Alabama Independent, 2016 Issue 1

2016 - ISSUE 1

INDEPENDENT

alabama

120th Annual AIIA Convention & Trade Show

The Changing of the Tides June 8-10, 2016

In the movies, it’s thrilling when the little guy finds a way to win big.

In the ISU Network…it happens every day.

Okay, as a member of the ISU Insurance Agency Network, you aren’t exactly a little guy. You don’t have a downtown skyscraper, but you can compete with those that do. 

You maintain complete independence, yet are part of an organization of 160 established and successful independent agencies with combined premiums over $2 billion.



You have access to over 350 carriers, meaning broader coverages for existing clients and multiple avenues for new business development.



You are part of a coast-to-coast community that shares proven ideas and provides solutions to difficult challenges.

And to make victory even sweeter, you receive performance incentive income that averaged $57,400 last year and is trending upward by about 25% annually.

INSURANCE AGENCY NETWORK 2

Helping Independent Agents Stay Independent for Over 35 Years

Let’s talk about ISU member victories, competing locally, regionally and nationally. www.JoinISU.com

In 2016, ISU will add new carriers and new qualified agents in the Carolinas. For an exploratory discussion of the ISU model...

Call Jack O’Connell Regional Vice President (704) 771-9597

BURNS &

PARTNER, NOT COMPETITOR

WILCOX

WHOLESALE IS OUR MIDDLE NAME. Free of retail divisions, ownership or even affiliations, we never cross the line between wholesaler and competitor. Your best interests always come first, keeping the focus on growing your business. Don’t compromise. Partner with the leader who works with you instead of against you — Burns & Wilcox.

Birmingham, Alabama | 205.988.9650 toll free 800.888.1179 | fax 205.988.3073 birmingham.burnsandwilcox.com

Commercial | Professional | Personal | Brokerage Binding | Risk Management Services

2016 Issue 1 | Alabama Independent

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2016 - ISSUE 1

alabama

INDEPENDENT

alabama

2016 • Issue 1

INDEPENDENT CONTENTS

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15 120th Annual AIIA Convention & Trade Show

The Changing of the Tides

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June 8-10, 2016

Alabama Independent Insurance Agents, Inc. 141 London Parkway Phone: 205-326-4129 | Fax: 205-326-3086 | www.aiia.org Executive Vice President: Bill Sager, CIC Editor: Michelle McKee

LEADERSHIP & STAFF AIIA OFFICERS President : Richard Pardue, CIC Birmingham President Elect: Jeff Hogg, CPIA, CLCS Tuscaloosa

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Secretary/Treasurer: Haig Wright, CIC Jasper State National Director: Jeff Grice, CIC Jasper Immediate Past President: Jean Ann Rittenour, CIC, CISR, CPIA, CPIW Montgomery

6 6 8 10 14 15-18 19 20 23 24 25 26 27 28 28 30 30

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First STEP Sponsors AIIA Save The Date Letter from the AIIA President, Richard Pardue, CIC Letter from the AIIA EVP, Bill Sager, CIC InsurPac 2015 Contributors 120th Annual AIIA Convention & Tradeshow Section Big I PAC Contributors Buy Your Way To Growth - What You Need to Know 2016 Outstanding CSR of the Year Award Promo Ted’s Tablet Q & A Education Calendar BIIA Donates $10,000 to Russellville Dream Center AIA Launches Exclusive Commercial P&C Program Seen & Heard Welcome New Members SIU Introduces Active Shooter Insurance TPI Announces New Poultry Program

Alabama Independent | 2016 Issue 1

BOARD OF DIRECTORS District 1 Larry Crosby, CIC - Brewton Michael Sullivan, CIC - Foley C. Todd Thomas - Montrose District 2 Steve Mullis, CPIA - Montgomery David Peel, CIC - Montgomery District 3 John H. Dark, CIC, AAI - Alexander City Steve Sprayberry, CIC - Sylacauga Brad Young, CPIA - Anniston District 4 Stacey Waldrep - Boaz Wayne Walker - Hamilton District 5 Kelly Aday - Lexington Susanne Grimwood, CIC, CISR - Huntsville Connie Waldrip, CISR - Huntsville District 6 William Jacka, Jr. - Birmingham Evelyn Burchfield, CIC, CRM, AAI, AIS Birmingham

Russell Greenhalgh, CIC - Birmingham Mary Hall - Birmingham Mark Hughes, CIC, CPA, CPIA, CISR Birmingham District 7 Kevin Myrick - Tuscaloosa Young Agents C.D. Denson - Homewood Past President Jere Peak - Selma AIIA STAFF Executive Vice President: Bill Sager, CIC Director of Education: Ted Kinney, CIC, CPCU, ARM, CPIA, AAI, AU, CISR Director of Communications & Member Services: Michelle McKee Director of Education Administration: Tangerie Underwood, CISR, CPIA E & O Administrator: Carol Hunt, CPIA Accounting Supervisor: Irene Smyly Director of Meetings & Events: Nancy Crowe RLI Administrator: Tangerie Underwood, CISR, CPIA Printing & Mailroom Coordinator: Waymon McIntosh Office Manager: Michelle McKee

ADVERTISER INDEX

PUBLICATION INFORMATION

AIA 31 Berkley Southeast 7 Burns & Wilcox 3 Centauri Insurance 5 EMC Insurance Companies 9 FCCI 25 ISU 2 Johnson & Johnson 12-13 SIUPREM 29 Southern Insurance Underwriters 32 Summit Consulting 29 The National Security Group 27

The Alabama Independent is the official magazine of the Alabama Independent Insurance Agents, Inc. Association (AIIA), and is published quarterly by Blue Water Publishers, LLC. AIIA does not necessarily endorse any of the companies advertising in this publication or the views of its writers. AIIA reserves the right, in its sole discretion, to reject advertising that does not meet AIIA qualifications or which may detract from its business, professional or ethical standards.

The publisher cannot assume responsibility for claims made by its advertisers, content provided by the editor, or the opinions expressed by contributing authors.

For information on advertising, contact Jim Aitkins, Blue Water Publishers, 360-805-6474 or jima@bluewaterpublishers.com.

