When You Stop Learning … You Stop Earning! More info at www.AccuAgents.org
A Guide to Selling an Agency In this edition
by Al Diamond
A GUIDE TO SELLING AN AGENCY ... 1 BE ALERT: UNLICENSED AGENT OPERATING IN NORTHEAST MISSISSIPPI .................................... 8 EZ TAX PLUS!................................ 9 HOW
ARE YOU (AND YOUR ORGANIZATION) KEEPING UP WITH CHANGE? ..................................... 10
FINDING YOUR STOLEN MOBILE DEVICE ........................................ 12 WAYNE HOOPER REPORTS: M ARKET TRENDS FOR 2013 ....................... 14 21 WAYS TO GET CUSTOMER REVIEWS: THE ULTIMATE LIST........................... 20 GET A COMPLIMENTARY WEBSITE & M ARKETING ASSESSMENT ............ 20 A SIMPLE RETIREMENT PLAN FOR THE SELF-EMPLOYED ................... 21 AGENTS E&O TIPS....................... 24
Merry Christmas from AccuAuto
The time comes in every agent’s life when he considers cashing out. This can be for any number of reasons such as the desire to spend time with friends and family, for health reasons or even just the desire to do other things. He has built his career selling and servicing insurance and has made a good living doing so but every agent has (or should have) considered his business like a herd of dairy cows.
Whether you inherit your herd, buy it from your father or from someone else or begin with a single cow and grow your herd “the hard way,” you earn your living from the products of the herd. But growing the herd enhances its inherent value as well. No farmer would consider just walking away from the herd when retirement beckons. Not only does the herd need tending every day, but there is value in the herd’s perpetuation. Similarly, every agent has built a value while he has earned his living and it would be ludicrous to simply stop servicing the clients and telling them to get insurance elsewhere. So, whether the agency has been built on sub-standard auto risks, on life and health insurance products or on personal and/or commercial lines of business, sufficient value exists to make a sale a worthwhile activity for the agent to provide for his retirement or for his heirs. There was a time when every agent expected to sell his agency for two times its revenue. When those transactions were made, half of them cheated the buyer and the other half cheated the seller. In all but rare instances, the “two times formula” was simply not justified by the earnings that the buyer could expect to generate from the agency over a reasonable period of time. Continued on page 2
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Selling an Agency Continued from page 1 If you take nothing more from this article, be sure you understand that the value of an agency (or of any business) is defined by its potential earnings over a period of time that is justified by the buyer during which he is willing to take little or no earnings (profits after tax) from the transaction.
Advertise in AccuAgents Attention: Insurance Companies, MGA’s, Premium Finance Companies & Insurance Industry Vendors:
The interesting part of all transactions is that every buyer will have a different set of criteria that determines his earnings potential or the amount of time he is willing to abate earnings potential from the business in order to sponsor its purchase. This means that five different potential buyers will legitimately have five different offers for an agency (if they have done their homework properly) based on their own criteria. What kind of “criteria?”
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The easiest criteria to explain is based on location and staff. If one buyer wants to become the agent’s replacement and has no existing agency, he must keep the office in place and all of the staff, simply replacing the owner’s expense with his own. Since either the old owner or the new would work to administer the agency, their reasonable compensation is a part of agency costs rather than after tax earnings.
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Whatever the earnings that the old owner has taken each year will be the earnings (profit after taxes) that the new owner takes, and that is all he has to use to value the agency. If the agency throws off $50,000/year in earnings, that is all that the new owner can spend for the cost of the agency multiplied by the number of years he is willing NOT to take profits for himself. It simply doesn’t make financial sense to spend five or 10 years of profits to pay for the agency unless you want the agency very badly and are young enough to build its value over the new owner’s remaining work life.
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However, if another buyer owns a neighboring agency and has the space and staff to accommodate the seller’s book of business, while seller could earn $50,000 of net profit, the new owner could multiply that substantially because he does not need to pay for rent, overhead or for excess staff of the purchased agency. That projected profit (after tax load) multiplied by the number of years the new owner is willing to give up those profits defines what he can pay the seller in an equitable deal.
Questions? Contact Eddie K. Emmett at eddie@fyiexpress.com or (770) 312-2342.
Continued on page 4
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“If you want to succeed you should strike out on new paths, rather than travel the worn paths of accepted success.” John D. Rockefeller
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We wish you many blessings this holiday season and in the coming year! Merry Christmas!
When You Stop Learning … You Stop Earning! More info at www.AccuAgents.org
If you can’t send a document for signature by email, there is another agent who can. If the price is similar, the customer will go with the agent who makes it easier to buy! Agents using InsureSign are currently signing over 700 new applications and renewals per month using our service. That number is growing rapidly month by month. Get signed up with InsureSign now and erase the advantage of direct writers and other competition.
Check out the demo link at: www.insuresign.com/demo An alternative is selling the assets from the corporation and living with a negative worth in an inactive corporation forever. Seek advice from your agency consultant or from your accountant to determine which course if right for you. The liquidity ratios that are common and defined for an insurance agency will also be evaluated by a buyer and will add or subtract “risk” that can lower or increase your value in a sale. Call us (800-779-2430) to get a copy of our article on Tangible Net Worth and Liquidity Ratios if you want to educate yourself and begin measuring your own.
Selling an Agency Continued from page 2 So, we know the value of the business is based on logical earnings generation, not on any “multiple” of anything. This article’s title is to permit thousands of agents, large and small, who realize that they will someday need to sell their asset in order to attain its value during their lifetime. So let’s define what can be done to maximize value and how to go about finding a buyer.
For the sake of this article, it is important to note that it takes several years to correct poor liquidity or negative net worth and that should be addressed by any agent seeking to maximize value in a sale.
THREE YEARS BEFORE THE SALE If you are a corporation, take a close look at your Balance Sheet. It defines one part of the agency’s value, its Tangible Net Worth (TNW) and several liquidity ratios that will make your agency more or less attractive to the rational buyer. If you have a negative Tangible Net Worth, you must alter it over your remaining ownership time or face a subtraction of the negative net worth from the value of your book of business in the event of a sale of the corporation. AccuAgents
TWO YEARS BEFORE THE SALE Analyze your carriers and your book of business and clean up your house to maximize its value. Any agent in his right mind looks at historical loss ratios and company contracts when valuing a potential acquisition. Continued on page 5 Page 4
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When You Stop Learning … You Stop Earning! More info at www.AccuAgents.org
These are customers who repeatedly fail to pay their premiums, those with high loss ratios and those who consistently cause more work for the agency than they pay in commissions. While most states have restrictions on actions that can be voluntarily taken for “bad” customers, there are no restrictions to “flagging” their accounts and not exerting extraordinary efforts to continue the relationship.
AccuAuto has negotiated with Fearnley and Price, LLC to offer a special program to our AccuAuto customers. As an independent agent and AccuAuto customer you will be able to help your clients who are interested in the Deferred Action for Childhood Arrivals (DACA) that is currently being offered by the U.S. Government for certain individuals.
