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
a L
Independent Insurance Agents of NM 1511 University Blvd. NE Albuquerque, NM 87102. (505) 843-7231. Fax (505) 243-3367. Web site www.iianm.org. This publication is intended to provide accurate and authoritative information on the subject matter covered, but is distributed with the understanding that neither IIANM, nor any contributing author, publisher, contributor or advertiser is rendering legal, accounting or any other professional service and assume no liability whatsoever in connection with its use. Further, the electronic links to our advertisers and/or contributors found in this publication are provided as a courtesy to our readers and do not necessarily indicate an endorsement by IIANM. 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 Communications Director Rachel Sheffield Member Services Associate Renee Trujillo
2012-2013 Officers
Features
o VZ
"The Voice" of Independent Agents since 1934
IIANM’s 2013 Company Partners
04
IIANM Holiday Party Invitation
05
Beating the Auto Discount Trap
07
IIANM Dues Deductibility
09
Community Corner
09
Why Do Insureds Need D&O Insurance?
10
DocuSign for Independent Insurance Professionals
12
2013 Best Practices Study: Agency Specialization on the Rise
17
PAP Coverage for Valet Parking
18
Union Standard’s League of Heavy Hitters
19
Stop the Micro-Management Mess
20
A Look Back at 2013
23
IIANM’s 2014 Calendar of Events
24
Avoiding Social Media Traps
26
In Every Issue Tech Talk
14
December's Clickable Calendar
28
Odds n Ends
29
Advertiser Index
Chair Diana Hobbs
Acuity
Vice-Chair Gabe Portillo
Litchfield Special Risks
08
Secretary/Treasurer Connie Sevier
Market Finders, Inc.
13
Mountain States Insurance Group
National Director Sam Conlee Immediate Past Chair PJ Wolff
Burns & Wilcox
06
Back Cover
11
New Mexico Mutual
02
Risk Placement Services (RPS)
16
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!
IIANM’s Holiday Party! Your whole office is invited! Help us celebrate the season and enjoy cocktails & hors d’ oeuvres! See you there, December 5th, 2013 4pm - 8pm
WE SHOT FOR THE STARS AND LOOK WHAT WE HIT
IN COMPANY ASSETS!
ACUITY ’s assets are skyrocketing to new heights! Just 10 years after reaching the $1 billion mark, ACUITY ’s assets have tripled to $3 billion. We owe our thanks to loyal independent agents in 22 states and our staff of nearly 1,000 insurance professionals for helping ACUITY achieve results that are truly out of this world!
www.acuity.com Page 6
For Independent All That Matters facebook.com/acuitywow Insurance Agents of New Mexico - www.iianm.org - * December 2013
Beating the Auto Balancing consumer demand for discounts with value-added service can be an uphill battle. By Jacquelyn Connelly, IA assistant editor.
TRAP
Focusing on the prevalence of discounts in auto compared to other types of insurance, a recent study from insure.com analyzed the availability and savings potential of 49 types of auto discounts for large car insurance carriers. According to the study, Missouri, Connecticut and Indiana offer the most potential discounts, with savings available more than 32% of the time. Insure.com also identified that good student discounts and those involving bundling are among the largest and easiest to find. “Auto is generally a competitive market,” says Amy Danise, editorial director at insure.com. Offering discounts, then, is “definitely a tool to attract new business, because it’s one way companies can differentiate themselves from the competition and rise above the fray a little bit.”
The Power of the Discount Leveraging auto discounts is a tactic many independent agencies use to sell more policies, and it often starts at the very beginning of the application process with identifying the discounts for which current or potential clients might qualify. “We don’t want to miss something,” says Ron Bixby, vice president of Ludlow Insurance Agency in Ludlow, Vt. When quoting auto for Ludlow Insurance, producers use a “cheat sheet” that lists available discounts. “As many discounts as we can come up with for someone, obviously the better off it is for them price-wise, and for us to make the final sale. So we try to get as many discounts involved as we can.”
‘Discount’ Doesn’t Always Mean ‘Savings’ But when it comes to auto discounts, the study also warns that looks can be deceiving—after all, higher discounts often translate into higher base rates. Good student discounts, for example, average highest at 16%—but the base rate for an 18-year-old male will usually be significantly higher than an older driver who no longer receives a report card. So if savings don’t paint the entire picture, what fills in the gaps? That’s a particularly tricky question for independent agents, who often find it difficult to compete with large carriers that use discounts to lure customers away from them. But clients who fall into the trap might be forgetting about the situations where insurance savings matter most: claims. “Sometimes, paying less doesn’t equate to a better scenario when a claim happens,” Ross says. “You can pay your insurance premiums all day long, and you might be happy that you’re paying a certain rate. But when that claim happens, that’s when you suddenly need that advocate, that person on your side who’s going to do their best to make sure you get back to being whole.” The agent’s role as advocate is behind Ross’s belief that unless the savings amounts to 20 or 30%, most people still afford more weight to the relationship they have with their agent.
In addition to checking client qualifications right off the bat, maximizing auto discounts also tends to involve “account-rounding” as often as possible. Bixby cites client “longevity” as a reason behind offering concurrent policies, which Danise asserts is “one of the most common” types of discounts available.
“What they end up losing in the savings proposition is an advocate who is looking out for their best interest,” Ross explains. “You sort of lose that when you’re dealing with a direct writer—not to say that direct writers aren’t doing great things, but you just lose that extra layer of someone who’s going to fight the fight for you.”
“Our company strategy as a whole, whether it’s on the personal side or the commercial side, is to bundle up all coverages,” says Derek Ross, president of ISU Insurance Services – Kulchin Ross Agency in Tarzana, Calif. “We find it’s in the client’s best interest to handle all lines of coverage—it helps identify and prevent any gaps. And it also allows us to build up that bundle discount to potentially offer significant savings.”
Bixby agrees that most clients would prefer a foundation of trust over moderate annual savings. “A lot of people say price is the bottom line and that’s what they deal with,” he says. “But once they find out that you saved them a little bit of money or saved them a lot of money after a claim because you had them covered correctly, then they see the value in the independent agency.”