, x a l Re labama.

A

We’ve got you covered.

When unpredictable weather strikes, residents of Alabama need more than the usual kind of insurance products. Count on Centauri Insurance to provide peace of mind when your customers need it the most.

Homeowners I Dwelling Fire I Tenants I Flood

centauriinsurance.com 2016 Issue 1 | Alabama Independent

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FIRSTSTEP

AIIA thanks the following sponsors for their support and participation in the First STEP program. AIIA’s First STEP program is your first step to involvement with independent agents in Alabama. For more sponsorship information or to sign up as a sponsor, please contact Nancy Crowe at 205-326-4129 or visit our website at www.aiia.org.

$20,000

Alabama Insurance Management Services The Sheffield Fund

$15,000 Your name here

$10,000

Cornerstone National Insurance

$7,500

National Security Fire & Casualty

$5,000

Alabama Trucking Association WCSI Fund Centauri Insurance

$2,500 Alabama Self-Insured WC Fund AlaCOMP American Mining Insurance Co Auto-Owners Insurance BAMA Berkley Southeast Insurance Grp CRC Insurance Services Donegal Insurance Group EMC Insurance Companies Enterprise Rent-A-Car

Frankenmuth Insurance Genesee General Insurance House Penn National Insurance Progressive Sagamore Insurance Company Sentry Insurance Southern Insurance Underwriters/ SIUPREM TheZenith

We Thank You! 6

Alabama Independent | 2016 Issue 1

AIIA

Save The Date Excalibur Education Foundation Clay Shoot April 15 Selwood Farms

Troy University RMI Golf Tournament April 25 Wynlakes Country Club

MIIA Annual Spring Golf Tournament & Social May 5 Wynlakes Country Club

HIIA Trusted Choice Walk

May 7 Big Spring Park Downtown Huntsville

AIIA Annual Convention June 8-10 Hilton Sandestin Beach Golf Resort & Spa

Young Agents Annual Summer Conference July 28-30 Hilton Pensacola

Young Agents Committee Day August 17 AIIA Office

AIIA Committee Day August 18 AIIA Office

Big I PAC Golf Tournament September 20 Prattville Country Club

Fall Education Conference & Trade Fair October 20 AIIA Office Hosted by Small & Rural Agents Committee

I-Day

November 9 University of Alabama

BER K L EY S OU T H E A S T IN S URA NC E G ROU P ANNO U N CE S L A U NC H O F B S IG A DVA NTA G E Creative Solutions for Small Businesses BSIG Advantage provides a simplified solution for writing your small business customers through access to our proprietary online rating system. BSIG Advantage provides comprehensive, flexible coverage that can be written on a Package or on a monoline basis.

Comprehensive Coverage With over 400 eligible classes in 8 market segments, we have the right product to fit the needs of your small business clients.

Fast and Easy Online binding for eligible classes makes placing business easier than ever!

Best of All Our agents and policyholders will continue to receive the same outstanding products, services and solutions, from our local underwriters, claims professionals and risk services specialists.

WAN T TO KN OW M OR E ?

Please contact:

Kay Hall Territory Manager 205-994-3679

Berkley Southeast Insurance Group is a member company of W. R. Berkley Corporation, whose insurance company subsidiaries are rated A+ (Superior) by A.M.Best.

Products and services are provided by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued.

berkleysig.com 2016 Issue 1 | Alabama Independent

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Richard Pardue, CIC AIIA President

Your association continues to do well, from finances to committee meetings with input from our membership. We appreciate the time and resources that each of you contribute to continue our quest for unity and to make AIIA the very best association in the nation.

Our 120th Annual AIIA Convention & Trade Show is coming June 8 – 10, 2016 at the Hilton Sandestin Beach Golf Resort & Spa. We hope this year’s schedule and topics will be of great interest and benefit to all members.

You will arrive on Wednesday in time for The Kids Night out and the Welcome Reception, Sports Buffet (so, feel free to wear your team’s jersey or colors). We will also have the new and improved Trivia Game.

Thursday’s schedule is somewhat different from previous years. Starting at 7:30, we will have a continental breakfast and educational session on Agency Valuation and Perpetuation. With the average age of agency principals around 55, this is certainly a timely topic. From 11:00 to 2:00 will be the Trade Show with lunch on the Trade Show Floor. The rest on the day is on your own or join others on the beach for the Corn Hole tournament or some Volleyball fun.

On Friday, from 9:00 to 11:30, we will start with Brunch and then move into the Annual Business Meeting, Election and Installations.

We are fortunate that Spencer Houldin, 8

Alabama Independent | 2016 Issue 1

IIABA Chair-Elect will speak and afterwards we will conclude with Recognitions and Awards. In the afternoon, those that choose can reconvene for the Corn Hole playoffs and again Volleyball will be available. Starting at 6:30, we will convene for the Closing Reception and Seated Dinner. The honored Insuror of the Year award will be presented and your new President will assume leadership. Our entertainment will be Steve Haffner, a Mentalist who promises to be both entertaining and leave you spellbound. At the end, we will have the Draw Down. Hopefully you will be a big winner.

As you can see, there are great things lined up for everyone. So, don’t delay in registering (with reduced fees available) and enjoy the convention. We need and want you to be there and be involved in your association.

As always, we could not do what we do without our sponsors and contributing associate members. We are thankful and grateful for each ones contribution. Please join in thanking them as you see them.

Henry Ford once said: “The man who will use his skill and constructive imagination to see how much he can give for a dollar instead of how little he can give for a dollar is bound to succeed.”

Best regards to all and hope to see you at Convention!

Provide more than protection for your clients. Offer them the added value of EMC’s no-fee loss control services, which could help reduce the cost of their insurance. It’s just one of the many reasons policyholders Count on EMC ®.

BILL STULTZ Senior Risk Improvement Representative EMC Birmingham Branch

REDUCING LOSSES ADDS

VALUE FOR CLIENTS. BIRMINGHAM BRANCH OFFICE Phone: 800-239-2005 | Home Office: Des Moines, IA

www.emcins.com © Copyright Employers Mutual Casualty Company 2016. All rights reserved.

