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The Oregon Agent • Winter 2017
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11/4/2016 8:10:26 AM
Winter 2017 • The Oregon Agent
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WINTER 2017
Agent
Page 18
CONTENTS
OREGON
Page 23
Page 10
Page 2
IIABO Office 6 Centerpointe Drive, #430 Lake Oswego, OR 97035 Phone: 503-274-4000 Fax: 503-274-0062 Toll Free: 866-774-4226
IIABO Staff Directory Executive Vice President Jim Perucca jimp@insureoregon.org
Vice President Education & Finance Tyra Dressel tyra@insureoregon.org Asst. Vice President Agency Products & Services Abby Kahl abbyk@insureoregon.org IIABO Lobbyist Roger Beyer roger@rwbeyer.com
The Oregon Agent is a publication of the Independent Insurance Agents and Brokers of Oregon and is published quarterly by Blue Water Publishers, LLC. IIABO reserves the right in its sole discretion to reject advertising that does not meet IIABO qualifications or which may detract from its business, professional or ethical standards. IIABO and Blue Water Publishers, LLC do not necessarily endorse any of the companies advertising in the publication or the views of its writers. The publisher cannot assume responsibility for claims made by advertisers, content provided by the editor, or for the opinions expressed by contributing authors.
For more information on advertising, contact : Jim Aitkins Blue Water Publishers 22727 161st Avenue SE Monroe, WA 98272 360-805-6474 fax: 360-805-6475 jima@bluewaterpublishers.com
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The Oregon Agent • Winter 2017
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A Letter from the New IIABO President, Kay Hunkapillar
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IIABO 2016 - 2017 Leadership
10 Reducing Your Insurance Costs... Distinguishing Bad Advice from Good Advice 16 2017 MidWinter Education Symposium Information Registration 18 Partnership Marketing 23 Don’t Get Caught in the Web... Be Aware of and Mitigate E&O Exposures from Your Website 27 J. R. Johnson’s Sponsorship Bringing New Classes in 2017 28 Selling is Changing...Not Really! 30 Kennedy Restoration - Classes that Fulfill Your 2017 Law & Ethics Requirements ADVERTISER INDEX
Sr. Vice President Marketing & Communications Barb Demings barbd@insureoregon.org
AmTrust 19 Anchor Bay 13 Anderson and Murison 25 Burns & Wilcox 11 Contractor Connection 15 EMC Insurance 3 Grange Insurance Association 5 Griffin Underwriting 2
Imperial PFS Liberty Mutual Mutual of Enumclaw Preferred Property Program RT Specialty Risk Placement Services Ron Rothert Ins Services Western National Ins Group
22 32 21 12 24 31 29 7
“It really comes across when we talk to our policyholders and our agents, that we care.” Ernie Mamallo Claims Representative
We value the
independent agent.
Interested? Let’s talk. Grange Insurance Association only partners with Independent Agents. Why? Because these agents are uniquely qualified to offer trusted advice and superior customer service. Independent Agents also know the value of personal relationships. And so do we, which allows us to provide the tools and support to help you succeed. Because better coverage means more satisfied customers. Call us today. California • Colorado • idaho • oregon • Washington • Wyoming
For information, contact us at (800) 247-2643 Visit us online at grange.com Winter 2017 • The Oregon Agent
5
FROM THE IIABO PRESIDENT
Kay Hunkapillar
President, Wheatland Ins. Ctr., Inc.
I
It is remarkable that I’ve already reached the halfway point in my term as president of the IIABO! It is a great honor to serve in this position and it has enabled me to see up close how membership in our association provides a vast array of benefits. Most of these benefits are included in your dues while others are available at a modest cost.
Closer to home, we are looking forward to the MidWinter Education Symposium March 9-10, 2017 at the Inn at Spanish Head Hotel, Lincoln City, Oregon. This is a great way to earn 12 hours CE, OR/WA while enjoying a getaway to the Oregon Coast. Registration includes CE filing fees, breakfasts, lunches and a hosted reception.
The IIABO gives members a very strong voice in both Salem and Washington D.C. This is vital to agents, both as producers, but also as small business owners. Agents are represented in Salem by our lobbyist, Roger Beyer. Roger spent eleven years in the state legislature, both as a representative and senator. He served one term as Senate Republican leader.
A gourmet lunch/cooking demonstration/wine pairing is an option for registered spouses and guests. This event is held at the nearby Pacific Coast Culinary Institutes and transportation is provided by the IIABO.
On the national level, we have a strong voice on Capitol Hill. We see firsthand how the work of the Washington D.C. lobby brings about positive results for agents. The $1,000,000 IIABA PAC supports candidates who will listen to our needs—both Republican and Democrat. Over 93% of the candidates the IIABA supported were successful in their election efforts.
This year our instructor is David Thompson, CPCU. Dave began his career in the family agency in Vero Beach and for the last 19 years has worked for the Florida Big “I” conducting continuing education across the country. The MidWinter is a great way to earn half your bi-annual CE requirements, have fun with sponsors while at the same time enjoying the view from the most spectacular classroom in the state. Registration and class information is included in this issue of the Oregon Agent. Hope to see you in Lincoln City.
Another important benefit included with membership is the “Virtual University”. The “VU” brings a wealth of information to your fingertips, including policy forms, coverage interpretation’s, business practices and white papers. You can even “ask an expert” simply by posting a question, then read the answers from the VU panel of insurance experts.
Kay Hunkapillar President IIABO Wheatland Insurance Center, Inc.
Your association staff: Executive VP
Jim Perucca
503-274-0583
jimp@insureoregon.org
Sr. Vice President
Barb Demings
503-274-4000 ext. 26
barbd@insureoregon.org
Vice President
Tyra Dressel
503-274-4000 ext. 31
tyra@insureoregon.org
Asst. Vice President
Abby Kahl
503-274-4000 ext. 23
abbyk@insureoregon.org
Toll Free Numbers:
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The Oregon Agent • Winter 2017
1-866-77-IIABO or 1-866-774-4226
WN-2013FallAd-(IIABWA-(WA)).pdf 1 10/25/2013 8:17:24 AM
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We can help with both. With friendly underwriters who listen, and a full complement of products to serve your small-to-mid-size commercial insurance needs (including enhanced BOP, surety, and packaged coverages), Western National is your one-stop shop for getting business done. The proof is in the partnership.
