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FALL 2013 IIABO Office 5550 SW Macadam Suite 305 Portland, OR 97239 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 Marketing & Communications Barb Demings barbd@insureoregon.org Assistant Vice President Education & Finance Tyra Dressel tyra@insureoregon.org Director Agency Products & Services Abby Kahl abbyk@insureoregon.org IIABO Lobbyist Roger Beyer roger@rwbeyer.com

INSIDE THIS ISSUE: 6

Letter from the President, Steve Wilson

IIABO 2013-2014 Leadership

10 IIABO 85th Annual Convention Photo Wrap Up 12 Becoming A Social Business: A Model for Success 17 Before You Can Close A Sale...You Have to Open It! 18 Agency Strategies to Successfully Manage Change

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The Oregon Agent is the official magazine of the Independent Insurance Agents and Brokers of Oregon and is published four times yearly. IIABO does not necessarily endorse any of the companies advertising in this publication or the views of its writers.

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The Oregon Agent • Fall 2013

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FROM THE PRESIDENT

he convention banquet was a proud moment for me to stand in front of over 300 industry professionals and their families making my first appearance as President of the Independent Insurance Agents and Brokers of Oregon. It is an honor to serve. One of the biggest challenges facing the independent agency distribution system is our ability as individual agents to recruit, hire and develop new producers. I’ve discussed this with the IIABO board and our state national director (Brian Wilbur, Pacific Insurance Partners—Forest Grove) and we concluded that there is an urgent need to apply the resources of our National association in partnership with carriers who are willing to join in this effort. The average agency principal is over 53 years of age, and the majority do not have a younger member in their agency producing and preparing for perpetuation.

Several companies have endeavored to help in the effort to attract new producers (with varying degrees of success), but I feel this need is so great that it deserves the full attention of the Independent Insurance Agents and Brokers of America and our company partners. This will not be a quick fix, but we need to address the issue today if we are to survive and thrive as a distribution system. I’d also like to thank all the sponsors and exhibitors who participated in our 85th annual convention. Please enjoy the photos found in this issue of the Oregon Agent Magazine. Thanks to the IIABO staff and volunteers who pulled off a flawless event. If you have any input or would like to get more involved with the IIABO, please let me know. This is your association and it is here to help you reach your goals.

lso i W e v e t S

Steve Wilson, President IIABO Ashland Insurance

Your association staff: Executive VP Marketing & Communications Education & Finance Products & Services Toll Free Numbers: 6

The Oregon Agent • Fall 2013

Jim Perucca Barb Demings Tyra Dressel Abby Kahl

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Fall 2013 • The Oregon Agent

2013 - 2014 IIABO LEADERSHIP Steve Wilson President Ashland Insurance, Inc. Ashland

Gary Githens Past President Beecher Carlson Bend

Trish Fulwiler Board Member J.D. Fulwiler & Co. Portland

Ed Davis Vice President/Legislative Chair MaPS Insurance Services, LLC Salem

Keith Blackerby Board Member Bisnett Insurance, Inc. Lake Oswego

Jim Ginger Board Member KPD Insurance, Inc. Springfield

Adam Harris Board Member LaPorte & Associates, Inc. Portland

Greg Horner Board Member USI Northwest Portland

Kay Hunkapillar Board Member Wheatland Ins. Ctr., Inc. Pendleton

Marty Kantola Board Member Chet Hill Insurance Portland

Debbie Krambeal Board Member CAL/OR Insurance Specialists, Inc. Harbor

Ryan Miller Finance Chair Miller Insurance Tualatin

Matthew Pidcock Board Member Valley Insurance LaGrande

Steve Smelley Board Member PayneWest Insurance Beaverton

Brett Slater Board Member Slater & Assoc. Insurance, Inc. Tualatin

John Timm Board Member Timmco Insurance, Inc. Portland

Brian Wilbur National Director Pacific Insurance Partners Forest Grove

The Oregon Agent â&#x20AC;˘ Fall 2013

Steve Fitzwalter Board Member Rogers, Fitzwalter & Powell Portland

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IIABO 85th Annual Convention & Trade Show Sunriver Resort, Sunriver, OR

“Cheeseburgers in Paradise”

another Congrats on tion. Really great conven iendly a neat kid fr and great t en nm enviro , ary Hubbard content. – G e nc l Insura Liberty Mutua

Great people, great products, great learning. Definitely an event that you cannot afford to miss. Corban Enns, Surety Solutions, LLC

Betsy Furlott winning her height in beer with Darren Eversole/IES

Wanted to share what a great job you and your team did! I reported back to the mother ship that the event was well worth the time and expense. – Steve Palmer, AFCO/Prime Rate Premium Finance

Steve Smelley enjoying some Pringles with Jason Hewlett

Jason Hewitt, Monday Banquet Entertainer

Just want to say thanks to you for another job well done. You are always very well organized and do a great job! – Greg Horner, USI Northwest

Exhibit Hall

The entire event was outstanding. A very enjoyable and worthwhile gathering! – James Scardino, AmTrust North America

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The Oregon Agent • Fall 2013

The IIABO Annual Convention is the place to learn, have fun and connect. Nothing else in the NW comes close to delivering what this convention delivers. – T.J. Sullivan, Huggins Insurance

Monday Banquet

e terrific Thanks for th e staff th d an job you nt IIABO did on the rece end. It B in conference as usual. , ne do l was wel kins, – Richard Haw claw m nu Mutual of E

Abby Kahl working on decorations Keith & Michelle Blackerby; and Kent & Ann Bergstedt The IIABO Annual Convention is a “class act” through and through. The speakers not only have knowledge of their topic’s, but present in an interesting and sometimes entertaining format! The food was fabulous as well as the accommodations. A great time to network with company folks and other agents. Nancy Snider, Wheatland Insurance

