Big I Virginia, Fall 2015 by Blue Water Publishers, LLC

BIG I The

Official Publication of the Independent Insurance Agents of Virginia

Virginia Fall 2015

The Top Eight Sales Success Traits The Little Stuff That Drives Your Customers Away Securing Cyber Coverage for Your Agency Discrimination In the Workplace

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Fall 2015 • THE BIG “I” VIRGINIA

FALL 2015

BIG I The

Official Publication of the Independent Insurance Agents of Virginia

Virginia

The Big I Virginia is a publication of the Independent Insurance Agents of Virginia 8600 Mayland Drive, Richmond, VA 23294 Phone: 804.747.9300 / Toll-free: 800.288.IIAV (4428) Fax: 804.747.6557 E-mail: members@iiav.com / Website: www.iiav.com IIAV IS AN ORGANIZATION DEVOTED TO PROMOTING, ENHANCING, SERVING AND ASSISTING INDEPENDENT INSURANCE AGENTS.

The Big I Virginia is a publication of the Independent Insurance Agents of Virginia and is published quarterly by Blue Water Publishers, LLC. IIAV and Blue Water Publishers, LLC do not necessarily endorse any of the companies advertising in the publication or the views of its writers.

Inside this issue 6

Message from the Chairman of the Board - Jason Angus

Message from the State National Director - James P. Bradner

Message from the President and CEO - Bob Bradshaw

The Top Eight Sales Success Traits

The Little Stuff That Drives Your Customers Away

Are You Secure? How to Secure Cyber Coverage For Your Agency

Discrimination In the Workplace

Personal Brand vs. Business Brand

Climbing the Ladder From Producer to Principal

What is A Young Agent?

Potential E&O Claim: Should I Report It to My E&O Carrier?

What Would You Do If You Had A Data Breach?

2015 Young Agents Conference: October 8-9

IIAV Staff Bevin Anderson Communications/Media Director banderson@iiav.com

Sherry Grubbs, AISM Accounting Manager sgrubbs@iiav.com

Nettie Ardler, CPIW, DAE, AIAM Insurance Account Executive aardler@iiav.com

Joe Hudgins, CPCU Technical Consultant jhudgins@iiav.com cell (804) 929-4138

Robert N. Bradshaw, Jr., MAM President & CEO rbradshaw@iiav.com cell (804) 929-4134 Teri Chester Executive Secretary/ Receptionist & Membership Coordinator tchester@iiav.com

THE BIG “I” VIRGINIA • Fall 2015

Bonnie Joyce Insurance Administrative Assistant bjoyce@iiav.com

Thank You Advertisers Agents Insurance Markets 31 Allstar Financial 43 Amerisafe 29 Anderson and Murison 18 Atlantic Specialty Lines 11 Atlas General Services 41 Builders Mutual Insurance 47 Burns & Wilcox 9 Coastal Agents Alliance 42 Consumers Insurance / Motorists Group 27 FCCI Insurance Group 35 GUARD Insurance Group 34 Harford Mutual 41 Harleysville Insurance 48 Hilb Group 33 Interstate Insurance Management 19 Jackson Sumner & Associates 2 Johnson & Johnson 24, 25 MEMIC 21 Millers Mutual Group 7 Nationwide 13 Penn National Insurance 17 Preferred Property Program 15 RPS Rollins 3 SIA of VA 29 SIAA 14 Southern Insurance Company of VA 23 The Iroquois Group 5 Utica National 42 For information on advertising please contact: Jim Aitkins, Blue Water Publishers, LLC 22727 161st Ave SE, Monroe, WA 98272 phone: 360.805.6474 / fax: 360.805.6475 jima@bluewaterpublishers.com

Linda Loving, CIC, AISM, AIAO IIAV Chief Operating Officer & VFSC Executive Vice President loving@iiav.com cell (804) 929-4133 Danny Mitchell, AAI Vice President Business Development dmitchell@iiav.com cell (804) 929-4135 Susan E. C. Perkins Membership/Education Coordinator sperkins@iiav.com

Kristina Preisner IIAV Director of Education & VAIA Executive Director kpreisner@iiav.com Marie Toney Sales Associate mtoney@iiav.com cell (804) 929-4136 Bonnie J. Warren Insurance Account Executive bwarren@iiav.com

Strong Agencies Made Stronger

For over 30 years Iroquois has helped make strong, independent agencies even stronger and more independent. And it shows.

LEADERSHIP Iroquois recognizes some of its members who have recently played key leadership positions within the industry: Ryan M. Andrew

Douglas B. Megill

John W. Atkins, III

Crystal Miller-Johnson

Barry K. Carper

J. Vince Mullins

W. Montgomery Dise

Michael Partlow

Dawn Dotson

Jordan Reynolds

Michael F. Funkhouser

Robert T. Short

Frances P. Garrett

Dennis C. Winfree

Shannon H. Herring

Benjamin G. Winters

VFSC Board of Directors The Andrew Agency, Inc.

District 5 Director, IIAV McLean Insurance Agency, Inc.

President, VFSC Board of Directors Lewis Insurance Associates Immediate Past President, PIA of VA & DC Insurance Center of Winchester Second Vice Chair, IIAV Asset Protection Group, Inc.

First Vice Chairman, IIAV Associated Insurance Systems Services, Inc. Board Member, PIA of VA & DC Huffman Insurance Agency, Inc. VFSC Board of Directors Partlow Insurance Agency, Inc.

VAIA Board of Directors Robins Insurance Agency, Inc.