Winter 2017 • The Oregon Agent
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2016 - 2017 IIABO LEADERSHIP The IIABO Board of Directors is a diverse group of insurance professionals representing the varied interests of agents throughout the State of Oregon. We would like you to learn more about these volunteer leaders and the years of experience they bring to the association.
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Kay Hunkapillar President, IIABO President, Wheatland Ins. Ctr., Inc. Pendleton, Oregon - 46 years
Brett Slater President Elect, IIABO Chief Operating Officer, Slater & Assoc. Insurance, Inc. Tualatin, Oregon - 26 years
Steve Smelley Vice President, IIABO Chief Operations Officer, PayneWest Insurance Beaverton, Oregon - 25 years
Trish Fulwiler Past President, IIABO President, J.D. Fulwiler & Co. Portland, Oregon - 24 years
TJ Sullivan Legislative Chair, IIABO Huggins Insurance Services Salem, Oregon - 18 years
Keith Blackerby Finance Chair, IIABO Chief Operating Officer, Bisnett Insurance Offices throughout Oregon - 28 years
Ed Davis National Director, IIABO Maps Insurance Services Salem, Oregon - 49 years
Lyndsay Kooistra Young Agents Chair, IIABO LaPorte Insurance Portland, Oregon - 14 years
Mark Atkinson Board Member President, Atkinson Insurance Group Portland, Oregon - 25 years
The Oregon Agent • Winter 2017
Debbie Flores Board Member KPD Insurance, Inc. Springfield, OR - 29 years
Gary Githens Board Member Data Breach Specialist Brown & Brown NW Bend/Portland, Oregon - 35 years
Greg Horner Board Member Commercial Lines Producer, Insurance Partners, LLC Portland, Oregon - 20 years
Joe Hubbard Board Member Managing Partner, The Protectors Insurance Medford, Oregon - 31 years
Marty Kantola Board Member Owner, Chet Hill Insurance Portland, Oregon - 30 years
Debbie Krambeal Board Member President, CAL/OR Insurance Specialists, Inc. Brookings, Oregon - 32 years
Matthew Pidcock Board Member Co-Owner, Valley Insurance LaGrande, Oregon - 17 years
John Timm Board Member President, Timmco Insurance, Inc. Portland, Oregon - 39 years
Brian Wilbur Board Member Owner, Pacific Insurance Partners Forest Grove, Oregon - 21 years
Insurance carriers and service providers do not serve on the IIABO board of directors, but support the association as Associate Members, Sponsors and Exhibitors. If you want to learn more about the IIABO, or if you would like to get involved, please contact any of these individuals. If you are not a member, please email Jim Perucca, jimp@insureoregon.org for information on membership.
Winter 2017 • The Oregon Agent
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Reducing Your Insurance Costs…
M
Distinguishing Bad Advice from Good Advice Many Americans are struggling financially in the current economy, particularly those struck by lay-offs, and are faced with tough decisions about how to reduce expenses. As a result, much has been written in recent months about how to reduce insurance premiums as one aspect of a belt-tightening strategy. Unfortunately, too much of this advice has been BAD and much of this bad advice comes from consumer web sites and publications that have little understanding of insurance and risk management. The purpose of this article is to identify some of the bad advice being bandied about and to reinforce some of the good advice. It concludes with 10 reasonable things you can do to reduce your insurance costs. The first myth we want to dispel is that all policies are alike, the difference only being the price. Insurance policies are legal contracts and, aside from some industry standards, each insurer’s policy is unique. Some cover far more or less than others. For example, some auto policies do not cover non-owned autos. Do you ever drive someone else’s car? Some auto policies do not cover business use. Do you ever run by Office Depot, the post office, or the bank on behalf of your employer? Some auto policies exclude undisclosed household residents. Is it possible that a child might move back home for economic reasons and you forget to tell your insurance agent? Might you drive that resident child’s car after they move in? Did you know that some auto policies won’t cover you while driving a resident family member’s car? Has a family member taken on a second job delivering pizzas to make ends meet? Some auto policies cover this, some don’t. These are all very real examples of coverage shortcomings that the “low cost” auto insurance advertisers don’t tell you about. In fact, if you ask to see their policies before buying, chances are you won’t get a copy. Consumers shop for most things based on value, not just price. The same should be true for insurance which is far too often
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The Oregon Agent • Winter 2017
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portrayed as some sort of homogeneous commodity. So the next time you see a cute or clever sales pitch from a lizard, cave man, or giggling Walmart-like “pick your price” aisle clerk, ask what you’re buying. The amount of coverage you need depends on your exposure to loss and what assets and income you need to protect today and in the future, not what you’d like to pay.
you from catastrophic loss. The article shows that, by dropping your liability limits from 100/300/50 to 25/50/10 and eliminating the physical damage and uninsured motorists coverages on your auto, you can reduce your total premium by just over 50% on average.
A second myth is that you can rely on insurance advice from consumer web sites and publications. Sadly, consumers often accept insurance advice from attorneys, plumbers, roofers, cops, and accountants before they’ll listen to their own insurance agent. A major national publication included advice from a “consumer expert” that recommended dropping replacement cost coverage for “actual cash value” coverage, something that is likely to save the insured little in exchange for much in the way of lesser coverage. In the late 1980s and early 1990s, Charles Givens made a name for himself, in part, by recommending that consumers drop various kinds of insurance. Lawsuits ensued when consumers who followed his advice suffered catastrophic 7.5X4.625 uninsured losses.
What they don’t show is that the average values of the autos they used in the examples ranged from $12,000 to $22,000 according to Kelly’s Blue Book. How many economically depressed or outof-work families can afford even a $12,000 loss, much less a 6- or 7-figure liability claim? Auto liability limits of 25/50/10 mean that each person you negligently injure in an auto accident gets no more than $25,000 ($50,000 total for all injuries) and any property damage you cause, such as damage to the other vehicle, is limited to $10,000. Is it possible that a hospital bill might exceed $25,000? Is it likely that the other vehicle you total is worth more than $10,000? Of course, particularly considering that all of the autos they used in their examples of how you can save money by dropping physical damage coverage were worth more than that!