Once again this is the best convention out there. Great job by Jim, Barb, Tyra and Abby. – Kent Bergstedt, Bisnett Insurance

Where else ca n you hear from industry experts, lear n from peers yo u admire, an d mingle with company pa rtners and exhibito rs who serve our customers al l in one plac e! I wouldn’t mis s this event if I considered m yself an insu rance professional . – John Tim m, Timmco Insu rance

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“Cheeseburgers in Paradise” Fall 2013 • The Oregon Agent

Becoming a Social Business: A Model for

Success A social business is one that possesses the culture, organization and processes that position it to thrive in the current environment characterized by rapid change and the emergence of the “social culture” and “connected society.” This article defines what is meant by a social business and then describes how it is different from traditional hierarchical businesses. The complete picture of what social businesses ultimately will look like is still evolving, but the article points to the many exciting things agencies and other businesses are already doing to transform themselves into more flexible, social and collaborative organizations.

“

By Rick Morgan Neither do men put new wine into old bottles: else the bottles break, and the wine runneth out, and the bottles perish: but they put new wine into new bottles, and both are preserved.” (Matthew 9:17, King James version of the Bible) This parable accurately identifies the dynamic our industry grapples with as it tries to adapt, stay relevant, and make sense of the many challenges it faces in today’s rapidly evolving business environment. More often than not, agencies try to make social and mobile technologies work within the constructs of outdated business models, organizational structures and traditional processes. The result is an effort that fails. For example, social media is treated simply as a marketing tactic; a Facebook Page is launched and an administrative employee is put in charge. Disruption in day-to-day office procedures results with little if any real benefit. Clearly, there is a difference between organizations that simply engage in social activity and execute social media tactics, and those that actually become social businesses. What is a Social Business? A Google search will turn up hundreds of definitions. Understanding what a social business model is and how it differs from a traditional business model is not all that simple. The concept of social business is new and still evolving. Yet, the definition below is a good start. I have followed Amber Naslund on several social channels for the past four years and consider her to be a pioneer and thought leader in this space:

The Oregon Agent • Fall 2013

•

“Social Business is the creation of an organization that is optimized to benefit its entire ecosystem (customers, employees, owners, partners) by embedding collaboration, information sharing, and active engagement into its operations and culture. The result is a more responsive, adaptable, effective, and ultimately more successful company. Social business can encompass using external social media, but it’s not a requirement. Technically, an organization can be a social business without engaging publicly in social media at all.” (Amber Naslund, President, Sideraworks)

The concept of social business is more than theory. A growing number of agencies realize the need to adapt and understand that their business must be transformed or reinvented. They realize the need for a comprehensive social strategy that is clearly aligned with business goals. (Too often this is not the case. An Altimeter survey of nearly 700 social media professionals and executives found that only 34% of businesses felt that their social strategy was connected to business outcomes.)

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Further, these agencies have senior management involvement, organizational alignment and operational processes in place that enable execution of their social strategy. They also understand the need to integrate social methodologies into their organizations in order to enable their businesses to adapt to the fast and ever changing business environment. These agencies know that use of new technology, as well as social and mobile initiatives, will only be successful if there is an organizational and cultural transformation that changes the way employees work, interact with one another and communicate with customers and prospects – in essence, a reinvention of the agency. The concept of reinvention is not new to our industry. When we first started installing agency management systems, we found that there was a big difference between just using “automation” vs. becoming an “automated agency.” Only when agencies reinvented operational processes and procedures (remember Transactional Filing?) did their investment in technology start paying off. Only when management became involved did agency management systems transition from being primarily accounting systems to tools that supported agency service, sales, and marketing activity. As difficult as process change is – changing an agency culture and the “people” part is even harder. It all starts with 11716 WA IIABA ad.pdf 1 12/18/12 3:55 PM leadership. Personal Umbrella endorsed by IIABA

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Leadership Charlene Li, founder of Altimeter Group, and Keynote speaker at the 2013 ACORD Insurance Systems Forum said this about social business adoption: “The biggest determinants, by far, of whether you will be successful at social business are leadership and culture.” As mentioned above, all the technology in the world is useless if operational processes and organizational behaviors aren’t changed. Change starts from the top and an agency’s senior management and leaders are the ones responsible for facilitating this change. That is, success depends on change management initiatives being driven by agency leadership and practiced at every level from senior management down to customer service and support personnel. Thus, executives must not only talk about changing the organization; they must also become involved and demonstrate the behaviors that drive change. This is often referred to as “transformational leadership” where the leader provides employees with an inspiring mission and vision for the organization and encourages them to challenge the status quo and to alter the landscape in which the business competes. What does a Social Business look like? It is difficult to understand exactly what a social business is and how it is different from a traditional business by a definition alone. Perhaps looking at some examples of the operational and organizational changes a growing number of agencies are making will make it easier to understand what becoming a social business means. Trust Employees Empower and trust your employees to participate on social sites on the agency’s behalf and trust that they will do the right thing. Consider starting a blog and use it to educate your customers and prospects and demonstrate your subject matter expertise. But also use it to build and strengthen your brand personality. Agency staff will be the foundation for building a fully collaborative social business. A shift in employee behavior becomes a key success factor in driving organizational change. Encourage your employees to build personal brands on social sites. Thus, opting out of social networking activity is not an option. Successful social businesses depend upon a team effort. They create processes that support organizational consistency. For example, when a new employee joins the agency and wants to start blogging or Tweeting on behalf of the agency, a process should be in place that governs employee training and certification in the social media policy that the agency has in place. (See ACT’s guide to creating a social media policy.) Flexible and responsive work The definition of work changes – the incoming workforce will

