The Tennessee Agent

the

Tennessee agent DECEMBER 2011

VOL. 53, NO. 6

IN THIS ISSUE Sound Business Practices in Family-Owned Agencies Agency Trust Money Background Clutter on Your PC

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OFFICERS Elaine Morton, CPIA President Morton Insurance Agency, Inc., Bartlett Ph: 901-382-4600 email: elaine@mortonagency.com Steve Peay President-elect Boyle Insurance, Memphis email: stevep@boyle.com Tina Hutsenpiller, CPIA Vice President Hutsenpiller Insurance Services, Mt. Juliet email: tina@hutsenpillerinsurance.com Herbert Montgomery Secretary Clay & Land Insurance, Inc., Memphis email: hmontgomery@clayandland.com Donnie Hogan, CIC Treasurer Fred M. Smith & Son, Inc., Springfield email: donnie@fredmsmith.com Glen Page, CIC, CPIA Immediate Past President Page, Chaffin & Riggins Insurance, Cordova email: glen@pcrins.com

N AT I O N A L D I R E C T O R June W. Taylor, CIC, CPIA, CPIW, DAE Wilkinson Insurance Agency, White House email: june.taylor@wilkinsonins.com

Tennessee agent TA B L E O F C O N T E N T S December 2011 Vol. 53, No. 6

Articles Family-owned independent insurance agencies The adoption of sound business practices is important when family members join the agency. Mike Policastro describes such practices that are designed to help minimize issues that may arise when family members join the agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Uniqueness of E&S lines require understanding Curtis Pearsall offers E&O prevention strategies for agencies when business is placed in the excess and surplus lines marketplace. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

DIRECTORS Carl Butcher, CIC, CPA C. L. Butcher Agency, Knoxville email: carl@clbutcher.com Andrea Bond Johnson, CPIA Golden Circle Insurance Agency, Brownsville email: abjohn@bellsouth.net John Keisling, CPIA, CISR Keisling Insurance Agency, Inc., Byrdstown email: john@keislingins.com Joe Kerr, CIC, CPIA Kerr Insurance Services, LLC, Brentwood email: joe@kerrinsurance.net

Agency Trust Money and Capitalization “I continually find agency owners who believe that because their state does not have a trust law, they can spend their clients’ money as long as they pay their carriers on time,” writes Chris Burand. . . . . . . . . . . . . . . .15 Is all that background clutter needed?

“I was surprised to find…93 processes running on my computer, taking up about 24% of the computer’s memory.” Tech Bit author Gregg Marshall questions if all these processes are necessary. . . . . . . . . . . . . . . . . . . . . . . . .17

Britt Linder, CIC Peterson Insurance Services, Inc., Bartlett email: britt@peterson-insurance.com Bill Oglesby, II, CIC, CPIA Brown Insurance Group, Crossville email: bill@brown-insurance.com Barry Wilson, CIC Mid-South Insurance Office, Inc., Memphis email: bwilson@mid-southinsurance.com

S TA F F Brennan J. Paris, CIC, CRM Executive Vice President email: bparis@piatn.com

Columns Welcome New Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 President’s Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Vision for the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 PIA Calendar & Education . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Pamela D. Cass, CPIA Convention, Education, Membership pcass@piatn.com Sandy Clive, CPIA E&O, Member Services sclive@piatn.com Lochiel Gaines Communications, Trade Show lgaines@piatn.com

The Tennessee Agent (ISSN 1081-566X) is published bimonthly by the Professional Insurance Agents of Tennessee, Inc. Statement of fact or opinions expressed in any article are solely that of the author and does not imply opinions of the officers, directors or staff of PIA of Tennessee, Inc. The publishing of any article or advertisement does not imply endorsement by PIA of Tennessee, Inc. No material within this publication may be reproduced in whole or in part without the consent of the Editor.

Editor: Lochiel Gaines, lgaines@piatn.com Advertising inquiries should be made to the Editor, The Tennessee Agent, 504 Autumn Springs Court, A-2, Franklin, TN 37067.

