Viewpointwinter2014 by Independent Insurance Agents of Iowa

WINTER 2014 • VOLUME 32 • ISSUE 1 INDEPENDENT INSURANCE AGENTS OF IOWA

Young Agents– The Oxygen for the Independent Insurance Agents Future!

PRESIDENT’S REPORT Young Agents - The Oxygen For The Independent Insurance Agents Future! Independent Insurance Agents of Iowa 4000 Westown Parkway West Des Moines, Iowa 50266 (515) 223-6060 • FAX (515) 222-0610 800-272-9312 (In-State only)

Advertising Editor Melissa Meiners

BOARD OF DIRECTORS President Terry McDonald, CIC - Iowa City

President-Elect

How do we (agency principals) develop the next generation of agents and excite them about insurance sales as a future. by Terry McDonald, CIC Page 5

NATIONAL DIRECTOR’S REPORT Studies, Surveys, and Perdictions I wondered if I would work hard only to be put out of business by direct writers or the government or some other alternate distribution system. by Dean Brooks, CPCU, CLU, ALCM Page 9

Scott Morningstar, CPCU - Lisbon

Treasurer Jerry Mease - Winterset

National Director Dean Brooks, CPCU, CLU, ALCM West Des Moines

Directors Eldon Hunsicker - Ottumwa Terry Friedman, CPCU - Dubuque Tim English, CIC - Dyersville John Dalton - Council Bluffs Steve Madsen - Marshalltown David Rowley, CPCU, CIC, AU - Spirit Lake Scott Wirtz - Emmetsburg Jamie Krist, CIC, MBA - West Des Moines Luke Horak - Washington

Past President

ADVERTISERS We would like to thank our advertisers for their support. This magazine would not be possible without them. THANK YOU! 14 Amerisafe 23 Big “I” Professional Liability 19 Burns & Wilcox 8 EMC Insurance Co. 12 Grinnell Mutual 2 The IMT Group

Paul Pohlson - Grinnell

8 IMWCA Iowa Municipalities Workers’ Compensation Association

IIAI OFFICE STAFF

6 Insurance Associates of America

Chief Executive Officer

7 Integrity Insurance

Bob Skow, CPCU, CAE bob@iiaiowa.org

18 Iowa Mutual Insurance Co.

Membership Operations Coordinator Melissa Meiners melissa@iiaiowa.org • Ext. 15

Technology & Communications Administrator

Meet CoOportunity Health Page 13

Tech Talk - How to Use Outlook for Text Messages Page 15

In 2014 Make A Plan That Prepares Your Agency To Win! Page 17

Multiple Peril Crop Page 22

10 Mass Mutual 8 Merchants Bonding Co. 14 M.J. Kelly Company 16 Northern States Agency 16 Pekin Insurance

Jeanne Reynolds jeanne@iiaiowa.org • Ext. 17

14 QBE NAU

Membership Services Coordinator

11 West Bend

Marilyn Paul, CPCU, AIT, AAM, CPIW marilyn@iiaiowa.org • Ext. 11

In This Issue

21 SECURA Insurance Co. 4 Western National Insurance

Membership Services Coordinator Brenda Kluger, CIC, CISR, CIIP, CRM brenda@iiaiowa.org • Ext. 14

Membership Services Coordinator Megan Kincy, AINS, AIS megan@iiaiowa.org • Ext. 16

Receptionist Cindy Grim cindy@iiaiowa.org • Ext. 12

MISSION STATEMENT: The Independent Insurance Agents of Iowa will be an unrelenting advocate of the business, professional and p olitical interests of its members; doing so by working in the p ublic’s best interest and with the highest e thical standards. Viewpoint is a publication of the Independent Insurance Agents of Iowa. Viewpoint is published quarterly: Winter, Spring, Summer and Fall. Viewpoint is mailed to Iowa insurance agents, Iowa Home Office Executives, Affiliate members, and other state associations and organizations.

MobileAppAdFinal-(IIAI).pdf 1 1/3/2014 12:34:00 PM

Western National Mutual Insurance Company Insurance Identification Card

Policy Number:

02 PAP 14755

Effective Date:

09/02/2013 - 03/02/2014

Insured(s):

JANE DOE

Agency:

ABC INSURANCE GROUP (555) 113-4567

Vehicle:

2011 HONDA PILOT UTL 5FNY4H23BB022433

Please note that this digital proof is of insurance might not be accepted by law enforcement in all U.S. states.