demand a more open and flexible work environment. Options as to how, when, and where work happens are expanded. For example, new models in the form of small virtual offices, expanded geographic locations, flexible work hours, 24/7 availability, outsourcing, niche or expertise-driven agents are transforming how we define work. For example, becoming a social business means producers – in addition to using social tools to create personal brands – spend less time behind desks and more time in the field making “real life” contact, meeting in places like Starbucks. Collaborative work environment Develop a collaborative (vs. hierarchical) organizational structure. The new social and connected cultures have set new expectations when it comes to speed of communication and response. Traditional hierarchically structured agencies will not be able to adapt to this new standard of consumer expectation. Further, information must be available and shared – not horded, restricted or reside in silos. In fact, many agencies are inviting customers to participate in agency decisions. For example, they have customers sit on the agency’s board of directors or participate in advisory councils. Become transparent in your communication. Customers and employees expect to communicate more seamlessly and develop personal relationships. Agencies have found that this is one of the best ways to build trust. Community Involvement Become personally involved in your real-life community, including active involvement and support of charitable initiatives. The profiles of successful agencies reflect social values that are embedded in the core of the organization. This is also a key value for customers – they want to do business with a company that is socially responsible.

ones. (i.e., Yellow Page ads to digital/on-line marketing). Keep track of the communications preferences of your clients and be prepared for communications of differ types from a wide variety of devices. Reinvention of Agency Processes In addition to organizational and cultural changes, many traditional processes are also in need of reinvention. We need to think through how many of our everyday processes might and should change, enabled by the new technologies available to us. Everything from managing passwords, e-signatures, certificates of insurance, ID cards, online self-service, mobile options, policy delivery, billing and payment options, and even coverage offerings must change to meet current customer service expectations. Summary It is important to remember that consumer expectations are set by the culture, not the industry. The culture is shaped by new technologies and innovative applications of those technologies by other industries and social institutions. We have become a “social culture” and a “connected society,” where consumers are increasingly connected and empowered through changing technology to interact with and shape the world around them. Local agents are not on the verge of extinction, but we do need to change and adapt. We are past the theoretical stage – there are a growing number of agencies that have started to make the shift/transformation. Agencies that are able to make the transition and become social businesses will be well positioned to meet the challenges of the new business landscape and the demands of the new social culture and connected society. Tying this to the opening parable, they are putting new wine in new bottles.

Technology Deploy technology that facilitates collaboration. Technology will not change an organization’s culture. However, having a strong understanding of your agency’s cultural objectives will have an impact on your technical requirements, choice of technology and how to implement and configure it. Clearly, there will be need for agency management system technology to support the new social business model.

Additional Resources For additional examples as to how agencies are reinventing themselves for the future, please see: • ACT’s “Agency Perspectives on the Future” Video • ACT’s “Agency Strategies for Growth” Video • 5 Ways Agency Principals Can Seize the Future by Peter van Aartrijk • Agency Strategies to Manage Change Successfully by Jeff Yates

Responsive Marketing Most personal lines and small commercial customers are interacting with agents and insurers across the full range of channels: in-person, by mobile device, by phone, and even through services like Skype or Google Hangouts. It is necessary to understand your customer and adjust your marketing and communications accordingly. For example, shift marketing dollars from traditional marketing channels to digital

Rick Morgan rick@Aartrijk.com, in addition serving as a consultant to ACT and chairing the ACT Social Web Work Group, is senior vice president with branding consultancy Aartrijk. He has four decades of experience in innovative technology, marketing, and publishing in the independent insurance agency system. Rick produced this article for ACT www. independentagent.com/act. It reflects the views of the author and should not be construed as an official statement by ACT. Fall 2013 • The Oregon Agent

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Before You Can Close a Sale...

You Have to Open It! By Dave Kahle

very salesperson talks about “Closing the sale.” The best salespeople understand that before you can close the sale, you must open it. “Opening” means using well designed and delivered questions to thoroughly uncover as many aspects of the buying decision as possible. Too many sales people mistakenly concern themselves with only the technical aspects of the sale, and neglect entirely some of the other issues... Every salesperson talks about “Closing the sale.” The best salespeople understand that before you can close the sale, you must open it. “Opening” means using well designed and delivered questions to thoroughly uncover as many aspects of the buying decision as possible. Too many salespeople mistakenly concern themselves with only the technical aspects of the sale, and neglect entirely some of the other issues. Most competitors are able to meet the prospect’s technical needs. The sale often goes to the supplier who takes the time to understand the personal and situational aspects of the buying dynamics. I made a joint sales call with a client’s salesperson which illustrates this important skill. After measuring the area and recording the specs for some new equipment the prospect was interested in, the salesperson I was coaching said to the prospect, “I’ll fax you a proposal in a couple days, OK?” He had done an excellent job of noting the technical requirements, but a non-existent job of “opening “ the sale. As the salesperson was preparing to leave, I intervened and asked the following “opening” questions. In order to qualify the prospect, I asked, “What’s the possibility of you ordering this within the next few weeks? “ His response? “None at all. I’m just collecting information for the budget.” The salesperson would have vainly tried to close a sale that was never opened! He didn’t realize that because he didn’t take the time, nor have the courage, to correctly open the sale. Here are the rest of the questions I asked. “What’s your situation?” The answer to this helps you understand the underlying motivations for the prospect, and gives you a broad view of the pressures on him/her. The more you understand the situation from the prospect’s perspective, the more prepared you are to close the sale.