Independent agents with premium from $1 million to $100 million join The Iroquois Group® for market optimization and strategies to increase their revenue, profits and agency value—without giving up their independence.

Board Member, PIA of VA & DC SWVA Professional Insurance Agency, Inc.

Vice President, VFSC Haun Magruder Inc.

Immediate Past Chairman, IIAV Short Insurance

Past President, PIA of VA & DC Chas. Lunsford Sons & Associates, Inc. Young Agent Liaison, IIAV Hubbard Insurance Agency, Inc.

VAIA Board of Directors Wood Insurance Agency District 3 Director, IIAV Winters Oliver Insurance Agency

Edward C. Kellam, Jr. District 2 Director, IIAV Ware Insurance

The

IROQUOIS Group

To learn more about how Iroquois could further strengthen your agency, contact Matt Ward at 804-320-6984 or mward@iroquoisgroup.com and visit our website at www.iroquoisgroup.com

Fall 2015 • THE BIG “I” VIRGINIA

Chairman of the Board Jason Angus jangus@hilbgroup.com

Is There a Young Agent in Your Agency?

Define a YOUNG AGENT, you say. Well, for the sake of this discussion let’s assume anyone under age 41 is a YOUNG AGENT. Most agencies generally have at least some licensed staff persons nestled in this age category. But a surprising number of well-established agencies do not. And for many, in a few short years those agents currently qualifying will have outgrown the designation. What is your agency doing to encourage today’s younger generation members to enter this business? What is your agency doing to ensure that your younger agents already on staff will remain? If you are considering bringing in a new young producer, you should seriously consider having him/her evaluated using one or more of the recognized firms that test for sales skills, etc. A frequently asked question focuses on just how an agency should compensate a new young hire. For those in an agency supporting role such as a CSR, you have the benefits of some really helpful data from Best Practices. Averaging supporting position compensation levels as well as account and premium volume

THE BIG “I” VIRGINIA • Fall 2015

loads per employee are very helpful management tools and great barometers for your business. When bringing on a new producer there are very few good “norms” to follow. What may work exceedingly well for Agency A may not suit the business model or production expectations of Agency B at all. Your IIAV staff can be a terrific source of compensation ideas especially if you have not brought on a new producer recently. Training is another issue altogether. Long gone are the days when a small agency could simply, easily, and affordably send new producer Jim or Sally off to the Insurance Company Agents School and expect to get a fully-trained, “ready-to-hit-the-streets” sales genius in return thirty days later. Developing your own in-house training is one option. That could be time-consuming, not thorough, and taxing on your existing staff. Taking advantage of outside sales programs may suit you better. The important message here is to begin developing a strategy to recruit new agents and encourage them to join your firm. Start with a plan and don’t hesitate to reach out to IIAV for assistance.

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State National Director

James P. Bradner jbradner@towneinsurance.com

Today’s Youth: How are You Encouraging Them to Get into the Insurance Industry? For the seemingly countless number of young people seeking to enter today’s job market, the immediate opportunities for a meaningful and long-lasting career are slim. The job market is tight. Current economic trends force many businesses and industries to greatly limit expansion, thus stifling new hiring. The independent insurance agency system is literally begging for new, younger talent, but there is a tremendous disconnect from this industry starving for new employees and an eagerness for the new youth to select the independent insurance agency system.

What are you doing to change that perspective? Enticing today’s youth to seriously contemplate the independent agency as a career path is not easy. First, let’s examine some of the negatives. •

Agencies are not doing a great job of advertising for positions.

•

Potential candidates don’t really understand the duties expected for the jobs available.

•

Training is limited.

•

Initial pay scales may be uninviting for neophytes entering the business.

•

“Insurance Agent” may not resonate well as a moniker for a job title.

And there are surely many other reasons you may think of.

THE BIG “I” VIRGINIA • Fall 2015

As an industry we must do a more thorough and convincing job of illustrating the rewards for those who may enter this business. The agency business has become much more flexible when attracting new talent. Individuals can specialize in personal or commercial lines, or focus on more segmented, niche areas within such lines. Our friends with the career life carriers have done a far better job of laying out a career pathway, income potential AND training opportunities. Additional opportunities abound for remotely located employees using virtual offices. More and more frequently I run across agencies with employees in other states working as though they were just down the hall. Potential hires (especially producers) should be shown realistic charts of production growth and income possibilities. If equity opportunities are available down the road, then let’s point this out more clearly with examples and value explanations. And, perhaps most importantly, focus on one of the greatest assets of our industry ----- INDEPENDENCE. How many other careers have as many ways for an employee to easily chart his or her own course as ours? We have lot to offer today’s youthful employees.

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President and CEO

Robert N. Bradshaw, Jr., MAM rbradshaw@iiav.com

Are you bullish on the future of our profession? I am! There’s not an industry alive that’s not concerned about the “graying of America” and wondering where future employees are going to come from. A lot of these businesses are looking at automation – such as automated tellers at banks and even sit-down restaurants. That will help in some small manner but you can’t replace the customer service experience provided by your agency with technology, nor do you want to. Technology is great at doing some things but the true customer service experience is through person to person contacts and I firmly believe that people want to work with an associate, someone whom they trust. They want to work with those who care. When I attend our young agent meetings, I feel nothing but excitement for the future of our profession. We have been actively working to develop our young agent program and to associate with the insurance programs at ODU and VCU. It’s an awesome group of people who have entered our profession and industry for a wide range of reasons. But the long and the short of it is that they all seem to care about their clients and want to make sure that they take the best possible care of them. Whether the client is an individual, family or business, it’s clearly a personal relationship and one that our young agents/professionals grasp. I must also include the participation of young professionals from our company partners, too. The