CMY

Download it today!

Western Nationalâ&#x20AC;&#x2122;s free new mobile app, WN Mobile Assistant (now available in iTunes and Google Play), gives policyholders the ability to access their personal auto insurance ID cards anytime, anywhere. Combine that with helpful roadside assistance tools, including the ability to locate your nearest towing service, locksmith, gas station and more, and youâ&#x20AC;&#x2122;ve got another great resource to help protect you on the road.

www.wnins.com

president’s REPORT

Young Agents– The Oxygen for the Independent Insurance Agents Future!

would like to devote this article to the Young Agents and discuss their role in the future of the independent insurance agency system. How do we (agency principals) develop the next generation of agents and excite them about insurance sales as a future? You would be hard-pressed to find an insurance agency principal that will disagree about the importance of new, young talent in our industry. And it would be hard to find a young agent in the insurance business today that doesn’t find our industry interesting, financially rewarding and technically challenging. Not to mention, how the flexibility of being an independent insurance agent fits with their multi-tasking and busy schedules. Several of the prospective young agents are coaches, volunteers and serve on community boards while raising families. So what is the problem? Why aren’t we recruiting more young agents in our business? I wish I knew the answer. When I first entered the insurance business as a young agent, I was selling insurance for a direct writer and had no clue what the Independent Insurance Agents of Iowa was all about. Farm Bureau didn’t teach us the value of becoming an Independent Agent at their Career School 1, 2 or

by Terry McDonald, CIC

3. Granted, after working for a Farm Bureau for a few years I quickly realized there was a better way to build a mouse trap, but I was not sure what resources were available to help me understand what a true independent agent was all about. I just knew the answer for me was not to continue down the path I was going. Once I entered the independent agency system I discovered the Iowa Young Agents Committee at the IIAI. WOW! All of

a sudden I became energized about our industry. I still remember the day I received a letter from the IIAI’s Executive Director, Larry Vander Tuig, asking me to serve on the YAC. I was excited and eager to start networking with other young agents across the state, comparing notes, asking coverage questions, complaining and sharing information about markets (Remember the March 1986 Time Magazine Cover - Sorry America, your insurance has been cancelled - that was when I entered the independent agency system. I have the cover page framed in my office to remind me of how insurance used to be “back in the day”), bouncing marketing ideas off others that were experiencing my same issues. I could name the other Young Agents I had the privilege to meet, but all you have to do is look at the most recent past presidents or current board member list too and you will see 80% of my first networking contacts. That leads me to my next point. Agency principals, it is time to start persuading your current young agents to get involved in the IIAI. If you do not have a young agent, go out and find one. Remember, this is an

WINTER 2014 |

investment not an expense. You may ask “Where do I find a young agent that desires to be in the insurance profession?” My answer to that is; underwriters, marketing reps, direct writers, school teachers, coaches, other sales people, family members (you would be surprised how successful a son or daughter may be in our business) bankers etc. The last 4 successful hires in my office were from the following professions: • Top Audi car salesman • Insurance Company Underwriter • Claims manager for an insurance company • Pharmaceutical Sales

IAA

a mentor from another agency located a long way from your selling territory. IIAI has education programs, a state Young Agents Committee as well as a national young agents committee. The Young Agents even have their own annual conference so they can get together, network and bond with each other the same way we did it 20 years ago. I do not know the statistics about the longevity of a young agent in our business, but I am willing to stake my career on the young agents involved in the IIAI have a much greater success rate than those that are not.

I would like to conclude this by saying, the IIAI is here to help you bring young agents along. This is not only crucial to your agency, but it is crucial to the ongoing success of the Big “I”. The The Big “I” offers support to these development of a young agent is a 3 young agents by connecting them with Sales, Product Tired PC BACK 1_14:AIA 02.10.10 PClegged BACKstool1/8/14 6:12 AM Knowledge Page 1

and Professional Development. The IIAI staff is here to help agencies with all three of these important keys to help your young agent become a successful. Thank you.

Save the date for Young Agents Conference. April 30, 2014 and May 1, 2014 Drury Inn West Des Moines, Iowa

Tired of Walking Away from Business? We Can Help!