One popular consumer insurance web site recommends that consumers consider dropping their physical damage and uninsured motorists coverage completely while reducing their liability coverage to the state minimum requirements. At a time when consumer assets are at their greatest peril, now is not the time to be reducing or eliminating critical coverages that protect
According to the Insurance Research Council, 1 in 6 drivers may be driving uninsured by 2010. With the number of uninsured drivers already over 25% in some states, what happens when a family member is permanently disabled by an uninsured driver and the family has dropped its uninsured motorists coverage? A much better recommendation would be to begin cost-cutting
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The Oregon Agent • Winter 2017
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measures by eliminating the purchase of pizza, cigarettes and beer instead of critical insurance coverages. A third myth is that you can drop some coverages because others exist to pay in their absence. For example, so-called financial experts may recommend dropping uninsured motorists and medical payments coverage on an auto policy if you have health or workers compensation insurance. Uninsured motorists insurance covers much more than just medical expenses. Given the growing number of uninsured motorists, removing or reducing this coverage can expose you, your family members, and passengers to catastrophic loss.
cost to rebuild but also on the value of the location and land value. It’s also a function of how much someone is willing or able to pay for your property based on their financial position and the ability to obtain a loan. Your insurance limit is based almost exclusively on the cost to repair or replace the building. The market value can be significantly higher or lower and, just because the market value of your home or business building has declined doesn’t mean you should reduce your insurance limit. In fact, while home prices countrywide have declined measurably in the past year, the cost to rebuild those homes has risen about 4%.
In the case of business insurance, many business owners are looking, if the law permits, to drop workers compensation insurance or have officers with strong health insurance plans exempt themselves. Workers compensation typically pays UNLIMITED medical benefits, plus disability, rehabilitation and even burial benefits. In addition, some health insurance plans exclude work-related injuries or work injuries that could have been covered by workers compensation. Some businesses are considering eliminating business interruption insurance even though studies have shown that few businesses survive a major loss long enough to be able to reopen their doors.
These are just a few examples of what consumers and business owners are doing to reduce their insurance costs, many of these approaches coming from extraordinarily bad advice from consumer writers and others who lack the knowledge to understand what they are suggesting. Attorneys, for example, often suggest that youthful drivers be placed on their own minimum-limits policies (and their vehicle titled in their name if possible) in order to insulate the parents’ assets from a lawsuit. Many, if not most, auto policies have an exclusion that would result in the parents having NO coverage under their own policy for some claims, an unintended consequence that arises from advice given by someone who lacks the intimate understanding of the insurance contract necessary to provide sound insurance advice.
A fourth myth is that you should insure the market value of your home or business building. Market value is based not only on the
So, what are some reasonable approaches that CAN be taken to reduce or control insurance costs?
We Haven’t Raised Our Rates in 10 Years... Restaurant, Bar & Tavern Program Can your current pub, tavern & sports bar market make that claim?
We’ve had a restaurant, bar and tavern program for ten years and right now – today – it is Since 2000, have written program restaurants, pubs,accounts, taverns &wesports morewe competitive thananit exclusive has ever been. Onon “target” (preferred) have bars beenin Alaska, Oregon,consistently Washingtonable and,tomore recently, in Colorado. We've written over 10,000 policies and $50 beat expiring pricing by 20% and more and our bind-to-quote ratioover is more million inthan premium 70%. in this class of business. We’re stable. We’ve been with the same carrier for over 10 years and our loss and loss expense ratio is the–six priorfor to submitting this advertisement, we have only lost two renewals and right at In 40% so weeks we’re here the long haul. our written premium versus the same period in 2009 has more than doubled. Our application We have great rates. Because we have been so profitable, we haven’t been forced to take the big rate flow is up more than five-fold. Most accounts are quoted within 4 to 48 hours. increases that have plagued our competition. We haveOur a strong form. Wenon-admitted are usually silent on policy Assaultform & Battery on the we offer several carrierpolicy is rated A- IX, and our is strong. ThisCGL is a and package policy other coverage advantages over our competition. that includes Property, General Liability and Liquor Liability. We have a Property broadening dohave not exclude Medical Payments. Battery is of usually included We are endorsement. growing rapidly.WeWe a very high “hit ratio” and, inAssault the first&six months the year, our written without limitation or sublimit on target accounts. We offer Food Borne Illness coverage with premium is up almost 40% over last year. We do rushes. sublimit. Our commission level is generally much higher than our competition’s. Regrettably, we are unable to consider nightclubs, adult entertainment, accounts with liquor serving issues or, in Oregon only, about accounts moreincluding than 75%program liquor. No or distressed business For details the with program, andsubstandard target account eligibility criteria, andplease. an application, please visit: http://www.surpluslines.com/products/restaurant-bar-tavern.asp
We compete favorably with all the major programs! Anchor Bay Insurance Managers, Anchor Bay Insurance Managers, Inc.Inc. Post Box Office // Silverdale, 98383 Post Office # Box 2510# 2510 // Silverdale, WAWA 98383 Contact Bill at (360) 649-8969 Phone: (800) 929-9560 // Tanner Fax: (800) 929-9794 www.SurplusLines.com Web: Web: www.SurplusLines.com Email: Info@ SurplusLines.com Email: Info@ SurplusLines.com
Winter 2017 • The Oregon Agent
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10 THINGS YOU CAN DO TO CONTROL INSURANCE COSTS
1
Investigate coverage and product options with your independent insurance agent. One of the advantages of using an independent agent is that s/he represents a number of insurers with different products and can assist customers in fitting the right product at the right price for the unique exposures you present. Keep in mind that a lower price often means inferior service and lesser coverage, possibly lesser to a greater degree than the premium decrease. Also note that this tip deliberately avoids advising you to “shop around” because that implies price comparisons should drive the decision.