“What are you looking for in a proposal?” This is a simple question that so many salespeople neglect to ask. It helps you understand specifically what interests your prospect. Don’t assume you know the answer. You may be surprised! In my illustration, the salesperson assumed the prospect wanted a quick, thorough proposal. That assumption almost killed the sale. “Why?” Delivered with the right tone of voice (friendly and concerned), “Why” questions can be powerful tools for you and the prospect to understand the motivation for his/her interest, as well as the thought processes that led him to you. A “why” question can also frequently reveal some other approach to the problem and provide you with opportunities for other solutions. “How will the decision be made?” The answer to this question helps you understand the decision-making process and thus deal with the customer in the way he/she wants to be dealt with. All of these “opening” questions pave the way for you by further revealing the prospect’s situation, motivations, interests and processes. If you take the time to prepare them and have the courage to use them, you will gain sharper insights into the mind of the prospect and the situation he/she is in. Doing so will provide you far more information with which to close the sale when the time comes. The best “closers” are often those salespeople who take the time to properly “open” the sale. Dave Kahle is a consultant and trainer who helps his clients increase their sales and improve their sales productivity. Dave has trained thousands of salespeople to be more successful in the Information Age economy. He’s the author of over 200 articles and three books. The Six-Hat Salesperson, was recently released by AMACOM. For more information, or to contact the author, contact The DaCo Corporation, 15 Ionia SW, Suite 220, Grand Rapids, MI 49503; phone 1-800-3311287; fax 1-616-451-9412; info@davekahle.com www.davekahle.com Copyright 2000-2013 by Dave Kahle. Used with permission. Fall 2013 • The Oregon Agent

o t s e i g e t a e r g t a S n y a c n M e y l g l A u f s s e Succ

By Jeff Yates

ew would dispute that we are living in a time of rapid and profound changes. Consumer expectations are changing fast, often shaped by their experiences in other industries. More and more consumers are “connected” and will communicate with their business partners using any device that is handy to them at the time. These consumers are also empowered by social media and will use these tools to research their potential business partners, as well as to spread the word when they receive bad service. New technologies are enabling businesses to enhance the consumer experiences that they provide and to differentiate themselves from their competitors. Managing through all of this change has become a major challenge even for the most tech savvy agencies, as well as for our carriers and vendors. What are the key trends that will affect my business materially? Where will my major competitors be in five years? Which new technologies should I implement and when? Agencies can position themselves to prosper in this rapidly changing environment by creating a culture that embraces innovation and implementing a defined change management process. Below are several insights gleaned from ACT discussions to assist agencies in managing change successfully within their firms. Management Sets the Tone Agency management plays a key role in creating a culture where innovation is prized as a core value of the business. These agency leaders look at new technologies and other innovations 18

The Oregon Agent • Fall 2013

strategically, as tools that will give them a competitive advantage. They encourage ideas from every source – most especially from their employees and clients – as to how the agency can do things better. Clients are surveyed regularly and some agencies have even set up client advisory councils to test ideas and get fresh thinking. These agency leaders are involved in their associations and organizations like ACT, AUGIE (ACORD User Groups Information Exchange) and their user groups, as well as with their carriers, to keep up with the latest innovations available to them and the benefits other agencies are deriving from these implementations. The ACT website contains a number of resources to assist agencies in considering the key trends that are likely to affect them and how their fellow agencies are changing to position themselves for the future. (Examples include: 2012 Key Trends & Industry “Must Do” Issues (currently being updated); “Agency Perspectives on the Future” Video; How Consumers, Businesses & Agencies will Change; Attributes of Successful Independent Agencies of the Future.) Keeping up with Innovation in Other Industries Innovative agencies also are keeping up with the innovations taking place in other industries, because consumer and business expectations increasingly are being shaped by the experiences they have in these other industries. Agents can also learn from their business clients by asking them about their recent innovations and their resulting impact. Daniel Burrus, the author of Technotrends, notes that successful businesses of the future will not only need to be “agile” but “anticipatory.” Agility is important in reacting to competition. But being anticipatory enables you to become the competition because you are thinking through the “hard” trends that will affect you and you foresee where your consumers and your competitors

Fall 2013 â&#x20AC;˘ The Oregon Agent

will be in the future in light of these trends. (“Hard” trends are those that are certain and permanent.) The anticipatory firm begins to make the changes now to position itself to be where its consumers and competitors will be in the future. The other key for successful implementers of change is to create metrics, so that you can quantify whether the change has been a success or not. Employee Involvement & Training are Key The agencies that are implementing change successfully involve their employees in the shaping of that change. Employees – representing all of the disciplines affected by the change – work together in teams to implement it. Employees are empowered to innovate based upon the firm’s principles and are rewarded for doing so. There is an understanding that many innovations will not work perfectly at the start and will need to be modified and enhanced. These employees are also encouraged to work through these issues and to pursue problems with their carriers and vendors until they are fixed. The innovative agency makes sure it has the right employees in the correct spots. These agencies are looking for employees who are willing to embrace change and who know how to ask the right questions to get their jobs done correctly. These qualities have become the top factors these agencies look for in candidates – even more important than the individual’s insurance expertise. Some agencies also are striving to have a staff make up that reflects the multiple generations and ethnic groups their firm is serving, to encourage diverse thinking and more effective understanding of each of their client segments. These agencies are also more willing to delegate authority and responsibility to employees in areas where they have a special interest and skill (in social media, for example). In order to achieve a successful implementation, these agencies tell their employees the “why” for the change, how it fits with the agency’s vision (which the employees have bought into) and then thoroughly train them on how to implement the change effectively. Once the agency implements the new workflow or technology, the employees are expected to use it, so that there is consistency throughout the agency. Innovative agencies also provide their employees with training that helps them to become more effective employees in areas such as teamwork, leadership and management. “Slow Down in order to Speed Up” This expression, coined by Paul Fuller of Strategic Insurance Software, expresses so well the importance of the agency’s taking the time to make sure the change it is pursuing – whether a new technology, workflow, etc. – is the right solution. Employees should be given uninterrupted time to confirm that their defined solution is the correct one. In addition, rather than just automating a traditional workflow that was devised for a paper world, these agencies rethink the workflow from the ground up in light of the new possibilities that have been enabled by technology. 20

