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STREET WISE Alliance of Insurance Agents of NC “What You Don’t Know Can’t Help You!” … Eddie K. Emmett, Editor / Publisher
THE LAW OF DIMINISHING RETURNS From FYI Archives
In This Edition THE LAW OF DIMINISHING RETURNS .................................... 1 A Very Grim Fairy Tale ............... 4 A Very Grim Fairy Tale: The Lost Chapters .................... 11 NC DOI News ............................ 17 When an expense is incurred has a loss happened? .............. 18
(Editor’s note: I was going through the FYI Archives pulling together information for “The World’s Best Insurance Agency Operations Manual”. This Oldie but Goodie caught my attention!)
THE LAW OF DIMINISHING RETURNS By Michael B Krizmanich
Examples of these costs would be postage, time involved with the policy, wear and tear on your copy machine, endorsements, taking payments, faxing long distance, etc. D = your profit after expenses (i.e. the agency's owner's income) Now apply the formula A x B C=D Example 1: $600,000 x .15 $60,000 = $30,000.
These days, I hear many agents comment on lower commission products. I myself have thought much about this subject and I would like to share with you some of my thoughts regarding this issue:
Note: At a 15% commission average you are $30,000 plus.
https://www.youtube.com/watch ?v=CbyIjuqgCDI
Hard as it may seem, writing more business for less commission only nets less profit for the agent. If you doubt the preceding statement, you should take a look at the math before you become a statistic:
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A = 1000 policies at $600 premium per policy ($600,000 in annualized premiums)
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B = your commission base off of the premium (10% or 15%)
I know what you're saying... "The insurance company said that if I sell lower price I will write more policies and make more money." Let's change the numbers to apply this theory. Let's say we change "A" to $800,000 in premium at $500 an average policy. Keep in mind that premiums will now be lower and you cost factor will go up because you will have more clients to service - this will translate to a client base of 1600 ($800,000 divided by $500 = 1,600 accounts).
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AIANC’s STREET WISE
C = the cost to underwrite and manage these policies. Let's say for demonstration purpose that we use $60 per policy as the cost for now. You can use whatever you think, however, you should be aware that most industry articles are currently advising that it may even be higher than $60. Page 1 of 21
Example 2: $600,000 x .10 $60,000 = $0. Note: at a 10 % commission average you have no profit.
Example 3: $800,000 x .10 $96,000 = $16,000 in the red!!! (** remember 1,600 accounts x $60!!). You made more revenue, but your expenses went up also. Continued on page 2 April 2016
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THE LAW OF DIMINISHING RETURNS Continued from page 1 You now cannot pay yourself and you probably will want to let someone go at your agency to break even. Scary stuff, huh?! Furthermore, has anyone ever considered what premium income the insurance company is "giving up" with these lower commission products? In most, cases, the only difference between one tier plan and another is just the agent's commission!!!
I feel the answer to that question is both yes AND no. Yes, you may lose a few accounts. However, by only quoting a higher commission product that formula previously mentioned can now work possibly in your favor. Perhaps you even "lost" two clients out of ten because you quoted only higher commission products (i.e. 15%). That's 20% of your business. What would happen? Example 4: $480,000 x .15 - $48,000 = $24,000. (We adjusted the premium policy count, premium, and cost to manage each policy by 20% because premium and policy count decreased).
THE BOTTOM LINE
Now remember Example 3 above:
If you decide to sell lower commission products and still survive, you will need to cut your expenses and / or servicing cost associated with each client. But what you need to consider is, can you cut your expenses adequately without cutting the quality of service? Remember, every time your employee is involved with a customer, this is a time and wage expense. Every time you take a payment for a client that isn't even late and use your own postage to mail this payment, this is a time, wage and postage expense. Every time you do a policy change request that decreases your commission and process it to your company this is a time, wage, postage and loss of commission expense. In other words, every time you sell a lower commission product, the insurance company is really laughing at you! As far as I have seen, the amount of service needed has not decreased in proportion with the commission. In fact, I have actually seen it go in reverse due to the decrease in the quality of service with some carriers as they try to lower their own servicing costs. TRUTH OR DARE Are you afraid that by only quoting 15% commission products you will lose business and as a result lose $$$? AIANC’s STREET WISE
$800,000 x .10 - $96,000 = $-16,000!! Which profit and loss statement would you prefer? THE ZERO POINT What is the "zero point"? That's the point where the agent sees zero in the checkbook even though he has increased his client base. Eventually it will happen to any agent who decides to work for minimum wage. The question that needs to be addressed is will you permit it to happen to you? As long as agents continue to sell themselves short (no pun intended) companies will always be attracted to playing these commission games. What everyone seems to forget is that IT ALL BEGINS WITH THE AGENT. IF THE AGENT DOESN'T QUOTE THE PRODUCT, IT CAN'T BE SOLD. IF IT CAN'T BE SOLD, NO MONEY IS MADE FOR THE COMPANY. In other words, the agent has always been in control even when they sometimes complain that they are powerless. If enough agents realize this reality, what would companies do? Perhaps, (drum roll please) raise commissions to attract more business?