2
Carefully consider whether increasing deductibles NOW is appropriate. While increasing a deductible can save money, it’s important to do it at the right time. Don’t raise the property deductible well past the point of sensible premium reduction on the theory that “it will never happen to me”... insurance purchasing decisions are often made with little regard to post-loss consequences of our current buying decisions. A higher deductible could pay for itself in 3-5 years, but it could take 7-10 years and not be a good investment. The preferred approach is to increase deductibles during good economic times when you can afford a $1,000 - $2,500 loss while accumulating a deductible fund that can be used during hard times if a loss actually occurs then.
3
Consider multiple-policy discounts. This is common advice and generally good advice. Having homeowners, auto, and umbrella policies in the same company will likely save money and, perhaps even more important, will make it less likely that a coverage gap will show up when more than one insurance company is involved in a claim. Likewise, in business insurance, having general liability and auto coverage in the same insurer using “ISO-standard” or superior forms is often critical.
4
Ask for credits. Too often, consumers are entitled to credits for alarms, extinguishers, good student driving discounts, etc. but the agent is not aware of them. Ask your agent for a list of everything that could reasonably reduce your premium and see if you can meet those standards. A good example is how your auto is rated for use. If you’re laid off from work or you’ve found a job closer to home, you might very well be entitled to a lower premium. Unless you tell your agent about these kinds of changing circumstances, you won’t reap the benefits of reduced risk.
5
If you’re going to drop coverages, consider dropping noncritical coverages. Examples include towing and rental reimbursement, credit insurance, etc. Your independent agent can assist you in making these decisions. Consider discontinuing high-risk activities such as using ATVs, jet skis, etc. Catastrophic injuries are common with vehicles of these types. 14
The Oregon Agent • Winter 2017
6
CAREFULLY consider dropping physical damage coverage on your vehicles. As outlined above, this is not always a good idea unless you can absorb a significant 4- or even 5-figure loss. Keep in mind, too, that as an auto loses value, the physical damage premium generally declines as well. Do not be fooled by any simple formula that says you should drop coverage when the value of the vehicle drops below “X” times the premium. You should base your decision on what you can afford to lose and, if your car was destroyed and you could not replace it, how would that affect you financially.
7
Weigh risk management alternatives to insurance. For example, you could place jewelry in a safety deposit box rather than scheduling it. Needless to say, this is probably more risky, but it’s a reasonable consideration. Also, do not cut back on maintenance and loss control procedures that yield long-term benefits like the reduction of frequent losses and those often excluded by insurance policies.
8
If necessary, sell some possessions. Can you get by without certain autos, motorcycles, ATVs, jet skis and boats, homes, jewelry, guns, etc.? If so, you can drop the insurance on those items. However, it is generally a good idea to not drop insurance on property until your exposure to loss no longer exists. This is especially true of any possession that has a significant liability exposure.
9
Seek expert advice. Start with your independent insurance agent who is familiar with you and your circumstances, not a consumer web site or publication that presents generalized, sometimes suspect, advice, nor someone who lacks the training and experience to provide sound insurance advice. Work with your agent to seek outside advice from other experts. If you are getting insurance advice from your attorney or accountant, run it by your insurance agent to see what impact it might have on your policy coverages.
10
Question any advice you get, even the advice in this article! It may not be right for YOU. Before you make decisions to reduce or eliminate insurance coverages, assess your risks of loss. What are your exposures? What can you lose? What exposures represent losses you cannot afford? What exposures can you retain? The quality of your decisions may be the difference between economic survival and bankruptcy. Carefully chose an insurance representative who can help assess risk with a degree of sophistication and business acumen. Copyright 2009-2015 by the Independent Insurance Agents & Brokers of America. All rights reserved. NOTE: Policy coverages and circumstances can change at any time, so the information above may not be accurate at the time of reprinting or subsequently to that time. IIABA does not assume and has no responsibility for liability or damage which may result from the use of any of this information. The most current, up to date version of this article can be found at IIABA’s Virtual University at www.bigivu.com.
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The Oregon Agent • Winter 2017
Winter 2017 • The Oregon Agent
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P
By Al Diamond
Partnership Marketing is the joining of two diverse organizations with a client base that can use the services and products of both. In its broadest terms the concept can apply to almost any two businesses that serve the same type of client base. But in reality Partnership Marketing can be very beneficial and profitable, but only to synergistic product or service providers. WHY MOST FAIL Partnership Marketing is neither new nor novel. Gas stations and convenience stores are a perfect example. Before, after or while the gas is pumping, we are prone to run into the convenience store for a cup of coffee or some other convenience food. But productive partnership marketing has been evasive and most attempts end in frustration and mutual separations. The reason that many joint or partnership marketing has not yielded the desired success is the lack of synergy between the products/services offered by the partners. For instance, most people who buy tires have cars and, therefore, need auto insurance. However, there doesn’t seem to be enough commonality between the local Firestone dealer and an insurance agency for cross-marketing to make sense to the tire customers (or to the insurance customers). How would you feel if you received solicitations for banking services simply because you were a customer of a grocery store? After all, most people who shop at grocery stores re-
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The Oregon Agent • Winter 2017
quire and use sources of money! Most people would prefer to base their banking relationship on something more substantial than where they buy peas and carrots. Although many grocery stores now have banking branches in them, those branches are the convenience factor for already established relationships. The convenience of banking at your grocery rarely trumps better rates and products at other banking institutions. And it takes a unique customer to want to have their taxes done at their local Walmart. Yes, there are tax offices at ‘big box’ stores, but they have never been as busy as the tax services stand-alone stores. So we see Service Centers for other forms of customer service companies placing themselves in (renting) grocery and ‘big box’ stores, but they are not examples of Partnership Marketing. Similarly, most insurance customers who have reached beyond the ‘lowest price’ syndrome for their insurance providers are more interested in the qualifications and quality of the vendor than by the casual relationship between the partners. SYNERGY – THE WAY MARKETING PARTNERSHIPS CAN WORK But, where there is SYNERGY between the products and services of a partner and insurance, the potential for cross-selling and building customer loyalty to both entities is great. In all the transactions we have seen in well over 35+ years of
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agency consulting we have found that the commonality of client relationships of successful versus unsuccessful relationships is the reason for the partnership. If the reasons of each partner is primarily serving client needs, customer-centric (always doing what is best for the customer) relationships and building loyalty through multi-dimensional product and service provision, the partnership has a good chance of succeeding (if both sides have equal requirements and equal opportunity for business development). If the reason for the partnership is simple revenue generation its chances of success diminish considerably.
cy may only yield a few hundred dollars of new commission while it may yield thousands of dollars of revenue to a partner. However, that is because of the scale of revenues generated by each. If you provide as many new customers to your partner as they do to you the partnership will be successful in the long term.