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Bill Sager, CIC

AIIA Executive Vice President

As we complete the first quarter of 2016

As we look farther down the 2016 highway,

things are running well at your association.

we are excited about our annual conven-

We were saddened to accept the resignation

tion in June and the Young Agents Confer-

of Alison Ray, Director of Member Services

ence in July. Your current President, Richard

and Communications. Alison accepted a

Pardue has done an excellent job in planning

position with a local agency to assist them

the annual meeting. The Young Agents are

with their marketing and growth plan. Alison

putting the finishing touches on their meeting

did an excellent job for 15 years as an AIIA

and it looks to be an outstanding line up. I

employee. She contributed positively in

want to extend a special invitation to you to

many ways to our Association and we wish

attend whichever meeting is right for you.

her nothing but the best in her new position.

Now, she will be able to attend our functions

As you plan the remainder of your year, I

and won’t have to work behind the scenes!

hope you will look to participate in many of the opportunities provided by AIIA. Whether

Michelle McKee, our office manager, has

it is educational opportunities, networking

accepted the position of Director of Member

events, finishing your CE requirements or

Services and Communications. The office

conventions our goal is to provide quality

manager position required one to work with

events that can assist you in your business

every area within our association. Michelle

as you go through your days and weeks. We

brings a strong background to the position as

are open to suggestions for new events or

she will continue to work with our member-

improvements to our existing activities. Our

ship going forward.

goal is to support the membership and their needs. Your feedback is always helpful.

The current legislative session began on February 2nd. It has been a very busy one

I am looking forward to a great 2016, as

and we have several bills we are monitoring.

I’m sure you are. Together we can make it

You should have received the legislative

happen!

summary by email. As always contact me with any questions.

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Alabama Independent | 2016 Issue 1

Get To Know Big “I” Flood Together, Big “I” Flood and Selective deliver members an unparalleled flood program. With personalized support, competitive commissions, and an easy-to-use quoting platform, it is an easy decision to start writing your flood business through the Big “I” Flood program with Selective.

As a Big “I” member, writing your flood book of business through Selective gives you access to: •

Experienced and dedicated underwriting teams who are well-versed in the legislative changes tied to the Biggert-Waters Act of 2012 and Homeowner Flood Insurance Affordability Act of 2014.

•

Selectiveflood.com, an agency portal offering real-time processing along with reporting capabilities to help manage your book of business effectively and efficiently.

•

A dynamic Online Marketing Portal​ offering complimentary and tailored marketing solutions ranging from co-brandable flyers, brochures and postcards to custom eMarketing campaigns, pre-recorded radio spots, commercials and more.

•

Skilled Territory Managers​ who travel the country facilitating Continuing Education (CE) classes, providing the knowledge and expertise needed to effectively speak flood.​

Beyond the immediate benefits you’ll enjoy when participating in the program, your flood business supports the important flood government advocacy work of IIABA. The Big “I” works tirelessly to ensure your interests as independent insurance agents are well represented on Capitol Hill. And, your support of the Big “I” Flood program with Selective helps the Big “I” better serve you!

Big “I” government affairs efforts contributed to the reauthorization of the National Flood Insurance Program (NFIP)​ and the independent insurance agent representation in the Homeowners Flood Insurance Affordability Act of 2014 (also known as HFIAA or Grimm-Waters 14).

It is through production generated from Big “I” Flood appointed agents that Selective provides financial resources supporting legislative advocacy efforts on behalf of independent agents, by promoting NFIP reform and sustainability.

By placing your agency’s flood book of business with Selective, you will enjoy competitive commissions while working with one of the most experienced and dedicated carriers in the marketplace.

Selective is also the only insurer that directly supports the Big “I” national and state advocacy efforts in Congress and with the NFIP. United, we can help independent agents have a strong voice of flood insurance, by placing more business through the Big “I” Flood program.

Learn more at www.iiaba.net/Flood.

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InsurPac 2015 CONTRIBUTORS Many thanks to those who contributed to the IIABA political action committee; Alabama met, and exceeded our 2015 goal!

SPONSOR LEVELS: ^ $1,000 Centennial Club ^ $150 Founders Club Kelly Aday – YA Sam Newton Insurance Agency Monica Aday – YA Sam Newton Insurance Agency Joseph Bennett – PC Cousins Insurance Agency, Inc. Casey Bentley – O Rux Carter Insurance Agency Raymond Best – FC Best Insurance Agency, LLC George Boohaker – FC The Insurance Network, Inc. Kathy Brown – PC Sam Newton Insurance Agency Evelyn Burchfield – O McGriff, Seibels & Williams, Inc. Mark Calhoun – PC McGriff, Seibels & Williams, Inc. John Dark – PC Dark Insurance Agency C.D. Denson – FC Stead & Fuller Tim Donahue – O Fitts Agency, Inc. Jerry Dubose – YA National Security Fire & Casualty Mike Evans – FC Haleyville Insurance Center Forrest Fitts – O Fitts Agency, Inc. J. David Fitts – O Fitts Agency, Inc. 14

^ $500 Gold Club ^ $250 Pioneer Club ^ $100 Young Agent ^ $149 (or less) Other

John Freisen – PC Fountain, Parker, Harbarger & Associates Joe Fuller – CC Stead & Fuller Vickie Fuller – GC Stead & Fuller Art Glasgow – FC Peck-Glasgow Agency, Inc. Jeff Grice – CC Lacy Grice Insurance Agency Jeff Hogg – GC Fitts Agency, Inc. Steve Hoggle – O Woodall & Hoggle Insurance Agency Joni Holt – GC Holt Insurance Agency Charles Horton – O Fitts Agency, Inc. Marvin Hughes – YA O.M. Hughes Insurance Jay Ison – GC Thames Batre, Ltd. Mark Landers – PC J. Smith Lanier & Co. Harry Mattei – GC Thames Batre, Ltd. Ken McFeeters – PC PAC Insurance Agency, Inc. Boyd McGehee – PC Talladega Insurance Agency

Alabama Independent | 2016 Issue 1

Vicki Mullino – O Cousins Insurance Agency, Inc.