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
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Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
2012-2013 IIANM Dues Deductibility Dues to the Independent Insurance Agents of New Mexico (IIANM) are not deductible as a charitable contribution but may be deductible as an ordinary and necessary business expense. To the extent that The Big “I” engages in lobbying, the portion of the dues that relate to lobbying expenses is not deductible as an ordinary and necessary business expense. This law was enacted in 1993, effective January 1, 1994 [Section 13222 of the Omnibus Budget Reconciliation Act of 1993 (OBRA 1993)]. The non-deductible portion of dues for 2012-2013 is 23.14%. Please forward this information to the appropriate staff in your organization. The following is a recap of the non-deductible portion of dues for the past six years:
FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14
Estimated Estimated Estimated Estimated Estimated Estimated Estimated
25.16% 18.23% 17.72% 21.92% 22.83% 22.71% 23.76%
Actual Actual Actual Actual Actual Actual
17.99% 17.35% 21.37% 22.19% 22.29% 23.14%
We are pleased to announce that Mountain States received the Association of Fundraising Professional’s 2013 National Philanthropy Day’s award as the Outstanding Business/Corporation in Philanthropy! We would like to thank everyone who gives to the community so generously, with either their time or money. Congratulations Mountain States!
Congratulations are also in order for Cress Insurance Consultants. The Albuquerque Journal’s Business Outlook listed them number 27 on their top 100 list for revenue-producing private-sector companies who contribute mightily to the state’s vitality. Well done!
Also, a shout out to our own IT professionals, Abba Technologies they were #42 on the same listing. Good job guys!
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
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No doubt, agents have often been asked by insureds or prospects why they need Directors & Officers (D&O) insurance or any other type of liability insurance other than CGL and auto.
Why Do Insureds Need D&O Insurance? by, Bill Wilson, director of the Big “I” Virtual University A D&O policy typically covers "wrongful acts" by directors and officers of an entity within their capacity to make decisions regarding the entity's activities. A wrongful act is often defined to be: any error, misstatement, misleading statement, act, omission, neglect or breach of duty committed, attempted or allegedly committed or attempted, by an insured person, individually or otherwise, in an insured capacity, or any matter claimed against him or her solely by reason of his or her serving in such insured capacity. If the D&O policy excludes wrongful acts arising out of the provision of professional services, a separate errors & omissions (E&O) or other type of professional liability coverage may be needed—although some D&O policies package E&O, employment practices liability insurance (EPLI) and sometimes fiduciary liability insurance. All of these policies provide coverage for exposures, damages, claims and suits not covered by a CGL policy. Directors and officers can be sued by an entity itself, or by other current or former directors and officers, employees, shareholders, investors, lenders, vendors and customers. They can also be sued by competitors, various government officials such as a state attorney general, Internal Revenue Service, state and federal labor departments, consumer groups and other third parties. Most D&O claims come from shareholders and employees, with the next most common source being competitors. Because D&O policies typically include an intentional acts exclusion, a policy should include a severability clause so coverage is afforded to an innocent insured who did not participate in such acts. It is also usually a good idea to include the organization as an insured in addition to the directors and officers. This can typically be done by endorsement and often at no additional charge. Listed below are some examples of D&O claims: • A minority shareholder in a family-owned electrical contracting business sued the two major shareholders on behalf of the company, claiming they breached their fiduciary duties. The minority shareholder claimed that the majority shareholders, by drawing excessively large salaries and bonuses, caused the company to lose money. The court ruled in favor of the majority shareholders, but the defense costs amounted to six figures. • A mid-sized manufacturing firm hired an employee away from one of its competitors, bringing the person on as an
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officer. A year later, that new officer's ex-employer sued the officer and his new firm, alleging that the officer misappropriated trade secrets and violated certain provisions of is termination agreement. • The plaintiff filed a complaint against their competitor alleging that a former employee, now working at the competition, engaged in unauthorized use of confidential and proprietary information and committed other acts of unfair competition. As a result, the plaintiff alleged it has suffered irreparable and immediate injury. In addition, the plaintiff alleged that the defendant has possession of its confidential information and intellectual property. • The federal government sued the CEO, the president and other officers of an East Coast manufacturing company for price fixing. After an extensive trial, the allegations were dismissed due to lack of evidence, but the defense costs and fees incurred approached $1 million. • A company enters into an investment agreement with a third party and agrees not to negotiate with other entity regarding financing or a potential acquisition for a two-week period. During the exclusivity period the company engages in negotiations with another investment group. The third party alleges breach of investment agreement and intentional and negligent misrepresentation. Click here to access the full version of this story, which includes more claims examples and links to related information.. For help accessing the website, email rachel@iianm. org to request your login information.
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
Meet the new face of Mountain States.
New look. New website. Same core values.
Visit our new website at msig-nm.com *
* If difficulty viewing new site, you may need to refresh or empty cache and re-bookmark
See How Easy Life Can Be with eSignatures
New Member Benefit!
Experiment with a quick demo from Big ‘I’-endorsed eSignature partner, DocuSign. The Big “I” recently announced its endorsement of eSignature provider DocuSign, and with it an exclusive Big “I” member discount on DocuSign annual subscriptions. Big “I” members save $48 per year, bringing the annual rate to just $192 per year per user.
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Rusbuldt Named Among Top Association Lobbyists The Hill newspaper again honors Big ‘I’ president & CEO. Respected political newspaper The Hill has named Bob Rusbuldt, Big “I” President & CEO, one of the top trade association lobbyists in Washington, D.C.
