July-August

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by Jon Spaugy, BIG’s Chief Executive Officer

Now that we’re about halfway through summer, it’s time to start thinking about fall activities. What’s that you say? “Uh, Jon , it’s 100 degrees outside and we need to start thinking about fall?” I know what you are saying and no, I didn’t “fall” on my head. My a/c is working overtime just like yours. But I’m sure you’ll agree that there is nothing wrong with planning ahead. One event that technically does not happen in fall, but is close enough for this, is our annual Minivention in Northern California . This oneday event on Tuesday, September 1st brings together top carriers and service providers to producers who sometimes don’t get the attention their colleagues to the south do. Obviously, there are insurance brokers and agents interested in growing their agencies, and BIG is here to provide them with the tools to do so. In addition to the trade show, we are also offering a Commercial 101 class provided by Mike Russ Training Center. Not only will attendees learn the basics about a very lucrative and popular class of insurance, but earn two hours of CE credit, as well. Capping off the event will be an excursion to Oakland Coliseum to watch the Oakland A’s battle the Los Angeles Angels. All of this for the low price of $40.

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Speaking of baseball and the Angels, looking further down the road BIG will be hosting another night of baseball down in Orange County as the Angels and Dodgers clash to see who is the REAL representative of the City of Angels. That September 9th night game will find BIG members and supporters in the Left Field Pavilion cheering on their favorite Los Angeles team. Marketing Reps are encouraged to invite agents out to a fun industry event. Agen-

Big Times Magazine | May/June 2015

cy owners should consider offering tickets to exceptionally performing staffers and a thank you. Tickets are $40. You can find information about these and other BIG events on our website at www.biginsusa.com. That is your best resource for all things BIG -- BIG Times Magazine, membership benefits, and much more. I hope to see many of you up north in September for our third annual Minivention. If you can’t make the trip this year, hopefully you can come to Angel Stadium (which will truly be the “BIG” A that evening) for a great outing with friends and colleagues. As always, let me know if you have and comments and suggestions by emailing me at info@biginsusa.com.


BIG MINIVENTION 2015 IS NOT TO BE MISSED

Why not start September off really doing something positive for your business? BIG wants you to indulge in America’s two biggest pastimes: Baseball and Business. In the jampacked one-day Minivention, slated for September 1st at Oakland Coliseum, you will be able to accomplish an entire weekend’s worth of production in just a few hours. “Many California- based associations are accused of a Southern California bias. Events are planned around the Los Angeles/Inland Empire/San Diego areas and Northern California members and supporters are forced to make a special trip to participate with their own trade group,” said Jon Spaugy, BIG CEO. “BIG believes that every member should be able to stay at least semi-local to connect with colleagues and potential business partners.”

Of course, there is no better way to usher in the month of September than going to the ballpark. Since you will already be at Oakland Coliseum, stay around and join 500 other BIG supporters cheering on the Oakland A’s and the Los Angeles Angels as the BIG Minivention 2015 comes to a close. The Trade Show (complete with door prizes and other giveaways), a two-hour CE course and a ticket to the baseball game, all included in your $40 registration. You will not find a better deal than that. Better hurry, though, as space is limited and tickets for this go very quickly. To register, visit the BIG website at www.biginsusa.com. ​

The BIG Minivention event will feature over 50 vendors attending this year, ranging from standard to preferred insurance carriers, GA’s, finance companies, technology companies and much more. This “one-stop shopping” tour will introduce participants to companies eager to do business with the successful insurance professionals that comprise the BIG member roster. Talk appointments, new markets, product innovations, or just hook up with current company reps to find out the latest news. For those wanting to take a break from the action, the Minivention will feature a Commercial 101 class provided by Mike Russ Training Center. For those producers who are strictly P&C, this is an excellent opportunity to learn about a potentially lucrative line of insurance that may be overlooked. The course will offer a two-hour exploration on all facets of commercial lines production, and participants will receive two hours of CE credit.

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Sidebar with

Harper &

Heim

Lawyers

LETTERS OF INTENT By Jon S. Heim, Attorney Letters of intent are common in business and commerce. Less widespread is correct understanding of them. Try this test. What do you think? Is a letter of intent (“LOI”) a binding contract? Is it an itemization of agreed terms, with more negotiation and agreement anticipated? An agreement to negotiate in good faith? Or is an LOI merely a list of proposals under fluid discussion? The answer is: an LOI may be any of these. It depends on what you and the other negotiating parties intend the LOI to be. More precisely, it depends on the objective manifestations the parties’ intent, meaning the words they use and sometimes the actions they take that reflect or contradict an intent to be bound to a contract. (Pacific Group Corporate Holdings, LLC v. Keck (2014) 232 Cal.App.4th 294, 309.)