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April 2016
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A Very Grim Fairy Tale
Anyway, let’s assume $8,000 per month expenses. That's $96,000 per year before good old boy, S.C. sees a dime.
Adapted from an original story by Byron McKibben Once upon a time there lived a handsome prince named S.C. Agent. S.C. had a single location agency selling essentially 100% specialty auto coverages. S.C.'s castle was in a suburban location and had a fairly large yellow page ad on which the Southern Bell tooth fairy gave no discount. S.C. has been in business for several years and is fortunate to receive 65% of his transactions as renewals and the other 35% as new, rewrites, etc. On staff are two long term, well trained, licensed insurance worker persons who don't work free (Nor should they be expected to). By the time rent on the castle, phone, insurance persons, advertising, paper clips, etc., etc., ad infinitum are paid, the total expense for this location will be in excess of $8,000 per month. This must be paid before our hero sees one cent. I am using $8,000 for a base, but I sincerely would expect 10 - 25% more expense if the agency is aggressive in advertising and sales. The only way to operate on much less is to gut everything including quality employees. But alas, a shoe string operation will not last. Without new business, the business will simply melt away due to the high nonrenewal ratio of specialty auto. The handsome prince would eventually wither and die and become a frog.
S.C. wasn't doing too badly for himself. A couple of years back, S.C. showed a net written premium of about $1,000,000 which paid him 15.00% commission. He grossed $150,000 and paid expenses of $96,000 leaving him $54,000. Even after paying self -employment taxes (or corporation taxed), S.C. would still need to make almost $50,000 in a real job to make that much money. Not bad for a country prince in the big city. The hard work and sacrifice S.C. put into building his magic kingdom was finally paying off. The kids would be able to go to good public colleges and complain about their parents, even though they would have to drive pre owned Japanese chariots. And, when S.C. is ready, he can sell his kingdom to another young prince and retire on the payout. It came to pass that the King of Palmetto sent out a decree that chariot insurance was to be changed. Company reps from all over the country descended on the land like a swarm of locusts. One day, S.C. lost a quote to the Joe Dokes Agency across the street. About a month later, he lost another one. Neither quote showed up on S.C.’s comparative rating program and it sort of bothered S.C. since he didn't know who Joe Dokes had written the customer with. Continued on page 6
AIANC’s STREET WISE
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April 2016
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More Tips & “How-To” videos at www.AllianceInsuranceAgentsNC.com The company rep called on S.C. a few days later. The rep was very intelligent, articulate and extremely well versed in the company's doctrine - a truly sharp individual. "Hi, Mr. Agent" said the rep. "I'm from Grab & Hold Insurance, and I'm here to help you." S.C. was extremely impressed by this recent college graduate, as were the members of his staff. The rep went over how easy it was to quote their product, how the company mails everything direct to the insured, and how they take a lot of work off the agent using an 800 number. S.C. couldn't wait to start. The two members of his staff were even more anxious to start since the field rep had told them all the ways Grab & Hold would help to make their bleak lives in the tower easier. When S.C. got his contract, he read over it and happened to notice that the commission structure was different than his other companies. The rep had apparently forgotten to mention this to S.C. The company paid only 12% on new business and 8% on renewals. S.C. mentioned this to the rep. AND FRIENDS, THIS WHERE OUR FAIRY TALE REALLY BEGINS!!! The rep, never flinching, responded, "Don't worry, S.C.! (They were now on first name basis). Our procedures will make your agency so much more efficient that you will save more than the difference in commission. Besides, our rate is slightly lower and you will be able to sell more Grab & Hold!" AND THIS IS THE PART WHERE THE SWAMP REALLY GETS DEEP!!
A Very Grim Fairy Tale Continued from page 4 Besides, S.C. had never cared for Dokes who was very obnoxious and looked like his fairy godmother had already turned him into a toad. S.C. waited about a month and called the customers he had lost to Dokes. It seems Dokes had written both of them with a new and improved company called the Grab & Hold Insurance Company. S.C. then called Grab & Hold to see about getting a contract with them. AIANC’s STREET WISE
"8% of something is better than 15% of nothing.” thought S.C. "Anything I write with Grab & Hold will be gravy for me". S.C. signed the contract. S.C.'s staff just loved the new company. Peace, love, and tranquility had arrived. The local peasants were surprised but pleased that S.C.’s staff was reducing the number of coins required to renew their chariot insurance.
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Continued on page 7 April 2016
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A Very Grim Fairy Tale
Those carriers were now relegated to second drawer, and Grab & Hold became the apple in everyone's eye.