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Several former members of Congress who are now lobbyists also earned spots on this year’s list, including Sen. Chris Dodd (D-Conn.), Sen. Judd Gregg (R-N.H.), Sen. Gordon Smith (R-Ore.), Rep. Ken Bentsen (D-Texas) and Rep. Steve Largent (R-Okla.). Former Gov. Frank Keating (R-Okla.) also made the list. The Big “I” was one of only three insurance associations named this year (alongside AIA and PCI), and was the only insurance agent/broker group on the list. “Our Big ‘I’ government affairs team, under the leadership of Charles Symington, is top notch and well-respected on Capitol Hill,” Rusbuldt says. “Their hard work and commitment to the independent agents and brokers they serve continues to have an impact in Washington, D.C., and this award recognizes the hard work and dedication of the government affairs staff.” Click here for the complete article and list
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
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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!)
How to Use Outlook for Text Messages Text messaging is becoming a popular way for agency staff to communicate with clients, prospects, and others they deal with on a daily basis. However, appropriately managing text messaging so that client information can be properly documented continues to be a major problem. Few agency management systems allow text messaging as an option for communicating with clients. In this TechTips, I want to let you know about one option for text messaging that your agency might want to explore. Microsoft Outlook 2007, Outlook 2010, and Outlook 2013 have a built-in feature that allows users to add an account to send SMS messages from within the Outlook application. When you set up a new text messaging account within Outlook, you are given the option to connect the application with several SMS service providers.
The one I chose is SMSOfficer. With SMSOfficer, which is a plug-in for Outlook, you can send and receive text messages from your desktop email to cell phones. The service works with any cell phone carrier (but only with Outlook email). This service takes advantage of the OMS interface (Outlook Mobile Service) provided by Microsoft. Your SMS message gets sent to SMSOfficer’s servers, where they are turned into SMS messages and sent over the mobile carrier networks. Up until now, few other services in the U.S. took advantage of this capability. To use the service you purchase credits—$33 for 500 and $63 for 1,000. A credit lets you send a text message up to 160 English characters or 70 non-English characters. If the person replies to your text message, it comes back into your Outlook inbox and costs you another credit. The company also offers the Business Control Panel solution, which allows business subscribers to purchase one bulk amount of credits and then share them among multiple corporate users. The advantage of using Outlook for sending and receiving text messages is that they are a type of document that can be attached to the client file in your agency management system.
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Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
Two Quick Microsoft Office Keyboard Shortcuts
A New Kind of Business Card Getting your name in front of clients and prospects is only part of the battle in today’s noisy environment. People want to know more about who you are and what you do before they commit to a conversation. That’s why SavvyCard might be a great option for enhancing your email signature. I first found out about the platform from a business friend and fellow National Alliance instructor – Jerry Rhinehart. He had set up an account and added his interactive SavvyCard link to his email signature.
I’m a keyboard guy. I don’t like taking my hands off of the keyboard. And I especially don’t like using a mouse if there is a keyboard shortcut. So, I tend to learn as many of them as I can. Here are a couple of shortcuts that many people don’t know. CTRL+F1 When working in the Microsoft Office Suite of products, using Control+F1 can be an easy way to gain more screen real estate. It is a simple toggle that hides the ribbon bar at the top of the screen. The full ribbon bar takes up quite a bit of space and is not always needed. So, when I am concentrating on writing, I type CTRL+F1 and the bar disappears. Type it again and it’s back. If I do need a command that’s on the ribbon bar I can simply move my mouse up to the top and the bar will drop down to allow me to access the command. This key works for every program within the Office Suite. CTRL+K You can quickly locate a user in your address book or a company address book by typing portions of the name or alias and pressing CTRL+K. For example, if you want to send an email to John Doe, typing “jo do” and then pressing CTRL+K will automatically complete the name John Doe, unless other names exist with “jo” and “do.” This is very helpful with a large corporation’s address book, especially when you don’t know how to spell someone’s name.
You can create your free online SavvyCard in minutes with an easy-to-use card builder. You can also customize the information included to provide as much or as little as you are comfortable sharing. I might suggest that in today’s environment the more information you provide about yourself the more likely it is someone will want to connect with you.
Keep an Eye Out!
IIANM’s New Website January 1st, 2014! Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
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2013 Best Practices Study: Agency Specialization on the Rise
By Shirley Lukens
Since 2010, the percentage of agencies with a specialty or niche has increased significantly across all revenue categories, according to the 2013 Best Practices Study.
the four service staff positions.
The comprehensive 2013 Best Practices Study is the 21st edition of the annual benchmarks provided in a joint effort by the Big “I” and Reagan Consulting. This year’s iteration, which marks the beginning of a new three-year study cycle, provides an expanded look at the activities of top agencies across the country, and includes additional information not available in the annual updates. The expanded information includes results related to specialty/niche revenue, employee productivity, technology issues, management practices, key challenges and more. The increase in specialization is not surprising given the potential efficiencies and growth advantages of the practice. Developing an expertise or proficiency in a certain industry or product facilitates targeted leads and referrals, improves retention and provides a competitive edge for an agency. Specialization has increased across agencies of all sizes: BPS Rev <$1.25 Category million 2010 2013
25.0% 39.4%
$1.25-2.5 million 44.2% 55.9%
$2.5-5 million 51.4% 64.4%
$5-10 $10-25 million million 55.6% 72.1%
64.1% 72.7%
Another interesting result from the expanded study is the ranking of technology investments planned for the coming year. The top investment choice for agencies with revenue under $5 million will be in internet marketing and social media, while agencies with revenue over $5 million ranked investments in agency management systems as the No. 1 choice. Internet marketing and social media investments ranked fourth for the larger agencies, perhaps because many of these firms have already ventured into these fields. Across all revenue groups, the average number of agency staff members that devote time to social media activities is 1.3 employees, who spend about 10% of their time on these activities. This year’s study also takes a new approach to measuring service staff productivity. Rather than identifying the average book of business serviced per account executive (AE) and customer service representative (CSR), the study combines all service positions—AE, CSR, processor, marketer/placer and claims—by line of business, and does not include administrative staff members like accountant or receptionist. This change gives readers access to the total number of people the typical Best Practices agency utilizes to service the revenue in its commercial, bonds, personal, group life-health and individual life-health books of business. The study also provides a salary range for each of
Latest study reveals new data on niche revenue, staff productivity and more.