The Oregon Agent • Fall 2013

Willingness to Experiment Successful agency innovators are willing to experiment with new technologies and continue to “tweak” them based upon feedback from clients and others. Creating a mobile friendly website and mobile apps provide great examples. There is no question mobility and the “connected” consumer are both “hard” trends that will increasingly affect us. Steve Anderson reports in a recent TechTips that 43% of Google searches are local and 74% are performed via a mobile device. So, it makes good sense for agencies to position themselves for this inevitable change, fully realizing they are going to have to enhance these mobile tools over time based upon the features that consumers ask for and use. Another good example where agents are experimenting with new technology tools involves Internet marketing. Agencies continue to measure the effectiveness of the social media ads they run and modify the criteria until they hit upon a strategy that attracts the most correct leads, most cost effectively. The keys for these innovative agencies are: (1) to be willing to experiment; (2) to measure the effectiveness of each change they make; and (3) to refine the implementation as needed. Innovations Save Time & Money Successful innovations often cut the time it takes to accomplish particular processes. For example, Stu Durland, a New York independent agent, found that he was able to cut his agency’s turnaround time to receive signed client documents from an average of 23 days to 3-5 days by implementing an electronic signature tool. Think about all of the time and follow ups this one innovation is saving his agency! Similarly, Applied Systems has been able to greatly speed up its responsiveness to customers by creating faster communications vehicles for reporting issues and implementing an Agile development process, which brings together multifunctional teams to work with customers to devise and implement solutions without delays. There are numerous technologies available to agencies today that can enhance their competitive position. None of these specific implementations, however, is as important as positioning the agency to implement change successfully. The agency that embraces innovation as a basic value, keeps up with key trends and opportunities both within the industry and in other industries, empowers its employees to participate in the change process and implements a defined change management process – will position itself effectively for an environment that will continue to experience rapid and profound change. Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. Jeff can be reached at jeff.yates@ iiaba.net. ACT’s website is www.iiaba.net/act. This article reflects the views of the author and should not be construed as an official statement by ACT.

Fall 2013 â&#x20AC;˘ The Oregon Agent

Keeping Agency Da

The Oregon Agent â&#x20AC;˘ Fall 2013

Kate Gluck & Paul Fuller provide nine great tips for agencies to follow to protect against data breaches, which can destroy an agency’s reputation and cost a lot of money to remedy. The article also points to resources the agency can access to get further information and to implement the recommendations. The authors seek to simplify an increasingly complex subject – laying out a series of manageable steps – in the hope that agencies will take action now to bolster their current agency security procedures where needed.

ta Secure By Kate Gluck & Paul Fuller, Strategic Insurance Software

enjamin Franklin once said that distrust and caution are the parents of security. The expression seems remarkably fresh and relevant in today’s world, especially when it comes to protecting sensitive client data. In fact, this caution is becoming more and more necessary. In an age of highly portable data (and of increasing identity theft), independent agents have an ever-increasing responsibility to keep a lock on their client data. State and federal privacy and data breach notification laws and regulations (e.g., Gramm-Leach-Bliley Act and the Health Insurance Portability and Accountability Act (HIPAA)) put pressure on you to keep your clients’ sensitive personal data safe. Even more important, if a data breach were to occur, your company’s reputation would take a nosedive. In an attempt to simplify a complex area, this article will touch on nine things – some basic and some not-so-basic – that an agency can do to mitigate risk of a data security breach. 1. Keep data in a password-protected, encrypted space Because so many of us these days carry our computers around with us, there is always danger of them being lost or stolen. While most people are honest, unfortunately the same cannot be said for everyone, and precautions must be taken to store client data in a way that is inaccessible to unauthorized users. The best way to do that is to encrypt and password protect it. There are three easy ways to do this: • Store data in your agency management system – Because your agency management system is password protected, and data it sends over the Internet can be encrypted, data that is saved in your system or sent via Real

•

Time, secure email or a Virtual Private Network has some measure of safety from prying eyes as long as the proper protocols are followed. Data retained on most agency management systems, however, is not encrypted, so it is extremely important to keep your server in a secure location if housed within your agency, or if you use your vendor’s online system, to have confidence in the security measures practiced by your vendor. Encrypt a folder on your hard drive – While your agency management system is a good location to store most client data, it is almost inevitable that you will have things saved outside of your system, such as on a laptop or USB flash drive. We recommend that the agency strictly limit the employees and instances where client personal data can be kept on such mobile devices and then only for a specific use, after which time the data is deleted from such devices. The trick is to keep this data secure as well. The first option for securely storing confidential information outside of your agency management system is to encrypt space on your hard drive. While this may sound complicated, in reality it is rather simple, so long as you know what to do. o To create an encrypted space—essentially a password-protected folder that you can save files to “on the fly”—our recommendation is that you use the very good (and free) TrueCrypt software. The opensource software is available for download at (http:// www.truecrypt.org/), as is a step-by-step beginner’s tutorial on how to create and use a TrueCrypt container. o Once you get the system installed and in use, the beauty of encrypted space is fourfold. First, in many Fall 2013 • The Oregon Agent