Continued from page 6
The end result was movement of a lot of business to Grab & Hold that had been going to others, while the overall volume was cut almost in half.
"But we've always stood by you", said the Star of Orion, “and helped you build your fine castle with stable rates and claims service!” "That's okay', said our hero, "Grab & Hold is just a few percentage points less. And they have a bonus plan, too". "Well, thanks for what you sent us", said the Star of Orion as he shook his head and mounted his steed to call on other princes.
The staff continued to load up Grab & Hold because they had become very fond of the field rep that was always visiting and calling and telling them what a great job they were doing. The staff never missed an opportunity to tell S.C.’s other companies just how wonderful Grab & Hold was.
A couple of years later, our hero had to complete a financial statement for the bank because money had gotten tight and, quite frankly, S.C. needed some cash to bring his bills up to date. Even though business was still great and holding steady, it just seemed harder to make ends meet.
S.C. had expected a lot of extra business, but overall app count stayed about where it was before.
AIANC’s STREET WISE
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Continued on page 8 April 2016
More Tips & “How-To” videos at www.AllianceInsuranceAgentsNC.com New income = $600,000 x 35% x .12 = $25,200
A Very Grim Fairy Tale
Renewal income =
Continued from page 8
$600,000 x 65% x .08 = 31,200
Then, as if by magic (this is a fairy tale), something strange and mysterious happened. It was as if the clouds had parted and the sun suddenly began to shine after a long period of darkness. S.C. looked at his commission statements. S.C.'s net written premium with Grab & Hold was now $600,000 of which 65% was renewals paying 8% commission (390,000 x 8% = $31,200) and 35% was new business paying 12% commission ($210,000 x 12% = $25,200) for a total of 56,400 income on 600,000 of premium. The rest of S.C.’s book of business was only about $400,000. However, on this book of business he was still receiving 15% or $60,000. Let's look at that one more time, good princes and princesses. Grab & Hold Insurance Company Total book of $600,000 which is 35% new and 65% renewal.
AIANC’s STREET WISE
Total income = $56,400, or 9.4% average commission Other companies = $400,000 x .15 = 60,000 Average of entire agency = $1,000,000 premium / $116,400 on which he still had an expense of $96,000, leaving S.C. $20,400 for his trouble, only 40% of what he was earning previously, and less than either of his employees were earning. It was even less than his daughter was earning in her first year of teaching. And S.C. was still working 50 plus hour weeks and had his neck on the line every day. For the mathematically inclined among you, I want to present one more fact. If S.C. has a $1,000,000 book of business and $96,000 in expenses, then 9.6% of gross premium goes for expenses. On the book of business above, if S.C. had placed all of his business with Grab & Hold, then his income on $1,000,000 would have $94,000, since his average commission on Grab & Hold business is 9.4%. Continued on page 10
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April 2016
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A VERY GRIM FAIRY TALE Continued from page 8 THAT MEANS THAT IF S.C. HAD WRITTEN ALL OF HIS BUSINESS WITH GOOD OLD GRAB & HOLD, HE WOULD HAVE TAKEN IN $94,000 AND SPENT $96,000 IN EXPENSES. NOT ONLY WOULD S.C. HAVE NOT MADE ANY MONEY FOR HIMSELF, HE WOULD HAVE HAD TO BORROW $2,000 JUST TO KEEP HIS BUSINESS RUNNING! THIS CONCLUDES THE FAIRY TALE, BOYS AND GIRLS. The End P.S. I wish I could say S.C. lived happily ever after. This is a fairy tale, after all. But unfortunately, that is not to be. Do you remember Joe Dokes? His income was dropping, too. He ultimately got into financial trouble, and got caught holding a BIG box full of Grab & Hold apps. In return for not prosecuting, Grab & Hold took over his book of business and rebound the box full of apps. Then, they opened up their own shop in the old Dokes location. In the meantime, our hero had to let his experienced help go and started trying to get by with part time employees. One of them started writing apps and (you guessed it) keeping the money. When everyone eventually found out, most of the companies, including Grab & Hold, terminated our hero, despite pleas for mercy from him. By the time S.C.’s customers started getting nonrenewed, Grab & Hold had begun running huge newspaper and television ads. Guess where most of S.C.'s Grab & Hold clients wound up? Yep. You guessed it. Across the street. Grab & Hold was, after all, a few dollars cheaper. In addition, they had a real sharp, talented, licensed, recent college graduate running their office for them. I don't know if there is a moral to this fairy tale. But there ought to be. Byron McKibben owned and operated the McKibben Agencies of Columbus and Atlanta in Georgia. March 14, 2016 -- Goodwin Announces $29.8 Million in Recoveries and Savings for North Carolinians RALEIGH -- Insurance Commissioner Wayne Goodwin today announced that the North Carolina Department of Insurance saved or recovered $29.8 million for North Carolinians in 2015...
