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In This Issue Customer Service IS the Insurance Product Improving the Customer Experience Changing Customer Expectations Want Happier Customers?

Texas PIA P.O. Box 700877 Dallas, TX 75370 (972) 862-3333


In This Issue Customer Experience IS the Insurance Product

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3 Ways to Improve the Customer Experience Page 11 The Impact of Changing Customer Expectations

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Want Happier Customers? Help Them Get Oriented

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Insurance Renewal: American Style

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Mobile Insurance: Smooth and Seamless

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Small Business: Frustrated With Commercial Insurance Purchase Page 29 Protect Your Clients from Cyber Attacks

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The Biggest Mistakes Made Managing Agents Page 31 Selling to Millennials: A Unique Generation of Consumers

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Recent Hurricanes Producing More Flood Claims than Wind Claims

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Texas News Round-Up

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David Gorman As independent agents we pride ourselves on delivering excellent customer service. And isn’t “customer experience” just new lingo that means the same thing? Not even close. According to a recent Forbes Magazine article, “A major difference is customer service is reactive and often is only used when a customer isn't satisfied. If a customer has an issue with a product or service that is typically the only time they would contact customer service. Conversely, customer experience is proactive and aims to reach every customer”. Our industry typically lags behind in adopting the technology and attitudes that allow us to compete in the customer experience arena. This month’s issue aims to help catch us up so that our customer experience delivery equals our outstanding customer service. Yours,

David David (Red) Gorman Office: 214-374-9997 Email:


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Visit for more information.


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Customer Experience IS the Insurance Product by Ryan Hanley, There is no doubt Ted Devine, CEO of Insureon, rattled some cages with his closing keynote presentation at Elevate 2017. He also delivered one of the defining quotes of the conference:

“Experience is the product”. Before we can dive into why customer experience is the product, we first define the term (per Wikipedia): “In commerce, customer experience (CX) is the product of an interaction between an organization and a customer over the duration of their relationship. This interaction is made up of three parts: the customer journey, the brand touchpoints the customer interacts with, and the environments the customer experiences (including digital environment) during their experience.” The barriers to finding new products and service providers have all been torn down. Independent agents are no longer the gatekeepers of insurance coverage. The entire insurtech movement is based on the modern insurance consumers desire for a new customer experience. But while customer experience building a modern customer experience may feel fairly straightforward for tangible products, there is a deeper CX application for a consumer brand that does not offer a tangible product (like insurance). This has always been the issue with insurance products. Our product is a contract. Ugh. There is nothing sexy about an insurance contract. You can’t walk into a trendy boutique and “experience” the latest fashion in insurance contracts. Insurance contracts are intangible, obscure and obtuse. It is extremely difficult to build a customer experience around the insurance contract. Not to mention an entrenched belief among consumers that insurance is a commodity. As independent agents we sell relationships and a promise built on trust. Relationships and promises are easy. It’s the trust part that’s tricky. There was a time when trust assumed based on our industry’s legacy in the marketplace. The Baby Boomers parents used independent agents, so they used independent agents. Gen X’ers parents are Baby Boomers, so the same equation applied. But with each subsequent generation, (the Silent Generation, to Baby Boomers, to Gen Xers), more and more consumers gave directs and captives a shot. This is why Geico was the most-advertised individual brand in 2016, for the first time taking the No. 1 spot on Ad Age’s ranking of brands’ measured-media spending, knocking off AT&T (the top spender in 2015). Geico had U.S. measured-media spending above $1.4 billion in 2016 (source). Inherent trust in the independent agency channel began to wane as more insurance consumers built trust with competitive channels. This is where we find ourselves today.


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Here are 5 ways to make customer experience the insurance product and save the future of your agency:

1) Get your entrance experience right You’ve heard the saying, “You never get a second chance to make a first impression.” Well, it’s true and the psychology behind first impressions is crazy. It can take as little as one-tenth of a second for us to judge someone and make a first impression (source). The scary part is that whether you are trustworthy or not is one trait determined during a first impression. So what kind of first impression does it make on a new potential client when you advertise, (through word of mouth, digital or otherwise), around a commitment to customer service and then send inbound callers to a phone tree? That’s right, you can’t be trusted. No one who actually cares about their clients sends them directly into a phone tree. But phone calls certainly aren’t the only way prospects get a first impression of your agency. Your website is a big one for sure. Your social media platforms, including Facebook page, LinkedIn profile and so on. What about how your agency looks from the outside and even more important, the inside. When is the last time your physical location got a fresh coat of paint and some new carpeting? However, all of this is simply lipstick on a pig, if your “Entrance Experience” does not match customer expectations. LESSON: Sit down and think about what the type of client you want expects when they reach out to you the first time. The answer is where you begin building your customer experience.


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2) Design your customer experience with the customer in mind Designing the customer experience has nothing to do with you. This is mistake number one I see agents and carriers making. They try to develop a customer experience based on how THEY like to do business. Nope. Not going to work. Your customers (or potential customers in this case) don’t care how you like to do business. They care about how they like to do business. This is the defining difference between customer service vs customer experience. Sydney Roe put together a fantastic video explaining this concept and why it’s so important to understand the difference. Customer service is the company-centric model. Customer experience is the customer-centric model.

Customer Service vs. Customer Experience (Explained with a Beer Fridge)

How your customer wants to do business, is the way you do business or they won’t be your customer for long. LESSON: Think customer first. Always. How you want to do business doesn’t matter anymore.