The Midwest’s Premier Cluster Group

* 100% Retained Ownership * Increased Markets-Over 30 Represented * Knowledgeable Support Staff Commercial Assistance - Placement * Increased and More Stable Contingencies * Comparative Rater Provided * Retain 90% of Commission * Reduced Cost of Applied Management System * Preferred Agency Contracts

Check out our website at www.iaanetwork.com

For more information call Mike Sabourin 866-789-9712

| WINTER 2014

No one sells like you. No one services like Integrity. Integrity puts a comprehensive range of services and products behind each independent agent. With quality imbedded in our DNA, we help you make a lasting impression with every customer, at every touch point. Itâ&#x20AC;&#x2122;s partnership that runs deep. The way it should be.ÂŽ For more information, connect with Cathy Beaudin at 920.968.8326 or cbeaudin@imico.com integrityinsurance.com

Common Sense Surety Since 1933

www.imwca.org | 800.257.2708

Cross-Sell Strategy

DATA COMPROMISE COVERAGE

“ Don’t let clients compromise on data compromise coverage.” Tanya Wentzel, Des Moines Branch Marketing Manager An incident of data compromise can have a negative impact on your clients’ credibility and profits. You can help protect them by adding EMC’s data compromise coverage to their insurance program. It’s just one of the many reasons policyholders Count on EMC®.

Des Moines Branch: 800.362.2227

Home Office: Des Moines, IA

national director’s REPORT

Studies, Surveys, and Perdictions I

Dean Brooks, CPCU, CLU, ALCM

t has been relatively quiet at the national level the past couple of months. We have not had a national Board meeting since my last report to you in October so there is nothing noteworthy to bring to you at this time. This gives me a golden opportunity to talk about one of my pet peeves in our industry – studies, surveys, and predictions from various industry pundits on the decline of the independent agency distribution system. This time it is the recently released study from the consulting firm McKinsey & Co. with the ominous, and I feel pretentious, title “Agents of the Future: The Evolution of Property Casualty Distribution”. After getting through just the first few pages, a Yogism came to mind: “It’s common: they were wrong, wrong deja – vu all over again”. Not long and wrong again. after I started in this business in 1972, an article appeared in the National During my first few years in the busiUnderwriter forecasting the demise ness, I was occasionally discouraged of the independent agent. About that by such studies and prognostications. same time, the I wondered if I CEO of a large would work hard “i wondered if i would insurance comonly to be put out work hard only to be put of business by pany out west was out of business by quoted as saying direct writers or direct writers or the the Independent the government or Agent model is some other altergovernment or some going the way of nate distribution other alternate buggy whip manusystem. Remember distribution system.” facturers. Over the “pay-at-the-pump” ensuing years, sevauto insurance? eral other studies and various industry With the hindsight of forty plus years peers periodically would opine on the in this business, I now wonder why I demise of Independent Agents. All worried at all about the future of the of those predictions had one thing in independent agency system. To quote

Don Herold, American humorist and writer: “If I had my life to live over, I would perhaps have more actual troubles but I’d have fewer imaginary ones”. In my humble opinion, the demise of the independent agency is certainly an imaginary problem. That is not to say there haven’t been significant changes in the independent agency system during the past forty years and that there won’t be even more changes going forward. But what I’ve seen over the years is that independent agents are resilient and extraordinarily adaptable. They are good business people with an entrepreneurial spirit who embrace new and more efficient ways of doing business and, importantly, they work hard at getting better in all phases of the business. The McKinsey study is worth reading because it does offer some observations about the future of insurance distribution that you might find thought provoking and perhaps even somewhat useful. But beware of one thing: the authors, like too many others in our business, have bought into the “commoditization” of personal auto insurance as the only model. One of the implicit assumptions in many of these studies is the seeming inevitability of the internet to take over distribution of at the personal auto market, and perhaps the Homeowners and small commercial market. One

FALL 2013 |

observation in the study I find particularly irksome: “Consumers have easy multichannel access to auto insurance products from many carriers, and no longer need an agent to navigate carriers or explain terms”. I do not agree with the categorical nature of the second part of this assumption. Yes, there is a certain segment of the consumer population choosing to do business direct online, and there certainly is a large segment of consumers (70+%) who collect information on line, but a significant majority of consumers still prefer to purchase insurance from and have a continuing relationship with an agent. Interestingly enough, surveys have shown a significant portion of this group of consumers rank quality of coverage and service slightly ahead of or roughly equal to price in the buying decision. Remember the old sales adage “price is secondary unless you make it primary”.