•

cases it’s free. Second, the simple step of creating and saving to a single file provides an added layer of protection. Because you and you alone decide where you want to file your encrypted folder, anyone trying to gain unauthorized access would not only need the password, they’d also need to know where to look. Third, it’s mobile. You can copy and backup the password-protected file anywhere. Lastly, it won’t slow down your machine. o Summary: creating encrypted space on your machine is a convenient and controllable way to protect data that doesn’t cost performance. Encrypt entire hard drive – If you’d prefer not to worry about having to remember to save confidential information to one specific folder, another option is to encrypt your entire hard drive. From a user standpoint, essentially all this would mean is an extra login. From a security standpoint, it is about as secure as you can achieve, short of prohibiting that such data be kept on such portable devices. So secure, in fact, that if you were to forget your password, the likelihood you’d even be able to get back in is slim. One option to do this is BitLocker. (Available in the Ultimate and Enterprise editions of Windows 7 and Vista and in the Pro and Enterprise versions of Windows 8.) Another is the aforementioned TrueCrypt. Something to consider when deciding whether to encrypt your entire hard drive, or just space on your hard drive, is that in some cases, particularly with older computers, encrypting the hard drive may slow the performance of your machine somewhat. Summary: The beauty of encrypting your entire hard drive is that if your machine gets stolen, without the password, no one can make sense out of it – the whole hard drive becomes a puzzle. Smart phones and tablets – Agent use of these devices is growing exponentially and they pose additional security risks. Personal data might be contained in emails received from the client. Agency employees should take care to delete these emails promptly and not transmit this kind of data from these devices via unsecure email. In addition, the agency should make sure their employees have activated the password protection on these devices and should employ a remote wiping technology, so that if the employee loses or misplaces the device, the agency can restore the device to its original manufactured state with all of its data removed. In addition, some larger agencies are starting to employ software on the mobile device that walls off and secures business applications and data.

2. Create “Strong” Passwords and Keep them Secure Because your password is the first line of defense in preventing 24

The Oregon Agent • Fall 2013

unauthorized file access (whether to your agency management system, your encrypted file or your entire encrypted hard drive), it is important to create strong passwords and store them in a safe place. Best case scenario would be not to write them down at all. If you must write them down, don’t carry them around with you or leave them in an easily accessible place. Microsoft offers the following suggestions for creating a strong password: • Make sure it is at least 8 characters long • Make sure it does not contain your user name, real name, or company name • Make sure it does not contain a complete word • Make sure it is significantly different from other passwords you have used • Make sure it contains at least one uppercase letter, one lower case letter, one number and one symbol. 3. Change Passwords Often Experts have different opinions as to how often passwords should be changed. Our best advice on this is to set a standard for your agency (whether it be every month, every three months or every six months) and enforce that policy agencywide. Of course, if you ever have any reason to believe that your password has been compromised, it should be changed immediately. Many systems require this from you, and do so for good reason. It is much harder to hack systems that require frequent password resets. It adds a level of complexity for the hacker that can be both a deterrent and a safeguard if there is a breach. As you know, carrier portals continually request password changes from all of their users to ensure fraudulent access is minimized. Make sure your agency management system has password management capabilities – so when you change your password on the carrier site, you can change your password in the agency management system and retain your Real Time access. Changing these passwords for multiple employees, carriers and other entities is cumbersome. The good news is that there is an industry movement underway to streamline these processes. The ID Federation (http://idfederation.org/) is a notfor-profit group dedicated to creating the Trust Framework to enable agencies and others to use a digital identity provided by a trusted Identity Provider to authenticate themselves with carriers and other business partners in place of passwords. Look for vendors to emerge to start to provide these digital identities to agencies in the coming year. 4. Keep User Permissions Tightly Controlled Unfortunately, one of the biggest password related problems we’ve seen across the board is that many agencies not only share their agency management system passwords among staff

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Fall 2013 • The Oregon Agent

members, they leave the user permissions wide open. Because of the sensitivity of the data stored in the system, the only ones who should have access are those who use it day in and day out. Use your user permissions well. The better systems will have fairly comprehensive permission lists that are assignable by individual user. Make sure you: • Understand the levels of permission you can set within your system. • Understand the access that each of your team members needs to your system to perform their job optimally. • Implement based on your agency’s best practices. • Make sure employees understand that they should not share their passwords with any other employee or person. For example, many agency systems have permissions to dictate who can pull data in a mass fashion from your system. Take the time to understand these permissions, and who needs to have access. Do your producers need to be able to export a client list with sensitive data? Do your CSRs? If not, consider implementing this permission to restrict their ability to do so.

7.5 x 4.625 jgs_umbrella_7.4x4.625v1 5. Remember to Log Out While it may seem simplistic, remembering to log out is one 2012

of the more important steps you can take towards keeping your data secure. As long as you are signed in, it doesn’t matter how

many layers of security you have or how good your password is – anyone who can get their hands on your computer or mobile device can access your data. Most systems will have an automatic log-out feature that you can set. For example, if you are not active on a computer for 10 minutes, you will be logged out of the system. Make sure you are using this effectively. If you walk away from your office with your system left open and this auto log-out feature is not active, you essentially give the keys to your kingdom to anyone that walks in the door. 6. Protect Outbound Data While everything we’ve discussed up until this point has related to the data residing on your computer, protecting your outbound data is just as essential, if not more so. Here are a few quick tips: • Use Real Time – As emphasized in the ACT article, Agency Strategies to Send & Receive Personal Data Securely, Real Time offers a much more efficient and secure method to handle transactions with carriers than email. When you send a file using Real Time, communications are automatically encrypted and kept within both the agency’s and carrier’s management systems. • Secure your email with TLS (Transport Layer Security) email encryption. ACT has published a number of articles

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outlining the basics of TLS encryption. Rather than duplicate these efforts, we suggest the following reading: o Protect Your Clients with Secure Email Using TLS o TLS Email Encryption--Frequently Asked Questions o Insurance Carriers Enabled for TLS Email Encryption for the Agencies TLS is the industry recommended secure email solution for business partners where there are frequent email communications going back and forth, such as between agencies and carriers. TLS is an open standard that is transparent to end users, but it requires that it be activated in the email servers of both partners. Most agencies are also likely to need to employ a proprietary email solution for use with their clients (or set up a secure client portal on the agency website), for those instances when sensitive personal data is transmitted to the client, such as that contained in the insurance policy. When storing/saving client emails, attach them to files within your password protected agency management system instead of saving them in the Outlook application.