3) Empower your people Wegmans, one of the largest grocery retailers in the US, is commonly held up as example of steadfast commitment to customer experience. Their secret sauce you ask? Wegmans empowers their people. Staff members have complete control in their day-to-day interactions, without having to filter enquiries through several layers of management before they can resolve a customer issue. At Wegmans, empowering their people is also letting them experience with new products and processes that may or may not work. In practice, this empowerment can range from the bakery department making pork-flavored biscuits to supporting an employee initiative to accept Apple Pay. According to Kevin Stickles, senior vice president of Human Resources, “When you think about employees first, the bottom line is better. We want our employees to extend the brand to our customers.” So how does an independent agency owner develop enough confidence in her people to empower them in a similar manner? Training and trust. Wegmans does an incredible amount of training. Employees are not allowed to talk to a customer until they have had 40 hours of training. And the training doesn’t stop there. They send their butchers to cattle farms, their fish market team to Alaska and their deli managers to Wisconsin. “What some companies believe is that you can’t grow and treat your people well,” explains Mary Ellen Burris, senior vice president at Wegmans. “We’ve proven that you can grow and treat your people well.”


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LESSON: Your team can only be as good as you empower them to be. Train them. Trust Them. Then let them do their job.

4) Use technology to streamline the customer experience We’ve written extensively on the insurance technology revolution, (aka insurtech) and the focus on customer experience. Take a deep dive here: How Insurtech Disruptors Will Defeat Independent Agents. Customer experience is the insurance industry’s low hanging fruit. Independent insurance channel has avoided improving their own customer experience for far too long, (decades in many cases). This goes to carriers and agents alike. However, a customer experience based solely on technology is far too easy to commoditize. Therefore, disruptors will not defeat independent agents on customer experience alone. This does not give you the right to purposefully neglect technology at your customer’s expense. Today’s technology is cheap and easy to use. There is no excuse for a lack of adoption. Your agency is NOT the unique snowflake who can survive without streamlining at least some of your customer experience touchpoints. Here are just a few of the tools at your fingertips: •

Email marketing and automation: Mailchimp.

Customer follow-up and referrals: Rocket Referrals.

Agency management system: TechCanary.

VOIP phone system: Grasshopper.

Experienced US-based virtual staffing: WAHVE.

LESSON: Streamlining your customer experience with technology is cheaper and easier than ever before. Don’t allow the competition to pull ahead because of easy to solve technology problems.

5) Prioritize effectiveness over efficiency At first blush, number five may sound contrary to number four. It’s not. For every shiny new object technology provides us, it must always be passed through the filter of effectiveness. Does this tool improve our ability to provide the customer experience insurance consumers desire? And not just any insurance consumer, but the exact insurance consumer you and your agency WANT work with. Not every powerful customer experience improvement scales over the entirety of your client base. Nor do you need it to. Right now, our competition is winning on efficiency. In truth, I’m not sure the independent agency channel can ever win on efficiency. I’m not sure we want to win on efficiency. Efficiency isn’t our value proposition. Effectiveness is our value. Effectiveness in coverage, in quality of carrier, in depth of connection. LESSON: Always, always, always prioritize effectiveness of customer experience over efficiency of customer experience and your business will never be a commodity.


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3 Ways to Improve the Customer Experience by Fred Lizza,

The excitement of implementing new technology can cause insurers to forget the main reason for adoption — improving the customer experience.

As the insurance industry undergoes a period of reinvention through digital transformation, it’s vital to remain focused on what really matters. The excitement and hype over new technology can lead us to forget the underlying drive to adopt it — improving the customer experience. Treating customers right encourages them to spread the word, consider new services and remain loyal. All three are essential in a competitive industry with such a bounty of choice. Best-in-class customer experience means faster growth and higher profitability, according to McKinsey, and can be achieved through the pursuit of certain qualities that customers crave. Courtesy and professionalism should be a given at any carrier, but many insurers could make strides by focusing on greater transparency, facilitating easier communication, and increasing the average speed of claim settlement.

Making things crystal clear The fastest way to annoy a customer is to obfuscate and then make them jump through hoops to find out what’s going on. An insurance claim is often a stressful time for insureds, so it’s vital to make things clear to ease the burden. Every claim you process will have a workflow or lifecycle with several stages that require different actions before further progress can be made. Ensure that the current status is easily accessible for every customer, and for every employee or third-party administrator that interacts with your customer. If the ball is in their court, and you require further information before the claim can go ahead, then make that crystal clear. An automated query system, combined with self-service portals, can make for a smooth process where there’s never any doubt about what must happen next to advance the claim. Real transparency is vital internally, so your adjusters can do the best job possible. Why not expand it to include your customers?