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For starters, titles may matter, but only superficially and inconclusively. “[C]alling a document ‘letter of intent’ implies, unless circumstances suggest otherwise, that the parties intended it to be a nonbinding expression in contemplation of a future contract, as opposed to…being a binding contract.” (Rennick v. O.P.T.I.O.N. Care, Inc., (9th Cir. 1996) 77 F.3d 309, 315, italics supplied;

Big Times Magazine | May/June 2015

accord, First Nat. Mortg. Co. v. Federal Realty Inv. Trust (9th Cir. 2011) 631 F.3d 1058, 1065.) It is not the title, but the substance that determines whether an LOI is binding. “If a letter of intent is merely an agreement to agree, it is not enforceable as a contract. Where a contract appears to be a preliminary agreement embodying only the spirit of a contemplated supplementary contract ... and it is perfectly clear ... that the minds of the parties never met upon the details, then it is not [enforceable].” (In Re Ankeny (9th Cir. B.A.P. 1995) 184 B.A.R. 64, 71, citations and inner quotations omitted; see, e.g., First Nat. Mortg. Co. v. Federal Realty Inv. Trust, supra, 631 F.3d 1058, 1065-1066.) On the other hand, “[i]f the parties so intended, a letter of intent constitutes a binding contract. The parties’ expectations may be inferred from the conduct of the parties and the surrounding circumstances. In looking at the instrument as a whole, if the parties agreed to the essential terms in writing, there is an enforceable contract between them even if they may have contemplated that a more formal agreement would be signed later.” (In Re Ankeny, supra, 184 B.A.R. at p. 71, citations and inner quotations omitted.) Under this analysis, each provision of an LOI must be considered in determining whether the whole LOI constitutes a binding agreement. There simply is no bright-line rule that an LOI is or is not binding, in other words that an LOI is or is not a contract. This long established law often leads to uncertainties in business. Many times a party eager to see a contract performed – say an insurance broker looking to sell his or her book of business – may imagine hope and security from an LOI stating an attractive price but including disclaimers of intent to be bound or conditions that are easily defeated. Less often but more detrimentally, a party increasingly unsure of the benefit of a pending deal may discover that he or she is contractually bound by a writing called an LOI but bearing unconditional language of assent or of binding force. In the latter instance, the party


may be bound by words that objectively mean “I do” even when the party privately thought “well, maybe -- if everything still looks good.” Obviously, whenever you are entering into a legally binding contract, you need to know it. Just remember you can’t tell from a title alone. You must read the entire contract for binding or disclaiming words. In some cases you may also have to consider what actions taken pursuant to an LOI may suggest that you thus mean or don’t mean to be bound. As a matter of professional preference and style, I dislike the title LOI and prefer to avoid it. For my money, or more properly for my esteemed clients’ money, a writing of commercial terms is either a binding contract or preliminary negotiation, and it should be called only what it really is. Nothing in between and nothing with an encouraging title is useful. Indeed anything hybrid can be confusing to all and disappointing to one side. But my cause here was lost long

ago. The title LOI will never be banished from the commercial lexicon; yet the nature of an LOI will never be standardized. We’ll all keep using LOIs, even though most do either too little or too much, and even if we aren’t sure what any particular one really does. Call Jon Stanley Heim at (510) 725-7593, or e-mail him at jshinslaw@gmail.com or harperandheim@gmail.com.


The Future of Business and Beyond! Is All About Connecting, Here Are 11 Ways to Do It Better!

By Nancy D. O’Reilly PsyD, author and motivational speaker In case you haven’t already gotten the memo, competing with others is out. However, connecting with others to share ideas, work together on projects, and offer support is most definitely in. The changes brought about by the global economy have made collaboration and innovation “must-have” skills, and taking your own connections to the next level doesn’t have to be as difficult as you may think. (In fact, it may even be fun!) The world is making a shift to what I call ‘Connecting 2.0.’ It’s more meaningful than the ‘mile-wide and inch-deep’ type of connecting we associate with social media. It’s based on sharing and co-creating, not self-interest. It’s authentic, it feels good, and it works. This deeper approach to connecting works so well, in fact, that individuals all over the country (and across the world!) are creating an ever-expanding network of resources offering expertise and support to people in business, government, education, philanthropy, and other fields. The idea is not just to advance our careers and make money, but to make life itself richer, more exciting, and more creative. This is not some exclusive club—it’s open to anyone with passion, enthusiasm, and a yearning to live a richer, more fulfilling life and maybe even change the world. Here are some tips: · First things first. Aim for a good mix of online and face-to-face con-

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necting. It’s easy to send an email message, and it’s really easy to like, to share, to follow in the world of social media. That’s why so many people do it. (It’s easy to push a key or click a mouse after all.) And while there is nothing wrong with social media, it’s also no substitute for real-world human interaction. The Connecting 2.0 movement depends on both types of connecting: virtual and face-to-face. If you’re burning up social media, consider taking an online contact offline. Tell that person you’d love to meet up for lunch the next time he or she is in town. Conversely, if you’re proudly ‘old school’ and are neglecting your social media presence, dive in. You really need a foot in both worlds. · Join a new group that interests you and really attend the meetings. Make them a priority. It doesn’t matter what activity it’s based on. This may be a book circle or a kayaking club or a community cause. What’s important is that you’re getting together with other people who share a common interest—and that you go to meetings and events often enough to let these strong connections develop. It’s the shared passion for the activity that generates the connections. And those connections take on a life of their own. You may end up forging alliances, finding jobs, winning clients—even though that’s not the ‘purpose’ for the group. · Get involved in a philanthropic cause that speaks to your heart. Women and men who care enough about others to volunteer their time, talents, and treasure are the