AIANC’s STREET WISE
February 23, 2016 -- Wilson County Insurance Agent Charged with Embezzlement RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Jacob Christopher Mullins, 28, of 6465 Frank Price Church Road, Fremont; he is charged with one count each of embezzlement by an insurance agent, financial card fraud and... February 19, 2016 -- Free Medicare Counseling Available at New Site in Gates County RALEIGH -- Insurance Commissioner Wayne Goodwin is pleased to announce that people in Gates County can now receive free, unbiased counseling about Medicare at the Gates County Community Center, 130 US Hwy 158 West, in Gatesville... February 18, 2016 -- Wilson County Insurance Agent Charged with Embezzlement RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Jacob Christopher Mullins, 28, of 6465 Frank Price Church Road, Fremont; he is charged with one count each of embezzlement by an insurance agent, financial card fraud and...
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HU
Questions? Contact Eddie K. Emmett at eddie@fyiexpress.com or (770) 312-2342. UH
April 2016
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S.C. looked as he was bid. There, not fifty feet away, was Joe Dokes cruising by in the slickest new chariot he had ever seen pulled by two powerful white stallions. What's more, next to Dokes rode one of the kingdom's fairest maidens, clearly thrilled to be in the company of one so powerful and successful.
A Very Grim Fairy Tale: The Lost Chapters by Ronald J. Manera The Underwriter’s Insider Author's note: The scrolls on which these lost chapters had been translated were recently unearthed near the mouth of an ancient cave. So, one day shortly after a check cashing operation took over the lease on his insurance castle, S.C. Agent was skulking around his new office — a low rent cave that had recently served as the winter residence of a hog herd — when he stepped in a steaming pile of fresh dragon doo. “This is it! This is really it! This is the last straw!” shrieked S.C. in utter frustration at the awful string of misfortune that had befallen him since Grab & Hold Insurance Company had come to his village. Intent on ending it all, S.C. climbed to the top of a sheer cliff face, left a short note to his favorite princess expressing his misery and remorse, looked into the sunset and leaned into the void. “Are ya happy now, Grab & Hold? Go ahead and steal all my renewals because you won't have S.C. Agent to kick around anymore!” He screamed. Just as he flung his body out over the abyss, an incredible gust of wind (some would later claim it was fairy dust) blew up that shear face — carrying S.C. Agent back from eternity and depositing him gently on a smooth stone well back from the precipice. That's when S.C. heard the clear, magical voice say, “S.C., S.C., don't despair — look, look over there.” AIANC’s STREET WISE
“Dokes! Dokes! What happened?” S.C. yelled to his former competitor. “Last thing I heard, you'd lost your agency to old Grab & Hold Insurance Company and were working as a jousting dummy. Now you're cruising in high style with new wheels. Dokes, what turned your life around so?" “No time to talk now, S.C. Sabrina here is running low on jewelry and we're headed to the mall. Then I gotta stop at the bank and make another deposit and then we're having lunch with a couple of Counts and a Duke,” Dokes replied without slowing down. “Please Dokes! Just give me a clue — I'm about to end it all. How did you get out of that financial dungeon you were in?” S.C. implored at the top of his lungs as the dust cloud from the passing chariot settled around his head. Dokes never did respond, but lovely Sabrina did. She turned, gave him a cute little smile and said as they passed, “Towing & Rental, S.C. Towing & Rental. Forget insurance commissions — they won't even cover your expenses. The only economic reason to even sell insurance is to get a chance to sell some Towing & Rental alongside. That's your real income source. You can still save yourself, S.C., if you act now!”