4. Management of insurance by non-insurance professionals –
We see this in acquisitions of agencies by non-insurance entities more than in partnerships. The manager doesn’t have to already be an insurance professional. However, if from another discipline, the manager must convert to full time agency management to become effective. So, financial managers (from banks) or non-financial operations managers who simply add the insurance operation to their managed disciplines generally get frustrated when the agency doesn’t operate the way he expects because the employees understand the agency operations and procedures and systems while he does not.
So it’s the REASONS for the partnership and equality of requirements and benefits to both parties that will make the relationship successful from both the customers’ and the partners’ standpoints. PITFALLS TO AVOID
1. Doing it for the money – Obviously business partnerships are
meant to provide some additional revenue and profit to each party. This means that if the partnership will only enrich one or the other partner in the optimum stage, the relationship is doomed. We’ve also noted that in dozens upon dozens of such partnerships with insurance agents across many industries and disciplines, if profit is the only motivator (or the primary motivator) failure is much more likely than long-term success. In reality, the potential profit derived from selling some insurance policies to diverse but common clients will not derive serious enough income to most other industries to warrant or justify the work of the partnership. Banks, as an example, measure their revenue projections in the millions of dollars of profit and earnings (after tax). If money is the motivator, an insurance relationship will simply not drive enough income to justify the work. And, if the partner business has low enough margins that a few thousand or a few tens of thousands of dollars will be attractive to them, the potential for serious enough returns to the agency diminishes, as well. However, Partnership Marketing is an excellent way to maximize customer retention of both entities and could enhance the revenue per customer in each partner business through effective cross-sell and benefit partnerships.
2. Partnership Marketing WILL NOT WORK if the cross selling
is, in any way, passive. Once the customers of both entities are informed of the partnership they will either be mildly interested, curious, or not care. An on-going cross-selling program in which the primary relationship manager introduces the clients to the new partner and products or services will yield the most immediate and the most long-term results.
3. Cross Selling must be cooperative and bi-lateral. A unilateral
marketing program may yield one partner new clients and the other partner a source of revenue, but it is NOT Partnership Marketing. In order to be in a true Partnership Marketing program, both partners must enjoy equal opportunities to generate new customers. That is the true synergy that makes partnerships successful. A new client to an insurance agen-
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The Oregon Agent • Winter 2017
5. Lack of marketing clarity at the outset of the relationship – A marketing partnership MUST carry specific goals as well as procedures for seeding (or cross-seeding) clients from the insurance to and from the non-insurance partners. “Let’s do it and see how it works” is a recipe for failure.
6.
Imbalanced work effort, responsibility, or income potential – When one partner has all the responsibility and the other has none -- or when one partner has all the benefit and the other only acts as a business source for some financial return the partnership will probably fail. Conversely we have seen successful marketing partnerships when both have a similar work effort and both see tangible results beyond dollars (i.e. new customers, customer retention, customer satisfaction).
SYNERGISTIC PARTNERSHIP POTENTIALS Real Estate - The best historical example of such synergy is real estate or mortgage companies and insurance. Customers who purchase homes or other properties commonly must have insurance to close the transaction. If they have a strong relationship with an agent partner, they will likely coordinate their insurance needs with their current advisor. However, if they have no such relationship or are not insurance savvy, the ability to have a partner insurance agent to the real estate agent available to shop their insurance and present them with a policy at closing is a great advantage to an easy transaction. Real estate/insurance partnerships have existed for well over 100 years and should be considered as a viable opportunity to serve the customer and provide additional business for both entities. Banks – Included in this category are banks, savings & loans and credit unions. The synergy between banking and insurance is PROTECTION OF ASSETS. Both institutions have asset protection as one of their primary tenets. But many financial institutions, like many insurance agencies use all the right jargon
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but act only toward the profit margins. If relationship building is truly of interest to BOTH the bank and to the insurance entity this synergy can work well. The key is to maximize retention of customers for the ban and the insurance agency by providing sufficient number and types of services and products from both that movement away from either will be difficult unless reasons well beyond price exist for the departure. Banks will be (and have been) generally disappointed if their reason is simply to generate an additional revenue base. The ROI expectations of financial institutions are difficult to meet within the realm of insurance agencies. And net revenues (after expenses) of insurance operations aren’t even a ‘blip on the radar’ for most financial institutions) without a solid commitment to active marketing of insurance over a long period (3-5 years) to all bank customers supported by all other bank operations. Most banks have management already stretched by the requirements for product and service revenue sources in primary bank products. They may not be as excited as the bank board with the synergy of insurance and banking since it puts the responsibility for another product or service into their already busy jobs. Those banks that believe in the Customer-Centric philosophy and actually want to protect the assets of their clients will still find a relationship with an agency attractive to have a team of professional specialists available to handle the banks customers’ insurance needs instead of losing control of those functions to outsiders who may not be as protective of the customer’s assets as they are desirous of generating revenues. THE BEST (AND WORST) WAYS TO PARTNER If an agency is partnering with another entity for the right reason -- to provide insurance services to that entity’s clients and (hopefully) the product or service of the partner to all agency clients, a team of agency staff and partner staff should be created. The goal of the Team is to take the vision of the principals for the partnership, a Mission Statement, and convert it to short term objectives and action plans for the execution of the partnership. The objectives must define annual goals the results of which would accomplish the Mission of the partnership. Both partners will have goals for their own business generation from their partner’s customer base or referrals and those goals will be tracked and evaluated quarterly for the first few years and annually thereafter to show the owners of each partner that the benefits are on-going and equal to both. 22
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Too often we have seen the dissolution of partnerships through active decisions or through passive negligence because, after the initial work effort, each partner’s efforts move to more productive directions. No goals were set. No expectations were defined. No team was established. No metrics were created. Eventually, benign neglect set in and the partnerships fell into ruin. And the strange thing is that the Partnership Marketing efforts were in the same industries in which others were quite successful over the long run. CONCLUSION The key to success in Partnership Marketing is in the goal-setting and the commitment and metrics that are implemented as a part of the marketing. If you set goals and manage them AND if the partnership is synergistic with both parties benefiting (relatively) equally you maximize your chances of success. Reprinted from The PIPELINE, the national newsletter for agency principals. The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 30 years. Call 800-779-2430, E-mail info@agencyconsulting.com, or visit www.agencyconsulting.com for information about the content of this article or PIPELINE subscription information.