kinds of people you want to meet. They tend to be “other-oriented” and want to make new connections, too. So whether your “cause” is homeless animals, kids with cancer, adult literacy, or clean oceans, get involved. I actually met the 19 women who cowrote my book through my Women Connect4Good, Inc., foundation. In fact, the book is living proof of the kind of collaboration that happens when people make connections based on their desire to serve. · Get on a different team at work. We tend to stick to our comfort zone. But shaking things up from time to time keeps you sharp and puts you in the path of exciting new people. When you work with people you don’t know on projects you’re unfamiliar with, you will learn, grow, and often discover vital new talents and interests. · Take a class. (And don’t just sit there; talk to your neighbor.) Whether it’s continuing education for your job, a creative writing class at the local community college, or even a martial arts training session, actively pursue new knowledge and skills. This will bring new and interesting people into your life—women and men who, just by being there, show that they have a zest for life and learning. · Volunteer your speaking services. Yes, yes, you hate public speaking. Many of us do. But taking to the podium is a powerful way to get your voice heard, to build up your confidence, and of course to make new connections with those who hear you speak. And there are many civic and service organizations—like the Chamber of Commerce and Rotary Club—that need speakers. · Handpick five to ten powerful individuals in your community and ask them to participate in an event. This might be a roundtable discussion that takes place at an industry conference or a community fundraiser, for example. And don’t think that busy, important men and women won’t have time for you, says O’Reilly. Many successful people love sharing stories, best practices, and ideas,” she says. “You might be surprised by how many will say yes. · If you’re invited, go. When someone invites you to an event or gather-

ing—whether it’s an industry trade show, a party, or a hiking trip—go if you can. Yes, even if you’re tired, out-of-sorts, and feeling blah. Say yes if it’s remotely possible. There are always reasons to say no and some of them are good reasons. But overall, life rewards action. Life rewards yes. The more times you say yes, the more connections you will make. The more connections you make, the richer and more creative your life will be. · Set a goal to meet “X” new people per month. Insert your own number, depending on your circumstances and personality. Hold yourself to this number (it will help greatly to keep track in a journal or calendar). If you take this metric seriously, you’ll figure out how to make it happen. And while meeting isn’t the same as connecting, it’s the essential first step. Let’s say your goal is to meet five new people this month, and it’s the last day of the month and you have two to go. You can always pop into the spin class at your gym, or maybe go to an open house or political rally. While you’re there, of course, strike up conversations with at least two individuals and introduce yourself.” Voilà! You’ve met your goal! While many people are naturally good at connecting, it still doesn’t happen automatically. We all have to make an effort. Most of us are so busy and overwhelmed that we just don’t make it a priority to connect with other people. We really do have to be deliberately purposeful about it. The benefits of connecting with other women and men are incredible, so we owe it to ourselves—and each other—to make it happen.

About the Author Nancy D. O’Reilly, PsyD, is an author of Leading Women: 20 Influential Women Share Their Secrets to Leadership, Business, and Life and urges women to connect to help each other create a better world. As a clinical psychologist, motivational speaker, and women empowerment expert, O’Reilly helps women create the satisfying and purposeful lives they want to benefit themselves, their families, and their communities. For more information, please visit www.drnancyoreilly.com.

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Q&A: Terry Soto by Don Lukenbill

For the past decade or two, successful businesses are focusing on the 55 million population strong Hispanic market with $1.5 billion in buying power. What was once a niche demographic concentrated in large metropolitan areas like California, Texas, Southern Florida, and the Southwest U.S., are now found in towns of all sizes across the country. By 2044, the U.S. Census estimates that Hispanics will comprise over one-quarter of the population. To help companies large and small successfully navigate the Hispanic market, we are fortunate to have Hispanic market strategy consultants like Terry Soto. She has helped accelerate Hispanic revenue growth for many of the country’s largest and “Best in Class” companies, including Walgreen’s, Aldi, AutoZone, Verizon Wireless, Coca Cola, Ringling Bros., MillerCoors, Citibank, Food Lion, T-Mobile, Kraft Foods, Absolut Vodka, Disney and Wells Fargo Bank, among others. Terry is also the author of Marketing to Hispanics A Strategic Approach to Assessing and Planning Your Initiative and lead author of Grow with America: Best Practices in Ethnic Marketing and Merchandising. BIG Times Magazine was fortunate enough to ask her a few questions about how to effectively think about the Hispanic market such that any business can effectively reach this profitable demographic. BIG Times Magazine: What in particular about the Hispanic market interests you? Terry Soto: Well, being Hispanic, I identify with this consumer group and I’m able to see their situations, needs and wants through their lens. But, it isn’t so much about what interests me about the market, it’s more about the opportunity to educate, dispel stereotypes and help my clients grow revenue by helping them deliver an excellent customer buying experience that keeps their Hispanic customers coming back. That’s the real Hispanic market interest and value I bring to my clients. BTM: When would someone use “Hispanic” as opposed to using “Latino?” TS: Hispanic is a term coined by the U.S. Census to categorize all persons from Latin America and is mostly a term used in the business community. Most Hispanics don’t use either to refer to themselves. Rather, they self-identify by country of origin or heritage. That said, most Hispanics believe Latino is a more accurate way to refer to the Hispanic community unless they’re speaking in a business context. BTM: If you were to teach “Marketing 101” for Hispanic (or any other) demographic, what would your first lesson be?