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Continued on page 13 April 2016
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Online Practice Quizzes w/ Answers Principles of Insurance This quiz reviews basic principles that provide a foundation for the insurance industry. They range from the concept of risk, to the idea that individuals and businesses can minimize losses by transferring and sharing risks, to the application of the law of large numbers. Various principles also determine why some risks of loss are insurable whereas others are not. http://www.proprofs.com/quizschool/story.php?title=principles-insurance
Personal Auto Insurance 14 questions on Personal Auto Insurance. Answer to Question #9 is incorrect since Property Damage is included in Georgia’s Uninsured Motorist Coverage. http://www.proprofs.com/quizschool/story.php?title=personal-auto-insurance P&C Insurance Practice Exam 22 Questions. Great practice. Don’t worry about correctly answering the ones on commercial insurance since you will be taking the Personal Lines Agent Exam http://www.proprofs.com/quizschool/story.php?title=pc-insurance-practice-exam Insurance Transactions A number of steps must be taken before an insurance transaction can be completed. These include making an application for insurance, underwriting the risk, and including all the steps required for forming a valid contract. http://www.proprofs.com/quizschool/story.php?title=insurance-transactions
AIANC’s STREET WISE
The Insurance Contract A contract is a legal agreement between two or more competent parties that promises a certain performance in exchange for a certain consideration. When an insurance company agrees to pay for an insured's losses in exchange for a certain premium, the two parties have entered into a contract. Although a contract of insurance can be oral, it is usually written in the form of an insurance policy. http://www.proprofs.com/quizschool/story.php?title=insurance-contract Property and Casualty Insurance License Exam Cram 83 Questions. Great practice. Don’t worry about correctly answering the ones on commercial insurance since you will be taking the Personal Lines Agent Exam http://www.proprofs.com/quizschool/story.php?title=property-casualty-insurancelicense-exam-cram Property and Casualty Insurance Quiz 85 Questions. Great practice. Don’t worry about correctly answering the ones on commercial insurance since you will be taking the Personal Lines Agent Exam http://www.proprofs.com/quizschool/story.php?title=property-and-casualtyinsurance-quiz
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April 2016
More Tips & “How-To” videos at www.AllianceInsuranceAgentsNC.com He could think of lots of clever ways to sell a product as good as this T&R contract. He decided he would only sell the contract on fullcoverage chariot policies and on chariot policies that were financed. These are the groups that would buy, S.C. reasoned. But he sold only a miserable few. But, like many good businessmen, when the going got rough, S.C. got creative. “We'll send out a T&R offer on all renewals notices and we'll do a special mailing to all our castle owner policy holders. We'll sell lots of these things!” S.C. explained to his staff. At the end of two months and thousands of mailings, S.C. counted three T&R sales. Finally, S.C. had remembered what the Charming Prince had told him years before. “Just add this little line to each quote after you have briefly listed and described each insurance benefit included in your quote: 'Towing up to $125 per occurrence and rental in the event of most collision accidents up to $25 per day for up to $20 days.' Add the cost of the T&R to the down payment and you're done. Do it every single time on every single chariot policy. If your customers don't want T&R, they will tell you.” Well, thought S.C., I've already wasted several months on this stuff, what's a little more time... Taking down most of the signs, S.C. called a staff meeting and instructed his staff to matter-of-factly include the little line to each chariot quote, each time. https://issuu.com/rmanera/docs/2016_april_tui/1 A VERY GRIM FAIRY TALE: The Lost Chapters continued from page 11 “Towing & Rental?” S.C. scratched his dusty head. Then he remembered a Charming Prince from a land far South of his village who had stopped by his insurance castle once years ago. The Prince showed him a wonderful little Towing & Rental add-on package that could earn him an extra $40 - $50 per sale while delivering incredible benefits to his customers. The Charming Prince (one helluva fella, actually) showed S.C. just how to sell the T&R Contract to his customers, but S.C. had only sold a few of them before quitting. Why, the Prince's system had been just too simple — just too easy to really work. S.C. decided he could enhance the Prince's simple system to fit his agency. The first thing S.C. had done was to put up signs up all over his castle explaining the terrific T&R contract. Then he tried to ask most of his customers if they wanted to buy one of the contracts. Everybody seemed to like the contract, but only a very few made an active choice to buy one right then. But S.C. wasn't discouraged. After all, wasn't he a pretty sharp marketing guy? AIANC’s STREET WISE
Well, just like magic, S.C.'s little agency started selling T&R and lots of it. As a matter of fact, at the end of the first month, his staff had sold a T&R on just about every chariot policy sold. That's when he got the bad news. The awful news. His policy count was down 20%. Worse, his top sales person advised that they were losing one or two quotes per day to Doke's agency. S.C., being nobody's fool, knew right away who the culprit was. It was that doggone T&R. Why should anybody buy from his insurance castle when Dokes' down payment was $50 less? He could just imagine Dokes over in his castle gloating and smirking about picking up 20% of S.C.'s business. It took about 20 seconds for that T&R stuff to hit the trash. No, S.C. was nobody's fool, even though he never quite made the connection between that one month of T&R sales and the simultaneous cash surplus in his accounts — a rare event indeed. As a matter of fact, S.C. thought at the time, “Hey, I guess I'm doing all right. I've got some money in the bank. I don't even need the aggravation of selling any of that T&R.” And now Dokes himself was zipping around in that sporty new chariot with money he made selling T&R? Something wasn't making sense yet... Maybe I ought to call that ol' Charming Prince, decided Dokes.
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Continued on page 15 April 2016
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April 2016
More Tips & “How-To” videos at www.AllianceInsuranceAgentsNC.com A VERY GRIM FAIRY TALE: The Lost Chapters continued from page 13 And that was the day S.C.'s life changed. S.C. found out how tantalizingly close he had already come to solving his financial problem — if he just hadn't been so hung up on counting policies. “There is no business reward for writing the most policies,” the Charming Prince had explained patiently, “The business reward,” said the Prince, “is for the highest net income.” “Sure I might be losing money on some of those policies, “countered S.C.,”but those customers will send in their friends and relatives to buy insurance!” “Yes, that may be true,” the Prince explained gently, “then you will get to lose money on each of those accounts too. Remember, S.C., it doesn't matter if you lose an unprofitable account. As a matter of fact, the more of them you lose, the better off you are!”