Telephone 615/771-1177 Fax 615/771-3456 Email – lgaines@piatn.com Website – www.piatn.com

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Welcome, New Members Active/Agency

Lynn Bullock Crossroads Insurance Knoxville www.crossroadsinsuranceknoxville.com Hope Kenney Handley Insurance Resources, Inc. Knoxville www.handleyins.com

Randy Schobinger First Volunteer Insurance Agency, Inc. Jasperwww.firstvolunteerinsurance.com

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THE TENNESSEE AGENT December 2011

Mary Wood Wood Insurance Group of Tennessee Madison

Associate/Company EMC Insurance Companies Mary Webb Birmingham, AL www.emcinsurance.com

President’s Perspective

BY ELAINE MORTON, CPIA

t’s hard to believe that 2011 is almost history. As I sit down to write my last article for the year, I reflect on all that has happened within our association in the past 12 months.

In November 2010, the board met for two days discussing the future of PIA. I came away from that meeting knowing three very important things: • PIA board members are truly dedicated to our association; • Our association was about to embark on major changes; • PIA has a staff that is second to NONE! One of the major decisions that was made in the meeting was to move forward with hiring a new EVP. So in the beginning of 2011, a search committee made up of five board members began looking for someone who could grow and lead the PIA into a successful future. In early April we began interviewing for the EVP position and by mid-May, Brennan Paris had joined PIA as the new EVP. At that point, life at PIA would change from a trot to post time!

Let’s take a look at our accomplishments.

Management System A new internal association management system will integrate with our website providing members improved efficiency and accuracy.

Committees Refocused committees to improve the efforts and effectiveness of our convention, government and industry affairs, and social media aspects of the association.

E&O Obtained another market to offer more options to our members and E&O insureds.

Mississippi PIA Looking forward to exploring joint ventures with the Mississippi PIA

Highlights from 2011 CPIA Designation In early spring a class of 20 enthusiastic participants began the Certified Professional Insurance Agent designation program.

To date close to 300 insurance professionals have earned the CPIA designation through PIA. Convention Held at the Marriott Resort in Muscle Shoals overlooking the Tennessee River and Wilson Lake, first class education programs and great networking opportunities attracted great participation.

Website A new PIA website will debut in January 2012 with online features for members to renew dues, pay for education classes, and sign up for the convention.

As you can see, our association was very busy in 2011, and the board and I are looking forward to many more exciting things in 2012. I encourage you to become more than just a dues-paying member in PIA. There are many new perks and advantages to being a PIA of Tennessee member and more is to come.

As 2011 comes to an end, do not be consumed with your loss ratios and volumes; be thankful for all that you have been given and all that 2012 will bring you. Merry Christmas, Happy Holidays and a Happy and Healthy New Year! •

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Coming in 2012 Our convention dates move to July 30 - August 1, 2012, and we return to Nashville meeting at the great Loew’s Vanderbilt Hotel.

PIA’s Day on the Hill—Be sure to watch your PIA Pipeline to watch for the date of Day on the Hill. I would encourage each of you to plan on attending this event. Your opinion matters to your legislators and your participation in PIA’s Day on the Hill will be worth your time and effort to attend.

PIA Partnership Program for our companies to enhance their efforts in reaching you with products and services for your agency.

Partnership with Vanderbilt and Tennessee sports through IMG Sports Marketing offering recognition for company partners and hospitality events for members and company partners.

THE TENNESSEE AGENT December 2011

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A Vision for the Future B Y B R E N N A N J . PA R I S , C I C , C R M EXECUTIVE VICE PRESIDENT

t is amazing to me that 2011 has come and almost gone. It has been a great year, but a year filled with change. In May, I was honored to be named Executive Vice President of this great association.

This move had some unknowns, but presented an incredible opportunity. I was blessed day one to walk in and have an amazing staff and board of directors that truly cares and values their association. My staff, comprised of Lochiel Gaines, Pam Cass and Sandy Clive, have really stepped up and charged ahead with me in revitalizing this association, and the board has been right there with us providing great ideas and helping to spread the excitement across the state. One big reason the year has come and gone so quickly is because the staff and I have worked very hard to enhance our association so that it provides great value to everyone that is a part of the PIA family.

Over these last 7 months, the PIA has been pursuing new and innovative ways to grow. We first began with researching and developing a brand new website. Websites these days provide our first impression and the new and improved www.piatn.com, set to go live before the year’s end, will certainly provide that strong and impactful first impression for visitors. And, for those of you that also are in need of an improved website, you will receive special pricing to redesign your website to help with marketability in your community.

We also have shaken up the structure of our convention for a fresh approach. The date has been changed to be held later in the summer, July 30August 1, and we will be here in the Music City at the Loews Vanderbilt Hotel. We have added new events and seminars, several guest speakers, as well as an opening night party and concert. Go ahead and mark your calendars for the new and improved PIA Annual Convention with the agenda set on making it a valuable experience for all who attend.