Todd Roberts – YA Talladega Insurance Agency

Steve Mullis – O The Whitecotton Agency, LLC

Bill Sager – GC AIIA

Jim Murphree – GC Jim Murphree Insurance Agency

Betty Salter – O Salter Insurance Agency

Sam Newton – PC Sam Newton Insurance Agency

Chase Sims – YA Winfield Insurance Center

Keith Nobles – O Cousins Insurance Agency, Inc.

Matthew Sims – YA Your Insurance Centers, Inc.

Taylor Norton – FC South Shore Insurance Agency

Ricky Sims – PC Your Insurance Centers, Inc.

Richard Pardue – GC Pardue & Associates Insurance, Inc.

Shane Sinquefield – GC Flowers Insurance Agency, LLC

Jere Peak – PC The Morris Agency

Frank Smith – O Sentry Insurance

David Peel – FC Colonial Insurance Agency, Inc.

Steve Sprayberry – PC Wright-Sprayberry Insurance LLC

Karl Peterson – FC Argos Group

Michael Sullivan – O South Shore Insurance Agency

Geoff Plott – PC USI Insurance Services

George Thompson – GC Thompson Insurance, Inc.

Eddie Pruett – PC Blackbelt Insurors Inc.

Connie Waldrip – PC Fountain, Parker, Harbarger & Associates

Mandy Rabren – YA Insurance Place Joanne Reed – FC The Sheffield Fund Perry Reynolds – PC Dormon & Reynolds Insurance, Inc. Jean Ann Rittenour – FC Palomar Insurance Corporation

Wayne Walker – PC Walker Insurance Agency Lisa Worley – PC Anchor Insurance Agency, Inc. Haig Wright – PC Byars | Wright, Inc.

THANK YOU!

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Alabama Independent | 2016 Issue 1

Thanks to our 2015 Big I PAC Contributors AIIA would like to thank all of our agency members who contributed to the Big I PAC in 2015 by contributing the voluntary amount on your dues billing. Your generous contributions to our state political action committee assist our legislative efforts in trying to keep Alabama’s government and judicial bodies filled with fair-minded, pro-business candidates. As you know, AIIA supports different election campaigns each year that help us with favorable legislation.

Thanks to the efforts of your contributions, your support of the Big I PAC Golf Tournament and your votes at the polls, we are a living testament to how well grassroots efforts can bring about change.

Contact us if you have any questions on how you can contribute to the Big I PAC!

Alabama Insurance Exchange, Inc.

Holt Insurance Agency

Salter Insurance Agency

Allison Agency, Inc.

Howell Insurance Agency

Sam Newton Insurance Agency

Anchor Insurance Agency, Inc.

Hull & Associates, Inc.

Sanbuck, Inc.

Associated Insurors

IL Group

Schrader - Broughton, Inc.

The Baxter Agency

Insurance Center of Southeast

The Service Agency

Beacon Insurance Group

The Insurance Network, Inc.

Sinclair Lawrence & Associates

Best Insurance Agency, LLC

Jim Murphree Insurance Agency

Solomon Insurance

Best Rate Insurance Agency

John A. Robertson Insurance Agency, Inc.

Southeast Insurance & Real Estate, Inc.

Blackbelt Insurors, Inc.

J.R. Prewitt & Associates, Inc.

Southern Alabama Insurance Agency

Brewton Insurance Agency & Real Estate

Judy Carter & Associates, LLC

South Shore Insurance Agency

Byars | Wright, Inc.

Kerry Wilson Insurance Agency

Starke Agency, Inc.

CIS Financial Services

Lacy Grice Insurance Agency

Stastka Insurance Agency

Commercial & Marine Insurance Brokers, Inc.

Lori Zucco Insurance, LLC

Stead & Fuller

The Cone Company

Mailon Kent Insurance Agency

Stephen A Davis Insurance, Inc.

Conour Insurance, Inc.

Marengo Insurance Agency

THI Insurance, Inc.

Cousins Insurance Agency, Inc.

McGriff, Seibels and Williams, Inc.

Thomas, Harrison & Associates

Dark Insurance Agency

Milstead Insurance Agency, Inc.

Thompson Insurance, Inc.

Davis & Davis Insurance

M.J. Carter & Company, Inc.

Tommy Pugh Insurance Agency

Deas Insurance Agency, Inc.

MWA Insurance Holdings, Inc. dba Insurance Place

The Upton Group, LLC

The Norwood Agency

VIG, LLC dba The Vestavia Group

Dormon & Reynolds Insurance, Inc. Elliot & Associates Insurance Enterprise Insurance Services LLC The Eversure Agency Fowlkes & McPherson Freedom Insurance Agency Galactic Insurance Services The Whitecotton Agency, LLC Harmon Dennis Bradshaw, Inc. Headland Insurance Agency Hicks & Associates, Inc.

Pardue & Associates Insurance Inc. Parnell Insurance Agency Paul Carter Agency Pelican Insurance Agency Ragland Agency, Inc. RIA Bonds, Inc. Roger Henry Insurance, LLC The Roux Company LLC

USI Insurance Services Vintson Insurance Agency Walker Insurance Agency West Insurance Agency The Witherington Insurance Group Woodall & Hoggle Insurance Agency Your Insurance Centers, Inc. Your Insurance Solution of Florence

Rux Carter Insurance Agency 2016 Issue 1 | Alabama Independent

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BUY YOUR WAY TO

GROWTH

What you need to know about acquiring another agency.

By Robert J. Pettinicchi In today’s demanding business climate, agencies have two options: grow and prosper, or just stay the course. But how to grow? Most agencies can grow organically, through plain old hard work, methodically attracting more clients and perhaps expanding markets. A few, however, accomplish it quickly, by acquiring another agency. In fact, hundreds of sizable independent agency mergers were recorded last year alone. Is a merger or acquisition in your agency’s future? Here are important considerations to help you craft a deal to your advantage.