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TS: Hispanics are not a homogenous group. Hispanic is not a race or an ethnicity. Hispanics can be of any race,

Big Times Magazine | May/June 2015

Author, President & CEO of About Marketing Solutions, Inc.

ethnicity and religion; white, black, Asian, Arabic, and Jewish. Hispanics can practice any religion including Judaism, Buddhism and Catholicism among many others. BTM: How different is the Hispanic demographic from others and what sort of tweaks should a generic marketing campaign be given? TS: This is a very broad question and the answer will differ depending on the product or service category which a company is selling. To begin with however, we should consider that Hispanics have been emigrating to the U.S. for about 50 years and some families in the west and southwest have been living in the U.S. since parts of the U.S. were part of Mexico. Today many U.S. Hispanics are native born. Today’s Hispanic market is not the Hispanic market of even ten years ago. Also, two thirds of Hispanic Millennials and ninety percent of Hispanic Gen Z, the two largest Hispanic generations representing over two thirds of all Hispanics, are U.S. born. But to provide an example, a campaign selling to Millennials of which 45% are multicultural and one quarter are Hispanic, will need to reflect multicultural diversity, be cognizant of Hispanic Millennials’ cultural and generational influences and understand their traditional and digital media behavior. While two thirds of Hispanic Millennials are U.S. born, they still view and listen to Spanish language media while having their favorite shows on English language media. BTM: Like with any other demographic, the Hispanic community cannot be painted with a broad brush. There are age differences, as well as income, geography, etc.


But like many immigrant groups, the differences between 1st generation and later generations can be significant. What are some of those differences?

BTM: What is/are the most common mistake(s) people make when creating and executing a marketing campaign?

TS: These differences are not absolute. Hispanics have morphed into hybrid consumers and borrow beliefs, behaviors and values from all cultures to which they are exposed. One thing is for sure. Hispanic culture is not fading among younger Hispanic generations. Even the youngest Gen Z Hispanics (4-18 years of age) many of whom have Millennials for parents are retaining aspects of their culture as part of their identity and this influences how they buy products and services. According to an Univision survey, ninety six percent of Hispanic Millennials say they will never stop doing the things that are a part of their heritage.

TS: Not having the competency to know that today’s consumer market is very diverse and different and that they respond differently to marketing messages. In the words of Peter Franchese, founder of American Demographics magazine, “there simply is no such thing as an “average consumer” in the U.S. any more and marketing to the “average consumer” is an irrelevant undertaking.”

That said, all Hispanics are also influenced by the macro and micro trends and behaviors of their generations and these also play a strong role in how Hispanics make buying decisions. There is no hard and fast answer to this question. As a company takes the appropriate steps to understand their target markets overall, they must also consider the cultural influences at play among Hispanic and other multicultural markets; all of which are very much a part of their companies’ target market profiles. In other words, marketers must be competent to not just think of their Hispanic customers, they must know how to think like them and make the appropriate shifts in marketing and sales approach to engage them. Sometimes this will involve language, but it is typically more about understanding what resonates. BTM: The BIG Group is comprised of insurance professionals – agents, company representatives and executives – who sell many kinds of coverage. Can you think of any cultural idiosyncrasies or distinctions that could come into play with insurance and financial services in general? TS: Well in the case of life insurance for instance, many consumers including Hispanics, come from a third world country where life insurance is purchased by a minority, life philosophies include living ‘in the moment,” have fatalistic outlooks on life due to strong religious beliefs and as a result, they seldom plan for a financial future for their family, have a very different perception of and acceptance of budgeting for an expense they might view as an “intangible service they may never get to benefit from directly.” Yet, if we take the steps to understand what motivates them in this category, there are ways to appeal to the “head of household” in ways that resonate, turn around deep seated mindsets and lead to writing policies. An agent must have a deep understanding of cultural contexts and a multitude of attitudes as well as the lack of product knowledge that may lead this consumer to view life insurance as a non-essential.

Today’s demographics have created a significant cultural and generational disconnect between the marketeers and the marketees and this represents huge challenges. The worst and most costly mistake an insurance provider can make is to launch marketing efforts blind to the thirty-eight percent of this country’s consumer market who are multicultural (even greater proportion if were speaking about the under thirty-five market). Think about it. Any marketing dollar investment which only relevantly impacts sixty-two percent of target consumers is realizing a very poor ROI in my view. My work with clients helps them improve that ROI by ensuring every dollar impacts as many target consumers as possible including Hispanics. BTM: If you could sum up a successful marketing campaign in a few words, what would you say? TS: Inclusive. Informed. Relevant. Engaging. Motivating. BTW: What drives you to succeed, personally and professionally? TS: Interestingly, my personal and professional success drivers are my beliefs in the power of education, awareness, fairness, compassion and open mindedness and a couple three-week vacations a year aren’t bad motivators either. BTW: Now a quick plug. What does a relationship with About Marketing Solutions mean to a client? TS: It means an opportunity to accelerate Hispanic revenue growth by helping optimize my clients’ organizations to deliver an excellent buying experience and an improved ROI. In today’s business environment, delighting customers is the only way to differentiate. I help make sure my clients’ operations are business-ready to delight their Hispanic customers. To contact Terry Soto: Website www.aboutmarketingsolutions.com E-Mail terrysoto@aboutmarketingsolutions.com Phone 818-842-9688