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Don’t Get
Be aware of and mitigate E&O exposures from your website! By Sabrena Sally, CPCU Westport Insurance Corporation, Swiss Re
A
Agency websites have become a core component of the marketing strategy for many independent agencies, but they also may present errors & omissions exposures that must be managed. This article explores some of the major E&O exposures that may arise and provides several E&O tips for mitigating those risks, as well as sample website disclaimers. Over 40% of agencies insured through the IIABA-Swiss Re E&O program now have their own website, having grown from 19% in 2006. Having a good website, with robust functionality, has become a core tool for agencies with a modern marketing strategy. Agencies are moving to more complex websites to respond to consumers and clients who increasingly want to shop online and be able to handle basic service needs when convenient for them. Virtually all agency websites provide basic advertising for the agency, showing the agency name, logo, phone number, address and email link. Over the past eighteen months, however, applications for E&O show a clear trend toward agency websites expanding beyond standard advertising information, as might be expected from expanding consumer online behavior and the services being offered by competitors and other industries. Winter 2017 • The Oregon Agent
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ADVERTISING EXPOSURE Let’s first examine what errors and omissions exposures an agency can face from the more traditional type of website. Many of the exposures on these sites are the same that exist in the ‘paper’ world. Advertising liability can arise out of the use or misuse of a trademark, or from the copyrighted material of others, and statements regarding the services available through the agency may be subject to regulatory requirements. At least one state, New York, makes this clear in Circular Letter No. 5 (2001), “Advertisements, Referrals and Solicitations on the Internet,” where it states that “Advertisements that appear on the Internet are subject to all applicable existing statutory and regulatory guidelines and restrictions applicable to advertisements in any other medium.” E&O TIP: The same level of care in creating ‘paper’ advertising is appropriate for the agency advertising contained on the website. If in doubt, a quick consultation with your qualified legal counsel is well worth the cost.
wellness plan,” and “Where to find information on OSHA requirements” are examples of topics seen on agency websites. Content can be general in nature or become more technical and specific to certain types of exposures. The options are practically endless. Posting informative articles on the agency website can draw visitors, generate stickiness with existing customers, and lead people to contact the agency for additional information. In addition to these positive benefits, there are risks that accompany posting information. E&O TIP: If the content is original material created by the agency, practicing due diligence to ensure accuracy of the information is a key preventative measure. The more specific the information provided, the higher the risk of generating allegations against the agency for misrepresentation or providing inaccurate advice. There is one significant difference between content posted on a website and content published in more traditional forms. Posting content online makes the information available to anyone regardless of their physical location. This instantaneous worldwide availability raises the issue of jurisdiction. It is not yet clear how legal jurisdiction might be applied to content published on a website. Including an appropriate legal disclaimer as part of posted information is for now one’s most effective tool in mitigating the jurisdictional risk.
Websites commonly provide a button allowing a site visitor to contact the agency via email. One could certainly expect questions about what services the agency provides, hours open for business or even driving directions. Keep in mind, however, that there is no way to control what a visitor might choose to include in the content of their email. The visitor might decide to include confidential personal information (such as a name coupled with a social security, drivers license or credit card number) in the YOUR CLIENTS’ NEEDS ARE WORLDS APART FROM A ONE-SIZE-FITS-ALL CONCEPT. unprotected email, creating an exposure Their complex risks require creative, innovative solutions. The industry veterans at RT Specialty are to breach of data privacy. precisely the ones to help you navigate the wholesale specialty and MGA marketplace. RT Specialty leads the way in providing specialty insurance services, proven leadership, extensive industry E&O TIP: To help mitigate the liability experience and quality services to retail agents. exposure from this common website feature, posting an appropriate disclaimer is a best practice. A sample disclaimer is provided at the end of this article for agents to use as a starting point and to customize to their agency’s situation. POSTING WEBSITE CONTENT As a simplified case study, let’s view the stages a hypothetical agency might follow in expanding its website over time, and how these changes can affect the agency’s E&O exposure. After constructing a basic website, the next step an agency often takes is to add articles that will be of interest to site visitors. Articles of interest can range widely in subject matter and may be available for viewing only or also as a download. “What is an umbrella policy,” “How to implement an employee 24
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Agents and brokers, for more information please contact: Sue Brennan - President P.O. Box 2011 Edmonds, WA 98020 (425) 954-2322 Ed Bukovinsky - President 1200 Fifth Ave., Suite 1910 Seattle, WA 98101 (206) 708-2000
PROPERTY | CASUALTY | EXECUTIVE & PROFESSIONAL LIABILITY | AGRIBUSINESS | WORKERS’ COMP | HEALTHCARE | AVIATION LIFE SCIENCES | CONSTRUCTION | TRANSPORTATION | CLAIMS SERVICES | BINDING AUTHORITY | PERSONAL LINES R-T Specialty, LLC (RT), a subsidiary of Ryan Specialty Group, LLC, provides wholesale brokerage and other services to agents and brokers. RT is a Delaware limited liability company based in Illinois. As a wholesale broker, RT does not solicit insurance from the public. Some products may only be available in certain states, and some products may only be available from surplus lines insurers. In California: R-T Specialty Insurance Services, LLC License #0G97516. ©2016 Ryan Specialty Group, LLC
E&O TIPS: If the content is obtained from another source, the first step in risk management is to verify the expertise of the information’s source. This step helps minimize the exposure to allegations of misrepresentation or inaccurate advice. The information is also most likely copyrighted, creating exposure to allegations of copyright infringement. Obtaining written permission from the owner or licensor of the material prior to posting and giving appropriate credit of authorship can help mitigate the copyright exposure. If the content is obtained under a licensing agreement, explore what options may exist to protect the agency via contractual indemnification. As with information authored by the agency, it is recommended that appropriate legal disclaimers be clearly posted with information obtained from other sources. WEBSITE REFERRALS As agencies often receive requests from customers for referrals to other service vendors, it is a natural next step for the agency website to include links to these types of service vendors. Windshield repair services, CPAs for tax preparation, and disaster recovery solutions firms, are just a few examples of service vendor links seen on agency websites. Linking to vendors on the agency website can create the same exposure to negligent referral that exists when the referral takes place verbally, through email or snail mail. Regardless of how a referral is provided, the best practice recommendation is to provide at least two referrals, leaving it to your customer to choose which vendor to use. If the A&M Assoc Ad OR PRINT.pdf