THE BIG “I” VIRGINIA • Fall 2015

synergy and networking of these meetings is hard to quantify but it’s clearly an enormous resource. I have only been impressed with the young professionals representing companies and attending our young agent meetings. It’s also good to see – through IIAV’s hard work – that the young professionals from the bankers association, CPA Society and REALTORS are being included in the IIAV Young Professionals social outings. These professional groups have the common desire to help and represent consumers in the protection of personal and professional assets. This will help our member agencies well beyond the next couple of years. If you have a young professional in your agency, you not only owe it to yourself, but also to your profession, to encourage them to get involved and start networking with their peers. Remember when you were coming up through the ranks and how it was to know others in your age group. We’re all young at heart….but some of us are younger than others. Encourage your young agents to get involved. Finally, on a purely selfish level – I look at our young agent professionals who are actively involved and can only think that I see IIAV leadership for the next ten to twenty years….and that’s exciting. Again, what a great group of professionals, and how wonderful to know that soon our industry, profession and association will be in their hands. Awesome!

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THE

TOP 8 Sales Success Traits What Makes the Top Salespeople the Top Salespeople? By John Chapin

While the answer to this question might seem obvious, the top sales success traits aren’t always that simple. In over 27 years in the industry, I’ve seen lots of great salespeople and all of them always have the following eight traits.

LASER FOCUS ON WHAT’S IMPORTANT

No matter what’s going on with the economy, in the industry, or in the world in general, top salespeople always hit their numbers. They always manage to make the calls, and ultimately, the sales that they need to make. This comes from the realization that, as a salesperson, only one thing counts: how much you sell. Top salespeople know that, no matter what, they simply have to do the necessary prospecting, presenting, and closing and they are committed to get them done regardless of what’s going on around them. As a result, they always sell more than anyone else in good times and in bad. Changes in price, competition, rules and regulations, and other factors that sidetrack other salespeople, never seem to affect them. They also don’t get bogged down in other peripheral items such as: 12

THE BIG “I” VIRGINIA • Fall 2015

research, having the “perfect” call, paperwork, or other items that keep them from talking to prospects and selling.

WORK ETHIC

Top salespeople are the hardest working people around and they do the work necessary for success. They also work smart, but when it comes to making phone calls, knocking on doors, and doing the other grunt work, they don’t look for short cuts or the easy way out, they simply do it. They show up before everyone, work after everyone, and they get more accomplished than everyone else. They answer their phone before and after business hours and they are super responsive. If they are in the twilight of their career, they may not put in the hours and work as hard as they once did, but when building the business initially, no one outworked them. Also, when they have to, they are still willing to do what needs to be done.

AN ABILITY TO ACT IN SPITE OF FEAR AND STEP OUT OF THEIR COMFORT ZONE

Salespeople can become awfully creative when it comes to staying in their comfort zone and avoiding that which they fear. In 27 years I’ve heard some of the most ridiculous excuses as to why people can’t make calls, can’t close the deal, and ultimately can’t or won’t do what’s necessary for success. I’ve heard excuses related to pets, kids, religion, health, politics, and other concerns that are so ridiculous, if I gave an example, you’d think I made it up. Top salespeople on the other hand, step out of their comfort zone and face and overcome fear every single day. They make the call they are afraid to make, try the crazy idea that might embarrass them but just might work, and they do whatever it takes to be successful regardless of how scared they are. In short, they simply do what needs to be done regardless of their fear or discomfort.

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HAVING INTEGRITY AND CHARACTER

While you can have some short-term success in sales without either of these, long-term success is impossible without both. Integrity and character involve being honest with people and truly caring about them. With integrity and character you will not make a sale unless it is right for both parties involved. You will also always do what’s right for the person you’re selling to even if that means sending them to the competition. Granted, you shouldn’t have to do that too often; if you do you are selling the wrong product or are with the wrong company. That said, you need to be willing to do what’s right regardless of the situation or circumstance. Knowing that, at the end of the day, all you have is your reputation.

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THE BIG “I” VIRGINIA • Fall 2015

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A FOCUS ON PEOPLE AND RELATIONSHIPS

Related to the above, your focus needs to be on people and longterm relationships. At the end of the day, unless you’re selling batteries at Walmart, the most important element in the sale is the relationship. This also means you need to be staying in touch with people and continually developing and strengthening relationships. In the end, your long-term success will come down to the loyalty and size of your network.

are continually upgrading their skills and developing themselves personally and professionally. They constantly get better at selling, communication, and understanding other people.

CONFIDENCE

Top salespeople have complete and total belief in themselves, their product, and their company. Top salespeople truly believe that others must have their product and they believe that their customers’ lives are much improved as a result of Generic Ad for PPPʼs Propertyowning Manager their Program product. Top salespeople know that the first sale is to yourself. 7.25 PREPARATION x 4.625 Top salespeople are always You have to have complete belief Job #3343 well prepared. They have and conviction in yourself and your great answers to questions, objections, product before you can sell anyone and all other items that might come else. up during a prospect interaction. They

ACCEPTING 100% RESPONSIBILITY FOR SUCCESS OR FAILURE

Top salespeople take 100% responsibility for everything in their lives. They realize that success in all areas of their lives is up to them and not determined by outside factors such as the economy, the market, or other people. Everything starts and stops with them. 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 27 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. John Chapin 508-243-7359 - 24/7 johnchapin@completeselling.com www.completeselling.com

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Fall 2015 • THE BIG “I” VIRGINIA