WHY CONSIDER A MERGER OR ACQUISITION? It’s all about creating value. Any proposed acquisition should help you create value in the agency for its owners and provide greater value-added to your clients. Larger agencies typically have more access to markets, can specialize, and may have a broader geographic reach. Therefore, an acquisition might be an appropriate way for you to efficiently: • Add qualified staff, functionality, or industry knowledge • Access more clients, or a new market • Increase market share • Reduce competition All of which should lead to enhancement of the value of your agency. Remember, however, that it is “better to be excellent than to be big.” You should not consider growing through acquisitions unless your existing agency is in good order. In particular, pay close attention to your agency’s financial health.

Maintaining a proper working capital position and reasonable debt load are two places to start. Other challenges for agencies continue to be managing compensation, utilizing technology, and finding and retaining the right people. There are a number of very qualified industry-specific consultants that can help you to get your agency humming. You may also want to see how your agency “stacks up” against other similar agencies by reviewing “Best Practices” data.

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Alabama Independent | 2016 Issue 1

IDENTIFY A TARGET The best target agency may be across the street, across town or across state, however, don’t expect the ideal target to drop into your lap. Most mergers and acquisitions evolve slowly and are the result of months or even years of talks.

Your top competitor may be your best target because you have a strong suspicion who their top clients are and who their most reliable markets are. Chances are you’ll have to do some networking and kick the tires on the deal before it all falls into place. Industry associations, insurance carriers, and consultants are good places to start when seeking potential candidates.

Characteristics that may point to a viable agency target are those with aging principals with no readily apparent perpetuation path or agencies in a stagnant growth position.

Remember that the hard market has enhanced the value of most agencies. Don’t expect to find a bargain.

Next, ask yourself how a merged operation may look. Do you think there is a chance that the two firms can be successfully integrated into one from a financial, cultural and human resources perspective? If not, that target may not be a proper fit. Remember, time is money; the longer it takes to successfully meld the combined enterprise will dramatically impact the chances for success (and ultimately the opportunity for enhancing value).

OPEN TALKS You’ll want to spend time with a target agency’s principals.

Consider the desires of the selling party. Does the seller expect to stay in the business in some capacity? Does he or she want to ride off into the sunset with the most cash now? Is it possible to strike a deal based on retention? Is some degree [Continued on page 22]

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[Continued from page 20]

Is a merger or acquisition in your agency’s future?

of seller financing available?

Be open and honest about your plans for the agency. Keep in mind that you are dealing with someone’s life-long pursuit. Don’t underestimate the amount of feelings and ego that may be present during negotiations.

Explain why you are interested, what your vision of the future is, and the potential opportunity for current owners.

AUDIT THE FINANCIALS Ask for three years of fiscal year end financial statements from the target agency’s management system and a current interim statement with a comparison to the previous year. Get an overall production report by business line and carrier. Ask for production reports from all of the major carriers and get copies of the carrier agreements as well.

Also, obtain an employee census with compensation details and copies of all producer anti-piracy and non-solicitation agreements. A big red flag is the failure of the seller to produce any and all of the preceding items. While you may be asked to sign a confidentiality agreement, the items will be needed to formulate an offer.

SEEK PROFESSIONAL HELP At this point you should consult with your accountant and attorney. Don’t forget to discuss this with your banker too, unless you have been a very diligent saver or don’t need to borrow money for the acquisition.

You would also be well served to engage a consultant to prepare a business valuation.

This could help you negotiate a better deal, identify business issues to be ironed-out and it may be required or at the least, appreciated by your banker.

Many articles have been written about the advantages of purchasing assets versus stock, all cash deals versus seller financed or partially financed deals and those deals based on retention or any combination of the above. This article is not intended to provide advanced advice but is meant to point you in the right direction. Again it is best to see out the advice of qualified professionals. Don’t cut corners by choosing professionals that don’t adequately represent your needs and don’t choose professionals based solely on price. There is usually some form of tax consequence to your actions. The cost of bad advice is one that you will keep paying for over time. The attorney that handled your sister’s divorce may not be your best choice for your next strategic acquisition.

SET THE TERMS Every deal is different. And, the more astute your lender, especially about the agency business, the more financing 22

Alabama Independent | 2016 Issue 1

options you’ll have.

For starters, how much credit is your lender likely to extend to you?

Specialized lenders are better able to assess the full value of your agency, represented by your book of business. If your current lender is unwilling to provide a loan based on the value of the agency you are acquiring, you may want to look elsewhere.

Most importantly, never force the numbers. From the outset, be sure you have defined the maximum amount you can invest and still achieve an acceptable return. Don’t take on an acquisition if the adjusted cash flow of the target cannot support the debt required to buy it. And remember, the sales price is not your total cost – you have to factor in any debt you will be acquiring.

TALK TO YOUR BANK Talk to your bank and do it early. You’ll get more support and valuable advice the better your lender understands your business and your track record. Does your banker understand that insurance agencies typically have little in the form of hard assets? Would your banker be willing to make a loan that is secured solely by the agency’s book of business and its associated cash flow?

If the answer to both questions is no, then you need to consider changing banks. The best time to do so is well before an acquisition opportunity arises.

A bank that specializes in your industry is better able to serve your needs. Ask your banker: • Is the bank willing to count your book of business when determining loan collateral?

• Does the bank offer a range of terms tailored to the nuances of the agency business and help you select the ones best suited to your needs?

• Does the bank have a suite of lending and depository products designed specifically for my industry?

• Does the bank sell insurance and compete with my agency?

Pulling off a successful merger or acquisition can be one of the most rewarding exercises an agency owner can pursue.

It can also be one of the most frustrating. Be sure to put a strong ally on your team by selecting a banker that knows your agency, your industry, and who can be fair and disciplined in their analysis, yet flexible and creative in their solutions.

Robert J. Pettinicchi is chief lending officer of InsurBanc, a federal thrift dedicated to providing banking products and services to Independent Insurance Agents. Additional information about the Farmington, Conn.-based bank is available at www.insurbanc.com or by calling 1.866.467.2262.