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agency site links directly to a vendor, there also may be exposure to allegations of trademark infringement or unfair use of cyber marks from the vendor. E&O TIPS: The best practices to follow to mitigate allegations of negligent referral for vendor referrals, including linking, are to: 1. obtain written permission from the vendor or site to which the link leads 2. provide always more than one selection for each type of service 3. ensure there are appropriate disclaimers regarding the services being provided by these vendors. INTERACTIVE AND WEB-BASED TRANSACTIONS Agencies are increasingly adding interactive website features to increase the effectiveness and efficiency of the agency. When interactive features are included on an agency website, more unique E&O exposures can quickly develop. The most rapidly growing exposure we have seen is the number of agency websites that are accepting application information. As part of the underwriting process on a recent renewal, we reviewed an agency website. The site opened to a very professionally designed home page. The site had clearly written text, eye-pleasing graphics, was well-organized, and quickloading. At the bottom of the first page, a link to the agency privacy statement was prominently posted. Following the various tabs, one could easily find informative articles which clearly showed authorship and contained appropriate disclaimer language. So far, so good. We then clicked on a button titled Personal Lines, on through the Auto Insurance button, to “Submit Application.” The Submit Application button led to a page where a full spectrum of personally identifiable information can be submitted, including: name, address, date of birth, social security number, drivers license number – basically all the information one needs to carry out identity theft. There was no indication of security being enabled by an ‘https’ displayed before the URL (evidence of creation of an SSL connection), and nothing contained within the web page itself referred to secure transmission of this data. An agency has the duty to protect personally identifiable information and a myriad of both state and federal laws apply. Violations of these laws carry significant financial penalties, not to mention the extreme damage that can be done to the agency’s reputation. One state, for example, specifically requires “encryption of all transmitted records and files containing personal information that will travel across public networks, and encryption of all data containing personal information transmitted wirelessly.” At the most recent count, forty-six states have some type of law or regulation addressing the protection of personal information. E&O TIPS: Agencies that collect personally identifiable information (whether on their websites or not) should take the Winter 2017 • The Oregon Agent
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necessary steps to be knowledgeable about state and federal laws and regulations that protect such personal information and provide the level of data security required by them.
website setting out its privacy policies. Website Disclaimers Please review carefully!
A best practice is that the agency website create an SSL connection with the visitor’s browser before the visitor is asked to enter an id or password or any personal information, such as that included on insurance applications, so that this information cannot be read by unintended parties over the Internet. Many agencies are now expanding their online presence to include social media as a part of their advertising and customer interaction. ACT has an article and webinar on the E&O exposures arising from the use of social media which can be found at www.iiaba.net/act at the “Website & Social Media” link.
“This information is not an offer to sell insurance. Insurance coverage cannot be bound or changed via submission of this online form/ application, e-mail, voice mail or facsimile. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly with a licensed agent. Note any proposal of insurance we may present to you will be based upon the values developed and exposures to loss disclosed to us on this online form/application and/or in communications with us. All coverages are subject to the terms, conditions and exclusions of the actual policy issued. Not all policies or coverages are available in every state.”
KEY ACTIVITIES FOR MITIGATING E&O EXPOSURES GENERATED BY A WEB PRESENCE It’s an exciting time as agencies become more creative in using the opportunities that websites can provide. Be creative, but not naive. Keep in mind that with every opportunity, there is risk. Consider the following quick tips to help mitigate your agency’s exposure to errors and omissions that may arise from your agency’s website:
“Please contact our office at 555.555.5555 to discuss specific coverage details and your insurance needs. In order to protect your privacy, please do not send us your confidential personal information by unprotected email. Instead, discuss that personal information with us by phone or send by fax.”
1. Review website advertising with the same level of legal scrutiny toward copyright and trademark issues as the agency’s more traditional advertising 2. Post an appropriate Privacy Statement prominently on the website 3. Review original content posted on the website for accuracy and post appropriate disclaimers 4. Obtain written permission for content obtained from other parties, be confident they are a knowledgeable source, credit their authorship, obtain the author’s indemnification (if feasible) and post appropriate disclaimers 5. If you decide to refer to other service providers, provide more than one provider name, obtain written permission to link to them and post appropriate disclaimers regarding the services provided by the vendors 6. If the website has interactive features that collect personally identifiable information, comply with all state and federal privacy and data breach notification laws and regulations and create an SSL connection with the visitor’s browser before the visitor is asked to enter an id or password or any personal information. SAMPLE WEBSITE DISCLAIMERS Agents should consult with their local counsel to customize these sample disclaimers so that they fit their website, are positioned at the appropriate places on the site and comply with all of the federal and state laws and regulations that apply to them. These disclaimers are in addition to the Privacy Statement that the agency should include at the bottom of its 26
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“Statements on this website as to policies and coverages and other content provide general information only and we provide no warranty as to their accuracy. Clients should consult with their licensed agent as to how these coverages pertain to their individual situation. Any hypertext links to other sites or vendors are provided as a convenience only. We have no control over those sites or vendors and cannot, therefore, endorse nor guarantee the accuracy of any information provided by those sites or the services provided by those vendors.” “Information provided on this website does not constitute professional advice. If you have legal, tax or financial planning questions, you need to contact a qualified professional.” This article is intended only for educational or illustrative purposes and should not be construed to communicate legal or professional advice. You should consult legal or other professionals with respect to any specific questions you may have. Further, the statements and/or opinions contained are those only of the author and do not constitute and should not be construed to constitute any statement, opinion or position of Swiss Re, IIABA or ACT. Sabrena Sally, CPCU is Senior Vice President of Westport Insurance Corporation, a Swiss Re company, and manages the Big “I” Agency Professional Liability Program, which is endorsed by IIABA and 51 Big “I” state associations. Sabrena can be reached at sabrena_sally@swissre.com. Sabrena produced this article for the Agents Council for Technology (ACT), a part of the Independent Insurance Agents & Brokers of America. For more information about ACT, visit www.independentagent.com/act or contact Jeff Yates, ACT Executive Director at jeff.yates@iiaba.net. This article reflects the views of the author and should not be construed as an official statement by ACT or IIABA.
