March2015 by BIG Independent Group

Big Times Magazine | March 2015

EDITORIAL by Jon Spaugy BIG’s Chief Executive Officer

Every once in a while, something happens in the insurance industry that has all the experts predicting an uptick in auto insurance sales. Changes in legislation, regulatory modifications, etc. all can create new business for agents and brokers. Whether or not this windfall actually happens is another story, but it never hurts to think positive and be prepared. Two decades ago, a mad scramble for auto coverage by uninsured drivers was forecast after mandatory enforcement legislation passed. Despite a lack of adherence to the law by some agencies and a few hiccups with fine-tuning the regulation, there was an increase in business. People were being asked to prove they were carrying at least the minimum limits, so people bought auto insurance. Speaking of minimum limits, a few years later, we were brought the California Low Coast Auto Program. For a low price, qualified drivers could purchase below-minimum basic coverage at a rock-bottom price. I’m not sure how much business LCA brought in, but it was some. Whether it was/is worth the extra work – call it R.O.I. – is a matter for debate, but there was/is a potential to sell additional policies. What both “business opportunities” have in common is providing auto coverage to drivers who had been uninsured. Now we have more predictions of an increase in business with uninsured drivers, this time with newly-(driver’s) licensed undocumented immigrants. According to a February 12, 2015 press release from the California Department of Insurance, more than 76,000 new driver’s licenses have been issued this year under AB 60. Oh yeah, and another piece of legislation that took effect this year (SB 1273) expanded LCA. So did these to bills create a “perfect storm” for auto insurance? EXECUTIVE EDITOR JON SPAUGY MANAGING EDITOR DON LUKENBILL ART DIRECTOR SAL AYALA The views of contributors to BIG TIMES Magazine are theirs alone and do not necessarily reflect those of the leadership or members of Big Independent Group.

Big Times Magazine | March 2015

Let us know if you have experienced an increase in your auto business. Are these newly-licensed drivers obtaining auto insurance? Have you seen a boost in your Low Cost Auto business? Send comments to info@biginsusa.com Write an opinion piece and we’ll publish it. We want to hear from you.

Active Listening Is Key To Customer Services by Patrick McClure Lighthouse Consulting

We’ve all heard one of the core maxims in providing excellent customer service: “The customer is always right.” This is used during training and by management to convey the important concept that when a customer is upset or concerned, it never works to argue with them or discount what they are saying. What it REALLY means is that the customer’s perception of what occurred is correct for them, regardless of what you think. Their experience, and how they feel about it, is the most important factor to be dealt with, and it must be listened to and understood. If the customer is angry, their impression of what just occurred has lead them to respond with anger, regardless of your impression. This is not the time to react, but it is a time to put yourself into their place and actively listen to what their viewpoint is. You will never be able to deliver excellent service if you REACT to the customer or immediately conclude they are stupid, ignorant or unrealistic. Statistics show that it is far more expensive to acquire a new customer than to retain an existing customer. One of my clients, a medical device company, has estimated that their fully burdened cost of acquiring a qualified LEAD for their product is over $1000. When you add to this the sales and market costs as well as all other expenses involved, the total hands over earth costs can be quite large. It’s time consuming, expensive, and very costly to acquire new customers. Once they have become customers, your company should be doing everything possible to retain them, by delivering excellent customer service. Conversely, an upset customer is 5-10 times more likely to broadcast their dissatisfaction to the world. All of the good work you do can be negated by one thoughtless comment, one angry word, and one negative comment. In today’s social media world – everything connected to the internet – a negative customer service experience is easily shared with thousands of people and can actually go “viral” when it is broadcast to thousands. Whenever you react and make a snap decision about someone else, this decision will color how you view that person. It’s like your mind is a huge magnifying glass and it will automatically seek out the character traits that you’ve decided must be there! If you perceive that the customer in front of you is messy and disorganized, then you will automatically assume their entire life must be the same way. If you feel insulted by what the other person has said, then you will project this feeling on them and the situation will worsen. The alternative is Active Listening, a much needed skill in the business world. This requires the following steps: • Shut up, stop talking. • Focus your attention on the other person, calmly and professionally. • Listen to their verbal communication, as well as their emotions and attitudes. Train yourself to become very perceptive with the non-verbal messages that we all project. • Ask questions to clarify as needed. Listen to their answers. • Paraphrase, clarify or summarize what they said to make absolutely certain you received what they said and what they meant. You will be amazed at discovering how often you didn’t fully grasp what was said. • Remember, active listening is not about you. It’s all about the other person, so get out of yourself and put your focus and attention on them. Good communication and active listening man listening to ground skills are the core component of delivering excellent customer service. The founder of one of the most successful (and largest) companies in the world had this to say: “Our Goal as a company is to have customer service that is not just the best, but legendary.” – Sam Walton, Wal-Mart About the Author

Patrick McClure, Sr. Sales & Customer Service Training Consultant of Lighthouse Consulting Services, LLC, is a speaker, trainer, consultant, and author who enjoys working with individuals and corporations to help them achieve maximum performance. He has dedicated his practice to helping others become more successful. Email: patrick@lighthouseconsulting.com