This does not affect nonstandard agencies or agencies with poor loss ratio books of business. Nonstandard agencies bear a value of their own based on cash flow potential. Standard lines agencies with historically poor loss ratios are less valuable since poor loss ratios without one or two losses that can reasonably explain the loss ratio define a problem agency. You can make a living as an agent that takes “all comers” but will not have much value built to pass on to the next owner beyond the cash flow that forms your paycheck.
Being an AccuAuto customer, Fearnley & Price will work with you and your clients to collect and file the necessary paperwork for DACA. The best part is the fee you can offer for this service is almost half of what other attorneys are charging so you will be getting your customers a great deal.
ONE YEAR BEFORE THE SALE
As the trusted local insurance agent you are in the unique position of helping your clients collect the necessary information. You will not be filling out the forms or providing any legal advice but you will be the point of contact for your client, and Fearnley & Price will pay you for your data collection services.
Market your agency. This means that you need to identify the likely buyers that you can trust to both pay you and maintain your agency in a manner similar to or better manner than you have yourself. Many agents know their potential perpetuators, whether or not they have discussed the possibility with them.
For more information, please call 770-242-6832, ext. 3 for Sales.
Be careful that marketing your agency isn’t used against you. We market agencies without identifying them to avoid competitor agencies telling the target agency’s clients and prospects that the agency is “on the block.” Here’s how you can do it:
Brochures will be provided upon request. You can start offering this immediately. The website includes other information about DACA which we encourage you to check out at http://daca.accuauto.net
1) Develop an Over view – This is a document that generally describes the agency in terms of size and complexion (premium size, commission income, percentage distribution of PL and CL, number of clients and policies, historical loss ratio and growth rates). This Prospectus gives potential buyers an idea of what is available.
Selling an Agency Continued from page 4
2) Identify the profile of the logical buyer. No, it is not anyone with enough money to buy the agency. You may think so at the outset, but there are many qualifiers for people with whom you should do business and the amount of money in their pocket is only one consideration, but not the most important consideration.
If you have had loss ratios that can help the agent get or maintain high contingency income, he will value you higher. If not, he will do the job that you should have done and clean up your book of business and will not pay for the culled business (he will negotiate a retention deal). He will also take the time with your companies to correct any contract terms such as commission rates, contingency agreements, etc. to determine if he will keep your companies or roll the business to his, higher paying companies.
a) Determine the size and complexion of agency that would best serve your customers b) Determine if you need (or want) cash or terms in a buyout (there are many advantages and many disadvantages to either)
The same things that the buyer will do after buying your agency at a bargain price, you can do with a few years still ahead of you to maximize your value. The agency must rid itself of customers who are nonproductive for the agency.
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Continued on page 6
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When You Stop Learning … You Stop Earning! More info at www.AccuAgents.org
SEEK WIN / WIN SCENARIOS ONLY IN A SALE.
Selling an Agency
ANYTHING ELSE WILL LIKELY END IN A LEGAL BATTLE.
Continued from page 5
8) Only deal with the most likely candidate from your research of their reputation and the logic of their value indication. Send a letter to the others indicating that you will be in touch with them if your current discussion does not bear fruit. Do NOT be tempted by the buyers who will call you and try to persuade you to change your mind. Deal with the most likely buyer first and deal with him only until the deal is concluded or until a roadblock is reached that requires you to move to another prospective buyer.
3) Use the Overview to attract prospective buyers to contact you (through a P.O. Box if you are trying to do it yourself). Send the Overview to every agency you have identified as a potential buyer. We do a Search and Screen process on behalf of sellers that use us as the point of contact (call us 800-779-2430 for more info on Search & Screen). 4) Respond to each buyer with a Confidentiality Agreement that provides you security that none of the information given to the potential buyers will be used in any way beyond evaluation of the prospective deal for valuation purposes. Your attorney can help you construct a Confidentiality Agreement that will serve the purpose. We have constructed a Confidentiality Agreement that can be purchased (call us if you’re interested at 800-779-2430) but we INSIST on its review by a qualified attorney in the State in which the transaction is being done because state laws differ and you need an attorney to review and correct it for your state.
9) Once you have agreed to price and terms, define the agreement, in English in a simple Letter of Intent and give that letter of intent to the buyer’s attorney to convert into a legal agreement. The attorney (or a qualified consultant) should review all agreements to assure your protection. The description of the sale process is how we at Agency Consulting Group, Inc. aid sellers to the completion of their transactions in a fair and honorable way that is businesslike and without undue pressure on either the buyer or the seller. We also locate and purchase agencies for our clients using this method. We would be happy to walk you through the process of selling or buying an agency or assist you with our services. Most agents are very good at building client relationships and selling and servicing insurance products. However, they have never sold or bought a business and quickly realize that their best interest is served by using a professional for this purpose. Others decide to learn how to buy and sell and use us as their education device. The only foolish ones are those who decide to buy or sell based on a whim or their “feelings”. This is much like Do It Yourself root canals or appendectomies. Can it be done? Probably. Is it the wisest course for your health and security? Probably not. Call David or Al Diamond to discuss any part of buying or selling an agency --- we’re here to help you through the process.
5) Send each respondent a full Prospectus of your agency fully redacted (without any identity information). The Prospectus gives the responding agents ALL of the information they would need to value your agency from their perspective and to evaluate their desire to purchase it. Each agent is asked to respond with an “indication” of value to them. This indication is non-binding and simply gives you an idea of your agency’s value to that buyer if his due diligence proves all of the information you have given him in the Prospectus. Call us for a copy of our Agency Evaluation Questionnaire that forms the body of your Prospectus (with all attachments). 6) Identify your expectation of the value of your agency against which you will compare the indications that you receive. You may have a specific need for cash for some designated purpose. You may want to avoid large cash payments if the taxation of that money has adverse effects on you. You would never buy a “pig in a poke”. Don’t sell one that way either. If you don’t know your agency’s value and cannot establish one logically, call us to perform an agency valuation for you (800-7792430).
Reprinted from the PIPELINE, the national newsletter for agency principals, by permission of Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for more than 20 years. Call 800-779-2430 for information or subscription; e-mail
7) Group all of your responses based on the indications that are at or near your expectation of value. Be as wary of values far higher than your expectation (and the majority of indications) as you are of low-ball indications or the amateurs who will write you and tell you that they will give you “what you desire” or “a reasonable amount.” These are horse-traders who will not be adverse to taking advantage of you if they can to their own financial benefit.
AccuAgents
info@agencyconsulting.com; website, www.AgencyConsulting.com.
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When You Stop Learning … You Stop Earning! More info at www.AccuAgents.org
ALABAMA
LOUISIANA
Is your agency visible to the thousands of Alabama Uninsured Motorists who will be looking for affordable coverage when the new Online Insurance Verification System kicks into high gear on January 1, 2013?