IT’S TIME TO PROMOTE THE

OUTSTANDING CSR OF THE YEAR Award About the Outstanding CSR of the Year Award

ENTRY DEADLINE: MAY 1ST

• Established in 1991 • Represents the highest honor for customer service representatives • Sponsored by the Society of Certified Insurance Service Representatives (CISR) and the Society of Certified Insurance Counselors (CIC)—proud member organizations of The National Alliance for Insurance Education & Research

Key Messages Please incorporate into your communications—both print and verbal—the following key messages. Use them in telephone conversations, speeches, letters, news releases, etc.

Who Can Nominate?

Anyone may make a nomination, so do not hesitate to nominate an individual. You can even nominate yourself! It’s as easy as providing a name, and contact information on a Nomination Form. Even if you do not think your nominee would write the essay or could win the contest, just being nominated is often considered an honor. Once you have nominated someone, encourage him or her to write the essay. As a guide, suggest that your nominee read past winners’ and finalists’ essays (go to www.scic.com/csr_award/csr_winners_essays and www.scic.com/csr_award/csr_finalist_essays).

Who Can Enter?

Anyone, regardless of affiliation or professional designation, whose primary duties center on insurance customer service, is eligible to enter (a CIC or CISR designation is not required). It is recommended, however, that candidates have a minimum of two years experience in the industry and sufficient experience to share through their essays.

To compete, candidates must: • Be an insurance customer service representative or have primary responsibility for customer service duties.

• Complete an Entry Form including formal education; insurance-related achievements, insurance awards, honors, and affiliations; community involvement, and significant contributions to business/coworkers; and list two professional references.

• Write an essay of no more than two double-spaced pages (approximately 1,000 words) on the following topic: “Many in our industry came into insurance by chance, but have built a career by choice. How did you come into the industry, and what are four reasons you stayed and built a career?”

• Submit letter(s) of recommendation from a business/professional reference(s). These may come from the references listed on the Entry Form, or they may come from other business/professional acquaintances.

What’s the Deadline?

Nominations are now being accepted in each of the 50 states, Puerto Rico, and the Virgin Islands. To compete, the nominee must submit the completed Entry Form and essay to his/ her licensed state association by May 1st.

AWARDS State Winners Each state winner will be automatically entered in the national competition and receive a framed certificate of recognition.

These certificates provide an exceptionally professional display, featuring an elegant bronze embossed foil medallion, and framed with a double mat.

The certificates will be awarded to the state winners at their respective state’s conferment ceremony.

National Finalists Four of the five national finalists will receive a $500 cash award, a distinctive gold and garnet pin, and will be included in the national recognition campaign honoring recipients.

National Winner The national winner will receive a framed certificate of recognition, a $2,000 cash award, and a gold and diamond pin. In addition, a scholarship to a National Alliance program will be awarded to his or her employer, and the nominator of the national winner will receive a $1,000 cash award.

The national winner will also have his or her name inscribed on a plaque located in the offices of The National Alliance in Austin, Texas.

He or she will also be invited to serve on the blue ribbon judging panel the following year.

How to Promote the Contest The last page of this document is a handy reference—in small poster form—that you can hang on your wall or keep close at hand. It outlines a timeline for promoting the contest and provides many ideas for promotional activities.

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2016 Issue 1 | Alabama Independent

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Q: A:

Ted’s Tablet

QUESTION: As you may know, Ardmore, Alabama in on the border with Tennessee. There is an actual Ardmore, Tennessee, too. I have an employee who needs to be licensed for P&C in our state; HOWEVER, while she works in Ardmore, Ala., she physically lives in Tennessee.

Can she get licensed in Alabama or does she have to do so in Tennessee and apply for non-resident’s license in Alabama? ~ Bill, Ardmore, Ala. ANSWER: Our law allows a resident license for producers based on residence or principal place of business. If you are using the principal place of business in order to obtain a resident license then it would need to be done by paper application. ~ Best wishes, T Reasons to have your licensed denied or revoked…

•

Must not have committed any act that is a ground for denial, suspension, or revocation of license, as follows: o Providing incorrect, misleading, incomplete, or materially untrue information in any application or in any communication to the commissioner.

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or cancellation shall proximately result to the financial detriment of such policyholder, unless the policyholder shall have been fully advised of that fact by the licensee. o Using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business under a license in this state or elsewhere. o Improperly withholding, misappropriating, or converting any monies or properties belonging to the insurers, insureds, or others received by the licensee in the exercise of his or her license. o Violating insurance laws or violating any valid order, subpoena, rule, or regulation, issued by the commissioner or issued by another state’s insurance commissioner. o Having been convicted of a felony. o Having an insurance producer license, or its equivalent, denied, suspended, or revoked in any other state, province, district, or territory.

o Obtaining or attempting to obtain a license through misrepresentation or fraud.

o Forging another’s name to an application for insurance or to any document related to an insurance transaction.

o Intentionally misrepresenting the terms of any actual or proposed insurance contract or application for insurance.

o Improperly using notes or any other reference material to complete an examination for an insurance license.

o Having admitted or been found to have committed any insurance unfair trade practice or fraud.

o Knowingly accepting insurance business from an individual who is not licensed.

o For inducing, persuading, or advising any policyholder to surrender or cause to be canceled any policy of insurance issued to the policyholder by any authorized insurer in exchange for a policy offered by the licensee where the surrender

o Failing to comply with an administrative or court order imposing a child support obligation.

Alabama Independent | 2016 Issue 1

o Failing to pay state income tax or failing to comply with any administrative or court order directing payment of state income tax.