Big Times Magazine | March 2015

CDI Campaigns for Low-Cost Auto Drivers Source California Department of Insurance www.insurance.ca.gov

In a statement, Insurance Commissioner Dave Jones and Senator Ricardo Lara urged Californians to make sure they are meeting their obligation to carry minimum liability insurance coverage on their vehicles and announced resources to help educate motorists and make it easier to get affordable coverage. Since January 2, more than 76,000 new drivers have been issued driver’s licenses under AB 60 (Alejo) which allows all eligible Californians, regardless of immigration status, to obtain a driver’s license. The next step in reducing the number of uninsured drivers and making California’s roads and highways safer is to reduce the number of uninsured motorists. “Driving in California is a privilege, not a right.” said Insurance Commissioner Dave Jones. “As newly-licensed drivers hit the road, it’s important that they do so legally, with proper automobile insurance coverage. Properly trained drivers who know and follow California’s rules of the road are safer drivers and are involved in fewer collisions. This makes driving safer for everyone.” SB 1273 (Lara), which passed in 2014, made changes to California’s Low Cost Auto Program that make it easier for new licensed drivers to qualify for the affordable coverage program.

Big Times Magazine | March 2015

“Getting auto insurance is the law and for some who can’t afford it, we have the Low Cost Auto Program.” said Senator Ricardo Lara, author of SB 1273.“ Of the roughly 25 million vehicles on California roads, an estimated four million remain without auto insurance coverage due to the high costs of standard insurance premiums. Now, thanks to SB 1273, the Low Cost Auto Program is expanded and affordable auto insurance options remain accessible for many low-income Californians, including those who may newly qualify as a result of AB 60.” The department has taken a number of steps to educate new drivers about how to get coverage and avoid being scammed by anyone trying to take advantage of the new drivers hitting the road. Workshops are offered through community based organizations. In addition, a California Low Cost Auto Program information card will be distributed through the DMV. The department sent a letter to all agents and brokers licensed to sell auto insurance reminding them that new drivers may need help navigating and understanding the financial responsibility law and their obligation to carry auto insurance, and to help watch out for scammers and schemes targeting the new population of drivers. The department also offers a toll-free bi-lingual consumer hotline for drivers with questions about the California Low Cost Auto Program or about how to buy appropriate insurance coverage. CALL (800) 927-4357 (HELP)

Big Times Magazine Q&A Scott Boren Sun Coast General by Don Lukenbill

General agencies fill an important niche in the independent agent distribution system. They provide access to markets for both established producers and those just just starting in the business. An agent searching for a specialty product often needs to look no further than a general agency. It is common to find these companies offering the latest innovations before anyone else. One familiar face in the general agency galaxy is Sun Coast General. Serving independent agents for over 30 years, it has played a role in the success of a multitude of agencies. Guiding the marketing efforts for Sun Coast is Scott Boren. A recognizable sight at BIG meetings and events, Scott has been a sounding board, supporter, and good friend for a long time. We wanted to get to know him a little better, so we decided to make him our Q&A “star” for March 2015.

Big Times Magazine: Before we jump into what’s new in insurance, how about giving us a brief bio of Scott Boren? What path brought you to the front door of the industry? Scott Boren: Like so many of your members, I wasn’t planning on working in the insurance industry. My mother was a claims manager for Nationwide Insurance, so I was familiar, but it wasn’t top of mind. I was actually preparing to go to law school when I took a job at Viking Insurance in the Product Management department. I quickly discovered I had a good instinct for profit-center management and product design and development. I enjoyed some early success at Viking, so I abandoned my aspirations for law school in exchange for a career in Insurance Product Management. Since Viking I have worked for some of the biggest insurance brands, but now I’m currently the Chief Marketing Officer at Sun Coast General Insurance, so I’ve come a long way since the Viking days, but in some ways I’m back where I started.

BTM: For some people, their career path is a straight line up the ladder. Others make diagonal leaps from one place to another. What has been your trajectory? SB: I’ve had some good fortune. My mentors and others who took an interest in my career as a young man were great teachers, and I experienced early success that translated into a pretty steep career trajectory. While working at Viking, I quickly got the opportunity to manage the California profit center. From there, I got an opportunity to work with Esurance during the early days post start-up (that was a lot of fun). While at Esurance, I got a call from GEICO to manage their California auto insurance portfolio, and you don’t turn down an opportunity to work for a Warren Buffett company. But I think I had the most growth when I left GEICO to manage a region of auto insurance business for Farmers Insurance. But despite my early success, I think that I always had an entrepreneurial spirit, so I gave up my corporate lifestyle to start an independent insurance agency in 2009. That experience was extremely rewarding, and I learned a lot of lessons, but when I was provided an opportunity to work with my friend Jeff Yeskin at Sun Coast I jumped at the opportunity. So, in 2012, I started work with the Yeskin family at Sun Coast General Insurance as the

Chief Marketing Officer. So, I think, while I was working my corporate life, I was on a “fast track,” but took one of your “diagonals” when I wanted to be more entrepreneurial.