Thursday, December 13, 2012 2 Hours of CE by Eddie Emmett Racing for Consistent Client Communication – Social Media
Go to www.GetListed.org and see how visible your agency is to Internet Searches.
Fair Grounds Race Course & Slots
Then go to www.AgencyThrive.com to see how AccuAuto’s Web Marketing programs can make a difference.
Includes CE, lunch buffet, 2 drink tickets, admission & race program
Download Jay Starling’s 23-page “OIVS” presentation & Eddie Emmett’s 31-page “Claim Your Free Google Listing” booklet in PDF at www.AgentsFirst.org.
GEORGIA
SOUTH CAROLINA
Nationwide to offer Protection following Data Breach Atlanta – Insurance Commissioner Ralph Hudgens issued the following statement today concerning the unauthorized access of Nationwide Insurance‘s website: Nationwide Insurance Company notified my office that a portion of their computer network was criminally attacked by individuals who gained unauthorized access to personal and private information of approximately 28,467 Georgia members and/or potential policyholders. To minimize the possible negative impact on these consumers, a plan of correction has been implemented. Nationwide will: Provide the Department of Insurance with evidence of written notice to the members and applicants regarding the improper disclosure of their private information. Create a dedicated toll-free number to answer questions from members and applicants. The Nationwide number is 800-760-1125. Offer affected members and applicants free credit monitoring and identity theft protection services from Equifax for at least one year. We treat any improper access of an applicant’s personal information as a serious matter. Consumers who have questions or concerns may also contact my office at 404-656-2070, or toll-free at 800-656-2298. AccuAgents
http://www.mcalister-smith.com/book-ofmemories/1420587/Peters-Lucy/service-details.php
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When You Stop Learning … You Stop Earning! More info at www.AccuAgents.org
FLORIDA
MISSISSIPPI
Case Notes
Be Alert: Unlicensed Agent Operating in Northeast Mississippi Commissioner of Insurance Mike Chaney and the Mississippi Insurance Department are alerting consumers that there is an individual operating in the Monroe County area who does not have an agent’s license and has no authority to collect insurance premiums. Melvin Earl Jackson, Sr. of Aberdeen, MS has been acting as an agent and collecting premiums for two burial associations, (Jackson Mortuary and Burial Insurance, Inc. and Modernistic Burial Association). He has also collected premiums on policies issued by various industrial life insurance companies.
The following are instances in which licensees or other persons violated the Florida Insurance Code and the administrative action the department has
Jackson, the subject of an ongoing investigation by the Mississippi Insurance Department, does not have an agent’s license issued by the Department and has NO authority to collect insurance premiums from anyone or on behalf of any company.
taken against them. Note: All administrative investigations are subject to referral to the Division of Insurance Fraud for criminal investigation. Case: A life and health agent hatched a scheme and
The Mississippi Insurance Department warns consumers that anyone who believes they have policies through Jackson Mortuary and Burial Insurance, Inc. or Modernistic Burial Association should not pay premiums to Jackson. Any policyholders who have been paying premiums to Jackson or Jackson Mortuary (funeral home) or who have questions about their coverage may call the Mississippi Insurance Department’s Toll Free Consumer Hotline at 1-800-562-2957.
recruited a network of agents to enroll unsuspecting consumers into a unauthorized health insurance product with "AIM/CEO" (Association of Independent Managers and Chief Executive Officers Club). To the victims' surprise, there was no authorized insurer underwriting these health policies. Compounding matters, the organizing agent held regular conference calls with other agents and provided them a multitude of marketing materials to perpetuate the sale of the unauthorized health insurance. The net effect was numerous consumers were left in the lurch without health coverage while the agent lined his pockets with premiums. Many of the other agents, some of which claim to have been "duped", had enforcement action taken against their licenses for soliciting and selling an unauthorized health product, which they failed to verify was authorized. Disposition: License revoked and permanently barred from the insurance industry.
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When You Stop Learning ‌ You Stop Earning! More info at www.AccuAgents.org
EZ Tax Plus!
You are no longer liable for the tax return You will not have to complete the competency
This is an innovative way for a customer to have their taxes done at your office while an EZ Tax preparer does all the work via webcam. Either way you are still providing a service to your customers and increasing your profit. You can decide what program works best with your comfort level.
test No continuing education hours No need to obtain a PTIN All you need is a computer, internet access, printer/scanner, and webcam
You probably already have everything you will need to prepare tax returns. All you need is a computer with internet access, and a printer. With EZ Tax (with you being the preparer) a number issued by the IRS is also needed. As part of your training EZ Tax will help you obtain your number by the IRS. With EZ Tax Plus you'll need a webcam. (Inexpensive webcams are available at many stores).
View the EZ Tax Plus informative PDF: http://library.constantcontact.com/download/get/file/1 102610196878-307/EZTaxSlideShow.pdf If you would like to sign up or you have questions, please contact: Mindy Brigance
The EZ Tax software programs are simple and easy to use; you do not have to have any previous tax knowledge.
AccuAuto, Tax Division Manager 1-800-229-2009, ext. 235
With EZ Tax Plus you can join us for only $295 (registration fee). Highlights include: AccuAgents
mindy@accuauto.net Page 9
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When You Stop Learning … You Stop Earning! More info at www.AccuAgents.org
We are now at the dawn of a profound technology-driven transformation that will make the changes we have experienced over the past 25 years seem small and slow.” Daniel Burrus, January 2009 I have used the above quote in many of my presentations over the last several years. Like many of you, I lived through the “technology-driven” changes over the past 25 years, and they seemed anything but small and slow. Yet, the changes in just the last five years have been dramatic. Facebook, Twitter, LinkedIn, the Kindle, iPhones, and iPads did not exist or were very new just five years ago. And the list goes on. The world adopts technology and new ideas at a much faster pace than ever before. Facebook introduces new changes and features constantly. Google and LinkedIn are changing the look and feel of profiles. Millions of people immediately adapted and adopted these new options. In fact, we have come to expect this kind of dynamic change. This fast pace has created a lot of opportunity for some and is—or will be—the demise of others. But human beings—and the way we work with and manage each other—have not changed and adapted nearly as quickly. That is one of the major challenges for insurance organizations today. The big question for leaders of insurance organizations today is how they handle the adoption of technology inside their organizations. How well do employees adapt and succeed. And the leaders of the future will likely be those who are flexible enough to move with these fast changes. What does that mean? It means that as a leader you still need to know where you want to take your organization, but you no longer have the luxury of planning the trip all the way to its final destination. Do you remember the 5 and 10 year plans? Today, they just might be a big waste of time. If you’re going to survive in this new faster race, you will have to be able to adapt and do so quickly. In the “good old days” business plans plotted the course from A to Z by connecting all the dots and creating a linear path that was easy to follow. A connects to B that connects to C and so forth. In this transformed economy, A connects to B and C might be something completely different than it was just a few months ago. As a matter of fact, C might not even be there at all. Unless you’re able to not only live with ambiguity but also embrace and anticipate change, you’re going to have a much harder time keeping up. What are the implications? More than ever before, insurance organizations have to know who they are and what they want because the “how” of their plans will be a constantly moving target. This can be frustrating to a lot of people, but it’s also exciting and dynamic for those who learn to embrace change, try new ideas, and are willing to discard ideas and systems that no longer deliver results. The cost of inertia has just gone up. Way up. How are you (and your organization) keeping up with change? ________________________________________________________________________ Steve Anderson is the leading authority on insurance agency technology. He is a prolific writer known for his knack for translating “geek speak” into easily understood concepts. Check out his free weekly newsletter “TechTips” and other resources for the insurance industry on his website.