The Little Stuff That Drives

YOUR CUSTOMERS AWAY By John Graham

“Companies should be an Excuse Free Zone”

With all the talk today about the need to create a great experience for customers, why are so many companies overwhelmed with a tidal flood of customer complaints? Much of it is little, picky stuff. But small things get big in a customer’s mind, and the next thing you know, the customer is gone — for good. Spotting the little stuff that upsets the customer is the first step. The next one is doing something about it. Here are examples of little stuff that drives customers crazy — and away:

1. “We make it easy for you.” For many customers, these words are a red flag. They’ve been duped too often. What’s easy from a company’s viewpoint may be complicated and confusing to its customers. Check with them before using “easy” or “convenient.” 2. Counter-intuitive websites. If visitors get confused when trying to navigate a website, they leave, unwilling to spend any time trying to figure it out. Websites are a marketing tool that must make sense to users. 3. Making excuses. “Sorry you had a problem. I gave that to my assistant to take care of….” Or, “I meant to get back to you but I was in meetings all afternoon.” Such words inflame customer rage, and send the message that someone is disorganized, distracted or incompetent. Companies should be an “Excuse-Free Zone.” 4. Slow is a killer. Amazon’s “1-click,” Apple pay, and 4-hour (or less) delivery all point in one direction: fast is never fast enough, as customer expectations go higher and higher. Slow, by whatever standard, isn’t tolerated. 5. Having to repeat your story. It’s not only frustrating and drives customers out of their minds, but there’s no acceptable reason why it should occur. Yet, it happens 16

THE BIG “I” VIRGINIA • Fall 2015

all too frequently. “Isn’t this information already in your computer?” a customer asks. The response is often an unsatisfactory excuse. 6. Being put on hold endlessly. There is nothing worse that having to hear the same words repeated endlessly: “Your call is important to us. A representative will be with you shortly.” After 25 times the voice adds, “We’re sorry for the inconvenience.” The message the customer hears is different: “My call isn’t important to you.” Customers retaliate by leaving. 7. Getting differing answers. “The salesperson assured me…,” says the customer when making an inquiry a week later. “Oh, we’ve never done that,” according to someone else. It raises the question, “Can I trust this company? Am I going to get what I expected?” Creating doubt drives customers away. 8. Putting customers on the defensive. When they asked why something occurred without prior notice, the manager said, “We sent an email to everyone and posted the notice.” That’s how to make customers feel stupid. A better approach may have been, “I understand how you feel if you didn’t get the email. I’ll make sure that’s corrected.”

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9. Lack of knowledge. Even five years ago, having to deal with people who lacked knowledge was irritating, but often ignored. Today, with instant access to endless sources, customers won’t tolerate it. If customers want help, they’ll find it. Ignorance isn’t bliss; it’s lost customers. 10. Faking answers to questions. Customers may not know everything, but they figure it out fast when someone makes up answers. It sounds basic, but employees should be empowered to get accurate information. 11. Getting passed around. After telling your story, there is nothing more aggravating than to be told, “You’ll have to talk to Martin about that. I’ll transfer you.” Then, you hear that Martin is away from his desk or helping other customers. Today, we get one shot at satisfying customers. 12. Inconsistency. It’s a lack of consistency that upsets customers. It applies to all types of change, from phone options, to personnel, website navigation, discounts, return policies, and product/service availability. So, prepare the way with customers before making even small changes. And, remember, customers are smart, so don’t tell them a change is to improve service. They won’t need any help in making that decision. 13. Not using communication options. Whether it’s texting, a chat line, or a help line, making it convenient for customers to get information or get their questions answered, technology helps maintain customer relationships.

17. Lack of follow through. Broken promises are indelible; they don’t go away. They influence how customers feel about a company from then on, and it’s even worse when customers take the initiative to find out why and are told one or more of the following, “I’m sorry, but I got busy,” or “It slipped through the cracks,” or “I thought I did that,” or “I’m just getting around to it.” Customers deserve timely responses. 18. Not showing appreciation. No customer likes feeling ignored or, worse, taken for granted. Relationship building begins with finding thoughtful expressions for saying “thank you” and “you’re important to us.” 19. Ignoring social media postings. With so many customers checking out businesses online, negative and inaccurate reviews can be damaging to a brand if ignored. Such examples make it clear that the little stuff that aggravates customers is a big deal. John Graham of GrahamComm is a marketing and sales strategistconsultant and business writer. He publishes a free monthly eBulletin, “No Nonsense Marketing & Sales.” Contact him at jgraham@grahamcomm.com, 617-774-9759 or johnrgraham.com.

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14. Making things complicated. The CVS clerk rang up the purchases and keyed in the coupons, until he came to the $6 “good customer reward.” Pointing to a coupon dispenser, he said, “You need to get it from the machine over there first and come back.” Not good. Customers want everything as simple as possible. 15. Not answering inquiries. The button on the restaurant’s website, said, “Send us a message,” noting that it will be answered within an hour. Three weeks later, still no response. The story is repeated when the name of this restaurant comes up. Tending to customers is as important as working the grill. 16. Making changes without telling customers. Let customers know why and when you’re making changes. The city was buried in snow, but the Boston Globe emailed its home delivery customers letting them know the Sunday edition would come at night when there was less traffic. Result: happy readers and a lot fewer complaints. 18

THE BIG “I” VIRGINIA • Fall 2015

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ARE YOU SECURE? How to Secure Cyber Coverage for Your Agency

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THE BIG “I” VIRGINIA • Fall 2015

Why Standalone?