BTM: What is it about the insurance industry that keeps you enthusiastic about your job? SB: I’m all about a good challenge and the insurance industry is very challenging -- very mature and competitive. It is the “Red Ocean” that they talk about in the book Blue Ocean Strategy. Whether you’re an insurance company, a general agent, or the retail agent, it’s difficult to separate yourself; to differentiate your brand and find a segment where you are uncontested. I find this challenge to be inspiring. Don’t get me wrong, I also find it immensely frustrating too … but do I love the challenge.

BTM: Would you recommend a career in insurance to a young person just starting out? SB: Sure, why not? Each industry has its challenges and insurance is no different. Insurance has opportunity for everyone: from the top tier MBA looking for executive leadership to someone starting in an entry-level CSR position. Frankly, insurance sales can still be a very rewarding career path if you take your profession and sales craft seriously.

BTM: People outside the industry probably don’t realize it, but there are some exciting things happening right now. Touch upon a few of them. SB: I think that the insurance industry, like so many other categories, has been in an ongoing change for some time now, and much of it is related to the fast-pace change in technology. It’s only been since the mid-1990’s that the internet has played a significant role in our daily lives, that’s only 20 – 25 years ago. While Progressive claims to have launched online auto insurance back in 1997, nearly all insurance companies were still on the sideline. Even GEICO didn’t begin online sales until the mid-2000’s. Heck, Facebook only got started in February of 2004 and Twitter in March of 2006. Just as we started to understand the internet from our PC’s, it went mobile following the

Big Times Magazine | March 2015

release of the first iPhone in 2007. All of this change in technology creates disruption, and insurance agents need to understand what it means for them and their clients. The only thing that is for certain is that technology is going to continue to evolve, and new opportunities and distribution channels will open as a result. In the very near future telematics will have a bigger role in auto insurance, and it will likely not be tied to a device like SnapShot, it will likely be a mobile app located on our mobile devices. Companies will continue to develop online capabilities, and the agent will be challenged to compete directly for consumers alongside the insurance carriers and online comparison sites like CompareNow. The changes in the way consumers view media has radically altered how marketing works today. The old “interruption” forms of advertising have changed forever. Conventional marketing will continue to become less meaningful, replaced with various forms of content marketing. I believe each company will need to have media production capability for video, audio (podcasting), and blogging will be the table stakes for all content marketers.

BTM: Which insurance product(s) do you see as having the most growth potential? SB: That is hard to say. Any product that is tied to emerging markets will experience growth, and niche products within existing lines like usage-based auto insurance will grow, but the balance of the market is mature. Agents will have to find a niche, get better at marketing online. If our industry cannot get better at online marketing we’ll be selling to a decreasing segment of the population that doesn’t embrace technology change.

BTM: Sun Coast is well known for its excellent relationship with independent insurance agents. What are some of the keystones? SB: We strive to be consistent. We pay our claims and we execute our service obligation with care. We want to make sure our agency partners are well taken care of when they trust their clients to Sun Coast. I think that is the key. We do what we say and we say what we do. Maybe that should be our motto. But more than that, we recently invested heavily in improving our system architecture and capabilities. Agents engaging with Sun Coast today get a fully automated, real-time user experience that makes sales, service and inquire extremely easy.

BTM: If you had to name one thing agents are missing with regard to agency growth, what would it be? SB: This is a tricky question, because it’s a bit different from agency to agency. For many who remain effective using conventional, network, or referral marketing, it’s hard to tell them to change what’s working. If there is one thing we as an industry need to be better at, it’s internet and mobile marketing. Today there is a formula that works, and it’s used by successful online marketers outside of our industry. It involves content marketing, developing new media capabilities and engaging customers in a two-way conversation. I believe agents who want to perpetuate their brands into the future need to invest in online content marketing, building audiences, and leveraging their current client base to expand their digital reach.

BTM: What does Sun Coast look for in an agent?

Big Times Magazine | March 2015

SB: We are (possibly) a bit more open to appointing agents than others. We take risks on startup agencies and will work with those agents who have struggled to get started. What we want from our agents is a passion for their business; agents who care that they are meeting the needs of their clients, and who will produce clean business. We recently introduced a program here in California and we’re open for business. So, if any producer would like to discuss an appointment, the marketing department is listening.

BTM: Flipping the question around, what should agents expect from a Sun Coast relationship? SB: Again, we are consistent, we provide good service, and our technology is easy to use and makes sales, service and inquiry extremely easy. We are trying to leverage technology so we can get out of the producers way so they can sell and service more business.

BTM: What else is new at Sun Coast? SB: Sun Coast is going to kick-off a new program which is largely a project I’m spearheading to teach marketing techniques -- content marketing and better use of the internet and mobile -- to our agents. This will be good for agents of all stripes, sizes, and levels of experience relative to online marketing. Sun Coast agents will begin to get access to this information shortly, and we are working with BIG to bring this information to the membership.