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HOW TO accept Credit Cards on your Website By Andree Ochoa CEO, DomainCart.com

Accepting credit cards on your website could be an issue for many online professionals, e-stores, associations, companies or small businesses. The issue comes with all the required paper work you need to submit in order for online payment companies to approve your business. However setting up online payment systems can be pretty easy, there are companies like Paypal that offer an easy approval system as well as a pretty reliable service and low commission and transfer fees especially for U.S. based customers. Paypal also offers service in various countries around the world, it is really important to setup an account within your country to make the approval easier. There are also other online payment systems like OkPay which allow you to also accept credit cards in your website as well as e-currencies like bitcoin, doge coin, lite coin, and others. Their setup process is also pretty easy and approvals only require a picture ID, proof of address and of course email verification. In either company, setup in your website is pretty easy, basically a matter of copying and pasting a little bit of code in to your website, both companies offer payment, subscription, and checkout buttons with no need for you to know any computer coding. So as you can see accepting online payments in your website it’s now easier than ever! Hope you liked this article and please share it if you think it could be of any help to your friends and/or family.

Source: http://www.andreeochoa.com/build-a-website/how-to-accept-credit-cards-on-your-website/

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Guiding Insurance Professionals on the New Insurance Regulatory Guidance By Dan Bonnet, Director, Small & Medium Business – North America On the wake of some of the largest data breaches to hit health insurance companies, the National Association of Insurance Commissioners has followed on the heels of the Securities and Exchange Commission and has issued “Guidance” on cyber security. In April, the Cybersecurity (EX) Task Force of the National Association of Insurance Commissioners (NAIC) adopted the Principles for Effective Cybersecurity Insurance Regulatory Guidance. The Principles for Effective Cybersecurity: Insurance Regulatory Guidance looks to state insurance regulators “to ensure that personally identifiable consumer information held by insurers, producers and other regulated entities is protected from cybersecurity risks.” The guidance encourages insurers, agencies and producers to secure data and maintain security with nationally recognized efforts such as those embodied in the National Institute of Standards and Technology (NIST) framework. The NIST framework provides guidance on managing and reducing cybersecurity risk for organizations of all sizes, putting them in a much better position to identify and detect attacks, as well as to respond to them, minimizing damage and impact. Producers, agencies and insurance companies could all be held liable for the loss of Protected Health Information (PHI) and personally identifiable information (PII) of prospects and clients, such as a person’s full name, date of birth, address, and Social Security numbers. The basic function of the NIST Framework consists of five functions, each divided into subcategories, as well as standards, guidelines and best practices. A security consultant who specializes in threats and cybersecurity can assess your network and help you secure your network using the NIST Framework and other standards. Whoever you work with should be familiar with common threats targeting the insurance industry, as well as the tactics, techniques and procedures attackers are using around the globe.

NIST Five Functions Function 1: Identify Identify your assets and risk so you can prioritize your security efforts. The first thing you’ll need to do is conduct a risk assessment to identify all your information assets, such as client lists, business strategies, marketing information, and client data. Then rank each of them according to their values, from very low to very high, to help you focus on protecting the high-value data. You’ll also need to do a vulnerability assessment to see what systems and company Web-facing applications are weak. Your assessor can help you rank the likelihood and probability of a threat exploiting certain vulnerabilities, and can assess your internal and external network controls, policies and procedures, gaps compared to regulations, and best practices. Function 2: Protect Once you know your information assets and their values, you can gauge your resources accordingly and decide what measures to take to protect them. Not only might you need security devices and software, you’ll need people to continually operate the devices. Many organizations erroneously believe that they can buy a security solution to protect their networks from intruders. However, all cybersecurity protective devices (firewalls, instruction protection/detection systems, unified threat management appliances and others) need to be consistently configured, managed and updated with the latest patches—as long as the update won’t harm the network. Once you buy a protective device, you need a human being for it to operate to its best ability. No matter what any security vendor says, all protective devices need consistent human interaction. There is no device that works automatically after plugging it into your network. Numerous breaches have occurred because people were not properly operating protective devices. When devices are not properly and consistently configured, hundreds of alerts go off and are ignored. Then the story becomes “The Boy Who Cried Wolf.” Function 3: Detect Although you could have hundreds of preventive