In many classes of business, cyber liability is combined with an E&O policy. The strategy makes sense for an industry like software development, where “it’s almost necessary that the two are on the same policy because the exposure could be one and the same,” explains Brian Thornton, president of ProWriters. But “as you get to other traditional professions, policies may be silent on it or may have an explicit exclusion for data breaches,” Thornton says. “Or they may separately underwrite it on a separate policy or they might have a separate endorsement for it.”

That means an independent agency that believes it has true cyber coverage under its agents E&O policy is probably mistaken, Thornton says. “Even if it potentially picked up some liability or defense, it wouldn’t be covering all those first-party costs unless they’ve truly addressed it with a robust endorsement,” he explains. “They could certainly be left hanging if they thought it might be covered under the E&O.” In addition to coverage gaps, insuring cyber and E&O under the same policy can erode limits for either risk. “You’re going to find a much more robust policy

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in a separate policy because they won’t be sharing limits,” says Alex Wayne, executive vice president at A.J. Wayne & Associates, Inc. “In some cases, add-on coverages don’t provide decent limits with regard to first-party coverages like notification and credit monitoring.” Insuring cyber on your agents E&O policy can also have a seriously negative impact on your agency’s E&O loss ratios. “Cyber is an unknown exposure, so you could be ruining your loss ratio for your E&O,” Wayne says. “If a cyber event ruins that loss ratio, it could increase their cost for agents E&O for years to come.”

What to Look For

The number of companies offering cyber liability insurance is constantly expanding—making it difficult to nail down the best option for your agency. Laird Rixford, president of Insurance Technologies Corporation, advises agents to pay close attention to limits. “Our cyber liability is actually more than our standard GL,” he says, noting his company recently increased cyber limits from $2 to $10 million. Why? Like an independent insurance agency, Insurance Technologies Corporation holds important customer information that increases the risk involved with a cyber attack. “You have to look at what that’s going to cost,” Rixford says. “If your notification fees are $1,000 per incident and you have 1,000 clients, then you’re probably looking at maybe $1 million to cover fines and another half a million for notification and administrative. So you could be looking at maybe a $2 million cyber limit.” Wayne agrees that agents should pay attention to limits for notification, credit monitoring and liability, as well as coverage for regulatory actions, extortion, website media liability and business income. “Those are all things that almost all cyber policies could potentially provide, but not all of them do,” he says. And watch out for potentially disastrous exclusions. “Double check whether the policy contains any type of encryption exclusion for your portable devices,” Wayne warns, noting that 22

THE BIG “I” VIRGINIA • Fall 2015

even if carriers don’t include an outright exclusion they might provide a higher retention rate if you don’t encrypt. “Many times insurance companies will remove that exclusion if you either don’t have the PII on your portable devices or you encrypt your portable devices that have the PII on them.” Moving forward, “prior acts” coverage will become an increasingly important option for insureds that may be unaware that they have even experienced a cyber event until years later. “It wouldn’t cover a known claim—that’s like insuring a burning building,” Wayne says. “But if the insured is unaware that they did in fact get hacked and they find out about it after they purchase the prior acts coverage, then the policy will cover that.” This article was reprinted with permission from IAMagazine. All rights reserved.

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Fall 2015 • THE BIG “I” VIRGINIA

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Fall 2015 • THE BIG “I” VIRGINIA

LET’S TALK

DISCRIMINATION

[ in the workplace ]

What Can We Learn from Ferguson

By Paige McAllister, Contributor HR Affinity Group

Discrimination is again becoming a sensitive issue. We have all heard about the events in Ferguson, MO which ended in, whether justifiable or not, the tragic killing of an 18-yearold boy. You can probably think of other incidents in recent news of people being targeted or mistreated because of their race, gender, religion, disability, age or sexual orientation. So what can we learn from these events that we can apply to our everyday business life? The answer…a lot. The Ferguson case, while a worst-case scenario, brings to mind the question of whether some timely actions from some people in positions of leadership could possibly have prevented the horrible result. It appears that the lack of such leadership resulted in a

THE BIG “I” VIRGINIA • Fall 2015

culture that many African Americans (read: protected classes in employment terms) felt marginalized them and viewed them as insignificant. What can we learn from the Ferguson incident, what led to it and its aftermath, with regard to how discrimination – both actual and perceived – can be addressed in our own workplaces? The US Justice Department recently released a 105-page report on the pervasive and persistent racism within the Ferguson police and court staff. When you read it, you will get a good sense as to how large problems can have their origins in a multitude of everyday, seemingly innocuous incidents, particularly when those incidents are left unaddressed.

Fall 2015 • THE BIG “I” VIRGINIA

IT STARTS WITH COMMENTS, JOKES AND EMAILS: The DOJ report cites emails as far

back as November 2008 that contained disparaging and inappropriate comments and jokes about African Americans, Muslims and foreigners. The people who sent these emails not only never received any discipline from supervisors, but often the supervisors themselves forwarded these emails with comments about how amusing they were.

THE LESSON: Take measures to immediately

address discriminatory, harassing and/or derogatory comments, emails and jokes among staff members, regardless of who does it. The higher up an employee is, the more severe the punishment should be. Supervisors, managers and executives, given their influence and authority over other employees and the tone they can set among the workforce, should be held to a higher standard.