AccuAgents
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In Partnership with Wants to help you find E&O coverage that best fits the needs of your agency.
Call AccuAuto Sales at 1-800-229-2009, ext. 3 or email sales@accuauto.net for more information.
When You Stop Learning ‌ You Stop Earning! More info at www.AccuAgents.org
Finding Your Stolen Mobile Device You can't find your phone and you start to panic. There is perhaps nothing more stressful than leaving your phone someplace or having it stolen. Losing your phone is like losing your wallet with $700 in cash, plus your emails, contacts, and passwords. And if you use it for business the data breach implications are huge.
you find a lost device. The Security tab of your Dropbox account shows a list of devices that are linked. Under "Most recent activity" you will find the last logged IP address. You can use this to look up the location. Lojack for Laptops (Windows, Mac OSX: $39.99/yr): Like Lojack for your car, this software offers remote file, geolocation, and remote locking with message display. For your own peace of mind I suggest you do something to help you locate your device if it is ever lost or stolen. What solution have you found for locating a lost or stolen mobile device? Let me know.
Kemper Specialty, part of the Kemper Corporation, is now accepting applications for new agency appointments in the state of Georgia.
There are several ways you can track and, hopefully, find and recover your lost or stolen mobile devices - if you take steps to install one of the many services that can help find lost devices. Some are platform specific; others work with a variety of smartphones, tablets and laptops. Following are a few suggestions: Find My iPhone (iOS: free): Very popular for finding an Apple device. It has key features including geolocation, remote alarm, and remote wipe. All you need to do is enable the app from your device settings.
Named the Non-Standard Insurance Carrier of the Year by the Brokers Insurance Group, Kemper Specialty serves its customers through a network of independent agents. So why be appointed with Kemper Specialty? We provide excellent customer service for our agents and policyholders. We are easy to use and have competitive rates and commissions. To be appointed as a new Kemper Specialty agent click here. Thank you,
Prey (iOS, Android, Linux, OSX, Windows: free and premium): This works across platforms including phones, tablets, and laptops. Lookout Mobile Security (iOS, Android: free and premium): The free version lacks remote wipe and lock, but does include other features like security and data backup.
Ed Furlong, Senior Territory Sales Manager, EFurlong@Kemper.com Metro-Atlanta Area Becky Wills, Senior Territory Sales Manager, RWills@Kemper.com Metro-Atlanta Area
Anne Kicinski, Territory Sales Manager, AKicinski@Kemper.com South Georgia Dropbox (iOS, Android, Linux, OSX, Windows: free Region and premium): While not generally thought of for mobile security, this service has a hidden feature that could help AccuAgents Page 12 December, 2012
www.underwritersinsider.com
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More “News, Satire & Opinions for Independent Agents from Independent Agents” at www.fyigeorgiaviews.com
Wayne Hooper Reports: Market Trends for 2013 The difference in the two names of this same storm is a “Hurricane Deductible” did not apply to the Tropical Storm.
By Wayne Hooper
This deductible would have transferred millions of dollars in losses from the carriers back to the insured’s. Loss estimates for New York and New Jersey runs as high as $71 Billion. I don’t think the industry is going to make the same mistake on the deductible wording next year. I wonder if the customer gets a reduction in premium for the reduction in coverage he accepts if the wind exceeds 75 mph? Just asking! Maybe the answer is “We won’t write your coverage unless you accept it!” Underwriting didn’t help either. Many companies shunned the coast areas in the Southeast to avoid a hurricane catastrophe Loss. They wrote, Inland, in safe places like Joplin, Mo., Tuscaloosa, Alabama, Ringgold Georgia and across the Midwest. “Mother Nature” destroyed all preconceived notions of a safe place to avoid catastrophes. Let’s face it, “stuff happens” which is why people buy insurance and doomsday preppers hoard food.
The national insurance journals are predicting higher insurance rates across the board in 2013. Well that’s not really news to anyone who has been to the gas station or the grocery store in the last 6 months.
The national news media is reporting an upturn in new home starts. I personally haven’t notice a lot of movement but if so, we can expect to see more contractors requesting quotes. Ford Motor Company expects record sales of their F-150 pickup in 2013 because of the upward trend in new home starts.
What does this mean for the independent agent? The answer depends on your marketing plan or technique. If you are a Specialty auto agent selling the lowest down payment and price, then the answer will be the same as 2012. You can expect to see a declining commission income and a high turnover of customers. You say “Hey, wait a minute. What about the trend to higher rates?” The answer is Yes, across all the carriers you will see higher rates, but if you are selecting only the lower 10% of the carriers in order to win the quote. You have given up the majority of the rate increase to stay competitive, but you also reduced your income. In the Specialty Auto business, carriers continue entering the market with low ball rates to win market share or volume. This year in Georgia, Louisiana and Texas many of those carriers self-destructed, cancelled contracts, reduced commissions, sold out or simply went out of business. In the property market, it appears the carriers are going with higher percentage deductibles or higher flat deductibles in order to reduce their Catastrophe exposure. The storms of the last few years have literally put the “Fear of God” back into the insurance business. The property carriers were pounded in 2011 with tornados then caught “Hurricane Sandy” also known as “Tropical Storm Sandy” in 2012. AccuAgents
They feel the average contractor’s truck is pushing 15 years old so they’ll need a new one. It’s the kind of positive thinking that works for me! 2013 might be a good year to open up those markets who like artisan contractors, builders risk and General Liability. p.s. (I feel a 15 year old truck is just beginning to build a little character. I wouldn’t trade it in just to get a new one, but that’s me! Of course, I’m still with my first wife too. She has thought about trading me in a few times on a newer model to get better emission controls.) 2013 can be the turnaround year for the independent agent, if we decide to work on lines of coverage that cannot be quoted on the internet by the average high school dropout. Your expertise and schooling are what you have to offer in determining the customer’s needs. Every customer has a need for multiple lines of coverage. Make sure they are aware you can meet those needs. Reinforce your needs analysis by building a profile of their likes and dislikes, number of children, preferred contact methods, hobbies, associations, interests and skills. You never know where these threads can lead.