APRIL 5 6 7 13-15 19 21 26

EducationCalendar

CISR Personal Miscellaneous – Huntsville E&O Risk Management – Birmingham CISR Personal Miscellaneous – Mobile CIC Agency Management – Birmingham CISR Personal Miscellaneous – Tuscaloosa CISR Personal Miscellaneous – Montgomery CISR Personal Miscellaneous – Birmingham

JUNE MAY 3 4 5 11-13 17 30

CPIA 1 – Birmingham CPIA 2 – Birmingham CPIA 3 – Birmingham CIC Personal Lines – Birmingham CISR William T. Hold – Tuscaloosa AIIA Closed for Memorial Day

8 9 14 16 21 22 23 28 29

CISR Elements of Risk – Mobile CISR Commercial Casualty Exposures 1 – Montgomery CISR Commercial Casualty Exposures 1 – Tuscaloosa CISR William T. Hold – Montgomery CISR Commercial Casualty Exposures 1 – Huntsville CISR Commercial Casualty Exposures 1 – Birmingham CISR Commercial Casualty Exposures 1 – Gulf Shores CPIA 2 – Mobile E&O Risk Management - Birmingham

800-226-3224 www.fcci-group.com

“At FCCI, we are here for our agents and our insureds for the long term, and we live by our values: loyalty, integrity, vision, excellence and service. I’m proud to work for a company that believes in ‘doing what we say we’ll do’ and I strive to do that for my agents and their clients.”

Babs Fowler Underwriting Specialist FCCI Insurance Group Gulf Coast Region Ridgeland, Miss.

Now, let’s talk about your business.

General liability • Auto • Property • Crime • Workers’ compensation Umbrella • Inland marine • Agribusiness • Surety Coverage available in 18 states. © 2016 FCCI

AI16_Fowler_4.625x7.5.indd 1

3/2/16 3:25 PM

2016 Issue 1 | Alabama Independent

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BIIA Donates $10,000 to the Russellville

DREAM CENTER

(l. to r.) BIIA President Todd Roberts with Shawn Rutherford of Russellville Dream Center during the check presentation.

The Birmingham Independent Insurance Agents hosted their Annual Gala at Rosewood Hall in Homewood on January 29th, 2016 to raise funds for the Russellville Dream Center. The evening included food, music, a silent auction, casino style games and prizes. All proceeds from the event are donated to a charity at the discretion of the current chapter president.

Recently, representatives from the Russellville Dream Center met at the Birmingham Independent Insurance Agents of Alabama home office.

BIIA President Todd Roberts who operates the Homewood office of Talladega Insurance Agency presented the donation check for $10,000.

Shawn Rutherford, Senior Pastor of Redemption Outreach Church from the Russellville Dream Center said he was amazed when he first heard from Mr. Roberts that BIIA had chosen them for their Gala’s beneficiary. He quoted “It is great to know that you don’t have to perform or jump through hoops for someone to see that it is all about God and about changing others’ lives that are in need.”

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Alabama Independent | 2016 Issue 1

The Russellville Dream Center is a faith based 501 (c)(3), non-profit organization. R.D.C.’s focus is to equip men and women with skills which will create a better transition into society. Overcoming the consequences of addiction and living a productive and successful life is the objective.

The Birmingham Independent Insurance Agents of Alabama (BIIA) is a non-profit organization that has served companies and agents of Birmingham since 1922. Unlike company-employed agents, independent insurance agents are a trusted choice for insurance because they represent more than one insurance company. Independent agents offer their clients a wider choice of auto, home, business, life and health coverage as well as retirement and employee-benefit products. They are dedicated to serving their customers and the community.

In coming BIIA President, Margaret Ann Pyburn has chosen United Cerebral Palsy as the BIIA charity for next year. The Gala is open to the public and the date has been set for Friday, January 27th, 2017.

INDUSTRY NEWS

Associated Insurance Administrators (AIA) Launches Exclusive Commercial P&C Program In Alabama

Associated Insurance Administrators (AIA), a wholesale insurance and managing general underwriting agency, has launched AIA P&C Plus, an exclusive program for Alabamabased Commercial Property & Casualty risks.

AIA P&C Plus is backed by Ascot International Underwriting. Policies will be issued on State National paper (A.M. Best rated “A, VII”) and North American Risk Services will be responsible for claims administration. The program is designed to give independent insurance agencies access to an admitted P&C carrier with no volume commitment and competitive commission rates.

AIA P&C Plus offers Comprehensive General Liability, Property, and Package capabilities along with optional coverage enhancement endorsements.

Targeted classes include habitational risks, restaurants, Main Street retail, artisan contractors, shopping centers and office buildings. The program is available to AIA-appointed insurance agencies.

For more information about AIA’s P&C Plus or any of their other products, please contact Patrick Albrecht at palbrecht@aiamga.com or by calling 334.279.7600.

For Comprehensive Mobile Homeowners Insurance, put your trust in a company that has been insuring homes for over 50 years.

National Security Can Provide You With: • • • • • • • •

$100,000 Maximum Policy Limits AAIS Special Form 3 Policy 15% New & Renewal Commission Partnership Profit Sharing Fast Online Policy Issuance Direct Contract with National Security Replacement Cost Option Discounts for New Home and 50+ Age of Insured • Easy Payment Options National Security has provided competitive, affordable insurance to policyholders for over 50 years, but we also provide a lot for our agents, with competitive commissions, excellent customer service and experienced company adjusters. As an admitted Southeastern based regional company, National Security prides itself on fast, efficient service from a friendly small town company, and online access for all agents, providing fast quotes, online policy issuance, online dec page printing, and real-time policy information.

Find out more by calling Sharon at 1-800-239-2358 x213 or visit nationalsecuritygroup.com.

Elba, Alabama

2016 Issue 1 | Alabama Independent

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SEEN&HEARD BIRTHS

Congratulations to Taylor Norton, of South Shore Insurance Agency, and his wife, Shelby St. John Norton, who welcomed their first child, a son, “Joseph” Taylor Norton, Jr. on October 14, 2015.

Chad Laird, of The Sheffield Fund, and his wife, Angela, welcomed their first child, a son, Clark Randall Laird on February 9, 2016.

SYMPATHY

Our thoughts are with Nancy Gothard, of The Sheffield Fund, on the loss of her husband, Lonnie.

Our thoughts are with Stacy St. Cin, of BancorpSouth Insurance Services, Inc., on the loss of her mother, Sandra Mae Hand.

NUPTIALS

Congratulations to Nichole Capps, of The Sheffield Fund, on her wedding. Nichole and Cody Marcum were happily married in January.

Welcome New Members AIIA would like to welcome the following new members who have recently joined the association. Thank you for joining Alabama Big I!

