmington, NM

Berger Briggs Insurance Albuquerque, NM

Scott Jones Immediate Past Chair

Sam Conlee National Director

Brown & Brown Insurance Albuquerque, NM

Wells Fargo Insurance Albuquerque, NM

Directors Anna Byers

JS Ward & Son, Inc. Artesia, NM

Casey Dove

Young Agent Chair The Republic Group Belen, NM

CJ Wiegel

Tucumcari General Insurance Agency Tucumcari, NM

Gena Fredrickson

Meridian Insurance Services Roswell, NM

Mike Parisi

Western Assurance Albuquerque, NM

Ed Risley

Daniels Insurance Agency, Inc. Santa Fe, NM

YAO of New Mexico 2012 - 2013 Executive Committee

Casey Dove Chair The Republic Group Belen, NM

We exist to help young agents in New Mexico succeed!

• We encourage involvement in our State Association • Promote leadership roles within our State Association and our respective organizations • Offer training in sales, management & leadership

Bob Smith Vice - Chair Mountain States Insurance Group Albuquerque, NM

• Educate agents regarding state political issues • Instigate communication between young agents

Attention Agency Owners!

Now is the time to develop your

Jessica Loomis Secretary-Treasurer HUB International Albuquerque, NM

“Young Agents” and promote your agency and create relationships to benefit your book of business.

Utilize your “Young Agents” and start improving your business today!

Rebecca Martinez Immediate Past - Chair New Mexico Mutual Albuqerque, NM

Click here for more information

g n a r e Boom "

Kids "

"In a recent Personal Lines Department meeting, the subject of “Boomerang Kids” came up.

These are kids who are over 18 that have moved back home with their parents, usually following job loss, divorce, etc. Given the state of the economy, the price of gas, and so forth, this is probably not unusual. What are the insurance issues for both parents and kids?"

“Home is the place where, when you have to go there, they have to take you in.” The great America poet Robert Frost’s immortal line shows that this is an age-old issue.

Here are some of the insurance issues. For the following discussion, assume Jack and Jill are Mom and Dad, Jillette is their 25-year-old daughter, and Jack, Jr. is their 17-yearold son. Jack is a high school senior who has always resided with Mom and Dad. Jillette is a college graduate who recently moved back in with Mom and Dad, after living on her own for several years.

HOMEOWNERS POLICY Insureds. For Section I Property and Section II Liability & Medical Payments, the definition of “insured” includes anyone who is a “resident relative.” Neither term is defined in the policy. At the time when Jillette moves back in with Jack and Jill, through choice or circumstance, her status as an “insured” in their Homeowners Policy is not clear cut or automatic. In fact, there is a considerable body of jurisprudence dealing with this issue.

For example, if Jillette moves in with Jack and Jill for a month or two awaiting the start of a new job, or graduate school, there is some doubt about her residency status. In contrast, if she intends to live with them for the foreseeable future, she would have a stronger argument as to residency. The jurisprudence is replete with endless variations on this issue of when residency exists.

To illustrate how uncertain the term is, consider this excerpt from one court case wrestling with determining residency: “The word ‘resident’ is flexible, elastic, slippery, somewhat ambiguous, obscure, and nebulous in meaning, has many definitions, and is difficult of exact or satisfactory interpretation.”

In situations where there is doubt about Jillette’s residency status in Jack and Jill’s Homeowners Policy, the safest course of action is for her to procure a policy in her own name – HO-4 in this case. See further discussion below.

Page 26

Coverage C – Personal Property. Jack and Jill’s Coverage C applies to “personal property owned or used by an insured while anywhere in the world.” Thus the personal property of Jack, Jill, and Jack, Jr. is covered worldwide.

If Jillette has residency status, her property is likewise covered.

If she is not a resident, there is still limited coverage for her property under Jack and Jill’s Coverage C, as follows: After a loss and at your request, we will cover personal property owned by: a. Others while the property is on the part of the “residence premises” occupied by an “insured”; or b. A guest or a “residence employee”, while the property is in any residence occupied by an “insured”.