The bigger issue we all must address is how we effectively and efficiently connect with a diverse range of customers and prospects to satisfy not only their purchasing needs but also their service needs. This is where the concept “multi-channel” does apply. When I started in the business, “social media” was the telephone (yes, and we used carbon paper for duplicate copies.) In 2014, the telephone is still one way to connect with some of your clients. However, it is also imperative to have a presence on the internet and be on the cutting edge of social media to effectively reach a significant and growing segment of the market. We all understand our customers have become more diverse and we must recast our agency structure to efficiently and effectively function

in a multi-channel world. This is where your national association can be helpful. The mission of IIABA is “To provide members with a sustainable competitive advantage”. To this end, I invite you to visit the IIABA website. Once there, click on the “Resources” tab and peruse the topics in the drop down box. There is a wealth of information on the IIABA site available for your use in evaluating your own agency performance and to help you improve agency processes in almost all areas. As always, if you have any comments or questions, feel free to contact me via email at dbrooks@mfhins.com or on my direct line at Miller, Fidler & Hinke Insurance Agency 515-868-0484.

BROKERAGE IS MORE THAN BUSINESS.

IT’S PERSONAL. Rob Hill

Andrea Lucas

To learn more, contact:

Every day, you pour time and energy into your business. You need to work with a company invested in helping you build your practice. MassMutual Iowa is here for you. Our broad portfolio and proven expertise will give your business the tools to help it thrive – today and for the long-term.

COMPETITIVE PRODUCTS

• Life Insurance – A comprehensive product portfolio, including Whole Life, Universal Life, Variable Universal Life1, Term Life and Survivorship Life • Disability Income Insurance – Individual DI Insurance or Multi-Life – BOE and Buy Sell – Protect ability to save for retirement • Long-Term Care Insurance – SignatureCare® 500

Rob Hill, Agency Brokerage Director robhill@massmutualbrokerage.com Andrea Lucas, Agency Brokerage Manager andrealucas@financialguide.com MassMutual Iowa 1415 28th St, Suite 350 West Des Moines, IA 50266 515-223-6277 (Office) 515-223-6560 (Fax)

LIFE INSURANCE + RETIREMENT/401(K) PLAN SERVICES + DISABILITY INCOME INSURANCE + LONG TERM CARE INSURANCE + ANNUITIES MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. Local sales agencies are not subsidiaries of MassMutual or its affilited compnies. Insurance products issued by MassMutual, Springfield, MA 01111-0001 and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company, Enfield, CT 06082. 1To offer or sell MassMutual and subsidiary company variable products, producers must be registered representatives of MML Investors Services, LLC, 1295 State Street, Springfield, MA 01111-0001, or a broker-dealer that has a selling agreement with MML Distributors, LLC. All products are offered by Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, MA 01111-0001. The products may not be available in all states. Product listing accurate as of 10/22/13. CRN201505-172592

10 |

| WINTER 2014

People who run a not-for-profit organization know. The most valuable things

are also the hardest to get.

This organization didn’t grow overnight. It came from years of hard work, confidence in what they could do, a strong commitment to the community, and making smart decisions. That’s why an insurance policy from West Bend makes sense. It protects these valuable and hard-earned businesses so your customers can focus on doing what they do best ... helping children, families, and individuals reach their full potential. And with West Bend, it’s backed by your knowledge and experience.

West Bend. Insurance your customers buy when they can’t afford anything less.

Making an

PACT

Big insurance coverages for small businesses.

MEET

CoOportunity Staff.

CoOportunity Health is Iowa and Nebraska’s first and only not-forprofit CO-OP — a Consumer Operated and Oriented Plan — offering health insurance to individuals and businesses. Founded in 2012, CoOportunity Health is one of 23 such organizations across the U.S. with the purpose of providing new, competitive health insurance options for individuals, families and employer groups of all sizes. The CO-OP difference is in every aspect of CoOportunity Health — from governance, operations and plan design to communications and interaction with members and the public. By the end of the second year of operations, members of the health plan will govern the organization, elect its board of directors, and be involved actively in the company’s programs. CoOportunity Health retains no profits; any financial gains must be returned to members in the form of lower premiums or enhanced benefits. Founded by experienced professionals with backgrounds in healthcare, insurance regulation, health plan

administration and management, CoOportunity Health has formed strategic business alliances with best-in-class provider and administrative services partners Midlands Choice and HealthPartners to deliver an exceptional member and employer group experience. This model reflects the determination to not only serve its members with supportive, accessible and engaging experiences, but to preserve the CO-OP fiscal responsibility. CoOportunity Health offers health insurance plans for individuals, small businesses and large employers (fully insured or self-funded options). The portfolio of plans includes CoOportunity Premier, a PPO plan design with a broad in-network group of providers that includes 100 percent of hospitals and 97 percent of practitioners in Iowa, Nebraska and bordering states. CoOportunity Health also has teamed up with the University of Iowa Health Alliance member organizations, plus other select providers, to introduce two unique plans in Iowa. CoOportunity Choice UI Health Alliance is an open access tiered benefit design plan available in all Iowa counties with flexibility for managing out-of-pocket costs based from three tiers of providers. Considerable consumer savings are realized when the