7. Use Security Software If you are using a reputable online hosted agency management system, the data in your system should be protected with

Internet and server firewall data protection, malware & antivirus protection, as well as weekly security patch updates to Windows and Internet and server firewall data protection. You should be receiving maintenance window updates from your agency management system provider that let you know these things are being kept up-to-date. If your agency management system is housed within the agency, you should make sure similar security hardware and software are employed. To protect data saved outside your agency management system, we also recommend that you use one antivirus program, a spyware scanner regularly, and keep your PDF reader (usually Adobe Acrobat Reader) updated and on the latest version. While this paper will not recommend one particular vendor, below are a number of vendors that supply both a standalone anti-virus package, along with a suite of security software for your machine. • McAfee • Symantec • Sophos • AVG • Microsoft Security Essentials In addition, it is recommended that you update your Microsoft operating system with the latest patch levels on your machine. For more information on the latest patch levels for your operating system, visit www.microsoft.com.

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8. Be Careful when using Public Wi-Fi While free public Wi-Fi is certainly convenient, if you don’t protect yourself against data thieves and hackers, that convenience could well come at a price. Steve Anderson put it quite succinctly in his Tech Tips article, Free, Public Wi-Fi Can Be Dangerous to Your Health when he wrote, “You go to an airport or other hot spot and fire up your PC, hoping to find a free hot spot. You see one that calls itself “Free Wi-Fi” or a similar name. You connect. Bingo -- you’ve been had! The problem is that it’s not really a hot spot. Instead, it’s an ad hoc, peer-to-peer network…” Fortunately, there are things you can do to protect your data, yet still access the Internet while you are on the road. Here are a few suggestions: • NEVER pick a “free” wireless network that is not identified clearly as a usable network by the provider. For example, most hotels and all Panera restaurants have clearly named networks and written instructions for accessing. Be careful not to use the network that advertises itself only as “FREE-WIFI!” • ALWAYS select the Public Network option when prompted. This uses Windows technology to make your device as undiscoverable as possible on the network. This can be hacked, but it is a critical first step. • Read the terms and conditions that come up if prompted (e.g., at Panera); make sure you are familiar with the security the specific Wi-Fi network is offering, and the associated liabilities. • Use a Virtual Private Network (VPN) when accessing your agency’s system. A VPN is a relatively inexpensive way to ensure secure online access wherever you are. Three examples of providers offering VPN solutions designed to provide a secure online experience – even in a free public Wi-Fi environment include: HotSpot Shield (http://www.hotspotshield.com/); GoTrusted (http://www.gotrusted.com/) and Witopia (https://www.witopia.net/) • Purchase and use a Wireless Internet Card. In very non-technical terms, a wireless Internet card is a small device you attach to your computer that will provide access to the Internet over a wireless carrier’s cellular network. These are available, for a fee, from the major cellular providers. Many 3G and 4G smartphones can also substitute for the wireless card for a small extra fee per month, and data charges. 9. Create a Security-Minded Agency Culture You want to have a clear understanding throughout the agency as to the major information security risks facing your firm, grounded in a written security plan and written procedures implementing the plan that are consistently applied. It is also 28

The Oregon Agent • Fall 2013

critical for you to have a good understanding of the information security requirements imposed by the state and federal privacy and data breach notification laws and regulations that are applicable to your agency. A common requirement of these laws, in addition to having and implementing a written security plan, is to appoint a Security Coordinator who takes ownership of the information security issue within the agency. Most important of all, it is essential for you to train your employees so that they have a good awareness of the security risks facing the agency, or in the words of Franklin, a healthy sense of “distrust and caution.” Many avoidable security breaches result directly from employee mistakes, because they are unaware of the risks. Agencies should ask their employees to commit to the requirements of the firm’s agency’s information security plan and procedures, and the agency should regularly audit for compliance. ACT has created a prototype agency information security plan that agencies can use as a starting point in creating their own plan. In addition, see the Security & Privacy section of the ACT website for a wealth of additional security-related information. Summary Some of these tips can easily be implemented; others will take a bit more time. When it comes to file and hard drive encryption, setting up VPN security measures or TLS email encryption, and standardizing security software across your agency, we highly recommend you get your IT consultant or department involved in the planning and implementation. The important thing, however, is to start: define and outline security measures and make them a standard requirement for everyone in your office. Note: products mentioned in the above article should not be considered product endorsements, just suggestions for where you can go to learn more. This article was written for ACT by Kate Gluck, Director of Marketing, and Paul Fuller, EVP – Product Management, of Strategic Insurance Software (SIS). Kate and Paul can be reached at kate.gluck@sisware.com and pfuller@sisware.com. This article reflects the views of the authors and should not be construed as an official statement by ACT. 1 2

Kristin, Finklea M. “Identity Theft: Trends and Issues.” Federation of American Scientists. Congressional Research Service, Feb. Web. 22 Oct. 2012. “Tips for Creating a Strong Password.” Windows. Microsoft, n.d. Web. 22 Oct. 2012. http://windows.microsoft.com/en-US/windows-vista/Tips-for-creating-astrong-password . Yates, Jeff. “Agency Strategies to Send & Receive Personal Data Securely.” Independent Insurance Agents & Brokers of America. ACT, Agents Council for Technology, n.d. Web. 22 Oct. 2012. Anderson, Steve. “Free, Public Wi-Fi Can Be Dangerous to Your Health.” Steve Anderson.com Tech Tips. Ed. Steve Anderson. n.d. Web. 22 Oct. 2012

Many companies exploring alternative distribution channels believe that some people don’t want the advice and counsel of an agent. Know what? They’re right! Know something else? You’re better off letting them have those customers! In fact, the best way to “compete” with direct sales (e.g., via company internet sites) is to stop selling “insurance.”