BTM: If you could go back ten years and talk to Scott Boren, what would you say to him? SB: Buy Apple stock! Just kidding (well, not really!). I don’t think I would need to go back 10 years, but simply to 2009 when I was preparing my independent insurance agency. I would have convinced myself to use the content marketing and new media approach Sun Coast is going to be teaching. I think my insurance agency would have grown faster and it would be much further ahead of where it is today.

BTM: Now fast forward ten years from now, what would you like to hear from future you? SB: Well done... you did it.

BTM: In one sentence, what would you say is your personal and professional philosophy? SB: When you have a good idea, be persistent and see it through to the end. I have a quote from Admiral Hyman Rickover that I read on occasion to keep me motivated and driven, especially when I’m working on a difficult project or I’m dealing with new challenges: “Good ideas are not adopted automatically. They must be driven into practice with courageous patience.”

BTM: Any final thoughts? SB: I’d like the thank the BIG for being a place for agents to gather and share, and Sun Coast looks forward to working with the BIG and each of the members in the future.

“Be persistent and see it through to the end.”

Big Times Magazine | March 2015

Sidebar with

Harper& Heim Lawyers

Editor’s Note: BIG Independent Group counsel and BIG Times contributor Jon Stanley Heim and his law partner, Marilyn A. Harper, debut a monthly short column on legal issues in the insurance production business. Watch this space for tips on selling insurance without buying trouble.

The RTDC Rule and When To Apply It It happens in law firms as well and insurance brokerages and other small businesses. A new broker or attorney recognizes a legal problem with a private party. Perhaps an insurer, a vendor, or a party opposing a client. He or she ruminates about the problem. Fires up the computer and plunges into the weeds of internet research right away. Soon gets lost in a thicket of variables. No roadmap to solution is evident. Where to go now? One answer is to recall what lawyers call The Rule of RTDC. RTDC stands for Read The Damn Contract. It is striking how few lawyers, let alone insurance professionals, begin with that necessarily first step. There are two occasions on which you must always RTDC: before you sign a contract and whenever you first sense trouble in a contractual relationship.

generally require no cause. The same is probably true of contracts that are terminable on a certain period of notice and don’t mention cause. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal. 4th 384, disapproving contrary holding in insurance production case, Wallis v. Farmers Group (1990) 220 Cal. App. 3d 718.) Insurance commission variance is often authorized by contract. Provisions in or exhibits to agreements that set commission rates but say they can be changed from time to time allow insurers to cut commissions whenever and for whatever reasons they like. In most cases, an insurance broker’s only remedy is to place the affected policies with another insurer on renewal, assuming of course that such placement also serves, or at least does not undermine, the insured’s best interests. Who owns a book of business is another subject commonly addressed in insurance production contracts. Most independent brokerage agreements provide that the broker owns the book as long as the broker remains current in premium and perhaps all other payments to the insurer. If not, say most contracts, the insurer owns the book of business. These provisions are intended in essence to pledge the book as security for the payments. Sometimes the enforceability of these provisions can be attacked under California’s strong and broad public policy against forfeitures. Moreover, the scope and consequences of broker-owners’ rights have yet to be fully defined. Indeed brokers’ book rights are being challenged by new, bold information practices on the part of some insurers and insurance wholesalers. But even here, the analysis of book ownership begins with the contract. Never sign a contract you have not read or do not essentially understand. Never. That’s like marrying someone you haven’t met. No appointment is so precious that you want it no matter what comes with it, what you will or can be paid, or how you can be treated.

Consider three recurring issues: whether insurance commissions can be cut, when an appointment or other contract can be terminated, and who owns a book of business. We at Harper & Heim, Lawyers get these questions every week. Most can be answered just by reading the contract in play. All can only be answered by first reading that contract.

So RTDC: Read The Damn Contract. Do it before you sign. Do it whenever something seems wrong. Do it before making big changes. With few exceptions, RTCD the first thing we at Harper & Heim, Lawyers do when you call us. Because the contract is the cornerstone of the commercial and legal relationship. It’s not everything, but it’s the first thing.

Insurance brokerage agreements usually state that they can be terminated with or without cause. If that’s what they say, that’s what lawfully can be done. Business sense, logic and fairness have little if anything to do with it. Under current California law, contracts which can be terminated at any time but do not specify whether cause is necessary

Call Jon Stanley Heim at (510) 725-7593, or e-mail him at jshinslaw@gmail.com or harperandheim@gmail.com.

Big Times Magazine | March 2015

St. Patrick’s Day Fun Facts March 17th, the day the ranks of Irish-Americans swell from the current 34.7 million people to at least ten times that. Erin Go Brah (which means “Ireland Forever”) is on everyone’s lips, as is the taste of Guinness Stout. Before you plan your St. Patrick’s Day festivities, we thought you would enjoy some interesting factoids about the holiday to impress your friends and win a few bar bets.

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The first St. Patrick’s Day parade took place in the United States on March 17, 1762, when Irish soldiers serving in the English military marched through New York City.