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Wayne Hooper Reports Wayne@FYIEXPRESS.com
Five Keys to Pursuing New Business by John Chapin
Cell # 678-296-6345
Wayne Hooper is a retired Insurance executive and agent with 43 years’ experience in the P&C industry. A Georgia native, born in Tifton, Ga., Wayne graduated from Georgia State University with a degree in Psychology. He was commissioned into the Army on graduation and served in Germany. Wayne has been an underwriter, supervisor, manager, Product Manager, Reinsurance coordinator, agent, and Sales Manager with various carriers and MGA’s in his career. He recently retired from Kemper Specialty Insurance Co. after 13.5 years of service to join the staff of the FYI Express as a contributing editor. Wayne enjoys good humor, good food, good stories, history, sailing, antique cars, and hiking in the North Georgia Mountains. Not always in that order, depending on the weather. Do you have some industry news to share? Send it to Wayne@FYIExpress.com
A RETIREE'S LAST TRIP TO WAL-MART Yesterday I was at my local Wal-Mart buying a large bag of Purina dog chow for my loyal pet, Jake, the Wonder Dog, and was in the check-out line when a woman behind me asked if I had a dog. What did she think I had - an elephant? So, because I'm retired and have little to do, on impulse I told her that no, I didn't have a dog, I was starting the Purina Diet again. I added that I probably shouldn't, because I ended up in the hospital last time, but that I'd lost 50 pounds before I awakened in an intensive care ward with tubes coming out of most of my orifices and IVs in both arms. I told her that it was essentially a Perfect Diet and that the way that it works is, to load your pants pockets with Purina Nuggets and simply eat one or two every time you feel hungry. The food is nutritionally complete so it works well and I was going to try it again. (I have to mention here that practically everyone in line was now enthralled with my story.) Horrified, she asked if I ended up in intensive care, because the dog food poisoned me. I told her no, I stopped to pee on a Fire Hydrant and a car hit me.
Whether you are relatively new to insurance, or simply want to add more business to your book, the following five ideas will help you do it quickly and effectively. While some of these are more subtle than others, all are important factors when growing your business. Five Finer Points of Increasing the Amount of New Business
1) Spend three to four hours a day prospecting. Your most important activity when building a book of business is filling your funnel with lots of prospects who are ready, willing and able to invest in your product. While items such as closing, a solid presentation, and good follow-up are important, having lots of good, qualified leads is by far the most critical aspect of building a business and one that will make up for a lot of mistakes in other areas. Producers who don’t have an abundance of good prospects tend to keep unqualified prospects in their funnel, they also tend to harass and over-contact the qualified leads because they have no one else to call. The answer is to spend a large portion of the working day finding prospects. You need to have several different prospecting methods in place, from getting solid referrals to cold calling. The objective is to have more prospects than you can handle, that way you won’t hang on to the unqualified ones and you won’t over-contact and irritate the good ones because there is no one else to call.
2) Zig when others zag. These days it’s more important than ever to stand out from the competition. Generally speaking, unless you’re getting chased by lions, it’s never been a good idea to run with the herd. This is true in many areas of insurance, for example, if everyone is calling three months before the x-date, call six months before the xdate. Also, when you do call, it’s important that you don’t sound exactly like the competition. You need to have three key differentiators, three important items that are unique and set you and your company apart from the competition. Your overall objective here is to sound, look, and act differently, in a good way, from the competition. Continued on page 17
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Five Keys … The saying “when you’re green you grow and when you’re ripe you rot” applies here. Keep in mind also that personal and professional development are your responsibility, not that of your employer. No one is going to threaten or otherwise force you to develop yourself and become better at who you are and what you do. Strive to learn something new, stretch your brain, and grow a little every day.
Continued from page 16 3) Speak a different language. It’s said that the most important conversation you have is the one you have with yourself. When agents talk to themselves about self-discipline, prospecting, and other challenging aspects of the business, I find that their self-talk tends to ensure that they constantly fight an uphill battle in these areas. Many refer to these aspects as hard, difficult, and in some cases even impossible. Remember, our subconscious brain is extremely powerful and it does not want to make a liar out of us. When we tell ourselves a task is difficult, the brain immediately goes to work to make us right. As a result, something as simple as picking up a phone receiver, dialing ten digits, and having a conversation with the person who picks up, becomes an onerous task in which the phone seems to weigh one hundred pounds and we mentally struggle to get the task done.
If you would like access to John's free monthly newsletter and a white paper on what it takes to be successful in sales, you can visit John's website at http://www.completeselling.com/ Have a sales question? E-mail John at johnchapin@completeselling.com John Chapin’s specialty is helping salespeople and sales teams double sales in 12 months. He is an award-winning sales speaker, trainer and coach, a number one sales rep in three industries, and the primary author of the goldmedal winning "Sales Encyclopedia". In his 24 years of sales, customer service and management experience, he has thrived in some of the toughest markets and economies.
Try changing your perspective and your language around these seemingly difficult tasks. Realize that there are literally tens of thousands of people easily and successfully doing what you think is hard. Also realize that the only difference between them and you is that they never told themselves these activities are difficult or hard, they understood that it simply comes down to learning how to do them effectively and then doing them to the point where they become simple and routine.
4) You need to be a self-starter. If you need someone standing over you to make sure you are doing what you have to do, you will never be successful at the highest levels possible. While having someone that you’re accountable to is important, you need to have enough drive and personal motivation to push yourself harder than anyone else can possibly push you. If you need some help in this area, start by looking at your purpose behind what you do during the day. Why do you get out of bed in the morning, go to work and do what you do? What do you want for yourself and the people in your life? Why is it important that you not only survive but thrive at the highest levels possible? If you have enough powerful reasons in these areas, you will push yourself to do what you need to do in order to achieve a high level of success. If you are motivated and driven enough, you simply will find a way.
5) Read a book a week. It’s extremely important to constantly be growing both personally and professionally. One of the best and most effective ways of doing that is to read a book a week. The most successful people in every profession are continually getting better and learning more. AccuAgents
For permission to reprint, or to reach John, email him at http://us.mg205.mail.yahoo.com/neo/johnchapin@compl eteselling.com. John Chapin Complete Selling, Inc. Helping you find and get all the business you want Cell: 508-243-7359 johnchapin@completeselling.com www.completeselling.com LINKEDIN: once logged in find me under: johnchapin1 FACEBOOK: http://www.facebook.com/johnjchapin TWITTER: http://twitter.com/johnjchapin # 1 Sales Rep in 3 industries, Author of the gold-medal winning SALES ENCYCLOPEDIA - The most comprehensive "how-to" guide on selling.
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21 Ways to Get Customer Reviews: the Ultimate List By Phil Rozek www.LocalVisibilitySystem.com
It doesn’t matter how much time you have, or how many customers you have, or how computer-savvy they are. At least some of these methods will work for you. Here are your 21 ways to get reviews (not ranked in any particular order): Organic method—making sure your business is listed on as many third-party sites as possible, so that customers can find you if they feel like writing reviews spontaneously. One place to start is by making sure you’re listed on all the suggested sites on GetListed.org.