Choice Tier 1 provider network is used for services. CoOportunity Preferred UI Health Alliance is an Exclusive Provider Organization (EPO) utilizing a select network plan available in 76 Iowa counties that offers significant out-ofpocket cost savings in exchange for obtaining services from an exclusive provider panel. All CoOportunity Health plans include the Healthy Rewards program, which gives enrolled members the opportunity to earn a $100 gift card for completing two healthy-living steps: a physical exam and a simple health survey. Many plans also include a “first three free” feature for office visits with primary care, specialists or behavioral health providers; any cost-sharing for the professional service is waived for the first three visits in a benefit period. All three portfolios — Premier, Choice and Preferred — also offer health savings account (HSA) plan options. CoOportunity claims it’s easy to shop and compare their insurance plans, benefits, rates and perks. Call, click or meet one-on-one with a CO-OP enrollment expert to help choose the best coverage options using one of five ways: • Using HealthCare.gov (also called the Health Insurance Marketplace or Exchange) • Visiting the CoOportunity Health website: coOportunityhealth.com • Calling their Enrollment Hotline: 1.866.217.6111 • Working with one of their preferred agents or brokers • Visiting one of their participating credit unions

WINTER 2014 |

| 13

With mobile access to your crop insurance tools, EASYmobilitySM is your connection to crop protection.

Mobile Change Forms EASYmobilitySM now features policy change forms for 2014 spring sales! Renew your producer applications digitally for a faster and easier workflow. Download EASYmobilitySM on your iPad® today. Visit naucountry.com to learn more.

TRUCKING

Apple and the Apple iPad tablet are registered trademarks of Apple Inc., registered in the U.S. and other countries. © 2013 NAU Country Insurance Company. All rights reserved. NAU Country Insurance Company is an equal opportunity provider. QBE and the links logo are registered service marks of QBE Insurance Group, Limited. NAU is a registered service mark of NAU Country Insurance Company.

Workers’ Comp InsuranCe For more InFormatIon Call: (888) 758-5042 www.amerIsaFe.com

Steve Anderson, Editor techtip@steveanderson.com ext messaging is becoming a popular way for agency staff to communicate with clients, prospects, and others they deal with on a daily basis. However, appropriately managing text messaging so that client information can be properly documented continues to be a major problem. Few agency management systems allow text messaging as an option for communicating with clients. In this TechTips, I want to let you know about one option for text messaging that your agency might want to explore. Microsoft Outlook 2007, Outlook 2010, and Outlook 2013 have a built-in feature that allows users to add an account to send SMS messages from within the Outlook application. When you set up a new text messaging account within Outlook, you are given the option to connect the application with several SMS service providers.

The one I chose is SMSOfficer. With SMSOfficer, which is a plug-in for Outlook, you can send and receive text messages from your desktop email to cell phones. The service works with any cell phone carrier (but only with Outlook email). This service takes advantage of the OMS interface (Outlook Mobile Service) provided by Microsoft. Your SMS message gets sent to SMSOfficerâ&#x20AC;&#x2122;s servers, where they are turned into SMS messages and sent over the mobile carrier networks. Up until now, few other services in the U.S. took advantage of this capability. To use the service you purchase creditsâ&#x20AC;&#x201D;$33 for 500 and $63 for 1,000. A credit lets you send a text message up to 160 English characters or 70 non-English characters. If the person replies to your text message, it comes back into your Outlook inbox and costs you another credit. The company also offers the Business Control Panel solution, which allows business subscribers to purchase one bulk amount of credits and then share them among multiple corporate users. The advantage of using Outlook for sending and receiving text messages is that they are a type of document that can be attached to the client file in your agency management system. What tools are you using to manage text messaging in your office? Thanks so much for reading this issue of TechTips. I look forward to touching base next issue! And remember, always feel free to email me with comments, new ideas or products that have worked for you. I will check them out and spread the word!