As expected, organic growth has continued to improve dramatically since last year’s study. The average growth rate in total commission and fee revenue was 9.4% (up from 2.1%) for agencies with net revenue under $5 million, and 9.8% (up from 4.5%) for agencies with net revenue over $5 million. Although a significant portion of the growth can be attributed to increasing premium rates and an improving economy, that’s not the whole story. Between 2007 and 2010, when the soft market and an extremely weak economy made positive growth nearly impossible, Best Practices agencies continued to invest in growth strategies that would allow them to achieve organic growth and obtain a competitive edge as conditions improved. The results of those strategies—which include hiring new producers and equipping them with new tools and resources, enforcing more producer accountability, focusing on specialty/niche areas and expanding marketing/advertising activities—has paid off.
Strong revenue growth improved profitability as well. Although last year’s study results identified that >$25 growth was stronger than it had been in years, profit million margins remained stubbornly flat thanks to waning 68.4% contingent income growth. That trend has now re80.0% versed. This year’s results show that contingent income has grown an average of 21.8% for agencies with revenue under $5 million, and an average of 10.7% for those with revenue over $5 million. At the same time, agencies did a much better job of controlling expenses so that operating profits grew faster than contingent income. The result? Smaller to mid-sized firms enjoyed an average ProForma EBITDA margin of 29.3%, while the larger firms averaged 22.7%. Finally, last year proved to be a solid year of value creation. The Rule of 20 scores, a simple growth and profitability balancing equation that provides a quick way to determine whether or not agency is creating value for its shareholders, were the highest they’ve been in several years. Small to mid-sized agencies earned an average score of 24.1, while agencies over $5 million earned 20.8. Generally speaking, an outcome of 20 or higher—regardless of growth and profitability—indicates that the agency’s shareholders can expect to earn 15-17% per year through stock price appreciation and/or shareholder distributions. For more information about Best Practices resources and to obtain your copy of the full report, visit Best Practices online or send questions to Best Practices staff. Shirley Lukens is principal of Reagan Consulting and previously served as vice president of industry affairs at the Big “I.”
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
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PAP Coverage for Valet Parking Virtual University’s Ask an Expert
ulty
VU Fac
Normally, the Personal Auto Policy (PAP) covers permissive users. However, there is an exclusion for anyone “employed or otherwise engaged in the ‘business’ of...Parking...vehicles designed for use mainly on public highways.” So, does the PAP provide coverage for valet parking at a restaurant or hotel? Let’s complicate things...how about valet parking of a rental car?
"An insured will be going on vacation to Las Vegas and renting a car there. She wants to know if her auto insurance policy provides the following coverage: 1.) for her while driving the rental car, and 2.) coverage if the rental car is driven by a valet driver. She has a 1994 ISO PAP.” Permissive drivers are generally covered under the ISO PAP. However, this only applies to “your covered auto” which is primarly a declared or “temporary substitute” auto, not a non-owned auto rented on vacation. In addition, the valet’s ISO PAP would not respond because of the “auto business” exclusion. This exclusion in the owner’s PAP might or might not apply as discussed below by the VU faculty. Most of the faculty comments address the liability exposure, but a couple discuss an important exclusion for physical damage. The answer to the first question is, in general, yes. The answer to the second one is no.
FACULTY RESPONSE
The rental company wants a declaration of the drivers. Some rental companies will permit the spouse to drive without additional charge. In other cases, all declared drivers will be charged. The important point is that all potential drivers need to be declared and valets never are. There have been some cases on this. In fact, there was one in Chicago some years ago, where the valet hit a pedestrian while taking the rented auto to the garage. I cannot remember the outcome. This is why I never valet my rental autos. I look like a cheapskate at times, particularly at nice hotels, but that is better than getting caught in a situation where I am in violation of a contract.
FACULTY RESPONSE In general, the ISO PAP extends coverage to a rental car. However, there are some types of exposures not covered such as diminished value charges. For example, check out the VU article, “Top 10 Reasons to Purchase the Rental Car CDW/LDW.” As for the valet, there is no liability coverage for permissive drivers except for “your covered auto.” In addition, there is an exclusion for people in the business of parking autos. The insured, however, would be covered. The named insured is protected for liability; the valet is not. The car rental agreement probably voids any CDW coverage the insured might buy because it’s being driven by a driver not authorized by the rental agreement. The typical car renter, even it told that only s/he has coverage, probably wouldn’t even think of this exclusionary provision in the rental agreement.
FACULTY RESPONSE
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Considering only the physical damage exposure, this is yet another reason to purchase the collision or loss damage waiver. The ISO PAP covers physical damage to nonowned autos if you have physical damage on at least one declared auto. However, this coverage extends only to a nonowned auto “while in the custody of or being operated by you or any ‘family member’....” If the rental car is being valet parked, it’s certainly not being operated by you. The question is whether it is still technically in your custody. Does custody mean possession or entrustment? Is the rental car in your custody from the moment you rent it or only when you have physical control? It’s a matter of law and contract interpretation. That’s why I never valet park a rental car.
FACULTY RESPONSE
Since the named insured isn’t engaged in an auto parking business, s/he would have coverage. The valet, like any permissive user, is only an insured when it comes to “your covered auto.” A typical rental (unless “YCA” is out of commission and that’s why you’re renting it) is a nonowned auto and not a “YCA,” so the valet would not even be an insured.
FACULTY RESPONSE
If it was the named insured’s own vehicle, the valet would be an insured permissive driver, but the question is whether the auto business exclusion would apply. The valet is most likely engaged in the business of parking cars, but does the exception apply? There is coverage for any agent or employee of the named insured or a family member. Is the valet an “agent” of the named insured in that s/he is acting on the named insured’s behalf in conducting this business? I don’t know the answer to that and I’ve never seen a court case that looked at the issue.