ENDORSED DISCRIMINATORY COMMENTS AND JOKES

“ENDORSED DISCRIMINATORY COMMENTS AND JOKES LEAD TO A CULTURE AND ATTITUDE OF

lead to a culture and attitude of discrimination as the norm, resulting in extensive disparate impact: The DOJ report also cites statistics showing a higher proportion of citations and arrests of African Americans in Ferguson. African Americans consist of 67% of the population of the city yet they accounted for 85% of vehicle stops, 90% of citations and 93% of arrests. These coincided with policies to use these for revenue-generation (via fines), as per a policy set by the Ferguson city manager. Police officers were rewarded for giving out excessive citations and fines, and they ended up targeting these toward members of minority groups. Court clerks were rewarded for generating revenue by tacking on exorbitant fees, and many of those who received the citations could not afford to pay them. (These same clerks fixed and requested other municipalities to clear tickets for “insiders” such as the former FPD chief and co-workers’ relatives.)

DISCRIMINATION AS THE NORM”

THE LESSON: Ensure that no supervisor, department or process impacts a protected group negatively. It may not be intentional, but something as routine as a skills test, pay structure or job requirement could be inherently biased and therefore create an on-going form of discrimination.

THE ATTITUDE OF “THEY ARE LESS THAN US” creates a culture of accepted excessive behavior: The DOJ report further cites

increased use of force against African Americans and other minorities. Ninety percent of documented force by police officers was against African Americans. The report also cites that the FPD used excessive force more often on clearly disabled individuals such as when police used an ECW (i.e., “Taser”) on a disabled person who, while having a seizure, bit the hand of an EMT. The FPD also had no effective process for documenting or reviewing use-of-force cases for validity or potential reprimand.

THE LESSON: Extreme workplace behavior such as terminations occur in all companies. Evaluate who is taking negative employment actions on your employees and the reason behind each instance. Even if justified by unacceptable performance 28

THE BIG “I” VIRGINIA • Fall 2015

evaluations, audit those evaluations to ensure they are legitimate and fair. Chronic disparate treatment of a group of employees can appear legitimate but be discriminatory at its core.

IF YOU DON’T FIX IT, SOMEONE ELSE WILL AT YOUR EXPENSE: The Ferguson

city manager and police chief have resigned and there is talk about a complete overhaul of the FPD and court clerk departments. I am sure the DOJ will be keeping close tabs on everything that group does for a while.

THE LESSON: Act now while you can.

If you are charged in an EEOC discrimination claim, you lose the ability to correct things on your terms as well as potentially a lot of money and considerable damage to your company’s reputation along the way.

www.SIAofVA.com Scott McKee Vice President (540) 280-1119

SO WHAT CAN WE LEARN? Little things

can grow into big things if not handled properly and timely. Examine your workforce for discriminatory behavior, even if it seems minor, and stop it. Train your supervisors to know discrimination when they see it and how to handle it. Document actions, discipline and changes thoroughly. Audit your processes, forms, workflow, etc. to make sure they are fair to everyone. Be consistent and treat everyone the same.

Paige McAllister is a contributor for Affinity HR Group, LLC, IIAV’s affiliated human resources partner. Affinity HR Group specializes in providing human resources assistance to associations such as IIAV and their member companies. To learn more, visit www.affinityhrgroup.com.

Fall 2015 • THE BIG “I” VIRGINIA

Personal Brand vs

BUSINESS BRAND

Improving Your Agency Brand on Social Media

By Sydney Roe I just recently went to the theatre to see the new Pixar film, Inside Out. As I was munching on my popcorn, waiting for the iconic Pixar lamp to squeakily hop out and introduce the movie – the typical premovie branding – a different visual popped up on the screen. The film’s director, Pete Docter, took about a minute to explain how his inspiration for the film was his own 11 year old daughter, thanked multiple people at Pixar and then thanked the audience for coming. It was a very nice, genuine, humble message that took me by surprise and made me smile. It also made me consider the current debate between personal branding and business branding. Instead of using their 15 second branded video-bite, Pixar introduced their movie with a personalized message from the director, Pete. Many companies have been faced with a similar marketing decision, as audiences become immune to corporate advertising. But I think the real question in today’s marketing environment is: personal branding or business branding with a personal touch?

PERSONAL BRANDING Personal branding is about becoming an authority on a topic. It’s about framing yourself as an expert so that people have confidence in your advice and product. 30

THE BIG “I” VIRGINIA • Fall 2015

Why is personal branding becoming more popular? Think about how charitable organizations use an individual story with a picture of a little boy or girl. They even tell you their name. That’s because these organizations know that you are more likely to donate more money after hearing about the tragic situation of an individual – than if they show you statistics about tragedies of the masses. People are touched by and relate to individuals and their stories. Personal branding is your story.

BUSINESS BRANDING AND BEYOND Business branding is about finding a consistent theme that both defines and communicates the core values of the business to the consumer. Instead of taking the personal branding route, Pixar (in my example above) has added a personal touch to their business brand. Now, they’re not just the squeaky lamp in my mind. I’ll remember a face and a name when I think of them. It makes them a little bit more real. More and more companies are mirroring Pixar’s tactics. What does all this mean for insurance agents?

Personal Branding - Funny enough, many insurance agents already have informal personal brands through their niches. My dad is actually known in Central Florida as a construction insurance guru. Sure, he sells other types of insurance, but those hard-to-place construction accounts are his baby. If you have a niche, think about developing a personal brand around your expertise. Beef up your LinkedIn account to showcase your passion for the topic. Start a blog to answer your customers’ questions. Find others with similar personal brands on LinkedIn and Google+ and collaborate with them.

Challenge your

Coverage on the road.

producers to find something they’re passionate about and develop their own personal brand. Adding branded expertise in other fields to the agency can only grow your current client base.