You’re Selling the

Wrong Thing!

any companies exploring alternative distribution channels believe that some people don’t want the advice and counsel of an agent. Know what? They’re right! Know something else? You’re better off letting them have those customers! In fact, the best way to “compete” with direct sales (e.g., via company internet sites) is to stop selling “insurance.” Independent insurance agencies are a means to an end for insurance companies. They are one means for companies to distribute their insurance products. Independent insurance agencies have long been a very efficient method for distributing, or selling, insurance because this method eliminates the need for insurance companies to invest huge sums in their own distribution force, buildings, computers, and most of all, people. However, insurance companies have alternate options for distributing their products and many alternatives are becoming more prevalent and economically feasible. As technology improves, low-cost insurance is more easily delivered directly to the consumer and the quality added by independent agents becomes less valued by certain classes of customers. These customers do not believe the difference in the quality provided by personal service versus direct methods, such as the Internet or an 800 number, is big enough to justify paying a higher price. Therefore, agencies need to identify those clients who do value their service and only solicit prospects likely to buy from an agency. Consider Allstate’s approach. In the October 1998 Best’s Review, Allstate President Robert Gary noted that as important, or even more important, than socioeconomic status, family size, cars, and homes in determining what to sell is the buyer’s attitude. When comparing two otherwise similar prospects he states, “One might be...a minimalist, who just doesn’t believe in insurance” and only buys auto or homeowner insurance because laws compel him to do so. His demographic twin though could be “a strong believer in insurance.” Obviously, the latter is more likely to value the personal attention and customized coverage an independent insurance agency can provide while the former would be happy Fall 2013 • The Oregon Agent

to buy insurance without ever talking to an agent or any other we spent the $232 a year for insurance. It’s a bargain.” These insurance person. These people want minimal interaction people were saved from their own lack of knowledge by an with an agent, low cost insurance, and they believe they know insurance agent! enough to obviate the agent. The Internet may therefore be Unfortunately, many producers act as though insurance is the best distribution method for the minimalists with some a simple product. They only offer what the client already has, computer savvy. they do not offer the best coverages and they focus on price. As As a result, independent agents must begin focusing a result, consumers will never know they are ignorant and they more and more on the “strong believers in insurance” and will eliminate the agent out of ignorance. If that happens, both tailoring services to meet their needs. The most obvious way consumers and agents will lose and we only have ourselves to to accomplish this is to offer all the coverages a client needs. blame. While agents also need to offer the best coverage to all clients Rather than selling insurance, sell knowledge, advice, for E&O purposes, this approach also makes each sale much experience, and information, and provide more alternatives in more profitable. Currently, most producers do not even ask less time. By doing so, we can beat the Internet sales, we can what coverages the client wants, much less analyze their true beat 800 number sales, and we can beat all competition! Agents needs. Instead, many simply get a copy of the current coverages are a means to an end for distributing insurance. Distinguish and try to duplicate those coverages at a lower price. For yourself from the competition...provide an added value to the minimalist customer, this approach may work. Your best become the preferred means for distributing insurance! customers will not be minimalists though! The best way to compete with direct sales through the Chris Burand, Burand & Associates, LLC Internet is to stop selling insurance. Instead, sell advice with a PMB 345, 1829 S. Pueblo Blvd., Pueblo, CO 81005 product thrown in for free. After all, anyone with a license, and Phone: 719/485-3868 Fax: 719/485-3895 probably a few without, can sell insurance. Selling insurance E-mail: chris@burand-associates.com requires no creativity because companies provide the product. Web Site: www.burand-associates.com Selling insurance is the easy way -- not the smart way -- to sell. Few people can sell good advice regarding the best way to protect assets. Few people are creative enough or willing to work hard enough. Therefore, those who can and do will have a terrific competitive advantage. Additionally, most consumers who believe they can successfully bypass the agent are kidding themselves. Insurance is complex, with homeowners insurance alone having at least 30,000,000 Imperial PFS, the leader in premium financing, possible combinations of coverage. Most continues to focus on the success of our agency partners. consumers do not understand enough The relationships we have developed with our agency partners are a about insurance and protecting their critical element in the way we do business. These relationships have assets to eliminate the agent.... enabled Imperial PFS to continually develop and improve programs In a letter to the editor in and services. Customer focus is why we operate a nationwide network of local offices, each shaped by the region it serves. We Countryside (Jan/Feb 1999), an insured look forward to your continued partnership with Imperial PFS and whose house burned down wrote, “We providing you the most comprehensive benefits in the industry. had a newly built home that we moved into in December 1997. Our insurance agent suggested we insure for more than the amount I was looking at, and I’m glad we did...we had $67,000 insurance on our possessions. This may sound like a lot, but it’s not. We lost everything to a fire but the clothes we were wearing. ipfs.com marketing@ipfs.com Everything we had accumulated in 57 Bothell: 800.888.2750 Spokane: 800.234.7373 years of life was gone...I’m so glad

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