By the end of his long & prosperous career, S.C. had built the most successful chariot insurance agency in the land, had been knighted by the King and had married the loveliest maiden in the village. Sure, there had been many agents with more customers, and old Grab & Hold had given each agent a nice wall plaque before throwing them out in the street, but who cares, thought S.C. “My insurance business had the highest income — AND the best served customers!” Ron developed the NCS T&R from his years of living this "Grim Fairy Tale". Thanks to both Byron and Ron for sharing their warped sense of humor with the industry. Eddie
“You mean I can lose 20% of my business to my competition and make more money?” asked S.C. incredulously. “Better than that, S.C.,” explained the Prince. “Selling T&R, you can lose 6 of 10 quotes and still make twice as much money as if you had sold all 10 quotes without the T&R!” S.C. was dumbfounded, but he did the math over and over again. The Charming Prince was right. Policy counting was a waste of time. It was dollar counting that made sense. And, yes, it was a hard and emotional decision — like when you learned drinking whole milk is bad for you after your mother spent your entire childhood telling you the opposite. But S.C. finally decided it would be just fine if some policy-counting agent wrote all of his unprofitable chariot accounts. Within a short time, S.C.'s insurance business moved out of the hog cave and into a bigger and better insurance castle than ever before, and he hired the finest CRS's in the Kingdom. Not only were expenses down and income up, but S.C. found he had far fewer unhappy customers after a claim — now that they had towing up to $125 and rental up to $25 per day up to 20 days. Within five years, Grab & Hold bought many of the unprofitable insurance castles in the Kingdom at a fraction of their former worth and turned them into company stores.
No Contract! Stop when you want
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But not S.C. Every month, he got to infuriate the representative from Grab & hold Insurance Company, (a recent college graduate), by explaining that they were getting along quite nicely without Grab & Hold.
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April 2016
More Tips & “How-To” videos at www.AllianceInsuranceAgentsNC.com
Mergers and Acquisitions – a potential E&O exposure? I recently read a National Underwriter article dealing with Mergers and Acquisitions. The primary focus of the story dealt with the record year for M&A activity of insurance agencies. In fact, the new record broke the old record (just set the prior year) so it certainly appears that M&A activity is extremely active. While there are many issues related to mergers and acquisitions to consider, there is one that doesn’t seem to get the attention it deserves: how does the typical E&O policy address potential liability issues that can make a good deal a “nightmare” without the proper attention. While this is not an overly complex matter, it is also not all that simple. Proper planning and appropriate attention to detail are extremely important. A good time to become educated on some of the significant coverage issues is as soon as you start thinking about buying or selling. Any good E&O carrier “worth its weight” can provide guidance and direction based on your specific scenario. They should be contacted. Both the buyer and the seller should allow sufficient time for the development and providing of additional paperwork, copies of the proposed transaction documents, applications, etc., the E&O carriers may require.
This is an important decision and should be carefully planned. One of the many important issues is to understand the “known loss provision” in the E&O policy. If you are selling your agency and are aware of any actual unreported claims or situations that could lead to a claim, it is vital these are reported to your E&O carrier to lock in coverage. Failure to report these real or potential claims has significant potential to result in a lack of coverage. The seller should secure an optional extendedreporting-period endorsement (a/k/a “tail”). Even after a sale, the now-defunct agency is still at risk of being sued. The purpose of this optional tail is to provide an additional period of time after the expiration of the policy for which valid claims will continue to be accepted, provided the wrongful act occurred before the end of the policy period. Be aware there is a tremendous lack of consistency as to the available options. Some carriers only allow an additional 1-year “tail” while others offer options much longer. The charge for this additional coverage comes with a hefty premium charge, so plan for this expense. You also only have one time to make the decision. Thinking about buying an agency or selling yours? Now is the time to start understanding the E&O issues. More E&O Tips at http://www.agentseotips.com
When you’re the buyer, it is best to consider “assetonly” purchases, and not purchases of any liabilities of the agency going out of business. This is one of the many areas where an attorney is needed to ensure the buyer is fully protected. The traditional approach is to have your E&O policy endorsed to provide coverage for the “new” agency for errors made by the “new” agency starting with the effective date of the acquisition. If you are selling your agency, contact your E&O carrier and advise them of your plans. Don’t hesitate to ask questions regarding cost, options, timeframes, etc. AIANC’s STREET WISE
https://www.mondaymorningmarkets.com/system-missiongoals
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April 2016
More Tips & “How-To” videos at www.AllianceInsuranceAgentsNC.com with one count each of attempting to obtain property by false pretense and insurance fraud... April 4, 2016 -- Harnett County Pair Accused of Conspiracy and Fraud RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrests Montrey Devon Bivins, 23, of 3531 9th Infantry St., Fort Bragg, and Jaquana Hick, 21, of 646 Nutgrass Road, Bunnlevel... April 1, 2016 -- Five Accused of Staging Car Accident in Durham County RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrests of two individuals in connection with an alleged staged auto accident; investigators seek three other suspects in association with the case... March 31, 2016 -- Tabor City Residents Accused of Staging Car Accident RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrests of four individuals in connection with an alleged staged auto accident; investigators seek two other suspects in association with the case...