I don’t usually do this, but let’s get theoretical for just a second: Every satisfied customer of yours should bring you more customers. The ideal is for word-of-mouth to do all the work—for your happy customers to refer their friends to you, who in turn become customers. Not having to advertise in any way is the best. But what if you’re not quite at that stage? That’s when the next-best thing needs to happen: for every happy customer to influence potential customers. More specifically, short of having your customers actually deliver more customers to your door, the best thing is for your current customers to sway potential ones by writing great reviews of your business. Let me put it another way, using a New Age-y metaphor: The goal is to re-channel as much positive energy as you can. It’s like karma, man. You work your tail off to do a super job. Sure, that’s its own reward, because you get paid and your customers get what they wanted. Everybody’s happy. But is that the only reward you get? Or do you also get at least a little public recognition for every great job you do? Without reviews, it’s harder for people to conclude that they should pick you over your competitors. Plus without reviews you’re far less likely to outrank your competitors in Google Places and Bing. The bottom line is you need to ask each and every happy customer for a review. But how? This is where even the smartest business owners— the ones who know how important reviews are to potential customers—often get stuck. They’re not sure how to ask customers or how to show them what to do, so the reviews never happen. Fortunately, you’ve got options. 21 of them. I know of 21 ways you can get reviews—reviews that customers either write directly on your Google Places page (AKA “Google reviews”) or write through third-party sites (like Yelp and CitySearch). Many of these methods also give you a way of including instructions for people who may not know how to leave you a review. AccuAgents
Links or clickable images on your site— something that customers who return to your site can click on to write you reviews. (Here’s an example.) Single-page handouts—a sheet of instructions you can simply hand to customers, which walks them through how to post a review. (I actually make handouts for Google reviews, by the way .) Personal email—a simple email with a polite request and a link. But for Pete’s sake, personalize it: none of that “Dear Valued Customer” garbage. You can also do this with your email signature: instead of a bunch of fluff at the bottom of your emails, have a little link to where customers can dash off a quick review. Autoresponder email—if you have your customers on an email list through a service like AWeber, you can have an email request for a review that goes out automatically. ReviewBiz button—a great (and free) way to get an extra trickle of reviews from customers who go to your site. Snail-mail request/instructions—people generally pay more attention to snail-mail, especially if it’s personalized and from a business they know and like. This method is more work, but you’ll probably bat pretty well if you do it. Video—a short walkthrough, for customers who you think would just rather watch a quick video than follow other types of easy instructions. Social media—in particular, Facebook. What’s nice is customers can write CitySearch reviews using their Facebook username, which makes it that much easier for them and you. On-site “review stations”—just a laptop set up in your office / store that people can write a review on. This isn’t against the rules of Google Places, but just don’t ask people to leave you Yelp reviews through the same IP. Paid services— like CustomerLobby or DemandForce, which contact your customers for you and help get some reviews posted. Continued on page 20 Page 19
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21 Ways to Get Customer Reviews: the Ultimate List Continued from page 19 QR code on a postcard—hand or send your customers a little postcard that asks them to review you by scanning a QR code with their smartphones. The QR code would just contain a link to your Google Places page, or a link to your InsiderPages listing, etc. (Here’s a handy QR code generator.) QR code as a sticker or decal—the sticker or decal could go anywhere in your office or store, and customers could scan it with their smartphones to review you on the spot. Phone call—kinda old-fashioned, but effective with the right kind of customer. Reverse side of your business card—on one side of your classy engraved business card is your basic info, on the other site a QR code or link that goes to a review site of your choice. A “We’re a Favorite Place on Google” decal—which you could put near the “Exit” side of your door. A slip or insert included with your product. The slip could simply be a piece of paper with a request, but ideally it would also include some instructions for people who may not know how to go about posting a review. Part of a little gift that you send customers. Like a free pad of paper with your logo and phone number on it, plus a request to leave you a quick review. Or a fridge magnet. A pen might be a little too small. The gift has to be something people will actually use, keep on their desk or kitchen table, and see every day. The idea is it’s a subtle but persistent reminder. Encouraging reviews in the responses you write to reviews on your Google Places page. Some fraction of the people visiting your Places page will be your current or past customers. They’re likely to read the reviews on your page, as well as your responses (which you should be in the habit of writing!). This is an opportunity to encourage others subtly to write reviews, too. I emphasize subtly.
Asking your reviewers to write through a variety of sites. In other words, if you know for a fact a given customer wrote you a Yelp review, ask that person to write you an InsiderPages review, too. There are no rules against it, and it’s plenty kosher. In fact, the review sites themselves share reviews: I’ve seen CitySearch reviews show up on Bing, Judysbook, Kudzu, MerchantCircle, Switchboard, Yahoo, YellowBot, and YP. Again, I suggest you only do this with really close, really loyal customers who don’t mind helping spread the good word. These methods are NOT mutually exclusive, nor do you have to pick one or even just a few. You can use as many of them as you’d like. In fact, it’s best if you use a variety of them, so you get reviews on a variety of sites, and so you can determine over time what works best for you and your customers. By the way, if some of your customers just don’t manage to give you reviews, but they’re kind enough to write you testimonials, put them on your site. And mark up the testimonials with hReview microformat, so that you can get those groovy extra “review stars” showing up whenever your site shows up in Google’s search results. Make every customer happy, and then make every happy customer count. What review-gathering method(s) have worked best for you so far? Can you think of any I didn’t? Go ahead…leave a comment! http://www.localvisibilitysystem.com/2012/04/13/21ways-to-get-customer-reviews-the-ultimate-list
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Asking family members of customers who already reviewed you. Let’s say you’re a jeweler and your latest customer just bought a really nice engagement ring for his fiancée. The gent has one perspective to offer (“Great service, really helped me pick out the ring”) whereas the lady also has a unique perspective (“I love the ring!”). Why not? Even though it’s one transaction, they’re both customers. The only caveat is this only works well when you’re dealing with close customers.