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
Union Standard Insurance Group®® Union Standard Insurance Group
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Union Standard is committed to working with Union is committed to working young Standard independent agents because they with are the young independent agents because they are the future of our business. That’s why we are partfuture business. why we are partneringof forour success withThat’s New Mexico’s Young nering success with New Mexico’s Young Agents.for Union Standard recognizes the need Agents. Standard recognizes the need to fosterUnion the growth of new talent to to foster thethe growth of new talent to System perpetuate Independent Agency perpetuate the Independent Agency System as well as provide young agents a competitive as well as provide young agents a competitive advantage. advantage.
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Stop the Micro-management Mess By Russ Banham, IA Senior Contributing Editor
Successful agencies are trading in sales ‘management’ for sales ‘leadership.’ Every independent agency wants to sell more and is constantly on the prowl for new ways to do so. But sales tactics are less important than an overall strategy. Establishing a consistent sales methodology can be a powerful revenue generator. This is one of several eye-opening findings of an in-depth study by Reagan Consulting, which identified specific agency business practices that correlate closely with superior organic growth. Based on a survey of more than 100 top-performing agencies of all sizes, the study’s purpose was to turn these insightful findings into ways to increase sales revenue. The study posits a stark difference between what the firm calls sales “management” - the traditional hierarchical process run by an internal sales manager - and sales “leadership.” In place of a full-time employee outside the top ranks of the agency who is recruited to oversee sales, sales leadership requires someone from the executive team to assume responsibility for developing the agency’s sales culture and holding every producer accountable for their performance.
“Most top-performing agencies told us they don’t manage sales, which they see as a remedial exercise for underperforming producers who lack the skills to succeed,” says Kevin Stipe, president of the Atlanta-based consulting firm. “They prefer the concept of sales leadership, where one or more executive team leaders take on sales as a part-time responsibility.” Page 20
The study distills sales leadership into three essential elements. Top performances tend to give producers the tools they need to be successful; create a culture of accountability for producers; and constantly nurture the next generation of sales talent. These responsibilities fall to the sales leader, executive team member, practice group or division head who takes on the task of guiding and monitoring the overall sales effort. “Many people erroneously assume that the best agencies from a sales standpoint have a fulltime sales manager, yet only 17% of the study respondents had one,” Stipe says. “The fulltime sales manager actually is a relative rarity. Sales leadership is not a person per se’ it is more a set of responsibilities and imperatives.”
Equipping Producers
The most successful agencies from a sales growth perspective are doing just that: increasingly entrusting an executive team member - on some cases the agency’s owner - with riding herd on the sales process.
The distinction is subtle but significant, Stipe says. “The
best agencies think sales management is for wimps,” he explains. “They basically told us, ‘If we hire salespeople that have to be managed, then we’ve hired the wrong people.’ Some of this is semantics, but the point they’re making is that sales as a management exercise is perceived as something negative, whereas sales leadership is a positive insofar as driving organic growth.”
Obviously , winning the sales war requires having the right ammunition. As one agency principal commented in the study, “We want to give our producers an unfair advantage in the marketplace.” But how are top agencies achieving this advantage? For one thing, they give their producers quality, value-added resources to sell both property-casualty insurance and employee benefits: four out of five agencies in the study offered at least one in-house P&C resource, and their 2.6% growth rate is twice the 1.3% of those that did not offer such resources.
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
Another advantage for producers is specialization. According to the study, agencies that develop a singular specialty - such as managing risk in a certain industry or developing a deep understanding of a particular insurance coverage - and then train producers accordingly are winning the sales war. At York International Agency LLC in Harrison, N.Y., CEO Robert Kestenbaum provides his producers with a highly specialized staff, offering services like risk assessments and actuarial skills. “We think the best way to win an account is to replace the broker that already has this account, and not winning on price,” Kestenbaum explains. “Depending on the account, our various value-added services help us accomplish this. If it is an employee benefits opportunity, the producer works with the actuarial staff. If commercial, we have risk analysts to work with them. There is no push and pull here between the staff and the producers.” Similarly, MHBT Inc. in Dallas utilizes a support staff of specialists in workers compensation. Services provided to producers include claims analysis, resolution and risk modeling, and workplace safety and loss control resources. On the benefits side, the staff proves bill reconciliation, wellness programs, a call center and a self-service technology tool that client employees can use to review their 401(k) plans or check their tax payments. “We want our producers to be specialists at what they do, not merely focused on sales for the sake of sales,” says Robbie Smith, chief operating officer. To equip its producers to sell more, Assurance Agency in Schaumburg, Ill. has invested in a CRM (customer relationship management) technology tool. According to the agency’s president Dan Klaras, producers use the CRM as a “prospect pipeline” to send clients information that differentiates their “thought leadership” in a particular area. The best example has been the Affordable Care Act, Klaras adds. “We’ve done a tremendous amount of work helping prospects and current clients prepare for the registration, leveraging the CRM system to push information out on a regular basis, regarding what they need to do now to get ready,” Klaras explains. “We also invite them to seminars and webinars that we host on the subject. This deservedly sets us up as experts.” And these successful agencies are not alone. As the Reagan Consulting study points out, the majority of top-performing agencies have built one or more industry vertical specialties, and/or one or more product-focused specialty teams. “In both cases, the overall growth rates of the agencies doing this are more than double the ones that haven’t,” Stipe says. Agencies that have developed resources for producers to build and retain new business are growing faster. “There’s another benefit that often goes overlooked,” Stipe says. “The development of such resources from an agency brand perspective can help agencies attract and retain higher caliber producers, which then serves to increase organic growth.”
Accountability Equation Doesn’t Add Up Once sales-leading agencies equip their producers with the tools to generate organic growth, they hold the field accountable to produce measurable results. Typically this means establishing specific goals for new business or book size, and setting incentives based on producers’ accomplishments. The Reagan Consulting Study found that 37% of responding firms have implemented a renewal rate clawback. For example, if a producer consistently fails to produce a minimum volume of new business, he or she is hit with a reduction in their renewal rate of compensation, typically in 5-point increments. Do traditional accountability measures result in increased sales? Interestingly, no one compensation program designed to drive accountability differentiates top performing agencies from all others. So what are the real differentiators? The study returns to the importance of sales leadership - a high-level agency executive empowered with leading the sales effort. This person is there to provide needed advice and assistance, including training and education or a change in sales focus.