In Chicago, on St. Patrick’s Day, the rivers are dyed green. In Seattle, there is a ceremony where a green stripe is painted down the roads.

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More than 100 St. Patrick’s Day parades are held across the United States. New York City and Boston are home to the largest celebrations.

People wear green to avoid being pinched. Legend has it that wearing green makes you to leprechauns, who can pinch anyone they want.

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St. Patrick’s Day is observed on March 17 because that is the feast day of St. Patrick, the patron saint of Ireland. It is believed that he died on March 17 in the year 461 AD.

Legend says that each leaf of the clover means something: the first is for hope, the second for faith, the third for love and the fourth for luck.

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St. Patrick did not actually drive snakes out of Ireland; the snakes represent the pagans that he converted to Christianity.

On St. Patrick’s Day, over 13 million pints of Guinness are sold worldwide. Global sales on other days total 5.5 million pints.

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Most of the bars in Ireland close for St. Patrick’s Day. I know, that’s not fun.

Big Times Magazine | March 2015

5 Mistakes that can undermine your New Business

by Randy H. Nelson

The dream of launching a business runs deep in the American psyche, but more often than not those dreams go bust. Half of new U.S. companies fail in their first five years, according to Gallup. Expand the timeframe out to 10 years and the failure rate reaches 70 percent. That’s not surprising, since he skills it takes to start a business aren’t necessarily the same as those it takes to keep that business afloat. What is surprising, though? In the U.S., more businesses are now being shut down (470,000) than are being started (400,000). As I said in my book, The Second Decision – The Qualified Entrepreneur many entrepreneurs have the gumption to take that dramatic first step of sparking something into creation, but too many lack the perspective to reflect on what’s needed for the next step. Also, anyone can declare themselves an entrepreneur. No qualifications are required. Because of that lack of proper qualifications, entrepreneurs often make five mistakes that threaten to put their businesses at risk.

Insistence on autonomy

An Inc. magazine study once said that a trait most entrepreneurs share is their desire for autonomy, which is great starting out. In the startup phase, the company is all about you. Your fingerprints are on everything, and there is very little you don’t know and aren’t directing. But after the startup phase, the company steams into the growth phase, becoming more complex and more vulnerable to industry and economic trends. At that point, an entrepreneur’s insistence on autonomy can hinder the company’s ability to respond quickly and intelligently to challenges it faces. In the growth phase, you simply can’t do it all, and it’s foolish to keep believing you can.

Unwillingness to build structure, cultivate expertise or delegate

ensure they receive the advice and input needed in their organization. The Small Business Administration has estimated that up to 60 percent of businesses owe their demise to a lack of cash. Other sources have this number as high as 90 percent. When it comes to financial leadership, it is what entrepreneurs don’t know that they don’t know that will multiply the risk in their business exponentially.

Reacting unwisely to boredom

Starting a business proved exhilarating. The day-to-day operation of it may pale in comparison. A bored entrepreneur can create significant troubles for the business. Things are going to get up-ended in a hurry, because many bored entrepreneurs either start new companies or abruptly make changes in their current companies to keep their own level of excitement high.

Many entrepreneurs will need to surround themselves with a strong executive team – or at least a steady right-hand individual – to ensure the company’s success. But too many business owners fail to create the kind of structure that produces good leadership decisions within a managerial team.

Of course, entrepreneurs are to be celebrated for their guts and desire to innovate. But when a serial entrepreneur habitually and almost obsessively looks for new sandboxes to play in, what happens to the existing company or companies often isn’t very good.

As you grow your company and enlarge it to meet new opportunities, you must also build in accountability. Systems need to be put into place, and people, too. The entrepreneur needs to know the employees and where their strengths lie to put them to good use.

Entrepreneurs need to be aware of their own strengths and weaknesses, the same things they gauge in their employ-

Lack of financial leadership.

Entrepreneurs by definition take risk when they make the decision to start their own business. In the area of financial leadership, which includes tracking cash levels and trends, financial covenants, metrics and expenses, entrepreneurs who are not financially literate and active will need the direct support of a financial expert to

Big Times Magazine | March 2015

ees.

Failure to engage in self-examination

You need to set aside your probably abundant self-confidence and take stock of what you know, what you’re good at, and what skills you still need to master in your leadership role.

About the Author

Randy H. Nelson is a speaker, a coach, a Qualified Entrepreneur, a former nuclear submarine officer in the U.S. Navy and author of The Second Decision – The Qualified Entrepreneur www.randyhnelson.com/book He co-founded and later sold two market-leading, multi-million dollar companies — Orion International and NSTAR Global Services.

Big Times Magazine | March 2015

Health Insurance Issues Due To Medical Providers Using Very Poor Discretion by Stephen S. Santoro

s former senior executive officer from a Fortune 200 Insurance Holding Company, I have learned to navigate the healthcare system. I have seen things none of you want to see or be involved in.