As a nonresident, her personal property is covered under their policy only while the property is at their home, or while she is a guest with them someplace else, such as on vacation.

Coverage C Limitations. Much of the current literature on “open nesters” indicates that many parents charge their adult kids room and board. Jack and Jill’s Homeowners Policy contains the following limitation: “We do not cover property of roomers, boarders and other tenants, except property of roomers and boarders related to an “insured”; Luckily for Jillette, even though Jack and Jill charge her room and board, this limitation does not apply to her personal property, since she is a relative.

Since Jillette has lived on her own for several years, she will likely have her own household furnishings & contents, TV, and numerous other items of personal property. If she keeps all this property at Jack and Jill’s house, there is the potential that their Coverage C might not be adequate.

Or, Jillette might elect is to put much of this property into a storage facility, such as a miniwarehouse. If Jillette has residency status and therefore is an “insured,” there is a provision in Jack and Jill’s policy for certain property off-

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

premises that is subject to a 10% limitation. Here is the excerpt:

1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer”.

Our limit of liability for personal property usually located at an “insured’s” residence, other than the “residence premises”, is 10% of the limit of liability for Coverage C, or $1,000, whichever is greater. However, this limitation does not apply to personal property.

2. Any person using “your covered auto”.

It is important to note that this 10% limitation for Coverage C property which is stored off-premises at a miniwarehouse is NOT subject to the 10% limitation. The limit only applies to personal property which is “usually located at an “insured’s” residence, other than the “residence premises…” The limit only applies when an insured keeps property at another residence of his/hers. The miniwarehouse is not a residence; therefore the 10% limitation does not apply. However, if Jillette has personal property still at some other residence of hers, then her coverage under Jack and Jill’s policy is 10% of their Coverage C for such property.

If Jillette is not a resident of Jack and Jill’s house, she would have no coverage for her property in the miniwarehouse. As noted above, her coverage as a nonresident would be that afforded to “others while the property is on the part of the residence premises occupied by an insured, or “a guest or a residence employee, while the property is in any residence occupied by an “insured”.

Another personal property issue Jillette needs to address is if she had personal property that should be scheduled, such as jewelry, etc.

Liability and Medical Payments. Section II applies to “insureds.” As noted above, Jillette’s status as a resident is not automatic simply because she is staying there.

She would have to show more of a residency connection to her parents’ home than merely being there for a short period of time.

Recommendations. Probably the safest approach for Jillette is to obtain her own HO-4. As outlined above, her status as an insured depends on her proving residency, so having her own insurance eliminates the problem.

Even in cases where she can establish residency for now, at age 25 that is likely to change at some point, probably sooner than later.

Another advantage to her having her own insurance is so that she could secure adequate limits on her personal property, including a schedule for valuable items, or adding coverage for a jet ski, ATV, etc. Also, she could select her own Section II limits, which would be particularly important if she has a Personal Umbrella.

PERSONAL AUTO POLICY Assume Jillette has her own PAP, and that Jack and Jill have their own PAP. Issue #1 – Jillette driving Mom’s car. Jack and Jill’s PAP is primary. Jillette is an “insured” in their policy, in one of two ways. In their PAP: B. “Insured” as used in this Part means:

The PAP contains the following definition of “family member”: “Family member” means a person related to you by blood, marriage or adoption who is a resident of your household.

This includes a ward or foster child.

Therefore, if Jillette is a resident, she is covered by the provisions of B.1., for any auto. If she is not a resident, she is covered as a permissive user under B.2.

In Jillette’s PAP, she is covered in Part A Liability for the “ownership, maintenance or use of any auto or trailer.”

Many of the exclusions in Liability are drafted to restrict the broad term “any auto” in order to provide the coverages intended. In Jill’s PAP, the following Exclusion 3 should be reviewed: 3. Any vehicle, other than “your covered auto”, which is: a. Owned by any “family member”; or b. Furnished or available for the regular use of any “family member”.

However, this Exclusion (B.3.) does not apply to you while you are maintaining or “occupying” any vehicle which is: a. Owned by a “family member”; or b. Furnished or available for the regular use of a “family member”.