Setting the Sales Policy In agencies that demonstrate sales leadership, the sales leader and producers review and discuss on a weekly or bi-weekly basis what is working and what isn’t. Then they come up with ides on how to improve the situation. Many top performers hold contests or use other fun means of motivating the workforce to improve their sales figures. Most, like Assurance Agency, have developed a specific sales policy: an over arching statement of what sales leadership means and requires. “We train all our prodercers on a singe sales methodology, which we have developed internally and consider proprietary to the agency,” Klaras says. “We have one sales model and we train all our producers to it. Everything we do, every meeting, aligns with this methodology. We have found that if our producers follow it and stick to the methodology, our numbers are consistently higher than the marketplace.” At Assurance, this policy entails frank conversations about sales successes and failures. “We try to figure out where sales may be broken, and then we offer training to fix the problem,” Klaras explains. Assurance holds its producers to a minimum production of $150,000 in revenue each. To achieve this figure, the agency hosts a contest offering a paid-for vacation to the top third of producers. But the “real key” is still a “consistent sales methodology, which gets everyone going in the same direction,” Klaras says. continued on next page...
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
Page 21
Recruitment and Development The last essential element in sales leadership is perhaps the most important - finding individuals with the alchemic mix of skill sets required to not only close a sale, but also maintain the business long-term. The best tools, resources and training won’t drive greater sales without smart people at the front lines. As the study concludes, “Building the next generation of sales talent [is] front and center for the insurance distribution system.”
The Bottom Lines
This generation consists of recent college graduates coupled with the ranks of individuals seeking second careers. Through its “Producer-in-Training” (PiT) program, Bouchard Insurance, Inc. in Clearwater, Fla. has brought in many talented producers who were formerly in the mortgage business. The agency employs a full-time recruiting coordinator whose sole occupation is searching for new talent.
The top six conclusions drawn from the study include:
Ray Bouchard, president of Bouchard Insurance, Inc., says the best producers are often those who have no experience in the insurance industry. “They’ve got some finance and accounting background, but other than that are completely raw.” he says. “We’ve learned that stealing someone else’s producers simply means you’re inheriting someone else’s problems. Successful producers with successful agencies aren’t going to leave easily.” PiT seasons raw talent, a process that may take longer for those without an insurance background. But Bouchard says it’s worth it. The full-time recruiting coordinator provides much of the instruction, although local colleges also teach classes to narrow the newbies’ learning curve. The agency further touts it mentorship program by aligning new producers with senior ones. “From day one, we’re indoctrinating our producers in the Bouchard culture, the way we do thing,” Bouchard says. “We provide much more than an insurance product here. This is not about going out, quoting and bidding. We sell solutions for business owners, whether it is claims management or loss control or HR support.”
The Reagan Consulting Sales Study’s key findings about top-performing agencies seem to counter accepted wisdom. Chief among those surprises is that a fulltime sales manager who is not an owner or senior partner won’t necessarily increase sales revenue - and in fact might be an unwise investment.
• Don’t assume the answer to your growth woes is hiring a full-time sales manager. • Top performers focus on building a core competency in producer recruiting and development. • Producer compensation may be a problem, but it is definitely not the answer. • Specialization is one of the clearest drivers of sustained organic growth. • Quality and professionalism of a firm’s producers may be the most important sustainable competitive advantiage in the marketplace. • Top performers elevate sales to the point that it becomes the centerpiece of their culture.
These training efforts coincide with the findings of the study, which identifies producer recruitment as “a primary role of the sales leader.” Boucard couldn’t agree more. “We have a guy here who’s been with us maybe a year, and he came into my office last week excited that he got the ‘agent of record’ letter without even quoting,” he says. “Now that’s a success story.”
IIANM now offers customized support at your agency to develop strong sales leadership models and help you get the most out of your sales team. Reach out to Marit Peters for a free consultation on your agency’s needs.
Page 22
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
A Look Back...
2013
Marit Peters
As we enter the holiday season and an end to another year, we’d like to take a moment to pause and reflect on some of the major association milestones accomplished on behalf of our members this year. • The IIANM lobby team had one of its best ‘long’ legislative sessions ever, including the passage of the enabling legislation to create the Office of the Superintendent of Insurance. On July 9th we celebrated the birth of the new agency and the appointment of John Franchini as its first Superintendent by hosting an industry reception featuring Governor Martinez our keynote speaker. • With all the changes with the OSI and other major initiatives such as the CAP Project, IIANM hosted four Town Hall meetings around the state to share what to expect with our members. As always, it was great to visit with over 200 of you during those luncheons. • We added two new staff members in 2013: Chief Strategy Officer, Marit Peters, and our Insurance Programs Director, Suzie Dodds. Their addition to the IIANM team allowed us to add a whole new category of member services for our members: customized business & sales support, leadership development and marketing/social media training. We are thrilled with the response to our new offerings, and will be expanding them in 2014. • Our 79th Annual Convention programs looked a lot different this year. We brought in national marketing guru Steve McKee to talk about how our distribution channel can compete, and followed it up with breakout sessions specifically geared toward creating a customized agency marketing plan including social media strategies. • Finally, as you will continue to see in 2014, agency and industry perpetuation are major initiatives for us. We completely re-vamped our Young Agents Program by launching NextGEN, and followed it with our 1st Innovative LeadershipNM class. As we round out the year, we are focused heavily on reaching you in all corners of our state by leveraging new technology. We will be using our Promethean board for distance learning, webinars and one-on-one agency “visits”. We are also launching a NEW web site later this month that we’ve designed to ensure you know exactly which member benefits you should be taking advantage of! Trustedchoice.com will bring live-ratings to New Mexico consumers in early 2014. Stay tuned…We will need your participation! Suzie Dodds, CIC