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A SIMPLE Retirement Plan for the Self-Employed Of all the retirement plans available to small business owners, the SIMPLE plan is the easiest to set up and the least expensive to manage. These plans are intended to encourage small business employers to offer retirement coverage to their employees. SIMPLE plans work well for small business owners who don't want to spend a lot of time and pay high administration fees associated with more complex retirement plans. SIMPLE plans really shine for self-employed business owners. Here's why... Self-employed business owners are able to contribute both as employee and employer, with both contributions made from self-employment earnings. SIMPLE plans calculate contributions in two steps: 1. Employee out-of-salary contribution The limit on this "elective deferral" is $11,500 in 2012, after which it can rise further with the cost of living. Catch-up. Owner-employees age 50 or over can make an additional $2,500 deductible "catch-up" contribution (for a total of $14,000) as an employee in 2012. 2. Employer "matching" contribution The employer match equals a maximum of 3% of employee's earnings. Example: A 52-year-old owner-employee with selfemployment earnings of $40,000 could contribute and deduct $11,500 as employee, and an additional $2,500 employee catch-up contribution, plus $1,200 (3% of $40,000) employer match, for a total of $15,200. SIMPLE plans are an excellent choice for homebased businesses and ideal for full-time employees or homemakers who make a modest income from a sideline business. If living expenses are covered by your day job (or your spouse's job), you would be free to put all of your sideline earnings, up to the ceiling, into SIMPLE retirement investments. A Truly Simple Plan A SIMPLE plan is easier to set up and operate than most other plans. Contributions go into an IRA you set up. Those familiar with IRA rules - in investment options, spousal rights, creditors' rights - don't have a lot new to learn. AccuAgents
Requirements for reporting to the IRS and other agencies are negligible. Your plan's custodian, typically an investment institution, has the reporting duties. And the process for figuring the deductible contribution is a bit easier than with other plans. What's Not So Good About SIMPLE Plans Once self-employment earnings become significant however, other retirement plans may be more advantageous than a SIMPLE retirement plan. Example: If you are under 50 with $50,000 of selfemployment earnings in 2012, you could contribute $11,500 as employee to your SIMPLE plus an additional 3% of $50,000 as an employer contribution, for a total of $13,000. In contrast, a 401(k) plan would allow a $29,500 contribution. With $100,000 of earnings, it would be a total of $14,500 with a SIMPLE and $42,000 with a 401(k). Because investments are through an IRA, you're not in direct control. You must work through a financial or other institution acting as trustee or custodian, and you will generally have fewer investment options than if you were your own trustee, as you would be in a 401(k). It won't work to set up the SIMPLE plan after a year ends and still get a deduction that year, as is allowed with Simplified Employee Pension Plans, or SEPs. Generally, to make a SIMPLE plan effective for a year, it must be set up by October 1 of that year. A later date is allowed where the business is started after October 1; here the SIMPLE must be set up as soon thereafter as administratively feasible. If the SIMPLE plan is set up for a sideline business and you're already vested in a 401(k) in another business or as an employee the total amount you can put into the SIMPLE plan and the 401(k) combined (in 2012) can't be more than $17,000 or $22,500 if catch-up contributions are made to the 401(k) by someone age 50 or over. So someone under age 50 who puts $9,000 in her 401(k) can't put more than $8,000 in her SIMPLE 2012. The same limit applies if you have a SIMPLE plan while also contributing as an employee to a 403(b) annuity (typically for government employees and teachers in public and private schools). Continued on page 22
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How to Get Started with a SIMPLE Plan
earnings. That date can't be later than October 1 of the year you adopt the plan, except for a business formed after October 1.
Continued from page 21 You can set up a SIMPLE account on your own, but most people turn to financial institutions. SIMPLE Plans are offered by the same financial institutions that offer IRAs and 401k master plans.
Another key document is the Salary Reduction Agreement, which briefly describes how money goes into your SIMPLE. You need such an agreement even if you pay yourself business profits rather than salary.
You can expect the institution to give you a plan document and an adoption agreement. In the adoption agreement you will choose an "effective date" - the beginning date for payments out of salary or business
Printed guidance on operating the SIMPLE may also be provided. You will also be establishing a SIMPLE IRA account for yourself as participant.
401k, SEPs, and SIMPLES Compared 401k Plan type: Can be defined benefit or defined contribution (profit sharing or money purchase)
SEP
SIMPLE
Defined contribution only
Defined contribution only
Number you can own: Owner may have two or more plans of different types, including an SEP, currently or in the past
Owner may have SEP and 401k
Generally, SIMPLE is the only current plan
Due dates: Plan must be in existence by the end of the year for which contributions are made
Plan can be set up later - if by the due date (with extensions) of the return for the year contributions are made
Plan generally must be in existence by October 1 of the year for which contributions are made
Dollar contribution ceiling (for 2012): $50,000 for defined contribution plan; no specific ceiling for defined benefit plan
$50,000
$23,000
Percentage limit on contributions: 50% of earnings for defined contribution plans (100% of earnings after contribution). Elective deferrals in 401(k) not subject to this limit. No percentage limit for defined benefit plan.
50% of earnings (100% of earnings after contribution). Elective deferrals in SEPs formed before 1997 not subject to this limit.
100% of earnings, up to $11,500 (for 2012) for contributions as employee; 3% of earnings, up to $11,500, for contributions as employer
Deduction ceiling: For defined contribution, lesser of $50,000 or 20% of earnings (25% of earnings after contribution). 401(k) elective deferrals not subject to this limit. For defined benefit, net earnings.
Lesser of $50,000 or 25% of eligible employee's compensation. Elective deferrals in SEPs formed before 1997 not subject to this limit.
Same as percentage ceiling on SIMPLE contribution
Catch-up contribution age 50 or over: Up to $5,500 in 2012 for 401(k)s
Same for SEPs formed before 1997
Half the limit for 401k and SEPs (up to $2,500 in 2012)
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Prior years' service can count in computing contribution
No
No
Somewhat narrower range of investments. Less direct control of investments.
Investments: Wide investment opportunities. Owner may directly control investments.
Withdrawals: Some limits on withdrawal before retirement age
No withdrawal limits
Permitted withdrawals before age 59 1/2 may still face 10% penalty
Same as 401k rule
Spouse's rights: Federal law grants spouse certain rights in owner's plan
No federal spousal rights
Rollover allowed to another plan (Keogh or corporate), SEP or IRA, but not a SIMPLE.
Same as 401k rule
Some reporting duties are imposed, depending on plan type and amount of plan assets
Few reporting duties
Same as SEP
No withdrawal limits
Same as 401k rule except penalty is 25% in SIMPLE's first two years
No federal spousal rights
Rollover after 2 years to another SIMPLE and to plans allowed under 401k rule
Negligible reporting duties
Please contact us if you are a business owner interested in exploring retirement plan options, including SIMPLE plans. Metro CPA, LLC 2193 Northlake Parkway, Building 12, Suite 101, Tucker, GA, 30084 Phone: (678)382-0444
info@themetrocpa.com Attention: Insurance Companies, MGA’s, Premium Finance Companies & Insurance Industry Vendors: Check out the rates for the most cost effective method of keeping your message in front of your customers … The Independent Insurance Agent.