Boost settlement speed If insureds can easily check on the claim status and upload supporting materials to move things along, then resolution will come faster, but there are also many other things insurers can do to increase the average settlement speed. Consider how appraisal, Continued on page 38 TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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The Impact of Changing Customer Expectations by Nick Frankland, Most people who’ve worked a lifetime in the insurance industry may not see a direct parallel with how Amazon’s aggregator model is reaching into virtually every aspect of consumer life, casting its shadow across an ever-lengthening list of industries, and channeling the direction in which technology is nudging insurance and financial services. Yet, this is exactly the mindset our industry needs to become aware of and acknowledge, so as to adopt strategies to leapfrog the challenges we face. This means addressing evolving customer expectations by offering comparison pricing and transparency, new products and innovative services. Further, it’s aspiring to make the customer’s experience truly frictionless, whether through quick delivery of quotes based on a minimum number of questions asked, but powered on the back end by big data; or on the banking side, by being able to speed underwrite a mortgage that’s no less rigorously risk-assessed but with the prospective borrower not having to jump through hoops because through open data, the necessary information on the borrower already exists and doesn’t have to be re-ascertained for the hundredth time. While the financial industry is unlikely to have the broad reach into consumers’ lives as sectors such as retail, consumer technology, telecom, entertainment and grocery, the digitization of these other industries have set up an expectation that the financial industry must also quickly move in this direction. Progress in our industry has been incremental rather than of a disruptive, “Big Bang” nature. Consider for example that in insurance, it’s taken us a couple of decades to get to a more advanced phase of online comparison, to evolve insurance aggregation from clunky to streamlined, from sites that were hard to navigate and finally arriving at apps that are frictionless and consumer-friendly. But clearly, when you think about Amazon’s recent opening gambit into insurance and healthcare, there’s far more potential to shake things up, well beyond comparison apps. In the past six months, this industry outsider has purchased an InsurTech company in India, announced with two other major employers, Berkshire Hathaway and JPMorgan Chase that it’s looking for ways to make employee healthcare more affordable, and announced its acquisition of Pillpack. Where next? How can the industry begin to respond to these developments? First, by recognizing how easily a non-incumbent could steal away its customers. Then by looking at where money can actually be made, and who is powering that shift. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Data is central to digital transformation For our industry to start thinking like an Amazon, it would look first at ways to show their customers that they are valued. Understanding customer pain points, and delivering life-improving solutions to those pain points to as many people as possible, is where the solution lies, and where technology plays a role in solving this primary challenge. Data is clearly the fuel that will power this endeavor by suggesting consumer-driven solutions. Data is allowing for a new form of transacting based on consumer habits, preferences, demographics and financial wherewithal — in short, their needs — supplanting traditional means of purchasing.. In a larger societal sense, these platforms offer a way to help and empower massive and underserved sectors of the population, for example young millennials and the elderly, giving them access to more choice, more availability of products and services, at a more reasonable price. A relentless pursuit of technological innovation to realize this goal can play a role in replacing retreating social safety nets.

The role of open data Between aggregation and comparison shopping and the trend toward the open data models, some patterns are emerging that should start coming into crisp focus for the insurance industry. With open data, consumers consent to making their financial data available to third parties. In exchange, they expect and demand a seller-as-bidder approach to transactions such as buying insurance and getting mortgages. Empowered consumers can thus gain the advantage by “putting themselves out there” — they can have their pick of the best priced, easiest, and highest value offers in insurance and other financial services.


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Simultaneously, we’re seeing a concept that has driven insurance and financial services since its inception doing a 180. Generally, we have relied on making most of our revenue from a few, low-risk customers. Now, we are looking at the more sustainable value proposition of getting a small amount of revenue from masses of customers. Today’s successful organizations understand that the model has to change in order to thrive.

Disruptors in insurance Innovators from within our industry are also taking slices of our pizza. Consider that there are one-month insurance policies available online. How did this happen? It’s a disruption of the long-held industry standard that the minimum period for a household insurance policy is one year. Now these companies are competing for your customers, who want insurance for a month, and making it possible to provide coverage for a policy period previously thought not worth the underwriting. Compare this to short term contracts for mobile phone or utility bills… the customer’s mantra seems to be: “Provide me only what I need and exactly when I need it — no more and no less.” We have no choice but to engage in this manner. Insurance’s legacy model of minimal interaction with customers — think of life insurers interacting with their policyholders only at the time of underwriting, and then with their families after their death — is no longer relevant, in light of current consumer demands for convenience, transparency and interaction. Our industry needs to start thinking like those competitors that have launched themselves headlong at our world with their digital models. After all, we have the key advantage: we know insurance. Now, we simply have to learn to reinvent the industry around the way consumers want to interact, before the industry is reinvented for us.


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Want Happier Customers? Help Them Get Oriented by Maria Ferrante-Schepis, Hugh Dubberly and Shelley Evenson provided a helpful framework for looking at customer experience in 2008, when they released their Experience Cycle model. In this framework, a customer’s interaction with a product or service is broken down into five phases: Connect & Attract, Orient, Transact, Extend & Retain and Advocate. You probably spend a great deal of time on connecting with consumers and attracting them, and also on the Transact, Extend & Retain and Advocate phases.

How to ‘orient’ insurance consumers Too often, “Orient” is the missing piece. To write profitable insurance, an insurance company often needs to spend time to get and review information about the consumer. The consumer needs to understand why the insurance company needs this information, and how to get the information efficiently. Insurance companies often expect consumers to go right from the Connect & Attract phase to the Transact phase, without going through the Orient stage. The consumer gets turned off by all of the unexpected requests for information, and may even bail out. This can happen online, and it can also happen in a face-to-face sales environment. So, in what ways might we fill in the missing piece?

Questions that must be answered First, we must understand what questions must be answered to get the consumer oriented. These questions include: •

Do I really need insurance?

If so, what kind?

How much do I need?

How are my costs determined? How much will it cost?

What does the process look like?

How much time and information do I really need to give?

How will you use my data? Will it be used against me now or down the road?