NC DOI News April 18, 2016 -- Rockingham County Man Accused of Insurance Fraud RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Jeffrey Michael McKinney, Sr., 61, of 896 Huffines Mill Road, Reidsville; he is charged with one count each of attempting to obtain property by false pretense and insurance fraud... April 15, 2016 -- Burlington Woman Accused of Car Insurance Fraud RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Kala Lavette Sellars, 45, of 1016 Chandler Court, Burlington; she is charged with one count each of attempting to obtain property by false pretense, insurance fraud and felony conspiracy... April 15, 2016 -- Greensboro Woman Accused of Filing False Insurance Claims RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Kelly Silina Hatcher, also known as Kelly Hatcher Blackstock, 34, of 4528 Holland Drive, Greensboro; she is charged with...
March 29, 2016 -- Randolph County Woman Accused of Obtaining Property by False Pretense RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Alison Keli Underwood, 24, of Asheboro; she is charged with one count of obtaining property by false pretense... March 29, 2016 -- Davidson County Woman Accused of Posing as Her Deceased Mother RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Turkessa R. Taylor, 38, of 391 White Oak Road, Thomasville; she is charged with one count each of obtaining property by false pretense and attempting to obtain property by false pretense... March 21, 2016 -- Robeson County Man Accused of Pawning Fire Department Property RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Eric Daniel Oxendine, 28, of 10921 Esther Drive, Wagram; he is charged with one count of felony larceny in Scotland County and one count of obtaining property by... March 14, 2016 -- Jacksonville Man Charged with Insurance Fraud over Stolen Trailer Claim RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Dale McKinley Montford, 55, of 3002 Oakwood Drive, Jacksonville; he is charged with two counts of insurance fraud and...
April 5, 2016 -- Anson County Man Accused of Car Insurance Fraud RALEIGH -- Insurance Commissioner Wayne Goodwin today announced the arrest of Walter Vernel Lisenby, 50, of 501 White Store Road, Wadesboro; he is charged AIANC’s STREET WISE Page 17 of 21
April 2016
More Tips & “How-To� videos at www.AllianceInsuranceAgentsNC.com A personal auto policy consists of four coverages; hence, there are four separate insuring agreements. If a loss or claim is not covered under any one of those insuring agreements, there is
If you have the knowledge to see the problem, you will also have the ability to discover the solution.
no coverage.
The Producer Online IN ACTION is a monthly reminder of how you can turn the knowledge gained from The Producer Online into powerful sales opportunities.
Click here to review the Personal Auto Policy insuring agreements.
Explaining isn't always easy
When an expense is incurred has a loss happened?
Personal Auto Policies are often purchased with little understanding of the coverage being provided. It is sometimes purchased merely to satisfy state requirements for registration of the vehicle or to obtain financing. Would you like to provide a very simple overview of the coverages that you could post on your website or send in a newsletter? Click here for two e-marketing articles on Personal Auto Coverages.
While driving in difficult road conditions, Melody's car started to slide, left the road, and came to rest. The good news is that no
Personalize your personal lines marketing
one was injured and nothing was damaged. However, Melody did need to be rescued from her predicament. The nearby volunteer fire department responded, rescued Melody and then sent her a bill for $1,200. She asked her insurance company, State Auto, to pay the bill. They denied coverage because the expense was not related to a covered loss. Melody and the fire department did not agree and asked the courts for help. Click here to see if the courts considered the rescue fees
Your clients are always making decisions that impact their loss
covered under Melody's personal auto policy.
exposures and their risk retention. They might not be aware of the impact such decisions or changes could have on their lives.
Insuring agreements are important
Helping your clients understand basic risk management can help them protect themselves while keeping their insurance costs reasonable. An email or letter providing risk management techniques is a good way to stay in contact with your client. Let them know that you are concerned about their safety and well-being. Ken http://www.rn-agencyonline.com/letters/3-c-26.htm http://www.rn-agencyonline.com/letters/3-c-27.htm
Every ISO insurance coverage contains an insuring
Click here to review two personal lines risk management letters
agreement. This agreement broadly describes and frames the
to get you started.
type of losses that are covered.