In an effort to strengthen the PIA brand and cre-

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ate more opportunities for PIA members and company partners to network, we have partnered up with the SEC and Vanderbilt and Tennessee athletics. With this partnership, PIA will be hosting hospitality events throughout the year at the following events: Auburn vs. Vanderbilt Basketball game, January 7, 2012 South Carolina vs. Vanderbilt Baseball game, March 31, 2012 Tennessee vs. Vanderbilt Football game, November 17, 2012 The package to these events will include entrance into the PIA hospitality event, ticket to the game, game program and great networking opportunities with our company partners. Our first event is rapidly approaching for the Vandy-Auburn basketball game, so if you want to join the PIA to watch some great SEC basketball and socialize with other insurance professionals, but haven’t gotten your ticket package, contact the PIA office today to reserve your spot.

Another change has been to replace associate membership, which has been made up of company personnel, with the PIA Partnership program. With my background being on the company side of the industry, I felt it was vital for our association to create a program that added visible value for our insurance companies operating here in Tennessee. I also wanted to eliminate companies feeling nickel and dimed throughout the year. Our partnership program is filled with a litany of benefits for the company and by laying out the total cost of each partnership level and convention sponsorships during the fourth quarter of this year, it has allowed companies to accurately budget for their partnership with the PIA in 2012. Company partners retain the ability to designate personnel to be recognized under the partnership as PIA members. So going forward, our association will be made up of agency members and company partners, with the PIA fully focused on being an advocate for both.

Our goal is to make our agency members as profitable as possible, and for every company partner to consider Tennessee one of their best states to operate in.

As mentioned above in making our agency mem-

THE TENNESSEE AGENT December 2011

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bers as profitable as possible, PIA has added several new member benefits and services. Now with discounts on office supplies, HP computers, third party payroll services, printing discounts, and a partnership with eVo Agency Management system, you can see more tangible benefits and services that will help your agency to cut expenses, to

become more efficient and ultimately to become more profitable.

I hope it is as clear to you as it is to me that PIA is polishing off a great year, and we have every intention of carrying that momentum into 2012. We have more education seminars coming your way, a legislative and government affairs tour across the state to take place in Spring

and the formation of a Young Professionals group, called Yo Pro, to meet in the local communities across the state with a purpose to assist young professionals in our industry in finding greater success as they move up in their careers.

And that is just the beginning, so I urge each of you across the state to get involved in 2012 and participate in these events that will help make our industry—and your agency—better.

I wish everyone a Merry Christmas and Happy New Year! See you in 2012!

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THE TENNESSEE AGENT December 2011

Family-owned independent insurance agencies Adopt sound business practices

BY MIKE POLICASTRO

family-owned independent insurance agency can be an excellent way to spend time with those you love while sharing the financial rewards of business ownership. It also can present a variety of challenges. Common problems include: relatives who bring family conflicts into the workplace or those who insist on hiring family members without regard to their abilities. Some family members may also have unreasonable compensation expectations based on their role within the family rather than their actual position and job performance. As an agency owner, it’s important to consider the following business practices that are designed to help minimize these types of issues.

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Focus on business goals All employees need to understand the agency’s mission and its goals as a business. Develop a clear mission statement and description of the agency’s key goals and communicate it broadly. Give each employee, including family members, specific, quantifiable, time-bound objectives that support the agency’s overall goals.

Policastro, senior vice president, Business Management Group Inc., has assisted agencies with strategic planning, operations improvement, sales, mergers, acquisitions, valuations and perpetuation planning for more than 20 years. BMG is a full-service consulting firm for insurance agencies and brokerages and a wholly owned subsidiary of The Hartford Financial Services Group Inc. Policastro can be reached at (800) 772-0208 or mpolicastro@bmgconsulting.com.

Chain of command Establish a chain of command with clear lines of authority. Make it clear that all employees should respect the chain of command, even if a family member reports to a non-family member. Make sure accountabilities, responsibilities, decision making, salary

increases, bonuses, promotions, etc. are based on the employees’ performance, whether they’re family members or not.

The insurance agency must run like a business in order to grow and remain financially sound. The most productive employees should hold the key positions, such as managing sales, operations, finance, and carrier relations. When family members join the agency, as a condition of their employment, they should agree to work within the established lines of authority and responsibilities of employees, regardless of their relationship within the family.