Insurance companies, their vendors, Medicare and Medicaid playing games with the elderly using a ploy I call “deny, delay and don’t pay” is one example. Medical vendors, including doctors, hospitals, emergency care centers, home health care, nursing care homes, rehabilitation hospitals, rehabilitations centers, nurses and aids commit insurance fraud with virtual impunity. Attorneys engage in fraud in concert with corrupt vendors. “The Alliance” in Los Angeles, CA was a prime example. These tactics give the business a bad name and make the public very distrustful of insurers, trail lawyers and the medical profession at large. On Wednesday, September 3rd, 2014, I was reading Page A-13 of the latest Wall Street Journal (WSJ), when an article written by attorney and doctor, Eric Michael David caught my eye. He titled his article “Health Care and the $20,000.00 Bruise.” Basically Eric’s 3 year old son had a swollen bruise on his head more than one week after the son fell off the son’s scooter. Eric felt he could get a reasonable cost on a CT. Eric and his family lived near a top pediatric ER room. Eric noted the care was fabulous. Eric’s son was diagnosed with an 11-day old bleed inside of his skull which was healing and virtually not an issue. Eric felt proud he was seeing academic medicine working on his son. His son RAN OUT of the ER room when the procedures were completed! The bill arrived! $20,000.00! No overnight stay! Eric’s health insurer paid $17,000.00, leaving him a $3,000.00 out-of-pocket payment due. Why? What for? One of the items listed was a $10,000.00 charge for “trauma team activation”. Because of this gross over billing, Eric wanted to give all of us 10 simple tips on how to fight health-care billings: 1 Get a job as a doctor or nurse He served on trauma teams in New York City, NY. He knows what trauma teams look like: doctors, nurses and residents running and yelling, IV lines, monitors. He knows one when he sees one. Eric’s son did NOT experience any of the aforementioned, at ANY time. Eric called the hospital and noted the trauma charge had to be a mistake. The billing agent explained it was standard and customary protocol to call a trauma team when there was internal bleeding in a head injury. Eric argues, correctly it was not clinically indicated.

2 Have or gather the legal knowledge to know when you are being lied to The hospital billing agent was not a physician and could not dispute Eric’s clinical knowledge, so she stated it was “county protocol” to call a trauma in cases like Eric’s son. Eric felt this was a bluff to get him off the phone by hiding behind “alleged” regulations, laws, statutes and administrative rules. (Trust me I have heard my share of this madness too.) This tactic is used effectively by hospital administrators to get people off the phone. It is an outrage! She then told Eric she would have the “head of emergency services” call Eric.

3 Have the resources to pay huge bills up front while you wait the months to it takes to correct billing errors This preserves your credit score and credit rating. It also gives you a HUGE hammer in court, because this shows “very food faith” on your part. Eric got a call two weeks later from the physician head of emergency services. Eric claimed he was professional, knowledgeable, and in agreement Eric should not have been billed for trauma activation. He agreed to call the billing team and tell them that for Eric. The following week the hospital wrote Eric telling Eric they were delighted to have had him speak to the head of ER services, but that the billing department had determined that the $10,000.00 charge was accurate and legitimate.

Big Times Magazine | March 2015

4 Understand that only the billing department, not the physicians decides what is to be billed (Translation: bean-counters are now practicing medicine and should not be.) The hospital Eric visited is a one-level trauma center, so it will bill for trauma activation at EVERY possible opportunity, WHETHER NEEDED OR NOT. Hospitals always “up code” -bill for as intensive a level of care as they can legally get away with. (Folks if that is not textbook fraud, folks I don’t know what is!)

5 Know where the hospital billing managers go to decide what kind of up coding they can get away with Most hospital guidelines, whether for Medicare or private insurers are derived from a several-thousand-page manual published by the Centers for Medicare and Medicaid Services (CMS) called the Medicare Claims Processing Manual (MCPM). You can access it on-line at cms.gov It is considered “impenetrable.” But here is a secret: There are lots of blogs written by hospitals coders who do the billing and they blog how to ensure a hospital can make their bills stand up to payers - i.e., insurers - whose job is to negotiate the bill down.

6 Google like mad Thirty minutes of informed search and research revealed that in order to bill for a trauma activation, the MCPM requires the trauma team be activated either by an EMS -an ambulance- or by transferring the patient from another hospital. This makes sense. If you want to bill $10,000.00 for a trauma team you cannot unilaterally decide that the patient required a trauma team. That is like a store demanded you buy $10,000.00 worth of a product because they decided you needed the product.

7 Have the combined medical and legal knowledge to understand the implications of the coders’ rules Eric drove his son to the ER, the trauma activation requirement WAS NOT MET. This was a huge failing by Eric’s insurers to have missed this point. The insurer’s adjustors should know this and these rules. Eric then called the billing supervisor at the hospital. He told Eric why the bill was valid, being very professional and friendly. (That is a common tactic by fraudsters: calm, professional, friendly and unrattled.)