celebrating a
NewBeginning
IIANM’s 2014 Calendar
(tentative)
January
1st
Office Closed - New Year’s Day
7th & 8th
Property & Casualty License Exam Review
Jack Cleary
IIANM
9th
Life & Health License Exam Review
Bob Ouellette
IIANM
20th
Office Closed - Martin Luther King Day
February 11th & 12th
Property & Casualty License Exam Review
Kitty Leslie
IIANM
13th
Life & Health License Exam Review
Jeff Straight
IIANM
17th
Office Closed - Presidents Day
March 4th & 5th
Property & Casualty License Exam Review
Jack Cleary
IIANM
6th
Life & Health License Exam Review
Bob Ouellette
IIANM
13th
Agency Management Tools & Process (83A) (8 CE hrs)
Jack Cleary
IIANM
26th & 27th
54th Annual Education Seminar (15 CE hrs)
Embassy Suites Hotel
April 8th & 9th
Property & Casualty License Exam Review
Kitty Leslie
IIANM
10th
Life & Health License Exam Review
Jeff Straight
IIANM
16th
Homeowners (ACSR1) (8 CE hrs)
Jack Cleary
IIANM
17th
Commercial Liability Insurance (82A) (8 CE hrs)
Jeff Straight
IIANM
18th
Office Closed - Good Friday Jeff Straight
IIANM
24th
E&O Loss Control (ACSR4) (8 CE hrs)
30th & 1st
Southern Seminar (tentative) (15 CE hrs)
Las Cruces
May 6th & 7th
Property & Casualty License Exam Review
Jack Cleary
IIANM
8th
Life & Health License Exam Review
Bob Ouellette
IIANM
21st
Other Commercial Insurance (82B) (8 CE hrs)
Jack Cleary
IIANM
22nd
Specialized Insurance and Bonds (82C) (8 CE hrs)
Jack Cleary
IIANM
26th
Office Closed - Memorial Day Jack Cleary
IIANM
28th
Insurance Production Environment (83B) (8 CE hrs)
June 10th & 11th
Property & Casualty License Exam Review
Kitty Leslie
IIANM
12th
Life & Health License Exam Review
Jeff Straight
IIANM
19th
Commercial Liability (ACSR7) (8 CE hrs)
Jeff Straight
IIANM
26th
Professional Development (ACSR5) (8 CE hrs)
Jeff Straight
IIANM
July 4th & 5th
Office Closed - Independence Day
8th & 9th
Property & Casualty License Exam Review
Jack Cleary
IIANM
10th
Life & Health License Exam Review
Bob Ouellette
IIANM
16th
Personal Lines Related Coverages (ACSR3) (8 CE hrs)
Jack Cleary
IIANM
17th
Commercial Property Coverages (ACSR6) (8 CE hrs)
Jack Cleary
IIANM
31st
Personal Auto (ACSR2) (8 CE hrs)
Jack Cleary
IIANM
August 5th & 6th
Property & Casualty License Exam Review
Kitty Leslie
IIANM
7th
Life & Health License Exam Review
Jeff Straight
IIANM
12th & 13th
Roswell Seminar (15 CE hrs)
Jeff Straight
Roswell
12th
Principles of Agency Management (83A) (8 CE hrs)
Jack Cleary
IIANM
13th
Commercial Auto (ACSR8) (8 CE hrs)
Jack Cleary
IIANM
25th & 29th
Last Chance Seminar (15 CE hrs) (tentative)
IIANM
September 1st
Office Closed - Labor Day
2nd & 3rd
Property & Casualty License Exam Review
Jack Cleary
IIANM
4th
Life & Health License Exam Review
Bob Ouellette
IIANM
24th and 25th 80th Annual Convention (tentative)
Sandia Casino
October 14th & 15th
Property & Casualty License Exam Review
Kitty Leslie
IIANM
16th
Life & Health License Exam Review
Jeff Straight
IIANM
December 4th & 5th
Property & Casualty License Exam Review
Jack Cleary
IIANM
6th
Life & Health License Exam Review
Bob Ouellette
IIANM
27th & 28th
Office Closed - Thanksgiving
4th
IIANM Holiday Party
IIANM
9th & 10th
Property & Casualty License Exam Review
Kitty Leslie
IIANM
11th
Life & Health License Exam Review
Jeff Straight
IIANM
24th & 31st
Office Closed - Christmas
December
Avoiding Social Media Traps
To sidestep the pitfalls of using social media, insurance agencies should consider a number of guidelines.
By Ron Panko
Insurance agencies have increasing found social media to be a great marketing tool. But while sites such as Facebook, LinkedIn, Twitter and Google+ can inexpensively and quickly reach multitudes of prospects, using these sites can be dangerous for an agency. Without well-considered plans, agencies may find themselves skirting insurance regulations or making public what should be private conversations. The trend toward social media has gained momentum among insurance professionals, but probably less than half of P&C agents and agencies use it, according to Jeff Yates, executive director of the Agent’s Council for Technology at the Independent Insurance Agents & Brokers of America. “The users are those that are really looking for a marketing edge,” Yates said. “I see some young producers using it as a way to build their communities quickly, but I also see older agents who are marketing-oriented. Social media provides prospecting power to agencies through its functionality. Most sites offer the ability to create a home page by following a template provided by the site, said Sabrena Sally, senior vice president of Westport Insurance Corp., a member of Swiss Re Corporate Solutions. SRCS is the endorsed carrier of the Big I’s Agency Professional Liability Program. A home page can contain information about the agency along with photos, videos and links to other sections of the site or other sites, she said. Most sites offer blogs, chat rooms or forums, and site users often invite other users to join their online community. To attract visitors to their social media websites, Yates said, agencies have to write from a consumer’s perspective. “If agents just communicate the kinds of information they’d normally discuss with their clients, in general terms, it’s a very useful mechanism,”Yates said. “It’s also a good way to show your community involvement,” he added. “One of the strengths of agencies over time has been their involvement in their communities. There are ways of using social media to talk about issues and Page 24
Watch an interview with Beth Diamond, claims leader for technology at Beazley Group. She discusses how social media is giving underwriters more information and the dangers of not having online guidelines. Click the “Play Button”, click the “Interviews” tab
charitable causes in the community. Social media can help to cement the important role that an agency plays in the community.” Social media can also help insurance professionals improve their search engine position, Yates said. And there are numerous examples of how agents used social media during disasters to effectively communicate not only with customers, but also with employees. The risk, however, is that users may be lulled by the casual nature of the medium into saying improper things that have staying power and are hare to eliminate, he said. “Sometimes you can lose sight of the risk when something goes from being in a traditional marketing environment or agency operation environment to an electronic environment,” said David Hulcher, assistant vice president of agency errors and omissions risk management at the Big I’s Advantage division. “You have to put in the thought when you make the decision to jump into the social media environment, just as you would when you are doing your traditional business model,” he said. Major E&O Risks from Use of Social Media: • • • • • • •
Incorrect advice. Misrepresentation of policy terms. Referrals without proper authorization. Business defamation. Trade libel. Posting private consumer information. Advertising liability.