AIANC’s STREET WISE
Page 18 of 21
April 2016
For 135 years Rough Notes has been dedicated to making you a better agent. Become the coverage expert with the Producer Online-Plus Producer Online-Plus Includes Commercial Lines Risk Evaluation Survey Personal Lines Risk Evaluation Survey Policy Form & Manual Analysis Coverages Applicable The Insurance Marketplace Marketplace Cybercast
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More Tips & “How-To” videos at www.AllianceInsuranceAgentsNC.com
Extreme Branding: Search and Deliver Imagine having hundreds of electronic billboards popping up all around your town. And each one with your logo in blazing color along with your contact information. And the message on each one automatically changes to fit the needs of your laser-targeted prospects.
Deliver with Facebook Facebook, on the other hand, allows businesses to deliver their message directly into the personal Facebook of a laser-targeted prospect. All you have to do is figure out the specific demographic characteristics of the prospects, create the video and BAM! The message is shown on the prospect’s Facebook, usually seen on a mobile device. If the prospect is not interested at that time, it costs nothing to brand your business into their subconscious. If they are interested, watch at least 10 seconds of the video and / or click through for more information the cost is about a penny per prospect.
All the interested prospect has to do is touch the screen to find out more. Does this sound like some futuristic movie device?
You can watch a tutorial on how to do it at Facebook Ad Creation Basics at https://www.facebook.com/business/learn/facebookcreate-ad-basics
No … it’s real and it’s available for every business owner. It’s called Extreme Branding using YouTube and Facebook.
Mobilize the Moment
Search with Google
Right now, people are looking for businesses just like yours.
In this day and age, folks who have an immediate need search the Internet.
Make sure your business shows up at the moment potential customers search for what you have to offer – whether they’re at home or on the go.
And more often than not the answer comes in the form of a YouTube video.
These days when people want quick and helpful information, they turn to whatever device they have on hand.
If a picture is worth a thousand words then one minute of video is worth 1.8 million words. Do you have the time and energy to write 1.8 million words? That’s the equivalent of 3,600 typical web pages. If you wrote an average of one web page an hour, it would take you 150 days of writing to achieve the impact of one minute of video. 65% of viewers watch more than ¾ of a video, which is more than can be said about text-based content. By 2017, video will account for 69% of all consumer Internet traffic. Adding a YouTube video can increase the chance of a front page Google result by 53 times. 65% of viewers visit the businesses website after watching a video. And the best part is that posting videos on YouTube is free … for now. AIANC’s STREET WISE
You can read a step-by-step tutorial on how to create & post videos to YouTube at http://www.wikihow.com/Make-a-YouTube-Channel
82% of Smartphone users say they use search to find a local business. Is your website “mobile-friendly”? How does it look on a Smartphone, tablet, laptop or desktop computer? Check it out at https://www.google.com/webmasters/tools/mobilefriendly.
DIY or DFY? I can personally train you on how to DIY (Do It Yourself) or use my special skills to create and manage your Extreme Branding DFY (Done For You). Check out my website at www.FYIExpress.com, call or text me at (770) 312-2342 or send an e-mail to eddie@FYIExpress.com for a free consultation.
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April 2016
AIANC Membership has More Advantages! Here’s what you get for only $250.00 per year: Free Disaster Planning Toolkit: At least one in four small businesses that close because of a major disaster never reopen. Here’s a new tool for your agency (& your commercial policyholders). Free Micro-Mobile Site & QR Code Marketing Strategy. Scan this QR Code for a current example. This could be your agency! Discount registration to Annual Convention Free Agency’s Online Visibility Report complete with improvement tips If your website looks like this on a Smartphone
It could look like this for Free if you join
Free 30 second Agency Promotional Video. Check out the one I created for my brothers’ agency. This could be your agency!
https://www.youtube.com/watch?v=b80uPAS38jI Free Customizable Business Forms: These documents are free to download and customize for your own professional use.
Free Small Business Handbook: Everything you need to know to run your business, from equity to employees.
Free Marketing Templates: Sets of templates with a coordinated design including letterhead, envelopes, business cards, brochures, etc.
Free Office Poster Software: Templates to create your own custom office posters, all without any knowledge of design or graphical skills needed.
Free Monthly CSR Online Training using interactive quizzes, videos and worksheets Free Monthly Agency Owner’s Tips ‘n Tools
Free “How To” Booklets on Agency Management, Buy / Sell / Evaluate an Independent Agency, Internet Marketing & Social Media
Free HR Policy & Compliance Guidelines Free Claims Apps for Policyholders Free Agency Valuation Consultation Free Voice to be heard in Raleigh
All this & much, much more for only $250.00 per year
Join today at www.AllianceInsuranceAgentsNC.com