Business Branding and Beyond - McDonalds started doing something interesting with their Twitter account. Their official Twitter, @McDonalds, links to the Twitter team bio page on their website, which has a picture and short bio of each staff tweeter. (Sidenote: this is a creative way to drive traffic back to their website.) Whenever an individual team member tweets from the McDonald’s twitter account, they sign it with their initials (In Megan’s case, it is ^MO). By the way, McDonalds has over a million followers. Moral of the story: people like to know about the people helping them. It creates a connection, builds trust and strengthens loyalty. A great place to start adding a personal touch to your business brand is social media. Have a pumpkin-carving competition in your office during Halloween – post pictures of everyone with their pumpkins and engage your clients by having them vote. Post about personal staff achievements or “life” moments (babies will gets you lots of attention – just like in the real world). Have your staff post about any pranks that happen and see if your clients can figure out who did it! Another area you can beef up is your website. Do you have pictures of your staff up? Have them add a short bio about themselves and their responsibilities. Let’s get branding, people! This article was originally published on agencynation.com and is reprinted here with permission.

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Climbing the Ladder

from Producer to Principal

According to the 2014 Future One Agency Universe Study, 11% of independent agencies plan to perpetuate by selling the current principal’s interest to a non-principal employee.

By Jacquelyn Connelly

It’s a big opportunity for young agents and new producers who have their eye on playing a more significant role in the agency’s future. But how does the process work? And what’s standing in the way of success on both sides?

WHAT THE EXPERTS SAY The biggest questions involved when a principal decides to sell their agency to a non-principal employee: Is the right person in place? And does the agency have the financial discipline and wherewithal to make it happen? “Internal transactions are funded out of cash flow, so consequently the agency has to be wellpositioned financially to be able to do that and have the right discipline in place,” says Tim Cunningham, partner at OPTIS Partners, LLC. “It’s probably the hardest [perpetuation plan] to make happen because usually the employee doesn’t have the finances and maybe not the experience,” agrees Mike Mensch, certified business intermediary and merger & acquisition master intermediary at Agency Brokerage Consultants. “We’ll start talking to an agency owner that wants to sell to an employee, but they just can’t come up with the money. So what happens is the owner ends up having to finance a portion or take a lower sales price on the business than they might otherwise get by selling it in the open market.” 32

THE BIG “I” VIRGINIA • Fall 2015

THERE’S A BIG DIFFERENCE BETWEEN

SELLING AND

SELLING OUT. Ready for the next chapter of your business? Consider Hilb Group. While other firms rely on pure acquisition to fuel growth, our strategy combines an aggressive acquisition model with a proven formula to drive growth internally. By combining the strength of your firm with the resources and expertise of ours, we’re able to help you reach not just the next chapter, but the next level. Thinking of your next step? Talk with us today and learn how joining the Hilb Group makes you more than just a seller. You become a partner in our success.

Contact Bob J. Hilb, President & CEO, at (804) 414 6505 or rhilb@hilbgroup.com

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Fall 2015 • THE BIG “I” VIRGINIA

money in the bank,” he suggests. Diamond encourages retiring principals to find out who might be able to afford the sale and give or sell them a small ownership interest. That way, someone else has ownership in the event that something happens to the owner. “There is a serious legal problem when the only stockholder of a corporation dies because that’s going to go to the courts, and during the several months that there’s a transition, the clients go away and sometimes the employees do as well,” he warns. “Much better off preparing by bringing an employee or several employees or producers into the mix as small interest partners.”

WHAT IT LOOKS LIKE An agency can fund itself in two ways, says Al Diamond, president of Agency Consulting Group, Inc.: compensation of the originating owner or bank loans. “It’s really important for agencies that are going to transition internally through non-owner employees to set up their operating statement and balance sheet in the best light possible so that if a bank or some other financer looks at the agency, they’re not seeing someone close to bankruptcy—they’re seeing someone with a conservative fiscal approach and with

When Clint Ivy, president of Fleming & Riles Insurance in Albany, Georgia, started as a producer fresh out of college, the agency owner and two older producers were all over the age of 50. He gradually grew his book of business as an active member of the national Young Agents Committee (YAC) and former chair of the Georgia YAC, and when one of the older producers retired, “we started talking about what was going to be the strategy for the agency going forward,” Ivy says.

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The previous owner had two daughters who were not interested in the business. “I was looking for an opportunity and he was looking for a way out, so we basically were looking for a commitment from each other,” Ivy explains. The team sought legal counsel and drew up an agreement, agreeing on an appraiser and a valuation with help from Reagan Consulting. “That let me know early on that this is where I wanted to be long term, and that gave him peace of mind,” Ivy says. “So we were able to just keep doing what we were doing for a while until we got to that time.” The biggest challenge throughout the process? “You’re dealing with people who built a business themselves and you’re basically telling them you’re going to take it over,” Ivy says. “No matter what happens it’s hard for them to let go, and I understand that. The best thing to do in the beginning is for people to not get ahead of themselves and put numbers out there. Talk to experts so everybody’s on the same page of how these things really need to work before they start to face disappointment.”

At 38, Ivy has some time before he starts planning the next wave of perpetuation—but that doesn’t mean it’s not on his mind. Fleming & Riles recently purchased a one-man operation and Ivy sees similar opportunities down the road. “I would say in the next seven years I’ve got to start thinking about what the plan is,” he says. “We’re looking to hire another producer—do I then start letting them buy a piece of it? We’re not there yet, but that’s something I have to start thinking about sooner rather than later.” The Agency Universe Study cites three other common perpetuation paths among independent agencies: children or other family members take over (38%); other principals buy all or part of the current principal’s interest (29%); and an outside party or organization buys out the current principal’s interest (24%). For strategies on how to implement these plans at your agency, don’t miss the June issue of Independent Agent magazine. Jacquelyn Connelly is IA senior editor. This article was originally published on IAmagazine.com and is reprinted here with permission.