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controls to prevent security incidents, some will still occur. That’s why it is important to be able to detect any anomalous activity as quickly as possible to get any attackers out as quickly as possible to prevent or lessen any damage. To spot attacks quickly, you need to monitor your network traffic and your endpoints (servers, workstations and laptops) 24 hours a day. It takes about 48 days for most organizations to recognize they’ve been breached, according to the 2013 survey report “Post Breach Boom” by the data security research center, Ponemon. However, when your network is continuously monitored, you can spot anomalous activity as soon as it occurs. In addition to monitoring your network, you also need to have detection systems on your endpoints (servers, laptops and workstations) that are also continuously being monitored. That allows you to see any anomalous activity on them so you can stop the attackers before they traverse the network. Function 4: Respond The sooner you recognize you’ve been breached, the sooner you can get the attackers to minimize the damage. The longer attackers are in your network, not only do you lose more and more data, it becomes more difficult and costly to get the attackers out. Getting attackers out of your network takes a lot of expertise that most organizations don’t have. Less than half of respondents to the Ponemon Post Breach survey said their organizations have the tools, personnel and funding to prevent, quickly detect and contain data breaches. While your organization can try to respond to a breach on its own, unless it has a full-time security team that works with threats day in and out conducting incident response engagements, has a global view of the threat landscape, and is familiar with certain patterns attackers make in networks, it may not be able to remove the entire threat. If it removes all but one trace of the threat, the attackers could still be hiding inside the network. To fully remove the threat, it often takes the expertise of a team that has handled hundreds of engagements and is familiar with the tools, techniques and procedures attackers use. The average time to resolve a cyberattack is 45 days, with an average cost to participating organizations of $1,593,627 during this 45-day period, according to the 2014 Cost of Cybercrime Study: U.S. by Ponemon. That long time span and high cost can greatly be reduced if you understand the attackers and the ways they work. Professional incident response (IR) teams that conduct IR engagements full time could get attackers out in

hours or days compared to weeks. Security companies offer IR retainer contracts that guarantee experts can be onsite within 24 hours to begin remediating a breach necessary, and that you get discounted rates, usually saving you about $100 an hour. Without a retainer, it could take an organization a few days to select an IR team and for one to become available. The sooner you get the attackers out, the overall less cost. Results from the Ponemon 2013 Cost of Cybercrime Study: U.S. show a positive relationship between the time to contain an attack and organizational costs incurring from business disruption, data loss, recovery costs and legal costs. The total annualized cost of cyber crime in 2014 ranges from a low of $1.6 million to a high of $60.5 million. Function 5: Recover Recovering from an attack takes planning long before your network is breached. You should have a Business Continuity Plan in place, as well as policies and plans in place to run your website and network from another offsite location. You should always keep hardware backups of your data each day. A security consultant can work with you to help you decide how much and what data needs to be backed up, as well as what critical systems and components are essential to your organization’s success. The recovery function helps you restore capabilities and services that were impaired. All these decisions need to be made before a crisis. Although independent agents probably won’t have a network to protect, at the very least, they should take applicable steps to secure their computers. They need to ensure privacy of their prospects’ and clients’ personally identifiable information (PII), including addresses, dates of birth, Social Security numbers, health data, and insurance policy information. They should ensure their computers are password protected so an intruder would be unable to access data on it. They should also use a private network at home and a virtual private network (VPN) whenever connecting to a public network. Using a public network at a coffee shop or restaurant makes you easy prey for attackers to snoop and see everything you are doing on the network. They can see all the sites you visit and everything you type on an online site, such as your login credentials. The right VPN will encrypt all traffic so even if attackers manage to snoop on your online activity, all they would see would be intelligible gibberish.

Dell SecureWorks, a global information services security company, helps organizations of all sizes reduce risk, improve regulatory compliance and lower their IT security costs.

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What It Takes To Manage Up & Manage Down: Five Key Points for Management By Dana Borowka, Lighthouse Consulting

we often get inquiries from companies wanting to know what it takes to manage up and manage down in order to: • Improve relationships, communications, efficiency, and productivity • Raise the bar on reducing waste • Increase the flow of ideas for better work flow • Enhance customer interaction and product or service design and improvement. So, we developed a workshop titled, Cracking the Personality Code: Managing Up and Managing Down – Communication Opportunity of a Life Time! We thought we’d share some key points on this huge topic: Teams should consider the following quote from Albert Einstein: “The significant problems we have today cannot be solved at the same level of thinking with which we created them.” We need to be receptive to consider how we have done things in the past and when things need to change in order to stay current. Remember the Rolodex cards? Even the good old fashioned light pole is being changed out for the more modern version that does not pollute, uses solar electricity, notifies central head quarters through a wireless device when it needs service, and is quicker and less expensive to install.

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A Strategy with Stress. Each team member needs to deal with one key element of miscommunication… stress! If we are just reacting without a strategy or a tactic to execute then we are doing no better than running in circles. Stress or “fear” can cause us to shut down and reduce our capacity to listen. An excellent team exercise to understand how stress manifests within the work environment is to have the team members draw a picture of what each person feels they

Big Times Magazine | May/June 2015


look like when under stress and write out some key attributes when staff members are under pressure and when they are feeling relaxed. Here are some questions to facilitate a discussion: How do your team members manage stress? Do your team members support each other when under pressure? What would be helpful when under stress?

Communication and empathy are crucial to developing a successful interpersonal relationship. The more you reach out with a plan in mind that is based on listening and openness, the more ideas will flow to you on how to best manage up and manage down.