WINTER 2014 |

| 15

We are known for transportation, BUT… Did you know we have a FULL HOUSE? Northern States Agency, a Managing General Agency & Wholesale Broker for over 55 years, providing a wide range of commercial insurance: x Inland Marine & Cargo General Liability x Umbrella & Excess x Property x Professional Liability x Garage x Miscellaneous E & O x Commercial Auto x Directors & Officers x Excess Auto • New for 2010: Workers Compensation x

Our underwriters average over 10 years experience with NSA Same day or next day response on submissions Great Service, Great Products, Great People 2145 Ford Parkway, Suite 202 St. Paul, MN 55116 P: 800-328-0828 • F: 651-646-1971 www.nsa-mga.com

Your TOTAL Solutions Provider

2014_IndustryAds_FieldManagers_IIA - IA 11/24/13 11:45 AM Page 1

Since 1921, Pekin Insurance® has committed to go beyond.

Join our network of independent insurance professionals and discover how easy it is to do business with us! In all we do, we are dedicated to going

Beyond the expected.®

8 00 - 32 2 -0 1 6 0 , E x te n s io n 2394 w w w.p e k i n i n su ra n c e. c om

Like us on Facebook at Facebook.com/PekinInsurance!

AUTO • HOME • BUSINESS • LIFE • HEALTH

Pe ki n , I l l i n o i s 6 1 5 58

TC F

2 50 5 Co u rt S tre e t

PAUL BARESEL Extension 2835

TOM SOMMERS Extension 3611

In 2014 Make A Plan That Prepares Your Agency To Win! Bob Skow, CPCU, CAE – Chief Executive Officer

hile 2013 will go down as another good year to be an independent agent in Iowa we do need to be aware that not everything is going as well as we would like it. For example, there is no question that the value an agent brings to the consumer seems to be in question. Each of us needs to stop for a moment and ask why are agents under attack? We have known for some time that we need to improve our collective image. That is the reason the Big “I” launched the Trusted Choice® campaign, which in part is our effort to inform consumers that independent agents are their trusted insurance advisors. One thing that would be helpful is to have every agency participate more in the message we are delivering with Trusted Choice®. As agents we need to better educate the public about what we do. Health insurance is a prime example… if the Federal Government would have used agents as the main conduit for people who are eligible for subsidies to access health insurance we could have done it! Frankly, we would have done so at a huge savings to the tax payers and given consumers a trusted resource they could count on living in their communities to help them through the process. The reason agents weren’t the center piece for delivery is the administration listened to consumer groups who painted agents as greedy middle men who don’t have consumer’s best interests

tute a new business incentive program that asks the agent to produce more business. Sounds like an unlikely formula for success to me – starve the cow, but ask the cow to produce more milk; yet that is what many companies are doing to independent agents today. For example, countrywide, companies are experiencing increases in property claims frequency and severity, their investment returns are dismal and catastrophes are lurking around the corner. Agents understand the need for profitability, but cutting the lifeblood income of agents who produce that business seems like a short-term solution to a long-term problem. Consider the economics of comat heart. Go to Google and type in mission reductions. At 15 percent “consumer groups criticize insurance commission on a $1,000 homeowner agents” to read article after article premium, an agent makes $150. voicing opposition to using agents Reduce that commission to 12 percent for accessing health insurance. Why and the agent’s income is reduced by is it that some 20 percent to $120. think you can do Some companies an end run on the are reducing “the key is not the agents and people ‘will to win’…everybody commissions to 10 are going to save percent or less on has that. it is the money and be betmonoline property, will to prepare to win ter off? which lowers the Sometimes agent’s income by that is important.” even our business at least a third; partners seem to but, some company at times embrace this idea. So encourpublic relations departments argue age consumers to come directly to that premiums have increased as well. them, weather it is reporting claims or That’s true for a variety of reasons, making changes. While others raise including increases in Coverage A rates, reduce commissions and instiamounts dictated by carriers. A recent

WINTER 2014 |

| 17

market reports show the average homeowner premiums in some parts of the country have increased 61 percent from 2000 to 2011 (Iowa has experienced significant premium increases and many companies have cut agent compensation during this period), but during the same period cumulative inflation has eaten up at least 30 percent of that income and contributed to rising wage costs which often make up more than half an agent’s expenses. For many agents facing commission reductions in 2014, income on that $1,610 homeowners policy will be up only $11 over what they would have made on that policy in 2000 (at $1,000 premium) – hardly enough to make up for inflation. Once again agents are asked to dig into their pockets to address company profitability, and this at a time when agents are struggling to gain market share from the directs and captives. For Iowa agents, who live in a state