While her PAP excludes an auto that is owned by a family member, the exception provides coverage for Jillette in her own policy while she is “maintaining or occupying” that car. This would clearly provide coverage for Jillette in her own PAP while she is driving her Mom’s car.

Issue #2: Jack, Jr. driving Jillette’s car. Jillette’s PAP would be primary, and Jack, Jr. is an insured, either as a “family member” (see “Insured” B.1. above) or a permissive user (B.2.), as discussed in Issue #1.

For excess coverage, Jack, Jr. is NOT covered by Jack and Jill’s PAP, if Jillette is considered a resident family member. Refer to the preceding discussion of Exclusion 3 above. Mom and Dad’s policy excludes liability coverage for an auto “owned by a family member.” The only exception is “while you are maintaining or occupying” the vehicle. In the PAP, “you” is defined as the named insured and resident spouse (i.e., Jack and Jill only).

However, if Jillette is not considered a resident of Jack and Jill’s household, then Exclusion 3 in their PAP would not apply, since the car Jack, Jr. is driving is owned by someone who is not a “family member.” Therefore, in that situation, Jack, Jr. would be still be covered under his Mom and Dad’s PAP for his use of Jillette’s car.

CONCLUSION When dealing with “Boomerang Kids,” the prudent approach for the agent would be to review the broad spectrum of insurance issues with both the parents and the adult kids. Good documentation would be important.

Independent Insurance Agents of New Mexico - www.iianm.org - * October 2012

page 27

2012 October

Sunday

Monday

1

8

Click on class title to register

Tuesday

Wednesday

Thursday

2

3

4

Pre-licensing Class

9

Friday

Saturday

5

6

12

13

L&H

P&C

7

Clickable Calendar

10

Pre-licensing Class

11

CE Committee Meeting

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

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Classifieds

14

New Mexico’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!

How to Save Your First $100,000

Want to get

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D E IR

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Steer clear of these mistakes that can land you on your employer’s short list of people to let go: • Chronic lateness. Showing up on time demonstrates reliability and commitment. If the boss doesn’ know when to expect you, he or she may decide not to wait around for you to appear.

These past few years have highlighted uncertainty. Everything that we thought would be rock solid came crashing down. Financial institutions, companies and countries have all stumbled and are struggling to get back up. Even the weather has been highly erratic. It's not at all unusual to worry and wonder how you will weather the storms that enter your life from time to time.

Financial stability, apart from being able to pay unexpected bills, fund your child's education or save for your own retirement, gives you the confidence and strength to go through everyday life. By saving money and increasing your income, you can move toward earning your first $100,000. And once you do that, the way to the next $100,000 can become easier.

How to Save Your First $100,000

• Online antics. Resist the temptation to complain about your job online, or to post photos of yourself goofing off at work. They’re hard to keep hidden, and they indicate that you’re not serious about wanting to do the best job possible.

• Sloppy personal habits. Even in a “casual” workplace, appropriate dress and hygiene are important. Unwashed T-shirts, beach sandals, and uncombed hair look unprofessional in any setting.

• Egotism. You may sincerely believe that you’re smarter and more capable than most of your co-workers, but if you refuse to compromise, ignore the chain of command, or otherwise behave arrogantly, you’ll alienate people whose support you need. Your skills may save you for a while, but in the long run, managers look for people they enjoy working with.

• “It’s not my job.” A good work ethic tells supervisors and co-workers they can depend on you for results. If you’re constantly trying to evade extra duties or responsibility, you’ll be seen as someone who doesn’ care about the organization or its people.

• Dishonesty. A lie on your résumé can get you fired, but even casual lies in the workplace can gain you a reputation as someone who can’t be trusted. Make an effort to tell the truth in every situation, especially when it means admitting a mistake.

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With the Caliper Profile, our consultants can provide you with a clear, accurate picture of an individual’s strengths, limitations, motivations and potential. Then, these results are compared to our unparalleled database of information about the qualities it takes to succeed in virtually every position, as well as the information you provide about your corporate culture, your management style and the responsibilities of the job. From here, our consultants can tell you if an individual is a natural fit for that position.

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