Next, we can take pages out of the lesson books from companies in other industry categories: Here are three examples:

1. Credit Karma Here’s a service that not only aggregates your various credit reports but also breaks your score down into key behaviors. The breakdown helps users understand how to improve their credit scores, and how credit scores are is used by credit card companies TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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2. Domino’s Pizza When you’re hungry, the tension of not knowing what’s happening with your order, or when it will arrive, can be maddening. Domino’s responded by creating the “where’s my pizza” function. The consumer can see exactly when the pizza is being made, when the pizza is in the oven, and when the pizza is in the car and on the way. For users, knowing in advance that they will have visibility into the process is comforting.

3. RealAge Test This system, used by millions of people, engages the user in a series of questions and instantly delivers a “real age,” based on health and risk factors. Your calendar age might be 40, but your “real age” could be 38. The test is a socially engaging way to help orient people around the behaviors that lead to longevity and health, while also helping them understand risk factors.

Those are examples of elaborate digital experiences, but you can also provide orientation with mechanisms such as simple FAQs, videos and chat tools.

What Should I Include In My Client Welcome Kit? from Packaging The first step is to understand that the Welcome Kit is going to be different for everyone. Your clients, your brand, your budget, your location and more can influence what you want to send out. I’ve seen many agents use boxes from the post office, but you can also get customized boxes printed. These can just have your logo or can use patterns and graphic elements from your Brand Guide (Google: Custom Mailing Boxes). I’ve also seen agents use the priority mail or even plain envelopes.

To determine your cost, start a list of everything associated with the mail. The packaging and mailing costs are going to end up driving a significant amount of your cost, so I’d suggest starting there when you are looking at your box. If you know your average clients per month, you can multiply it by the cost per mailing (package, postage, and contents) and get a monthly spend. If this is outside of your budget, look at a smaller box or go to an envelope. Contents •

Welcome Letter – A welcome letter with a sincere thank you message from the owner (or principal or department head depending on your setup).

Thank you card – From the person that sold that policy

Referral request with business cards

Agency logoed items (tee-shirts, wireless Google: Low cost logoed items for ideas

Carrier logoed items

Contact information sheet (or magnet) – Who to call with questions, claim number

Sales sheet showing all products

Informational sheet on policies they purchased







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Insurance Renewal: American Style by Kelly Donahue-Piro, So let’s chat a little bit about how a modern day renewal goes in an agency. So let’s just imagine and paint a picture. Let’s paint a picture of Sally and Jim. Sally is a nurse and let’s just say that Jim is veterinarian, right? So they both have a long day at work, they have a great family at home. Sally comes home from her long day of being a nurse, on her feet all day, she gets in the door and is greeted by her great kids. And the first kid is comWatch Video ing and saying, “Mommy! I want to go to soccer camp! It’s only twenty five hundred dollars!” and Sally’s like, “Great! How are we going to get that money?” She goes to mailbox, grabs the mail and in the mail is her insurance renewal. Now, she opens it up and what do you think has happened to it? It’s gone up, right? And right next to it is her credit card bill from Christmas that hasn’t been paid off yet and her son with crocodile eyes saying, “I wanna go to soccer camp!” She immediately puts the mail aside, says she’ll deal with it tomorrow and goes about making dinner. Now her husband comes home from a long day, maybe a nighttime meeting and he’s hangry. So he’s looking at the mail saying, “What the heck!? Jim in my office pays X and Bob pays Y and our cousin pays X! We are absolutely getting taken advantage of!” And all of a sudden you’re thinking to yourself, “Oh, we’ve got to take a look at this.” We’ve got all these bills and everything is going up and no one really wants to pay for insurance. Put it aside and say I’ll call in the morning. Now everyone sits down and watches some TV, maybe they’re watching The Voice. Great show, by the way, and all of a sudden what do you see every commercial break? Geico, State Farm, Progressive. All the direct writers out there basically saying go online, go online, go online. And we never have our phone, iPad or laptop more than six inches from us while we’re watching TV, right? They hop online, get a quote and what do they get? First of all, they can quote themselves at the lowest limit; saving them money. Second of all, they get a quote less than what they have currently with you and now they are spicy. Immediately when they submit they could call and buy new coverage at 11 o’clock at night. They’re going to get text messages, emails, phone calls from a sales team that wants to win that person’s business. Now, you’re closed, so by the grace of God in the morning they call and they are spicy. “What is going on? Our rates keep going up! I need to shop my insurance!” Now you go ahead and shop their insurance, but you get back to them four days later. In those four days they’ve received countless phone calls, emails, text messages from whoever they got quotes from and they may have even already selected a new carrier. That remarket you did could have just been in vain and then a waste of time because they’re not going to call you back. We need to embrace the modern renewal strategy in America especially for personal lines. Your competition is fierce and operating when people are actively looking for insurance. When someone calls into your agency looking to be remarketed it has to be the hottest priority, just like a new lead, because you don’t have a lot of time to work. The other thing is we really should be getting to people before that spicy phone call comes in. Get on those renewal calls. It’s key. Also understand and start analyzing how long, how quick your turnaround time is on a remarket. You may be shocked and that may be the biggest issue of why you’re losing some customers. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Mobile Insurance: Smooth and Seamless by Jason Walker, “There’s an app for that.” This phrase has become the solution for many consumers as they complete more of their day-to-day tasks from mobile devices. Need to reimburse a friend for dinner? Use Venmo to easily transfer money. Have to deposit a check? Just snap a picture and deposit it directly through a bank’s app. While apps have become the go-to solution for so many things, an app for independent agents that represent many carriers isn’t the only — or even the easiest — plan for creating a smooth, seamless customer experience. The case for going mobile is clear Unfortunately, there’s a real disconnect between the consumer shift toward mobile and agents’ capabilities. There are approximately 200 million mobile phone users in the United States, and half of all organic search engine visits originate from a mobile device. In fact, data assembled by my company from the performance of more than 1,200 insurance agency web sites shows that the fastest rising device type for online search and content consumption is mobile.