Hire based on qualifications A common challenge in a familyowned agency is the relative who needs a job but lacks the qualifications for the insurance business. As an agency owner, it is important to recognize that hiring a family member who does not have the skills, talent or energy to perform can be detrimental to relationships with clients, owners and other employees.

Unqualified employees can be a distraction and can send the wrong signal to other employees about their need to perform. They may also contribute to turnover and end up costing an agency more than just their salary.

It’s a good practice to test all employment candidates for their sales or service aptitude before hiring them. It is better to resist hiring someone who tests poorly than be in a situation with an underperforming employee who is difficult to THE TENNESSEE AGENT December 2011

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fire. In the long run, it may be more beneficial to help an unemployed family member by providing financial support for professional career counseling, job placement assistance or even a personal loan while he or she seeks a job outside the agency that better suits his or her skills.

Written employment agreements To minimize problems that may arise, agency owners should document all business agreements. Shareholder agreements should clearly address the buying and selling of shares, limitations on the sale of stock, the company’s dividend policy, mandatory retirement age, liability of shareholders, lines and limits of authority, compensation of owners, and other important issues. The agency should have a standard producer employment agreement that includes a non-piracy provision and a standard producer compensation addendum.

Producers should be placed on a draw against variable compensation based on the production and retention of the

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accounts they service. This should apply to all producers, regardless their relationship to the family. The agency should also have job descriptions with clear duties, responsibilities and reporting relationships for all employees.

Criteria to determine compensation Many employees feel underpaid regardless of their employers. In a family-owned agency, the complaints about compensation may be more personal.

Comments, such as: “Uncle George produces half what I do and he gets paid more than me,” can result if the agency does not adopt an objective criteria for compensation decisions. Industry data is a good starting point for determining salary ranges for non-sales positions.

Aligning pay with job descriptions recognizes the value the industry puts on specific positions. For production-related positions, the commission splits paid to employees for new business produced and for renewal business serviced should be the same, regardless of their role

within the family. Determine profit distributions for owners based on their respective ownership percentages. By creating a system where it’s clear that compensation is linked to objective criteria, you can reduce the potential for misunderstandings or hard feelings among family members, owners or other employees.

Code of conduct A key challenge for owners of a family-owned agency is keeping family issues outside the doors of the agency.

Quarrels and ill feelings among relatives must not affect the work environment.

Bickering and quarrels can damage productivity and create an uncomfortable emotional atmosphere that can lead to undesired turnover and poor overall agency performance. As the owner or manager, it is important to make it clear to all employee family members that their interests will be best served by a profitable, growing agency that is free from rumor mongering, politicking or allegiances to one family member or

another. The agency owner must avoid taking sides with family members solely because they are family. Instead, all disagreements and decisions should be resolved with fairness, integrity and the business objectives of the agency in mind.

It’s important to establish a consistent set of rules for family members to follow and communicate these rules to current family-member employees as well as those who may join the agency in the future.

While family-owned agencies can have their share of challenges, establishing a proper business atmosphere with wellcommunicated objectives and a sensible code of conduct can go a long way towards promoting a professional atmosphere and favorable business results. • —Reprinted with permission from PIA Management Services Inc.— This material is for informational purposes only. Readers should consult their attorney or business advisors with specific questions.

BMG does not warrant that the implementation of any view or recommendation contained herein will (i) be an appropriate legal or business practice; or (ii) result in compliance with any local, state, or federal ordinance, regulation, statute or law. BMG assumes no responsibility for the legal compliance with respect to your business practices, and the views and recommendations contained herein shall not constitute our undertaking, on your behalf or for the benefit of others, to determine or warrant that your business practices are in compliance with any law, rule or regulation.

THE TENNESSEE AGENT 11 December 2011

E&O Prevention

Uniqueness of E&S lines require understanding B Y C U R T I S M . P E A R S A L L , C P C U , A I A F, C P I A

ith many industry journals and experts indicating a firming of the marketplace, activity to the excess and surplus lines marketplace could increase. While this segment of our industry plays a vital role, it is important to understand the uniqueness it presents because a failure to do so could spell errors and omissions trouble.

There are a number of issues to lookout for, so let’s review some of the main ones.

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Mr. Pearsall is president of Pearsall Associates, Inc. and Special Consultant to the Utica National E&O Program.