Source: Agents Council for Technology, IIABA
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
Social Media Do’s and Don’ts for Agents Make sure employees are trained. According to the Agents’ Council website, major E&O risks from use of social media include incorrect advice; misrepresentation of policy terms; referrals without permission from the referred party; business defamation; trade libel; advertising liability; and posting private consumer information of the Web.
Jeff Yates, executive director of the Agent’s Council for Technology
Make sure employees use the “social Web code of conduct.” Yates said the code encourages employees to speak in the first person; to be one’s self; to be thoughtful and respectful of others; to listen and build relationships; and to avoid the hard sell. “Be aware of the culture of each social media site,” he said. “It’s the same as an agent talking abut things at a Rotary Club meeting. Be professional and judicious in what you say.” Comply with all statutory and regulatory guidelines regarding advertising liability. Each agency should have a process in place to review marketing materials, whether for use in traditional venues or social media. “The key point is that agencies need to know that pages or blogs on social media could be considered an advertisement under their states’ advertising laws,” Yates said. “In some states, agents have to display their licenses in ads that show where they are authorized to write business.” Have a procedure for responding to criticism that gets posted on blogs or in chat rooms or forums. Yates said the ability for aggrieved customers to complain in this manner “is one of the greatest developments” of social media. “You’ve seen that play out with the banks, when customers got them to back down on charging fees for using debit cards,” he said. Yates suggested that each agency designate a person to whom employees could refer unflattering online postings. “It might be the agency principal, who would think through what the strategy might be,” he said. Regarding how to respond, Yates said agencies should think of turning a negative into a positive by working with the individual to solve the problem. “We’ve had quite a bit of experience with agencies with social media, and we have not seen a lot of trashing of agencies,” he said. “Basically, they do a good job; that’s why it doesn’t happen.” Responding well to criticism is a good way to show the professionalism of an agency, and to show customers that there are many considerations in purchasing insurance - that it’s not just a commodity where price is everything, Yates said. David Hulcher, assistant vice president of agency errors and omissions risk-management, Big I Advantage division
Create a social Web policy for employees of the agency so that they know when to take a discussion offline and put the customer into the normal flow of business procedures. When the conversation starts to be about the individual situation of a prospect, “we recommend to agencies that they establish up-front some communications guidelines,” Hulcher said. As soon as the conversation get specific, the agent must also preserve the content of the discussion in the agency management system, he added.
Ensure that your social media site includes a disclaimer so that your customers understand up-front how the site can be used. And it is also important to ensure that personally identifiable information is not included in the social media communications, Hulcher said.
To help you plan your social media strategy, take some time to watch a three part webinar - series, “Planning Your Digital Presence”, featuring Marit Peters, Jason Cass, Marty Agather. (This is a re-cap of the program offered at our past convention this September)
For further questions, please contact Marit at 505-999-5804.
Independent Insurance Agents of New Mexico - www.iianm.org - * December 2013
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Clickable Calendar
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P&C Pre-Licensing Exam Review
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IIANM’s Job Bank We will be transforming our Job Bank on our new website in 2014. Our vision is this will become a magnet for any hiring managers or students/professionals seeking a career in the insurance industry. We will be encouraging university’s to use this resource for job placement and will need agencies and companies to be actively posting job opportunities as they become available. Click here to take advantage of IIANM’s Job Bank. Do you have an agency you’re trying to sell, or in the market to buy one? Check out our Classifieds!
Odds n
A lovely thing about Christmas is that it’s compulsory, like a thunderstorm, and we all go through it together.
It’s official: Voyager 1 has left the building The journey has been long, and it’s only just beginning. In September, space scientists confirmed that the space probe Voyager 1 has become the first human-built spacecraft to leave our solar system and enter interstellar space. Data on the ionized gas that Voyager travels through confirmed that the intrepid probe has exited the sun’s heliosphere, a sort of protective shell of charged particles. The plasma vibrates at different frequencies based on its distance from the sun, and readings indicate that Voyager 1 has departed our solar system. Next stop? The great unknown.
Christmas stockings. The first Christmas stocking was supposedly derived from the charity of a kindly Turkish bishop, who slipped a bag of gold into the stocking of a girl in need of a dowry.
Ends ~Garrison Keillor
Apply coffee directly to your skin - without the burn Don’t have time for a cup of coffee? Or you just can’t stand the taste of the stuff? A new product developed by a Harvard undergraduate in partnership with an Internet entrepreneur may let you get your fix through the skin. “Sprayable Energy,” as it’s called, is a topical caffeine spray that permeates the skin and seeps into your bloodstream. Four doses of the spray supply the same jolt of energy and wakefulness as a standard cup of coffee.
Winter Driving
Winter can be one of the most dangerous times to drive. Consider these tips so you know how to act in a winter-related emergency.
it ps
Don’t let the hectic demands of the December holiday season get you down. Learn to recognize signs of stress, keep expectations realistic, and practice saying no before you burn out. Also, watch your diet and stick to your exercise schedule to stay healthy and calm.
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