But according to a recent survey from the Insurance Digital Revolution, only 19% of agents currently offer any type of mobile application. A key reason more agents aren’t moving faster is that mobile strategies can be intimidating: most believe mobile requires downloadable apps. Apps can be expensive and complicated to develop. They must fit the parameters of a mobile operating system such as iOS and Android. And apps require insurance consumers to take an extra step by going to an app store on the phone and downloading the application, which can be cumbersome if a prospect is just looking for a quote. Carriers have made much more progress with these technologies, and it is easier for agents to defer their customers to the carrier app for claims and account management activities associated with their policies instead of building their own program from scratch. The rise of the mobile customer experience App-less mobile is a concept that provides a seamless insurance experience and that scales to fit the specific needs of independent insurance agencies. Consider this example: An agency has a website. To be effective, the site has to be mobile responsive, meaning it automatically adapts to fit the screen of the consumer’s device that is accessing it such as a desktop, smartphone or tablet. There is no app required to achieve this responsive design, just proper website programming. And an app-less experience goes beyond formatting. The goal is to create an experience that mimics the one-track, simple features of an app. Agencies can implement solutionsthat transform consumer lead and quote forms into app-like interfaces on the website, basically using smart, simple question-response techniques to engage the customer.


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For example, a virtual agent can lead the customer through the quoting process, asking specific questions about insurance needs, with new questions populating based on prior answers. At the end, the form can be linked with a rater and provide the prospect with policy quotes on the spot. Mobile is inherently a communications opportunity for agencies, and app-less mobile has many benefits. It provides universal accessibility across all browsers and operating systems. It’s less expensive than application development, requiring low-to-no maintenance costs beyond typical website fees. App-less mobile improves operations and the overall customer experience providing clean, simple workflows. They can also give an agency an advantage over competitors that have not embraced a responsive experience. The future of mobile is app-less With the advent of InsurTechs, mobile-first customer experiences have become the norm. While currently relegated to more commoditized home, auto, and small commercial policy transactions, in the future expect new breakthroughs. Companies in other industries have begun implementing app-less mobile experiences and are seeing more engagement. After Starbucks began offering an app-like experience on its website, the number of orders placed through the site doubled. Sixty percent of e-commerce retailer Flipkart’s customers who uninstalled the native app, returned to use the company’s website which offered an app-less mobile experience. The insurance industry is primed to follow this trend. Leading agencies will offer more tailored, focused solutions that humanize the customer experience using the devices their digital audience members choose. Texting, email, prescribed workflows to capture consumer data, and accessibility to customer portals will be empowered through mobile technology. In this scenario, downloadable apps are too constricting, and app-less mobile experiences have no limits. TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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The best place for agencies to start For agencies, going app-less starts with checking their websites. Navigate to the site using a desktop computer, tablet, AND smartphone. This will quickly demonstrate whether or not the webpages and forms are responsive to all devices. If they are not responsive, agents should contact the website developer to get it adjusted quickly. Then, agencies need to look at all web forms and ask themselves: will the business benefit from a more app-like form that digitally engages with visitors? Often the worst experience for customers is a passive one where they have to do all of the work. Finally, agencies should encourage their producers and CSRs to add texting to the customer engagement toolbox. Agency employees should be interacting with customers using the same devices they use for family and friends. After all, it is the human quality that makes agents the superior choice to drive the insurance value chain. In a digital insurance world, apps — the kind you have to download — really are no longer required. App-like interfaces on websites and on-demand chat provide customers with a great experience without having to download. The future of mobile is app-less, and it’s a win-win for agencies and their customers.


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Small Business: Frustrated With Commercial Insurance Purchase from, based on Accenture study Small commercial insurers aren’t giving their client base what they want – a simple and easy purchase experience. Whether online or through an agent, business owners are left confused, frustrated and having to seek extra advice before they can find suitable coverage, according to new Accenture research. “Small businesses are extremely frustrated with the process of commercial insurance, whether they purchase directly or through an agent,” the report concludes. “Many report that they do not trust the sales process or fear that they are inadequately covered by the policies they eventually buy.” Among the report’s findings: •

“Overwhelming,” “confusing” and “not fun” were words business owners used to describe pursuing the purchase of commercial insurance for the first time. They were confused about how insurers collect data, insurance industry language and how much coverage they actually needed. Businesses said they wanted the quoting process to be faster and simpler than it is.

Business owners may start pursuing the direct/online purchase of insurance, but they often feel overwhelmed by the complexity of it all and can’t find what they need. They end up needing more time and consultation with others.

Business owners are jaded about sales pitches from commercial or personal insurers, leaving them cynical and on a quest to find unbiased advice from somewhere else before they make a purchase.

Business owners complain that commercial insurance policies aren’t flexible, wishing instead that they could find policies that adjust to their needs over time.