8 Unleash hell Eric let the billing supervisor speak long enough to hang himself. Then Eric cut him off using the ammo from billing coders’ blogs: “You billed a G0390 for trauma-team activation. But chapters 4 and 25 of the MCPM require there be EMS or outside hospital activation if you are billing a G0390. There is no such activation here. So here is what I need you to do: Remove the $10,000.00 charge immediately and then reissue the bill.” He was silent for a moment. He then said, “Let me talk to my supervisor.”

9 Be graceful in victory and relize you got lucky To the hospitals credit, they sent a refund to Eric’s insurance company, reissued the bill, and deleted the $10,000.00 trauma activation. They could have refused and what would have Eric’s options been? Hire a lawyer? Try to interest his insurer in fighting a measly $10,000.00 lineitem charge? That is minuscule in their book of business. Eric believes in the free-market mechanisms as strongly as he believes in abiding by scientific principles such as relativity. Eric feels the quality of care, if you have great insurance, is the best in the world. He is a biotech executive. He feels the USA is responsible for driving more global medical innovation than any other nation, possibly all nations combined. But Eric feels the USA delivery system is an abortion, and I agree. The new Affordable Care Act (ACA) is “just a complex, poorly drafted, ugly patch on a complex and ugly system,” just as Princeton economist Uwe Reinhardt noted. Nothing will change until we shift incentives away from overuse and up coding. Both Democrats and Republicans have spent more of their time attempting to scare their constituencies than they have deeply examining solutions and repeal of the law--free market or otherwise.

10 Skip medical school and law school. Buy your child a helmet. Dr. David is co-founder and chief strategy officer of Organovo, Inc., a biotech company in CA. You decide folks! Thank you to Jon Spaugy and the Board of BIG for allowing my viewpoints. I’ll be back next time! About the Author

Stephen Santoro is a former senior executive officer from two Fortune 200 Insurance Holding Companies. Both firms were/are traded on the NYSE. Stephen’s background focused on reinsurance in both USA and tax haven venues, attended the University of UT from 1975-1980. He has worked in the insurance business and related businesses since 1981. He also has owned controlling interests in 3 managing general agencies in CA and GA.

Big Times Magazine | March 2015

MÉXICO’S CHANGING INSURANCE LANDSCAPE by Derek Kartchner MBA, CIC, Internacional Insurance Group, Inc.

Do you know what you are doing? Imagine an insurance agent that was unfamiliar with your state’s laws regarding minimum auto liability limits. Asinine right? Yet, MANY of us sell Mexico insurance, but are you familiar with the changes over the last couple of years? Mexico has an insurance problem they are trying to fix, and there have been a slew of changes. Do you know about these or are you the agent that doesn’t understand what you are selling? Here is a quick review of some law changes that have occurred in Mexico that you should understand because it affects your clients and the product you sell. Increased Liability in the event of a Death

How Mexico calculates what is paid in the event that a person causes the death of another person is very different than how that occurs in the US. Everything is actually based on a worker’s compensation-like labor law. In January 2013, the labor law changed, increasing the amounts one is responsible to pay if found to be at fault in a negligent death. It does vary state to state, but the State base their calculations on the Federal calculation. In 2013 we saw the Federal calculation jump from a few thousand dollars to significantly more. In fact, depending on the state, the responsible party can be on the hook for more than $300,000 in the event you cause the death of another person. A far cry from what we used to see in Mexico. Funny thing is people are still selling low limits on Mexico tourist auto policies. People, it’s a different legal system. They don’t just let you cross the border and kiss it all goodbye. When you sell a Mexico insurance policy you need to sell the highest liability limits you can find. It’s cheap and important.

Mandatory Insurance for Federal Highways

As of September 2014, insurance will now be mandatory on all Mexican Federal Highways and bridges. Failure to carry insurance can result in a fine. Now, this only applies to certain vehicles. As it turns out, only about 27% of drivers on the road in Mexico are insured. Consequently, there is a progressive implementation of this law. By 2019 all cars on the roads in Mexico will have to be insured, but for now only newer vehicles are required to carry coverage. However, the bottom line is that insurance is now mandatory in Mexico, as anyone driving just about anywhere will inevitably end up on a federal road. Keep your clients out of trouble, and keep them insured. Heaven knows the requirement is always more stringent for those driving US plated vehicles. For the record, the ISO endorsement is a terrible way to insure your client. It might be cheap but has no

provision OR ABILITY for providing the legal, roadside, or medical assistance your client needs. Furthermore, Mexican authorities won’t recognize a US insurer if there is trouble. What does this mean to you? You need to sell a proper Mexico Insurance policy to all your clients that travel to Mexico.