Lack of authority to bind In the standard marketplace, carriers typically spell out the types and sizes of risks agencies can bind. This adds to the efficiency of the process. Conversely, in the E&S marketplace, access to these carriers typically requires you to deal with an agency, traditionally referred to as a wholesaler, that has an E&S license.

The wholesaler’s job is to provide your agency with access to additional carriers that write more specialized risks and hard-to-place risks. Technically, the wholesaler is the agent for the carrier and will have some type of brokerage contract. Because your retail agency is not an agent for these carriers, you do not have binding authority. So to bind a risk you would need to advise the wholesaler that the risk should be bound. In some cases, even the wholesaler may not even have the authority to bind the risk and may need to contact the carrier.

Bottom line: as the retailer, do not advise the client that coverage is bound until you have confirmation from the wholesaler.

Binding requirements If you deal with multiple wholesalers, chances are the procedures and expectations to bind among those wholesalers differ. Let’s say you want to bind a risk at 4 p.m. on a Friday. Can you do it or will the wholesaler advise you that they need premium payment and the necessary affidavit forms before they can bind? Clearly, you need to know the rules of engagement when working with wholesalers. Professional wholesalers will make it clear on the proposals what is needed to bind coverage. Be aware of these “rules” and factor them into your handling of the risk. Look for wholesalers who will provide you with an account current for your business. This will take away some of the potential headaches.

Classification Limitation endorsement/other unique endorsements Do you know if the E&S carriers in your state include the Classification Limitation endorsement on their policies? You need to because this form has the potential to be your biggest headache.

Essentially, this endorsement restricts coverage under the policy to only those classifications noted on the policy. For example, if you insure a painter who only performs inside painting, the coverage would state only claims arising from inside painting would be covered. If the painter gets the opportunity to paint the outside of a house, there would be no C O N T I N U E D

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coverage unless the policy was modified accordingly. Look out for this form and, if it is included on that particular policy, advise your customer in writing of this limitation. Explain that if they perform any work outside the stated classifications, they have no coverage and should contact the agency before undertaking this additional work.

There is also the possibility the proposal/policy may contain other unique endorsements that could limit the coverage actually provided. Watch for these forms. It is highly recommended advising your client of these various limiting endorsements or exclusions at proposal time and when you send them the policy. Note in your cover letter to them that they should read their policy carefully and contact the agency with any questions.

Renewal policy Don’t expect the renewal policy to look like the expiring one because it probably won’t. When your E&S accounts come up for renewal, there is a good chance you will need a renewal application as automatic renewals are not the norm on the E&S side. When you receive the renewal proposal from the wholesaler, review it carefully, iden-

tifying any changes or new endorsements added. When a carrier wants to modify coverage in the E&S industry they do not need to issue a conditional renewal notice, unlike the standard marketplace. The E&S carrier may add new exclusions or even reduce the limits.

While it’s hoped they will give you advance notice, typically, they are not required to do so. It is wise to ask your wholesaler ahead of time if they expect any changes on the renewal policy.

There is a chance the coverage changes could be significant. In some cases, the customer may not be agreeable to the changes, so make it part of your process to contact the client and review the renewal proposal with them to get their approval on whether they want coverage bound.

No backdating It is critical that the agency’s staff clearly understands there is no backdating of coverage in the E&S market. As account executives prioritize their work, special attention should be given to accounts in the E&S market. If there is an account that renews on a Saturday and you leave the office on Friday not having bound the account, there is a chance that when

PIA Advantage Services Corp. was recognized at Utica National’s E&O annual affiliates conference held this fall. Sandy Clive, PIA’s E&O representative, accepted two awards—Outstanding Sales Achievement Silver Award and the Submissions Award. Pictured above left to right are Brian Lytwynec, President and COO of Utica National Insurance Group, Brennan J. Paris, PIA Executive Vice President; Ann Marleau Halpin, Utica E&O Underwriter; Sandy Clive and Dan Daly, Utica EVP / Senior Sales & Marketing Officer.

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you call on Monday to bind, the account will be bound as of Monday—once again, no backdating. If a loss occurred over the weekend, there may be no coverage in effect. This could be a significant issue with property coverage.

No Guaranty Fund With the exception of New Jersey, a state’s guaranty fund does not provide protection if an E&S carrier is declared insolvent. So, it is highly recommended to know the financial condition, the A.M. Best rating, of the carrier. When you receive proposals, know who the carrier is. Carrier ratings change, so know the carrier’s current rating. It is not a bad idea to ask the wholesaler; don’t rely strictly on their feedback. It is very easy to check carriers’ ratings through the A.M. Best website (www.ambest.com).