Be Like an Ostrich. The old tale that ostriches bury their head in the sand just isn’t true. What they are really doing is resting their heads on the ground which allows them to pick up on vibrations so if a predator is near by they can protect themselves. Ostriches are actually excellent listeners! We all need to be like an ostrich and become outstanding listeners. One way to develop your listening skills is to practice active listening where you paraphrase what you think the other person is saying to you. Get to Know Who You are Dealing With. List out those you consider to be “A” players and identify three key traits. Then do the same for “B” and “C” players. Look for commonalities and develop a strategy for how to approach each person in order to communicate in a way that is most effective for everyone. Create a Communications Plan. Here is a team exercise to focus on communication – briefly answer the following questions: a. How do you listen… if at all? b. What are three things that haven’t worked for you when communicating in the past? c. What are three things that have worked? d. What would you like your team members to do that they aren’t doing? e. What are some baby steps to improve your listening and communication style?

About the Author

Dana has over 25 years of business consulting experience and is a nationally renowned speaker, radio and TV personality on many topics. He provides workshops on hiring, managing for the future, and techniques to improve interpersonal communications that have a proven ROI. You can reach Dana at 310-453-6556, ext. 403 or by emailing him at dana@ lighthouseconsulting.com. He is the co-author of the books, “Cracking the Personality Code” and “Cracking the Business Code”. To order the books, please visit www.lighthouseconsulting.com.

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Now that we are midway through Summer 2015, we thought it would be interesting to share some fun facts about one of our four favorite holidays of the year. We discovered an awesome website, Random Facts (http://facts.randomhistory.com/), which gave us more information than we needed. So go out and enjoy the pool, ocean, and/or lake. Grab a burger, pop a cool one, and astound your friends and family with your wealth of knowledge about summer.

The word “summer” is from the Proto-Indo-European root *sam-, meaning summer. The root *sam is a variant from the Proto-Indo-European root *sem-, which means “together/one.”

The “dog days of summer” refer to the weeks between July 3 and August 11 and are named after the Dog Star (Sirius) in the Canis Major constellation. The ancient Greeks blamed Sirius for the hot temperatures, drought, discomfort, and sickness that occurred during the summer.

Summer is the by far the busiest time at movie theaters, and Hollywood always hopes to earn a significant portion of total annual ticket sales through summer blockbuster months. To date, the top 5 most famous summer blockbusters of all time are: 1. Jaws, 2. Star Wars, 3. Jurassic Park, 4. The Dark Knight, 5. Raiders of the Lost Ark

• The Eiffel Tower is 6 inches taller in the summer than in the winter. In the summer heat, the iron expands, making the tower grow. • The month of July was named in honor of Julius Caesar. The month of August was named for Julius Caeser’s adopted nephew Gaius Julius Caesar Octavius, who held the title “Augustus.” He named the month after himself. • Summer babies are statistically less likely to perform well in school, are more likely to be diagnosed with ADHD and are less likely to become CEOs. Because summer babies are typically the youngest children in each school class, their relative immaturity can affect the quality of their education.

• The first Olympic Games in the modern era were the 1896 Summer Olympics, officially known as the Games of the I Olympiad in Athens, Greece. The Games featured the Panathinaiko Stadium, the first giant stadium of the modern world that housed the largest crowd to ever watch a sporting event. • Before the Civil War, schools did not have summer vacation. In rural communities, kids had school off during the spring planting and fall harvest while urban schools were essentially year-round. The long summer holiday didn’t come about until the early 20th century. • According to Rolling Stone, the top 3 best summer songs of all time are: 1. Dancing in the Street by Martha & The Vandellas, 2. Summertime Blues by Eddie Cochran, 3. School’s Out by Alice Cooper



THERE MAY BE SEVERAL INSURANCE COMPANIES AND REINSURANCE COMPANIES WITH “BRAND NAMES” THAT MAY HAVE SOLVENCY ISSUES. RETAIL BROKERS AND AGENTS OWE THEIR CLIENTS A DUTY TO KNOW WHO IS AND WHO IS NOT A PROBLEM

Many of you may know of several large carriers who write billions of property & casualty premiums who have billed themselves “solvent” in the past. It is incumbent upon all of you to know who is and who is not “solvent”. I cannot, nor will I name any names in this article. However, a simple checklist can save you a lot of future headaches and potentially a loss of a great client. Check the AM Best ratings. Check the Standard & Poor (S&P) ratings. Check the ratings by Moody’s. Check the WEISS ratings. Check the LACE Financial Corp. ratings. Check the National Association of Insurance Commissioners website. Read articles about upgrades and downgrades on the insurers and reinsurers. If you see a string of downgrades over a period of time (months, quarters, years, etc.) if might be time to alert your client and make a change. If you see articles that note discussions with regulators, that is a red flag. If you see carriers that are being constantly and repeatedly fined by regulators, that is a HUGE read flag. (The crowd whose claims adjustment and payment philosophy is “deny, delay and not don’t pay” is a prime example.) If you see constant articles about these carriers and reinsurers in credible publications (publications unlike News Corp.’s Dow Jones, Inc., Wall Street Journal or Barron’s that don’t engage in “yellow journalism”) that are not positive, stop and ask yourself why are these articles appearing constantly?