The study argues that carriers should streamline information small business owners need to receive quotes or policy information; use artificial intelligence to update policies and improve coverage; and rely on clear, non-jargon language so people who don’t know insurance insider language can pursue buying a policy easily. There’s plenty of room for improvement. As Accenture noted, the small commercial insurance market has no single carrier with more than a 4 percent market share. Also, more than 60 percent of small businesses in the United States will be owned by millennials and Gen Xers by 2020, according to data cited by Accenture, and those demographics prefer “digital purchases and self-service to face-to-face” interactions or the telephone. That means carriers will win and stand out if they revamp their buying process for small commercial business customers in a way that addresses their concerns and preferences, Accenture said. “Carriers that want to win need to leverage design thinking co-creation with customers, hannels and touch points,” Accenture said in its study. Continued on page 38 TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Getting started is easy. Start protecting your clients today. Many agents are able to purchase the same PIA cyber insurance for their agency for a significantly reduced rate through their local PIA affiliate.


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The Biggest Mistakes Made Managing Agents by John Chapin There are five primary mistakes when it comes to managing agents. Almost every organization makes one or two of these, but most make more, many make all five. Each mistake you eliminate will add about 20% in additional revenues to the bottom line. That said, if you have and clean up all five, it could lead to an exponential revenue increase of 200% or more. Mistake #1: Having the wrong person This is usually a hiring mistake, though it could be someone who has become complacent over the years and is no longer doing their job. If it’s the latter, there is still hope but it will require relighting the fire they once had. Talk to them about this and see if you can help them find their passion once again. If not, you may have to move them somewhere else or out altogether. If it’s the former, you need to change your hiring process. While a whole book could be written on this, here are the most important pieces. One: hire attitude and work ethic. These are the most important character traits of any employee and they can not be trained. They either come to you with these or they don’t. While I have ways to flesh these out during the hiring process, many times you won’t know what you’re getting until they show up five minutes late day one and don’t seem real excited about work. That’s why it’s extremely important to, Two: set rules and expectations up front. For producers, “You’re expected to be in the office at 7:30 a.m. M-F and work most nights and weekends for the first three years in the business.” That’s an example, and one small piece. One other rule I have for commercial-lines producers is: “If you are in the office between 10 a.m. and 3 p.m. M-F it’s a $20 fine.” Some other guidelines I follow are: only hire employed people, only hire in your industry if recruited, have a hiring process, do an online and background check, look for open and transparent people, shake up the standard testing process, set goals and standards in writing, have an employment agreement, establish rules of the workplace, know their WHY, test them before you hire them, hire slowly, fire quickly, give them the tools, resources, and training to do their job, and provide the right environment. Mistake #2: A lack of accountability This means ensuring people are doing the job you’re paying them to do. Once you’ve set rules and expectations in the in the hiring stage, you’ve got to stick to these standards no matter what. If you see someone showing up late, leaving early, or doing anything else that negatively affects the work environment, it needs to be addressed and cleaned up immediately. There should be a series of rewards for the right activities and penalties for the wrong ones. Even after you’ve hired people, you need to continue to test and check up on them. Mistake #3: A lack of training & supervision The biggest issue here is a lack of sales training. There should be heavy emphasis on sales skills. Most companies put way too much emphasis on technical skills and product knowledge versus sales skills. While these are important, sales skills will trump technical skills all day when it comes to winning sales.


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Here are some other points on this item. Micromanage rookies and make sure they are doing the right activities the right way and that they are learning what they need to learn. You can be hands-off with your veterans as long as they are doing lots of good, clean business. Have a training schedule for all training: sales, product, and otherwise and cover this along with expectations and time commitments before you hire them. Assign a competent mentor to new producers. Mistake #4: No sales system and/or no sales process Most organizations have a bunch of agents running around all using different sales systems and processes. While each individual agent is different and will approach sales situations in a slightly different manner, they should all have a well-thought-out track to run on and specific sales system to follow. The process should also be relatively similar. The sales process should cover everything from getting to the decision maker all the way through building long-term client relationships. Your system should consist of: a playbook, a binder with all scripts, a Concept Book, and a way to track and follow up with clients and prospects. Mistake #5: Producers doing lots of things other than producer activities I purposely send e-mails to the agents I coach between 10 a.m. and 3 p.m. Monday through Friday. It amazes me how many times I get an instant response, and not from their cell phone. These are the prime hours during which agents should be on the road doing their most important activities: prospecting, presenting, and closing. Yet, many are in the office doing paperwork, and other things that can be done at any time night or day. You need to set rules similar to my “10-3� Rule. There also needs to be a clear separation of sales and service with roles and responsibilities spelled out for each person in each group. Producers should also have a plan which includes annual, monthly, and weekly goals, along with daily activity. You may also want to put your people through a good time management course to make sure they are following the 80/20 Rule and other key productivity principles.