18 |

| WINTER 2014

where it is not all that hard to get rate increases, this makes no sense. The hallmark of independent agency business is customer service, but that very service is threatened today by rising costs and reduced income. A starving cow costs less to keep, but she won’t produce more milk. Hearing so much about the direct system and its success in recent years, I decided to find out for myself by going online and quoting my auto insurance with GEICO. Why? In part just to see what would happen. Like you, I have many times been contacted by GEICO to obtain a quote on the Internet…I see the ads everywhere. It is reported they spent over a billion dollars in 2013 for advertising… almost 7% of the company premiums is spent on advertising! So I thought what the heck let’s check these guys out. The purpose was simply to gain knowledge with regard to the experiences that the insurance buying public

is having when acting as their own agent and buying their insurance on the internet. My experiences were a bit troubling and it occurred to me if I didn’t understand insurance well that maybe I would be making some pretty bad coverage choices. For example; the coverage defaulted to lower limits and, in my opinion, might be done to keep the cost down. It is pretty easy to be cheaper if you are quoting lower limits. While I put in higher limits the quote furnished by the system changed my uninsured motorist and underinsured to 20,000/40,000 and my current coverage limits actually at a single limit of $500,000. It did not offer an alternative of a combined single limit for liability or uninsured motorist coverage…I had to work to get their system to let me quote higher limits. GEICO only offered the option if I input into their quoting system the desire for higher liability limits. While I didn’t get an apple to apple they

For all your commercial property needs, the path is clear.

COMMERCIAL PROPERTY

did give me a quote for a lot less then ing employees they pay. Could it be Do you improve your internet preswhat I currently am paying. Their that American agency companies are ence? Is the answer a better website, quote was $299 for 6 months on my 3 using private passenger auto to make online quoting, or social media? All are vehicles, the coverage was as follows up losses for other lines? Are indeareas many agencies are focusing on in - $250,000/$500,000 BI, $100,000 PD, pendent agent companies demanding 2014 to improve their organic growth. $1,000 med pay, after I went in and more net profit than companies like Do you develop a nitch product and over rode the minimum limits for UM GEICO? I don’t know the answer, but expertise for a specific area? Do you and UND M to $250,000/$500,000 it what is pretty clear to me is if my case buy other books of business…grow gave me a $250 comp deductible and is what other consumers are running through mergers? Do you use Trusted $1,000 collision deductible. Currently, my coverage is a single limit $500,000 with the same on uninsured and underinsured motorist and a $100 comp deductible and $500 collision for $783.28 for 6 months which is more than double what GEICO quoted me. My coverage is with an American agency company which I have been with for over 30 years. My company’s personal auto Iowa loss ratio was about 59% last year, and 51% the year before. GEICO’s Iowa loss ratio was almost 56% and 55% over the same period…not much different. I was a bit surprised In 2014 do yourself a favor, sit down and write up Choice® as a key marketing that my carrier wasn’t more a business plan, set goals, decide on time lines competitive - even if the tool? and specific things you are going to focus on in coverage wasn’t exactly the Most agency management 2014 to make your agency better. same. Was it because my experts would agree with agent was getting paid commost of these ideas – but mission? Well, let’s dig a bit they all agree on one thing – deeper. My company, to the best of my into when going online…no wonder the agency must have a business plan. knowledge, did very little advertising, independent agents are losing market All an agency owner can do is conso I went and looked at the financial share to the direct marketers nationtrol what they can control. You can’t data and found they spend around 2% ally in the personal lines markets. At worry about GEICO; you can’t always on marketing and advertising, and my least in my case on auto insurance they convince your carriers to give you and agent was getting paid 12%...still not were very competitive – although I your clients a better deal. But, you the difference in my premium quoted. never went out and got a stand-alone can focus on the things within your One of the potential big differences homeowners quote…my guess is a control and design an agency plan that might be GEICO doesn’t write homelot of the savings would have quickly focuses on what you identify as keys to owners where my carrier also writes disappeared. success. In 2014 do yourself a favor, sit my home and they posted 145% and What do independent agents need down and write up a business plan, set 107% loss ratios on that business to do to be more competitive in 2014? goals, decide on time lines and specific during the last two years. Do you go out and find companies with things you are going to focus on in The question is…is GEICO and other competitive rates, competitive commis2014 to make your agency better. As direct marketers writing more business sions and do you look at improvement famous basketball Coach Bob Knight because they have a better premium in profit share formulas? What do you says, The key is not the ‘will to win’... and is that because they don’t use need to do to increase your agency net everybody has that. It is the will to agents? Yet they spend ridicules income in 2014? These are great prepare to win that is important.” sums on advertising, still have to pay questions and everyone has some Make a plan that prepares your staff to answer the phone and take ideas about how to grow their agency. agency to win! changes etc., and they do have marketDo you do it organically…if so how?