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BIV15_Turner_7.675x4.9.indd 1

9:53 AM35 Fall 2015 • THE BIG “I”1/12/15 VIRGINIA

THE BIG “I” VIRGINIA • Fall 2015

Fall 2015 • THE BIG “I” VIRGINIA

THE BIG “I” VIRGINIA • Fall 2015

Fall 2015 • THE BIG “I” VIRGINIA

Potential E&O Claim:

Should I report it to my E&O carrier?

THE DECISION WHETHER AN INSURANCE AGENCY REPORTS A POTENTIAL CLAIM TO ITS PROFESSIONAL LIABILITY CARRIER BRINGS WITH IT A HOST OF ISSUES TO CONSIDER.

What effect does reporting a potential claim have on my agency’s loss history? How will it affect my agency’s premium? What difference can it make? After all, it is a potential claim. My customer has not hired an attorney or filed a lawsuit against my agency. Am I only creating trouble for my agency by reporting this potential claim? The best source to answer this question is the agency’s professional liability policy. The policy requires that an agency report potential claims to its carrier. But apart from that, there are additional, common sense reasons for doing so. The following example highlights those reasons. An agency’s most important and long-term customer owned an engineering business along with numerous commercial buildings. The agency handled all of the customer’s insurance needs obtaining, among other coverages, commercial property coverage. 40

THE BIG “I” VIRGINIA • Fall 2015

A pipe burst in one of the commercial buildings resulting in over $200,000 in damage. Unfortunately, the building was vacant for several years, a fact not shared by the customer with the agency. As a result, the commercial property coverage placed by the agency contained limitations on coverage for vacant buildings. Even though the agency suspected the carrier would invoke the vacancy provisions of the policy, the agency thought it was best, nevertheless, to report the claim to the carrier. The agency’s suspicions were well-founded as the carrier denied coverage for the property claim because the building was vacant at the time of the loss and was vacant for several years. The customer was outraged by the lack of insurance coverage though it did not take issue with the carrier’s coverage position. Like many business owners, the customer believed that the significant premiums he paid each year entitled him to coverage in the event of a loss regardless of policy language.

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The agency was worried about losing its most important customer though it knew it did not breach any duty owed to the customer. After all, the customer never told the agency about the change in the building’s status: from occupied to vacant. And the agency also agreed with the carrier’s coverage position. Faced with an angry customer who was litigious by nature, and a significant uncovered loss, the agency decided to report a potential claim to its professional liability carrier, Westport Insurance Corporation. The Westport claim handler made his initial contact with the agency within 24 hours of the potential claim being received by Westport. After collecting the claim information, the Westport claim handler and the agency worked together as a team to develop a strategy focusing on both the customer and the carrier.

The customer was assured that the agency would advocate on the customer’s behalf with the carrier in an effort to identify any avenue of recovery for the customer. At the same time, it was explained to the customer that the agency did nothing wrong in placing the property coverage that included vacancy provisions. The customer’s indulgence was sought so that the agency could have time to then discuss the situation with the carrier. A commitment was made to provide frequent updates to the customer. The focus then turned to the carrier. As there was no dispute with the carrier’s coverage position, the Westport claim handler and agency agreed on a two-part strategy that would leverage the agency’s long-term profitable relationship with the carrier, and the customer’s profitable account history. The agency appealed to the carrier using empirical data to prove that the carrier benefited throughout the years by doing business with the agency and the customer. As a result, the carrier agreed to make a business accommodation by paying the customer $100,000 on the uncovered claim. This decision was relayed to the customer. The agency believed that the carrier would contribute more.

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After further discussions with the Westport claim handler, the agency made an additional appeal to the carrier resulting in an agreement to pay an additional $100,000 bringing the total recovery to $200,000. The agency’s contact with the carrier said that he had never seen a payment of this kind on a loss that was clearly not covered by the policy. The Westport claim handler and the agency had many conversations about not only what to say to the customer and carrier, but how to say it. Of utmost importance were creating and keeping goodwill with the customer. While not every potential claim is resolved on such favorable terms, this example shows what can be achieved when a thought-out, collaborative approach is taken by an agency and Westport. Without question, had this potential claim not been reported to Westport, the customer would have sued the agency and the carrier, and the agency would have lost its most important customer. The agency may also be concerned about whether the mere reporting of a potential E&O claim will have any adverse underwriting effect on their E&O. Each situation is unique and each carrier is different. Westport will review the facts and circumstances of the individual situation, but

as a general rule, the mere reporting of a claim does not automatically result in any underwriting action or increase in premium. Because your E&O professional liability policy is claims made, it is imperative that you report any potential claims immediately to your E&O carrier. In fact, Westport recommends that you report them as soon as practicable to ensure that the claim is reported during your policy period so coverage can be determined. In the situation described above, there generally would be no underwriting action taken or premium increase as a result of the potential claim. Not every potential claim will end up with a result like this one, but if you give yourself (and your E&O carrier) the opportunity to resolve things before they develop into something bigger, the probability of a positive outcome increases dramatically. And if you don’t, the possibility is completely gone. By taking steps to report potential claims to Westport early, you may avoid actual claims and maybe even litigation. Reprinted with permission of Big “I” Advantage, Inc. and Swiss Re Americas. All rights reserved.

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THE BIG “I” VIRGINIA • Fall 2015

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