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Selling to Millennials: A Unique Generation of Consumers from With more than 80 million millennials living in the U.S. today, millennials— those born between 1980 and 1995— now hold the largest share of the labor market, with 35% of the labor force. And this number is projected to hit 50% by 2020. But how are millennials different from other generations when it comes to consumerism? Also known as Generation Y or Echo Boomers, millennials have the greatest lifetime value of any customer in the marketplace, according to The Center for Generational Kinetics. In addition, millennials may be slow to give customer loyalty, but are extremely loyal once they actually choose a brand, service or company. And millennials consistently refer friends and family after having a positive buying experience. Due to the large size and spending power of this generation, millennials are clearly a vital piece of the economic market. Therefore, it is necessary to understand how they think, feel and spend in order to successfully sell to this generation. Let's take a look: Satisfy their curiosity: KPMG's Meet the Millennial report found that millennials are extremely curious and constantly need to grasp the specific reason for doing something. It is important for them to see the value of taking action, as well as how it fits into the bigger picture. Follow their communication preferences: Millennials are a generation of consistently connected individuals. The Center for Generational Kinetics found that millennials prefer to communicate in tech-savvy ways. In order of preference, their most used methods include: texts and IM apps (such as WhatsApp and Facebook Messenger), email (with an emphasis on the subject line), social media, phone calls and in-person communication. When communicating with millennials, keep these preferences in mind. However, be sure to remember that not all customers are the same, so it is imperative to use multiple methods of communication. Provide open and honest communication: KPMG's study found that millennials are extremely honest with each other and expect the same from others. They not only want their opinions to matter, but they want to feel as though their ideas are being understood. As a result, adopting a transparent communications policy is the best way to connect with millennials. Offer security: Millennials job hop more than previous generations. They are not afraid to switch jobs as a way to achieve security. Consequently, it is imperative to help millennials understand change and how it will affect them — as well as providing this generation with a "security blanket" in the form of products and services that deliver much-needed security. Ignore the stereotypes: Millennials are consistently stereotyped as lazy, impatient and entitled. They are described as lacking loyalty and attention, being financially illiterate and addicted to their cell phones, and having a bad work ethic. In fact, the Time Magazine article, "The Me Me Me Generation," referred to millennials as "narcissistic and entitled." Continued on page 38 TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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Recent Hurricanes Producing More Flood Claims than Wind Claims from Utica National When each story was written about Superstorm Sandy, Hurricane Harvey and Hurricane Florence it was ultimately the flooding that produced the biggest financial loss. Unlike wind or other exposures associated with this type of occurrence, flooding is not covered by standard Homeowners or Commercial Property policies. Many insureds found themselves without coverage or with less than adequate limits following these powerful storms. Some relief was available through government loans. Where did many flood victims turn in search of the funding to rebuild their lives? Their insurance agency and their Errors and Omissions Coverage. With the frequency and severity of recent storms and flooding events, it is even more incumbent upon agents today to inform insureds of the risk of flood and the availability of risk evaluation tools, mitigation techniques, and coverage through the government (NFIP) and/or private insurers. Failure to do so can lead desperate insureds to take action against their insurance agent. The following are actual E&O claims associated with the peril of flood along with suggestions regarding how to avoid them in your agency. Failure to place flood coverage The insured is a long-term customer of the agency operating a retail shop written on a Businessowners Policy (BOP). Superstorm Sandy caused flood damage to the insured’s rented store resulting in contents and inventory damage. The BOP carrier declined the claim. The insured sued the agency for failure to offer flood coverage. The agency did not document their file that flood coverage was offered/declined. The result was a $325,000 E&O claim with an additional $145,000 of loss adjustment expenses. The E&O risk management solution is to offer all insureds the option to purchase flood coverage in writing, have the insured sign acceptance or denial of coverage form, document the agency file, and repeat at each subsequent renewal. Failure to place flood coverage The insured is a long-term customer of the agency operating a retail shop written on a Businessowners Policy (BOP). Superstorm Sandy caused flood damage to the insured’s rented store resulting in contents and inventory damage. The BOP carrier declined the claim. The insured sued the agency for failure to offer flood coverage. The agency did not document their file that flood coverage was offered/declined. The result was a $325,000 E&O claim with an additional $145,000 of loss adjustment expenses. The E&O risk management solution is to offer all insureds the option to purchase flood coverage in writing, have the insured sign acceptance or denial of coverage form, document the agency file, and repeat at each subsequent renewal. Failure to procure adequate flood limits The agency has written the insured’s building coverage, including flood, at the same limit for several years. The insured owned and operated a manufacturing operation, under a different name, which occupied the building. The manufacturing operation was not a named insured TEXAS CONNECTION - TEXAS PROFESSIONAL INSURANCE AGENTS DIGITAL JOURNAL

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under the flood policy nor was contents coverage provided. Superstorm Sandy flooded the building. Flood damage to the building was covered, but there was no coverage for the tenant’s contents. The result was a $280,000 E&O claim with an additional $65,000 of loss adjustment expenses. The E&O risk management solution is to offer all insureds the option to purchase flood coverage in writing, have the insured sign an acceptance or denial of coverage form, ask the insured if any changes have taken place in their business which would require additional coverage or limits, document the agency file, and repeat at each subsequent renewal. Failure to adequately explain flood policy provisions The agency writes a large, complicated property policy for a supermarket chain encompassing numerous locations in multiple states. The Flood Coverage is provided with many unique coverage provisions. Superstorm Sandy caused flood losses at several of the insured locations. The flood claim adjustment accounted for the various provisions in the policy resulting in the insured receiving far less coverage than they anticipated. The insured sued the agency. The result was a $2,500,000 E&O claim with an additional $1,500,000 of loss adjustment expenses. The E&O risk management solution is to review all unique coverages, policy provisions, exclusions, and limitations with the insured; offer examples of how specific claim situations will be handled in the event of a flood loss; have the insured sign an acceptance of understanding form; document the agency file; and repeat at each subsequent renewal. All of the above examples show that flood insurance is a frequent cause of E&O claims against insurance agents. Taking time to understand the flood insurance options, offering all options to your clients, and documentation of their declination or acceptance of your proposal is sound customer service and E&O loss prevention.