20 |

| WINTER 2014

Let’s make sure they can spend time tending their roots.

Strong, steady growth since 1900 Commercial • Personal • Farm-Ag • Specialty

Multiple Peril Crop Top U.S. Insurers

Direct Premiums Written 2012 ($ Billions) ACE INA Group [18498] Wells Fargo Insurance Group [18188] QBE Americas Group [18713] Great American P & C Insurance Group [04835] Allianz of America [18429] Endurance Specialty Group [18620] CUMIS Insurance Society Group [18704] FMH Insurance Group [18171] Main Street America Group [18355] John Deere Insurance Company [14125]

0.5 1.0 1.5 2.0 2.5

Net Premiums

Combined Ratio

U.S. Industry ($ Billions)

U.S. Industry 5.46

120 5.32

5.09

100 80 60

3.97 3.50

40 20

‘08 ‘09 ‘10 ‘11 ‘12 22 |

| WINTER 2014

‘04 ‘06 ‘08 ‘10 ‘12

GET WISE about your agency RISK MANAGEMENT.

Swiss Re Corporate Solu ons policyholders: Don’t miss out on the invaluable risk management resources available exclusively to you. Log in to www.iiaba.net/EOHappens to access claims sta s cs, preven on tools, insigh ul ar cles and more.

the Big “I” Professional Liability Program Prevent.

Our exclusive risk management resources help your agency avoid making common preventable mistakes.

Protect.

Our superior coverage through Swiss Re Corporate Solu ons and our experienced claims teams are in your corner in the event of a claim.

Prosper.

When you know you have the best agency E&O Protec on, you can focus on growing your most important asset–your business.

The Big “I” and Swiss Re Corporate Solu ons are commi ed to providing IIABA members with leading edge agency E&O products and services. The IIABA and its federa on of 51 state associa ons endorse the comprehensive professional liability program oﬀered by Swiss Re Corporate Solu ons.

Visit www.iiaba.net/EOContact to connect with your state associa on today.

Insurance products underwri en by Westport Insurance Corpora on, Overland Park, Kansas. Westport is a member of the Swiss Re group of companies is licensed allstates 50 states District of Columbia. © 2012 Big “I” Advantage, Inc. and Swiss Re ons andand is licensed in allin50 andand the the District of Columbia. © 2012 Big Swiss Re Corporate Solu . “I” Advantage, Inc. and Swiss Re

INDEPENDENT INSURANCE AGENTS OF IOWA 4000 Westown Parkway, Suite 200 West Des Moines, Iowa 50266

PRSRT STD U.S. Postage Paid Des Moines, IA Permit No. 2538

2014

INDEPENDENT INSURANCE AGENTS OF IOWA PROGRAMS SPONSORS A Special Thank You To The Following Sponsors For Supporting IIAIâ&#x20AC;&#x2122;S Conferences and Programs in 2014.

GOLD

PLATINUM Allied Insurance EMC Insurance Company The IMT Group Independent Agents Service Corporation Iowa Mutual Insurance Company Pekin Insurance Progressive United Fire Group

Continental Western Group Grinnell Mutual Integrity Insurance Rain & Hail, LLC

S I LV E R Great American Insurance Companies GuideOne Insurance LeMars Insurance Company Merchants Bonding Company

BRONZE Accident Fund/United Heartland ACUITY AgriLogic Insurance Services Auto-Owners Insurance Diversified Insurance Services International Ag Insurance Solutions Liberty Mutual Insurance M.J. Kelly Company of Iowa

North Star Mutual Insurance Company Secura Insurance Society Insurance State Auto Insurance Travelers Insurance West Bend Mutual Western National Insurance Westfield Insurance