Compliance with state regulations There are a number of states requiring that a risk be declined by a specific number of admitted markets before business can be placed in the E&S marC O N T I N U E D

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Agency Trust Money and Capitalization

BY CHRIS BURAND

uly 8, 2010 Insurance Journal: FBI Raids Tennessee Payroll, Insurance Firm Sommet Group July 7, 2010 BestDay News: Former Agency Owner Arrested in $1.3 Million Insurance Scam July 1, 2010 Insurance Journal: Louisiana Agent Accused of Misappropriating Premium

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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@burand-associates.com.

These are just three headlines of many that have been hitting the newswires and Internet for many months. In almost all cases, the headlines involve agents who have not forwarded premiums to companies. In other words, they have violated their fiduciary duty to hold in trust money paid to them by insureds until it is time to forward the money to the appropriate carrier(s).

Dozens and dozens of agency owners have told me that because their states have no trust laws, they don’t have to be in trust. The states in the headlines don’t have trust laws either, per se. So why are these agents in trouble? They are in trouble because all states and the federal government require that money that is supposed to be held in a fiduciary capacity be held in a fiduciary capacity.

This means agents are not supposed to spend this money under any circumstances!

I continually find agency owners who believe that because their state does not have a trust law, they can spend their clients’ money as long as they pay their carriers on time. Generally, the lack of a trust law only means that an agency can commingle trust monies with operating monies. It does not mean an agency can spend its clients’ or carriers’ money!

It is also a myth that as long as the agency pays its premiums on time, it

does not have to be in trust. A generic definition of being “in trust” is: (cash + receivables) / (premiums payable + binder bill) > 1. If the agency’s trust ratio is less than one, it means the agency has spent money that does not belong to it. If the agency’s trust ratio is less than one and it is current in its premium payments, the agency must be robbing Peter to pay Paul. In other words, it must be using customer B’s premiums to pay customer A’s premiums.

How is this ethical or right? Too many agents believe the myth that this is permitted because the company is being paid on time. The problem with this musical chairs is that sooner or later someone is not going to get paid, the agency will have to be recapitalized with expensive after tax dollars, or it will have to be sold at a steep discount because the agency has violated its fiduciary responsibility.

I get the impression some consultants downplay the significance of this issue. I can tell you with certainty that a consultant who delivers news that the $500,000 or $1,000,000 missing from the trust account is diminishing the agency’s value to almost nothing is not a very popular person. More than once I have had agency owners ask me, “Why haven’t any of the other consultants told us this was an issue? We’ve been doing this for years.” Sometimes they fire me, sometimes they get mad, and sometimes they go into denial. Other more proactive owners realize the situation and work immediately to fix the problem.

Some consultants have perpetuated another myth by contending that agents are currently better capitalized than any C O N T I N U E D

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AGENCY TRUST MONEY AND CAPITALIZATION C O N T I N U E D F R O M PA G E 1 6

time in recent history. That has not been my experience and the headlines certainly do not support this supposition.

Perhaps part of this difference in views is that some people may not know how to read a balance sheet. If this is the case, agency owners need to be quite careful whom they choose as advisors.

I have heard it said that balance sheets do not matter because an agency can always find more cheap capital. Maybe

that was true a couple of years ago, but I do not believe that is true today. While being out of trust is not always an immediate death sentence, especially now as some companies are helping agencies that cannot pay on time out of fear of losing books of business, it is a major mistake to think this makes being out of trust okay.

Well-capitalized agencies have the opportunity today to invest in top people, buy distressed agencies, invest in better sales tools, and contract with bet-

ter carriers. With all these benefits, now is a great time to make being in trust a top priority. • 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.

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ketplace. In addition, in many states, the account cannot be placed in the E&S market if there is an admitted market willing to write the risk. It is essential that you comply with these regulations.

Hard market or soft, the E&S marketplace can be a tremendous asset to your agency. Because of its uniqueness, retail agencies need this side of the industry for certain risks. Establish a solid relationship with several wholesalers, as no one can do it all, and be on the lookout for the issues discussed above. An ounce of prevention is worth a pound of cure. •

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all the time. Often whatever that part is doing isn’t really needed and it’s just clutter in your computer’s memory. So, take some time and clean up the extra process clutter and your computer will run faster. And if you are ever “talking” to the software company (e.g. tech support), let them know you don’t appreciate hidden background clutter. Maybe if we all start saying “we’re mad as heck and we’re not going to take it any more” the software companies will stop cluttering our computers’ memory. • Gregg Marshall, CPMR, CSP, CMC is a speaker, author and consultant. He can be reached by e-mail at gmarshall@vendor-tech.co, or visit his website at http://www.vendor-tech.com.