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From “3 Ways to Improve the Customer Experience”, page 21

can do to increase the average settlement speed. Consider how appraisal, repair and replacement is handled. Could you fold service providers into the mix? Enabling, for example, a customer to book a windshield replacement directly with the repair service through your portal. The length of time it takes to settle a claim is one of the biggest contributors to customer satisfaction. The faster insureds can put the accident or claim event behind them and get on with their lives, the better. For many claims it’s also advantageous for the insurer to process the settlement as swiftly as possible as it can lead to lower costs. Claim automation enables carriers to process the bulk of straightforward claims with minimal involvement. Insureds drive the process and insurers act as facilitators. In rare cases where a problem develops, agents can be alerted and step in quickly. Focus on what’s really important

There’s such a huge pressure nowadays to embrace the digital revolution, and such an abundance of different services, tools and products to help you do it, that you can fall into the trap of adopting technology for its own sake. Making the right choices can be tricky, but if you turn things around and focus on improving customer experience, all becomes clear. Nothing is more important for your business than customer satisfaction and the pursuit of transparency, easy access and communication, and speedy settlements will secure it.

From “Small Business:Frustrated With Commercial Insurance Purchase”, page 29

imagination and experiential research capabilities to create and rapidly refine their target segments, channels and touch points,” Accenture said in its study. Accenture, working with the consulting company Fjord, based its conclusions on interviews with 12 small business organizations centered around identifying past and future insurance needs. They also held a business owner workshop with seven small business organizations to gauge participants’ perspective on buying insurance digitally and what carriers needed to do to boost business owners’ willingness to buy insurance directly. The report is based on participation from 19 total business owners, and it also involved “ethnographic research,” where researchers observe or interact with study participants in their real-life environment. Interviews and workshop took place in the U.S. in July. From “Selling to Millennials: A Unique Generation of Consumers”, page 34

Instead of buying into these preconceived notions, form your own opinions because the stereotypes are not helpful. Remember that millennials are important consumers. Spend time understanding their mindset. Research their concerns, answer their questions, and position yourself as a counselor and sounding board. Be someone with whom they can share their problems and fears. Form a strong relationship. The bottom line is that with millennials holding the title of "greatest lifetime value" of any customer in the marketplace, it is crucial to recognize the best methods to sell to this unique generation. Texas PIA will be partnering with AIMS Society to provide the Certified Professional Insurance Agent (CPIA) designation program. Watch your inbox for more details.


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Texas News Round-Up Attorney Charged With Insurance Fraud After Filing Bogus Hail Claims A Galveston, Texas, attorney has been indicted on charges of insurance fraud, barratry and money laundering in connection with allegations that he improperly submitted roof hail damage claims to insurance companies on behalf of clients he’d never met....more Texas Insurance Department Recommends Flood Disclosure on Property Policies In its 2018 Biennial Report, the Texas Department of Insurance made several recommendations to the legislature regarding issues the agency believes are worth looking at by lawmakers in the 2019 legislative session....more

Traffic Fatalities Dropped in Texas in 2018 After seven straight years of increases, the number of traffic fatalities in Texas fell in 2018, the Insurance Council of Texas (ICT) reported. Texas Department of Transportation data show that traffic fatalities dropped 4 percent from 3,720 in 2017 to 3,567 last year.…more Texas DOT Creating Connected, Autonomous Vehicle Task Force Texas Department of Transportation says its Connected and Autonomous Vehicle (CAV) Task Force will soon become a central point for CAV advancement in Texas.…more Houston Company to Pay $250K in Workers’ Comp Fraud Case A Houston company has pleaded guilty to workers’ compensation premium fraud in a case that spanned four years, the Texas Department of Insurance, Division of Workers’ Compensation announced....more Texas Sunset Board: Legislature Needs to Decide Nature of Windstorm Insurer To be the insurer of last resort for wind and hail insurance along the Texas coast, without state support and reliant on premium dollars and debt financing for funding, or to be a true insurance company that derives funding primarily from premium dollars?....more Bill Would Prevent Texans from Unknowingly Buying Homes in Flood-Prone Areas State Sen. Joan Huffman, R-Houston, has legislation that would require sellers of residential properties to notify buyers if a property is located in a flood-prone area — and whether it has previously flooded....more Workers’ Comp Relativities Are Obsolete, TDI Says In its 2018 Biennial Report, the Texas Department of Insurance has recommended that lawmakers delete from state statute references to classification relativities as an alternative basis for workers’ compensation rates. ...more Train Derails in Texas, Sends Freight Cars into Backyards A freight train derailment in the center of a small North Texas town sent freight cars smashing into a resident’s backyard. The 9:30 a.m. Jan. 9 smashup in downtown Aubrey, Texas, involved a Union Pacific train of one locomotive and 13 freight cars....more Texas Regulators Urge Flexibility in Claim/Dispute Deadlines for Windstorm Insurer The Texas Department of Insurance in its 2018 Biennial Report to the legislature has recommended amending state law to permit more flexibility in time limits for handling and resolving claims and disputes brought to the Texas Windstorm Insurance Association (TWIA)….more Do you have news to share? Email with your story. Download Latest Issue


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Profile for Texas Professional Insurance Agents

Texas Connection March 2019  

Texas Connection March 2019