Solvency II - Keeping Insurance Companies Accountable

Let’s not get bogged down in the details, and start with what you know. Mexico insurance companies have a bad rap; for being sketchy, not paying claims or randomly going belly up. Why? Lack of financial accountability in Mexico. In the US, carriers have to get a rating. My guess is that if you look at your E&O policy, it probably won’t defend you or pay claims if the carrier you sold was not at least a B+ or better and goes insolvent. This is why most carriers in the market strive for a good rating. They know if they don’t have a good rating agents can’t sell them. It’s the price of admission. This is not so in Mexico, until now. As of April 1st 2015 Mexican carriers will have to carry a rating. So for the first time we will get a glimpse into what it is that we have been selling. For the first time we will be able to know whether Mexican insurer has the ability to pay claims. This has always been a grey area with Mexican insurance companies, but it is my belief that with this information we will be held to a higher standard by our clients and our E&O carriers. You shouldn’t sell a non-rated or B- rated insurer for US coverage, so why would you do that for Mexican coverage? Things are changing in Mexico. For a while, with the recession, travel to Mexico slowed. It is picking up again, and you will see more clients looking for this coverage. Don’t be caught sleeping, understand what coverage is needed, and be ready!

About the Author

Derek Kartchner is the Vice President of Business Development for International Insurance Group, Inc. and a Mexico insurance expert with more than 10 years experience. For more information, visit www.MexicoInsuranceOnline.com

Big Times Magazine | March 2015

New SEO-Friendly gTLDS? Let’s talk about it for a moment By Andree Ochoa CEO, DomainCart.com

I was reading an article about this the other day and I thought it would be a good idea to address it in this column. My advice would be that you spend a little time doing some research about how the new gTLDs (generic top-level domain) have fared in independent SEO/SEM (Search Engine Optimization / Search Engine Marketing) studies specially for your business market. Whether you’re selling cars or insurance policies, domain research could be just what you need to start getting more leads to your business. In independent tests between www.examplekeyword.com (traditional TLD) and www.example.keyword (new gTLD), there were generally more impressions for the new gTLD. The Cost Per Click, Total Clicks and Average Positions were comparable. Once on the landing page, the Page Views, Bounce Rate and Percentage of exit were all comparable. Whether you choose a traditional domain like (.com or .net) or a new domain extension like (.cars or .insure), Google AdWords demonstrates no clear bias. When it comes to organic SEO results, keyword rich, relevant gTLDs do boost SEO rankings, because they more accurately indicate what a business or cause is about. So if you’re in a specific business market you may want to rush and register a new domain name with your company name or service before someone else does. Registering a new domain name is easy. You can utilize your own ISP or visit www.domaincart.com and search for your new domain name. There are hundreds of new gTLD extensions that just came out. For example, you could choose .tax, .insure, .accountant, .associate, etc. You get the idea. Hope you like this fast article on new domain extensions and SEO. As always, I encourage your feedback. Visit my blog at www.andreeochoa.com I’d love to hear from you.

Big Times Magazine | March 2015

It’s not about a Total Market Strategy, It’s about a Total Market - Competent Organization

By Terry J. Soto Author and President & CEO, About Marketing Solutions, Inc.

Much talk has surfaced lately about the whether it makes sense to have a total market strategy. Some contend that the intent of a “total market” strategy -to recognize all potential consumers’ needs, culture and behavioral characteristics within a company’s marketing strategy- is too often misunderstood or not understood at all. This assertion has resulted in approaches that homogenize how organizations communicate with consumers, and it underemphasizes and even ignores cultural nuances that work to powerfully connect consumers and brands. This is occurring, in part, as a result of agency work consolidation. Marketers are naively taking work from specialty agencies with the required market expertise, and under the guise of a “total market” strategy, are re-assigning the work to general market agencies who are as naïve and even indifferent to the country’s diverse cultural differences as their clients. I contend that the problem is based on two dynamics:

Said marketers lack understanding of consumer differences. Intuitively, I find this problem very hard to believe, as knowing one’s consumer and leveraging the right tools and resources to do so is at the heart of being an effective marketer.

Said marketers are looking for ways to make their jobs easier by streamlining processes, vendors and budgets. But one has to ask, at what cost?

Big Times Magazine | March 2015

Under any circumstances, marketers’ actions are catastrophic. I believe the crux of this problem is marketers, who remain ill-prepared to effectively see and consider today’s consumer market for what it is, and who aren’t sufficiently capable or competent to effectively create a “total market” strategy. By this I mean a strategy which effectively considers all consumers’ cultural insights: Hispanic, Asian, African American and non-Hispanic white consumers. More than ever in our country’s history, marketers are challenged to “step up” their competence in an environment that: 1 Is ever more multicultural or multiculturally influenced 2 Is ever more digitally driven 3 Requires a greater command of big data usage and analysis to optimize spending and maximize ROI. It’s true. This is a tall order. So why, at a time when marketers actually need to leverage expertise are they choosing to ignore and minimize the very vendor relationships that can support and even accelerate their success? Our job as marketers is to optimize our companies’ growth platforms and business strategies by planning and implementing complementary marketing strategies. Doing so effectively has always meant leading with competence AND hiring the right expertise for the job.

About the Author

Terry Soto is President and CEO of About Marketing Solutions, Inc., a Burbank, California – based strategy consulting firm specializing in transformative business readiness and strategy consulting for profitable and enduring total market success. She helps her clients dramatically improve overall business performance by optimizing their strategies to succeed in the Hispanic market. Email: terrysoto@ aboutmarketingsolutions.com

Big Times Magazine | March 2015