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Tech Bit Is all that background clutter needed?

BY GREGG MARSHALL

ith 18GB of RAM memory and a quad core CPU, I rarely worry about what programs are running in the background of my desktop computer. My thin and light laptop is a bit more limited (4 GB RAM, dual core CPU). But my netbook only has 1GB RAM and the modest Atom processor.

Having a bunch of relatively useless stuff running in the background can make a real difference in how it performs (actually how all my computers perform).

I was trying out some new backup software and as a matter of course looked to see what was running on my computer at the time. I was a bit surprised to find there were 93 processes running at the time, taking up about 24% of the computer’s memory. Actually there were over 120, but I had Google’s Chrome browser open at the time and it runs each tab as a separate process so if one tab/website crashes it doesn’t take all the other tabs with it (less of a problem as fewer websites use Flash).

A process is a computer program that is in memory either running or waiting to run. So when I have Outlook and Microsoft Word running, as I do now, there are two processes, one for Outlook and one for Word (actually Outlook occasionally has a second process). If you’d like to see the processes running on your Windows computer, press ControlAlt-Delete (all at once) and select the task manager option. One of the tabs in that window will show you the processes that are running.

But those are applications I’m using at the time.

What about the 90 other processes? About 30 are related to the operating system, such as the process that does antivirus scanning or a process to manage your wireless internet connection.

But there are a lot of processes for application programs I may only use occasionally. For example, there are at least four processes that identify themselves as being part of Adobe Acrobat. I know these processes are not vital to Acrobat displaying my PDF files, because I can kill the processes and

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Acrobat works just fine. I know one of the processes, taking 4 MB of memory, is there just to check for updates to Acrobat, as if it is of some vital importance that I know within seconds of when the next version is available. Why not just check when the program starts and give me that small part of my memory and CPU back?

There is a disturbing trend of applications automatically installing a permanent process that is always running in the background. A lot of those processes, often shown in the system tray on the lower right corner of your screen, do nothing more than open the program and/or check for updates.

What’s worse, they don’t give you the option of whether to have them run when you are installing them. In fact they don’t even tell you they are installing a background process, or what it does.

And they frequently have names so obscure you need to Google the process filename to find out what they do.

If your computer is running slow and you suspect it’s because there are too many processes from programs being loaded during start-up, you can take control if you’re a bit adventurous. Windows includes a program called MSCONFIG, which you can run by clicking Start and Run (usually in the accessories folder). Once MSCONFIG is running, select the start up tab. There you will be given a list of programs that will be run during startup, you can uncheck the boxes of any you don’t think you need. MSCONFIG will require a reboot of your computer when you are done, and the programs you deselected won’t be loaded. If you make a mistake and something isn’t working, you can always go back into MSCONFIG and re-select the program. And don’t be surprised if, during some upgrade, the program puts yet another entry in the start up program list; Acrobat is famous for doing that.

It’s unfortunate that so many programs feel the need to have some small part of themselves running C O N T I N U E D

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THE TENNESSEE AGENT 17 December 2011

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Calendar of Events PIA LOCAL CHAPTER MEETINGS • Chattanooga Meets 4th Tuesday of the month Contact Adam Cox, 423/877-3536 • East Tennessee Meets quarterly Contact Ron Welch, 865/689-6254

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2 0 1 1 E D U C AT I O N P A R T N E R S Accident Fund of America • Arlington-Roe • Bolton & Co. • Grange Insurance PIA Advantage Services Corp. • ServPro • U.S. Risk Insurance Group • Utica National Insurance Group

18 THE TENNESSEE AGENT December 2011

PIA Boosters PIA thanks our Agent and Booster advertisers!

For advertising information, fax the Tennessee Agent at 615/771-3456.

v P.O. Box 270 Columbia, Tennessee 38402 800/346-6071 800/296-0419 fax Tom Wilson, Marketing

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THE TENNESSEE AGENT 19 December 2011

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Tennessee agent 504 Autumn Springs Court, A-2 Franklin, Tennessee 37067