NEW AGENCY MEMBERS 1st Alabama Insurance Joseph West Moody, AL Liveoak Agency Larry Liveoak Millbrook, AL Shaw Insurance Agency Ronnie Shaw Montgomery, AL United Tax & Financial Services Jarea Wilson Dothan, AL

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Alabama Independent | 2016 Issue 1

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Coastal Insurance Company, Inc. Jim Trull Montgomery, AL

2016

alabama

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NEW ASSOCIATE MEMBERS

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If you have news, we would love to include it in our next issue! Please send your press releases, photos or notices to Michelle McKee at mmckee@aiia.org

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2016 Issue 1 | Alabama Independent

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INDUSTRY NEWS SIU Introduces Active Shooter Insurance for Educational Institutions Southern Insurance Underwriters, Inc. (SIU) introduces an innovative insurance product designed to protect educational institutions against the unfortunate effects of an active shooter incident on campus. The increasing incidence of gun violence in our nation’s schools makes proactive risk management a high priority for school administrators. SIU’s new product provides up-front risk assessment services, primary liability coverage and emergency responder services, all of which are designed to minimize the disruption and financial consequences of an active shooter event.

According to FBI statistics the number of active shooter events is steadily increasing. During 2007 through 2013 the average number of incidents was 16.4 per year. The Everytown for Gun Safety Action Fund cites 165 school shootings since 2013. While the actual number of incidents is relatively small, it is incumbent on school administrations to take proactive measures to reduce the possibility of an incident and to protect the institution from potential financial loss.

SIU’s Active Shooter Protection coverage provides primary liability coverage with limits up to $20 million, on-site risk assessment for insured locations, crisis management services, post event counseling services and funeral arrangements. Policies are issued by an insurer rated “A”

by A.M. Best and are offered through independent agents throughout the U.S. All educational institutions are eligible for coverage, including colleges, universities, and private and public schools. Policies can be structured for individual school locations or for large school systems with multiple campuses.

“Active Shooter Protection coverage should be an integral part of any educational institution’s risk management and risk financing program,” stated Hugh T. Nelson, Senior Vice President for SIU. Parties interested in marketing the Active Shooter Protection product should contact the firm directly or through the website www.activeshooterins.com.

For additional information regarding SIU’s Active Shooter Protection coverage or any of their other products, please contact Hugh Nelson at hnelson@siuins.com or by calling 678.498.4801.

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Alabama Independent | 2016 Issue 1

TPI Announces New Poultry Program Tim Parkman, Inc., TPI, has announced the release of their new property program for Poultry Farms. Available in Alabama, Arkansas, Mississippi and Oklahoma, this program offers coverage for Broiler, Pullet, Turkey and Commercial Egg Farms.

Here are some of TPI’s Poultry Program highlights: • Coverage Available: Basic, Broad & Special Forms; ISO Commercial Forms • Poultry Farms (Broiler-Pullet-Turkey-Commercial Eggs) and Any Building Used in Poultry Operation • $4,500,000 Maximum TIV Limit Per Location • $2,000,000 Maximum Per Building Limit for Poultry Confinement Houses • Replacement Cost on Buildings Up to 25 Years Old • Collapse Coverage Available • Per Building Deductible Applies • Business Personal Property Coverage Available • Business Income (up to 25% of Gross Income) Available Per Farm • Inland Marine Coverage Available for Equipment and Generators: Maximum Limit 20% of TIV • Coverage for Split Farms Available • Coverage for Risks with Up to 3 Losses Available • Coverage for Nailed or Screwed Down Roofs • Coverage for Risk 25 Years or Older: ACV & Photos Required Prior to Binding • New Ventures: Acceptable farm experience and financial stability required (Details of previous experience must be submitted with application) • Builders Risk Coverage for Ground Up Construction on Poultry Confinement Houses and Poultry related Buildings Other lines available: • Homeowners (HO-3, HO-8) • DP-1-3 • Manufactured Homes • Vacant Dwellings • Renovations • Builder’s Risk • General Liability Over 1000 classes of business available.

For more information about TPI’s Poultry Program or any of their other products, please contact TPI at 877-782-2594.

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SOUTHERN INSURANCE UNDERWRITERS, INC. IS

TRULY COMMITTED T O T HE SOUT HER N

INDEPENDENT AGENT

Delivering Insurance Innovation…Southern Style!

SIU has been underwriting insurance independently as a family owned business for over 50 successful years. Recognized as one of the most innovative MGA’s in America, SIU is the leader in service and new technologies. Call or visit us online today and give SIU the opportunity to treat you like part of the family!

SIU COMMERCIAL LINES MARKETS

SIU PERSONAL PROPERTY

• 85 different “A” rated carriers • Contractors: Artisans and General • Professional Liability • Roofers • Habitational Dwellings and Associations • Vacant Land and Dwellings • Restaurants (including Liquor) • Environmental Pollution

• Dwelling Fire (Vacant/Occupied) • DP1 & DP3 • HO3 & HO5 • Umbrella Stand Alone Liability • And much, much more

THE SOUTHEAST PROUDLY PROVIDING

WITH GREAT SERVICE

SIU COMMERCIAL TRANSPORTATION • Contractors • Towing • Day Care Buses • Church Buses • Garage: Dealers & Non-Dealers • Used Cars • Repair Shops • Brake Shops • Dumps • Trucking • Intermodal • Dump Operators • Artisans

WWW.SIURATE.COM • Over 200 Classes of Business • Single Point of Entry, Quote with Multiple Carriers • Online Statement Retrieval • SIU web Login/Password Questions: 678.498.4619 • Direct Bill • Pay with Credit Card

WRITE REWARDS PROGRAM • $5 for every new/renewed Personal Property policy • $10 for every new/renewed Commercial P&C policy • Visit WriteRewards.com for more information

PERSONAL PROPERTY BROKERAGE COMMERCIAL PROPERTY & CASUALTY COMMERCIAL TRANSPORTATION

CONTACT SIU TODAY AT: 678-498-4500 / 800-568-1700 WWW.SIUINS.COM CM GA