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Agents E&O Tips DO YOUR PROFESSIONAL LIABILITY CUSTOMERS UNDERSTAND THE IMPACT OF A “RETRO DATE”? Posted on December 2, 2012 by Curt Pearsall An equally important question – do you as their agent understand the impact of a retro date on an E&O / professional liability policy? The term “retro date” or “retroactive date” is an extremely important issue for agents and their customers to be aware of. More often than not, an E&O policy will be written on a claim made policy form. Within a claim made policy, there are a variety of key triggers with the two main points being the date of the “wrongful act” and the date the claim is made. A claims-made policy only covers claims made during the policy period (or any extended reporting period if applicable). The definition of a “wrongful act” is typically the act, error or omission an insured commits that ultimately gives rise to a claim. For an insurance agent, this could be the date that when the CSR did not bind the requested coverage. For the coverage to potentially apply, the date of the “error or omission” must be after any applicable retro date as noted on the policy. In other words, there is no coverage for any wrongful act that occurred prior to the retro date. For the customer to have coverage for all prior wrongful acts, they should look to secure “full prior acts” coverage. Some E&O carriers will provide this by stating “none” for the retro date on the dec page. If the E&O / professional liability contains a “retro date”, the agent should bring this to the customer’s attention and explain the significance of this date. Also, if the agency looks to move the E&O policy to another carrier, they should be sure that the new policy has the same retro date as the expiring. If the carrier is providing a more current retro date, this is significant and potentially extremely damaging to your customer. Don’t be misled by the premium differences because chances are the premium will be less because essentially the coverage is less.
WHAT IS YOUR PERSONAL E&O COMMITMENT? Posted on November 29, 2012 by Curt Pearsall What do you see when you look yourself in the mirror? Do you see someone that is conscientious, professional, hardworking and ethical? Do you see someone that gives everything you have to make sure that the agency expectations are met? Do you see yourself as someone who is technically proficient and who truly cares about the customers and wants to make sure that they know and understand the coverage they have? Do you see someone that has a strong personal E&O commitment? Conversely, do you see someone that has their own way of doing things and does not really care whether this is the way the agency wants it done? Do you see someone that will bend the truth to make the sale? Do you see someone that does not really know the various products but can justify it since you probably know more than the customer? On a scale of 1-10, how would you assess your personal commitment to E&O prevention? If you are honest with yourself, you would fall into the bottom third and some may call you “the next E&O waiting to happen”. Agencies don’t make mistakes, people do! In these tough legal times, an agency’s ability to avoid an E&O claim rests clearly with each and every staff member (including the owner) doing the best job that they can. Among other things, being a “documentation fanatic”. Continued on page 25 AccuAgents
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Agent’s E&O Tips Continued from page 24 If you fall into the top category, congrats – great job! Keep it up! If you fall into the bottom category, shame on you. You are in a great industry and customers (and your fellow team members) are counting on you to do your job and to pull your weight. Are you capable of makings the changes necessary? Only you can decide that. If you are not willing to do things the way the agency wants them done, then find another occupation because you are truly an E&O waiting to happen. For those that may be in the middle, make a concerted effort in 2013 to increase your personal E&O commitment. If you need more education on technical issues, go to your manager and let them know. Whatever your “weakness” is, work hard to correct it. The journey will be well worth it. So, on a scale of 1-10 (10 being the best), what is your personal E&O commitment? Only you really know the answer. HOW CONFIDENT ARE YOU THAT THE INSURANCE COVERAGE IS BOUND? POSTED ON NOVEMBER 12, 2012 BY CURT PEARSALL With much of the business that insurance agencies deal with on a daily basis, when they bind the coverage, the coverage is technically bound. This is because most agencies have standard agency agreements with many of their carriers that allow them to do so. It is critical that agency staff (producers and CSRs) realize that there are potentially some “conditions” that need to be met for the “binding” to be technically effective. One of those conditions is that the risk and the specifics of the risk (limit, construction type, etc.) are within the binding authority granted by the carrier. In other words, if you bound the carrier to a homeowners for $350,000 yet you technically, per the agency agreement, only have the authority to bind for limits up to $250,000, is the risk technically bound? Probably not unless the agency staff member has received authorization from the carrier for this “exception”. While this issue is causing more than its share of E&O claims, there is another issue that agencies deal with that has equal catastrophic potential. That issue involves placing business with various “alternative markets” such as Fair Plans, WC Pools, Assigned Risk, E&S markets, etc. When placing business with these markets, when is coverage technically effective? In most, if not all situations, it is when the market advises you it’s bound. Typically, this requires a fully completed application that has been underwritten and approved and sufficient payment to satisfy that market’s requirement for binding. Incomplete applications will be returned and will only delay the process further. Where this issue typically gets sticky is when you have a customer that you are looking to place coverage for. Since you don’t have binding authority, it is CRITICAL that when the customer leaves your office, they are aware (put it in writing!) that coverage is not yet bound and will not be bound until you are advised by the market that all conditions and requirements to bind coverage have been met. In an E&O seminar that I participated in at last week’s Massachusetts “Big Event”, the following was an actual claim we discussed on this issue. This involved the Mass WC Pool. The agency, submitted a WC application for Smith and Jones (contractor) dated 9/6. Due to premium finance issues that delayed receipt of the premium check, the Mass WC Pool finally issued a Notice of Assignment confirming that workers compensation coverage for Smith and Jones had been assigned and that coverage was effective 9/14. Unfortunately, one of the workers was injured on 9/11, 3 days before coverage was bound. The problem was when the agency wrote a letter to Smith and Jones dated 9/7 acknowledging receipt of premium payment, they said nothing about when the policy would be assigned and made effective. Smith and Jones presumed that when they made payment that coverage was bound at that time. Based on the effective date and the date of injury, there existed a coverage problem that ended up being the agency’s problem. When dealing with all of your markets, be certain that you know the binding guidelines. If you do not have the authority to bind, ensure that the risk is aware of this (verbally and in writing is preferred) and that coverage is not bound until you are advised by that specific market. This level of communication could just make a big difference if a problem develops.
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December, 2012
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Millions of people are using mobile devices to get online every day. Does your agency have a mobile-friendly site or an app? If not, you’ve come to the right place to get started. What is a mobile site and why do you need one? Just because you can access your desktop site on a mobile phone doesn’t mean it’s mobile-friendly. Your mobile efforts should reflect the unique navigation capabilities and limitations of mobile devices. A mobile-friendly site and mobile app can help your business connect with customers and drive conversions.
Why does mobile matter?
Your customers are already mobile. Are you?
Customers want to access your agency in their real world – anyplace, anytime.
Mobile users want to connect with the businesses in their local area. Your competitors’ mobile performance influences your customers’ expectations.
Where do I start? We know that starting to develop a mobile strategy can be an overwhelming task. Many questions can arise, leaving you anxiously contemplating which to concentrate on first.
Users expect their mobile experience to be as good as their desktop experience.
If customers can’t find or easily access your mobile content or services, you’ve lost their business.
Who is your target audience?
Are you targeting an audience using multiple devices?
Which platforms will you utilize?
What are your primary goals for the mobile site or
app?
What do your customers
want?
How are you going to measure success? Go to www.AgencyThrive.com for the answers! Whether you need significant direction, or a few questions answered, AgencyThrive will help develop your mobile strategy so you can see it thrive in the market!
AccuAgents
Page 26
December, 2012