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Selling is Changing
NOT REALLY!
nope... By John Chapin
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This past week I’ve received three separate e-mails from various sales gurus talking about how much sales has changed. While the internet, social media, and advances in technology have altered some of the peripheral aspects of selling, the foundational principles and keys that lead to sales success have remained the same.
SALES FACTS THAT WILL ALWAYS REMAIN THE SAME: FACT 1: SALES IS STILL A NUMBERS GAME 99.9% of the time failure in sales is due to a lack of activity. In other words, not making enough calls. Now that we have the internet, I know sales reps who spend hours looking up background information on prospects before they call them. This is a mistake. Look up the information a prospect would reasonable expect you to have, but don’t spend hours being perfect. Just look up some quick information and make the call. Another way technology can work against us is that some people believe they have to be technical experts before they call anyone. An insurance agent I know spent a full six months in the office studying cyber liability because he had to know everything before he could speak to anyone. The insurance agent is a producer (salesperson) first, not an underwriter (technician). The reality is: you will never know everything and this is usually just an excuse to avoid doing the hard work of making lots of calls. Also, just because you now have the internet to look up information doesn’t mean you should be spending hours “preparing” at the expense of making calls. Just get some basics and make the call. Learn what you need to learn so you don’t make any careless or “stupid” mistakes, but focus more on activity than on being technically proficient. FACT 2: YOU’RE STILL THE EXPERT. While it’s true that today’s consumer is, generally speaking, better informed than in years past, you’re still the expert who has probably forgotten more than they will ever know. The famous author Malcolm Gladwell once said that it takes 28
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roughly 10,000 hours of study to master one’s craft. While you may not be at the 10,000-hour mark yet, you are still far better off than someone who has spent 5, 10, or even 40 hours on the internet studying your industry and products. You live in your business every day, the prospect doesn’t. People still need an honest, straight-forward salesperson who understands the subtleties and idiosyncrasies and can educate them on what’s best for them. FACT 3: FACE-TO-FACE AND PHONE ARE STILL THE MOST EFFECTIVE WAYS TO SELL. Have you ever NOT received an e-mail that someone swore they sent to you? It just happened to me again two weeks ago. In addition to the fact that you can’t always rely on an e-mail, LinkedIn in-mail, or other “internet” communication to reach the person, you also lose the most important parts of communication such as voice tone and body
language. Couple that with the fact that electronic communication distances you and dehumanizes the experience. For these reasons, in-person communication is always the most effective followed second by Skype, and other face-to-face apps, and third by phone communication. Electronic communication serves its purpose which is: shortsweet, non-critical communication in which you are simply conveying information. What kills me is when I see salespeople using an e-mail for initial communication or during an important part of the selling process. In this case they are simply hiding behind technology because they are afraid to make a call. Also keep in mind that even non-critical electronic communication has to be backed up with a phone call or in-person contact to ensure it was received. You have much more impact when people can see and/or hear you. Don’t hide behind technology and spam people on the initial and other important communications. FACT 4: IT IS STILL ALL ABOUT RELATIONSHIPS AND DOING WHAT’S BEST FOR THE OTHER PERSON. There is no “new relationship selling” or “solution selling.” The best have always focused on the long-term relationship and the best possible solution for the prospect, even if it involved sending someone to the competition. The best have always been seen as a peer and business partner looking out for the best interests of the prospect.
THE BOTTOM LINE IS: THE ONLY WAY SALES HAS CHANGED IS FOR THOSE DOING IT THE WRONG WAY. Years ago you could pull the wool over someone’s eyes, get away with not knowing as much, have subpar sales and people skills, and not work as hard. That said, the people who have always done it right, have found little has changed over the years. For them, being great at sales still requires that you work hard and make the calls, communicate effectively, build the personal relationships, are professional, knowledgeable, put the other person first, and embody the character traits of honesty and integrity. John Chapin is a sales and motivational speaker and trainer. For his free newsletter, or if you would like him to speak at your next event, go to: www.completeselling.com John has over 29 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For permission to reprint, e-mail: johnchapin@ completeselling.com. # 1 Sales Rep w 29+ years’ experience, Author of the 2010 sales book of the year: SALES ENCYCLOPEDIA (Axiom Book Awards) - The largest sales book on the planet (678 pages). 508-243-7359 - 24/7 johnchapin@completeselling.com www.completeselling.com LINKEDIN: once logged in find me under: johnchapin1 FACEBOOK: http://www.facebook.com/johnjchapin TWITTER: http://twitter.com/johnjchapin
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A NAME THAT BUILDS RELATIONSHIPS At Risk Placement Services (RPS), we are committed to building relationships one retail partner at a time. Our stewardship begins by providing you access to the finest markets and top producers in the industry and providing customized solutions to meet your needs by designing, negotiating and tailoring individual risks that help you succeed. It’s a partnership you can count on! To learn more contact Bud Carter 480.860.5572 or email at Bud_Carter@RPSins.com. www.RPSins.com
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