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One new issue I have just encountered that has the attention not only of regulators, but also law enforcement is reporters and analysts who are “bribed” by interested parties to write positive

Big Times Magazine | May/June 2015

or negative articles about companies with the intent to increase the value or decrease value of their or their parent’s stock price. Four hedge funds apparently did this both with analysts and reporters and they are all under a cloud of investigation now. (I hope they are make an example out of as many of these characters as possible as this type of illegal and criminal behavior undermines the sanctity our all of our markets. Much worse it makes you and I look bad, even though we try and operate correctly, properly and within the confines of the laws of the venues we do business in. There is a lot of press around some select carriers now who may or may not be insolvent. I’m not here to render an opinion. Nor am I here to give a blow by blow analysis that some smart guy 25 year old MBA who has never taken risk with his or her own money, nor have they ever seen a recession of any length or global depression might try and argue my own personal bias. Or they may try and argue I have an “ax to grind” by helping a client or someone I do business with. I won’t walk that tightrope. What I will say is normally where there is smoke, fire is not far behind. I invest in financial stocks and make private placement investments too in financials. I like insurance and reinsurance companies, as I understand them well and they have been my life and a primary source of income since my college days ended in 1982. I also like banks and other financial companies. Make no mistake. I’ve misread a few financials be-


fore and I have lost money. Any investor worth his salt and who has experience is alive with a pulse and taking risk with his own money for more than 5 minutes has lost money. That includes Warren Buffet, Bill Gates, Hank Greenberg, Sanford Weill, John Neff, Ben Graham, Marc Farber, Bill Gross, Felix Zualoff, David Dremen, Jamie Dimon and a host of others. No one is perfect and a loss in securities is inevitable, NO MATTER HOW GOOD YOU THINK YOU ARE. In 2008 and 2009 through today in 2015, I learned some real world lessons about going into markets too soon and about credit default swaps, special purpose vehicles and many “off-balance sheet” mechanisms designed to “juice and increase yield and returns”. Trust me there is NO FREE LUNCH. In bull markets those mechanisms work great. In bear markets, recessions and global depressions they can kill you. And will. I caution you all to read publications that are credible, watch CNBC, MSNBC and others. Stay away from publications that create and further “yellow journalism.” “Yellow journalism” is not limited to Democrats or Republicans; Independents; radicals or passives. These clowns are everywhere. Many of these journalists are corrupt and “on the take” in some way. Many have personal and interpersonal relationships that cloud not only their judgment, but their reporting and analysis moral compasses. Be aware of it. Know it. Understand it. Filter it. And NEVER accept it!

as they are so far gone there is no hope of returning to profitability. Some will be revealed to be Ponzi schemes that just created cash flows to support a lifestyle of a CEO, Board of Directors or controlling shareholders, that had they properly priced their risks using “risk-based capital underwriting” would never have shown a profit, SAP, GAAP or otherwise. And thereby the lifestyles never would have been led. This type of behavior is not new. It is not a result of “bad regulation” or “loose regulation”. It is not the result of laws like Glass-Steagall being repealed or Dodd-Frank. It is the result of the criminal mind and criminal behavior. (You can try and deter this type of behavior. You cannot stop someone who is intent upon defrauding innocent bystanders.) It is a result of greed, avarice, envy and jealously. (Folks I am not playing shrink here, but I am a marketer and I do understand human behavior.) Some of this also can be attributed to stupidity and gross incompetence. It may also be due to ineptness. Most of it is really fueling production to create bonuses, stock options and increased personal revenues. Again fueling a lifestyle they want to lead, but cannot afford to lead if they do it correctly.

There are insurers and reinsures today, who were once mighty and strong. 2008 and 2009 through today in 2015 have reduced them to a shadow of their former selves. There are firms today who “cash flow underwrote” with cheap prices. Sometimes so cheap, they were 50% or less of what true “risk-based capital underwriting” required them to be. They know who they are and most of you know who they are.

Pay close attention to companies with a lot of bank debt or bond debt. If a company has $4B in debt, with a 10% coupon interest rate, it takes $400M every year to meet just the interest payment. If they write $4B in premiums, and they have to suck off $400M to pay interest (forget about the retirement of the principle outstanding), they have to operate at 90% combined ratios BEFORE THEY MAKE $1. Check and see how many p/c carriers or reinsurers worldwide, who operate now at 90% combined ratios, especially in “soft markets”. I like to see carriers operate at 93% combined ratios, with premium to surplus ratios of 2% to 2.5%. 90% is great but it is not easy to do it.

Most did not survive 2008, 2009 and 2010. Some were acquired. Some were merged with a “shotgun” marriage like when Bear-Stearns was forced into JP Morgan/Chase’s arms. Some will be conserved by Dept’s of Insurance (DOI’s). Some will be rehabilitated. Some will be outright liquidated

I wish you all the best and if you ever have a question on this point please ask me. I’ll try to respond and give you a candid answer. I will NOT name names or give you information that may cause a “run on the bank of policyholders” thereby causing an insolvency of an insurer or reinsurer

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that otherwise could have been avoided. There are some companies who have just fell on hard times and are really well managed. Left alone and allowed to work through the problems, they will be fine and will become great firms again. This article is NOT targeted at them. 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. His background focused on reinsurance in both USA and tax haven venues. Stephen has worked in the insurance business and related businesses since 1981. Stephen also has owned controlling interests in 3 managing general agencies in CA and GA. Contact him at (310) 305-0459 or ssantoro@ stephensantoro.com.

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